<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 September 30, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
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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: 26,707,036 shares of common
stock, $.001 par value, at November 5, 1998.
<PAGE>
PART 1 - FINANCIAL INFORMATION
ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
SEPTEMBER 30, DECEMBER 31,
1998 1997
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(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents.................. $ 10,766,718 $ 7,135,427
Short-term investments..................... 18,210,220
Pledged securities......................... 18,241,865 18,517,640
Restricted cash............................ 32,060 1,032,060
Accounts receivable........................ 165,570 199,316
Prepaid expenses and other current assets.. 24,268 112,825
------------ ------------
Total current assets..................... 29,230,481 45,207,488
Pledged securities......................... 8,758,571 25,842,275
Property and equipment, net................ 26,432,382 25,294,946
FCC licenses, net.......................... 191,230,091 131,210,102
Deferred financing costs, net.............. 6,287,657 4,502,330
Other assets............................... 448,652 502,608
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Total assets............................. $262,387,834 $232,559,749
============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Purchase money facility................... $ 3,020,216
Working capital facility.................. 9,362,319
Trade accounts payable..................... 1,387,934 $ 3,067,984
Accrued compensation and benefits......... 2,679,486 1,775,646
Book overdraft............................ 3,055,759
Other accrued liabilities.................. 1,660,711 3,109,631
Accrued interest payable................... 2,351,787 7,113,391
Current portion of long-term debt......... 187,654 1,476,256
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Total current liabilities............... 20,650,107 19,598,667
Long-term debt, net of current portion..... 107,863,051 106,823,103
Deferred income tax liability.............. 41,422,777 29,880,916
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Total liabilities....................... 169,935,935 156,302,686
Commitments and contingencies
Stockholders' equity:
Serial preferred stock, $.001 par value,
10,000,000 shares authorized, none issued
and outstanding..........................
Common stock, $.001 par value, 100,000,000
shares authorized, 26,701,030 and
21,429,485 shares issued and
outstanding.............................. 26,701 21,429
Additional paid-in capital................ 225,055,187 172,892,420
Note receivable from stockholder.......... (887,500) (887,500)
Accumulated deficit....................... (131,742,489) (95,769,286)
------------ ------------
Total stockholders' equity.............. 92,451,899 76,257,063
------------ ------------
Total liabilities and stockholders'
equity................................ $ 262,387,834 $232,559,749
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ -----------------
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Service revenue....................................... $ 186,756 $ 190,300 $ 629,083 $ 518,523
Equipment sales and construction revenue.............. 356,970
------------ ------------ ------------ ------------
Total revenue..................................... 186,756 190,300 629,083 875,493
Costs and expenses:
Technical and network operations.................. 1,442,206 1,135,368 4,627,121 3,757,246
Cost of equipment sales and construction.......... 214,399
Sales and marketing............................... 1,741,383 4,091,949 4,484,252 10,333,746
General and administrative........................ 2,677,207 2,397,031 8,027,296 8,780,463
Research and development.......................... 196,074 84,562 409,471 213,277
Equipment impairment charges...................... 2,682,803 2,682,803
Depreciation and amortization..................... 1,920,606 2,039,959 4,889,527 4,401,234
------------ ------------ ------------ ------------
Total operating costs and expenses............... 10,660,279 9,748,869 25,120,470 27,700,365
Income (loss) from operations......................... (10,473,523) (9,558,569) (24,491,387) (26,824,872)
Interest and other:
Interest expense.................................... 5,205,876 5,318,927 15,427,725 13,935,503
Financing commitment expense........................ 411,040 411,040 2,699,881
Other............................................... 12,338 419,078
Interest income..................................... (458,622) (1,286,608) (2,173,830) (3,846,182)
------------ ------------ ------------ ------------
Income (loss) before income taxes................. (15,644,155) (13,590,888) (38,575,400) (39,614,074)
Deferred income tax benefit........................... 808,974 595,226 2,602,197 1,460,023
------------ ------------ ------------ ------------
Net income (loss)................................. $(14,835,181) $(12,995,662) $(35,973,203) $(38,154,051)
============ ============ ============ ============
Basic and diluted net income (loss) per common share.. $ (0.56) $ (0.66) $ (1.48) $ (2.07)
Weighted average common shares........................ 26,701,030 19,818,850 24,274,910 18,437,896
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
NOTE
ADDITIONAL RECEIVABLE
COMMON STOCK PAID-IN FROM ACCUMULATED
SHARES PAR VALUE CAPITAL STOCKHOLDER DEFICIT TOTAL
------------ ------------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 21,429,485 $ 21,429 $172,892,420 $(887,500) $ (95,769,286) $76,257,063
Common stock issued in exchange
for certain FCC licenses 4,529,519 4,530 48,343,268 48,347,798
Shares issued in connection with note
receivable from stockholder 100,000 100 (100)
Value ascribed to warrants issued in
connection with the working capital
facility 2,447,550 2,447,550
Warrants exercised 626,308 626 19,063 19,689
Options exercised 15,718 16 94,445 94,461
Accrued stock compensation 1,258,541 1,258,541
Net income (loss) (35,973,203) (35,973,203)
------------ ------------- ------------ ----------- ------------- -------------
Balance, September 30, 1998 26,701,030 $ 26,701 $225,055,187 $(887,500) $(131,742,489) $92,451,899
============ ============= ============ =========== ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------
1998 1997
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss)........................................................ $(35,973,203) $(38,154,051)
Adjustment to reconcile net loss to net cash used in operating
activities:
Non-cash compensation expense........................................... 1,258,541 449,313
Non-cash equipment impairment charges................................... 2,682,803
Depreciation and amortization........................................... 4,889,527 4,401,234
Non-cash interest expense............................................... 975,462 1,309,648
Non-cash financing commitment expense................................... 411,040 2,699,881
Deferred income tax benefit............................................. (2,602,197) (1,460,023)
Changes in operating assets and liabilities :
Accrued interest payable.............................................. (4,761,604) 2,332,396
Accounts receivable................................................... 33,746 1,554,405
Accrued interest on securities
and investments...................................................... (1,544,638) (2,268,903)
Accounts payable and accrued liabilities.............................. (1,449,046) (1,297,340)
Prepaid expenses and other current assets............................. 88,557 59,207
Other assets 53,956 (39,545)
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Net cash used in operating activities............................... (35,937,056) (30,413,778)
Cash flows from investing activities:
Purchases of property and equipment..................................... (2,947,973) (19,528,597)
Additions to FCC licenses............................................... (495,198) (5,409,177)
Purchases of pledged securities......................................... (51,778,066)
Purchases of short-term investments..................................... (5,127,663) (39,066,051)
Proceeds from sale of short-term investments............................ 23,612,000 19,675,060
Proceeds from maturities of pledged securities.......................... 18,630,000 9,665,233
Proceeds from restricted cash........................................... 1,000,000
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Net cash provided by (used in) investing activities 34,671,166 (86,441,598)
Cash flows from financing activities:
Proceeds from issuance of Senior Notes and warrants..................... 135,000,000
Warrant issuance costs.................................................. (1,254,697)
Proceeds from working capital facility.................................. 10,000,000
Book overdraft.......................................................... (3,055,759)
Proceeds from option and warrant exercises.............................. 114,150 446,893
Principal payments of long-term debt.................................... (1,616,956) (1,570,190)
Additions to deferred financing costs................................... (544,254) (4,191,019)
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Net cash provided by financing activities............................. 4,897,181 128,430,987
Net increase in cash and cash equivalents............................. 3,631,291 11,575,611
Cash and cash equivalents, beginning of period............................ 7,135,427 1,974,407
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Cash and cash equivalents, end of period.................................. $ 10,766,718 $ 13,550,018
============= ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. THE COMPANY AND BASIS OF PRESENTATION:
Advanced Radio Telecom Corp. (collectively with its subsidiaries, "ART" or
the "Company") provides broadband Internet services to business customers
without fiber connectivity. The Company is building a packet-switched
broadband data network.
The unaudited condensed consolidated financial statements included herein
have been prepared by the Company. The financial statements contain all
adjustments, consisting only of normal recurring adjustments which are, in the
opinion of the Company's management, necessary to present fairly the
consolidated financial position of the Company as of September 30, 1998, the
consolidated results of its operations for the three and nine months ended
September 30, 1998 and 1997 and its cash flows for the nine months ended
September 30, 1998 and 1997.
The Company will require significant additional capital to fund its
operations and business plan. ART currently estimates that it will require in
excess of $1 billion over the next five years for capital expenditures, working
capital and funding of operations. In September 1998, the Company and Lucent
Technologies Inc. ("Lucent") entered into a credit facility (the "Working
Capital Facility") for Lucent to provide the Company with up to $25 million of
unsecured revolving loans for working capital purposes. As of September 30,
1998, the Company had drawn $10 million under the Working Capital Facility. The
availability of $15 million of the Working Capital Facility is subject to the
achievement of certain milestones by ART. Loans made pursuant to the Working
Capital Facility are due June 30, 1999, unless extended by Lucent to no later
than September 17, 1999. The terms of the Working Capital Facility require ART
to apply debt or equity capital raised by ART in excess of $50 million to
permanently repay the Working Capital Facility. Pursuant to the Working Capital
Facility, ART has issued Lucent warrants to purchase 277,892 shares of ART
common stock at an exercise price of $.01 per share and warrants to purchase
255,984 shares of ART common stock at an exercise price of $3.33 per share. The
Working Capital Facility also requires ART to issue warrants to purchase up to
an additional 383,976 shares of ART common stock at an exercise price of $3.33
per share as the Working Capital Facility is fully utilized.
In September 1998, the Company and Lucent entered into a purchase money
credit facility (the "Purchase Money Facility") setting forth the terms and
conditions under which Lucent will provide purchase money financing in an
aggregate amount of up to $200 million, to be used to finance the purchase of
the Company's data network from Lucent. Under the Purchase Money Facility,
Lucent made $10 million in initial purchase money loans (the "Initial Purchase
Money Loans") immediately available to ART. As of September 30, 1998, the
Company had drawn approximately $3 million of the Initial Purchase Money Loans.
Subject to other conditions, upon ART's raising at least $50 million of certain
debt or equity capital and repayment and termination of the working capital
Facility, Lucent will make available purchase money loans equal to 200% of the
aggregate capital raised, not to exceed $200 million, including the Initial
Purchase Money Loans. There can be no assurance that the funding contemplated
by the Purchase Money Facility will become available to ART.
The Company plans to raise substantial additional capital, including
financing sufficient to satisfy the requirements for additional availability
under the Purchase Money Facility. The Company believes that its existing
capital, together with funds available under the Working Capital Facility,
is sufficient to fund its operations at current levels at least through the end
of 1998. However, without additional capital, the Company will not be able to
implement its business plan. There can be no assurance that the Company will be
able to obtain such additional capital when required, or, if available, that the
Company will be able to obtain it on acceptable terms. If the Company fails to
obtain additional capital when required, such failure could result in the
modification, delay of or abandonment of some or all of the Company's
development and expansion plans and could materially adversely affect the
Company.
Certain information and disclosures normally included in financial
statements have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. The year-end condensed
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<PAGE>
consolidated balance sheet was derived from audited financial statements but
does not include all disclosures required by generally accepted accounting
principles. The unaudited condensed consolidated financial statements should be
read in conjunction with the Company's December 31, 1997 audited consolidated
financial statements and notes thereto contained in the Company's 1997 Form 10-K
on file with the Securities and Exchange Commission.
PROPERTY AND EQUIPMENT
As of September 30, 1998, approximately $7.5 million out of a total of
$24.3 million of wireless transmission equipment had been placed in service.
During the third quarter of 1998, the Company recorded a non-cash equipment
impairment charge of approximately $2.7 million to write down certain equipment
that is not expected to be an integral part of the Company's expanded broadband
network. The amount of the write-down was based on the sale or discounted
projected future cash flows from the deployment of such equipment.
FCC LICENSES
In July and August of 1998, the Company entered into definitive agreements
to acquire certain licenses in southern California, including Los Angeles, for a
purchase price of $4.3 million in cash and certain other licenses for 154,114
shares of common stock. The consummation of the acquisitions is subject to
various conditions including FCC approval. In the event the cash transaction is
not consummated, the Company may be required to pay $100,000 to the sellers.
In May 1998, the Company acquired from Columbia Capital Corporation and one
of its affiliates ("Columbia") 23 38 Ghz licenses for 1,335,750 shares of common
stock. The acquisition was a tax free exchange for Federal income tax purposes
and was accounted for as a purchase business combination for financial reporting
purposes. The total acquisition cost was approximately $15.7 million, comprised
of the fair value of the 1,335,750 shares of common stock issued of
approximately $12.0 million, direct costs incurred of approximately $80,000 and
the related deferred tax liability of approximately $3.6 million. The
operations of Columbia were minimal through the date of acquisition, and the
total acquisition cost was allocated to FCC licenses.
