<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 2000
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______ to _____
Commission File Number 000-21091
ADVANCED RADIO TELECOM CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 52-1869023
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
500 108th Avenue NE, Suite 2600
Bellevue, Washington 98004
(Address of principal executive offices)
(425) 688-8700
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes [X] No [_].
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date: 29,178,863 shares of common
stock, $.001 par value, at May 8, 2000.
<PAGE>
ADVANCED RADIO TELECOM CORP.
INDEX
PART 1. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
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<S> <C>
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
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<PAGE>
Advanced Radio Telecom Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................... $156,670 $108,161
Short-term investments.................................................. - 75,887
Pledged securities...................................................... - 9,407
Accounts receivable..................................................... 174 234
Prepaid expenses and other current assets............................... 169 227
--------- ---------
Total current assets................................................. 157,013 193,916
Property and equipment, net................................................ 18,387 14,747
FCC licenses, net.......................................................... 179,566 180,754
Deferred financing costs, net.............................................. 8,366 8,345
Other assets............................................................... 31,887 374
--------- ---------
Total assets......................................................... $395,219 $398,136
--------- ---------
Current liabilities:
Accounts payable........................................................ $ 6,735 $ 5,780
Accrued compensation and benefits....................................... 3,098 3,022
Accrued taxes other than income......................................... 5,244 5,034
Other accrued liabilities............................................... 10,556 2,826
Accrued interest payable................................................ 2,382 7,120
Current portion of long-term debt....................................... 276 380
--------- ---------
Total current liabilities............................................. 28,291 24,162
Long-term debt, net of current portion..................................... 109,454 109,047
Deferred income tax liabilities............................................ 29,051 29,326
--------- ---------
Total liabilities..................................................... 166,796 162,535
--------- ---------
Commitments and contingencies
Convertible Preferred Stock:
Series A 2,368,397 and 2,288,289 shares issued and outstanding.......... 200,299 195,796
Series B 769,103 and 849,211 shares issued and outstanding............. 43,237 47,740
--------- ---------
Total convertible preferred stock..................................... 243,536 243,536
--------- ---------
Stockholders' deficit:
Common stock and additional paid-in capital, 28,947,078
and 27,967,975 shares issued and outstanding............................ 239,162 231,513
Note receivable from stockholder........................................ - (887)
Accumulated other comprehensive income.................................. - 889
Accumulated deficit..................................................... (254,275) (239,450)
--------- ---------
Total stockholders' deficit.......................................... (15,113) (7,935)
--------- ---------
Total liabilities, convertible preferred stock and stockholders'
deficit.......................................................... $395,219 $398,136
--------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
Advanced Radio Telecom Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
---- ----
<S> <C> <C>
Revenues.......................................................... $ 398 $ 226
-------- --------
Costs and expenses:
Technical and network operations.............................. 4,686 3,540
Sales and marketing........................................... 1,235 1,466
General and administrative.................................... 4,691 2,646
Provision for equipment impairment............................ -- 6,376
Depreciation and amortization................................. 3,159 3,130
-------- --------
Total costs and expenses................................... 13,771 17,158
-------- --------
Loss from operations.............................................. (13,373) (16,932)
-------- --------
Interest and other:
Interest expense.............................................. (5,223) (7,336)
Interest income............................................... 3,496 432
-------- --------
Total interest and other................................... (1,727) (6,904)
-------- --------
Loss before income taxes.......................................... (15,100) (23,836)
Deferred income tax benefit....................................... 275 305
-------- --------
Net loss.......................................................... $(14,825) $(23,531)
======== ========
Net loss.......................................................... $(14,825) $(23,531)
Deemed preferred dividend......................................... (4,503) --
-------- --------
Net loss applicable to common stockholders........................ $(19,328) $(23,531)
-------- --------
Basic and diluted net loss per common share, including
$0.16 loss per share relating to deemed preferred
dividend in 2000.............................................. $ (0.68) $ (0.87)
-------- --------
Weighted average common shares.................................... 28,376 27,035
-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
Advanced Radio Telecom Corp. and Subsidiaries
Condensed Consolidated Statement of Stockholders' Deficit
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Note Accumulated
Common Stock and Receivable Other
Additional paid in capital from Comprehensive Accumulated
Shares Amount Stockholder Income Deficit Total
------ ------ ----------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 27,968 $231, 513 $ (887) $889 $(239,450) $(7,935)
Repayment of note receivable 887 887
Warrants exercised 57 - -
Stock options exercised 922 6,998 6,998
Stock compensation expense 651 651
Value ascribed to beneficial conversion feature
of Series A Preferred Stock 4,503 4,503
Deemed dividend of beneficial conversion
feature of Series A Preferred Stock (4,503) (4,503)
Comprehensive loss:
Net loss (14,825) (14,825)
Decrease in unrealized appreciation on investments
available for sale (889) (889)
--------
Comprehensive loss (15,714)
------- -------- --------- -------- ---------- --------
Balance at March 31, 2000 28,947 $239,162 $ - $ - $(254,275) $(15,113)
------- -------- --------- -------- ---------- --------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-5-
<PAGE>
Advanced Radio Telecom Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss....................................................................... $(14,825) $(23,531)
Adjustments to reconcile net loss to net cash used by operating activities:
Non-cash provision for equipment impairment.................................. - 6,376
Depreciation and amortization................................................ 3,159 3,130
Non-cash interest expense.................................................... 506 1,969
Non-cash stock-based compensation expense.................................... 651 137
Deferred income tax benefit.................................................. (275) (305)
Changes in operating assets and liabilities:
Accrued interest payable......................................................... (4,738) (4,696)
Accounts payable and accrued liabilities......................................... 6,710 (1,003)
Other............................................................................ 609 213
-------- --------
Net cash used by operating activities.................................... (8,203) (17,710)
-------- --------
Cash flows from investing activities:
Purchases of property and equipment.......................................... (3,998) (207)
Proceeds from disposition of property and equipment.......................... 120 372
Additions to FCC licenses ................................................... - (4,311)
Deposit for FCC license auction.............................................. (31,500) -
Proceeds from sale of short-term investments................................. 74,998 -
Proceeds from maturities of pledged securities............................... 9,450 9,450
Proceeds from repayment of notes receivable.................................. 887 -
-------- --------
Net cash provided by investing activities................................ 49,957 5,304
-------- --------
Cash flows from financing activities:
Proceeds from working capital facility borrowings............................ - 7,500
Proceeds from issuance of common stock....................................... 6,998 3
Principal payments of long-term debt......................................... (94) (143)
Additions to deferred financing costs........................................ (149) (202)
-------- --------
Net cash provided by financing activities................................ 6,755 7,158
-------- --------
Net increase (decrease) in cash and cash equivalents............................. 48,509 (5,248)
Cash and cash equivalents, beginning of period................................... 108,161 11,864
-------- --------
Cash and cash equivalents, end of period......................................... $156,670 $ 6,616
-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE>
Advanced Radio Telecom Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 1 - The Company and Basis of Presentation
Advanced Radio Telecom Corp. (collectively with its subsidiaries, "ART" or the
"Company") is a broadband internet protocol service provider to businesses. ART
has a nationwide footprint of 39 GHz spectrum licenses in the United States, and
owns 26GHz and/or 39GHz spectrum licenses in the United Kingdom and several
Scandinavian countries. The Company has announced plans to build high-speed,
internet protocol metropolitan area networks in 40 major United States markets
over the next three years.
The Company will require significant additional capital to fully fund its
operations and its long-term broadband data network buildout and business plan.
The Company currently estimates that it may require in excess of $750 million
over the next several years to fund capital expenditures, working capital and
operations. Accordingly, the Company will need to raise substantial additional
capital to fully implement its business plan. While the Company has raised
substantial capital in the past, there can be no assurance that the Company will
be able to obtain additional financing, or, if available, that it will be able
to obtain such additional financing on acceptable terms. Actual capital
requirements will be affected, possibly materially, by various factors including
the speed of the Company's build-out, the cost and amount of equipment acquired,
the number of markets served and the penetration of those markets, customer
acceptance and demand and the prices charged for services, competition and
technological change. The Company expects to be able to adjust its capital
requirements in part in response to customer demand by changing the rate at
which it adds new markets and builds out existing markets.
Interim financial statements - Certain information and footnote disclosures
normally included in financial statements have been condensed or omitted
pursuant to rules and regulations of the Securities and Exchange Commission. The
accompanying interim condensed consolidated financial statements are unaudited.
In the opinion of Company management, these financial statements include all
adjustments, consisting of normal recurring adjustments, necessary to a fair
statement of results for interim periods presented. The unaudited condensed
consolidated financial statements should be read in conjunction with the
Company's December 31, 1999, audited consolidated financial statements and notes
thereto contained in the Company's 1999 Annual Report on Form 10-K.
Use of Estimates - Preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect amounts reported in the financial statements. Actual
results could differ from these estimates. Among the more significant estimates
made by management include estimated useful lives of licenses and network
equipment and the recoverability of recorded values of long-lived assets.
Impairment of Long-Lived Assets - The Company evaluates its long-lived assets
for financial impairment and continues to evaluate them as events or changes in
circumstances indicate that the carrying amount of such assets may not be fully
recoverable. In cases where undiscounted expected cash flows associated with
such assets are less than their carrying value, an impairment provision is
recognized in an amount by which the carrying value exceeds the estimated fair
value of such assets. Recoverability of property and equipment and capitalized
FCC licenses is dependent on, among other things, the successful deployment of
networks in each of the respective markets, or sale of such assets. Management
estimates that the Company will recover the carrying amount of those costs from
undiscounted cash flows generated by the networks once deployed. However, it is
reasonably possible that such estimates may change in the near term as a result
of technological, regulatory or other changes.
Net Loss Per Share - Calculations of loss per share exclude the effect of
convertible preferred stock, options and warrants since inclusion in such
calculations would have been antidilutive. The net loss per share for the three
months ended March 31, 2000, gives effect to a deemed preferred stock dividend
of approximately $4.5 million representing the beneficial conversion feature of
Series A preferred stock.
-7-
<PAGE>
Advanced Radio Telecom Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 2 - Property and Equipment
Property and equipment capital expenditures during the three months ended March
31, 2000, included approximately $1.7 million which did not require cash.
During the three months ended March 31, 1999, the Company recorded a provision
for equipment impairment of approximately $6.4 million to write down the
carrying value of certain equipment not expected to be an integral part of the
Company's expanded broadband data network.
Note 3 - FCC Licenses and recent
Developments
In April 2000, the Company entered into an agreement to acquire up to all of
the 39GHz licenses of BroadStream Communications Corporation and its affiliates
("BroadStream") in exchange for shares of Company common stock. The number of
shares of common stock to be issued as consideration for the acquired licenses
will be determined by a formula based on 1.25 times the population covered by
the licenses (as defined) divided by 36. The maximum number of shares that will
be issued if all licenses are acquired approximates 10.2 million shares. The
Company has also entered into an agreement to make available to BroadStream a
bridge loan of up to $30 million. In addition, in March 2000, the Company
entered into an agreement to acquire all of the 39 GHz licenses of Bachow
Communications Incorporated in exchange for approximately 2.2 million shares of
the Company's common stock. Closing of both transactions, which are anticipated
in the second half of 2000, are subject to various conditions, including FCC
approval and, in the case of the BroadStream transaction, shareholder approval
and for certain licenses, license renewal.
The Company is a participant in an auction for 39 GHz licenses being conducted
by the FCC and in connection therewith in March 2000, the Company made a $31.5
million upfront payment (the amount of which was determined in accordance with
auction notice and filing requirements) for additional licenses it may acquire
in the auction. This deposit is included in other assets in the accompanying
March 31, 2000 consolidated balance sheet. As a result of the recently
completed auction, the Company was the high bidder for licenses having a total
purchase price of approximately $77 million.
In May 1999, the Company sold 11 licenses for approximately $6.9 million,
resulting in a gain included in other income of approximately $700,000.
Note 4 - Long-term Debt and Other Financings
Financing Agreement with Cisco Systems - During 2000, the Company entered into a
credit agreement with Cisco Systems Capital Corporation, an affiliate of Cisco
Systems, Inc. ("Cisco"), for multi-year vendor financing to be used to fund the
Company's purchases of Cisco networking hardware and for other costs associated
with the network installation and integration of such hardware. Funding under
the facility is available in tranches, approximately $14 million being
immediately available, $36 million available upon build-out of certain markets
and the remaining $125 million becoming available upon completion of additional
market build-outs or upon closing of additional financing facilities, as
defined. Terms of the credit agreement, among other things, include requirements
for the Company to maintain certain levels of financial ratios, limit
distributions, dividends, redemptions or other acquisitions of the Company's
capital stock, limit the amount of additional indebtedness and provides for
mandatory principal prepayments under certain circumstances. As of March 31,
2000, no amounts had been borrowed relating to this credit agreement.
Working Capital Facility - During 1999, the Company borrowed funds available on
a working capital facility, which facility was repaid in September 1999 and
terminated.
-8-
<PAGE>
Advanced Radio Telecom Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 5 - Capital Stock
During the three months ended March 31, 2000, as a result of the automatic
conversion of approximately 80,000 shares of Series B convertible preferred
stock into Series A convertible preferred stock, the Company recognized a deemed
dividend of approximately $4.5 million.
Note 6 - Commitments and Contingencies
Contingencies - The Company is party to certain claims and makes routine filings
with the FCC and state regulatory authorities. Management believes that
resolution of any such claims or matters arising from such filings, if any, will
not have a material adverse impact on the Company's consolidated financial
position, results of operations or cash flows. In the normal course of business,
the Company has various legal claims and other contingent matters outstanding.
Management believes that any ultimate liability arising from these actions would
not have a material adverse effect on the Company's financial condition,
liquidity or operating results.
Note 7 - Supplemental Cash Flow Information:
Supplemental disclosure of non-cash financing and investing activities and other
cash flow information for the three months ended March 31 is summarized as
follows (in thousands):
2000 1999
Non-cash financing and investing activities:
Issuance of shares for FCC licenses....................... $ - $ 848
Value ascribed to warrants................................ - 1,242
Interest paid.................................................. 9,454 9,918
-9-
<PAGE>
Advanced Radio Telecom Corp.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Cautionary Statement
This report includes "forward-looking" information, as that term is defined in
the Private Securities Litigation Reform Act of 1995 or by the Securities and
Exchange Commission in its rules, regulations and releases, regarding the
Company's financial and business prospects, the deployment of it's network and
capital requirements. The Company cautions investors that any such statements
are not guarantees of future performance and that known and unknown risks,
uncertainties and other factors may cause actual results to differ materially
from those in the forward-looking statements. Those risks include, without
limitation, ability to raise additional capital, capital requirements and other
financial risks, customer demand, technological risks, management of growth,
competition and government regulation, as described in Exhibit 99 to the
Company's Report on Form 10-K for the year ended December 31, 1999. The Company
does not undertake to update or revise its forward-looking statements publicly
even if experience or future changes make it clear that any projected results
expressed or implied herein will not be realized.
Overview
In September 1999, ART refocused its strategy to providing broadband internet
protocol services to businesses. As a result, revenues for the three months
ended March 31, 1999, represent sales to customers and for businesses that are
not part of the current strategy. Revenues and results for those periods are not
indicative of the Company's current business. The Company plans to deploy high
speed internet protocol metropolitan networks in ten U.S. markets in 2000 and in
an additional thirty markets over the next three years. The Company expects its
operating expenses to increase as it deploys its network and expands its
business.
Results of Operations
Three Months Ended March 31, 2000 Compared to Three Months Ended
March 31, 1999
Revenues for the three months ended March 31, 2000, increased to $398,000
compared to $226,000 for the comparative prior year period as increases in
internet access revenues exceeded decreases in revenues from the prior business
model.
Technical and network operations expenses increased to $4.7 million during the
three months ended March 31, 2000 from approximately $3.5 million for the
comparative prior year period. The increase resulted primarily from operation of
networks in four markets during the 2000 quarter as compared to three markets
during the prior year period and from increases relating to the ongoing network
buildout.
Sales and marketing expenses of approximately $1.2 million for the three months
ended March 31, 2000 decreased slightly from approximately $1.5 million for the
comparative prior year period. These costs are expected to increase as the
Company's market roll-out continues.
General and administrative expenses of approximately $4.7 million for the three
months ended March 31, 2000 increased $2 million over the comparative prior year
period. The increase was due to expanded operations and infrastructure build-up
in anticipation of network deployment, market development and business
expansion.
During the three months ended March 31, 1999, the Company recorded a provision
for equipment impairment of approximately $6.4 million related to the write-down
of certain equipment not expected to be an integral part of the Company's
broadband data network.
-10-
<PAGE>
Advanced Radio Telecom Corp.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Depreciation and amortization expense of approximately $3.2 million during the
three months ended March 31, 2000 was relatively unchanged as compared to the
prior year period and decreased from approximately $3.7 million during the
preceeding quarter ended December 31, 1999. As a result of recording provisions
for equipment impairment charges in 1999 and until the network build-out is
deployed, depreciation expense may decrease in year 2000 as compared to 1999.
Interest and other expenses decreased during the three months ended March 31,
2000 to $1.7 million from $6.9 million during the comparative prior year period
due to a decrease in interest expense of $2.1 million and an increase in
interest income of $3.1 million. The higher interest expense in the 1999 quarter
was primarily due to amortization of the value ascribed to warrants issued in
equipment financings and borrowings under these facilities, which were repaid in
September 1999. The increase for interest income results from earnings on
increased balances of cash and short-term investments.
Deferred income tax benefits were $275,000 and $305,000 during the three months
ended March 31, 2000 and 1999, respectively.
In February of 1999, the Company cancelled and reissued approximately 1 million
stock options which under recently issued interpretations of Accounting
Principles Board Opinion No. 25, would be accounted for as variable options
prospectively from July 1, 2000, the effective date of the interpretation, until
such options have been exercised. The financial statement effect relating to
these stock options will not be determinable until the effective date of the
interpretation.
Liquidity and Capital Resources
During the three months ended March 31, 2000, operating activities used cash of
approximately $8.2 million as compared to $17.7 million used by operating
activities during the comparative prior year period and approximately $11
million during the immediately preceding quarter. Cash used by operating
activities resulted primarily from the Company's net loss offset by increases in
accounts payable and accrued liabilities. The level of accounts payable and
accrued liabilities activity will increase or decrease cash used by operating
activities and may fluctuate on a quarter to quarter basis.
Investing activities provided cash of approximately $50.0 million and $5.3
million during the three months ended March 31, 2000 and 1999, respectively.
Investing activities provided cash primarily from maturities of short-term
investments during the three months ended March 31, 2000 of approximately $75
million and from maturities of pledged securities of approximately $9.5 million
during each of the 2000 and 1999 quarters. The February 15, 2000 Senior Notes
interest payment was made utilizing the last tranche of pledged securities;
accordingly future interest payments will no longer be funded by pledged
securities. Investing activities used cash of $31.5 million for a deposit
relating to the FCC license auction, approximately $4.0 million and $207,000 for
capital expenditures during the 2000 and 1999 quarters, respectively, and
approximately $4.3 million for acquisitions of certain FCC licenses during the
1999 period.
Financing activities provided cash of approximately $6.8 million during the
three months ended March 31, 2000, primarily the result of receipt of proceeds
from exercise of outstanding stock options and warrants to purchase Company
common stock. Financing activities provided cash of approximately $7.2 million
during the three months ended March 31, 1999, primarily the result of $7.5
million borrowings under its since repaid and terminated working capital
facility.
Since inception, the Company has financed its operations, capital expenditures
and acquisitions from issuances of debt and equity securities and vendor
financing. In September 1999, the Company raised $251 million from the private
placement of convertible preferred stock, and in 2000, the Company entered into
a credit agreement with Cisco for up to $175 million of financing for network
buildout. The Company will require significant additional capital to fully fund
its operations and its long-term broadband data network build-out and business
plan. The Company currently estimates that it may require in
-11-
<PAGE>
Advanced Radio Telecom Corp.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
excess of $750 million over the next several years to fund capital expenditures,
working capital and operations. Additionally, the Company may require
substantial additional cash relating to acquisitions of licenses, including
licenses to be acquired as a result of the recently completed FCC Auction in
which the Company was the high bidder for licenses having a total purchase price
of approximately $77 million. Accordingly, the Company will need to raise
substantial additional capital to fully implement its business plan. While the
Company has raised substantial capital in the past, there can be no assurance
that the Company will be able to obtain additional financing, or, if available,
that it will be able to obtain such additional financing on acceptable terms.
Actual capital requirements will be affected, possibly materially, by various
factors including the speed of the Company's build-out, the cost and amount of
equipment acquired, the number of markets served and the penetration of those
markets, customer acceptance and demand and the prices charged for services,
competition and technological change. The Company expects to be able to adjust
its capital requirements in part in response to customer demand by changing the
rate at which it adds new markets and builds out existing markets.
In April 2000, the Company entered into an agreement to acquire up to all of the
39 GHz licenses of BroadStream in exchange for shares of the Company's common
stock. The number of shares of common stock to be issued as consideration for
the acquired licenses will be determined by a formula based on 1.25 times the
population covered by the licenses (as defined) divided by 36. The maximum
number of shares that will be issued if all licenses are acquired approximates
10.2 million shares. The Company has also entered into an agreement to make
available to BroadStream a bridge loan of up to $30 million. In addition, in
March 2000, the Company entered into an agreement to acquire all of the 39 GHz
licenses of Bachow Communications Incorporated in exchange for approximately 2.2
million shares of the Company's common stock. Closing of both transactions,
which are anticipated in the second half of the year, are subject to various
conditions, including FCC approval and, in the case of the BroadStream
transaction, shareholder approval and for certain of the licenses, license
renewal.
-12-
<PAGE>
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
2.1 BroadStream Asset Purchase Agreement
2.2 Bachow Asset Purchase Agreement
2.3 Bachow Option Agreement
10.1 BroadStream Bridge Loan Agreement
27. Financial Data Schedule.
(b) Reports on Form 8-K:
The Company did not file a Form 8-K during the quarter ended March 31, 2000.
-13-
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on this 15th day of
May, 2000.
ADVANCED RADIO TELECOM CORP.
By: /s/ R. S. McCambridge
--------------------------------
R. S. McCambridge
President and
Chief Operating Officer
(Duly Authorized Officer and
Principal Financial and Accounting Officer)
-14-
<PAGE>
EXHIBIT INDEX
Exhibit
Number
- ------
Title
-----
2.1 BroadStream Asset Purchase Agreement
2.2 Bachow Asset Purchase Agreement
2.3 Bachow Option Agreement
10.1 BroadStream Bridge Loan Agreement
27. Financial Data Schedule
-15-
<PAGE>
EXHIBIT 2.1
ADVANCED RADIO TELECOM CORP.
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made as of April 14,
2000 (the "Signing Date") among Advanced Radio Telecom Corp. ("ART"), a Delaware
corporation, BroadStream Corporation ("BroadStream"), a Delaware corporation,
BroadStream Communications Corporation ("BCC"), a Delaware corporation, Commco,
LLC ("Commco"), a Delaware limited liability company (BroadStream, BCC and
Commco collectively, the "Holders"), Commco Partners, LLC (the "Parent"), a
Delaware limited liability company and Scott Reardon ("Reardon" and together
with Holders and Parent, the "Sellers").
WHEREAS, ART wishes to purchase, and Holders wish to sell, certain licenses
granted by the Federal Communications Commission (the "FCC") and held by
Holders, or which the Holders have a right to acquire, listed on Schedule 1(a)
hereto (the "First Licenses"), in exchange for that number of shares of ART's
Common Stock, $.001 par value per share (the "Common Stock"), calculated
pursuant to Section 1.3 hereof (the "Transaction");
WHEREAS, ART and Sellers wish to enter into certain arrangements with
respect to the potential future purchase of other licenses granted to or renewed
for Sellers and their affiliates, set forth on Schedule 1(b) hereto (the "Future
Licenses" and together with the First Licenses, the "Licenses") and certain
other 39 GHz licenses subsequently granted to any of the Sellers or their
affiliates, or which any of the Sellers or their affiliates holds or has the
right to acquire;
WHEREAS, ART and the Sellers desire the Transaction to qualify as a "tax
free" reorganization under Section 368(a) of the Internal Revenue Code of 1986,
as amended (the "Code"); and
WHEREAS, ART has delivered to Sellers a voting agreement entered into among
certain of the holders of its Series A Convertible Preferred Stock to vote in
favor of the issuance of shares of Common Stock to the Holders pursuant to this
Agreement.
NOW, THEREFORE, in consideration of the premises and the respective
covenants and representations and warranties herein contained, the parties
hereto agree as follows:
1. Sale of Assets.
--------------
1.1. Sale of Assets. Subject to and upon the terms and conditions of this
--------------
Agreement, Holders agree to sell and transfer to ART and ART agrees to acquire
from Holders, free and clear of any pledge, lien, options, warrants, security
interest, mortgage claim, charge, liability, right of first refusal, lease,
management agreement, contractual restrictions on transfer or other encumbrance
of any kind whatsoever (the "Liens") other than those in favor of ART, at the
<PAGE>
Closing (defined below) all of Holders' right, title and interest in, to and
under the following assets (the "Assets"):
(a) the First Licenses; and
(b) the following trademarks, trade names and service marks (the
"Marks"), including all goodwill associated therewith, all common law
rights thereto and all registrations that have been or may be granted
thereon, together with the right to sue and recover damages for future or
past infringement thereof: "BroadStream" and "BroadStream Communications"
and all Marks related thereto;
provided, however, that the Licenses denoted on Schedules 1(a) and 1(b) as
- -------- -------
presently held by Plaincom, Inc. (the "Plaincom Licenses"), may be sold and
transferred to ART following the Closing, as provided in Section 9.9 hereof.
1.2. No Assumption of any Liabilities. ART will not assume, satisfy or
--------------------------------
perform any of the debts, liabilities, obligations or commitments of Sellers
including, without limitation, with respect to the Plaincom Licenses. Sellers
will retain and satisfy all such debts, liabilities, obligations and
commitments.
1.3. Consideration. Subject to and upon the terms and conditions of this
-------------
Agreement, in consideration of the sale and transfer of the Assets to ART, ART
will (i) issue to each Holder at the Closing the number of shares of Common
Stock equal to: the quotient of (a) the product of (1) the aggregate number of
channel pops as set forth on Schedule 1 for Licenses transferred at the Closing
by such Holder multiplied by (2) $1.25, divided by (b) $36.00, and (ii) issue to
the Holders, pro rata based on the shares issued pursuant to clause (i), on the
first business day 91 days after the Closing, the number of shares of ART Common
Stock equal to the quotient of (x) $15,000,000 divided by (y) $36.00 (the ART
shares issued pursuant to (i) and (ii), collectively the "Consideration");
provided, however, that the portion of the Consideration payable under clause
(ii) shall be paid only if the Sellers are not in breach of any material
obligation under any of the Seller Documents (as defined in Section 3.2(a)
hereof). The Common Stock issued under this Agreement and under any agreement
to sell Future Licenses or Option Licenses pursuant to Section 1.4 or 1.5 shall
be termed the "Shares."
1.4. Future Licenses. ART hereby grants to Holders and Holders hereby
---------------
grant to ART the following rights with respect to the Future Licenses:
(a) Subject to the terms of this Section 1.4, the Holders hereby
grant to ART an option (the "Buy Option") to require the Holders to sell to
ART any Future Licenses which receive a Final Order (as defined below) of
renewal. Holders will provide written notice to ART within ten (10) days of
any such renewal by Final Order (the "Renewal Notice"). Such Buy Option may
be exercised with respect to any Future License only by written notice of
exercise to the Holders by ART (x) no earlier than the date that is the
-2-
<PAGE>
later to occur of (i) renewal of such Future License by Final Order and
(ii) nine (9) months following the Closing, and (y) no later than the date
that is the later to occur of (a) thirty (30) days after receipt by ART of
the related Renewal Notice and (b) ten (10) months after the Closing Date.
The closing of the transfer of any such Future License shall occur no
earlier than one year and one day following the Closing Date. The period of
time specified in this Section 1.4(a) for the exercise of any Buy Option is
referred to as the "Buy Option Period." For the purposes of this Agreement,
"Final Order" shall mean an action by the FCC granting a license, granting
renewal of a license or granting consent to the assignment of a license, as
the case may be, with respect to which no request for stay, petition for
rehearing, reconsideration or appeal is pending, and as to which the time
for filing any petition for rehearing, reconsideration or appeal has
expired and with respect to which the time for agency reconsideration or
review taken on its own motion has expired, or in the event of the filing
of such request, petition or appeal, an action which shall have been
reaffirmed or upheld and with respect to which the time for seeking further
administrative or judicial review shall have expired.