In May 1998, the Company acquired DCT Communications Inc. ("DCT"), which
held 49 38 Ghz licenses, in exchange for 3,124,875 shares of the Company's
common stock. The acquisition was a tax free exchange for Federal income tax
purposes and was accounted for as a purchase business combination for financial
reporting purposes. The total acquisition cost was approximately $45.9 million,
comprised of the fair value of the 3,124,874 shares of common stock issued of
approximately $35.2 million, direct costs incurred of approximately $182,000 and
the related deferred tax liability of approximately $10.5 million. The
operations of DCT were minimal through the date of acquisition, and the total
acquisition cost was allocated to FCC licenses.
In March 1998, the Company acquired a 38 Ghz license in exchange for 68,895
shares of the Company's common stock. The total acquisition cost was
approximately $1.2 million, which consisted of the aggregate market value of the
shares issued and direct costs.
FINANCING COSTS
Direct costs associated with obtaining debt financing are deferred and
charged to interest expense using the effective interest rate method over the
term of the debt or, in the case of equity, charged to additional paid-in
capital. Deferred costs associated with unsuccessful financings are charged to
expense. The Company charged approximately $419,000 to expense during the nine
months ended September 30, 1998 associated with its unsuccessful debt offering.
Deferred costs of obtaining commitments for financing are deferred and charged
to expense over the term of the commitments.
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<PAGE>
2. COMMON STOCK:
During 1998, the Company entered into agreements with two of its officers
to issue 85,000 shares of common stock deliverable in 2001 that has been
reflected as a non-cash compensation charge of approximately $657,500.
In October 1998, the Company authorized the repricing of certain stock
options to purchase up to 2,298,500 shares of the Company's common stock that
were previously granted to employees under the Company's equity incentive plan.
3. FINANCINGS:
WORKING CAPITAL FACILITY
The outstanding principal balance of the Working Capital Facility plus
accrued interest is due June 30, 1999, unless extended by Lucent. Interest
initially accrues at an annual rate of LIBOR plus 5% (10.5% at September 30,
1998) and increases 0.5% each month beginning January 1999. The value ascribed
to the warrants issued in connection with the execution of the commitment for
the Working Capital Facility totaled approximately $1,777,000. The value
ascribed to the warrants related to the draw of $10 million from the Working
Capital Facility totaled approximately $671,000 and has been reflected as a debt
discount.
INITIAL PURCHASE MONEY LOANS
The outstanding principal balance of the Initial Purchase Money Loans, plus
accrued interest is due March 31, 1999, unless the funding contemplated by the
Purchase Money Facility becomes available. Interest initially accrues at an
annual rate of LIBOR plus 5% (10.5% at September 30, 1998) and increases 0.5%
each month beginning January 1999.
4. SUPPLEMENTAL CASH FLOW INFORMATION:
Supplemental disclosure of cash flow information is summarized below for
the nine months ended September 30:
<TABLE>
<CAPTION>
1998 1997
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<S> <C> <C>
Non-cash financing and investing activities:
Issuance of shares for licenses....................... $48,347,798 $87,750,000
Value ascribed to warrants............................ 2,447,550 29,707,509
Additions to property and equipment
under Initial Purchase Money Loans.................. 3,020,216
Additions to property and equipment
under capital leases and other...................... 797,168 829,217
Accrued deferred financing costs...................... 967,491
Termination of software license agreement and
related obligations................................ 1,774,087
Interest paid............................................ 19,015,005 10,293,459
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
From its inception in 1993 to the fourth quarter of 1996, the Company
primarily focused on acquiring licenses, hiring management and other key
personnel, raising capital, acquiring equipment and roof rights and developing
operating and support systems to support its initial business of selling
connectivity to various telecommunications companies as a wholesale carriers'
carrier, which the Company commenced in the fourth quarter of 1996. Following
the establishment of a new core management team, the Company altered its
strategy in the first quarter of 1998 to sell a variety of broadband Internet
services to end user customers and to deploy a broadband data network.
Accordingly, the results of the Company in 1997 reflect a business no longer
being pursued by the Company. During the quarter ended September 30, 1998, ART
began offering its Internet services in the Seattle, Washington area and began
pre-selling services in the Portland, Oregon and Phoenix, Arizona areas, where
it intends to offer service by the end of 1998.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 1998 Compared to Nine Months Ended
September 30, 1997:
Revenue for the nine months ended September 31, 1998, was $629,083 compared
to $875,493 for the same period in 1997. The revenue for the first nine months
of 1997 included $356,970 of non-recurring equipment sales and construction
revenue associated with radio links installed for a third party. The Company
does not expect to routinely sell equipment and install radio links for third
parties in the future.
Operating costs and expenses were approximately $25.1 million for the nine
months ended September 30, 1998, compared to approximately $27.7 million for the
nine months ended September 30, 1997. The Company initiated certain
restructuring activities in the third and fourth quarters of 1997 intended to
align the Company's organization more closely with its marketing and business
development plans and to conserve capital resources. While such restructuring
activities reduced certain expenses, in future periods the Company expects
additional increases in cash expenses for network operations and sales and
marketing as the Company implements its business plan. The Company incurred
approximately $4.5 million of expenses principally related to sales and
marketing efforts in Seattle and, to a lesser extent, Portland and Phoenix,
including the hiring of additional sales personnel. During the nine-months ended
September 30, 1998, the Company recorded approximately $650,000 of severance
expenses related to the resignation of certain executives and, in connection
with the employment arrangements with certain executives of the Company, also
recorded non-cash charges of approximately $657,500 with respect to stock
grants. Cost of equipment sales and construction of $214,399 incurred in the
1997 period related to non-recurring equipment sales and construction revenue.
Depreciation and amortization was approximately $4.9 million for the nine months
ended September 30, 1998, compared to approximately $4.4 million for the nine
months ended September 30, 1997. The increase was primarily due to amortization
of additional FCC licenses. The Company also recorded approximately $2.7 million
of expenses for equipment impairment related to equipment previously acquired by
the Company which is not expected to be utilized in its broadband data network.
The write-down has been reflected in the net property and equipment balance of
approximately $26.4 million as of September 30, 1998.
Net interest and other expenses were approximately $14.1 million for the
nine months ended September 30, 1998 compared to approximately $12.8 million for
the nine months ended September 30, 1997. Included in net interest and other
expenses for 1998 was a charge of $419,078 related to an unsuccessful high yield
debt offering and a charge of $411,040 related to the amortization of deferred
financing costs related to the financing commitment under the Working Capital
Facility (defined below). Included in net interest and other expenses for 1997
was approximately $2.7 million related to a financing commitment which was
terminated in 1997 upon the sale of the Company's 14% Senior Notes due 2007 (the
"Senior Notes"). The issuance of the Senior Notes in February 1997 will continue
to cause interest expense to increase in future periods. Interest expense will
also increase in future quarters as a result of borrowings under the Working
Capital Facility and Purchase Money Facility.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Through September 30, 1998, funding for the Company's acquisitions, capital
expenditures and net operating losses has been provided from private placements
of equity and bridge financings in 1994 through 1996, the Company's initial
public offering in November 1996, the Company's public offering of units
consisting of its Senior Notes and warrants in February 1997, and the borrowings
from Lucent Technologies Inc. ("Lucent") described below in 1998. Approximately
$51 million of the approximately $130 million net proceeds from the sale of the
units was used to purchase a portfolio of U.S. Treasury securities that will
provide for interest payments on the Senior Notes through February 2000. Because
the Senior Notes have "significant original issue discount" for tax purposes,
the Company will not be able to deduct the interest expense related to the
accretion of this original issue discount for tax purposes.
During the nine months ended September 30, 1998, the Company issued
4,529,519 shares of common stock to acquire certain FCC licenses. In addition,
the Company has entered into definitive agreements to acquire additional
licenses for $4.3 million in cash and 154,114 shares of ART's common stock. The
consummation of such acquisitions is subject to various conditions including FCC
approval. In the event the cash transaction is not consummated, the Company may
be required to pay $100,000 to the sellers. The Company may continue to acquire
additional licenses in exchange for common stock or cash.
The Company will require significant additional capital to fund its
operations and business plan. ART currently estimates that it will require in
excess of $1 billion over the next five years for capital expenditures, working
capital and funding of operations. In September 1998, the Company and Lucent
entered into a credit facility (the "Working Capital Facility") for Lucent to
provide the Company with up to $25 million of unsecured revolving loans for
working capital purposes. As of September 30, 1998, the Company had drawn $10
million under the Working Capital Facility. The availability of $15 million of
the Working Capital Facility is subject to the achievement of certain milestones
by ART. Loans made pursuant to the Working Capital Facility are due June 30,
1999, unless extended by Lucent to no later than September 17, 1999. The terms
of the Working Capital Facility require ART to apply debt or equity capital
raised by ART in excess of $50 million to permanently repay the Working Capital
Facility. Pursuant to the Working Capital Facility, ART has issued Lucent
warrants to purchase 277,892 shares of ART common stock at an exercise price of
$.01 per share and warrants to purchase 255,984 shares of ART common stock at an
exercise price of $3.33 per share. The Working Capital Facility also requires
ART to issue warrants to purchase up to an additional 383,976 shares of ART
common stock at an exercise price of $3.33 per share as the Working Capital
Facility is fully utilized.
In September 1998, the Company and Lucent entered into a purchase money
credit facility (the "Purchase Money Facility") setting forth the terms and
conditions under which Lucent will provide purchase money financing in an
aggregate amount of up to $200 million, to be used to finance the purchase of
the Company's data network from Lucent. Under the Purchase Money Facility,
Lucent made $10 million in initial purchase money loans (the "Initial Purchase
Money Loans") immediately available to ART. As of September 30, 1998, the
Company had drawn approximately $3 million of the Initial Purchase Money Loans.
Subject to other conditions, upon ART's raising at least $50 million of certain
debt or equity capital and repayment and termination of the Working Capital
Facility, Lucent will make available purchase money loans equal to 200% of the
aggregate capital raised, not to exceed $200 million, including the Initial
Purchase Money Loans. There can be no assurance that the funding contemplated by
the Purchase Money Facility will become available to ART.
In August 1998, ART and Lucent entered into a definitive purchase agreement
(the "Lucent Purchase Agreement"), which amended and restated the Company's
purchase agreement with Lucent entered into in April 1998, under which Lucent
will design, engineer and construct the Company's wireless broadband data
network. The Company's purchase commitment under the Lucent Purchase Agreement
is initially $240 million upon the availability from Lucent of $200 million of
purchase money loans under the Purchase Money Facility, and increases to $1.2
billion if Lucent agrees to increase the amount of ART's purchase money loans to
$600 million on terms that are acceptable to ART. The Company's commitment is
subject to various other terms and conditions, including the availability of
additional financing on terms that are acceptable to ART.
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<PAGE>
The Company plans to raise substantial additional capital, including
financing sufficient to satisfy the requirements for additional availability
under the Purchase Money Facility. The Company believes that its existing
capital, together with funds available under the Working Capital Facility, is
sufficient to fund its operations at current levels at least through the end of
1998. However, without additional capital, the Company will not be able to
implement its business plan. There can be no assurance that the Company will be
able to obtain such additional capital when required, or, if available, that the
Company will be able to obtain it on acceptable terms. If the Company fails to
obtain additional capital when required, such failure could result in the
modification, delay of or abandonment of some or all of the Company's
development and expansion plans and could materially adversely affect the
Company.
ART's 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.
YEAR 2000 DISCLOSURE
Many existing computer programs use only two digits, rather than four, to
represent a year. Date-sensitive software or hardware written or developed in
this fashion may not be able to distinguish between 1900 and 2000, and programs
written in this manner that perform arithmetic operations, comparisons or
sorting of date fields may yield incorrect results when processing a Year 2000
date. This Year 2000 problem could potentially cause system failures or
miscalculations that could disrupt operations.
The Company's State of Readiness
The Company has implemented a survey to identify Year 2000 issues in three
areas: (i) financial and information technology systems (ii) non-IT network
equipment and (iii) third party vendors and suppliers. The Company believes its
financial and information technology systems and its non-IT equipment will be
Year 2000 compliant by the end of 1999.
Because the Company's financial and information technology systems are
relatively new, having been purchased in 1996 or thereafter, the Company does
not expect to uncover any material noncompliant systems. The Company believes
that its survey of financial and information technology systems will be
completed in fourth quarter of 1998. If Year 2000 issues are discovered, the
Company will evaluate and prioritize the problems. The Company expects to
coordinate any Year 2000 problems with the vendors that supplied the
noncompliant systems. The Company expects that any remediation efforts would
continue through mid-1999. However, there can be no assurance that the Company's
survey will identify all Year 2000 problems in these systems or that the
necessary corrective actions will be completed in a timely manner.
The Company has received warranties from its network equipment suppliers
and integrators, including Lucent, that the Company's non-IT network equipment
is Year 2000 compliant. In addition, the tests conducted by the Company before
accepting delivery are designed to evaluate whether the equipment is Year 2000
compliant. Based on these warranties and acceptance tests, the Company does not
plan to take further action to ascertain whether its network equipment is Year
2000 compliant. However, there can be no assurance that this equipment will be
Year 2000 compliant as warranted or that the acceptance tests will identify all
Year 2000 problems. In addition, the Year 2000 warranties that the Company has
received limit the damages that the Company would be able to recover if such
systems were not Year 2000 compliant. The Company is also reviewing the Year
2000 compatibility of its network management software. If the Company discovers
that this software is not Year 2000 compliant, it expects to coordinate its
remediation efforts with the software provider to remediate the system. The
Company expects that these remediation efforts, if any, will continue through
mid-1999.
The Company's survey is also assessing the Company's vulnerability to the
Year 2000 problems of third-party service suppliers. The Company relies on
third-party suppliers to deliver fiber telecommunications links, Internet
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<PAGE>
access, banking services, payroll services and electricity. The Company also
intends to develop new relationships with several providers of fiber-optic
telecommunications service, Internet service providers, telecommunications
resellers, and other companies in the telecommunications industry. The Company
intends to continuously identify and prioritize critical suppliers and
communicate with them about their plans and progress in addressing the Year 2000
problem.
The Company's Year 2000 Risk
Based on the efforts described above, the Company currently believes that
its systems will be Year 2000 compliant in a timely manner. The Company expects
to complete its survey of financial and information technology systems and non-
IT systems in the fourth quarter of 1998 and expects to complete any remediation
efforts by mid-1999. However, there can be no assurance that all Year 2000
problems will be successfully identified, or that the necessary corrective
actions will be completed in a timely manner. Failure to successfully identify
and remediate such Year 2000 problems in a timely manner could have a material
adverse effect on the Company's results of operations, financial position or
cash flow.
In addition, the Company believes that there is a risk relating to
significant service suppliers' failure to remediate their Year 2000 issues in a
timely manner. Although the Company is communicating with its suppliers
regarding the Year 2000 problem, the Company does not know whether these
suppliers' systems will be Year 2000 compliant in a timely manner. If one or
more significant suppliers are not Year 2000 compliant, this could have a
material adverse effect on the Company's results of operations, financial
position or cash flow.
The Company's Contingency Plans
The Company has not created a formal contingency plan for Year 2000
problems. The Company intends to take appropriate actions to mitigate the
effects of third parties' failures to remediate their Year 2000 issues and for
unexpected failures in its own systems. Such actions may include having
arrangements for alternate suppliers and using manual intervention where
necessary. If it becomes necessary for the Company to take these corrective
actions, it is uncertain whether this would result in significant interruptions
in service or delays in business operations or whether it would have a material
adverse effect on the Company's results of operations, financial position or
cash flow.
Costs of Year 2000 Remediation
As of September 30, 1998, the Company has not incurred material costs
related to the Year 2000 problem, and does not expect to in the future. The
Company has not deferred other information technology projects due to Year 2000
expenses, and does not expect to defer such projects in the future. However,
there can be no assurance that the costs associated with the Year 2000 problem
will not be greater than anticipated.
Readers are cautioned that forward-looking statements contained in the Year
2000 Disclosure should be read in conjunction with the Company's disclosures
under the heading: "Cautionary Statement" below.
CAUTIONARY STATEMENT
This Item and other Items in this Report include "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, about the Company's financing, strategy, network
deployment, operations and third party services. The Company cautions investors
that any such statements made by the Company are not guarantees of future
performance. Known and unknown risks, uncertainties, and other factors,
including without limitation, availability of additional financial resources,
capital requirements, operating expenses, operational issues, customer demand,
the ability to meet financing conditions, technological risks, management of
growth, competition, Year 2000 readiness and government regulation may cause
actual results to differ materially from the future results implied or expressed
in the forward looking statements. Additional information about the most
significant of such factors is identified in Exhibit 99 to the Company's Report
on Form 10-K for the year ended December 31, 1997. The Company does not
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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.
PART II -- OTHER INFORMATION
Item 2.
Pursuant to the Working Capital Facility, on August 26, 1998 and September
17, 1998, the Company issued warrants to Lucent to purchase 138,770 and 139,122
shares of ART common stock at an exercise price of $.01, and on September 19,
1998 the Company issued additional warrants to Lucent to purchase 255,984 shares
of ART common stock at an exercise price of $3.33. The warrants were offered
and sold in reliance on the exemption from registration under Section 4(2) of
the Securities Act of 1933, as amended. The warrants may be exercised at any
time and expire on August 25, 2008.
Item 4.
(a) The Company held its annual meeting of the stockholders (the "Annual
Meeting") on July 28, 1998. At the Annual Meeting, the stockholders of the
Company elected James C. Cook and Thomas J. Wynne as directors of the Company.
Of the 18,873,230 votes cast at the Annual Meeting, 15,469,740 votes were cast
in favor of the election of James C. Cook as director, and 3,403,490 votes
withheld their support for Mr. Cook; 15,651,253 votes were cast in favor of the
election of Thomas J. Wynne as director, and 4,221,977 votes withheld their
support for Mr. Wynne.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 Change of Control Agreement dated August 31, 1998 with
Thomas P. Boyhan.
10.2 Employment Agreement dated August 31, 1998 with
Thomas P. Boyhan.
10.3 Registration Rights Agreement dated August 26, 1998
between the Company and Lucent.
10.4 Amended and Restated Purchase Agreement dated July 24,
1998 between the Company and Lucent.*
10.5 Purchase Money Credit Agreement dated September 17, 1998
between the Company and Lucent.
10.6 Working Capital Credit Agreement dated September 17, 1998
between the Company and Lucent.
10.7 Form of Warrants issued to Lucent pursuant to the Working
Capital Facility.
10.8 Asset Purchase Agreement dated August 6, 1998 between the
Company and ICG Telecom Group, Inc.
10.9 Asset Purchase Agreement dated July 3, 1998 between the
Company and Astrolink Communications, Inc.
10.10 First Amendment to Asset Purchase Agreement dated
August 25, 1998 between the Company and Astrolink
Communications, Inc.
27 Financial Data Schedule.
* Confidential treatment request as to certain portions. The term
"confidential treatment" and the mark "*" as used throughout this
exhibit means that material has been omitted and separately filed
with the Commission.
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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 16th day of
November, 1998.
ADVANCED RADIO TELECOM CORP.
By: /s/ Robert S. McCambridge
------------------------------------
Robert S. McCambridge
Executive Vice President, Chief Financial
Officer
(Duly Authorized Officer and
Principal Financial and Accounting
Officer)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Index Title Page
- ------- ----- ----
<S> <C> <C>
10.1 Change of Control Agreement dated August 31, 1998 with Thomas P. Boyhan.
10.2 Employment Agreement dated August 31, 1998 with Thomas P. Boyhan.
10.3 Registration Rights Agreement dated August 26, 1998 between the Company
and Lucent.
10.4 Amended and Restated Purchase Agreement dated July 24, 1998 between the
Company and Lucent.*
10.5 Purchase Money Credit Agreement dated September 17, 1998 between the
Company and Lucent.
10.6 Working Capital Credit Agreement dated September 17, 1998 between the
Company and Lucent.
10.7 Form of Warrants issued to Lucent pursuant to the Working Capital
Facility.
10.8 Asset Purchase Agreement dated August 6, 1998 between the Company and ICG
Telecom Group, Inc.
10.9 Asset Purchase Agreement dated July 3, 1998 between the Company and
Astrolink Communications, Inc..
10.10 First Amendment to Asset Purchase Agreement dated August 25, 1998 between
the Company and Astrolink Communications, Inc.
27 Financial Data Schedule.
</TABLE>
* Confidential treatment request as to certain portions. The term
"confidential treatment" and the mark "*" as used throughout this exhibit
means that material has been omitted and separately filed with the
Commission.
<PAGE>
EXHIBIT 10.1
ADVANCED RADIO TELECOM CORP.
Change of Control Agreement
---------------------------
AGREEMENT, made as of the 31/st/ day of August, 1998, by and between THOMAS
BOYHAN ("Executive") and ADVANCED RADIO TELECOM CORP. (the "Company"),
RECITALS:
A. The Board of Directors of the Company (the "Board") recognizes that the
possibility of a change in control may exist and that such possibility, and the
uncertainty and questions which it may raise among management personnel, may
result in the departure or distraction of management personnel to the detriment
of the Company and its stockholders;
B. The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including Executive, to their duties, to assisting the
Board in assessing proposals with respect to a change in control and to advising
the Board as to the best interests of the Company and its shareholders with
respect to such potential change in control, without distraction and conflict
arising from the possibility of a change in control;
C. The Board wishes to induce Executive to join the Company as an employee and
thereafter to remain in the employ of the Company and to assure him of fair
severance should his employment terminate in specified circumstances following a
change of control of the Company.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein, the parties hereto agree as follows:
1. If within 24 months following a Change of Control (as defined in Exhibit A)
(the "Post Change of Control Period") Executive's employment with the Company is
terminated (i) by the Company for any reason (other than for "Cause" or
"Disability" (as defined paragraph 4 below) or as a result of Executive's
death), or (ii) Executive terminates such employment for Good Reason (as defined
in paragraph 4 below):
(a) The Company will pay to Executive within five business days of such
termination of employment a lump-sum cash payment equal to the sum of (i)
Executive's annual base salary ("Base Salary") at the time of termination
through the date of such termination of employment to the extent not theretofore
paid, (ii) a prorated portion of Executive's maximum incentive bonus for the
fiscal year in which such termination shall occur, calculated by multiplying (A)
such incentive compensation times (B) a fraction, the numerator of which is the
number of days in the fiscal year through the date of termination of employment,
and the denominator of which is 365, (iii) if Executive has not been paid
incentive compensation with respect to the
<PAGE>
fiscal year prior to the year in which such termination occurs (except where
prior to the Change of Control the Board had determined that no such incentive
compensation was to be paid to Executive with respect to such prior year), an
amount equal to Executive's maximum incentive bonus for such prior fiscal year,
(provided that if any target incentive compensation under (ii) or (iii) was
expressed in shares of common stock rather than cash, the Company will pay the
cash equivalent of such compensation based on the closing price per share as
reported in the Wall Street Journal (Eastern Edition), in the case of the
Company's common stock as of the date prior to the date of the Change of
Control), and (iv) any accrued and unpaid vacation pay through the date of
termination; and
(b) Any stock, stock option or other awards granted to Executive by the Company
shall immediately vest and, if applicable, become exercisable in full,
notwithstanding any provision to the contrary, and shall remain exercisable, if
applicable, until the earlier of the fourth anniversary of such termination of
employment or the latest date on which such grant could have been exercised, any
restrictions on any restricted stock, deferred stock or other awards shall
immediately terminate and all such awards shall immediately be vested in full,
and any certificates for any deferred stock shall be delivered to Executive no
later than five business days following such termination;
(c) The Company will pay to Executive within five business days of such
termination of employment a lump-sum cash payment equal to the greater of (i) an
amount equal to Executive's aggregate Base Salary and maximum incentive
compensation for the period from the date of termination through December 31,
2000 determined as if he had been employed through December 31, 2000 (but
without duplication of amounts paid pursuant to Section 1(a) above) or (ii) an
amount equal to: (A) the amount of Executive's Base Salary at the rate in effect
immediately prior to the date of termination or at the rate in effect
immediately prior to the Change of Control, whichever is higher, and (B) the
amount of Executive's maximum incentive compensation for the fiscal year during
which the termination of employment occurs or the amount of Executive's maximum
incentive compensation in effect immediately prior to the Change of Control,
whichever is higher (provided that if any such incentive compensation is
expressed or was paid in shares of common stock rather than cash, the
calculation will be based on, and the Company will pay the cash equivalent of,
such compensation based on the closing price per share as reported in the Wall
Street Journal (Eastern Edition) in the case of a share of the Company's common
stock determined on the date prior to the date of the Change of Control.