(b) Subject to the terms of this Section 1.4, ART hereby grants to
the Holders an option (the "Sell Option") to sell to ART any Future License
that receives a Final Order. Such Sell Option may be exercised with respect
to any Future License only by written notice of exercise to ART by the
Holders; provided, however, that such written notice of exercise by the
-------- -------
Holders shall be given no earlier than ninety (90) days following the
expiration of the Buy Option Period and no later than one hundred twenty
(120) days following the expiration of the Buy Option Period.
(c) In the event of the exercise with respect to any Future License
of the Sell Option or the Buy Option, the purchase and sale of the relevant
Future License(s) shall be made pursuant to one or more agreements in
substantially the form of Exhibit 1.4(c) hereof, which the parties agree to
execute within thirty (30) days of the exercise of the respective option.
The "Consideration" to be paid for any Future License (a) shall be the
number of shares of Common Stock valued at the quotient of (a) the product
of (x) the number of channel pops for the relevant Future License(s) being
transferred as set forth on Schedule 1(b) and (y) $1.25, divided by (b)
$36.00, and provided, further, that the parties (i) will use reasonable
-------- -------
efforts to set mutually agreeable closing dates and (ii) will group any
closings with respect to Future Licenses and any Option Licenses
transferred pursuant to Section 1.5 so that closings do not occur more
frequently than once per fiscal quarter.
(d) Promptly after exercise of the Sell Option or the Buy Option, the
Holders will use their best efforts to submit an Application (as defined in
Section 9.1(a)) to the FCC requesting approval of the assignment of such
Future License.
1.5. Option Licenses. Subject to the terms of this Section 1.5, Sellers
---------------
hereby grant to ART the option (the "Grant Option") to purchase any future 39
GHz Licenses (i) granted by the
-3-
<PAGE>
FCC by Final Order to any of Sellers or any current or future affiliate of any
Seller, including without limitation any Person controlled by, controlling or
under common control with any Seller (the "Reardon Affiliates"), after the date
hereof, and (ii) which any Reardon Affiliate at any time holds or has the right
to acquire, in each case prior to the second anniversary of the date hereof
(collectively, the "Option Licenses").
(a) Sellers shall provide ART written notice of (i) the grant of any
Option License to any Seller or Reardon Affiliate, (ii) the acquisition of
any Option License by any Seller or Reardon Affiliate and (iii) the
acquisition of any rights to acquire any Option License by any Seller or
Reardon Affiliate (each such notice, a "Grant Notice") within ten (10) days
thereof.
(b) ART may exercise the Grant Option by written notice to Sellers
delivered not later than thirty (30) days following ART's receipt of any
Grant Notice.
(c) In the event the Grant Option is exercised with respect to any
Option Licenses, the purchase and sale of such Option Licenses shall be
made pursuant to one or more agreements substantially in the form of
Exhibit 1.4(c) hereof, which the parties agree to execute within thirty
(30) days of the exercise by ART of the Grant Option, provided, that upon
--------
the closing of such purchase and sale, such Option License shall have
received a Final Order. The "Consideration" to be paid for any Option
License (a) shall be the number of shares of Common Stock valued at the
quotient of (a) the product of (x) the number of channel pops for the
Option Licenses being transferred at such closing (determined from the same
1997 population data source used to establish the pop numbers on Schedule
1) and (y) $1.25 divided by (b) $36.00, and provided further, that the
parties (i) will use reasonable efforts to set mutually agreeable closing
dates and (ii) will group any closings with respect to Future Licenses
transferred pursuant to Section 1.4 and any Option Licenses so that
closings do not occur more frequently than once per quarter.
(d) Sellers will cause each Reardon Affiliate to comply with the
provisions of this Section 1.5 as if it were a party hereto.
For purposes of this Agreement, "Person" shall mean any individual,
partnership, corporation, limited liability company, association, trust, joint
venture, unincorporated organization or other entity.
2. Closing.
-------
2.1. The closing of the Transaction (the "Closing") shall take place on
such date and at such time within three business days of the satisfaction of the
conditions contained in Sections 10 and 11 as mutually agreed by the parties
(the "Closing Date") at the offices of Ropes & Gray, One International Place,
Boston, Massachusetts 02110.
-4-
<PAGE>
2.2. Deliveries by Sellers at Closing. At the Closing, the Sellers shall
--------------------------------
deliver to ART:
(a) any bills of sale or other instruments of assignment reasonably
required or requested by ART to transfer, convey and assign the Assets to
ART;
(b) certified copies of resolutions of the shareholders and the board
of directors of Sellers authorizing Sellers to enter into and perform their
respective obligations under this Agreement;
(c) a copy of the charter documents of Sellers certified by the
appropriate public official and a copy of the by-laws or other
organizational documents of Sellers certified by their respective
Secretaries;
(d) all such other documents and instruments as ART or its counsel
shall reasonably request to consummate or evidence the transactions
contemplated hereby;
(e) any tax clearance certificates or other similar certificates.
(f) any original documentation from the FCC relating to the Licenses
transferred at the Closing.
2.3. Deliveries by ART at Closing. At the Closing, ART shall deliver to
----------------------------
Sellers one or more stock certificates representing the Consideration,
registered in the name of the respective Holders, and such other documents and
instruments as Sellers or their counsel shall reasonably request to consummate
or evidence the transactions contemplated hereby.
2.4. Form of Documents and Instruments. All of the documents and
---------------------------------
instruments delivered at the Closing shall be in form and substance, and shall
be executed and delivered in a manner, reasonably satisfactory to the parties'
respective counsel.
3. Representations and Warranties of Sellers. Sellers jointly and severally
-----------------------------------------
represent and warrant to ART as follows:
3.1. Entity Status. Each of Holders and Parent is a corporation or limited
-------------
liability company duly organized or formed, validly existing and in good
standing in its respective state of organization, which such state is set forth
in the preamble hereof. Each of the Holders and Parent has full power and
authority to carry on its business as and where now conducted, and to own or
lease and to operate its properties and assets where such properties and assets
are now owned, leased or operated by it and where such business is now conducted
by it. Each of the Holders and Parent is qualified to do business and is in
good standing in each of the jurisdictions in which the nature of its business
or the property owned or leased by it make such qualification necessary. Each of
the Holders and Parent has delivered to ART complete and correct copies of
-5-
<PAGE>
any organizational, by-law or charter documents applicable to it, each as
amended and in effect on the date hereof.
3.2. Authority for Agreement; Conflicts.
----------------------------------
(a) Each Seller has all necessary power and authority to enter into,
execute and deliver this Agreement, and to the extent such Seller is a
party thereto, the Management Agreements (the "Management Agreements")
entered into between ART and each Holder dated the date hereof, the Bridge
Loan Agreement dated as of the date hereof (the "Loan Agreement") among
BCC, BroadStream and ART and the related documents set forth on Schedule
3.2 hereof (the "Loan Documents" and, together with this Agreement and the
Management Agreement, collectively the "Transaction Agreements"), the
Registration Rights Agreement in the form of Exhibit 3.2 hereto to be
entered into by the Holders and ART at the Closing (as the same may be
amended pursuant to Section 9.12 hereof, the "Registration Rights
Agreement"), the Pledge Agreement to be entered into at the Closing by the
ART and the parties specified in Section 10.16 hereof (the "Pledge
Agreement") and the other documents to be delivered by Sellers in
connection with such agreements (the Transaction Agreements, the
Registration Rights Agreement, the Pledge Agreement and such other
documents are referred to collectively as the "Seller Documents") and to
perform fully his or its obligations hereunder and the transactions
contemplated hereby and thereby. The execution, delivery and performance of
this Agreement and the applicable Seller Documents by each Seller has been
duly authorized by all necessary action.
(b) Each of the Transaction Agreements has been, and at the Closing
each of the other Seller Documents will be, duly and validly executed and
delivered by each Seller party thereto. Each of the Seller Documents
constitutes, or at the time of execution thereof, will constitute, the
legal, valid and binding obligation of each Seller party thereto, and each
of the Seller Documents is, or at the time of execution thereof will be,
enforceable by and against each Seller party thereto in accordance with its
respective terms.
(c) The execution and delivery of each Seller Document by each Seller
party thereto and the consummation of the transactions contemplated hereby
and thereby will not conflict with or result in any violations of or
defaults under: (i) any statute, regulation, order, judgment or decree of
any federal, state or local governmental body or regulatory authority
applicable to any Seller or any of the Assets or Licenses; (ii) any other
statute, regulation, order, judgment or decree applicable to any Seller or
any of the Assets or Licenses under or in any other applicable
jurisdiction; (iii) any mortgage, indenture, lease, agreement, instrument
or other obligation to which any Seller is a party or by which any of the
Assets or Licenses are bound; or (iv) any permit, concession, grant,
franchise, license, of or applicable to any Seller. Such execution,
delivery and consummation will not result in the creation of any Lien upon
any of the Assets or Licenses.
-6-
<PAGE>
3.3. Consents and Approvals.
----------------------
(a) Except for the approval by the FCC of the assignment of the
Licenses and the expiry or earlier termination of the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder (the "HSR Act"), no
consent, approval or filing with any governmental or regulatory authority
is required to be made or obtained by any Seller in connection with its
execution and delivery of and performance of its or his obligations under,
this Agreement.
(b) None of the execution and delivery by the Sellers of the Seller
Documents nor the consummation of the transactions contemplated hereby and
thereby will conflict with, result in a breach of, constitute a default
under, require any consent under, result in any Lien upon the Assets or
Licenses, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which any Seller or any
Reardon Affiliate is a party, and no such arrangement will adversely affect
the Assets or Licenses or ART's ability to acquire any rights thereunder.
3.4. FCC Regulatory Matters.
----------------------
(a) Sellers. Each of the Sellers is in compliance with the Federal
-------
Communications Act of 1934, as amended (the "Communications Act"), and the
rules, regulations and policies of the FCC promulgated thereunder
applicable to such Seller, the Licenses or the Assets, and each of the
Sellers is in compliance with all other federal, state and local laws,
rules, regulations and ordinances applicable to such Seller, the Licenses
or the Assets and is not in default under any order, writ, injunction or
decree of any court or governmental agency or instrumentality applicable to
such Seller, the Licenses or the Assets.
(b) FCC Licenses. Schedule 1 sets forth a true and complete list of
------------
each License that is being transferred to ART hereunder, the name of the
licensee, the call sign, the License expiration date, and the status of any
applications for assignment, transfer or waiver of FCC rules filed (or to
be filed) with the FCC. Sellers have provided to ART true and correct
copies of the Licenses received by the Holders from the FCC and of the
other Licenses shown on Schedules 1(a) and 1(b). Except for the Loan
Agreement dated as of February 11, 2000 among BCC and the lenders named
therein providing for term loans in an aggregate amount of $3,025,000, the
Loan Agreement dated as of February 11, 2000 among BCC and the lenders
named therein providing for term loans in an aggregate amount of $60,000
and the Loan Agreement dated as of September 15, 1999 among BCC and the
lenders named therein providing for term loans in an aggregate amount of
$9,150,000 (collectively, the "Existing Credit Agreements") Agreements,
which grant a lien to the lenders thereunder on the proceeds of the
Licenses held by BCC as of the date hereof, none of such Licenses are
subject to any Lien, and, except for the Plaincom Licenses, Holders own, or
will by Closing own, all of the right, title and interest
-7-
<PAGE>
in, to and under such Licenses. All the Licenses are currently valid and in
full force and effect and all material construction or build-out
regulations required to be met as of this date for each of the Licenses
have been met. None of the Licenses nor any licensee or any affiliate of
any licensee is subject to or has received any notification of an
investigation, violation or forfeiture, any notice of apparent liability,
or any other order or complaint issued by or before any court or
governmental body, including the FCC, that could in any manner threaten or
adversely affect the validity, continued effectiveness, material terms, or
likelihood of renewal of any of the Licenses, nor to the knowledge of
Sellers after due inquiry is any such action threatened. No License is
subject to any proceedings, and no Seller nor any Reardon Affiliate has
knowledge after due inquiry of any other proceedings that could in any
manner threaten or adversely affect the validity, continued effectiveness,
material terms, or likelihood of renewal of any of the Licenses.
(c) Fees. All franchise, license or other fees and charges that have
----
become due and payable with respect to the Licenses pursuant to any
applications, filings, recordings and registrations with, and all
validations or exemptions, approvals, orders or authorizations, consents,
licenses, certificates and permits from, the FCC, any state public utility
commission and any other federal, state or local regulatory or governmental
bodies or authorities, including any subdivision thereof, have been paid.
(d) License Compliance. No event has occurred or failed to occur
------------------
which (i) results in, or after notice or lapse of time or both would result
in, revocation, suspension, adverse modification, non-renewal, impairment,
restriction or termination of, or order of forfeiture with respect to, any
License or (ii) adversely affects or could reasonably be expected in the
future to adversely affect any of the rights of Sellers or any Reardon
Affiliate thereunder. Sellers have no reason to believe that the Licenses
will not be renewed by the FCC in the ordinary course.
(e) Reports. Any and all reports and filings required to be filed
-------
with the FCC with respect to the Licenses have been filed, and Sellers have
provided true and correct copies of all such reports and filings to ART.
All such reports and filings were accurate and complete in all material
respects on the date thereof. From the date hereof through the last closing
to occur with respect to any Future License, Option License or Plaincom
License, all such required reports and filings will be filed by Sellers on
a timely basis.
(f) Disclosure. Holders know of no facts pertaining to their
----------
qualifications to be a licensee which would cause the FCC not to issue its
approval with respect to, or otherwise prevent, the assignment of the
Licenses to ART pursuant to this Agreement.
(g) Assignment. With respect to the Plaincom Licenses, Holders have,
----------
or by the Closing or such later date as provided in Section 9.9 hereof will
have, (a) obtained any and all governmental consents necessary to be
assigned the Plaincom Licenses by Final Order and will have closed any
transactions necessary to be licensee under the Plaincom Licenses
-8-
<PAGE>
and duly notified the FCC thereof or (b) taken all steps necessary to
ensure that any and all governmental consents necessary for ART to acquire
the Plaincom Licenses shall have been obtained and will have taken all
necessary actions to cause ART to become a licensee of the Plaincom
Licenses.
(h) Exception. Notwithstanding any of the foregoing, with respect to
---------
any First License and with respect to any Future License, unless such
Future License is transferred to ART, Sellers make no representation with
respect to, and assume no responsibility hereunder for, the demonstration
of "substantial service" set forth in Section 101.17(a) of the FCC's rules.
3.5. Title to the Transferred Assets; Liens; Other Assets. Except for the
----------------------------------------------------
Liens granted pursuant to the Existing Credit Agreements and except for the
Plaincom Licenses, Sellers have good, indefeasible and transferable title to all
of the Licenses, free and clear of all Liens. Upon transfer of any License,
Future License, Option License or Plaincom License to ART, ART will obtain good,
indefeasible and transferable title thereto, free and clear of all Liens.
3.6. Further Interests. Schedules 1(a) and 1(b) set forth a true and
-----------------
complete list of all 38.6 - 40 GHz licenses (the "39 GHz Licenses") in which any
Seller or any Reardon Affiliate has any direct or indirect ownership, right,
claim, or other interest, including any option or acquisition right.
3.7. Contracts. Except for this Agreement and the Existing Credit
---------
Agreements, no Seller is a party to any contract, commitment or similar
agreement or arrangement, whether written or oral, by which any of the Assets or
Licenses is bound or affected.
3.8. Litigation. There are no actions, claims, proceedings, suits and
----------
investigations pending, or, to the best knowledge of each Seller after due
inquiry, threatened against any Seller, the Assets or Licenses or any of their
properties, assets or rights before any court, arbitrator or administrative or
governmental body: (i) relating to the Assets or Licenses or which seek to
revoke, rescind, cancel, modify or refuse to renew any License or (ii) relating
to the transactions contemplated hereby, nor is there any basis for any such
action. There is no judgment, order or decree affecting the Assets or Licenses
or the transactions contemplated hereby.
3.9. Disclosure. Neither this Agreement nor any exhibit or schedule
----------
hereto nor any statement, list or certificate delivered to ART at or prior to
the Closing in connection with the Seller Documents contains any untrue
statement of a material fact with respect to the subject matter thereof or omits
to state a material fact with respect to the subject matter thereof necessary in
order to make the statement contained herein and therein in the context in which
they were made not misleading. Except as otherwise disclosed herein, no Seller
knows of any information or fact that has or could have a material adverse
effect on the Assets.
-9-
<PAGE>
3.10. Taxes. Each Holder has timely filed all requisite federal, state and
-----
local tax and information returns which are required to be filed by it and has
paid, or made adequate provision for the payment of, all taxes which may have or
may become due and there are no assessments or any basis therefor. There are no
examinations in progress or claims against any Holder for federal or other taxes
(including penalties and interest) for any period and no notice of any claim,
whether pending or threatened, for taxes has been received.
3.11. Compliance with Laws. Each of the Sellers, the Reardon Affiliates
--------------------
and any predecessor thereto is in compliance with all applicable laws,
ordinances, rules, statues and regulations and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure to so comply.
Neither the ownership or use of the Assets or Licenses nor the conduct of the
business of any Seller or the Reardon Affiliates conflicts with the rights of
any other Person or violates, or with the giving of notice or the passage of
time or both will violate, conflict with or result in a default under any of
their charter or bylaws, any Lien, lease, license agreement, understanding, law,
ordinance, rule or regulation, or any order, judgment or decree to which any of
them is bound or affected.
3.12. Liabilities. No Seller has, or will have, any liability or
-----------
obligation for which ART could become liable or responsible, including, without
limitation, with respect to the Plaincom Licenses.
3.13. Brokerage. There are no claims for brokerage commissions or finder's
---------
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of any
Seller, except for fees payable to Bear, Stearns & Co., which fees will be paid
by Sellers.
3.14. Accredited Investors. Each Seller and each Reardon Affiliate is an
--------------------
"accredited investor" as such term is defined under Rule 501 under the
Securities Act of 1933, as amended (the "Securities Act"). Each Seller's and
each Reardon Affiliate's investment decisions are made by persons having such
knowledge and experience in business and financial matters as to be capable of
evaluating the merits and risk of the investment contemplated hereby. Each
Seller and each Reardon Affiliate is capable of bearing the economic risks
associated with the investment contemplated hereby. Each Seller has been
provided access to such information and documents regarding ART and has
requested and has been afforded an opportunity to ask questions of, and receive
answers from, representatives of ART concerning this Agreement and the Common
Stock.
3.15. Own Account. Each Seller and each Reardon Affiliate acquiring
-----------
Shares is acquiring such Shares for its own account, for investment and not with
a view to any "distribution" thereof within the meaning of the Securities Act.
3.16. Transfer Restrictions. Each Seller and each Reardon Affiliate
---------------------
understands that the Shares are subject to certain restrictions on transfers and
that ART may, as a condition to a
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<PAGE>
permitted transfer of any of the Shares, require that the request for transfer
be accompanied by an opinion of counsel, in form and substance satisfactory to
ART, to the effect that the proposed transfer does not result in violation of
the Securities Act, unless such transfer is covered by an effective registration
statement under the Securities Act or by Rule 144(k) of the Securities Act. Each
Seller and each Reardon Affiliate understands that each certificate representing
the Shares will bear the following legend or one substantially similar:
The securities represented by this certificate were issued in a
private placement, without registration under the Securities Act of
1933, as amended (the "Act"), and may not be sold, assigned, pledged
or otherwise transferred in the absence of an effective registration
under the Act covering the transfer or an opinion of counsel,
satisfactory to the issuer, that registration under the Act is not
required.
3.17. Private Placement. Each Seller and each Reardon Affiliate has been
-----------------
advised that the Shares have not been and are not being registered under the
Securities Act, and that ART in issuing the Shares is relying upon, among other
things, the representations and warranties of the Sellers and each Reardon
Affiliate in this Section 3 in concluding that the offer and sale of the Shares
shall be exempt from the provisions of Section 5 of the Securities Act.
3.18. Plaincom. Sellers have the right to acquire the Plaincom Licenses
--------
and will have acquired, or caused to be transferred to ART, all right, title and
interest in such licenses, free and clear of all Liens, on the Closing Date or
on such later date as the Plaincom License are transferred to ART, as provided
in Section 9.9 hereof.
3.19. Ownership. Except as set forth on Schedule 3.19, there are no
---------
options, warrants or other rights, agreements, arrangements or commitments of
any character existing on the date hereof to which BCC is a party relating to
the issued or unissued capital stock of, or ownership interest in, BCC or
obligating BCC to sell any shares of capital stock of, or other equity interest
in, BCC. All of the outstanding shares of capital stock, or other interests, of
BCC are duly authorized, validly issued, fully paid and nonassessable, and,
except as set forth on Schedule 3.19, all such shares are owned, directly or
indirectly, by the Parent, free and clear of all security interests, liens,
claims, pledges, agreements, limitations in respect of voting rights, charges or
other encumbrances of any nature whatsoever. There are no options, warrants or
other rights, agreements, arrangements or commitments of any character existing
on the date hereof to which BroadStream is a party relating to the issued of
unissued capital stock of, or ownership interest in, BroadStream or obligating
BroadStream to sell any shares of capital stock of, or other equity interest in,
BroadStream. All of the outstanding shares of capital stock, or other interests,
of BroadStream are duly authorized, validly issued, fully paid and
nonassessable, and all such shares are owned, directly or indirectly, by BCC,
free and clear of all security interests, liens, claims, pledges, agreements,
limitations in respect of voting rights, charges or other encumbrances of any
nature whatsoever.
-11-
<PAGE>
4. Representations and Warranties by ART. ART represents and warrants as
-------------------------------------
follows:
4.1. Entity Status. ART is a corporation duly organized, validly
-------------
existing and in good standing under the laws of the State of Delaware. ART has
full corporate power and authority to carry on its business as and where now
conducted, and to own or lease and operate its properties and assets where such
properties and assets are now owned, leased or operated by it and where such
business is now conducted by it. ART is qualified to do business and is in good
standing in each of the jurisdictions in which the nature of its business or the
property owned or leased by it make such qualification necessary.
4.2. Authorization for Agreement; Conflict.
-------------------------------------
(a) ART has all necessary corporate power and authority to enter
into, execute and the Transaction Agreements, the Registration Rights
Agreement, the Pledge and Security Agreement and the other documents
to be delivered by ART in connection with such agreements
(collectively, the "ART Documents") and to perform fully its
obligations hereunder and the transactions contemplated hereby and
thereby. The execution, delivery and performance of the ART Documents
has been duly authorized by all necessary corporate action.
(b) Each of the Transaction Agreements has been, and at the
Closing each of the other ART Documents will have been, duly and
validly executed and delivered by ART and each of the ART Documents
constitutes the legal, valid and binding obligation of ART and each of
the ART Documents is enforceable by and against ART in accordance with
its respective terms.
(c) The execution and delivery of the ART Documents by ART and
the consummation of the transactions contemplated hereby and thereby
will not conflict with or result in any violations of or defaults
under: (i) any statute, regulation, order, judgment or decree of any
federal, state or local governmental body or regulatory authority
applicable to ART; (ii) any other statute, regulation, order, judgment
or decree applicable to ART under or in any other applicable
jurisdiction; or (iii) any permit, concession, grant, franchise,
license, of or applicable to ART.
4.3. Consents and Approvals.
----------------------
(a) Except for the approvals by the FCC of the assignments of
the Licenses, and the expiry or earlier termination of the waiting
period under the HSR Act, and except for any consent, approval of
filing which will have been made or obtained prior to Closing, no
consent, approval or filing with any court or governmental or
regulatory authority is required to be made or obtained by ART in
connection with its execution, delivery and performance of this
Agreement.
-12-
<PAGE>
(b) Except as set forth on Schedule 4.3, none of the execution
and delivery by ART of the ART Documents nor the consummation of the
transactions contemplated hereby and thereby will conflict with,
result in a breach of, constitute a default under, require any consent
under, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which any ART or any of
its affiliates is a party.
4.4. Stock. The Common Stock issued as the Consideration, when issued
-----
hereunder, will be duly authorized, validly issued, fully paid and
nonassessable.
4.5. SEC Filings; Financial Statements.
---------------------------------
(a) ART has filed with the Securities and Exchange Commission
(the "SEC") all reports, schedules, forms, statements and other documents
required by the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act") to be filed by ART since January 1, 1999
(collectively, the "ART SEC Reports"). As of their respective dates (except
if revised or superseded by a subsequent filing), the ART SEC Reports (i)
complied as to form in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations thereunder, and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. ART has filed
with the SEC as exhibits to the ART SEC Reports all agreements, contracts
and other documents or instruments required to be so filed, and such
exhibits are in all material respects true and complete copies of such
agreements, contracts and other documents or instruments, as the case may
be (subject to any confidential treatment requests allowing excision of
confidential information from the publicly filed document).
(b) The consolidated balance sheets of ART and its consolidated
subsidiaries as of each of December 31, 1998 and September 30, 1999 and the
related consolidated statements of income (loss) and stockholders' equity
and cash flows for the twelve-month period and nine-month period then ended
fairly present in all material respects ART's consolidated financial
position and its consolidated subsidiaries as of their respective dates and
their consolidated results of operations and cash flows for the respective
periods then ended, in accordance with U.S. generally accepted accounting
principles applied on a consistent basis except as described in the
footnotes to the financial statements.
4.6. Brokerage. There are no claims for brokerage commissions or finder's
---------
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
ART.
5. Standstill. The Sellers hereby agree as follows: during the period
----------
commencing on the date hereof and ending on the third anniversary of the Closing
Date (the "Standstill Period"), except
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<PAGE>
as (x) specifically permitted by this Agreement, (y) specifically approved in
writing in advance by ART or (z) caused by the exercise of warrants now held by
Commco, the Sellers shall not, and shall cause each of its affiliates to not, in
any manner, directly or indirectly, either individually or together with any
person or persons acting in concert of beneficial ownership (within the meaning
of Rule 13d-3 of the Exchange Act:
(a) acquire, or offer or agree to acquire, or become the beneficial
owner of or obtain any rights in respect of any capital stock of ART
except, for any Shares that may be issuable pursuant to this Agreement
(including pursuant to Section 1.4 or 1.5 hereof), provided, that the
foregoing limitation shall not prohibit the acquisition of securities of
ART or any of its successors issued as dividends or as a result of stock
splits and similar reclassifications or received in a consolidation, merger
or other business combination in respect of, in exchange for Common Stock
held by Sellers or any of their affiliates at the time of such dividend,
split or reclassification, consolidation or merger or business combination;
(b) solicit proxies or consents or become a "participant" in a
"solicitation" (as such terms are defined or used in Regulation 14A under
the Exchange Act) of proxies or consents with respect to any voting
securities of ART or any of its successors or initiate or become a
participant in any stockholder proposal or "election contest" (as such term
is defined or used in Rule 14a-11 under the Exchange Act) with respect to
ART or any of its successors or induce others to initiate the same, or
otherwise seek to advise or influence any person with respect to the voting
of any voting securities of ART or any of its successors;
(c) publicly or privately propose, encourage, solicit or participate
in the solicitation of any person or entity to acquire, offer to acquire or
agree to acquire, by merger, tender offer, purchase or otherwise, ART or a
substantial portion of its assets or more than 5% of the outstanding
capital stock (except in connection with the registration of securities
pursuant to the Registration Rights Agreement); or
(d) directly or indirectly join in or in any way participate in a
pooling agreement, syndicate, voting trust or other arrangement with
respect to the ART's voting securities or otherwise act in concert with any
other person (including any company, partnership, corporation or any other
entity), for the purpose of acquiring, holding, voting or disposing of
ART's securities.
During the Standstill Period, the Sellers and their permitted transferees
under this paragraph will not sell, transfer, assign, convey, gift, mortgage,
pledge, encumber, hypothecate, or otherwise dispose of, directly or indirectly
("Transfer"), any of the Shares except for (i) Transfers between and among the
Sellers and their affiliates controlled by them, provided such Transfer is done
in accordance with the transfer restrictions applicable to the Shares under
federal and state securities laws and the affiliate transferee agrees to be
bound by the restrictions
-14-
<PAGE>
applicable to such Shares, including without limitation the agreements set forth
in this Section 5, (ii) Transfers of Shares permitted by, and consummated
pursuant to, the Registration Rights Agreement, provided that no individual
transferee (except an underwriter during the course of distribution of the
Shares) will hold, as a result of such Transfers, more than 5% of the
outstanding Common Stock, giving effect to the conversion of outstanding
convertible securities that are then convertible, (iii) Transfers of Shares
pursuant to a cash or stock merger or consolidation involving ART as a
constituent corporation, (iv) Transfers of Shares in connection with a tender
offer approved by the Board of Directors of ART, (v) Transfers of Shares to the
public pursuant to Rule 144 under the Securities Act, (vi) Transfers of Shares
to financial institutions, investment funds or similar entities (collectively,
the "Private Transferees"), provided that no individual Private Transferee will
hold, as a result of such Transfers, more than 5% of the outstanding Common
Stock, giving effect to the conversion of outstanding convertible securities
that are then convertible, and (vii) Transfers of Shares to Bear Stearns & Co.
Inc. or any other nationally recognized broker-dealer (a "Broker-Dealer")
acceptable to the Lender or any Person that is wholly controlled, either
directly or indirectly, by The Bear Stearns Companies, Inc. or other Broker-
Dealer acceptable to the Lender, provided that such Person agrees not to make
any further Transfers of such Shares, except to other such Persons or to the
extent such Transfers would be permitted to be made by the Sellers under this
paragraph. Notwithstanding any other provision of this Section 5, no Seller or
subsequent holder of the Shares shall avoid the provisions of this Section 5 by
making one or more transfers to one or more affiliates and then disposing of all
or any portion of such Seller's or holder's interest in any such affiliate. Each
certificate evidencing any Shares shall bear a legend consistent with the
foregoing.
Any attempted Transfer of Shares not permitted by this Section 5 shall be
null and void, and ART shall not in any way give effect to any such
impermissible Transfer.
6. Expenses. Except as set forth in Section 9.1(c), each party shall assume
--------
and satisfy all fees, costs and expenses incurred or assumed by it in connection
with the transactions contemplated hereby, including its legal and accounting
expenses, whether or not the transaction is consummated.
7. Survival of Representations and Warranties. All representations,
------------------------------------------
warranties and agreements of each Seller and ART contained herein (including all
schedules and exhibits hereto) or in any document, statement, certificate or
other instrument referred to herein or delivered at the Closing in connection
with the transactions contemplated hereby shall survive the execution and
delivery of this Agreement, any investigation by ART of the Sellers or the
Assets, the Closing and the consummation of the transactions contemplated by
this Agreement; provided, however, that all representations and warranties shall
-------- -------
survive only for a period of two years following the Closing (or with respect to
Future Licenses, Option Licenses and Plaincom Licenses transferred after the
Closing, for two years from the applicable closing with respect thereto).
8. Indemnities. The parties agree as follows:
-----------
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<PAGE>
8.1. Indemnification by Sellers. Sellers shall jointly and severally
--------------------------
indemnify and hold harmless ART and its successors and assigns for any and all
damages, claims, losses, liabilities, and expenses, including without limitation
reasonable legal and accounting expenses (collectively, "Losses"), which may
arise out of: (i) any breach of any of the Sellers' covenants and agreements
hereunder; (ii) any inaccuracy or misrepresentation in any representation or
warranty of any Seller hereunder or under any Seller Document, in each case as
such representation or warranty would read if all knowledge standards were
deleted from it; (iii) any liabilities of Sellers; or (iv) any claim or action
asserted by any third party arising out of or in connection with any event, act
or omission relating to any of the Assets occurring prior to the Closing.
Sellers shall not be liable for indemnification claims under this Section 8.1
unless Sellers are given notice of the claim by ART within two years following
the Closing (or with respect to Future Licenses, Option Licenses and Plaincom
Licenses transferred after the Closing, two years from the applicable closing
with respect thereto).
8.2. Indemnification by ART. ART shall indemnify and hold harmless
----------------------
Sellers from and against any and all Losses which may arise out of: (i) ART's
breach of any of the covenants and agreements made in this Agreement by ART; or
(ii) any inaccuracy or misrepresentation in any representation or warranty of
ART hereunder or under any ART Document, in each case as such representation or
warranty would read if all knowledge standards were deleted from it.
9. Covenants.
---------
9.1. FCC and Other Approval.
----------------------
(a) Each of the Sellers and ART will use their respective best
efforts to join in and submit as soon as practicable, and in no event later
than ten business days after the date hereof, one or more applications (the
"Applications") to the FCC as deemed by ART to be appropriate requesting
the FCC's written approval of the assignment of the Licenses to ART or
designees of ART.
(b) Each of the Sellers and ART will comply with the HSR Act. Each of
the Sellers and ART will file as soon as practicable, and in no event later
than fifteen business days after the date hereof, any Notification and
Report Forms and related material that it may be required to file with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the HSR Act. If a request for additional
information or documentary material is made to ART, any Seller, or any
direct or indirect owner or subsidiary of any Seller in connection with
such filings, such party shall respond promptly to such request and use its
best efforts to comply promptly with such request.
(c) ART and Holders shall equally share in any fees charged by the
FCC in connection with the Applications.
-16-
<PAGE>
9.2. Further Assurances. At any time and from time to time at or after
------------------
the Closing, at the request of ART and without further consideration, the
Sellers will execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and take such action as ART may
reasonably determine is necessary to transfer, convey and assign to ART, and to
confirm ART's title to or interest in the Assets or Licenses to put ART in
actual possession and operating control of the Assets or Licenses and to assist
ART in exercising all rights with respect thereto.
9.3. Public Announcements. Without the prior written consent of ART,
--------------------
neither the Sellers nor their affiliates, representatives or advisors will,
directly or indirectly, make any public comment, statement or communication with
respect to, or otherwise disclose or permit the disclosure of, this Agreement,
the other agreements and transactions contemplated hereby, or the specific
matters discussed between the parties.
9.4. Information and Access; Compliance. During the period from the date
----------------------------------
of this Agreement and continuing until the Closing or until the termination of
this Agreement pursuant to Section 12 hereof, the Sellers shall afford ART and
its representatives and advisors with reasonable access to the Sellers and the
Assets and all matters and information that any of them may reasonably request.
The provisions of access pursuant to this Section 9.4 shall in no way affect or
otherwise obviate or diminish any representations and warranties of any Seller.
The parties shall take all reasonable actions necessary to comply promptly with
all legal requirements which may be imposed on such party with respect to this
Agreement and the transactions contemplated hereby (including furnishing all
information required by the FCC in connection with transfer of the Licenses) and
shall take all reasonable actions necessary to cooperate promptly with and
furnish information to the other party in connection with any such requirements
imposed upon such other party in connection with this Agreement and the
transactions contemplated hereby.
9.5. Conduct of Business by Sellers. Sellers covenant that they shall
------------------------------
not, except in connection with the transfer of the Licenses to ART as
contemplated by this Agreement:
(a) sell, transfer, convey or otherwise dispose of any of the Assets,
any Future License, or any right thereto or interest therein;
(b) encumber, or agree to encumber, in any way, or enter into any
consensual restriction with respect to, any of the Assets, any Future
License, or any right thereto or interest therein;
(c) enter into any contract, agreements or understanding with respect
to any of the Assets or any Future License;
(d) take any action which, or reasonably fail to take any action the
failure of which, would cause Holders' disqualification as an assignor of
the Licenses or would
-17-
<PAGE>
materially adversely affect the Assets, any Future License or ART's rights
with respect thereto; or
(e) enter into any agreements or commitments for any of 9.5(a)
through 9.5(d).
9.6. Exclusivity. No Seller will (and the Sellers will not cause or
-----------
permit any of their subsidiaries, officers, directors, members, partners, agents
or affiliates to) (i) solicit, initiate, or consummate any transaction relating
to the direct or indirect acquisition of any interest in the Assets, any Future
License or any capital stock or other voting securities in the Holders
(including any acquisition structured as a merger, consolidation, or share
exchange) or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Sellers will notify ART immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
9.7. Proxy Statement. ART shall promptly prepare and file with the
---------------
Securities and Exchange Commission (the "SEC") a preliminary proxy statement
with respect to the Transaction and the approval by shareholders of ART of the
issuance of Common Stock hereunder, and shall use its reasonable efforts to have
such proxy statement cleared by the SEC under the Exchange Act and mailed to the
shareholders of ART as soon as practicable thereafter. Upon the request of ART,
Sellers shall furnish to ART all such information concerning Sellers as ART may
reasonably determine to be required to be disclosed in the proxy statement.
None of the information supplied by Sellers with respect to Sellers and the
Transactions for inclusion in the proxy statement will, as of the date of the
proxy statement, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they were
made, not misleading. Sellers shall each promptly notify ART if at any time
before the shareholder vote it becomes aware that the proxy statement contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
9.8. Intercarrier Agreement. ART shall and Sellers shall, and shall cause
----------------------
any party other than ART with rights thereunder to, terminate concurrently with
the Closing the Intercarrier Agreement dated as of September 13, 1996 between
ART and Forest Communications, L.L.C., (subsequently assigned to Horizon
Technologies, L.L.C. and subsequently assigned to BroadStream, amended to date)
(the "Intercarrier Agreement").
9.9. Plaincom Licenses. Sellers will use their best efforts to ensure
-----------------
that any and all governmental consents necessary to be assigned, or to cause to
be assigned to ART, the Plaincom Licenses shall have been obtained, and
reasonable efforts to ensure that such consents have been obtained at or prior
to the Closing; provided, however, that if FCC authorization of the assignment
-------- -------
to ART or its designee of the Plaincom Licenses by Final Order has not been
received
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<PAGE>
prior to Closing, the transfer of those Licenses shall occur promptly following
receipt of the Final Orders.
9.10. Actions Prior to Closing. Each party agrees to use its reasonable
------------------------
efforts to effectuate the Closing and to fulfill or cause to be fulfilled the
conditions to Closing hereunder.
9.11. Liquidation. Each of the parties to this Agreement acknowledges
-----------
that BroadStream intends to liquidate concurrently with the Closing and BCC
intends to liquidate promptly following the Closing. The Sellers may allow
BroadStream to be liquidated only pursuant to a plan of liquidation reasonably
acceptable to ART and only so long as at the time of liquidation it is a wholly
owned subsidiary of BCC and that after giving effect thereto, BCC will be able
to perform BroadStream's obligations under this agreement. The Sellers may cause
BCC to be liquidated only pursuant to a plan of liquidation reasonably
acceptable to ART that provides for distribution of all of the assets and
liabilities of BCC (i) to an entity that (a) engages in no business activities
other than those relating to holding and maintaining the Licenses, (b) has, and
will have, no liabilities or obligations (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, whether incurred or consequential
and whether due or to become due) other than the liabilities of BCC under the
Seller Documents and (c) agrees, pursuant to an instrument acceptable in form
and substance satisfactory to ART, to be bound by the terms of, and assumes all
of the obligations of BCC under, this Agreement and the other Seller Documents
as if it were a Holder hereunder and thereunder, and (ii) which does not result
in the issuance of the Shares at the Closing or the issuance of any Shares with
respect to any Future License, Option License or Plaincom License requiring
registration under the Securities Act or any state securities laws (such plans
of liquidation of BroadStream and BCC are referred to herein as the "Permitted
Liquidation").
9.12. Closing Documents. At the Closing, the parties agree to execute and
-----------------
deliver the Registration Rights Agreement (as amended, if necessary, pursuant to
the following sentence) and the Pledge Agreement in the form previously agreed
by the parties. If the Registration Rights Agreement (the "Investor Agreement")
dated as of June 1, 1999, among the Company and the parties listed on Schedule I
thereto shall have not been amended so as not to conflict with the Registration
Rights Agreement, then the Company will amend the Registration Rights Agreement
to the extent, and only to the extent, necessary so that the Registration Rights
Agreement would not conflict with the Original Agreement. The Company will use
its reasonable efforts to obtain the Investor Agreement amendment contemplated
by this Section.
9.13. Actions Relating to the Marks.
-----------------------------
(a) The Sellers agree to file, at ART's expense, any applications
reasonably requested by ART to be filed to protect the Marks.
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<PAGE>
(b) At or immediately following the Closing, the Sellers shall cause
BCC and BroadStream to change their names and will take such other actions
as are necessary to permit ART to use the names "BroadStream" and
"BroadStream Communications."
10. Conditions Precedent to ART's Obligations. All obligations of ART under
-----------------------------------------
this Agreement are subject to the fulfillment by Sellers prior to or at the
Closing of each of the following conditions, any of which may be waived by ART
in its sole discretion:
10.1. Representations and Warranties. The representations and warranties
------------------------------
made by the Sellers in this Agreement (including all exhibits and schedules
hereto), shall be true and correct in all material respects when made and shall
be repeated and shall be true and correct in all material respects at and as of
the Closing Date, and ART shall have received a certificate dated the date of
the Closing signed by the chief executive officer, or equivalent, of each Seller
to the foregoing effect and confirming the satisfaction of the conditions in
sections 10.5, 10.10 and 10.11.
10.2. Consents. All material filings with and material consents from all
--------
federal, state and local governmental agencies required to consummate the
transactions contemplated by this Agreement shall have been made or received, as
applicable.
10.3. FCC Licenses. Without limiting the generality of Section 10.2,
------------
the FCC shall have authorized the assignment of all of the First Licenses, other
than the Plaincom Licenses that are transferred to ART after the Closing Date as
provided in Section 9.9, by a Final Order without any conditions or restrictions
that materially affect the value of the First Licenses or operations pursuant to
the First Licenses or any conditions or restrictions materially different than
the normal authorizations issued by the FCC to other 39 GHz license holders at
the date of this Agreement. In the event that any FCC order approving the
transfer of the First Licenses to ART imposes such conditions, this condition
shall not be satisfied until such conditions are removed or eliminated, and
Sellers shall fully cooperate in obtaining the removal or elimination of such
restrictions.
10.4. HSR Matters. All applicable waiting periods (and any extensions
-----------
thereof) under the HSR Act shall have expired or otherwise been terminated.
10.5. Performance by Sellers; Certificate. Sellers shall have performed
-----------------------------------
and complied with all agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
10.6. Absence of Errors and Omissions. ART shall not have discovered any
-------------------------------
material error, misstatement or omission in any of the representations or
warranties, or any material failure to perform or satisfy any covenants or
conditions required by this Agreement to be performed or satisfied by any Seller
on or prior to the date of Closing.
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<PAGE>
10.7. Opinions of Counsel for Sellers. ART shall have received a legal
-------------------------------
opinion addressed to it and dated the Closing Date of counsel and FCC counsel
for Sellers, reasonably satisfactory to ART, in the form and substance of
Exhibit 10.7 hereto.
10.8. Absence of Litigation. No action or proceeding shall have been
---------------------
instituted or threatened prior to or at the Closing Date before any court or
governmental body or authority pertaining to the transactions contemplated
hereby, the result of which could reasonably be expected to prevent or make
illegal the consummation of such transactions or which could be materially
adverse to the Assets.
10.9. UCC Searches. ART shall have received Uniform Commercial Code
------------
(including fixture filings) and state and federal tax and judgment lien searches
against Holders all dated within 5 days of the Closing Date.
10.10. Release of Liens. All of the Assets shall be free and clear of all
----------------
liens and ART shall have received evidence of the release of all Liens and the
termination of all financing statements, if any, as may be reasonably requested
by ART.
10.11. Termination of Intercarrier Agreement. All parties other than ART
-------------------------------------
that have rights under the Intercarrier Agreement shall have delivered to ART an
executed termination of the Intercarrier Agreement.
10.12. Shareholder Approval. Shareholders representing a majority of the
--------------------
total votes cast on the matter at a meeting of the Company's shareholders shall
have approved this Agreement and the issuance of the Shares hereunder.
10.13. No Default. No default shall exist under any of the Loan Documents.
----------
10.14. Additional Loan Documents. BCC, BroadStream and/or Parent, or the
-------------------------
permitted successors and assigns of each of the foregoing, shall have executed
and delivered to ART one or more Pledge Agreements in the form of Exhibit 6.5 to
the Loan Agreement, together with certificates of Common Stock with a value of
at least three times the amount of the loan outstanding under the Loan
Agreement, together with stock powers duly executed in blank.
11. Conditions Precedent to the Obligations of Sellers. The obligations of
--------------------------------------------------
Sellers to consummate the transactions contemplated hereby shall be subject to
the fulfillment by ART, prior to or at the Closing, of each of the following
conditions:
11.1. Representations and Warranties. The representations and warranties
------------------------------
made by ART in this Agreement shall be true and correct in all material respects
when made and shall be repeated and shall be true and correct in all material
respects at and as of the Closing Date and Sellers shall have received a
certificate dated the date of Closing signed by an officer of ART to the
foregoing effect and confirming the satisfaction of the conditions in Section
11.4.
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<PAGE>
11.2. HSR Matters. All applicable waiting periods (and any extensions
-----------
thereof) under the HSR Act shall have expired or otherwise been terminated.
11.3. Government Consents. All filings with and consents from all
-------------------
federal, state and local governmental agencies required to consummate the
transactions contemplated hereby shall have been obtained at or prior to the
Closing.
11.4. Performance of ART. ART shall have performed and complied with all
------------------
agreements and conditions required by this Agreement to be performed or complied
with by it prior to or at the Closing and an officer of ART shall deliver a
certificate or certificates to Sellers to such effect.
11.5. Absence of Litigation. No action or proceeding shall have been
---------------------
instituted or threatened prior to or at the Closing Date before any court or
governmental body or authority pertaining to the transactions contemplated
hereby, the result of which could reasonably be expected to prevent or make
illegal the consummation of such transactions.
11.6. Termination of Intercarrier Agreement. ART shall have delivered to
-------------------------------------
Sellers a termination of the Intercarrier Agreement.
11.7. Tax Representation Certificate. The Sellers shall have received
------------------------------
from ART a tax representation certificate in substantially the form set forth on
Exhibit 11.7.
11.8. Tax Law. There shall have been no change in law (including a
-------
change in or issuance of relevant statutes, regulations, published rulings or
positions of the Internal Revenue Service or court decisions) since the date of
this Agreement which shall cause the Transaction not to qualify as a "tax free"
reorganization under Section 368(a) of the Code.
11.9. Registration Rights. ART shall have executed and delivered to the
-------------------
Holders the Registration Rights Agreement.
11.10. Consideration. The Consideration shall have been delivered to
-------------
Holders.
12. Termination. This Agreement may be terminated prior to the Closing by the
-----------
parties as set forth in this Section 12 as follows:
(a) at any time by the mutual written consent of Sellers and ART;
(b) by ART at any time after fourteen (14) months from the date
hereof, if the conditions set forth in Section 10 shall not have been
complied with or performed and such noncompliance or nonperformance shall
not have been cured or eliminated by the Sellers by such time, provided,
that if prior to such date, the FCC has issued an order, that is not
-22-
<PAGE>
yet a Final Order, approving the transfer or change in control, as
applicable, of the First Licenses, to ART, ART may extend such date for
forty-five (45) days by notice to Sellers;
(c) by Sellers at any time after fourteen (14) months from the date
hereof (the "Seller Date"), if the conditions set forth in Section 11
hereof shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated by
ART by such time, provided, that if prior to the Seller Date, the FCC has
issued an order, that is not yet a Final Order, approving the transfer or
change in control, as applicable, of the First Licenses, to ART, ART may
extend the Seller Date for forty-five (45) days by notice to Sellers;
(d) by the Sellers on the one hand, or by ART on the other, if there
shall have been a breach of any representation, warranty, covenant or
agreement on the part of the other set forth or contemplated by this
Agreement, which breach cannot be cured prior to the Closing and which
would result in the failure by the non-terminating party to satisfy one or
more conditions to Closing hereunder; or
(e) by the Sellers or ART if the shareholders of ART fail to approve
the Transaction and the issuance of Common Stock under this Agreement at
the meeting of shareholders contemplated by Section 9.7, at any time within
seven (7) days of the meeting;
provided, however, that the terminating party may not terminate its obligations
- -------- -------
under this Agreement if such terminating party has breached this Agreement in
any material respect.
Notwithstanding any termination of this Agreement pursuant to this Section
12, the provisions of Sections 8 and 9.3 hereof shall remain in full force and
effect. No termination of this Agreement pursuant to Section 12(b), (c) or (d)
shall relieve a breaching party of any liability hereunder for any such breach
occurring prior to termination.
Notwithstanding anything in the Loan Documents to the contrary, upon any
termination pursuant to Section 12(e), ART will forgive all amounts outstanding
under the Loan Agreement on the date of termination and, within three (3)
business days, return all certificates representing securities pledged to secure
the loan made under the Loan Agreement.
13. Remedies. The parties acknowledge and agree that it would be difficult to
--------
measure economic losses to ART and the Sellers, respectively, that result from
the breach of any of the covenants of Sellers or ART, respectively, in this
Agreement, and that because of the uniqueness of the Assets, Licenses and Option
Licenses, money damages would not be an adequate remedy. Therefore, the parties
agree that, in the event of a breach by ART or any Seller, or any permitted
successors or assigns, of any of the covenants set forth in this Agreement, the
Sellers or ART, as applicable, may, at their option, in addition to obtaining
any other remedy or relief available
-23-
<PAGE>
to it (including without limitation damages at law), enforce the provisions of
this Agreement by obtaining specific performance, injunction and other equitable
relief.
14. Entire Agreement; Assignability. This Agreement, together with the
-------------------------------
Transaction Agreements, the Loan Documents, the Pledge and Security Agreement,
the Registration Rights Agreement and the schedules and exhibits hereto,
constitutes the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as
specifically set forth herein. Except pursuant to the Permitted Liquidation,
this Agreement (or any part thereof) may not be assigned by any Seller without
the prior written consent of ART and any such attempted assignment shall be null
and void.
15. Amendment. This Agreement may be amended by the parties hereto at any
---------
time, but only by an instrument in writing duly executed and delivered on behalf
of each of the parties hereto.
16. Headings. Section headings are not to be considered part of this Agreement
--------
and are included solely for convenience and are not intended to be full or
accurate descriptions of the contents thereof. References to Sections are to
portions of this Agreement unless the context requires otherwise.
17. Exhibits, etc. Exhibits, schedules and other documents referred to in this
-------------
Agreement are an integral part of this Agreement.
18. Successors and Assigns. All of the terms and provisions of this Agreement
----------------------
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective transferees, successors and assigns.
19. Notices, etc. All notices, requests, demands and other communications
------------
hereunder shall be in writing and shall be deemed to have been duly given on the
date of delivery if delivered or mailed, first-class postage prepaid,
(a) if to Sellers, to: 4513 Pin Oak Court
Sioux Falls, South Dakota 57103
Attention: Scott Reardon
Telecopy: 605-338-3938
with a copy to: Davenport Law Firm
513 S. Main Avenue
Sioux Falls, South Dakota 57103
Attention: David L. Knudson, Esq.
Telecopy: 605-335-3639
-24-
<PAGE>
(b) if to ART to: Advanced Radio Telecom Corp.
500 108th Avenue, NE, Suite 2600
Bellevue, Washington 98004
Attention: Thomas M. Walker, Esq.
Telecopy: 425-990-1642
with a copy to: Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Attention: Mary E. Weber, Esq.
Telecopy: 617-951-7050
20. Governing Law. This Agreement and the rights and obligations of the
-------------
parties hereto arising out of this Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to the
internal conflict of law provisions thereof.
21. Severability. The provisions of this Agreement are severable, and if any
------------
one or more provisions are deemed illegal or unenforceable, the remaining
provisions shall remain in full force and effect.
22. Counterparts. This Agreement may be executed simultaneously in any number
------------
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[The remainder of this page has been intentionally left blank.]
-25-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
ADVANCED RADIO TELECOM CORP.
By: ________________________________
Name:
Title:
BROADSTREAM CORPORATION
By: ________________________________
Name:
Title:
BROADSTREAM COMMUNICATIONS CORPORATION
By: ________________________________
Name:
Title:
COMMCO PARTNERS, LLC
By: ________________________________
Name:
Title:
COMMCO, LLC
By: ________________________________
Name:
Title:
____________________________________
Scott Reardon, Individually
-26-
<PAGE>
SCHEDULE 1(a) - ASSETS
LICENSES
<TABLE>
<CAPTION>
Channel Latitude Longitude
Licensee Market Call Sign Pops Minimum Maximum Minimum Maximum Expiration Date FCC Application
- -------- ------ --------- ---- ------- ------- ------- ------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
SCHEDULE 1(b)
FUTURE LICENSES
Channel Latitude Longitude Status of any
Licensee Market Call Sign Pops Minimum Maximum Minimum Maximum Expiration Date FCC Application
- -------- ------ --------- ---- ------- ------- ------- ------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
-27-
<PAGE>
Exhibit 2.2
ADVANCED RADIO TELECOM CORP.
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made as of March 28,
2000 (the "Signing Date") among Advanced Radio Telecom Corp., a Delaware
corporation ("ART") and Bachow Communications, Inc., a Delaware corporation
("BCI").
WHEREAS, ART wishes to purchase, and BCI wishes to sell, certain licenses
granted by the Federal Communications Commission (the "FCC") to BCI listed on
Schedule 1.1 hereto (the "Licenses") and certain other assets specified herein
in exchange for that number of shares of ART's Common Stock, $.001 par value per
share (the "Common Stock"), calculated pursuant to Section 1.3 hereof (the
"Transaction").
WHEREAS, the Assets (as defined herein) comprise more than ninety percent
(90%) of the assets of BCI; and
WHEREAS, ART and BCI desire the Transactions to qualify as a "tax free"
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, in consideration of the premises and the respective
covenants and representations and warranties herein contained, the parties
hereto agree as follows:
1. Sale of Assets.
--------------
1.1. Sale of Assets. Subject to and upon the terms and conditions of this
--------------
Agreement, BCI agrees to sell and transfer to ART and ART agrees to purchase and
acquire from BCI, free and clear of any pledge, lien, options, warrants,
security interest, mortgage claim, charge, liability, right of first refusal,
lease, management agreement, contractual restrictions on transfer or other
encumbrance of any kind whatsoever (the "Liens") other than those in favor of
ART, at the Closing (defined below) all of BCI's right, title and interest in,
to and under the following assets (the "Assets"):
(a) the Licenses and all other licenses, permits, authorizations and
approvals from all Federal, state, municipal, county, local and any other
governmental or quasi governmental department, commission, board, bureau,
agency, court or other instrumentality (collectively, the "Governmental
Authorities") with respect to the foregoing; and
(b) The leases and the related agreement listed on Schedule 1.1
hereto (the "Leases").
<PAGE>
1.2. No Assumption of any Liabilities. ART will not assume, satisfy or
--------------------------------
perform any of the debts, liabilities, obligations or commitments of BCI other
than: (i) liabilities under any Leases included in the Assets arising after the
Closing Date; and (ii) Assumed Expenses (as defined below) (collectively, the
"Assumed Liabilities"). BCI will retain and satisfy all such debts, liabilities,
obligations and commitments other than the Assumed Liabilities.
1.3. Consideration.
-------------
(a) Subject to and upon the terms and conditions of this Agreement,
in consideration of sale and transfer of the Assets to ART, ART will issue
to BCI at the Closing the number of shares of its Common Stock (the
"Consideration") equal to: the quotient of (i) the product of (A) two
multiplied by (B) the excess of (x) 39,669,466 over (y) the quotient of the
dollar amount of the Assumed Expenses divided by $1.35, divided by (ii) 36
(rounded up to the newest whole number).
(b) In the event that, prior to Closing, any stock split,
combination of the shares of Common Stock, or recapitalization of ART
occurs, the Consideration shall be equitably adjusted so that BCI will
receive after the event occasioning such adjustment the same number of
shares of Common Stock as it would have received had the Closing occurred
immediately prior to such event. In the event of any consolidation or
merger of ART with another corporation or entity prior to Closing, the sale
of substantially all of ART's assets to another corporation or entity prior
to Closing, or if ART is not involved in such a transaction, but is not at
the Closing listed on Nasdaq, the New York Stock Exchange or a comparable
system (a "Qualifying Listing"), the Consideration shall be altered so that
BCI will receive (i) if the consideration in such transaction is publicly
traded stock, the number of shares of such stock as would be issuable or
payable with respect to or in exchange for that number of shares of Common
Stock calculated pursuant to Section 1.3(a) if the Consideration had been
issued immediately prior to such consolidation, merger or sale and (ii) if
the consideration in such transaction is other than publicly traded stock
or if the Consideration would be issued in Common Stock and ART does not
have a Qualifying Listing, cash equal to the product of (A) the number of
shares calculated pursuant to Section 1.3(a) and (B) $36.
2. Closing.
-------
2.1. The closing of the Transaction (the "Closing") shall take place on
such date and at such time within 10 days after all necessary FCC consents to
assign the Licenses become Final Order (as defined in Section 10.3) (the "FCC
Consent), subject to the satisfaction or waiver of the conditions contained in
Sections 10 and 11 (but in no event later than April 1, 2001) as mutually agreed
by the parties (the "Closing Date") at the offices of Ropes & Gray, One
International Place, Boston, Massachusetts 02110.