(d) Executive, together with his dependents, will continue following such
termination of employment to participate fully in the life and medical insurance
plans maintained or sponsored by the Company immediately prior to the Change of
Control on the same basis they participated prior to the Change in Control until
the earlier of (i) the second anniversary of such termination or any longer
period as may be provided by the terms of such plan or (ii) the date Executive
becomes re-employed with another employer and is eligible to receive
substantially equivalent life and medical benefits under another employer
provided plan,
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<PAGE>
provided that if the continued participation of Executive and his dependents is
not possible under the terms of any of such Company plans, the Company shall
instead either arrange to provide Executive and his dependents with
substantially equivalent benefits or pay to Executive (within five days of the
date of termination) an amount equal to the full value thereof in cash; and
(e) to the extent not theretofore paid or provided for, the Company shall
timely pay or provide to Executive any other amounts or benefits required to be
paid or provided or which Executive is eligible to receive under any plan,
program, policy, practice, contract or agreement of the Company ("Other
Benefits"); and
(f) the Company will promptly reimburse Executive for any and all legal fees
and expenses (including, without limitation, stenographer fees and printing
costs) incurred by him as a result of such termination of employment, including
without limitation all fees and expenses incurred to enforce the provisions of
this Agreement or contest or dispute that the termination of his employment is
for Cause or other than for Good Reason (regardless of the outcome thereof).
Notwithstanding anything herein to the contrary, (i) to the extent that any
payment or benefit provided for herein is required to be paid or vested on any
earlier date under the terms of any plan, agreement or arrangement, such plan,
agreement or arrangement shall control; and (ii) if a Change of Control occurs
and if Executive's employment with the Company is terminated by the Company for
a reason other than Cause prior to the date upon which the Change of Control
occurs, and Executive reasonably demonstrates that such termination of
employment (x) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (y) otherwise arose in
connection with or in anticipation of a Change of Control, then for all purposes
of this Agreement, Executive shall be entitled to the benefits provides in
Section 1 above.
If Executive receives any benefit, amount or payment other than under this
Agreement upon the termination of his employment with the Company, the amount of
such payments shall be deducted from the amount paid under this Agreement and
the benefits to be provided hereunder shall be provided only to the extent
additional to the benefits to be provided other than under this Agreement. To
avert a duplication of benefits, neither this paragraph nor the provisions of
any other agreement shall be interpreted to reduce the amount payable to
Executive below the amount that would otherwise have been payable under this
Agreement.
2. Death, Disability, Cause, Other Than For Good Reason
(a) If Executive's employment shall terminate during the Post Change of Control
Period by reason of Executive's death, this Agreement shall terminate without
further obligations to
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<PAGE>
Executive's legal representatives under this Agreement, other than the timely
payment or provision of Other Benefits.
(b) If Executive's employment is terminated during the Post Change of Control
Period by reason of Executive's Disability, this Agreement shall terminate
without further obligations to Executive other than the timely payment or
provision of Other Benefits. For purposes of this Agreement, "Disability" shall
mean the absence of Executive from Executive's duties with the Company on a
full-time basis for 180 consecutive business days as a result of incapacity due
to mental or physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and reasonably acceptable to
Executive or Executive's legal representative. If the Company determines in good
faith that the Disability of Executive has occurred during the Post Change of
Control Period, it may give Executive written notice of its intention to
terminate Executive's employment. In such event, Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by Executive, provided that, within the 30 days of such receipt, Executive shall
not have returned to full-time performance of Executive's duties.
(c) If Executive's employment shall be terminated for Cause (as defined in
Section 4 below) during the Post Change of Control Period, this Agreement shall
terminate without further obligations to Executive other than the obligation to
pay Executive (A) his Base Salary through the date of termination and (B) Other
Benefits, in each case to the extent theretofore unpaid.
(d) If Executive voluntarily terminates employment during the Post Change of
Control Period, excluding a termination for Good Reason, this Agreement shall
terminate without further obligations to Executive other than the timely payment
or provision of Other Benefits.
3. "Cause" means only: (a) commission of a felony or gross neglect of duty by
Executive rising to the level of deliberate dereliction, (b) conviction of a
crime involving moral turpitude, or (c) willful failure by Executive in the
performance of his duties to the Company which failure is deliberate on
Executive's part, results in material injury to the Company, and continues for
more than 30 days after written notice given to Executive pursuant to a two-
thirds vote of all of the members of the Board at a meeting called and held for
such purpose (after reasonable notice to Executive) and at which meeting
Executive and his counsel were given an opportunity to be heard, such vote to
set forth in reasonable detail the nature of the failure. For purposes of this
definition of Cause, no act or omission shall be considered to have been
"willful" unless it was not in good faith and Executive had knowledge at the
time that the act or omission was not in the best interest of the Company. Any
act or failure to act based on authority given pursuant to a resolution duly
adopted by the Board or based on the advice of counsel of the Company shall be
conclusively presumed to be done, or omitted to be done, by Executive in good
faith and in the best interest of the Company. Cause shall not
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<PAGE>
include willful failure due to incapacity resulting from physical or mental
illness or any actual or anticipated failure after Notice of Termination for
Good Reason.
4. Executive shall be deemed to have voluntarily terminated his employment for
Good Reason if Executive leaves the employ of the Company for any reason
following:
(a) The assignment to Executive of any duties inconsistent in any respect with
Executive's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities immediately prior to the
Change of Control; or the diminution or adverse alteration in any material
adverse respect of such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by Executive;
(b) Any reduction in Executive's rate of Base Salary for any fiscal year to
less than 100% of the rate of Base Salary payable for the fiscal year
immediately preceding the Change of Control or of the Base Salary provided for
such fiscal year in any agreement between Executive and the Company, or
reduction in Executive's total cash and stock compensation opportunities,
including Base Salary and incentives, for any fiscal year to less than 100% of
the total cash and stock compensation opportunities made available to him
immediately preceding the Change of Control for the then current fiscal year or
of the total cash and stock compensation opportunities which were to be made
available to him for the fiscal year pursuant to any agreement between Executive
and the Company (for this purpose, such opportunities shall be deemed reduced if
the objective standards by which Executive's incentive compensation measured
becomes more stringent, the target or maximum amounts of such incentive
compensation are reduced, or the amount of such incentive compensation is
reduced on a discretionary basis from the amount that would be payable solely by
reference to the objectives); or
(c) Failure of the Company to continue in effect any retirement, life, medical,
dental, disability accidental death or travel insurance plan or other benefit
plan or practice, in which Executive was participating immediately prior to the
Change of Control unless the Company provides Executive with a plan or plans or
practices that provide substantially similar benefits, or the taking of any
action by the Company that would adversely affect Executive's participation in
or materially reduce Executive's benefits under any of such plans or practices
or deprive Executive of any material fringe benefit enjoyed by Executive
immediately prior to the Change of Control other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by Executive; or
(d) The Company requires Executive to be based at any office or location
further than 40 miles from the City of Bellevue, or the Company requires
Executive to travel on Company
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<PAGE>
business to a substantially greater extent than required immediately prior to
the date of the Change of Control; or
(e) Any failure by the Company to comply with and satisfy Section 6 of this
Agreement.
Executive's right to terminate his employment pursuant to this section shall not
be affected by his incapacity due to physical or mental illness. Executive's
continued employment shall not constitute consent to, or a waiver of rights with
respect to, any circumstances constituting Good Reason hereunder.
5. In the case of any dispute under this Agreement, Executive may initiate
binding arbitration in Seattle, Washington before the American Arbitration
Association by serving a notice to arbitrate upon the Company or, at Executive's
election, institute judicial proceedings. The Company shall not have the right
to initiate binding arbitration, and agrees that upon the initiation of binding
arbitration by Executive pursuant to this paragraph 5 the Company shall cause to
be dismissed any judicial proceedings it has brought against Executive relating
to this Agreement. The Company authorizes Executive from time to time to retain
counsel of his choice to represent Executive in connection with any and all
actions, proceedings, and/or arbitration, whether by or against the Company or
any director, officer, shareholder, or other person affiliated with the Company,
which may affect Executive's rights under this Agreement. The Company agrees to
(i) pay the fees and expenses of such counsel, (ii) to pay the cost of such
arbitration and/or judicial proceeding, and (iii) pay interest to Executive on
all amounts owed to Executive under this Agreement during any period of time
that such amounts are withheld pending arbitration and/or judicial proceedings.
Such interest will be at the base rate as announced from time to time by
Canadian Imperial Bank of Commerce.
In addition, notwithstanding any existing or prior attorney-client relationship
between the Company and counsel retained by Executive, the Company irrevocably
consents to
Executive entering into an attorney-client relationship with such counsel and
agrees that a confidential relationship shall exist between Executive and such
counsel.
6. If the Company is at any time before or after a Change of Control merged or
consolidated into or with any other corporation or other entity (whether or not
the Company is the surviving entity), or if substantially all of the assets
thereof are transferred to another corporation or other entity, the provisions
of this Agreement will be binding upon and inure to the benefit of the
corporation or other entity resulting from such merger or consolidation or the
acquirer of such assets (the "Successor Entity"), and this paragraph 6 will
apply in the event of any subsequent merger or consolidation or transfer of
assets. The Company will require any such Successor Entity to assume expressly
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such transaction had taken
place. As used in this Agreement, Company shall mean the Company
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<PAGE>
as hereinbefore defined and any Successor Entity which assumes and agrees to
perform this Agreement by operation of law or otherwise.
In the event of any merger, consolidation, or sale of assets described above,
nothing contained in this Agreement will detract from or otherwise limit
Executive's right to or privilege of participation in any stock option or
purchase plan or any bonus, profit sharing, pension, group insurance,
hospitalization, or other incentive or benefit plan or arrangement which may be
or become applicable to executives of the corporation resulting from such merger
or consolidation or the corporation acquiring such assets of the Company.
In the event of any merger, consolidation, or sale of assets described above,
references to the Company in this Agreement shall unless the context suggests
otherwise be deemed to include the entity resulting from such merger or
consolidation or the acquiror of such assets of the Company.
7. Any termination by the Company for Cause, or by Executive for Good Reason,
shall be communicated by Notice of Termination to the other party hereto given
in accordance with the last paragraph of Section 13 of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written notice
that (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than thirty days after the
giving of such notice). The failure by Executive or the Company to set forth in
the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of Executive or the
Company, respectively, hereunder or preclude Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing Executive's
or the Company's rights hereunder.
"Date of Termination" means (i) if Executive's employment is terminated by the
Company for Cause, or by Executive for Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein, as the case may be,
(ii) if Executive's employment is terminated by the Company other than for Cause
or Disability, the Date of Termination shall be the date on which the Company
notifies Executive of such termination and (iii) if Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of Executive or the effective date of the Disability, as the
case may be.
8. All payments required to be made by the Company hereunder to Executive or
his dependents, beneficiaries, or estate will be subject to the withholding of
such amounts relating to tax and/or other payroll deductions as may be required
by law.
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9. There shall be no requirement on the part of Executive to seek other
employment or otherwise mitigate damages in order to be entitled to the full
amount of any payments and benefits to which Executive is entitled under this
Agreement, and the amount of such payments and benefits shall not be reduced by
any compensation or benefits received by Executive from other employment other
than with respect to certain welfare benefits as provided in the first proviso
to Section 1(d).
10. Nothing contained in this Agreement shall be construed as a contract of
employment between the Company and Executive, or as a right of Executive to
continue in the employ of the Company, or as a limitation of the right of the
Company to discharge Executive with or without Cause; provided that Executive
shall have the right to receive upon termination of his employment the payments
and benefits provided in this Agreement and shall not be deemed to have waived
any rights he may have either at law or in equity in respect of such discharge.
11. No amendment, change, or modification of this Agreement may be made except
in writing, signed by both parties.
12. This Agreement shall terminate on December 31, 2000, provided, however,
that commencing on December 31, 1998 and on each annual anniversary of such date
(each such date hereinafter referred to as a "Renewal Date"), unless previously
terminated, the term of this Agreement shall be automatically extended so as to
terminate three years from such Renewal Date, unless at least sixty days prior
to the Renewal Date the Company shall give notice to Executive that the term of
this Agreement shall not be so extended. This Agreement shall not apply to a
Change of Control which takes place after the termination of this Agreement.
The provisions of this Agreement shall be binding upon and shall inure to the
benefit of Executive, his executors, administrators, legal representatives and
assigns, and the Company and its successors.
The validity, interpretation, and effect of this Agreement shall be governed by
the laws of the State of Washington. Any ambiguities in this Agreement shall be
construed in favor of Executive.
The invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
The Company shall have no right of set-off or counterclaims, in respect of any
claim, debt, or obligation, against any payments to Executive, his dependents,
beneficiaries, or estate provided for in this Agreement.