2.2. Deliveries by BCI at Closing. At Closing, BCI shall deliver to ART:
----------------------------
-2-
<PAGE>
(a) any Bills of Sale or other instruments of assignment reasonably
required or requested by ART to transfer, convey and assign the Assets to
ART;
(b) certified copies of resolutions of the shareholders and the
board of directors of BCI authorizing BCI to enter into and perform its
obligations under this Agreement;
(c) a copy of the charter documents of BCI certified by the
appropriate public official and a copy of the by-laws of BCI certified by
its Secretary; and
(d) all such other documents and instruments as ART or its counsel
shall reasonably request to consummate or evidence the transactions
contemplated hereby; and
2.3. Deliveries by ART at Closing. At Closing, ART shall deliver to BCI:
----------------------------
(a) one or more stock certificates as BCI shall request, not
exceeding 10, representing the Consideration registered in the name of BCI
(or cash if required under Section 1.3(b));
(b) certified copies of the resolutions of the board of directors of
ART authorizing ART to enter into and perform its obligations under this
Agreement;
(c) a copy of the charter documents of ART certified by the
appropriate public official and a copy of the bylaws of ART certified by
its secretary; and
(d) all such other documents and instruments as BCI or its counsel
shall reasonably request to consummate or evidence the transactions
contemplated hereby.
2.4. Certifications; Opinions. At Closing, ART and BCI shall deliver the
------------------------
certificates, opinion of counsel and other documents described in Sections 10
and 11 hereof, respectively, unless waived.
2.5. Form of Documents and Instruments. All of the documents and
---------------------------------
instruments delivered at Closing shall be in form and substance, and shall be
executed and delivered in a manner, reasonably satisfactory to the parties'
respective counsel.
3. Representations and Warranties of BCI. BCI represents and warrants to ART
-------------------------------------
as follows:
3.1. Entity Status. BCI is a corporation duly organized, validly existing
-------------
and in good standing under the laws of the Commonwealth of Pennsylvania. BCI
has full corporate power and authority to carry on its business as and where now
conducted, and to own or lease and to operate its properties and assets where
such properties and assets are now owned, leased or operated by it and where
such business is now conducted by it. BCI has delivered to ART complete and
-3-
<PAGE>
correct copies of any organizational, by-laws or charter documents applicable to
it, each as amended and in effect on the date hereof. Paul Bachow (the
"Stockholder", and together with BCI the "Bachow Entities") owns 100% of the
outstanding capital stock of BCI, and there are no outstanding subscriptions,
options, warrants or other rights convertible into or exercisable for, or any
agreements to issue, capital stock of BCI.
3.2. Authority for Agreement; Conflicts.
----------------------------------
(a) BCI has all necessary power and authority, corporate or
otherwise, to enter into, execute and deliver this Agreement, the Rights
Agreement (the "Rights Agreement") entered into between ART and Bachow
Entities dated the date hereof, the Management Agreement (the "Management
Agreement") entered into between ART and BCI dated the date hereof and the
other documents to be delivered by Bachow Entities at the Closing (the
Rights Agreement, Management Agreement and such other documents, including
without limitation the Guarantee of Paul Bachow attached as Exhibit A
hereto (the "Guarantee") are collectively the "Bachow Documents") and to
perform fully its obligations hereunder and the transactions contemplated
hereby and thereby. The execution, delivery and performance of this
Agreement and the applicable Bachow Documents by BCI has been duly
authorized by all necessary corporate action.
(b) Each of this Agreement, the Management Agreement, the Rights
Agreement and the Guarantee has been, and the other Bachow Documents, at
the Closing, will have been, duly and validly executed and delivered by, as
applicable, BCI and Stockholder and each of this Agreement, the Management
Agreement and the Rights Agreement constitutes, and the other Bachow
Documents will constitute, the legal, valid and binding obligation of BCI
and, if a signatory thereto, Stockholder and each of this Agreement, the
Management Agreement, the Rights Agreement and the Guarantee is, and the
other Bachow Documents will be, enforceable by and against BCI and, if a
signatory thereto, Stockholder in accordance with its respective terms,
except as enforceability thereof may be limited by applicable bankruptcy,
reorganization, 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.
(c) The execution and delivery of this Agreement, the Rights
Agreement, the Management Agreement, the Guarantee and the Bachow Documents
by BCI and, if a signatory thereto, Stockholder and the consummation of the
transactions contemplated hereby and thereby will not conflict with or
result in any violations of or defaults, except such as would not have a
material adverse effect on the Assets or on obtaining FCC Consent, under:
(i) subject to the receipt of FCC Consent, any statute, regulation, order,
judgment or decree of any federal, state or local governmental body or
regulatory authority applicable to BCI, the Stockholder or any of the
Assets; (ii) any mortgage, indenture, lease, agreement, instrument or other
obligation to which BCI or the Stockholder is a party or by which any of
the Assets are bound; or (iii) any permit,
-4-
<PAGE>
concession, grant, franchise, license, of or applicable to BCI or the
Stockholder. Such execution, delivery and consummation will not result in
the creation of any Lien upon any of the Assets.
3.3. Consents and Approvals of Governmental Authorities. Except for the
--------------------------------------------------
FCC Consent and the expiry or earlier termination of the waiting period under
the HSR Act, no consent, approval or filing with any governmental or regulatory
authority is required to be made or obtained by BCI or Stockholder in connection
with its execution and delivery of and performance of its obligations under,
this Agreement and the Guarantee.
3.4. FCC Regulatory Matters.
----------------------
(a) BCI is in compliance with the Federal Communications Act of
1934, as amended (the "Communications Act"), and the rules, regulations and
policies of the FCC promulgated thereunder applicable to either Bachow
Entity or the Assets, and each Bachow Entity is in compliance with all
other federal, state and local laws, rules, regulations and ordinances
applicable to either Bachow Entity or the Assets and is not in default
under any order, writ, injunction or decree of any court or governmental
agency or instrumentality applicable to either Bachow Entity or the Assets,
except for any noncompliance that would not materially threaten or
adversely affect the validity, continued effectiveness, material terms, or
likelihood of renewal of any of the Licenses or the grant of FCC Consent.
(b) FCC Licenses. Schedule 1.1 sets forth a true and complete list
------------
of each License that is being assigned to ART hereunder, the name of the
licensee or permit holder, the call sign, the License expiration date, and
the status of any applications for assignment, transfer or waiver of FCC
rules filed with the FCC. BCI has provided to ART true and correct copies
of the Licenses received by it from the FCC. None of such Licenses are
subject to any Lien, and BCI owns all of the right, title and interest in,
to and under such Licenses. All the Licenses are currently valid and in
full force and effect and BCI and its affiliates have met material
applicable construction or build-out regulations required to be met as of
this date for each of the Licenses. Neither BCI nor any of its affiliates
has received, as of the date of this Agreement, any notification of an
investigation, violation or forfeiture, any notice of apparent liability,
or any other order or complaint issued by or before any court or
governmental body, including the FCC that could in any manner threaten or
adversely affect the validity, continued effectiveness, material terms, or
likelihood of renewal of any of the Licenses, nor, as of the date of this
Agreement, to the knowledge of BCI is any such action threatened (other
than, in any such case, actions or matters relating to the wireless
communications or 38.6 - 40 GHz licenses ("39 GHz Licenses") industries
generally). At the date of this Agreement, neither BCI nor any of its
affiliates has knowledge of any other proceedings (other than proceedings
relating to the wireless communications industry or 39 GHz Licenses
generally) that could in any manner threaten or adversely affect the
validity, continued effectiveness, material terms,
-5-
<PAGE>
or likelihood of renewal of any of the Licenses.
(c) Fees. All franchise, license or other fees and charges that
----
have become due and payable with respect to the Assets pursuant to any
applications, filings, recordings and registrations with, and all
validations or exemptions, approvals, orders or authorizations, consents,
Licenses, certificates and permits from, the FCC, any state public utility
commission and any other federal, state or local regulatory or governmental
bodies or authorities, including any subdivision thereof, have been paid.
(d) License Compliance. No event has occurred or failed to occur
------------------
which (i) results in, or after notice or lapse of time or both would result
in, revocation, suspension, adverse modification, non-renewal, impairment,
restriction or termination of, or order of forfeiture with respect to, any
License or (ii) materially adversely affects any of the rights of BCI or
any of its affiliates thereunder, except in the case of clause (i) or (ii),
for litigation, legislation, rule making or other matters, in each case,
affecting the wireless communications industry or 39 GHz Licenses
generally. At the date of this Agreement, except to the extent caused by
ART's failure to comply with its obligations under the Management
Agreement, BCI has no reason to believe that the Licenses will not be
renewed by the FCC in the ordinary course.
(e) Reports. Any and all material reports and filings required to
-------
be filed with the FCC by the Bachow Entities with respect to the Licenses
have been filed and BCI has provided true and correct copies of all such
reports and filings to ART. All such reports and filings were accurate and
complete in all material respects.
(f) Disclosure. BCI knows of no facts pertaining to its
----------
qualifications to be a licensee which would cause the FCC not to issue its
approval with respect to, or otherwise prevent, the transfer to ART
pursuant to this Agreement of the Licenses (other than those relating to
the wireless communications industry or 39 GHz Licenses generally).
(g) Exception. Notwithstanding any of the foregoing, BCI makes no
---------
representation with respect to, and assumes no responsibility hereunder
for, (a) the demonstration of "substantial service" set forth in Section
101.17(a) of the FCC's rules or the consequent nonrenewal of any License
under that section or (b) the failure of any of the representations and
warranties in Section 3.4 to be true and correct if such failure is due,
directly or indirectly, to ART's actions under or in connection with, or
failure to act in breach of its obligations under, the Management
Agreement. ART expressly assumes the risks referred to in the preceding
sentence.
3.5. Title to the Transferred Assets; Liens; Other Assets. BCI has,
----------------------------------------------------
subject to the laws and regulations administered by the FCC generally applicable
to 39 GHz Licenses, good, indefeasible and transferable title to all of the
Assets, free and clear of all Liens.
-6-
<PAGE>
3.6. Leases. Schedule 1.1 includes a correct description of each Lease
------
included in the Assets, including the name of the Landlord, the address of the
leased location and the monthly rent. A true, complete and correct copy of each
written Lease included in the Assets has been provided to ART. A complete
description of all terms of any oral lease is set forth on Schedule 1.1. Each
such Lease is a legal, valid, binding enforceable agreement, in full force and
effect and consummation of the transactions contemplated hereby will not cause a
default under or permit the termination or modification of any such Lease. No
party to any such Lease is in default thereunder.
3.7. Contracts. Except for this Agreement and the Leases, neither Seller
---------
is a party to any contract, commitment or similar agreement or arrangement,
whether written or oral, by which any of the Assets is bound or affected.
3.8. Litigation. At the date of this Agreement, there are no actions,
----------
claims, proceedings, suits and investigations pending, or, to the best knowledge
of BCI threatened against BCI or any of its properties, assets or rights before
any court, arbitrator or administrative or governmental body: (i) which seek to
revoke, rescind, cancel, modify or refuse to renew any License or; (ii) relating
to the transactions contemplated hereby, nor is there any basis for any such
action. As of the date of this Agreement, there is no judgment, order or decree
adversely affecting the Assets or the transactions contemplated hereby. At the
Closing, there shall be no order or decree materially adversely affecting the
Assets or the transactions contemplated hereby (except those relating to the
wireless communications industry or 39 GHz Licenses generally).
3.9. Disclosure. Neither this Agreement nor any exhibit or schedule
----------
hereto nor any statement, list or certificate delivered to ART at or prior to
the Closing in connection with this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statement contained herein and therein in the context in which they were made
not misleading. Except as otherwise disclosed herein or on the schedules hereto,
BCI knows of no information or fact that has or could have a material adverse
effect on the Assets except that BCI makes no representation with respect to
changes affecting 39 GHz Licenses generally and changes external to BCI and its
business such as changes in demographics, the industry or the economy.
3.10. Brokerage. There are no claims for brokerage commissions or finder=s
---------
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of BCI
or Stockholder other than with Daniels and Associates, L.P. which fees will be
paid by BCI, to the extent not included in Assumed Expenses.
3.11. Accredited Investors. BCI is an "accredited investor" as such term
--------------------
is defined under Rule 501 under the Securities Act. BCI investment decisions are
made by persons having such knowledge and experience in business and financial
matters as to be capable of evaluating the merits and risk of the investment
contemplated hereby. BCI is capable of bearing the economic
-7-
<PAGE>
risks associated with the investment contemplated hereby. BCI has been provided
access to such information and documents regarding ART and has requested and has
been afforded an opportunity to ask questions of, and receive answers from,
representatives of ART concerning this agreement and the Common Stock.
3.12. Own Account. BCI is acquiring the shares of Common Stock (the
-----------
"Securities") for its own, for investment and not with a view to any
"distribution" thereof within the meaning of the Securities Act. It is
understood that, in addition to any other transfers complying with applicable
securities laws, the Securities may be transferred (a) pursuant to a pro rata
distribution to shareholders upon the liquidation of BCI, (b) by gift to the
spouse or issue of Stockholder or to a trust or other vehicle solely for the
benefit of any of the foregoing, and (c) by gift to a charitable trust organized
by Stockholder (collectively, the "Permitted Transfers").
3.13. Transfer Restrictions. BCI understands that the Securities are
---------------------
subject to certain restrictions on transfers and that the Company may, as a
condition to a permitted transfer (other than a "Permitted Transfer") of any of
the Securities, require that the request for transfer be accompanied by an
opinion of counsel, in form and substance reasonably satisfactory to the
Company, to the effect that the proposed transfer does not result in violation
of the Securities Act, unless such transfer is covered by an effective
registration statement under the Securities Act or by Rule 144(k) of the
Securities Act. BCI understands that each certificate representing the
Securities will, subject to subsequent removal, bear the following legend or one
substantially similar:
The securities represented by this certificate were issued
in a private placement, without registration under the
Securities Act of 1933, as amended (the "Act"), and may not
be sold, assigned, pledged or otherwise transferred in the
absence of an effective registration under the Act covering
the transfer or an opinion of counsel, satisfactory to the
issuer, that registration under the Act is not required.
3.14. Private Placement. BCI has been advised that the Securities have
-----------------
not been and, subject to Section 5 hereof, are not being registered under the
Securities Act, and that ART in issuing the Securities is relying upon, among
other things, the representations and warranties of BCI in this Section 3 in
concluding that the offer and sale of the Securities shall be exempt from the
provisions of Section 5 of the Securities Act.
4. Representations and Warranties by ART. ART represents and warrants as
-------------------------------------
follows:
4.1. Entity Status. ART is a corporation duly organized, validly existing
-------------
and in good standing under the laws of the State of Delaware. ART has full
corporate power and authority to carry on its business as and where now
conducted, and to own or lease and operate its properties and assets where such
properties and assets are now owned, leased or operated by it and where such
business is now conducted by it. ART is qualified to do business and is in good
-8-
<PAGE>
standing in each of the jurisdictions in which the nature of its business or the
property owned or leased by it make such qualification necessary.
4.2. Authorization for Agreement; Conflict.
-------------------------------------
(a) ART has all necessary corporate power and authority to enter
into and execute this Agreement, the Rights Agreement, the Management
Agreement and the other documents to be delivered by ART at the Closing
(the "ART Documents") and to perform fully its obligations hereunder and
the transactions contemplated hereby and thereby. The execution, delivery
and performance of this Agreement and the ART Documents has been duly
authorized by all necessary corporate action.
(b) Each of this Agreement, the Management Agreement and the Rights
Agreement has been, and the other ART Documents, at the Closing, will have
been, duly and validly executed and delivered by ART and each of this
Agreement, the Management Agreement and the Rights Agreement constitutes,
and the other ART Documents will constitute, the legal, valid and binding
obligation of ART and each of this Agreement, the Management Agreement and
the Rights Agreement is, and the other ART Documents will be, enforceable
by and against ART in accordance with its respective terms, except as
enforceability thereof may be limited by applicable bankruptcy,
reorganization, 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.
(c) The execution and delivery of this Agreement and the ART
Documents by ART and the consummation of the transactions contemplated
hereby and thereby will not conflict with or result in any violations of or
defaults, except such as would not have a material adverse effect on ART or
the attainment of FCC Consent, under: (i) any statute, regulation, order,
judgment or decree of any federal, state or local governmental body or
regulatory authority applicable to ART; (ii) any mortgage, indenture,
lease, agreement, instrument or other obligation to which ART is a party;
or (iii) any permit, concession, grant, franchise, license, of or
applicable to ART.
4.3. Litigation. As of the date of this Agreement, there are no actions,
----------
claims, proceedings, suits or investigations pending, or, to the knowledge of
ART, threatened, that question the validity of this Agreement or of any action
taken or to be taken pursuant to or in connection with the provisions of this
Agreement, nor does ART know of any basis for any such action, claim, suit,
proceeding or investigation.
4.4. Consents and Approvals of Government Authorities. Except for the FCC
------------------------------------------------
Consent, and the expiry or earlier termination of the waiting period under the
HSR Act, and except for any consent, approval of filing which will have been
made or obtained prior to Closing, no consent, approval or filing with any court
or governmental or regulatory authority is required to be made or obtained by
ART in connection with its execution, delivery and performance of this
-9-
<PAGE>
Agreement.
4.5. Stock. The Common Stock issued as the Consideration, when issued
-----
hereunder, will be duly authorized, validly issued, fully paid and
nonassessable.
4.6. FCC Regulatory Matters. Except in each case as would not have a
----------------------
material adverse effect on ART or the transactions contemplated hereby, ART is
in compliance with the Communications Act and the rules, regulations and
policies of the FCC promulgated thereunder applicable to ART or its assets, and
ART is in compliance with all other federal, state and local laws, rules,
regulations and ordinances applicable to ART or its assets and is not in default
under any order, writ, injunction or decree of any court or government agency or
instrumentality. ART knows of no facts pertaining to its qualifications to be a
licensee which would cause the FCC not to issue approval with respect to, or
otherwise prevent, the transfer to ART pursuant to this Agreement of the
Licensees (other than those relating to the wireless communications industry or
39 GHz Licenses generally).
4.7. SEC Filings; Financial Statements.
---------------------------------
(a) ART has filed with the Securities and Exchange Commission (the
"SEC") all reports, schedules, forms, statements and other documents
required by the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act") to be filed by ART since January 1, 1999 as
filed on or before the date of this Agreement (collectively, and in each
case including all exhibits and schedules thereto and documents
incorporated by reference therein the "ART SEC Reports"). As of their
respective dates (except if revised or superseded by a subsequent filing on
or before the date of this Agreement, as of such date), the ART SEC Reports
(including the financial statements included therein) (i) complied as to
form in all material respects with the requirements of the Securities Act
or the Exchange Act, as the case may be, and the rules and regulations
thereunder, and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. ART has filed
with the SEC as exhibits to the ART SEC Reports all agreements, contracts
and other documents or instruments required to be so filed, and such
exhibits are in all material respects true and complete copies of such
agreements, contracts and other documents or instruments, as the case may
be (subject to any confidential treatment requests allowing excision of
confidential information from the publicly filed document). None of ART's
subsidiaries is required to file any reports, schedules, statements or
other documents with the SEC.
(b) The consolidated balance sheets of ART and its consolidated
subsidiaries as of each of December 31, 1998 and September 30, 1999 and the
related consolidated statements of income (loss) and stockholders' equity
and cash flows for the 12 month period and the nine month period then
ended, true and complete copies of which have been
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<PAGE>
made available to BCI, fairly present ART's consolidated financial position
as of their respective dates and its consolidated results of operations and
cash flows for the respective periods then ended, in accordance with U.S.
generally accepted accounting principles applied on a consistent basis
except as described in the footnotes to the financial statements.
(c) Since January 1, 1999, to Art's knowledge, there has been no
material disagreement (within the meaning of Item 304(a)(1)(iv) of
Regulation S-K under the Securities Act) between ART and its independent
accountants with respect matters of accounting principles or practices,
financial statement disclosure or auditing scope or procedures which if not
resolved to the satisfaction of such accountant would cause it to make a
reference to the subject matter of the disagreements in connection with its
report.
4.8. Brokerage. There are no claims for brokerage commissions or finder's
---------
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
ART.
5. Registration Rights. If ART at any time proposes to file a Registration
-------------------
Statement (as defined below) for the sale by ART of its Common Stock, it will,
prior to such filing, give notice to BCI (or the Included Transferees, as
defined below; the Included Transferees and BCI, together the "Holders") of its
intention to do so and, upon written request of any of the Holders given within
15 days after ART provides such notice (which request shall state the intended
method of disposition of such Registrable Shares (as defined below)), ART shall
use its reasonable efforts to cause all Registrable Shares which ART has been
requested by any of the Holders to register to be registered under the
Securities Act of 1933 and the rules and regulations thereunder (the "Securities
Act") to the extent necessary to permit their sale or other disposition in
accordance with the intended methods of disposition specified in the request
specified in such Holders' request, provided that ART shall have the right to
-------- ----
postpone or withdraw any registration effected pursuant to this Section 5 and
shall incur no liability to any Holder for doing so. ART hereby agrees to pay,
all Registration Expenses (as defined below) in connection with each
registration of Registrable Shares requested pursuant to this Section 5. For
purposes hereof, an "Included Transferee" shall include BCI, Stockholder and up
to 10 other persons holding Registrable Shares originally issued to BCI, or an
affiliate, as the case may be, as Consideration hereunder (or under the Rights
Agreement) and designated by a Bachow Entity as an Included Transferee provided
--------
that (i) BCI, or such affiliate, has given ART notice of such transfer and (ii)
- ----
such transferee agrees in writing to be bound by all the provisions of this
Section 5. In the event, prior to Closing, ART files a so called "shelf"
Registration Statement under Rule 415 under the Securities Act with respect to
which a Holder would have rights to include Registrable Shares if they were then
issued, BCI shall have the right to include in such Registration Statement up to
a reasonable estimate of the number of shares of Common stock to be issued as
the Consideration, all subject to the other provisions of this Section 5, as if
such shares were then issued.
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<PAGE>
5.1. "Rule 144" means Rule 144 promulgated under the Securities Act, and
any successor rule or regulation thereto, and in the case of any referenced
section of such rule, any successor section thereto, collectively and as from
time to time amended and in effect.
5.2. "Registration Statement" means a registration statement filed by ART
with the SEC for a public offering and sale of ART's Common Stock (other than a
registration statement on Form S-4 or Form S-8, or their successors, or any
other form for a similar limited purpose, or any registration statement covering
solely securities proposed to be issued in exchange for securities or assets of
another corporation or other entity in a merger, consolidation, acquisition,
exchange offer, or other transaction).
5.3. "Registrable Shares" means the shares of ART Common Stock received by
BCI or any other Holder as part of the Consideration in the transaction
contemplated hereby or (ii) pursuant to a closing under the Rights Agreement;
provided that any shares which are Registrable Shares shall cease to be
- -------------
Registrable Shares: (i) upon any sale thereof pursuant to a Registration
Statement, Rule 144, or otherwise in a public offering; (ii) upon any assignment
thereof except to and included Transferee; or (iii) when, in the opinion of
counsel satisfactory to ART, such shares become eligible for sale under
paragraph (k) of Rule 144.
5.4. "Registration Expenses" means all expenses incident to performance of
or compliance with Section 5 hereof by ART, including without limitation all
listing fees, all fees and expenses of complying with securities or blue sky
laws, all printing and automated document preparation expenses, all messenger
and delivery expenses, the fees and disbursements of counsel for ART and of its
independent public accountants, including the expenses of any special audits
required by or incident to such performance and compliance, underwriting
discounts and commissions and applicable transfer taxes, if any. Notwithstanding
the foregoing, the Holders shall, on a pro-rata basis, pay all registration and
filing fees and underwriting commissions and discounts and transfer taxes
attributable to the Registrable Shares and all fees and disbursements of their
individual counsel and advisors.
5.5. Cutbacks. In connection with any registration under this Section 5
--------
involving an underwriting, ART shall not be required to include any Registrable
Shares in such registration unless Holders accept the terms of the underwriting
as agreed between ART and the underwriters selected by it. If the managing
underwriter advises ART that the inclusion of Registrable Shares or other shares
proposed to be included in such registration would interfere with the successful
marketing (including pricing) of shares for ART's account proposed to be
registered by ART, then ART shall be required to include in the registration
only that number of Registrable Shares, if any, which the managing underwriter
believes should be included therein. In such case, the securities so included
shall be reduced as follows: (i) all shares which stockholders other than ART,
the Holders and other persons or entities holding registration rights seek to
include in the registration shall be excluded from the registration to the
extent limitation on the number of shares included in the registration is
required; and (ii) if further limitation on the number of shares to be included
in the registration is required, then the shares to be registered shall include:
(a) first,
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<PAGE>
shares to be registered by ART, (b) second, those shares held by the persons or
entities holding registration rights which by their terms are prior to the
rights of BCI the agreements for which are set forth on Schedule 5.5; and, if
pursuant to a demand by persons having so called "demand registration rights",
the shares such parties hold, and (c) third shares held by all other persons or
entities holding registration rights, including BCI's Registrable Shares, if
any. If pursuant to clause (c) of the prior sentence other persons or entities
holding registration rights seek to register such rights then the Holders and
such other persons or entities shall participate in the registration pro rata
based upon their total ownership of shares of Common Stock (giving effect to the
conversion into Common Stock of all securities convertible thereunto). If any
holder of registration rights would thus be entitled to include more shares than
such holder requested to be registered, the excess shall be allocated among
other requesting holders pro rata in the manner described in the preceding
sentence. ART will not grant new piggyback registration rights with priorities
greater than the piggyback registration rights of the Holders.
5.6. Information Provided by the Holders. ART may require Holders, as a
-----------------------------------
condition to registering any Registrable Securities, to furnish ART such
information regarding the Holders and the distribution of such securities as ART
may from time to time reasonably request in writing and which shall be required
by the Securities Act (or similar state laws) or by the Commission in connection
therewith.
5.7. Filing Requirements. Until the date two years following the last
-------------------
issuance of Common Stock to BCI pursuant to this Agreement or to the Holders
pursuant to the Rights Agreement, ART shall timely file with the SEC such
information as the SEC may prescribe under Section 13 or 15(d) of the Exchange
Act and the rules and regulations of the SEC thereunder and otherwise use its
reasonable efforts to ensure that the public information requirements of Rule
144 are satisfied with respect to ART.
5.8. Indemnification.
---------------
(a) Indemnities of ART. In the event of any registration of any
------------------
Registrable Securities under the Securities Act pursuant to this Section 5,
ART will indemnify and hold harmless each Holder and each other Person, if
any, who controls such Holder within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which such Person may be or become subject under the
Securities Act and any other securities or other law of any jurisdiction,
common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or
are based upon: (i) any untrue statement or alleged untrue statement of any
material fact contained or incorporated by reference in any registration
statement under the Securities Act, any preliminary prospectus or final
prospectus included therein, or any related summary prospectus, or any
amendment or supplement thereto, or any document incorporated by reference
therein; or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse Holders
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<PAGE>
for any legal or any other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, action
or proceeding; provided, however, that ART shall not be liable to Holders
-------- -------
in any such case for any such loss, claim, damage, liability, action or
proceeding: (i) to the extent that it arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
or incorporated document, in reliance upon and in conformity with written
information furnished to ART or expressly for use therein or on behalf of
such Holder; or (ii) such untrue statement or alleged untrue statement or
omission or alleged omission was contained in a preliminary prospectus and
corrected in a final or amended prospectus, and the Holders failed to
deliver a copy of the final or amended prospectus at or prior to the
confirmation of the sale of the Registrable Shares to the person asserting
any such loss, claim, damage or liability in any case in which such
delivery is required by the Securities Act. The indemnities of ART
contained in this Section 5.8 shall remain in full force and effect
regardless of any investigation made by or on behalf of the Holders.
(b) Indemnities of BCI or Other Holders. In the event of any
-----------------------------------
registration of any Registrable Securities pursuant to this Section 5, each
Holder will indemnify and hold harmless (in the same manner and to the same
extent as set forth in Section 5.8 hereof) ART, each director of ART, each
officer of ART who shall sign such registration statement and each other
Person (other than BCI), if any, who controls ART within the meaning of
Section 15 of the Securities Act, with respect to any statement in or
omission from such registration statement, any preliminary prospectus or
final prospectus included therein, or any amendment or supplement thereto,
or any document incorporated therein, if such statement or omission was
made in reliance upon and in conformity with written information furnished
to ART expressly for use therein by or on behalf of such Holder. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of ART or any such director, officer or
controlling Person; provided that the obligation to indemnify will be
-------- ----
individual to each Holder and will be limited to the proceeds (net of
underwriting discounts and commissions) received by such Holder from the
sale of Registrable Stock pursuant to such Registration Statement.
(c) Indemnification Procedures. Promptly after receipt by an
--------------------------
indemnified party of notice of the commencement of any action or proceeding
involving a claim of the type referred to in the foregoing provisions of
this Section 5.8, such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party, give written notice
to each such indemnifying party of the commencement of such action;
provided, however, that the failure of any indemnified party to give notice
to such indemnifying party as provided herein shall not relieve such
indemnifying party of its obligations under the foregoing provisions of
this Section 5.8, except and solely to the extent that such indemnifying
party is actually prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, each indemnifying
party will be entitled to
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<PAGE>
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to such an
indemnifying party), and after notice from an indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
indemnifying party will not be liable to such indemnified party for any
legal or other expenses subsequently incurred by the latter in connection
with the defense thereof; provided, however, that: (i) if the indemnified
-------- -------
party reasonably determines that there may be a conflict between the
positions of such indemnifying party and the indemnified party in
conducting the defense of such action or that there may be defenses
available to such indemnified party different from or in addition to those
available to such indemnifying party, then counsel for the indemnified
party shall conduct the defense to the extent reasonably determined by such
counsel to be necessary to protect the interests of the indemnified party
and such indemnifying party shall employ separate counsel for its own
defense; (ii) in any event, the indemnified party shall be entitled to have
counsel chosen by such indemnified party participate in, but not conduct,
the defense; and (iii) the indemnifying party shall bear the legal expenses
incurred in connection with the conduct of, and the participation in, the
defense as referred to in clauses (i) and (ii) above. If, within a
reasonable time after receipt of the notice, such indemnifying party shall
not have elected to assume the defense of the action, such indemnifying
party shall be responsible for any legal or other expenses incurred by such
indemnified party in connection with the defense of the action, suit,
investigation, inquiry or proceeding. No indemnifying party will consent to
entry of any judgment or enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect to such
claim or litigation.
(d) Contribution. If the indemnification provided for in this
------------
Section 5.8 hereof is unavailable to a party that would have been an
indemnified party under this Section 5.8 in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
referred to therein, then each party that would have been an indemnifying
party thereunder shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to
reflect the relative fault of such indemnifying party on the one hand and
such indemnified party on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof). The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such
indemnifying party or such indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties agree that it would not be
just and equitable if contribution pursuant to this Section 5.8 were
determined by pro rata allocation or by any other method of allocation
which does not take
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<PAGE>
account of the equitable considerations referred to in the preceding
sentence. The amount paid or payable by a contributing party as a result of
the losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) referred to above in this Section 5.8 shall include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. The
obligation to contribute will be individual to each Holder and will be
limited to the amount of proceeds (net of underwriting discounts and
commissions) received by such Holder from the sale of Registrable Stock
pursuant to such Registration Statement. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation.
5.9. ART's Obligations in Registration. Whenever ART is obligated, by the
---------------------------------
provisions of this Section 5, to effect the registration of any Registrable
Shares under the Securities Act, ART shall (a) furnish to the Holders for whom
such Registrable Shares are registered or are to be registered and to the
underwriter, if any, such numbers of copies of a prospectus, including a
preliminary prospectus and any amendments or supplements thereto, in conformity
with the requirements of the Securities Act, (b) register or qualify the
Registrable Shares covered by such registration statement at the expense of such
Holder (if such expense is in addition to those incurred by ART in registering
or qualifying shares to be sold by ART in such registration) under such state
securities or blue sky laws of such jurisdictions as the Holders for whom such
Registrable Shares are registered or are to be registered shall reasonably
request in light of any distribution being then contemplated, except that ART
shall not for any purpose be required to execute a general consent to service of
process or to qualify to do business as a foreign corporation in any
jurisdiction where it is not so qualified; (c) notify each Holder of such
Registrable Shares, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement contains
an untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading; and (d) cause all such Registrable Shares to
be listed on the Nasdaq Stock Market or on such other exchange on which
securities of the same class as the Registrable Shares are then primarily
listed.
6. Expenses. ART shall assume and satisfy up to an aggregate of $3 million of
--------
the fees and expenses incurred by BCI in connection with the Transaction,
including BCI's legal and accounting expenses and fees and expenses payable by
BCI to the firm of Daniels & Associates L.P., but only to the extent that such
--------
fees and expenses are set forth on a detailed schedule identifying the party and
amount owned delivered to ART by BCI at Closing (all such fees and expenses
assumed by ART collectively, the "Assumed Expenses"). ART will not assume or
bear any expenses, fees or liabilities other than as provided in Section 1.2
and this Section 6. The Bachow Entities shall remain responsible for and shall
satisfy any amounts not shown on the schedule referenced above and for any
amounts above $3 million.
7. Survival of Representations and Warranties. All representations,
------------------------------------------
warranties and
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<PAGE>
agreements of BCI and ART contained herein (including all schedules and exhibits
hereto) or in any document, statement, certificate or other instrument referred
to herein or delivered at the Closing in connection with the transactions
contemplated hereby shall survive (i) the execution and delivery of this
Agreement, (ii) any investigation by ART of the Bachow Entities or the Assets,
and (iii) the Closing and the consummation of the transactions contemplated by
this Agreement provided, however, that such representations and warranties shall
-------- -------
only survive two years after the Closing.
8. Indemnities. In addition to the indemnities provided under Section 5.8
-----------
hereof, the parties agree as follows.
8.1. Indemnification by BCI. BCI shall indemnify and hold harmless ART
----------------------
and it ssuccessors and assigns for any and all damages, claims, losses,
liabilities, and expenses, including without limitation reasonable legal and
accounting expenses (collectively, "Losses"), which may arise out of: (i) any
breach of BCI's covenants and agreements hereunder; (ii) any inaccuracy or
misrepresentation in any representation or warranty of BCI hereunder, or any
inaccuracy or misrepresentation in any certificate or document delivered in
accordance with the terms of this Agreement by the Bachow Entities; (iii) any
liabilities of BCI other than Assumed Liabilities; or (iv) any claim or action
asserted by any third party arising out of or in connection with any event, act
or omission relating to any of the Assets occurring prior to the Closing (other
than (a) those relating to the wireless communications industry or 39 GHz
Licenses generally and (b) to the extent caused by any act of ART under, or
failure of ART to fulfill its obligations under, the Management Agreement). BCI
shall not be liable for indemnification claims under this Section 8.1 unless BCI
is given notice of the claim by ART within two years following the Closing. To
the extent feasible BCI may satisfy its obligations under this Section 8.1 by
delivering to ART shares of ART stock; provided, however, that any Losses that
-------- -------
result in cash out-of-pocket expenditures by ART must be satisfied by BCI with
cash, unless otherwise agreed. Shares delivered in satisfaction of obligations
under this Section 8.1 shall be valued at $36 per share.
8.2. Limitation. Notwithstanding Section 8.1, BCI shall have no obligation
----------
to indemnify ART and its successors and assigns pursuant to this Section 8 until
the aggregate of all Losses suffered or incurred by ART and such other persons
exceeds $250,000, in which case ART may recover for all Losses. BCI's maximum
liability for indemnification shall be the value of the Consideration net of all
taxes paid or payable (giving effect to the tax effect of any indemnity
payments).
8.3. Indemnification by ART. ART shall indemnify and hold harmless BCI
----------------------
and its respective successors and assigns from and against any and all Losses
which may arise out of: (i) any breach of any of ART's covenants and agreements;
or (ii) any inaccuracy or misrepresentation in any representation or warranty of
ART hereunder, or any inaccuracy or misrepresentation in any certificate or
document delivered to the Bachow Entities in accordance with the terms of this
Agreement to ART shall not be liable for indemnification claims under this
Section 8.3 unless ART is given notice of the claim by BCI within two years
following the
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<PAGE>
Closing. Notwithstanding Section 8.3, ART shall have no obligation to indemnify
BCI and its successors and assigns pursuant to this Section 8 until the
aggregate of all Losses suffered or incurred by BCI and such other persons
exceeds $250,000, in which case BCI may recover for all Losses.
8.4. Exclusive Remedy. The indemnification provisions in this Section 8
----------------
shall constitute the sole remedies for any claim brought after Closing in
connection with this Agreement or any of the transactions contemplated hereby,
except for a claim arising under Section 5 or from a breach of a covenant or
agreement.
9. Covenants.
---------
9.1. FCC and Other Approval.
----------------------
(a) BCI and ART will use its best efforts to join in and submit as
soon as practicable, and in no event later than ten business days after the
Signing Date, one or more applications (the "Applications") to the FCC as
deemed by BCI and ART to be appropriate requesting the FCC's written
consent to the assignment of the Licenses to ART or designees of ART.
(b) Each of BCI, and its ultimate parent, as applicable, and ART
will use its best efforts to comply with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"). Each of BCI, and its ultimate
parent entity, and ART will file as soon as practicable, and in no event
later than fifteen business days after the Signing Date, any Notification
and Report Forms and related material that it may be required to file with
the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the HSR Act. Each party shall pay its
own filing fees.
(c) ART and BCI shall each pay the fees charged to it by the FCC in
connection with its Application, and the cost of publishing any public
notices in connection therewith.
9.2. Further Assurances. At any time and from time to time at or after
------------------
the Closing, at the request of ART and without further consideration, BCI will
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation and take such action as ART may reasonably determine
is necessary to transfer, convey and assign to ART, and to confirm ART's title
to or interest in the Assets.
9.3. Public Announcements. (a) Prior to the Closing, without the prior
--------------------
written consent of the other party, neither BCI nor ART (nor their respective
affiliates, representatives or advisors) will, and each will direct its
respective representatives or advisors not to, directly or indirectly, make any
public comment, statement or communication with respect to, or otherwise
disclose or permit the disclosure of, this Agreement, the other agreements and
transactions contemplated hereby, or the specific matters discussed between the
parties, and (b) after the
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<PAGE>
Closing, BCI (nor its respective affiliates, representatives or advisors) will
not and will direct its affiliates, representatives or advisors not to, at any
time, without the prior written consent of ART, make any announcement, issue any
press release or make any statement to any third party with respect to this
Agreement, the agreements and transactions contemplated hereby, or any of the
specific matters discussed between the parties; provided, with respect to both
(a) and (b) of this Section 9.3 BCI and ART may each communicate with its or
their representatives and advisors concerning these matters and any party may
make any disclosure required by law (including, without limitation, the HSR Act)
or the rules of the FCC or Nasdaq.
9.4. Information and Access; Compliance. During the period from the date
----------------------------------
of this Agreement and continuing until the Closing or until the termination of
this Agreement pursuant to Section 12 hereof, BCI shall afford ART and its
representatives and advisors with reasonable access to BCI and the Assets and
all matters and information that any of them may reasonably request. The
provisions of access pursuant to this Section 9.4 shall in no way affect or
otherwise obviate or diminish any representations and warranties of BCI. The
parties shall take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on such party with respect to this
Agreement and the transactions contemplated hereby (including furnishing all
information required by the FCC, the Federal Trade Commission or the Department
of Justice in connection with transfer of the Licenses) and shall take all
reasonable actions necessary to cooperate promptly with and furnish information
to the other party in connection with any such requirements imposed upon such
other party in connection with this Agreement and the transactions contemplated
hereby. Neither the Bachow Entities nor ART shall take any action that shall
have the foreseeable effect of preventing the Closing of the transactions
contemplated hereby.
9.5. Conduct of Business by BCI. BCI covenant that, without ARTs written
--------------------------
consent, it shall not:
(a) sell, transfer, convey or otherwise dispose of any of the
Assets or any right thereto or interest therein except termination of
leases not material to the business and transfers in accordance herewith;
(b) encumber, or agree to encumber, in any way, or enter into any
consensual restriction with respect to, any of the Assets or any right
thereto or interest therein;
(c) enter into any contract, agreements or understanding with
respect to any of the Assets, other than leases terminable at will;
(d) take any action which, or reasonably fail to take any action
the failure of which, would cause either BCI's disqualification as an
assignor of the Licenses, or would materially adversely affect the Assets
or ART's or BCI's rights with respect thereto; or
(e) enter into any agreements or commitments for any of 9.5(a)
through 9.5(d).
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<PAGE>
9.6. Legend Removal. On or after the date two years following the
--------------
issuance of any Security to BCI, upon the request of BCI (or any transferee) if
BCI or such transferee, as the case may be, is not an "affiliate" (as defined in
Rule 144 of the Securities Act) of ART, ART shall issue to BCI (or such
transferee) a replacement certificate for the Securities without the legend
referenced in Section 3.14.
10. Conditions Precedent to ART's Obligations. The obligations of ART to
-----------------------------------------
consummate the transactions contemplated hereby shall be subject to the
fulfillment by BCI prior to or at the Closing, of each of the following
conditions, any of which may be waived by ART in its sole discretion:
10.1. Representations and Warranties. The representations and warranties
------------------------------
made by BCI in this Agreement (including all exhibits and schedules hereto),
shall be true and correct in all material respects when made and shall be
repeated and shall be true and correct in all material respects at and as of the
Closing Date (except insofar as any of those representations and warranties are
expressly qualified by reference to any earlier or later date and except insofar
as an act by ART under the Management Agreement or failure to perform its
obligations thereunder causes such representations and warranties to be untrue
or incorrect), and ART shall have received a certificate dated the date of the
Closing signed by the chief executive officer of BCI to the foregoing effect.
10.2. Consents. All material filings with and consents from all federal,
--------
state and local governmental agencies required to consummate the transactions
contemplated by this Agreement shall have been made or received, as applicable.
10.3. FCC Licenses. Without limiting the generality of Section 10.2, the
------------
FCC shall have consented to the assignment of all of the Licenses by a Final
Order (as defined below), without any conditions or restrictions that materially
affect the value of the Licenses or operations pursuant to the Licenses or any
conditions or restrictions materially different than the normal authorizations
issued by the FCC to other 39 GHz license holders at the date of the Closing. In
the event that any FCC order approving the transfer of the Licenses to ART
imposes such conditions, this condition shall not be satisfied until such
conditions are removed or eliminated, and BCI and ART shall cooperate with one
another in obtaining the removal or elimination of such restrictions. "Final
Order" means an action by the FCC giving its consent to the assignment of the
Licenses, with respect to which no request for stay, petition for rehearing,
reconsideration or appeal is pending, and as to which the time for filing any
petition for rehearing, reconsideration or appeal has expired and with respect
to which the time for agency reconsideration or review taken on its own motion
has expired, or in the event of the filing of such request, petition or appeal,
an action which shall have been reaffirmed or upheld and with respect to which
the time for seeking further administrative or judicial review shall have
expired.
10.4. Changes. There shall not have been any material adverse change
-------
specific to the Licenses, it being understood that changes affecting 39 GHz
Licenses generally and changes external to BCI and its business such as changes
in demographics, the industry or the economy
-20-
<PAGE>
shall not be deemed specific to the Licenses.
10.5. HSR Matters. All applicable waiting periods (and any extensions
-----------
thereof) under the HSR Act shall have expired or otherwise been terminated.
10.6. Performance by BCI; Certificate. BCI shall have performed and
-------------------------------
complied in all material respects with all agreements and conditions required by
this Agreement to be performed or complied with by them prior to or at the
Closing, and the chief executive officer of BCI shall deliver to ART a
certificate dated the Closing Date to such effect.
10.7. Opinions of Counsel for BCI. ART shall have received favorable
---------------------------
opinions addressed to it and dated the Closing Date of counsel and FCC counsel
for BCI, in substantially the form set forth in Exhibits B and C, respectively.
10.8. Absence of Litigation. No action or proceeding shall be pending
---------------------
against BCI or involving the Assets at the Closing Date before any court or
governmental body or authority which could be materially adverse to the Assets.
There shall not be in existence any court order or order of any governmental
agency or body which prevents or makes illegal the consummation of the
transactions contemplated hereby.
10.9. Release of Liens. All of the Assets shall be free and clear of all
----------------
liens and ART shall have received evidence of the release of all Liens and the
termination of all financing statements, if any, as may be reasonably requested
by ART.
11. Conditions Precedent to the Obligations of the BCI. The obligations of BCI
--------------------------------------------------
to consummate the transactions contemplated hereby shall be subject to the
fulfillment by ART prior to or at the Closing, of each of the following
conditions, any of which may be waived by BCI in its sole discretion:
11.1. Representations and Warranties. The representations and warranties
------------------------------
made by ART in this Agreement shall be true and correct in all material respects
when made and shall be repeated and shall be true and correct in all material
respects at and as of the Closing Date (except insofar as any of the
representations and warranties are expressly qualified by reference to an
earlier or later date), and BCI shall have received a certificate dated the date
of Closing signed by an officer of ART to the foregoing effect.
11.2. HSR Matters. All applicable waiting periods (and any extensions
-----------
thereof) under the HSR Act shall have expired or otherwise been terminated.
11.3. Government Consents. All material filings with and consents from all
-------------------
federal, state and local governmental agencies required to consummate the
transactions contemplated hereby shall have been obtained at or prior to the
Closing.
11.4. Performance of ART. ART shall have performed and complied in all
------------------
material
-21-
<PAGE>
respects with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing and an executive
officer of ART shall deliver to BCI a certificate dated the Closing Date to such
effect.
11.5. Absence of Litigation. There shall not be in existence any court
---------------------
order or order of any governmental agency or body which prevents or makes
illegal the consummation of the transactions contemplated hereby.
11.6. Consideration. The Consideration shall have been delivered to BCI.
-------------
11.7. Material Adverse Change. There shall not have occurred with respect
-----------------------
to any issue of debt of ART having an outstanding principal amount of $5,000,000
or more (i) an event of default that has caused the holder thereof to declare
such indebtedness to be due and payable prior to its stated maturity and such
indebtedness has not been discharged in full or such acceleration has not been
rescinded or annulled within 30 days of such acceleration, (ii) the failure to
make a payment of principal or interest when due that has not been made, waived
or extended within 5 days of such payment default, or (iii) if ART is not
generally paying its debts as they come due, admits its inability to pay its
debts as they come due, or if ART commences, or there is commenced against ART
and undismissed, any proceedings under any bankruptcy, insolvency or
reorganization law.
11.8. Opinion of Counsel for ART. BCI shall have received a favorable
--------------------------
opinion addressed to it and dated the Closing Date of counsel for ART in
substantially the form set forth in Exhibit D.
12. Termination. This Agreement may be terminated prior to the Closing by the
-----------
parties as set forth in this Section 12.
(a) at any time by the mutual written consent of BCI and ART;
(b) by ART at any time after April 1, 2001 (the "End Date"), if the
conditions set forth in Section 10 hereof shall not have been complied with
or performed and such noncompliance or nonperformance shall not have been
cured or eliminated by BCI by such time provided that if prior to the End
Date, the FCC has issued an order, that is not yet a Final Order, approving
the transfer or change in control, as applicable, of the Licenses, to ART,
BCI may extend the End Date until May 15, 2001 by notice to ART;
(c) by BCI at any time after the End Date, if the conditions set
forth in Section 11 hereof shall not have been complied with or performed
and such noncompliance or nonperformance shall not have been cured or
eliminated by ART by such time provided that if prior to the End Date, the
FCC has issued an order, that is not yet a Final Order, approving the
transfer or change in control, as applicable, of the Licenses, to ART, ART
may extend the End Date until May 15, 2001 by notice to BCI; or
-22-
<PAGE>
(4) by BCI on the one hand, or by ART on the other, if there shall
have been a breach of any representation, warranty, covenant or agreement
on the part of the other set forth or contemplated by this Agreement, which
breach cannot be cured prior to the Closing and which would result in the
failure by the non-terminating party to satisfy one or more conditions to
Closing hereunder;
provided, however, that the terminating party may not terminate its obligations
- -------- -------
under this Agreement if such terminating party has breached this Agreement or
the Management Agreement in any material respect.
Notwithstanding any termination of this Agreement pursuant to this Section
12, the provisions of Sections 8 hereof shall remain in full force and effect
and no termination of this Agreement pursuant to Section 12(b), (c) or (d) shall
relieve a breaching party of any liability hereunder for any such breach
occurring prior to termination.
13. Regulatory Matters. Each party hereto recognizes that it is subject to
------------------
certain FCC rules and other laws and is under an obligation to, among other
things, disclose the existence of agreements relating to post auction market
structures at the time such party files its FCC Form 175 in connection with FCC
Auction No. 30 (the 39 GHz spectrum auction). The parties further recognize that
this Agreement is limited by its terms to the acquisition of specified licenses
and does not constitute an agreement relating to any party's conduct in the
auction with respect to bid amounts, bid strategies or the markets that each
bidder will or will not bid upon during the auction. The parties also recognize
that, after the filing of the FCC Form 175, they may not engage in any
prohibited discussion with the other of bid amounts, bid strategies or the
markets each bidder will or will not bid upon during the auction.
14. Entire Agreement; Assignability. This Agreement, together with the Rights
-------------------------------
Agreement, the Management Agreement and the schedules and exhibits hereto,
constitutes the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as
specifically set forth herein. This Agreement (or any part thereof) may not be
assigned by any party hereto without the prior written consent of the other
parties hereto and any such attempted assignment shall be null and void, except
to the extent that the assignment of Securities confers rights upon Holders.
15. Amendment. This Agreement may be amended by the parties hereto at any
---------
time, but only by an instrument in writing duly executed and delivered on behalf
of each of the parties hereto.
16. Headings. Section headings are not to be considered part of this Agreement
--------
and are included solely for convenience and are not intended to be full or
accurate descriptions of the contents thereof. References to Sections are to
portions of this Agreement unless the context requires otherwise.
-23-
<PAGE>
17. Exhibits, etc. Exhibits, schedules and other documents referred to in this
-------------
Agreement are an integral part of this Agreement.
18. Successors and Assigns. All of the terms and provisions of this Agreement
----------------------
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective transferees, successors and assigns.
19. Notices, etc. All notices, requests, demands and other communications
------------
hereunder shall be in writing and shall be deemed to have been duly given on the
date of delivery if delivered or mailed, first-class postage prepaid,
(a) if to BCI, to: Bachow Communications, Inc.
Three Bala Plaza East, Suite 502
Bala Cynwyd, Pennsylvania 19004
Attention: Paul S. Bachow
with a copy (which shall
not constitute notice) to: Drinker Biddle & Reath LLP
One Logan Square
Philadelphia, Pennsylvania 19103-6996
Attention: Howard A. Blum, Esq.
Fax: 215-988-2757
(b) if to ART to: Advanced Radio Telecom Corp.
500 108th Avenue, NE, Suite 2600
Bellevue, Washington 98004
Attention: Thomas M. Walker, Esq.
with a copy to (which shall
not constitute notice) to: Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Attention: Mary E. Weber, Esq.
20. Governing Law. This Agreement and the rights and obligations of the
-------------
parties hereto arising out of this Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to the
internal conflict of law provisions thereof.
21. Severability. The provisions of this Agreement are severable, and if any
------------
one or more provisions are deemed illegal or unenforceable, the remaining
provisions shall remain in full force and effect.
22. Counterparts. This Agreement may be executed simultaneously in any number
------------
of
-24-
<PAGE>
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[The remainder of this page has been intentionally left blank]
-25-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
BACHOW COMMUNICATIONS, INC.
By: ________________________________
Name:
Title:
ADVANCED RADIO TELECOM CORP.
By: ________________________________
Name:
Title:
<PAGE>
SCHEDULE 1.1 - ASSETS
LICENSES
<TABLE>
<CAPTION>
Channel Latitude Longitude Status of any
Licensee Market Call Sign Pops Sq. Miles Minimum Maximum Minimum Maximum Expiration Date FCC Application
- ----------------- --------- --------------- ------- ------- ------- ------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
LEASES
Landlord Address Monthly Rent Contact Person
- --------------------------------------------------------------------------------
-27-
<PAGE>
Guaranty
Paul S. Bachow, the sole shareholder of BCI ("Guarantor"), hereby
guarantees that the obligations of BCI under Section 5.8 and Section 8.1 (the
"Obligations") will be paid in full when due and payable ("Guaranty"). This
Guaranty shall be a continuing, absolute and unconditional guaranty and shall be
irrevocable and remain in full force and effect until all Obligations, shall
have been paid or provided for according to the terms of this Agreement. This
is a guaranty of payment and not of collection, and the Guarantor expressly
waives any right to require that any action be brought against BCI or to require
that resort be had to any security, whether held by or available to ART. If ART
prevails in enforcing the Guaranty, the Guarantor will pay all reasonable costs
and expenses, including reasonable attorneys' fees (whether or not suit is
brought and whether incurred at trial, upon rehearing, retrial or appeal or in
any bankruptcy proceeding), paid or incurred by ART in enforcing this Guaranty,
the amount of such attorneys' fees to be without regard to any statutory
presumption.
_________________________________
Paul Bachow, Individually
<PAGE>
EXHIBIT 2.3
RIGHTS AGREEMENT
This Rights Agreement (the "Agreement") is made as of the 28th day of
March, 2000 by and among Advanced Radio Telecom Corp., a Delaware corporation
("ART"), Paul Bachow, an individual and Bachow Communications, Inc., a Delaware
corporation ("BCI"). This Agreement is entered into as an inducement to ART
entering into the Asset Acquisition Agreement (the "Asset Acquisition
Agreement"), dated the date hereof, between ART and BCI. The effectiveness of
this Agreement is conditioned upon the occurrence of the Closing (as defined in
the Asset Acquisition Agreement).
In consideration of the foregoing, the mutual agreements herein and other
adequate consideration, the parties hereby agree as follows:
1. Definitions
-----------
1.1 "1999 Population" shall mean the number of people residing on December
31, 1999 within a given geographic area determined by reference to a source
mutually agreed to by ART and Paul Bachow.
1.2 "Application License" shall mean any license granted by Final Order
pursuant to any application listed on Schedule 1 or Schedule 2.
1.3 "Auction" shall mean the auction to be conducted by the Federal
Communications Commission (the "FCC") of licenses for fixed point-to-point
microwave sources on the 38.6 to 40.0 GHz band ("39 GHz Licenses") scheduled to
begin in April 2000, whether or not such auction begins in April 2000.
1.4 "Bachow Affiliate" shall mean any of Paul Bachow and any person or
entity controlled directly or indirectly by Paul Bachow at any time after the
date hereof.
1.5 "Cleared License" shall mean any Pending MX Auction License covering a
territory and frequency that is no longer subject to any legal or regulatory
proceedings involving a party other than a Bachow Affiliate.
1.6 "Closing" shall mean any closing of the transfer of Option Licenses to
ART upon exercise of the Option.
1.7 "Final Order" shall mean an action by the FCC granting its consent to
the assignment of a license, with respect to which no request for stay, petition
for rehearing, reconsideration or appeal is pending, and as to which the time
for filing any petition for rehearing, reconsideration or appeal has expired and
with respect to which the time for agency
<PAGE>
reconsideration or review taken on its own motion has expired, or in the event
of the filing of such request, petition or appeal, an action which shall have
been reaffirmed or upheld and with respect to which the time for seeking further
administrative or judicial review shall have expired.
1.8 "Granted Auction License" shall mean any license granted to a Bachow
Affiliate in the Auction which covers territory adjoining all or a portion of
the territory covered by any License and at the same frequency as such License.
1.9 "License" shall have the meaning set forth in the Asset Acquisition
Agreement.
1.10 "Option Licenses" shall mean, collectively, the Granted Auction
Licenses and the Pending Licenses.
1.11 "Option Price" payable at any Closing shall be the sum of (a) the
product of $2 multiplied by the aggregate 1999 Population covered by the
territory covered by the Granted Auction Licenses transferred to ART at such
Closing that is in addition to the territory covered by the Licenses plus (b)
the product of $2 multiplied by the aggregate 1999 Population covered by the
Pending Licenses transferred to ART at such Closing.
1.12 "Pending Auction License" shall mean any license granted to a Bachow
Affiliate in the Auction which includes substantially all of the territory
covered by any application set forth on Schedule 1 hereto and at the same
frequency as such application, provided that the cost of such license in the
Auction was equal to or less than the product of $2 multiplied by the 1999
Population covered by such license.
1.13 "Pending Licenses" shall mean collectively, the Pending Auction
Licenses, the Pending MX Auction Licenses and the Application Licenses.
1.14 "Pending MX Auction License" shall mean any license granted to a
Bachow Affiliate in the Auction which includes substantially all of the
territory covered by any application set forth on Schedule 2 hereto and at the
same frequency as such application, provided that the cost of such license in
the Auction was equal to or less than the product of $2 multiplied by the 1999
Population covered by such license.
1.15 "Trailing Market Price" shall mean the average of the last sale prices
reported by Nasdaq for ART's Common Stock for the thirty trading days ending on
the day Paul Bachow gives ART written notice pursuant to Section 2.2 hereof.