-8-
<PAGE>
No right or interest to or in any payments shall be assignable by Executive;
provided, however, that this provision shall not preclude him from designating
- --------
one or more beneficiaries to receive any amount that may be payable after his
death and shall not preclude the legal representative of his estate from
assigning any right hereunder to the person or persons entitled thereto under
his will or, in the case of intestacy, to the person or persons entitled thereto
under the laws of intestacy applicable to his estate. The term "beneficiaries"
as used in this Agreement shall mean a beneficiary or beneficiaries so
designated to receive any such amount, or if no beneficiary has been so
designated, the legal representative of Executive's estate.
No right, benefit, or interest hereunder, shall be subject to anticipation,
alienation, sale, assignment, encumbrance, charge, pledge, hypothecation or set-
off in respect of any claim, debt or obligation, or to execution, attachment,
levy or similar process, or assignment by operation of law. Any attempt,
voluntary or involuntary, to effect any action specified in the immediately
preceding sentence shall, to the full extent permitted by law, be null, void,
and of no effect.
All notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to Executive: Thomas Boyhan
- ---------------
4003 South Oak Circle
Sugar Land, TX 77479
If to the Company: Advanced Radio Telecom Corp.
- -----------------
500 108th Avenue, N.E.
Suite 2600
Bellevue, WA 98004
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
-9-
<PAGE>
IN WITNESS WHEREOF, the Company and Executive have each caused this Agreement to
be duly executed and delivered as of the date set forth above.
ADVANCED RADIO TELECOM CORP.
By:______________________________
Henry C. Hirsch
Chairman, CEO & President
________________________________
Executive
-10-
<PAGE>
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT dated as of August 31, 1998 between Thomas Boyhan ("Executive")
and Advanced Radio Telecom Corp. (the "Company"), a Delaware corporation located
at 500 108th Ave NE, Suite 2600, Bellevue, WA 98004.
RECITALS
--------
Executive seeks to be employed by the Company, and the Company seeks to
employ Executive as its Executive Vice President, Sales. The Company and
Executive intend that Executive shall serve the Company on the terms set forth
below and, to that end, deem it desirable and appropriate to enter into this
Agreement.
AGREEMENT
---------
The parties hereto, in consideration of the mutual agreements hereinafter
contained, agree as follows:
1. EFFECTIVE DATE; TERM OF AGREEMENT. This Agreement shall become effective
---------------------------------
as of September 1, 1998 (the "Effective Date"). Executive's employment shall
continue on the terms provided herein until December 31, 2000, subject to
earlier termination as provided herein (such period of employment hereinafter
called the "Employment Period").
2. SCOPE OF EMPLOYMENT.
-------------------
a. Nature of Services. During the Employment Period, Executive shall be
------------------
elected and serve as Executive Vice President, Sales or as such other executive
vice president designated by the Chief Executive Officer or the Board of
Directors ("Board") of the Company and shall have and diligently perform the
duties and the responsibilities of such office and such additional executive
duties and responsibilities consistent with such office as shall from time to
time be assigned to him.
b. Extent of Services. Except for illnesses and vacation periods, Executive
------------------
shall devote substantially all his working time and attention and his best
efforts to the performance of his duties and responsibilities under this
Agreement. However, Executive may (i) make any passive investments where he is
not obligated or required to, and shall not in fact, devote any managerial
efforts, (ii) participate in charitable or community activities or in trade or
professional organizations, or (iii) subject to Board approval (which approval
shall not be unreasonably withheld or withdrawn), hold directorships in public
companies, provided that the Board shall have the right to limit such
investments, participation and services whenever the Board shall reasonably
believe that the time spent on such activities infringes in any material respect
upon
<PAGE>
the time required by Executive for the performance of his duties under this
Agreement or is otherwise incompatible in any material regard with those duties.
3. COMPENSATION AND BENEFITS.
-------------------------
a. Base Salary. Executive shall be paid a base salary at the annualized rate
-----------
of Two Hundred Thousand Dollars ($200,000.00) or such higher annualized rate as
the Board may determine ("Base Salary"), such Base Salary to be paid in the same
manner and at the same times as the Company shall pay base salary to other
executive employees.
b. Bonus Compensation. Executive will be eligible for an incentive bonus
------------------
with respect to each fiscal year or portion thereof during the Employment Period
pursuant to such bonus or incentive compensation plan as is then available to
executives of the Company generally, or if there is no such plan, as the Board
may determine based on performance criteria set annually. The maximum incentive
bonus for each fiscal year shall be 100% of his Base Salary in effect with
respect to such fiscal year. For each fiscal year or portion thereof, the
determination of the target incentive bonus and whether Executive has earned any
incentive bonus and the amount thereof shall be made by the Board in its
judgment.
c. Policies and Fringe Benefits. Executive shall be subject to Company
----------------------------
policies applicable to its executives generally and shall be entitled to receive
all such fringe benefits as the Company shall from time to time make available
to other executives generally (subject to the terms of any applicable fringe
benefit plan), including vacation of four weeks per year, in accordance with and
subject to prevailing Company policies.
4. TERMINATION OF EMPLOYMENT.
-------------------------
a. The Company shall have the right to terminate Executive's employment at any
time and for any reason, with or without Cause. Executive may resign for any
reason on thirty (30) days notice and upon Constructive Termination (as defined
below).
b. The Employment Period shall terminate when Executive dies or becomes
Disabled. In addition, if by reason of Incapacity Executive is unable to
perform his duties for at least six continuous months, the Employment Period may
be terminated by the Company for Incapacity upon written notice by the Company
to Executive. "Disability" and "Disabled" shall have the meaning given in the
Company's long-term disability plan. Executive's employment shall be deemed to
be terminated for Disability on the date on which Executive is entitled to
receive long-term disability compensation pursuant to such long-term disability
plan.
-2-
<PAGE>
"Incapacity" shall mean a disability (other than Disability) or other impairment
of health that renders Executive unable to perform his duties to the reasonable
satisfaction of the Board.
c. Whenever the Employment Period shall terminate, Executive shall resign all
offices or other positions he holds with the Company and any affiliated
entities.
5. BENEFITS UPON TERMINATION OF EMPLOYMENT OR UPON EXPIRATION OF THE
-----------------------------------------------------------------
AGREEMENT.
---------
a. Certain Terminations Prior to December 31, 2000. If the Employment Period
-----------------------------------------------
shall terminate prior to December 31, 2000 by reason of (i) death, Disability or
Incapacity of Executive, (ii) termination by the Company for any reason other
than Cause or (iii) termination by Executive in the event that either (A)
Executive shall be removed from or fail to be reelected as an Executive Vice
President or (B) Executive is relocated more than 40 miles from the current
corporate headquarters of the Company, in the case without his prior written
consent (each a "Constructive Termination") and subject to Section 6 hereof,
Executive shall be entitled to the following severance benefits:
(i) The Company shall continue to pay to Executive or his legal representative
his Base Salary for twelve (12) months following such termination and, at the
termination of such twelve-month period, shall pay Executive an incentive bonus
at the target amount at the time of his termination; provided that if Executive
is eligible for long-term disability compensation benefits under any Company
long-term disability plan, the amount payable under this clause shall be reduced
by the long-term disability compensation benefits under such plan for which
Executive is eligible with respect to the period following termination.
(ii) For twelve (12) months following termination, and subject to such minimum
coverage-continuation requirements as may be required by law, the Company will
provide (except to the extent that Executive shall obtain or be eligible to
obtain such insurance from another employer) such medical and hospital insurance
and term life insurance for Executive and his family, comparable to the
insurance provided for executives generally, as the Company shall determine, and
upon the same terms and conditions as the same shall be provided for other
Company executives generally; provided, however, that in no event shall such
insurance benefits supplied by the Company or the terms and conditions thereof
be less favorable to Executive than those afforded to him as of the date of
termination. To the extent it is impossible or impracticable to provide any
such benefits to Executive under the Company's then existing employee benefit
plans or arrangements, the Company shall arrange for alternative comparable
coverage or, if such alternative coverage is not available, shall pay to
Executive the cost of such coverage, as reasonably determined by the Company.
(iii) All of Executive's previously granted stock options ("Options") then
outstanding, to the extent not already vested, shall be immediately vested and
shall remain exercisable for a period of one year or, if less, the remainder of
the original option term, and shall then terminate.
-3-
<PAGE>
(iv) It is agreed and understood that all payments and benefits provided to
Executive hereunder shall be expressly conditioned on the execution by Executive
or his legal representative of a general release and waiver of claims in favor
of the Company and its directors, officers, affiliates, and representatives.
b. Voluntary Termination of Employment. If Executive terminates his employment
-----------------------------------
voluntarily (other than a Constructive Termination), Executive or his legal
representative shall not be entitled to any severance or other benefits under
this Agreement.
c. Termination for Cause. If the Company should terminate Executive's
---------------------
employment for Cause, Executive or his legal representative shall not be
entitled to any severance or other benefits under this Agreement, all Options
shall immediately terminate and the Company shall not waive any rights it may
have for damages or for injunctive relief. "Cause" shall mean dishonesty by
Executive in the performance of his duties, conviction of a felony (other than a
conviction arising solely under a statutory provision imposing criminal
liability upon Executive on a per se basis due to the Company offices held by
Executive, so long as any act or omission of Executive with respect to such
matter was not taken or omitted in contravention of any applicable policy or
directive of the Board), gross neglect of duties (other than as a result of
Disability, Incapacity or death) rising to the level of deliberate dereliction,
conflict of interest, which conflict shall continue for 30 days after the
Company gives written notice to Executive requesting the cessation of such
conflict, or material breach by Executive of any of the restrictive covenants
contained in Sections 6(a) and 6(b) hereof.
6. AGREEMENT NOT TO SOLICIT OR COMPETE; CONFIDENTIALITY.
----------------------------------------------------
a. Nonsolicitation. For a period of one year after the termination of his
---------------
employment, Executive shall not under any circumstances employ, solicit the
employment of, accept unsolicited the services of or assist any other entity in
employing or soliciting the employment of, any Protected Person (as defined
below), recommend the employment of any Protected Person to any other business
or encourage any Protected Person to terminate his or her employment
relationship with the Company. A "Protected Person" shall mean any person who
was employed by the Company or its subsidiaries prior to the termination of
Executive's employment and is, or during the three months prior to the
commencement of conversations with Executive with respect to employment was,
employed by the Company or its subsidiaries.
-4-
<PAGE>
b. Noncompetition. During the course of his employment, Executive will learn
--------------
trade secrets of the Company and will have access to Confidential Information
(as hereinafter defined) and business plans of the Company. Therefore, (i)
during the Employment Period, (ii) upon automatic termination of the Employment
Period on December 31, 2000, if Executive should terminate his employment
voluntarily at any time, or if Executive's employment is terminated for
Disability or Incapacity, then for a period of one year after the termination of
his employment, or Executive will not, directly or indirectly, engage in, become
associated in any manner with, lend his name to or have any financial interest
in any Competitive Business (as defined below) anywhere in the world, whether as
a contractor, consultant, agent, partner, principal, investor, employee, owner,
manager or otherwise. Without limiting the generality of the foregoing,
Executive agrees during such period that he shall not, directly or indirectly,
solicit or encourage any customer or vendor of the Company to terminate or
diminish its relationship with the Company or to conduct with himself or with
any other person, organization or other entity any business or activity which
such customer or vendor conducts or could conduct with the Company.
"Competitive Business" shall mean any line of business in which the Company is
at the time engaged or for which the management or the Board of Directors of the
Company is at the time actively planning to become engaged. Nothing herein
shall prevent Executive from owning not in excess of one percent of any security
issued and outstanding listed on a national securities exchange or traded on the
Nasdaq National Market. It is agreed and understood that the post-employment
Noncompetition period prescribed herein shall be tolled, and shall not run,
during any period of time in which Executive is in breach of the provisions of
this Section 6(b).
c. Confidentiality. Executive acknowledges that during his employment, he may
---------------
develop Confidential Information for the Company and may learn Confidential
Information developed or owned by the Company or entrusted to it by others.
Executive agrees that he will not, during the term of this Agreement or at any
time thereafter, other than as required in furthering the best interests of the
Company, use or disclose any Confidential Information. "Confidential
Information" means any and all information of the Company that is not generally
available to the public. Confidential Information includes but is not limited
to (i) the Company's development, research and marketing activities, (ii) the
Company's products and services, (iii) the Company's costs, sources of supply
and strategic plans, (iv) the identity and requirements of the Company's
customers, prices charged and services provided and (v) the people and
organizations with whom the Company has business relationships and those
relationships. Confidential Information also includes such information as the
Company may receive or has received belonging to customers or others who do
business with it, but shall not include information which is either generally
known to the public and/or is required to be disclosed publicly by operation of
law or regulation.
d. Return of Confidential Information. All Confidential Information created
----------------------------------
by Executive or to which Executive has access and all documents, records and
files, in any media of whatever kind and description, relating to the business,
present or otherwise, of the Company or containing, based on or reflecting
Confidential Information (the "Documents"), whether or not prepared by
Executive, shall be the sole and exclusive property of the Company. Executive
shall
-5-
<PAGE>
return to the Company immediately after the termination of this Agreement, and
at such other times as may be specified by the Company, all Documents and all
other property of the Company then in his possession or control.