2. Option
------
2.1 Grant. Subject to the terms of this Agreement, Paul Bachow, for
-----
himself and for the Bachow Affiliates, hereby grants ART the option (the
"Option") to acquire the Option Licenses.
-2-
<PAGE>
2.2 Notice. Paul Bachow shall notify ART in writing, (i) within ten (10)
------
days of the grant or award of the last license that would be a Granted Auction
License or a Pending Auction License and (ii) within ten (10) days of any
Pending MX Auction License becoming a Cleared License or of the grant or award
of an Application License, of the occurrence of such events.
2.3 Exercise. ART may exercise the Option by written notice to Bachow
--------
delivered within thirty (30) days of ART's receipt of the first notice given
pursuant to Section 2.2 hereof. If ART either (i) fails to exercise the Option
within such thirty (30) day period or (ii) breaches its obligations under
Section 2.4 after exercising the Option, the Option shall expire and become null
and void. If ART exercises the Option, ART must acquire all Option Licenses,
provided ART shall not be required to acquire (a) any Pending MX Auction License
unless and until it becomes a Cleared License or (b) any other Option License
prior to it being granted by Final Order.
2.4 Option Closings. In the event the Option is exercised, the purchase
---------------
and sale of the Option Licenses shall be made pursuant to one or more agreements
substantially in the form of the Asset Acquisition Agreement (including, without
limitation, the investment protection provisions of Section 1.3(b), the
registration provisions of Section 5 and the conditions to closing, each as
appropriately modified with appropriate bring-down modifications (each, a
"Purchase Agreement")), which the parties agree to execute, or cause to be
executed, within thirty (30) days of the exercise by ART of the Option. If the
Option is exercised, the parties (a) acknowledge that one or more of the Option
Licenses may be granted or awarded to a Bachow Affiliate and agree that such
Bachow Affiliate shall execute the applicable Purchase Agreement with ART and
the applicable Purchase Agreement will be appropriately modified and (b)
anticipate the first agreement and Closing thereunder to include the transfer of
all of the Granted Auction Licenses and Pending Auction Licenses. The
consideration payable by ART at any Closing shall be in shares of ART Common
Stock valued at the Trailing Market Price with an aggregate value equal to the
Option Price payable at such Closing.
2.5 Tax-Free. The parties shall use commercially reasonable efforts to
--------
structure the Option Closings so that they qualify as "tax-free" reorganizations
under the Internal Revenue Code of 1986, as amended, provided, however, that the
foregoing shall not require ART to delay any Closing relating to all of the
Granted Auction Licenses and Pending Auction Licenses for more than forty five
(45) days.
3. Proceedings. In the event the Option is exercised, BCI and Bachow will
-----------
promptly terminate all proceedings involving the frequency and territory covered
by any Pending Auction License or any Cleared License promptly following the
final grant of any Pending Auction License or following any Pending MX Auction
License becoming a Cleared License, as the case may be.
-3-
<PAGE>
4. Right of First Refusal. Subject to the provisions of this Section 4, Paul
----------------------
Bachow, for himself and each other Bachow Affiliate, hereby grants ART a right
of first refusal with respect to any license granted or awarded to any Bachow
Affiliate in the Auction which is not an Option License (collectively, "ROFR
Licenses"). For clarification, any license which would have been an Option
License but for the fact that its cost in the Auction exceeded the threshold set
forth herein shall be a ROFR License. No Bachow Affiliate may transfer any ROFR
License to any third party without first complying with this Section 4. In the
event any Bachow Affiliate receives and proposes to accept a bona fide offer
("Offer") from any third party ("Offeror") for the Transfer to such third party
of one or more ROFR Licenses then:
4.1 Paul Bachow shall, or shall cause such Bachow Affiliate to, deliver a
written notice ("ROFR Notice") to ART specifying the identity of the Offeror,
the price and all other material terms and conditions of the Offer. ART shall
have the right, exercisable during a period ending thirty (30) days following
ART's receipt of the ROFR Notice, to agree to acquire such ROFR License(s) on
the same terms and conditions, provided, however, that ART shall have the right
-------- -------
to make the purchase for cash or ART Common Stock valued at the Trailing Market
Price equal to (a) the cash consideration offered by the Offeror, or (b) if the
Offer is not for cash, equivalent consideration as determined by the parties
pursuant to good faith negotiations.
4.2 If, and only if, ART does not exercise its right pursuant to this
Section 4, the Bachow Affiliate may transfer such ROFR License(s) to the Offeror
on the terms and conditions and at the price set forth in the Offer. If an
agreement on such terms is not entered into with the Offeror within ninety (90)
days following the end of the thirty day period referred to in Section 4.1, such
ROFR License(s) may not be transferred without the Bachow Affiliate again
complying with the provisions of this Section 4.
5. Miscellaneous.
-------------
5.1 Bachow Affiliates. Paul Bachow shall cause each Bachow Affiliate to
-----------------
comply with the terms of the Agreement as if such Bachow Affiliate were a party
hereto.
5.2 Remedies. Because of the difficulty of measuring economic losses to
--------
ART, and its respective subsidiaries as a result of the breach of any of the
covenants in this Agreement, and because of the immediate and irreparable damage
that would be caused to ART and its respective subsidiaries for which it would
have no other adequate remedy, Paul Bachow and BCI agree that, in the event of a
breach by any of them of any of the covenants set forth in this Agreement, ART
may, at its option, in addition to obtaining any other remedy or relief
available to it (including without limitation damages at law), enforce the
provisions of this Agreement by injunction and other equitable relief.
5.3 Termination. This Agreement shall terminate (a) upon the termination
-----------
of the Asset Acquisition Agreement, if such agreement is terminated by its terms
prior to the closing under such agreement, (b) upon the written request of any
party hereto, if (i) a Closing shall not have
-4-
<PAGE>
occurred prior to the sixth anniversary of the closing under the Acquisition
Agreement or (ii) the Option shall not have been exercised by ART prior to the
fifth anniversary of the closing under the Acquisition Agreement, other than, in
either case, because of a material breach hereunder or under any Purchase
Agreement by a Bachow Affiliate, (c) if, prior to the exercise of the Option by
ART, ART shall merge or consolidate with any corporation or other entity that
results in a surviving corporation that does not have shares of common stock (or
their equivalent) registered under Section 12 of the Securities and Exchange Act
of 1934, as amended, or (d) if, prior to the exercise of the Option by ART, ART
shall sell all or substantially all of its assets to any corporation or other
entity that does not have shares of common stock (or their equivalent)
registered under Section 12 of the Securities and Exchange Act of 1934, as
amended.
5.4 Amendments; Waivers. The terms of this Agreement may not be waived,
-------------------
amended, modified, terminated or discharged unless in a writing signed by the
parties hereto.
5.5 Notices. All notices or other communications provided for under this
-------
Agreement shall be in writing (including facsimile) and mailed, hand delivered,
sent by overnight courier or by telecopier to the parties effective when
received at the addresses specified:
If to Paul Bachow or any other Bachow Affiliate:
Bachow Communications, Inc.
Three Bala Plaza East, Suite 502
Bala Cynwyd, Pennsylvania 19004
Attention: Paul S. Bachow
with a copy to (which copy
shall not constitute notice):
Drinker Biddle & Reath LLP
One Logan Square
Philadelphia, Pennsylvania 19103-6996
Attention: Howard A. Blum, Esq.
Fax: 215-988-2757
If to ART:
Advanced Radio Telecom Corp.
500 108th Avenue, NE, Suite 2600
Bellevue, Washington 98004
Attention: Thomas M. Walker, Esq.
with a copy to (which copy
shall not constitute notice):
-5-
<PAGE>
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Attention: Mary E. Weber, Esq.
5.6 Regulatory Matters. Each party hereto recognizes that it is subject
------------------
to certain FCC rules and other laws and is under an obligation to, among other
things, disclose the existence of agreements relating to post auction market
structures at the time such party files its FCC Form 175 in connection with the
FCC Auction No. 30 (the 39 GHz spectrum auction). The parties further recognize
that this Agreement is limited by its terms to the acquisition of specified
licenses and does not constitute an agreement relating to any party's conduct in
the auction with respect to bid amounts, bid strategies or the markets that each
bidder will or will not bid upon during the auction. The parties also recognize
that, after the filing of the FCC Form 175, they may not engage in any
prohibited discussion with the other of bid amounts, bid strategies or the
markets each bidder will or will not bid upon during the auction.
5.7 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
5.8 Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original but all of which taken together shall
constitute one and the same instrument.
5.9 Entire Agreement. This Agreement and the Asset Acquisition Agreement
----------------
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and therein. This Agreement and the Asset
Acquisition Agreement supersede all prior agreement and understandings between
the parties with respect to the subject matter hereof and thereof.
5.10 Section Headings. Section headings in this Agreement are for
----------------
convenience only and shall not form a part of this Agreement.
5.11 Severability. If any provision of this Agreement shall be found by
------------
any court of competent jurisdiction to be invalid or unenforceable, the parties
waive such provision to the extent that it is found to be invalid or
unenforceable. Such provision shall, to the maximum extent allowable by law, be
modified by such court so that it becomes enforceable and, as modified, shall be
enforced as any other provision hereof, all the other provisions hereof
continuing in full force and effect.
5.12 Duty to Prosecute. ART hereby agrees and acknowledges that the
-----------------
execution of the Agreement and the granting of the Option hereunder does not
create any duty or obligation of, or otherwise oblige in any manner, BCI, Paul
Bachow or any Bachow Affiliate to pursue or prosecute any of the Option
Licenses, or to bid or continue to bid for any such Option License,
-6-
<PAGE>
nor does it obligate or otherwise oblige BCI, Paul Bachow or any Bachow
Affiliate to defend any such Option License, whether pursuant to judicial or
administrative proceedings or otherwise.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the day and year first above written.
ADVANCED RADIO TELECOM CORP.
By:__________________________________
Title:
BACHOW COMMUNICATIONS, INC.
By:__________________________________
Title:
_____________________________________
Paul Bachow, Individually
<PAGE>
EXHIBIT 10.1
BRIDGE LOAN AGREEMENT
This Agreement, dated as of April 14, 2000, is between BroadStream
Communications Corporation, a Delaware corporation (the "Borrower") and Advanced
Radio Telecom Corp., a Delaware corporation (the "Lender").
WHEREAS, pursuant to this Agreement, the Lender is extending to the
Borrower a $30,000,000 loan (the "Loan"), which will mature on the Final
Maturity Date;
WHEREAS, the Loan is guaranteed by Commco Partners, LLC, a Delaware limited
liability company (the "Parent"), and by Scott Reardon and is secured by a
pledge of the stock of the Borrower and its Subsidiaries; and
WHEREAS, the proceeds of the Loan shall be used solely for the purposes
specified in this Agreement;
NOW, THEREFORE, in consideration of the premises and the respective
covenants and representations and warranties herein contained, the parties
hereto agree as follows:
1. Definitions; Certain Rules of Construction. Certain capitalized terms are
------------------------------------------
used in this Agreement and in the other Credit Documents with the specific
meanings defined below in this Section 1. Except as otherwise explicitly
specified to the contrary or unless the context clearly requires otherwise, (a)
the capitalized term "Section" refers to sections of this Agreement, (b) the
capitalized term "Exhibit" refers to exhibits to this Agreement, (c) references
to a particular Section include all subsections thereof, (d) the word
"including" shall be construed as "including without limitation," (e) accounting
terms not otherwise defined herein have the meaning provided under GAAP, (f)
references to a particular statute or regulation include all rules and
regulations thereunder and any successor statute, regulation or rules, in each
case as from time to time in effect and (g) references to a particular Person
include such Person's successors and assigns to the extent not prohibited by
this Agreement and the other Credit Documents.
"Acquisition" means the acquisition by the Lender, pursuant to the
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Acquisition Agreement, of certain licenses granted by the Federal Communications
Commission.
"Acquisition Agreement" means the Asset Purchase Agreement dated as of the
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date hereof among the Lender, the Borrower, the Parent, BroadStream Corporation,
Commco, LLC and Scott Reardon.
"Additional Pledge Agreement" is defined in Section 6.5.
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"Affiliate" means, with respect to the Borrower (or any other specified
---------
Person), any other Person directly or indirectly controlling, controlled by or
under direct or indirect common control with the Borrower (or such specified
Person), and shall include (a) any officer or director or general partner of the
Borrower (or such specified Person), (b) any Person of which the Borrower (or
such specified Person) or any Affiliate (as defined in clause (a) above) of the
Borrower (or such specified Person) shall, directly or indirectly, beneficially
own either (i) at least 10% of the outstanding equity securities having the
general power to vote or (ii) at least 10% of all equity interests and (c) any
Person directly or indirectly controlling the Borrower (or such specified
Person) through a management agreement, voting agreement or other contract.
"Agreement" means this Bridge Loan Agreement as from time to time amended,
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modified and in effect.
"Bankruptcy Code" means Title 11 of the United States Code.
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"Bankruptcy Default" means an Event of Default referred to in Section
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8.1.10.
"Borrower" is defined in the Preamble of this Agreement.
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"Borrowing Certificate" is defined in Section 5.2.1.
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"By-laws" means all written by-laws, rules, regulations and all other
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documents relating to the management, governance or internal regulation of any
Person other than an individual, all as from time to time in effect.
"Business Day" means a day other than a Saturday, Sunday or other day on
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which commercial banks in New York, New York are authorized or required by law
to close.
"Cash Equivalents" means:
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(a) negotiable certificates of deposit, time deposits (including
sweep accounts), demand deposits and bankers' acceptances having a maturity
of nine months or less and issued by any United States financial
institution having capital and surplus and undivided profits aggregating at
least $100,000,000 and rated at least Prime-1 by Moody's or A-1 by S&P;
(b) corporate obligations having a maturity of nine months or less
and rated at least Prime-1 by Moody's or A-1 by S&P;
(c) any direct obligation of the United States of America or any
agency or instrumentality thereof, or of any state or municipality thereof,
(i) which has a remaining maturity at the time of purchase of not more than
one year and (ii) which, in
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the case of obligations of any state or municipality, is rated at least AAA
by Moody's or AAA by S&P; and
(d) any mutual fund or other pooled investment vehicle rated at least
AAA by Moody's or AA by S&P which invests principally in obligations
described above.
"CERCLA" means the federal Comprehensive Environmental Response,
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Compensation and Liability Act of 1980.
"Charter" means the articles of organization, certificate of incorporation,
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statute, constitution, joint venture agreement, partnership agreement, trust
indenture, limited liability company agreement or other charter document of any
Person other than an individual, each as from time to time in effect.
"Closing Date" means the Initial Closing Date and each other date on which
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any extension of credit is made pursuant to Section 2.1.
"Code" means the federal Internal Revenue Code of 1986.
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"Credit Documents" means:
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(a) this Agreement, the Note, the Guarantee Agreements, the Initial
Pledge Agreements and the Additional Pledge Agreement, each as from time to
time in effect; and
(b) any other present or future agreement or instrument from time to
time entered into among the Parent, any of its Subsidiaries or any other
Obligor, on one hand, and the Lender, on the other hand, relating to,
amending or modifying this Agreement or any other Credit Document referred
to above or which is stated to be a Credit Document, each as from time to
time in effect.
"Credit Obligations" means all present and future liabilities, obligations
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and Indebtedness of the Parent, any of its Subsidiaries or any other Obligor,
and any permitted successor or assign of the foregoing, owing to the Lender
under or in connection with this Agreement or any other Credit Document,
including obligations in respect of principal, interest, amounts provided for in
Section 9 and other charges, indemnities and expenses from time to time owing
hereunder or under any other Credit Document (all whether accruing before or
after a Bankruptcy Default and regardless of whether allowed as a claim in
bankruptcy or similar proceedings).
"Credit Security" means all assets now or from time to time hereafter
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subjected to a security interest, mortgage or charge (or intended or required so
to be subjected pursuant to the Initial Pledge Agreements, the Additional Pledge
Agreement or any other Credit
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Document) to secure the payment or performance of any of the Credit Obligations,
including the assets described in section 2 of the Initial Pledge Agreements and
the Additional Pledge Agreement.
"Default" means any Event of Default and any event or condition which with
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the passage of time or giving of notice, or both, would become an Event of
Default.
"Distribution" means, with respect to the Borrower (or other specified
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Person):
(a) the declaration or payment of any dividend or distribution on or
in respect of any shares of any class of capital stock of or other equity
interests in the Borrower (or such specified Person);
(b) the purchase, redemption or other retirement of any shares of any
class of capital stock of or other equity interest in the Borrower (or such
specified Person) or any of its Subsidiaries, or of options, warrants or
other rights for the purchase of such shares, directly, indirectly through
a Subsidiary or corporate parent or otherwise;
(c) any other distribution on or in respect of any shares of any
class of capital stock of or equity or other beneficial interest in the
Borrower (or such specified Person);
(d) any payment of principal, interest or fees with respect to, or
any purchase, redemption or defeasance of, any Financing Debt of the
Borrower (or such specified Person) or any of its Subsidiaries which by its
terms or the terms of any agreement is subordinated to the payment of the
Credit Obligations; and
(e) any payment, loan or advance by the Borrower (or such specified
Person) to, or any other Investment by the Borrower (or such specified
Person) in, the holder of any shares of any class of capital stock of or
equity interest in the Borrower (or such specified Person) or any of its
Subsidiaries, or any Affiliate of such holder (including the payment of
management and transaction fees and expenses);
provided, however, that the term "Distribution" shall not include (i) dividends
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payable in perpetual common stock of or other similar equity interests in the
Borrower (or such specified Person), (ii) payments in the ordinary course of
business in respect of (A) reasonable compensation paid to employees, officers
and directors, (B) advances and reimbursements to employees for travel expenses,
drawing accounts, relocation costs and similar expenditures, or (C) rent paid
to, or accounts payable for services rendered or goods sold by, non-Affiliates
that own capital stock of or other equity interests in the Borrower (or such
specified Person) or any of its Subsidiaries, (iii) payments, loans or advances
by the Borrower to BroadStream Corporation or (iv) distributions of cash by a
wholly-owned Subsidiary to the Borrower.
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"Environmental Laws" means all applicable federal, state or local
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statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment, including the federal Occupational Health and
Safety Act.
"ERISA" means the federal Employee Retirement Income Security Act of 1974.
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"ERISA Group Person" means the Parent, any of its Subsidiaries and any
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Person which is a member of the controlled group or under common control with
the Parent or any of its Subsidiaries within the meaning of section 414 of the
Code or section 4001(a)(14) of ERISA.
"Event of Default" is defined in Section 8.1.
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"Exchange Act" means the federal Securities Exchange Act of 1934.
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"Final Maturity Date" means the earlier to occur of (a) the termination of
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the Acquisition Agreement pursuant to section 12 thereof, and (b) the date that
is 90 days following the Closing (as defined in the Acquisition Agreement).
"Financial Officer" of the Borrower (or other specified Person) means its
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chief executive officer, chief financial officer, chief operating officer,
chairman, president, treasurer, controller or any of its vice presidents whose
primary responsibility is for its financial affairs, in each case whose
incumbency and signatures have been certified to the Lender by the secretary or
other appropriate attesting officer of the Borrower (or such specified Person).
"Financing Debt" means each of the items described in clauses (a) through
--------------
(d) and (f) of the definition of the term "Indebtedness" and, without
duplication, any Guarantees of such items.
"GAAP" means generally accepted accounting principles as from time to time
----
in effect, including the statements and interpretations of the United States
Financial Accounting Standards Board.
"Guarantee" means, with respect to the Borrower (or other specified
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Person):
(a) any guarantee by the Borrower (or such specified Person) of the
payment or performance of, or any contingent obligation by the Borrower (or
such specified Person) in respect of, any Indebtedness or other obligation
of any primary obligor;
(b) any other arrangement whereby credit is extended to a primary
obligor on the basis of any promise or undertaking of the Borrower (or such
specified Person), including any binding "comfort letter" or "keep well
agreement" written by the
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Borrower (or such specified Person), to a creditor or prospective creditor
of such primary obligor, to (i) pay the Indebtedness of such primary
obligor, (ii) purchase an obligation owed by such primary obligor, (iii)
pay for the purchase or lease of assets or services regardless of the
actual delivery thereof or (iv) maintain the capital, working capital,
solvency or general financial condition of such primary obligor;
(c) any liability of the Borrower (or such specified Person), as a
general partner of a partnership in respect of Indebtedness or other
obligations of such partnership;
(d) any liability of the Borrower (or such specified Person) as a
joint venturer of a joint venture in respect of Indebtedness or other
obligations of such joint venture;
(e) any liability of the Borrower (or such specified Person) with
respect to the tax liability of others as a member of a group (other than a
group consisting solely of the Borrower and its Subsidiaries) that is
consolidated for tax purposes; and
(f) reimbursement obligations, whether contingent or matured, of the
Borrower (or such specified Person) with respect to letters of credit,
bankers acceptances, surety bonds and other financial guarantees,
in each case whether or not any of the foregoing are reflected on the balance
sheet of the Borrower (or such specified Person) or in a footnote thereto;
provided, however, that the term "Guarantee" shall not include endorsements for
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collection or deposit in the ordinary course of business. The amount of any
Guarantee and the amount of Indebtedness resulting from such Guarantee shall be
the maximum amount that the guarantor may become obligated to pay in respect of
the obligations (whether or not such obligations are outstanding at the time of
computation).
"Guarantee Agreements" is defined in Section 5.1.4.
--------------------
"Guarantor" means each of the Parent and Scott Reardon.
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"Hazardous Material" means any pollutant, toxic or hazardous material or
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waste, including any "hazardous substance" or "pollutant" or "contaminant" as
defined in section 101(14) of CERCLA or any other Environmental Law or regulated
as toxic or hazardous under RCRA or any other Environmental Law.
"Indebtedness" means all obligations, contingent or otherwise, which in
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accordance with GAAP are required to be classified upon the balance sheet of the
Borrower (or other specified Person) as liabilities, but in any event including
(without duplication):
(a) indebtedness for borrowed money;
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(b) indebtedness evidenced by notes, debentures or similar
instruments;
(c) capitalized leases;
(d) the deferred purchase price of assets, services or securities,
including related noncompetition, consulting and stock repurchase
obligations (other than ordinary trade accounts payable on customary terms
in the ordinary course of business), and any long-term contractual
obligations;
(e) mandatory redemption, repurchase or dividend rights on capital
stock (or other equity), including provisions that require the exchange of
such capital stock (or other equity) for Indebtedness from the issuer;
(f) reimbursement obligations, whether contingent or matured, with
respect to letters of credit, bankers acceptances, surety bonds, other
financial guarantees and Hedge Agreements (without duplication of other
Indebtedness supported or guaranteed thereby);
(g) unfunded pension liabilities;
(h) obligations that are immediately and directly due and payable out
of the proceeds of or production from property;
(i) liabilities secured by any Lien existing on property owned or
acquired by the Borrower (or such specified Person), whether or not the
liability secured thereby shall have been assumed; and
(j) all Guarantees in respect of Indebtedness of others.
"Indemnified Party" is defined in Section 9.2.
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"Initial Closing Date" means the date on which all of the conditions set
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forth in Section 5 have been satisfied or waived and the Lender has made the
initial extension of credit pursuant to Section 2.1.
"Initial Pledge Agreements" is defined in Section 5.1.5.
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"Investment" means, with respect to the Borrower (or other specified
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Person):
(a) any share of capital stock, partnership or other equity interest,
evidence of Indebtedness or other security issued by any other Person;
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(b) any loan, advance or extension of credit to, or contribution to
the capital of, any other Person;
(c) any Guarantee of the obligations of any other Person;
(d) any acquisition of all, or any division or similar operating unit
of, the business of any other Person or the assets comprising such
business, division or unit; and
(e) any other similar investment.
The investments described in the foregoing clauses (a) through (e) shall be
included in the term "Investment" whether they are made or acquired by purchase,
exchange, issuance of stock or other securities, merger, reorganization or any
other method; provided, however, that the term "Investment" shall not include
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(i) trade and customer accounts receivable for property leased, goods furnished
or services rendered in the ordinary course of business and payable within one
year in accordance with customary trade terms, (ii) deposits, advances or
prepayments to suppliers for property leased or licensed, goods furnished and
services rendered in the ordinary course of business, (iii) advances to
employees for relocation and travel expenses, drawing accounts and similar
expenditures, (iv) stock or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due to the Borrower (or
such specified Person) or as security for any such Indebtedness or claim or (v)
demand deposits in banks or similar financial institutions.
In determining the amount of outstanding Investments:
(A) the amount of any Investment shall be the cost thereof minus any
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returns of capital in cash on such Investment (determined in accordance
with GAAP without regard to amounts realized as income on such Investment);
(B) the amount of any Investment in respect of a purchase described
in clause (d) above shall include the amount of any Financing Debt assumed
in connection with such purchase or secured by any asset acquired in such
purchase (whether or not any Financing Debt is assumed) or for which any
Person that becomes a Subsidiary is liable on the date on which the
securities of such Person are acquired; and
(C) no Investment shall be increased as the result of an increase in
the undistributed retained earnings of the Person in which the Investment
was made or decreased as a result of an equity interest in the losses of
such Person.
"Legal Requirement" means any present or future requirement imposed upon
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the Lender or the Borrower and its Subsidiaries by any law, statute, rule,
regulation, directive, order, decree or guideline (or any interpretation thereof
by courts or of administrative bodies)
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of the United States of America or any state or political subdivision of any of
the foregoing, or by any board, governmental or administrative agency of the
United States of America or where the Borrower or any of its Subsidiaries owns
property or conducts its business, or any political subdivision of any of the
foregoing.
"Lender" means Advanced Radio Telecom Corp., a Delaware corporation.
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"Lien" means, with respect to the Borrower (or any other specified Person):
----
(a) any lien, encumbrance, mortgage, pledge, charge or security
interest of any kind upon any property or assets of the Borrower (or such
specified Person), whether now owned or hereafter acquired, or upon the
income or profits therefrom (excluding in any event a financing statement
filed by a lessor under an operating lease not intended to be a secured
financing);
(b) the acquisition of, or the agreement to acquire, any property or
asset upon conditional sale or subject to any other title retention
agreement, device or arrangement (including a capitalized lease);
(c) the sale, assignment, pledge or transfer for security of any
accounts, general intangibles or chattel paper of the Borrower (or such
specified Person), with or without recourse;
(d) in the case of securities, any purchase option, call or similar
purchase right of a third party; and
(e) the transfer of any tangible property or assets for the purpose
of subjecting such items to the payment of previously outstanding
Indebtedness in priority to payment of the general creditors of the
Borrower (or such specified Person).
"Loan" is defined in the Recitals of this Agreement.
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"Material Adverse Change" means, since any specified date or from the
-----------------------
circumstances existing immediately prior to the happening of any specified
event, a material adverse change in (a) the business, assets, financial
condition, income or prospects of the Parent and its Subsidiaries (on a
consolidated basis), whether as a result of (i) general economic conditions
affecting the telecommunications industry, (ii) difficulties in obtaining
supplies and raw materials, (iii) fire, flood or other natural calamities, (iv)
environmental pollution, (v) regulatory changes, judicial decisions, war or
other governmental action or (vi) any other event or development, whether or not
related to those enumerated above or (b) the ability of any Obligor to perform
material obligations under the Credit Documents or (c) the rights and remedies
of the Lender under the Credit Documents.
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"Material Agreements" is defined in Section 7.2.2.
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"Material Financing Debt" means any Financing Debt (other than the Credit
-----------------------
Obligations) outstanding in an aggregate amount of principal (whether or not
due) and accrued interest exceeding $50,000.
"Moody's" means Moody's Investors Service, Inc.
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"Multiemployer Plan" means any Plan that is a "multiemployer plan" as
------------------
defined in section 4001(a)(3) of ERISA.
"Note" is defined Section 2.1.4.
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"Obligor" means the Borrower, the Parent, each other Guarantor and each
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other Person guaranteeing or providing collateral for the Credit Obligations.
"Parent" is defined in the Recitals of this Agreement.
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"PBGC" means the Pension Benefit Guaranty Corporation or any successor
----
entity.
"Person" means any present or future natural person or any corporation,
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association, partnership, joint venture, limited liability, joint stock or other
company, business trust, trust, organization, business or government or any
governmental agency or political subdivision thereof.
"Plan" means, at any date, any pension benefit plan subject to Title IV of
----
ERISA maintained, or to which contributions have been made or are required to be
made, by any ERISA Group Person within six years prior to such date.
"RCRA" means the federal Resource Conservation and Recovery Act, 42 U.S.C.
----
section 690, et seq.
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"S&P" means Standard & Poor's, a division of The McGraw Hill Companies,
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Inc.
"Securities Act" means the federal Securities Act of 1933.
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"Subsidiary" means any Person of which the Parent (or other specified
----------
Person) shall at the time, directly or indirectly through one or more of its
Subsidiaries, (a) own at least 50% of the outstanding capital stock (or other
shares of beneficial interest) entitled to vote generally, (b) hold at least 50%
of the partnership, joint venture or similar interests or (c) be a general
partner or joint venturer.
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2. The Loan.
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2.1. Loan. Subject to all the terms and conditions of this Agreement and
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so long as no Default exists, from time to time on and after the Initial Closing
Date and prior to the Final Maturity Date the Lender will make loans to the
Borrower in such amounts as may be requested by the Borrower in accordance with
Section 2.2, subject to the requirements set forth in Section 2.4. The sum of
the aggregate principal amount of loans made under this Section 2.1 shall in no
event exceed $30,000,000.
2.2. Borrowing Requests. The Borrower may from time to time request a loan
------------------
under Section 2.1 by providing to the Lender a notice. Such notice must be
received by the Lender not later than noon (Seattle, Washington time) on the
first Business Day prior to the requested Closing Date for such loan. The
notice must specify (a) the amount of the requested loan, (b) the requested
Closing Date therefor, which shall be a Business Day, and (c) the intended use
of proceeds therefor. In connection with each such loan, the Borrower shall
furnish to the Lender a Borrowing Certificate.
2.3. Note. The Loan shall be evidenced by a note of the Borrower in
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substantially the form of Exhibit 2.3 (the "Note"), payable to the Lender.
2.4. Application of Proceeds.
-----------------------
2.4.1. Permitted Applications. The Borrowing Certificate shall specify
----------------------
that the intended use of proceeds is solely for payment of one or more of: (a)
payables incurred on or after the date of this Agreement for the construction of
networks to satisfy the "substantial service" requirement set forth in Section
101.17(a) of the rules of the Federal Communications Commission for the renewal
of Future Licenses (as defined in the Acquisition Agreement), provided that such
construction will be completed first for licenses identified on Schedule 1(b) to
the Acquisition Agreement as "First Build Licenses" before licenses identified
as "Other Markets;" (b) general and administrative expenses of the Borrower
incurred on or after the date of this Agreement in connection with the
construction activities described in clause (a) above, the consummation of the
Acquisition (excluding legal, accounting and other professional fees related
thereto), obligations under existing leases, the Borrower's Las Vegas operations
or commercial activities related to license perfection; and (c) subject to the
prior approval of the Lender, which approval shall not be unreasonably withheld,
payables outstanding as of the date of this Agreement in an amount not to exceed
$3,000,000; provided, however, that the amounts to be borrowed in any calendar
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month (including the partial month of April 2000) under clauses (a) or (b) above
shall not exceed $3,000,000 through October 2000, $1,500,000 through January
2001 and $0 thereafter; and provided, further, that to the extent not used in
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any month, unused amounts shall be carried forward into subsequent months.
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2.4.2. Specifically Prohibited Applications. The Borrower will not,
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directly or indirectly, apply any part of the proceeds of the Loan for any
purpose that has not been specified by the Borrower in a Borrowing
Certificate. Except as provided in clause (c) of Section 2.4.1, the
proceeds of the Loan shall not be available to repay liabilities of the
Borrower existing on the date hereof or for the payment of obligations of
the Borrower to employees of the Borrower or any of its Affiliates under
any contract, whether or not presently in effect, including, without
limitation, any bonus, severance or other extraordinary payment, except for
the payment of salaries, the reimbursement of travel and similar out-of-
pocket expenses and payments under benefit plans available to all
employees, each in the ordinary course of business.
3. Interest. The Loan shall accrue and bear interest at a rate per annum
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equal to 10%. For purposes of this Agreement, interest shall be computed on the
basis of a 360-day year for actual days elapsed.
4. Payment.
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4.1. Payment at Maturity. On the Final Maturity Date or any accelerated
-------------------
maturity of the Loan, the Borrower will pay to the Lender an amount equal to the
Loan then due, together with all accrued and unpaid interest with respect
thereto and all other Credit Obligations then outstanding.
4.2. Voluntary Prepayments. The Borrower may from time to time prepay all
---------------------
or any portion of the Loan, without premium or penalty of any type. The Borrower
shall give the Lender at least one Business Day prior notice of its intention to
prepay the Loan, specifying the date of payment and the total amount of the Loan
to be paid on such date.
4.3. Mandatory Prepayments. Following the Closing of the Acquisition (as
---------------------
defined in the Acquisition Agreement), upon the receipt of proceeds by the
Borrower from any sale, pledge or other disposition of the shares of common
stock of the Lender issued to the Borrower under the Acquisition Agreement, the
Borrower shall within one Business Day pay to the Lender as a prepayment of the
Loan the lesser of (a) the amount of such proceeds and (b) the outstanding
amount of the Loan; provided, however, that any such proceeds received by the
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Borrower may be applied in the following order: first, to the payment of trade
payables outstanding as of the date hereof in an amount not to exceed $14
million, second, to the payment of amounts for which the proceeds of the Loan
would have been available pursuant to Section 2.4.1(a) or (b) (including the
limitations in the first proviso of Section 2.4.1) if the Closing (as defined in
the Acquisition Agreement) had not occurred, and, third, to the prepayment of
the Loan.
4.4. Reborrowing. No portion of the Loan prepaid pursuant to Section 4.2
-----------
or Section 4.3 may be reborrowed.
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5. Conditions to Extending Credit.
------------------------------
5.1. Conditions on Initial Closing Date. The obligation of the Lender to
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make the initial extension of credit pursuant to Section 2.1 shall be subject to
the satisfaction, on or before the Initial Closing Date, of the conditions set
forth in this Section 5.1 as well as the further conditions in Section 5.2. If
the conditions set forth in this Section 5.1 are not met on or prior to the
Initial Closing Date, the Lender shall have no obligation to make any extensions
of credit hereunder.
5.1.1. Note. The Borrower shall have duly executed and delivered to
----
the Lender the Note.
5.1.2. Legal Opinions. On the Initial Closing Date, the Lender shall
--------------
have received from Dorsey & Whitney LLP and Davenport, Evans, Hurwitz &
Smith, L.L.P., special counsels for the Parent and its Subsidiaries,
opinions with respect to the transactions contemplated by the Credit
Documents, which opinions shall be in form and substance reasonably
satisfactory to the Lender. The Parent authorizes and directs its special
counsels to furnish the foregoing opinions.
5.1.3. Acquisition Agreement. The Lender, the Parent, the Borrower,
---------------------
BroadStream Corporation, Commco, LLC and Scott Reardon shall have entered
into the Acquisition Agreement.
5.1.4. Guarantee Agreement. Each of the Guarantors shall have duly
-------------------
authorized, executed and delivered to the Lender a guarantee agreement in
substantially the form of Exhibit 5.1.4 (the "Guarantee Agreements").
5.1.5. Initial Pledge Agreements. Each of the Parent and the
-------------------------
Borrower shall have duly authorized, executed and delivered to the Lender
(a) a pledge agreement in substantially the form of Exhibit 5.1.5 (the
"Initial Pledge Agreements") and (b) each of the documents required to be
delivered thereunder.
5.1.6. Proper Proceedings. This Agreement, each other Credit
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Document and the transactions contemplated hereby and thereby shall have
been authorized by all necessary corporate or other proceedings. All
necessary consents, approvals and authorizations of any governmental or
administrative agency or any other Person of any of the transactions
contemplated hereby or by any other Credit Document shall have been
obtained and shall be in full force and effect.
5.1.7. General. All legal and corporate proceedings in connection
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with the transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Lender and the Lender shall have
received copies of all documents, including certified copies of the Charter
and By-Laws of the Borrower and
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the other Obligors, records of corporate proceedings, certificates as to
signatures and incumbency of officers and opinions of counsel, which the
Lender may have reasonably requested in connection therewith, such
documents where appropriate to be certified by proper corporate or
governmental authorities.
5.2. Conditions to Each Extension of Credit. The obligations of the
--------------------------------------
Lender to make any extension of credit pursuant to Section 2 shall be subject to
the satisfaction, on or before the Closing Date for such extension of credit, of
the following conditions:
5.2.1. Borrowing Certificate. The representations and warranties
---------------------
contained in Section 7 shall be true and correct on and as of such Closing
Date with the same force and effect as though made on and as of such date
(except as to any representation or warranty which refers to a specific
earlier date); no Default shall exist on such Closing Date prior to or
immediately after giving effect to the requested extension of credit; and
the Borrower shall have furnished to the Lender in connection with the
requested extension of credit a certificate to these effects, in
substantially the form of Exhibit 5.2.1, signed by a Financial Officer (the
"Borrowing Certificate").
5.2.2. Lender Approval. The Lender: (a) with respect to clauses
---------------
(a) and (b) of Section 2.4.1, shall not reasonably have disapproved the use
of proceeds specified in the Borrowing Certificate as being inconsistent
with the permitted applications provided in Section 2.4.1; and (b) with
respect to clause (c) of Section 2.4.1, shall have approved the proposed
use of proceeds specified in the Borrowing Certificate.
5.2.3. Acquisition. The Closing (as defined in the Acquisition
-----------
Agreement) shall not have occurred.
6. General Covenants. The Borrower covenants that, until all of the Credit
-----------------
Obligations shall have been paid in full and until the Lender's obligation to
extend credit under this Agreement and any other Credit Document shall have been
irrevocably terminated, the Borrower and its Subsidiaries will comply with the
following provisions:
6.1. Taxes and Other Charges; Accounts Payable.
-----------------------------------------
6.1.1. Taxes and Other Charges. Each of the Borrower and its
-----------------------
Subsidiaries shall duly pay and discharge, or cause to be paid and
discharged, before the same becomes in arrears, all taxes, assessments and
other governmental charges imposed upon such Person and its properties,
sales or activities, or upon the income or profits therefrom, as well as
all claims for labor, materials or supplies which if unpaid might by law
become a Lien upon any of its property; provided, however, that any such
-------- -------
tax, assessment, charge or claim need not be paid if the validity or amount
thereof shall at the time be contested in good faith by appropriate
proceedings and if such Person shall, in accordance with GAAP, have set
aside on its books adequate reserves with respect
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<PAGE>
thereto; and provided, further, that each of the Borrower and its
-------- -------
Subsidiaries shall pay or bond, or cause to be paid or bonded, all such
taxes, assessments, charges or other governmental claims immediately upon
the commencement of proceedings to foreclose any Lien which may have
attached as security therefor (except to the extent such proceedings have
been dismissed or stayed).
6.1.2. Accounts Payable. Each of the Company and its Subsidiaries
----------------
shall promptly pay when due, or in conformity with customary trade terms,
all payables incurred on or after the date hereof incident to the
operations of such Person not referred to in Section 6.1.1; provided,
--------
however, that any such payables need not be paid if the validity or amount
-------
thereof shall at the time be contested in good faith and if such Person
shall, in accordance with GAAP, have set aside on its books adequate
reserves with respect thereto.
6.2. Conduct of Business, etc.
------------------------
6.2.1. Types of Business. The Borrower and its Subsidiaries shall
-----------------
engage only in the business of (a) constructing the Licenses (as defined in
the Acquisition Agreement), (b) other activities directly related thereto
and (c) other activities described in Section 2.4.1.
6.2.2. Maintenance of Properties. Each of the Borrower and its
-------------------------
Subsidiaries:
(a) shall keep its properties in such repair, working order and
condition, and shall from time to time make such repairs, replacements,
additions and improvements thereto, as are necessary for the efficient
operation of its businesses and shall comply at all times in all material
respects with all material franchises, licenses and leases to which it is
party so as to prevent any loss or forfeiture thereof or thereunder, except
where (i) compliance is at the time being contested in good faith by
appropriate proceedings and (ii) failure to comply with the provisions
being contested has not resulted, and does not create a material risk of
resulting, in the aggregate in any Material Adverse Change; and
(b) shall do all things necessary to preserve, renew and keep in full
force and effect and in good standing its legal existence and authority
necessary to continue its business.
6.2.3. Statutory Compliance. Each of the Borrower and its Subsidiaries
--------------------
shall comply in all material respects with all valid Legal Requirements
applicable to it, except where (a) compliance therewith shall at the time
be contested in good faith by appropriate proceedings and (b) failure so to
comply with the provisions being contested has not resulted, and does not
create a material risk of resulting, in the aggregate in any Material
Adverse Change.
-15-
<PAGE>
6.2.4. Compliance with Material Agreements. Each of the Borrower
-----------------------------------
and its Subsidiaries shall comply in all material respects with the
Material Agreements (to the extent not in violation of the other provisions
of this Agreement or any other Credit Document), except that this paragraph
shall not require the payment of payment obligations under the Material
Agreements that were incurred prior to the date of this Agreement, whether
or not such payment obligations actually arise after the date of this
Agreement; provided, however, that the Borrower shall not incur any
-------- -------
additional obligations under the Material Agreements after the date hereof
except for payment obligations for which the proceeds of the Loan are
available pursuant to Section 2.4.1(a) or (b) (including the limitations in
the first proviso of Section 2.4.1). Without the prior written consent of
the Lender, no Material Agreement shall be amended, modified, waived or
terminated in any manner that would have in any material respect an adverse
effect on the interests of the Lender.
6.3. Liability Insurance. Each of the Borrower and its Subsidiaries shall
-------------------
maintain with financially sound and reputable insurers insurance against
liability for hazards, risks and liability to persons and property, including
product liability insurance, to the extent, in amounts and with deductibles at
least as favorable as those generally maintained by businesses of similar size
engaged in similar activities; provided, however, that it may effect workers'
-------- -------
compensation insurance or similar coverage with respect to operations in any
particular state or other jurisdiction through an insurance fund operated by
such state or jurisdiction or by meeting the self-insurance requirements of such
state or jurisdiction.
6.4. Reports.
-------
6.4.1. Notice of Litigation, Defaults, etc. The Borrower shall
-----------------------------------
promptly furnish to the Lender notice of any litigation or any
administrative or arbitration proceeding which results, or creates a risk
of resulting, in a Material Adverse Change. Promptly upon acquiring
knowledge thereof, the Borrower shall notify the Lender of the existence of
any Default or Material Adverse Change, specifying the nature thereof and
what action the Company or any of its Subsidiaries has taken, is taking or
proposes to take with respect thereto.
6.4.2. ERISA Reports. The Borrower shall furnish to the Lender as
-------------
soon as available the following items with respect to any Plan:
(a) any request for a waiver of the funding standards or an extension
of the amortization period,
(b) notice of any reportable event (as defined in section 4043 of
ERISA), unless the notice requirement with respect thereto has been waived
by regulation,
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<PAGE>
(c) any notice received by any ERISA Group Person that the PBGC has
instituted or intends to institute proceedings to terminate any Plan, or
that any Multiemployer Plan is insolvent or in reorganization,
(d) notice of the possibility of the termination of any Plan by its
administrator pursuant to section 4041 of ERISA, and
(e) notice of the intention of any ERISA Group Person to withdraw, in
whole or in part, from any Multiemployer Plan.
6.4.3. Other Information; Audit. From time to time at reasonable
------------------------
intervals upon request of the Lender, each of the Borrower and its
Subsidiaries shall furnish to the Lender such other information regarding
the business, assets, financial condition, income or prospects of the
Borrower and its Subsidiaries as such officer may reasonably request,
including copies of all tax returns, licenses, agreements, leases and
instruments to which any of the Borrower or its Subsidiaries is party. The
Lender's authorized officers and representatives shall have the right
during normal business hours upon reasonable notice and at reasonable
intervals to examine the books and records of the Borrower and its
Subsidiaries, to make copies and notes therefrom for the purpose of
ascertaining compliance with or obtaining enforcement of this Agreement or
any other Credit Document.
6.5. Additional Pledge of Securities. Upon the Closing (as defined in the
-------------------------------
Acquisition Agreement), one or more of the Obligors, or the permitted successors
and assigns of one or more of the Obligors, shall enter into a pledge agreement
in substantially the form of Exhibit 6.5 (the "Additional Pledge Agreement"),
pursuant to which each such Obligor, or its permitted successors and assigns,
will pledge to the Lender, as additional security for the Credit Obligations,
shares of common stock of the Lender issued to each such Obligor, or its
predecessor, as consideration for the Acquisition, which shares shall initially
have a fair market value of not less than three times the outstanding principal
amount of the Loan as of the Closing (as defined in the Acquisition Agreement),
and shall deliver each of the documents required to be delivered thereunder.
6.6. Indebtedness. Neither the Borrower nor any of its Subsidiaries shall
------------
create, incur, assume or otherwise become or remain liable with respect to any
Indebtedness, including Guarantees of Indebtedness of others and reimbursement
obligations, whether contingent or matured, under letters of credit or other
financial guarantees by third parties, (or become contractually committed to do
so), except the following:
6.6.1. Indebtedness in respect of the Credit Obligations.
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<PAGE>
6.6.2. To the extent that payment thereof shall not at the time be
required by Section 6.1, Indebtedness in respect of taxes, assessments,
governmental charges and claims for labor, materials and supplies.
6.6.3. Guarantees by the Borrower of Indebtedness and other
obligations incurred by its Subsidiaries and permitted by the other
provisions of this Section 6.6 and the Guarantee by BroadStream Corporation
of the promissory note payable by the Borrower to the ELAR Cellular
referenced in Exhibit 7.2.2.
6.6.4. Indebtedness in respect of deferred taxes arising in the
ordinary course of business.
6.6.5. Indebtedness described in Exhibit 7.2.1 or 7.4, including
accounts payable outstanding on the date hereof that may constitute
Indebtedness; provided, however, that this Section 6.6.5 shall not include
-------- -------
any additional obligations under such Indebtedness incurred after the date
hereof.
6.6.6. Indebtedness secured by Liens permitted by Section 6.7.5.
6.6.7. Indebtedness in respect of ordinary trade accounts payable on
customary terms (with payment terms not to exceed 60 days) in the ordinary
course of business, the payment of which the proceeds of the Loan would
have been available pursuant to Section 2.4.1(a) or (b) (including the
limitations in the first proviso of Section 2.4.1).
6.7. Liens. Neither the Borrower nor any of its Subsidiaries shall create,
-----
incur or enter into, or suffer to be created or incurred or to exist, any Lien
(or become contractually committed to do so), except the following:
6.7.1. Liens on the Credit Security that secure the Credit
Obligations.
6.7.2. Liens to secure taxes, assessments and other governmental
charges, to the extent that payment thereof shall not at the time be required by
Section 6.1.
6.7.3. Restrictions under federal and state securities laws on the
transfer of securities.
6.7.4. Liens outstanding on the date hereof and described in Exhibit
7.3.
6.7.5. Liens on shares of common stock of the Lender held by the
Borrower that have not been pledged to the Lender pursuant to the Additional
Pledge Agreement; provided, however, that, except for shares of common stock of
-------- -------
the Lender initially pledged to the Lender and returned to the pledgor in
accordance with Section 3 of the
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<PAGE>
Additional Pledge Agreement, not more than 25% of the aggregate number of
the shares that are issued at the Closing (as defined in the Acquisition
Agreement) may be subject to such Liens.
6.8. Investments and Acquisitions. Neither the Borrower nor any of its
----------------------------
Subsidiaries shall have outstanding, acquire or hold any Investment (including
any Investment consisting of the acquisition of any business) (or become
contractually committed to do so), except the following:
6.8.1. Investments in Cash Equivalents permitted by the other
provisions of this Agreement.
6.8.2. Investments in wholly owned Subsidiaries.
6.8.3. Guarantees permitted by Section 6.6.
6.8.4. The Acquisition as contemplated by the Acquisition Agreement.
6.8.5. The acquisition of the Plaincom Licenses (as defined in the
Acquisition Agreement).
6.9. Distributions. Neither the Borrower nor any of its Subsidiaries
-------------
shall make any Distribution (or become contractually committed to do so), except
for the Permitted Liquidation (as defined in the Acquisition Agreement) and
pursuant to any other plan of liquidation that has been approved in advance by
the Lender in its sole discretion.
6.10. Asset Dispositions and Mergers. Neither the Borrower nor any of its
------------------------------
Subsidiaries shall merge or enter into a consolidation or sell, lease, exchange,
sell and lease back, sublease or otherwise dispose of any of its assets (or
become contractually committed to do so), except for the following:
6.10.1. To the Lender pursuant to the Acquisition Agreement.
6.10.2. Pursuant to the Permitted Liquidation (as defined in the
Acquisition Agreement);
6.10.3. The disposition of the assets described in Exhibit 6.10.3;
provided, however, that the fair market value of the assets that are
-------- -------
disposed of shall not exceed $5,000,000 in the aggregate;
6.10.4. The disposition of assets other than the assets listed on
Exhibit 6.10.3 that are no longer useful in the business of the Company or
such Subsidiary or in connection with the transactions contemplated by the
Acquisition Agreement; provided,
--------
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<PAGE>
however that the aggregate fair market value (book value, if greater) of
-------
all assets disposed of under this Section 6.10.4 shall not be material; and
6.10.5. Following the Closing (as defined in the Acquisition
Agreement), sales of common stock of the Lender held by the Borrower.
6.11. Issuance of Stock by Subsidiaries; Subsidiary Distributions.
------------------------------------------------------------
6.11.1. Issuance of Stock by Subsidiaries. No Subsidiary shall
---------------------------------
issue or sell any shares of its capital stock or other evidence of
beneficial ownership to any Person.
6.11.2. No Restrictions on Subsidiary Distributions. Except for this
-------------------------------------------
Agreement and the Credit Documents, neither the Borrower nor any Subsidiary
shall enter into or be bound by any agreement (including covenants
requiring the maintenance of specified amounts of net worth or working
capital) restricting the right of any Subsidiary to make Distributions or
extensions of credit to the Borrower (directly or indirectly through
another Subsidiary).
6.12. Voluntary Prepayments of Other Indebtedness. Neither the Borrower
-------------------------------------------
nor any of its Subsidiaries shall make any voluntary prepayment of principal of
or interest on any Financing Debt (other than the Credit Obligations) or make
any voluntary redemptions or repurchases of Financing Debt (other than the
Credit Obligations).
6.13. Negative Pledge Clauses. Neither the Borrower nor any of its
-----------------------
Subsidiaries shall enter into any agreement, instrument, deed or lease which
prohibits or limits the ability of the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of their respective
properties, assets or revenues, whether now owned or hereafter acquired, or
which requires the grant of any collateral for such obligation if collateral is
granted for another obligation, except the following:
6.13.1. This Agreement and the other Credit Documents.
6.13.2. The Acquisition Agreement.
6.13.3. Covenants in documents creating Liens permitted by Section
6.7 prohibiting further Liens on the assets encumbered thereby.
6.14. ERISA, etc. Each of the Borrower and its Subsidiaries shall comply,
and shall cause all ERISA Group Persons to comply, in all material respects,
with the provisions of ERISA and the Code applicable to each Plan. Each of the
Borrower and its Subsidiaries shall meet, and shall cause all ERISA Group
Persons to meet, all minimum funding requirements applicable to them with
respect to any Plan pursuant to section 302 of ERISA or section 412 of the Code,
without giving effect to any waivers of such requirements or extensions of the
-20-
<PAGE>
related amortization periods which may be granted. At no time shall the
accumulated benefit obligations under any Plan that is not a Multiemployer Plan
exceed the fair market value of the assets of such Plan allocable to such
benefits by more than $100,000. The Borrower and its Subsidiaries shall not
withdraw, and shall cause all other ERISA Group Persons not to withdraw, in
whole or in part, from any Multiemployer Plan so as to give rise to withdrawal
liability exceeding $100,000 in the aggregate. At no time shall the actuarial
present value of unfunded liabilities for post-employment health care benefits
(other than COBRA continuation coverage benefits), whether or not provided under
a Plan, calculated in a manner consistent with Statement No. 106 of the
Financial Accounting Standards Board, exceed $100,000.
6.15. Transactions with Affiliates. Neither the Borrower nor any of its
----------------------------
Subsidiaries shall effect any transaction with any of their respective
Affiliates (except for the Borrower and its Subsidiaries) on a basis less
favorable to the Borrower and its Subsidiaries than would be the case if such
transaction had been effected with a non-Affiliate.
6.16. Environmental Laws.
------------------
6.16.1. Compliance with Law and Permits. Each of the Borrower and its
-------------------------------
Subsidiaries shall use and operate all of its facilities and properties in
material compliance with all Environmental Laws, keep in effect all
necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws.
6.16.2. Notice of Claims, etc. Each of the Borrower and its
---------------------
Subsidiaries shall immediately notify the Lender, and provide copies upon
receipt, of all written claims, complaints, notices or inquiries from
governmental authorities relating to the condition of its facilities and
properties or compliance with Environmental Laws, and shall promptly cure
and have dismissed with prejudice to the reasonable satisfaction of the
Lender any actions and proceedings relating to compliance with
Environmental Laws.
7. Representations and Warranties. In order to induce the Lender to extend
------------------------------
credit to the Borrower hereunder, the Borrower represents and warrants as
follows:
7.1. Organization and Business.
-------------------------
7.1.1. The Parent. The Parent is a duly organized and validly
----------
existing limited liability company, in good standing under the laws of
Delaware, with all power and authority, corporate or otherwise, necessary
to (a) enter into and perform each Credit Document to which it is party,
(b) guarantee the Credit Obligations, (c) grant the Lender the security
interests in the Credit Security owned by it to secure the Credit
Obligations and (d) own its properties and carry on the business now
conducted or
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<PAGE>
proposed to be conducted by it. Certified copies of the Charter and By-laws of
the Parent have been previously delivered to the Lender and are correct and
complete.
7.1.2. Subsidiaries. Each Subsidiary of the Parent is duly organized,
------------
validly existing and in good standing under the laws of the jurisdiction in
which it is organized, with all power and authority, corporate or otherwise,
necessary to (a) enter into and perform this Agreement and each other Credit
Document to which it is party, (b) guarantee (in the case of the Borrower,
incur) the Credit Obligations, (c) grant the Lender the security interest in the
Credit Security owned by such Subsidiary to secure the Credit Obligations and
(d) own its properties and carry on the business now conducted or proposed to be
conducted by it. Certified copies of the Charter and By-laws of each Subsidiary
of the Parent have been previously delivered to the Lender and are correct and
complete.
7.1.3. Qualification. Each of the Parent and its Subsidiaries is duly and
-------------
legally qualified to do business as a foreign corporation or other entity and is
in good standing in each state or jurisdiction in which such qualification is
required and is duly authorized, qualified and licensed under all laws,
regulations, ordinances or orders of public authorities, or otherwise, to carry
on its business in the places and in the manner in which it is conducted, except
for failures to be so qualified, authorized or licensed which would not in the
aggregate result, or create a material risk of resulting, in any Material
Adverse Change.
7.1.4. Capitalization. No options, warrants, conversion rights, preemptive
--------------
rights or other statutory or contractual rights to purchase shares of capital
stock or other securities of the Borrower or any Subsidiary now exist, nor has
the Parent or any Subsidiary authorized any such right, nor is any Subsidiary
obligated in any other manner to issue shares of its capital stock or other
securities, except, in each case with respect to the Borrower, as set forth on
Exhibit 7.1.
7.2. Financial Statements and Other Information; Material Agreements.
---------------------------------------------------------------
7.2.1. Financial Statements and Other Information. The Borrower has
------------------------------------------
previously furnished to the Lender copies of the audited consolidated balance
sheet of the Borrower and its Subsidiaries as at December 31, 1999 and the
audited consolidated statements of operations and the audited consolidated
statements of changes in stockholders' deficit and of cash flows of the Borrower
and its Subsidiaries for the fiscal year of the Borrower then ended. Such
audited consolidated financial statements (including the notes thereto) were
prepared in accordance with GAAP and fairly present in all material respects the
financial position of the Borrower and its Subsidiaries on a consolidated basis
at the respective dates thereof and the results of their operations for the
periods covered thereby. Except as set forth on Exhibit 7.2.1, 7.3 or 7.4 and
except as may arise in connection with the activities described in Section
-22-
<PAGE>
2.4.1(a) or (b), neither the Borrower nor any of its Subsidiaries has any
known contingent liability material to the Borrower and its Subsidiaries on
a consolidated basis which is not reflected in the balance sheet referred
to above or in the notes thereto.
7.2.2. Material Agreements. The Borrower has previously furnished
-------------------
to the Lender correct and complete copies, including all exhibits,
schedules and amendments thereto, of the agreements and instruments, each
as in effect on the date hereof, listed in Exhibit 7.2.2, which constitute
all agreements and instruments material to the Borrower and its
Subsidiaries on a consolidated basis (the "Material Agreements").