7. ENFORCEMENT. The parties desire that the provisions of this Agreement
-----------
shall be enforced to the fullest extent permissible under the laws and public
policies applied to the jurisdiction whose laws govern this Agreement.
Accordingly, to the extent that a restriction contained in this Agreement is
more restrictive than permitted by the laws of any jurisdiction where this
Agreement may be subject to review and interpretation, and in the event that any
restriction shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its being extended over too great a time, too large a
geographic area or too great a range of activities, the terms of such
restriction, for the purpose only of the operation of such restriction in such
jurisdiction, shall be the maximum restriction allowed by the laws of such
jurisdiction and such restriction shall be deemed to have been revised
accordingly.
8. REMEDIES. Executive acknowledges that he has carefully read and
--------
considered all the terms and conditions of this Agreement, including the
restraints imposed upon him pursuant to Section 6 hereof. Executive agrees that
said restraints are necessary for the reasonable and proper protection of the
Company and that each and every one of the restraints is reasonable in respect
to its core subject matter, length of time and geographic area. Executive
acknowledges that the provisions of this Agreement are of a special and unique
nature, the loss of which cannot be accurately compensated for in damages by an
action at law, and that, were he to breach any of the covenants contained in
Section 6 hereof, the damage to the Company would be irreparable. The Executive
therefore agrees that the Company, in addition to any other remedies available
to it, shall be entitled to preliminary and permanent injunctive relief against
any breach or threatened breach by the Executive of any of said covenants,
without having to post bond, and shall be further entitled to recover from
Executive its reasonable attorney's fees and expenses incurred in connection
with the enforcement of its rights hereunder should the Company prevail.
9. ASSIGNMENT. The rights and obligations of the Company shall inure to the
----------
benefit of and shall be binding upon the successors and assigns of the Company.
The rights and obligations of Executive are not assignable except only that
payments payable to him after his death shall be made by devise or descent.
10. NOTICES. All notices and other communications required hereunder shall be
-------
in writing and shall be given by mailing the same by certified or registered
mail, return receipt requested, postage prepaid. If sent to the Company, the
same shall be mailed to the Company at 500 108th Avenue, N.E., Suite 2600,
Bellevue, WA 98004, Attention: General Counsel, or other such address as the
Company may hereafter designate by notice to Executive; and if sent to
Executive, the same shall be mailed to Executive c/o the Company at 500 108th
Avenue, N.E., Suite 2600, Bellevue, WA 98004 with a copy to 4003 South Oak
Circle, Sugar Land, TX 77479, or such other address as Executive may hereafter
designate by notice to the Company.
-6-
<PAGE>
11. WITHHOLDING. Anything to the contrary notwithstanding, all payments
-----------
required to be made by the Company hereunder to Executive shall be subject to
the withholding of such amounts, if any, relating to tax and other payroll
deductions as the Company may reasonably determine it should withhold pursuant
to any applicable law or regulation.
12. GOVERNING LAW. This Agreement and the rights and obligations of the
-------------
parties hereunder shall be governed by the laws of the State of Washington.
13. CONFLICTING AGREEMENTS. Executive hereby represents and warrants that the
----------------------
execution of this Agreement and the performance of his obligations hereunder
will not breach or be in conflict with any other agreement to which Executive is
a party or is bound and that the Executive is not now subject to any covenants
against competition or similar covenants that would affect the performance of
his obligations hereunder. Executive will not disclose to or use on behalf of
the Company any proprietary information of a third party without such party's
consent.
14. SEVERABILITY. If any portion or provision of this Agreement shall to any
------------
extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law. The parties agree to substitute a provision
that effects the intent of the invalidated provision as nearly as possible.
15. WAIVER; AMENDMENT. No waiver of any provision hereof shall be effective
-----------------
unless made in writing and signed by the waiving party. The failure of either
party to require the performance of any term or obligation of this Agreement, or
the waiver by either party of any breach of this Agreement, shall not prevent
any subsequent enforcement of such term or obligation or be deemed a waiver of
any subsequent breach. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly or authorized
representative of the Company.
16. HEADINGS; COUNTERPARTS. The headings and captions in this Agreement are
----------------------
for convenience only and in no way define or describe the scope or content of
any provision of this Agreement.
-7-
<PAGE>
17. ENTIRE AGREEMENT. This Agreement represents the entire agreement between
----------------
the parties relating to the terms of Executive's employment by the Company and
supersedes all prior written or oral agreements between them.
______________________________
Thomas Boyhan
ADVANCED RADIO TELECOM CORP.
By:_________________________________
Henry C. Hirsch
Chairman, CEO & President
-8-
<PAGE>
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT, dated August 26, 1998 between
ADVANCED RADIO TELECOM CORP., a Delaware corporation (the
"Company") and LUCENT TECHNOLOGIES INC. ("Lucent").
------
The Company is issuing the Original Warrants (as defined below) as
consideration for the execution and delivery by Lucent of the Commitment Papers
(as defined below), and proposes to issue the Other Warrants (as defined below)
as consideration for the establishment of the Working Capital Facility (as
defined below) and extensions of credit thereunder as contemplated by the
Commitment Papers.
As further consideration for the foregoing, the Company and Lucent,
for the benefit of the Beneficiaries (as defined below), agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following
------------
terms shall have the following meanings:
"Affiliate" means as to any Person, any other Person that, directly or
---------
indirectly, alone or through others, controls, is controlled by or is under
common control with such Person. For purposes of this definition "controls"
(including with correlative meanings, the terms "controlled by" and "under
common control with" as applied to any Person) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contracts or otherwise.
"Beneficiaries" means the Warrantholders and the Restricted
-------------
Stockholders.
"Commission" means the Securities and Exchange Commission or any other
----------
Federal agency at the time administering the Securities Act.
"Commitment Papers" means Lucent's commitment letter dated April 27,
-----------------
1998 and the attached term sheet, as supplemented by the supplemental commitment
letter dated July 17, 1998 and the attached supplemental term sheet, accepted
and agreed to by the Company.
"Common Stock" means the Common Stock, $.001 par value per share, of
------------
the Company or similar securities of any successor to the Company issued or
issuable upon any conversion or exchange of the Common Stock or upon exercise of
any Warrants.
<PAGE>
2
"Exchange Act" means the Securities Exchange Act of 1934, and the
------------
rules and regulations of the Commission promulgated thereunder, all as the same
shall be in effect from time to time.
"Existing Agreement" means the Second Restated and Amended
------------------
Registration Rights Agreement dated July 3, 1996, among the Company and certain
other parties identified therein, as amended on October 16, 1996.
"Majority Beneficiaries" means, at any time, Beneficiaries holding a
----------------------
majority in interest of the Restricted Shares (including Restricted Shares
issuable upon exercise of Warrants) at such time.
"Original Warrants" means (a) the warrants issued by the Company to
-----------------
Lucent (or its designee) on the date of this Agreement and (b) any warrants
issued upon any transfer, division, combination, exchange or replacement thereof
(including successive transfers, divisions, combinations, exchanges or
replacements).
"Other Warrants" means (a) the warrants (other than the Original
--------------
Warrants) contemplated by the Commitment Papers to be issued by the Company to
Lucent (or its designee) and (b) any warrants issued upon any transfer,
division, combination, exchange or replacement thereof (including successive
transfers, divisions, combinations, exchanges or replacements).
"Person" means any individual, partnership, corporation, trust,
------
unincorporated organization, limited liability company, association, joint
venture or other entity or a government, agency, political subdivision,
instrumentality or division thereof.
"Primary Shares" means at any time the authorized but unissued shares
--------------
of Common Stock or shares of Common Stock held by the Company in its treasury.
"Restricted Shares" means at any time, with respect to any
-----------------
Beneficiary, the Warrant Shares which are held by such Beneficiary (or, in the
case of a Warrantholder, issuable upon exercise of its Warrants) and which (a)
have not previously been sold to the public pursuant to a registration statement
under the Securities Act and (b) such Beneficiary is not entitled to sell
pursuant to Rule 144(k) under the Securities Act.
"Restricted Stockholder" means any holder of Restricted Shares.
----------------------
<PAGE>
3
"Rule 144" means Rule 144 promulgated under the Securities Act or any
--------
successor rule thereto or any complementary rule thereto.
"Securities Act" means the Securities Act of 1933, and the rules and
--------------
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
"Warrant Shares" means any shares of Common Stock issued or issuable
--------------
upon exercise of any Warrants.
"Warrants" means the Original Warrants and Other Warrants.
--------
"Warrantholder" means any Person holding Warrants.
-------------
"Working Capital Facility" is defined in the Commitment Papers.
------------------------
SECTION 2. Piggyback Registration. If the Company at any time
-----------------------
proposes for any reason to register shares of Common Stock under the Securities
Act (other than on Form S-4 or S-8 promulgated under the Securities Act or any
successor forms thereto) it shall promptly give written notice to each
Beneficiary of its intention and, upon the written request, given within 30 days
after delivery of any such notice by the Company, of any Beneficiary to include
in such registration Restricted Shares (which request shall specify the number
of Restricted Shares proposed to be included in such registration), the Company
shall use its best efforts to cause all such Restricted Shares to be included in
such registration on the same terms and conditions as the securities otherwise
being sold in such registration; provided, however, that if the managing
-------- -------
underwriter advises the Company that the inclusion of all shares of Common Stock
and other securities proposed to be included in such registration would
interfere with the successful marketing (including pricing) of the offering,
then the number of shares of Common Stock and other securities proposed to be
included in such registration shall be included in the following order:
(a) first, the Primary Shares, if any;
-----
(b) second, the shares of Common Stock or other securities, if any,
------
entitled to be included in such registration pursuant to the Existing Agreement;
(c) third, the Restricted Shares requested to be included pursuant to
-----
this Agreement on a pro rata basis; and
<PAGE>
4
(d) fourth, other shares of Common Stock or securities requested to be
------
included.
SECTION 3. Demand Registration; Limitations. (a) At any time, upon
---------------------------------
the request (a "Demand") of the Majority Beneficiaries, the Company shall use
------
its best efforts to file as promptly as practicable (but in no event more than
45 days after so required or requested pursuant to this Section 3) with the
Commission, and thereafter shall use its best efforts to cause to be declared
effective, a registration statement (which shall be a shelf registration
statement, if requested) on an appropriate form under the Securities Act
relating to the offer and sale of the Restricted Shares by the Beneficiaries in
accordance with the methods of distribution set forth in such registration
statement (hereafter, a "Demand Registration Statement"); provided, however,
----------------------------- -------- -------
that, if the Company is then involved in (i) a primary registration of its
shares of Common Stock under the Securities Act, (ii) an acquisition of another
entity which requires registration of securities to be issued in connection
therewith or (iii) a registered repurchase or acquisition of its shares of
Common Stock, then, at the request of the Company, the rights of the
Beneficiaries to registration pursuant to this Section 3 shall be deferred until
the conditions set forth in clause (i), (ii) or (iii) no longer apply, except
that notwithstanding such deferral the Company shall be obligated to complete
the registration that is the subject of such Demand within 12 months after such
Demand.
(b) Notwithstanding the foregoing, in the event of a Demand (i) the
Company shall not be required to effect a Demand Registration Statement during
the 180-day period following the effective date of any other registration
statement pertaining to an underwritten public offering of Primary Shares and
(ii) if, in the good faith judgment of the Company, it would not be in the best
interests of the Company and its stockholders generally for such Demand
Registration Statement to be filed, the Company shall have the right to defer
the filing of such Demand Registration Statement for a period of not more than
180-days after receipt of the Demand; provided, however, that the Company shall
-------- -------
not be entitled to utilize the right set forth in this Section 3(b) more than
once in any 12-month period.
(c) Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Demand Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any
<PAGE>
5
Demand Registration Statement and any amendment thereto (in either case, other
than with respect to information included therein in reliance upon or in
conformity with written information furnished to the Company by or on behalf of
any Beneficiary specifically for use therein (the "Holder's Information") or by
-------- -----------
or on behalf of any underwriter or other selling holder (the "Other
-----
Information")) does not contain an untrue statement of a material fact or omit
- -----------
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any prospectus forming part of any
Demand Registration Statement, and any supplement to such prospectus (in either
case, other than with respect to Holders' Information or Other Information),
does not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
The Company shall be required to file and to cause to be declared
effective and to remain effective as provided herein only one Demand
Registration Statement.