7.3. Agreements Relating to Financing Debt, Investments, etc. Exhibit 7.3
-------------------------------------------------------
sets forth as of the date hereof:
7.3.1. The amounts (as of the dates indicated in Exhibit 7.3, as so
supplemented) of all Financing Debt of the Borrower and its Subsidiaries
and all agreements which relate to such Financing Debt.
7.3.2. All Liens and Guarantees with respect to such Financing
Debt.
7.3.3. All agreements which directly or indirectly require the
Parent or any Subsidiary to make any Investment.
7.3.4. All trademarks, tradenames, service marks, service names and
patents owned by the Parent and its Subsidiaries that are registered with
the federal Patent and Trademark Office (or with respect to which
applications for such registration have been filed).
7.3.5. All copyrights owned by the Parent and its Subsidiaries that
are registered with the federal Copyright Office.
7.3.6. All internet domain names owned by the Parent and its
Subsidiaries and the related registry information.
The Borrower has furnished the Lender correct and complete copies of any
agreements described above in this Section 7.3 requested by the Lender.
7.4. Changes in Condition. Since December 31, 1999, neither the Borrower
--------------------
nor any of its Subsidiaries has incurred any Indebtedness except as shown on
Exhibit 7.4 or as permitted to be incurred hereunder.
7.5. Title to Assets. The Parent and its Subsidiaries have good and
---------------
marketable title to their assets, subject to no Liens except for Liens permitted
by Section 6.7.
-23-
<PAGE>
7.6. Operations in Conformity With Law, etc. The operations of the Parent
--------------------------------------
and its Subsidiaries as now conducted or proposed to be conducted are not in
violation of, nor is the Parent or its Subsidiaries in default under, any Legal
Requirement presently in effect, except for such violations and defaults as do
not and will not, in the aggregate, result, or create a material risk of
resulting, in any Material Adverse Change. The Parent has received no notice of
any such violation or default and has no knowledge of any basis on which the
operations of the Parent or its Subsidiaries, as now conducted and as currently
proposed to be conducted after the date hereof, would be held so as to violate
or to give rise to any such violation or default.
7.7. Litigation. Except as would not, individually or in the aggregate,
----------
result in a Material Adverse Change, no litigation, at law or in equity, or any
proceeding before any court, board or other governmental or administrative
agency or any arbitrator is pending or, to the knowledge of the Borrower or any
other Obligor, threatened, which involves the Parent, the Borrower or any
Guarantor or their assets, or which seeks to enjoin the consummation, or which
questions the validity, of any of the transactions contemplated by this
Agreement or any other Credit Document. Except as would not, individually or in
the aggregate, result in a Material Adverse Change, no judgment, decree or order
of any court, board or other governmental or administrative agency or any
arbitrator has been issued against or binds the Parent or any of its
Subsidiaries.
7.8. Authorization and Enforceability. The Borrower has taken all
--------------------------------
corporate action required to execute, deliver and perform this Agreement and
each other Credit Document to which it is a party, and each of the Parent and
each other Obligor has taken all corporate action required to execute, deliver
and perform each Credit Document to which it is party. No consent of
stockholders of the Parent or any of its Subsidiaries is necessary in order to
authorize the execution, delivery or performance of this Agreement or any other
Credit Document to which the Parent or any of its Subsidiaries is party. Each of
this Agreement and each other Credit Document constitutes the legal, valid and
binding obligation of each Obligor party thereto and is enforceable against such
Obligor in accordance with its terms.
7.9. No Legal Obstacle to Agreements. Neither the execution and delivery
-------------------------------
of this Agreement or any other Credit Document, nor the making of any borrowings
hereunder, nor the guaranteeing of the Credit Obligations, nor the securing of
the Credit Obligations with the Credit Security, nor the consummation of any
transaction referred to in or contemplated by this Agreement or any other Credit
Document, nor the fulfillment of the terms hereof or thereof or of any other
agreement, instrument, deed or lease contemplated by this Agreement or any other
Credit Document, has constituted or resulted in or will constitute or result in:
(a) any breach or termination of the provisions of any agreement,
instrument, deed or lease to which the Parent, any of its Subsidiaries or
any other Obligor is a party or by which it is bound, or of the Charter or
By-laws of the Parent, any of its Subsidiaries or any other Obligor;
-24-
<PAGE>
(b) the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Parent, any of its
Subsidiaries or any other Obligor;
(c) the creation under any agreement, instrument, deed or lease of
any Lien (other than Liens on the Credit Security which secure the Credit
Obligations) upon any of the assets of the Parent, any of its Subsidiaries
or any other Obligor; or
(d) any redemption, retirement or other repurchase obligation of the
Parent, any of its Subsidiaries or any other Obligor under any Charter, By-
law, agreement, instrument, deed or lease.
No approval, authorization or other action by, or declaration to or filing with,
any governmental or administrative authority or any other Person is required to
be obtained or made by the Parent, any of its Subsidiaries or any other Obligor
in connection with the execution, delivery and performance of this Agreement or
any other Credit Document, the transactions contemplated hereby or thereby, the
making of any borrowing hereunder, the guaranteeing of the Credit Obligations or
the securing of the Credit Obligations with the Credit Security (other than
filings necessary to perfect the Lender's security interest in the Credit
Security) and consents required from the Federal Communications Commission to
transfer control upon any foreclosure by Lender under the Initial Pledge
Agreements.
7.10. Defaults. Neither the Parent nor any of its Subsidiaries is in
--------
default under any provision of its Charter or By-laws or of this Agreement or
any other Credit Document. Except for the failure to make required payments
under Indebtedness described in Exhibit 7.4, whether or not such required
payment obligations actually arise after the date of this Agreement (provided
that this exception shall not apply to additional required payment obligations
under such Indebtedness incurred after the date of this Agreement), neither the
Parent nor any of its Subsidiaries is in default under any provision of any
agreement, instrument, deed or lease to which it is party or by which it or its
property is bound so as to result, or create a material risk of resulting, in
any Material Adverse Change.
7.11. Tax Returns. Each of the Parent and its Subsidiaries has filed all
-----------
material tax and information returns which are required to be filed by it and
has paid, or made adequate provision for the payment of, all taxes which have or
may become due pursuant to such returns or to any assessment received by it,
other than taxes and assessments being contested by the Parent and its
Subsidiaries in good faith by appropriate proceedings and for which adequate
reserves have been taken in accordance with GAAP. Neither the Parent nor any of
its Subsidiaries knows of any material additional assessments or any basis
therefor. The Parent reasonably believes that the charges, accruals and
reserves on the books of the Parent and its Subsidiaries in respect of taxes or
other governmental charges are adequate.
-25-
<PAGE>
7.12. Pension Plans. Each Plan (other than a Multiemployer Plan) and, to
-------------
the knowledge of the Parent and its Subsidiaries, each Multiemployer Plan is in
material compliance with the applicable provisions of ERISA and the Code. Each
Multiemployer Plan and each Plan that constitutes a "defined benefit plan" (as
defined in ERISA) are set forth in Exhibit 7.12. Each ERISA Group Person has met
all of the funding standards applicable to all Plans that are not Multiemployer
Plans, and no condition exists which would permit the institution of proceedings
to terminate any Plan that is not a Multiemployer Plan under section 4042 of
ERISA. To the knowledge of the Parent and each Subsidiary, no Plan that is a
Multiemployer Plan is currently insolvent or in reorganization or has been
terminated within the meaning of ERISA.
7.13. Environmental Regulations.
-------------------------
7.13.1. Environmental Compliance. Each of the Parent and its
------------------------
Subsidiaries is in compliance in all material respects with the Clean Air Act,
the Federal Water Pollution Control Act, the Marine Protection Research and
Sanctuaries Act, RCRA, CERCLA and any other Environmental Law in effect in any
jurisdiction in which any properties of the Parent or any of its Subsidiaries
are located or where any of them conducts its business, and with all applicable
published rules and regulations (and applicable standards and requirements) of
the federal Environmental Protection Agency and of any similar agencies in
states or foreign countries in which the Parent or its Subsidiaries conducts its
business other than those which in the aggregate have not resulted, and do not
create a material risk of resulting, in a Material Adverse Change.
7.13.2. Environmental Litigation. No suit, claim, action or
------------------------
proceeding of which the Parent or any of its Subsidiaries has been given notice
or otherwise has knowledge is now pending before any court, governmental agency
or board or other forum, or to the Parent's or any of its Subsidiaries
knowledge, threatened by any Person (nor to the Parent's or any of its
Subsidiaries' knowledge, does any factual basis exist therefor) for, and neither
the Parent nor any of its Subsidiaries have received written correspondence from
any federal, state or local governmental authority with respect to:
(a) noncompliance by the Parent or any of its Subsidiaries with any
Environmental Law;
(b) personal injury, wrongful death or other tortious conduct
relating to materials, commodities or products used, generated, sold,
transferred or manufactured by the Parent or any of its Subsidiaries
(including products made of, containing or incorporating asbestos, lead or
other Hazardous Material; or
(c) the release into the environment by the Parent or any of its
Subsidiaries of any Hazardous Material generated by the Parent or any of
its Subsidiaries whether or
-26-
<PAGE>
not occurring at or on a site owned, leased or operated by the Parent or
any of its Subsidiaries.
7.13.3. Hazardous Material. Exhibit 7.13 contains a list as of the
------------------
date hereof of all waste disposal or dump sites at which Hazardous Material
generated by either the Parent or any of its Subsidiaries has been disposed
of directly by the Parent or any of its Subsidiaries and all independent
contractors to whom the Parent and its Subsidiaries have delivered
Hazardous Material, or to the Parent's or any of its Subsidiaries'
knowledge, where Hazardous Material finally came to be located, and
indicates all such sites which are or have been included (including as a
potential or suspect site) in any published federal, state or local
"superfund" or other list of hazardous or toxic waste sites. Any waste
disposal or dump sites at which Hazardous Material generated by either the
Parent or any of its Subsidiaries has been disposed of directly by the
Parent or any of its Subsidiaries and all independent contractors to whom
the Parent or any of its Subsidiaries have delivered Hazardous Material, or
to the Parent's or any of its Subsidiaries' knowledge, where Hazardous
Material finally came to be located, has not resulted, and does not create
a material risk of resulting, in a Material Adverse Change.
7.13.4. Environmental Condition of Properties. None of the
-------------------------------------
properties owned or leased by the Parent or any of its Subsidiaries has
been used as a treatment, storage or disposal site for Hazardous Material,
other than as disclosed in Exhibit 7.13. No Hazardous Material is present
in any real property currently or formerly owned or operated by the Parent
or any of its Subsidiaries except that which has not resulted, and does not
create a material risk of resulting, in a Material Adverse Change.
7.14. Acquisition Agreement. The Acquisition Agreement is a valid and
---------------------
binding contract as to each of the Obligors that is a party thereto. The
representations and warranties of each such Obligor set forth in the Acquisition
Agreement are true and correct in all respects as of the date hereof with the
same force and effect as though made on and as of the date hereof.
7.15. Disclosure. Neither this Agreement nor any other Credit Document nor
----------
any financial statement, report, notice, mortgage, assignment or certificate
furnished or to be furnished to the Lender by or on behalf of the Parent or any
of its Subsidiaries in connection with the transactions contemplated hereby or
by such Credit Document contains any untrue statement of material fact or omits
to state a material fact necessary in order to make the statements contained
herein or therein with respect to the subject matter hereof or thereof not
misleading in light of the circumstances under which they were made.
8. Defaults.
--------
8.1. Events of Default. The following events are referred to as "Events
-----------------
of Default":
-27-
<PAGE>
8.1.1. Payment. The Borrower shall fail to make any payment in
-------
respect of principal or interest on or in respect of any of the Credit
Obligations owed by it as the same shall become due and payable, whether at
maturity or by acceleration or otherwise.
8.1.2. Covenants. The Parent, any of its Subsidiaries or any other
---------
Obligor shall fail to perform or observe any other covenant, agreement or
provision to be performed or observed by it under this Agreement or any
other Credit Document, and such failure shall not be rectified or cured to
the written satisfaction of the Lender within five days after the earlier
of (a) notice thereof by the Lender to the Borrower or (b) a Financial
Officer shall have actual knowledge thereof.
8.1.3. Representations and Warranties. Any representation or
------------------------------
warranty of or with respect to the Parent, any of its Subsidiaries or any
other Obligor made to the Lender in, pursuant to or in connection with this
Agreement or any other Credit Document, or in any financial statement,
report, notice, mortgage, assignment or certificate delivered to the Lender
by the Parent, any of its Subsidiaries or any other Obligor in connection
herewith or therewith, shall be false in any material respect on the date
as of which it was made.
8.1.4. Material Financing Debt Cross Default, etc.
------------------------------------------
(a) the Parent or any of its Subsidiaries shall fail to perform or
observe the terms of any agreement or instrument relating to any Material
Financing Debt (other than with respect to payment obligations under
Material Financing Debt described in Exhibit 7.3.1 that were incurred prior
to the date of this Agreement, whether or not such payment obligations
actually arise after the date of this Agreement (provided that this
exception shall not apply to additional payment obligations under such
Material Financing Debt incurred after the date of this Agreement)), and
such failure shall continue, without having been duly cured, waived or
consented to, beyond the period of grace, if any, specified in such
agreement or instrument, and such failure shall permit the acceleration of
such Material Financing Debt;
(b) all or any part of any Material Financing Debt (other than with
respect to payment obligations under Material Financing Debt described in
Exhibit 7.3.1 that were incurred prior to the date of this Agreement,
whether or not such payment obligations actually arise after the date of
this Agreement (provided that this exception shall not apply to additional
payment obligations under such Material Financing Debt incurred after the
date of this Agreement)) of the Parent or any of its Subsidiaries shall be
accelerated or shall become due or payable prior to its stated maturity for
any reason whatsoever (except with respect to voluntary prepayments or
mandatory contingent
-28-
<PAGE>
payments that do not result from a default thereunder or the occurrence of
an event similar to an Event of Default hereunder);
(c) other than the use of a deposit account by U.S. Bank National
Association in connection with the letter of credit issued for the benefit
of Science Applications International Corporation referenced in Exhibit
7.2.2, any Lien on any property of the Parent or any of its Subsidiaries
securing any Material Financing Debt (other than a Lien arising with
respect to payment obligations under Material Financing Debt described in
Exhibit 7.3.1 that were incurred prior to the date of this Agreement,
whether or not such payment obligations actually arise after the date of
this Agreement (provided that this exception shall not apply to additional
payment obligations under such Material Financing Debt incurred after the
date of this Agreement)) shall be enforced by foreclosure or similar
action; or
(d) any holder of any Material Financing Debt shall exercise any
right of rescission with respect to the issuance thereof or put, mandatory
prepayment (other than with respect to payment obligations under Material
Financing Debt described in Exhibit 7.3.1 that were incurred prior to the
date of this Agreement, whether or not such payment obligations actually
arise after the date of this Agreement (provided that this exception shall
not apply to additional payment obligations under such Material Financing
Debt incurred after the date of this Agreement)) or repurchase rights
against the Parent or any of its Subsidiaries with respect to such Material
Financing Debt (other than any such rights that may be satisfied with
"payment in kind" notes or other similar securities).
8.1.5. Ownership; Liquidation; etc. Except as permitted by Section
---------------------------
6.9 or Section 6.10:
(a) the Parent shall cease to own, directly or indirectly, all the
capital stock of its Subsidiaries; or
(b) the Parent or any of its Subsidiaries or any other Obligor shall
initiate any action to dissolve, liquidate or otherwise terminate its
existence.
8.1.6. Enforceability, etc. Any Credit Document shall cease for
-------------------
any reason (other than the scheduled termination thereof in accordance with
its terms) to be enforceable in accordance with its terms or in full force
and effect; or any party to any Credit Document shall so assert in a
judicial or similar proceeding; or the security interests created by this
Agreement or any other Credit Documents shall cease to be enforceable and
of the same effect and priority purported to be created hereby.
8.1.7. Judgments. A final judgment (a) which, with other
---------
outstanding final judgments against the Parent and its Subsidiaries,
exceeds an aggregate of $25,000 in
-29-
<PAGE>
excess of applicable insurance coverage shall be rendered against the
Parent or any of its Subsidiaries, or (b) which grants injunctive relief
that results, or creates a material risk of resulting, in a Material
Adverse Change and in either case if (i) within 30 days after entry
thereof, such judgment shall not have been discharged or execution thereof
stayed pending appeal or (ii) within 30 days after the expiration of any
such stay, such judgment shall not have been discharged.
8.1.8. ERISA. Any "reportable event" (as defined in section 4043
-----
of ERISA) shall have occurred that reasonably could be expected to result
in termination of a Plan or the appointment by the appropriate United
States District Court of a trustee to administer any Plan or the imposition
of a Lien in favor of a Plan; or any ERISA Group Person shall fail to pay
when due amounts aggregating in excess of $100,000 which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or
notice of intent to terminate a Plan shall be filed under Title IV of ERISA
by any ERISA Group Person or administrator; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to
be appointed to administer any Plan or a proceeding shall be instituted by
a fiduciary of any Plan against any ERISA Group Person to enforce section
515 or 4219(c)(5) of ERISA and such proceeding shall not have been
dismissed within 30 days thereafter; or a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that
any Plan must be terminated.
8.1.9. Bankruptcy, etc. The Parent, any of its Subsidiaries or any
---------------
other Obligor shall:
(a) commence a voluntary case under the Bankruptcy Code or authorize,
by appropriate proceedings of its board of directors or other governing
body, the commencement of such a voluntary case;
(b) (i) have filed against it a petition commencing an involuntary
case under the Bankruptcy Code that shall not have been dismissed within 60
days after the date on which such petition is filed, or (ii) file an answer
or other pleading within such 60-day period admitting or failing to deny
the material allegations of such a petition or seeking, consenting to or
acquiescing in the relief therein provided, or (iii) have entered against
it an order for relief in any involuntary case commenced under the
Bankruptcy Code;
(c) seek relief as a debtor under any applicable law, other than the
Bankruptcy Code, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the
rights of creditors, or consent to or acquiesce in such relief;
-30-
<PAGE>
(d) have entered against it an order by a court of competent
jurisdiction (i) finding it to be bankrupt or insolvent, (ii) ordering or
approving its liquidation or reorganization as a debtor or any modification
or alteration of the rights of its creditors or (iii) assuming custody of,
or appointing a receiver or other custodian for, all or a substantial
portion of its property; or
(e) make an assignment for the benefit of, or enter into a
composition with, its creditors, or appoint, or consent to the appointment
of, or suffer to exist a receiver or other custodian for, all or a
substantial portion of its property.
8.2. Certain Actions Following an Event of Default. If any one or more
---------------------------------------------
Events of Default shall occur and be continuing, then in each and every such
case:
8.2.1. Terminate Obligation to Extend Credit. The Lender's
-------------------------------------
obligation to make any further extensions of credit under the Credit
Documents shall automatically terminate.
8.2.2. Specific Performance; Exercise of Rights. The Lender shall
----------------------------------------
proceed to protect and enforce its rights by suit in equity, action at law
and/or other appropriate proceeding, either for specific performance of any
covenant or condition contained in this Agreement or any other Credit
Document or in any instrument or assignment delivered to the Lender
pursuant to this Agreement or any other Credit Document, or in aid of the
exercise of any power granted in this Agreement or any other Credit
Document or any such instrument or assignment.
8.2.3. Acceleration. The Lender shall by notice in writing to the
------------
Borrower declare all or any part of the unpaid balance of the Credit
Obligations then outstanding to be immediately due and payable.
8.2.4. Enforcement of Payment; Credit Security; Setoff. The Lender
-----------------------------------------------
shall proceed to enforce payment of the Credit Obligations in such manner
as it may elect.
8.2.5. Cumulative Remedies. To the extent not prohibited by
-------------------
applicable law which cannot be waived, all of the Lender's rights hereunder
and under each other Credit Document shall be cumulative.
8.3. Annulment of Defaults. Once an Event of Default has occurred, such
---------------------
Event of Default shall be deemed to exist and be continuing for all purposes of
the Credit Documents until the Lender shall have waived such Event of Default in
writing, stated in writing that the same has been cured to the Lender's
reasonable satisfaction or entered into an amendment to this Agreement which by
its express terms cures such Event of Default, at which time such Event of
Default shall no longer be deemed to exist or to have continued. No such action
by the Lender shall extend to or affect any subsequent Event of Default or
impair any rights of
-31-
<PAGE>
the Lender upon the occurrence thereof. The making of any extension of credit
during the existence of any Default or Event of Default shall not constitute a
waiver thereof.
8.4. Waivers. To the extent that such waiver is not prohibited by the
-------
provisions of applicable law that cannot be waived, each of the Parent and the
other Obligors waives:
(a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by this Agreement or any
other Credit Document), protests, notices of protest and notices of
dishonor;
(b) any requirement of diligence or promptness on the part of the
Lender in the enforcement of its rights under this Agreement or any other
Credit Document;
(c) any and all notices of every kind and description which may be
required to be given by any statute or rule of law; and
(d) any defense (other than indefeasible payment in full) which it
may now or hereafter have with respect to its liability under this
Agreement or any other Credit Document or with respect to the Credit
Obligations.
9. Indemnity. The Borrower shall indemnify the Lender and hold the Lender
---------
harmless from any liability, loss or damage resulting from the violation by the
Borrower of Section 2.2. In addition, the Borrower shall indemnify the Lender
and each of the Lender's directors, officers, employees, agents, attorneys,
accountants and consultants (the Lender and each of such directors, officers,
employees, agents, attorneys, accountants and consultants is referred to as an
"Indemnified Party") and hold each of them harmless from and against any and all
claims, damages, liabilities and reasonable expenses (including reasonable fees
and disbursements of counsel with whom any Indemnified Party may consult in
connection therewith and all reasonable expenses of litigation or preparation
therefor) which any Indemnified Party may incur or which may be asserted against
any Indemnified Party in connection with (a) the Indemnified Party's compliance
with or contest of any subpoena or other process issued against it in any
proceeding involving the Parent or any of its Subsidiaries or their Affiliates,
(b) any litigation or investigation involving the Parent, any of its
Subsidiaries or their Affiliates, or any officer, director or employee thereof,
(c) the existence or exercise of any security rights with respect to the Credit
Security in accordance with the Credit Documents, or (d) this Agreement, any
other Credit Document or any transaction contemplated hereby or thereby;
provided, however, that the foregoing indemnity shall not apply (i) to
- -------- -------
litigation commenced by the Borrower against the Lender which seeks enforcement
of any of the rights of the Borrower hereunder or under any other Credit
Document and is determined adversely to the Lender in a final nonappealable
judgment or (ii) to the extent such claims, damages, liabilities and expenses
result from the Indemnified Party's own gross negligence or willful misconduct.
THE BORROWER EXPRESSLY ACKNOWLEDGES
-32-
<PAGE>
THAT IT MAY BE REQUIRED TO INDEMNIFY PERSONS AGAINST THEIR OWN NEGLIGENCE.
10. Successors and Assigns. All of the terms and provisions of this Agreement
----------------------
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective transferees, successors and assigns.
11. Notices. Except as otherwise specified in this Agreement or any other
-------
Credit Document, any notice required to be given pursuant to this Agreement or
any other Credit Document shall be given in writing. Any notice, consent,
approval, demand or other communication in connection with this Agreement or any
other Credit Document shall be deemed to be given if given in writing (including
by telecopy) addressed as provided below (or to the addressee at such other
address as the addressee shall have specified by notice actually received by the
addressor), and if either (a) actually delivered in fully legible form to such
address or (b) in the case of a letter, unless actual receipt of the notice is
required by any Credit Document five days shall have elapsed after the same
shall have been deposited in the United States mails, with first-class postage
prepaid and registered or certified.
If to the Parent or any of its Subsidiaries, to:
4513 Pin Oak Court
Sioux Falls, South Dakota 57103
Attention: Scott Reardon
Telecopy: (605) 338-3938
with a copy to:
Davenport Law Firm
513 South Main Avenue
Sioux Falls, SD 57104
Attention: David L. Knudson, Esq.
Telecopy: (605) 335-3639
If to the Lender, to:
Advanced Radio Telecom Corp.
500 108th Avenue, NE, Suite 2600
Bellevue, Washington 98004
Attention: Thomas M. Walker, Esq.
Telecopy: (425) 990-1642
with a copy to:
-33-
<PAGE>
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Attention: Mary E. Weber, Esq.
Telecopy: (617) 951-7050
12. Amendments; Course of Dealing; No Implied Waivers. This Agreement may be
-------------------------------------------------
amended by the parties hereto at any time, but only by an instrument in writing
duly executed and delivered on behalf of each of the parties hereto. No course
of dealing between the Lender, on one hand, and the Borrower or any other
Obligor, on the other hand, shall operate as a waiver of any of the Lender's
rights under this Agreement or any other Credit Document or with respect to the
Credit Obligations. In particular, no delay or omission on the part of the
Lender in exercising any right under this Agreement or any other Credit Document
or with respect to the Credit Obligations shall operate as a waiver of such
right or any other right hereunder or thereunder. A waiver on any one occasion
shall not be construed as a bar to or waiver of any right or remedy on any
future occasion. No waiver, consent or amendment with respect to this Agreement
or any other Credit Document shall be binding unless it is in writing and signed
by the Lender.
13. General Provisions.
------------------
13.1. Defeasance. When all Credit Obligations have been paid, performed
----------
and reasonably determined by the Lender to have been indefeasibly discharged in
full, this Agreement and the other Credit Documents shall terminate and, at the
Borrower's written request, accompanied by such certificates and other items as
the Lender shall reasonably deem necessary, the Credit Security shall revert to
the Obligors and the right, title and interest of the Lender therein shall
terminate. Thereupon, on the Obligors' demand and at their cost and expense, the
Lender shall execute proper instruments, acknowledging satisfaction of and
discharging this Agreement and the other Credit Documents, and shall redeliver
to the Obligors any Credit Security then in its possession; provided, however,
-------- -------
that Sections 9 and 13 shall survive the termination of this Agreement.
13.2. No Strict Construction. The parties have participated jointly in
----------------------
the negotiation and drafting of this Agreement and the other Credit Documents
with counsel sophisticated in financing transactions. In the event an ambiguity
or question of intent or interpretation arises, this Agreement and the other
Credit Documents shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement and the other
Credit Documents.
13.3. Certain Obligor Acknowledgments. Each of the Borrower and the other
-------------------------------
Obligors acknowledges that:
-34-
<PAGE>
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Credit Documents;
(b) the Lender does not have any fiduciary relationship with or
duty to the Obligors arising out of or in connection with this Agreement or
any other Credit Document, and the relationship between the Lender, on one
hand, and the Obligors, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions contemplated
hereby or thereby among the Obligors and the Lender.
13.4. Interpretation; Governing Law; etc. Time is (and shall be) of the
----------------------------------
essence in this Agreement and the other Credit Documents. All covenants,
agreements, representations and warranties made in this Agreement or any other
Credit Document or in certificates delivered pursuant hereto or thereto shall be
deemed to have been relied on by the Lender, notwithstanding any investigation
made by the Lender on its behalf, and shall survive the execution and delivery
to the Lender hereof and thereof. The invalidity or unenforceability of any
provision hereof shall not affect the validity or enforceability of any other
provision hereof, and any invalid or unenforceable provision shall be modified
so as to be enforced to the maximum extent of its validity or enforceability.
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof. This Agreement and the other
Credit Documents constitute the entire understanding of the parties with respect
to the subject matter hereof and thereof and supersede all prior and
contemporaneous understandings and agreements, whether written or oral. This
Agreement may be executed in any number of counterparts which together shall
constitute one instrument. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of the State of
Delaware.
[The rest of this page has been intentionally left blank.]
-35-
<PAGE>
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
ADVANCED RADIO TELECOM CORP.
By: ________________________________
Name:
Title:
BROADSTREAM COMMUNICATIONS
CORPORATION
By: ________________________________
Name:
Title:
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 156,670
<SECURITIES> 0
<RECEIVABLES> 218
<ALLOWANCES> (44)
<INVENTORY> 0
<CURRENT-ASSETS> 157,013
<PP&E> 33,462
<DEPRECIATION> (15,075)
<TOTAL-ASSETS> 395,219
<CURRENT-LIABILITIES> 28,291
<BONDS> 0
243,536
0
<COMMON> 239,162
<OTHER-SE> (254,225)
<TOTAL-LIABILITY-AND-EQUITY> 395,219
<SALES> 398
<TOTAL-REVENUES> 398
<CGS> 0
<TOTAL-COSTS> 13,771
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,727<F1>
<INCOME-PRETAX> (15,100)
<INCOME-TAX> 275
<INCOME-CONTINUING> (14,825)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,825)
<EPS-BASIC> (.68)
<EPS-DILUTED> (.68)
<FN>
<F1>Net of interest income of $3,496
</FN>
</TABLE>