SECTION 4. Holdback Agreement. If the Company at any time shall
-------------------
register shares of Common Stock under the Securities Act (including any
registration pursuant to Section 2 or 3) for sale to the public, no Beneficiary
shall sell, make any short sale of, grant any option for the purchase of, or
otherwise dispose of any Restricted Shares (other than those Restricted Shares
included in such registration) without the prior written consent of the Company
for a period designated by the Company in writing to the Beneficiaries, which
period shall not begin more than 10 days prior to the effectiveness of the
registration statement pursuant to which such public offering shall be made and
shall not last more than 120 days after the effective date of such registration
statement. If requested by the Company, the Beneficiaries shall enter into
"lockup" agreements consistent with the terms of this Section 4 with the
managing underwriter, if any, of any such public offering of Common Stock.
SECTION 5. Preparation and Filing. If and whenever the Company is
-----------------------
under an obligation pursuant to the provisions of this Agreement to use its best
efforts to effect the registration of any Restricted Shares, the Company shall,
as expeditiously as practicable:
(a) use its best efforts to cause a registration statement that
registers such Restricted Shares to become and remain effective for a
period of 90 days or
<PAGE>
6
until all of such Restricted Shares have been disposed of (if earlier);
(b) furnish, at least five business days before filing a registration
statement that registers such Restricted Shares, a prospectus relating
thereto or any amendments or supplements relating to such a registration
statement or prospectus, to one counsel selected by the Majority
Beneficiaries (the "Selling Stockholders' Counsel"), copies of all such
-----------------------------
documents proposed to be filed (it being understood that such five-
business-day period need not apply to successive drafts of the same
document proposed to be filed so long as such successive drafts are
supplied to such counsel in advance of the proposed filing by a period of
time that is customary and reasonable under the circumstances);
(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for at least a period of 90 days or until all of such
Restricted Shares have been disposed of (if earlier) to comply with the
provisions of the Securities Act with respect to the sale or other
disposition of such Restricted Shares;
(d) notify in writing the Selling Stockholders' Counsel promptly (i)
of the receipt by the Company of any notification with respect to any
comments by the Commission with respect to such registration statement or
prospectus or any amendment or supplement thereto or any request by the
Commission for the amending or supplementing thereof or for additional
information with respect thereto, (ii) of the receipt by the Company of any
notification with respect to the issuance by the Commission of any stop
order suspending the effectiveness of such registration statement or
prospectus or any amendment or supplement thereto or the initiation or
threatening of any proceeding for that purpose and (iii) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of such Restricted Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purposes;
(e) use its best efforts to register or qualify such Restricted Shares
under such other securities or blue sky laws of such jurisdictions as any
seller of Restricted Shares reasonably requests and do any and
<PAGE>
7
all other acts and filings which may be reasonably necessary or advisable
to enable such seller of Restricted Shares to consummate the disposition in
such jurisdictions of the Restricted Shares owned by such seller; provided,
--------
however, that the Company will not be required to qualify generally to do
-------
business, subject itself to general taxation or consent to general service
of process in any jurisdiction where it would not otherwise be required so
to do but for this paragraph (e);
(f) furnish to each seller of such Restricted Shares such number of
copies of a summary prospectus or other prospectus, including a preliminary
prospectus in conformity with the requirements of the Securities Act, and
such other documents as such seller of Restricted Shares may reasonably
request in order to facilitate the public sale or other disposition of such
Restricted Shares;
(g) use its best efforts to cause such Restricted Shares to be
registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of
the Company to enable the seller or sellers thereof to consummate the
disposition of such Restricted Shares;
(h) notify on a timely basis each seller of such Restricted Shares at
any time when a prospectus relating to such Restricted Shares is required
to be delivered under the Securities Act within the appropriate period
mentioned in paragraph (a) of this Section, of the happening of any event
as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing and, at the request of such seller prepare and
furnish to such seller a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the offerees of such shares, such prospectus shall not include
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(i) make available for inspection by any seller of such Restricted
Shares, any underwriter participating
<PAGE>
8
in any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such seller or
underwriter (collectively, the "Inspectors"), all pertinent financial and
----------
other records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary to enable
-------
them to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information
(together with the Records, the "Information") reasonably requested by any
-----------
such Inspector in connection with such registration statement. Any of the
Information which the Company determines in good faith to be confidential,
and of which determination the Inspectors are so notified, shall not be
disclosed by the Inspectors unless (i) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in the
registration statement, (ii) the release of such Information is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction or (iii) such Information has been made generally available to
the public. The seller of Restricted Shares agrees that it will, upon
learning that disclosure of such Information is sought in a court of
competent jurisdiction, give notice to the Company and allow the Company,
at the Company's expense, to undertake appropriate action to prevent
disclosure of the Information deemed confidential;
(j) use its best efforts to obtain from its independent certified
public accountants "cold comfort" letters in customary form and at
customary times and covering matters of the type, customarily covered by
cold comfort letters;
(k) use its best efforts to obtain from its counsel an opinion or
opinions in customary form;
(l) provide a transfer agent and registrar (which may be the same
entity and which may be the Company) for such Restricted Shares;
(m) issue to any underwriter to which any seller of Restricted Shares
may sell shares on such offering certificates evidencing such Restricted
Shares;
(n) register such Restricted Shares on any national securities
exchange on which any shares of the Common Stock are listed or, if the
Common Stock is not listed on a national securities exchange, use its best
<PAGE>
9
efforts to qualify such Restricted Shares for inclusion on the automated
quotation system of the National Association of Securities Dealers, Inc.
(the "NASD");
----
(o) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission and make available to its security
holders, as soon as reasonably practicable, earnings statements (which need
not be audited) covering a period of 12 months beginning within three
months after the effective date of the registration statement, which
earnings statements shall satisfy the provisions of Section 11(a) of the
Securities Act; and
(p) use its best efforts to take all other steps necessary to effect
the registration of such Restricted Shares contemplated hereby.
SECTION 6. Expenses. All expenses incurred by the Company in
---------
complying with Section 5, including, without limitation, all registration and
filing fees (including all expenses incident to filing with the NASD), fees and
expenses of complying with securities and blue sky laws, printing expenses, fees
and expenses of the Company's counsel and accountants and fees and expenses of
the Selling Stockholders' Counsel, shall be paid by the Company; provided,
--------
however, that all underwriting discounts and selling commissions applicable to
- -------
the Restricted Shares shall be borne by the seller or sellers thereof, in
proportion to the number of Restricted Shares sold by such seller or sellers.
SECTION 7. Indemnification. (a) The Company agrees to indemnify, to
----------------
the extent permitted by law, each holder of Restricted Shares, its officers and
directors and each Person who controls such holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such holder expressly for
use therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall
<PAGE>
10
indemnify such underwriters, their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the holders
of Restricted Shares.
(b) In connection with any registration statement in which a holder
of Restricted Shares is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such holder; provided that the obligation to indemnify
shall be individual, not joint and several, for each holder and shall be limited
to the net amount of proceeds received by such holder from the sale of
Restricted Shares pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give prompt notice
shall not impair any Person's right to indemnification hereunder to the extent
such failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified
<PAGE>
11
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and shall survive the transfer of securities. The
Company also agrees to make such provisions as are reasonably requested by any
indemnified party for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
SECTION 8. Underwriting Agreement. No Person may participate in any
-----------------------
registration hereunder which is underwritten unless such Person (i) agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements approved by the Person or Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements; provided that no holder of
--------
Restricted Shares included in any underwritten registration shall be required to
make any representations or warranties to the Company or the underwriters (other
than representations and warranties regarding such holder and such holder's
intended method of distribution) or to undertake any indemnification obligations
to the Company or the underwriters with respect thereto, except as otherwise
provided in Section 7 above.
SECTION 9. Information by Holder. Each holder of Restricted Shares
----------------------
to be included in any registration shall furnish to the Company such written
information regarding such holder and the distribution proposed by such holder
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Agreement.
SECTION 10. Exchange Act Compliance. The Company shall comply with
------------------------
all of the reporting requirements of the Exchange Act and with all other public
information reporting requirements of the Commission which are conditions to the
availability of Rule 144 for the sale of the Common Stock. The Company shall
cooperate with each Beneficiary in supplying such information as may be
necessary for such Beneficiary to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to the
availability of Rule 144.
<PAGE>
12
SECTION 11. No Conflict of Rights. (a) Subject to paragraph (b) of
----------------------
this Section, the Company represents and warrants to the Beneficiaries that the
registration rights granted to the Beneficiaries hereby do not conflict with any
other registration rights granted by the Company. The Company shall not, after
the date hereof, grant any registration rights which conflict with or impair the
registration rights granted hereby.
(b) The parties hereto intend that the registration rights granted by
this Agreement not conflict with or impair the registration rights granted by
the Existing Agreement, and this Agreement shall be interpreted accordingly.
SECTION 12. Termination. This Agreement shall terminate and be of no
------------
further use or effect when there shall not be any outstanding Warrants or
Restricted Shares and the Company shall not have any further obligation to issue
any Warrants.
SECTION 13. Successors and Assigns. This Agreement shall bind and
-----------------------
inure to the benefit of the Company and the Beneficiaries and their respective
successors and assigns.
SECTION 14. Entire Agreement. This Agreement contains the entire
-----------------
agreement among the parties with respect to the subject matter hereof and
supersedes all prior arrangements or understandings with respect hereto.
SECTION 15. Notices. All notices, consents and other communications
--------
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument and shall be deemed to have been duly given when delivered in
person, by telecopy, by nationally-recognized overnight courier, or by first
class registered or certified mail, postage prepaid, addressed to such party at
the address set forth below or such other address as may hereafter be designated
in writing by the addressee to the addressor:
(i) If to the Company, to:
Advanced Radio Telecom Corp.
500 108th Ave., N.E. Suite 2600
Bellevue, WA 98004
Attention: General Counsel
Telecopy no.: (425) 990-1642
<PAGE>
13
(ii) if to Lucent, to:
Lucent Technologies, Inc.
283 King George Road, Room A1D14
Warren, NJ 07059
Attention: Director, Financing Operations
Telecopy no.: (908) 559-1706
(iii) if to any other Beneficiary, at his or its address furnished to
the Company for purposes of this Agreement.
All such notices, requests, consents and other communications shall be
deemed to have been delivered (a) in the case of personal delivery or delivery
by telecopy, on the date of such delivery, (b) in the case of nationally-
recognized overnight courier, on the next business day, and, (c) in the case of
mailing, on the third business day following such mailing. The Company shall,
upon request of any Beneficiary, provide to such Beneficiary a list of the names
and addresses of the other Beneficiaries.
SECTION 16. Modifications; Amendments; Waivers. This Agreement may
-----------------------------------
not be modified or amended, or any provision hereof waived, except by an
instrument in writing signed by the Company and the Majority Beneficiaries.
SECTION 17. Counterparts. This Agreement may be executed in any
-------------
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
SECTION 18. Headings. The headings of the various sections of this
---------
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
SECTION 19. Severability. It is the desire and intent of the parties
-------------
that the provisions of this Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any provision of this Agreement
would be held in any jurisdiction to be invalid, prohibited or unenforceable for
any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly
<PAGE>
14
drawn, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 20. Governing Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of New York, without giving
effect to principles governing conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
ADVANCED RADIO TELECOM CORP.,
By:
--------------------------
Name:
Title:
LUCENT TECHNOLOGIES, INC.,
By:
--------------------------
Name:
Title:
<PAGE>
Exhibit 10.4
AMENDED AND RESTATED PURCHASE AGREEMENT
BETWEEN
ADVANCED RADIO TELECOM CORP.
AND
LUCENT TECHNOLOGIES INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<C> <S> <C>
ARTICLE 1
DEFINITIONS............................................ 1
ARTICLE 2
PURCHASE OF THE NETWORK AND RELATED SERVICES........... 12
ARTICLE 3
DESIGN AND CONSTRUCTION OF THE NETWORK................. 16
3.1. Configuration of the Network................ 16
3.2. Construction of the Network................. 17
3.3. Forecasts................................... 17
3.4. Best in Class............................... 17
3.5. OEM Products................................ 19
3.6. Reserved.................................... 19
3.7. Radio Technology............................ 19
3.8. Permits and Approvals....................... 20
3.9. Product Development......................... 20
3.10. Availability................................ 21
3.11. Spare Parts................................. 21
3.12. Punchlists.................................. 21
3.13. Facilities Access........................... 21
ARTICLE 4
RELATED SERVICES....................................... 21
4.1. RS Orders for Related Services.............. 21
4.2. Electronic RS Orders........................ 22
4.3. Changes in RS Orders........................ 22
4.4. Cancellation or Postponement of RS Orders... 22
4.5. RS Prices................................... 23
4.6. Terms of Payment............................ 23
</TABLE>
-i-
<PAGE>
<TABLE>
ARTICLE 5
<C> <S> <C>
SUBCONTRACTORS......................................... 24
5.1. Subcontractors.............................. 24
5.2. Seller's Liability.......................... 24
5.3. No Effect of Inconsistent Terms in
Subcontracts............................. 24
5.4. Assignability of Subcontracts to Customer... 25
5.5. Removal of Subcontractor or
Subcontractor's Personnel................ 25
5.6. Subcontractor Insurance..................... 25
5.7. Review not Relief of Seller Liability....... 25
5.8. Evaluation of Subcontractors................ 25
5.9. Seller Warranties........................... 26
5.10. Payment of Subcontractors; Indemnity of
Customer................................. 26
ARTICLE 6
NETWORK DESIGN, ORDERS AND INVOICES.................... 26
6.1. Initiation of Phases........................ 26
6.2. Content of Orders........................... 27
6.3. Electronic Orders........................... 28
6.4. Bill and Hold Products...................... 28
6.5. Changes in Orders........................... 28
6.6. Cancellation or Postponement of Orders...... 29
6.7. Changes in Products or Licensed Materials... 30
6.8. Invoice Prices.............................. 30
6.9. Terms of Payment............................ 31
6.10. Security Interest........................... 33
6.11. Taxes....................................... 33
6.12. Transportation and Packing.................. 34
6.13. Delivery and Acceptance..................... 34
6.14. Provisional Acceptance...................... 34
ARTICLE 7
TITLE AND RISK OF LOSS................................. 36
</TABLE>
-ii-
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE 8
LICENSED MATERIALS..................................... 36
8.1. License for Licensed Materials.............. 36
8.2. Transfer and Relocation..................... 37
8.3. Installation of Software.................... 39
8.4. Backwards Compatibility..................... 39
8.5. Software Support............................ 39
8.6. Reserved.................................... 39
8.7. Annual Release Maintenance.................. 39
8.8. Notice...................................... 40
8.9. Installation and Testing.................... 40
8.10. Software Fixes.............................. 40
ARTICLE 9
WARRANTY............................................... 41
9.1. ****** **********........................... 41
9.2. Product, Software and Service Warranties.... 42
9.3. Scope of Warranties......................... 46
9.4. Effect of Customer Approvals................ 47
ARTICLE 10
PROJECT ADMINISTRATION AND FAILURE RESOLUTION.......... 49
10.1. Appointment of Primary Contact Person....... 49
10.2. Progress Updates............................ 50
10.3. Failure Reports; Response................... 50
ARTICLE 11
OPEN ARCHITECTURE...................................... 50
11.1. Open Architecture........................... 50
ARTICLE 12
INFRINGEMENT........................................... 51
ARTICLE 13
CUSTOMER'S REMEDIES.................................... 52
13.1. EXCLUSIVITY OF REMEDIES..................... 52
13.2. Remedies for Failure to Provide
Point-to-Multipoint Radio Technology..... 53
</TABLE>
*This confidential portion has been omitted and filed separately with the
Commission.
-iii-
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE 14
USE OF INFORMATION..................................... 54
ARTICLE 15
INSURANCE.............................................. 55
ARTICLE 16
TERMINATION............................................ 55
16.1. Customer's Right to Terminate............... 55
16.2. Continuation of Work........................ 56
16.3. Costs....................................... 57
16.4. Surviving Obligations....................... 57
16.5. Seller's Right to Terminate................. 57
16.6. Effect on Open Orders....................... 58
16.7. Termination of License...................... 58
16.8. Special Termination Provisions.............. 59
16.9. Financing................................... 59
16.10. Change of Control........................... 59
16.11. Material Adverse Change..................... 60
16.12. Termination Process......................... 60
ARTICLE 17
MISCELLANEOUS.......................................... 60
17.1. Documentation............................... 60
17.2. Notices..................................... 60
17.3. Force Majeure............................... 61
17.4. Assignment.................................. 61
17.5. Arbitration................................. 62
17.6. Independent Contractor...................... 62
17.7. Confidentiality of Agreement................ 62
17.8. Amendments.................................. 63
17.9. Severability................................ 63
17.10. Waiver...................................... 63
17.11. Survival.................................... 63
</TABLE>
-iv-
<PAGE>
<TABLE>
<C> <S> <C>
17.12. Section Headings............................ 63
17.13. Choice of Law............................... 63
17.14. Counterparts................................ 63
ARTICLE 18
ENTIRE AGREEMENT....................................... 64
18.1. Entire Agreement............................ 64
</TABLE>
-v-
<PAGE>
AMENDED AND RESTATED PURCHASE AGREEMENT
BETWEEN
ADVANCED RADIO TELECOM CORP.
AND
LUCENT TECHNOLOGIES, INC.
This Amended and Restated Purchase Agreement (hereinafter "Purchase
Agreement" or "Agreement") is made effective as of the 24th day of July, 1998
("Effective Date") by and between Advanced Radio Telecom Corp., a Delaware
corporation, with offices located at 500 108th Avenue NE, Suite 2600, Bellevue,
Washington 98004 (hereinafter "Customer"), and Lucent Technologies Inc., a
Delaware corporation, with offices located at 600 Mountain Avenue, Murray Hill,
New Jersey 07974 (hereinafter "Seller").
WHEREAS Customer and Seller have entered into a Purchase Agreement dated
April 24, 1998 providing for the Seller to design, configure, engineer,
construct and sell to Customer a fully integrated, nationwide, wireless
broadband data network for deployment in the United States which shall require
Seller to design, configure, engineer, equip, install, build, test and service
such network including the utilization of point-to-multipoint radio technology
in accordance with the terms and conditions, and as otherwise set forth herein
pursuant to this Agreement (as it may be amended from time to time);
WHEREAS Seller and Customer wish to amend and restate said Purchase
Agreement dated April 24, 1998 relating to the design, construction and sale of
the above referenced network;
WHEREAS Seller is willing to design, configure, engineer, construct and
sell to Customer the above referenced network on the basis set forth in this
Agreement; and
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, Customer and Seller hereby agree to the following:
ARTICLE 1
DEFINITIONS
For the purpose of this Agreement, the following definitions will apply:
(a) "Acceptance Test Procedures" or "ATP" means the tests of the
Network Infrastructure and the Network which are set out and
administered in accordance with Exhibit A.
(b) "Affected Deliverable" shall have the meaning set forth in
Section 3.4.
-1-
<PAGE>
(c) "Affiliate" of a corporation means its Subsidiaries, any company
of which it is a Subsidiary, and other Subsidiaries of such
company.
(d) "Allocation Period" means (i) an initial period commencing on
April 24, 1998 and ending on the first month end after the date
which is one year after Final Acceptance and commercial operation
of at least one Initial Phase meeting Minimum Requirements and
(ii) consecutive one year periods thereafter commencing on the
day after expiration of such initial period.
(e) "Applicable Permits" means any waiver, exemption, zoning,
building, variance, franchise, permit, authorization, approval,
license or similar order of or from any United States, foreign,
federal, state, provincial, county, municipal, regional,
environmental or other governmental body, instrumentality,
agency, authority, court or other body having jurisdiction over
all or any part of the Network or the work to be performed
pursuant to the terms of this Agreement.
(f) "Assignment" shall have the meaning set forth in Section 17.4.
(g) "ATM Switch" shall mean any electronic device using Asynchronous
Transfer Mode protocol to connect an input port or originating
connection to an output port or terminating connection.
(h) "Average Allocation" shall have the meaning set forth in Section
2.8(b).
(i) "Average Allocation Test" means Customer not having two
consecutive Allocation Periods where the Average Allocation does
not total at least ************, calculated in accordance with
Section 2.8(b), including Cure Purchases.
(j) "Backwards Compatible" means (i) with respect to Licensed
Materials, the ability of newer or more advanced versions to
function seamlessly with the two prior older or less advanced
versions of Software or other Licensed Materials and with all
existing in-service Seller Provided Products already installed in
the Network, and (ii) with respect to Seller Provided Products,
the interoperability and compatibility of such Seller Provided
Products with existing infrastructure resulting in no reduction
in the existing level of Functionality of the existing
infrastructure. For the purposes of this definition, any
particular version of
*This confidential portion has been omitted and filed separately with the
Commission.
-2-
<PAGE>
Licensed Materials shall mean only a Software Upgrade or Software
Enhancement.
(k) "Best In Class" shall have the meaning set forth in Section 3.4.
(l) "Bill and Hold Products" means Products and/or parts thereof,
which the customer requests and Seller agrees in writing to
inventory or warehouse until final delivery into the Network.
(m) "Change of Control" means the occurrence of any of the following
events: (i) any person or group (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934)
becomes the beneficial owner of more than 50% of the securities
entitled to vote for the election of Customer's directors, (ii)
consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of
Customer in one or a series of transactions (a "Business
Combination"), in the case of either (i) or (ii), unless,
following such Business Combination, (x) all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the outstanding customer common stock and
outstanding customer voting securities immediately prior to such
acquisition or Business Combination beneficially own, directly or
indirectly, immediately following such Business Combination more
than 50% of, respectively, the outstanding shares of common stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from
such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns Customer
or all or substantially all of Customer's assets either directly
or through one or more subsidiaries) or (y) at least a majority
of the members of the board of directors of the corporation
resulting from such Business Combination were members of the
incumbent board of directors of Customer at the time of the
execution of the initial agreement, or of the action of the board
of directors, providing for such Business Combination.
(n) "Change Order" shall have the meaning set forth in Section 6.5.
(o) "Characteristics" shall have the meaning set forth in
Section 3.4.
(p) ********** ***** *** ************* ***** ** ****** *********
***** ********* ** ******* **
*This confidential portion has been omitted and filed separately with the
Commission.
-3-
<PAGE>
(q) "Commercial Service" means, with respect to any Products or
Licensed Materials, the use of such Products or Licensed
Materials to bring non-trial, for fee services to any customer of
Customer, and with respect to any Phase, the use of a Switching
Center and at least one Hub to bring billable services to at
least one customer of Customer.
(r) "Complete" shall have the meaning set forth in Section 6.9.
(s) "Conditional Acceptance" of a Phase shall mean the point when all
Products and Licensed Materials included in such Phase have been
installed, all Services included in such Phase have been
completed, all applicable Acceptance Test Procedures have been
completed and a Punchlist for such Phase has been created.
(t) "Cure Purchases" shall have the meaning set forth in
Section 2.8(b).
(u) "Customer Comparison" shall have the meaning set forth in
Section 3.4.
(v) "Customer Site" means any location, whether of Customer or of a
customer of Customer, and all Products and Licensed Materials
located there, including endpoint point-to-point or point-to-
multipoint radios and the distribution hardware and software, to
bring service to a Network user.
(w) "Deficiency Notice" shall have the meaning set forth in
Section 3.4.
(x) "Deliverable" shall have the meaning set forth in Section 3.4.
(y) "Delivery Date" shall have the meaning set forth in Section 6.14.
(z) Designated Processor means the type of product, processor or
product line for which licenses to use Licensed Materials are
granted.
(aa) "Effective Date" shall have the meaning set forth in the
Preamble.
(bb) "Escalation Procedures" shall mean the escalation policies and
procedures detailed on Exhibit L.
(cc) "Expansion Phase" means a Phase in the construction of the
Network which improves or increases Customer's data transmission
services available beyond the services based on an existing
Switching Center.
(dd) "Extended Warranty" shall have the meaning set forth in
Section 9.2.
(ee) "Failure Report" shall have the meaning set forth in
Section 10.2.
-4-
<PAGE>
(ff) "Final Acceptance " means, with respect to a Phase, when all
Products and Licensed Materials included in such Phase have been
installed, all Services to be performed in such Phase have been
completed, and all items have been eliminated from the Punchlist
for such Phase.
(gg) "Firmware" means a combination of (1) hardware and (2) Software
represented by a pattern of bits contained in such hardware.
(hh) "Fit" means physical size or mounting arrangement (e.g.,
electrical or mechanical connections).
(ii) "Force Majeure" shall have the meaning set forth in Section 17.3.
(jj) "Form" means physical shape.
(kk) "Forecast" shall have the meaning set forth in Section 3.3.
(ll) "Function" means an operation a particular Product performs.
(mm) "Functionality" means the level or standard to which any Product
performs its Function including, but not limited to, speed,
accuracy and reliability.
(nn) "Government Entity" means any nation or government, any state,
province or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
(oo) "Hub" means a central point-to-point or point-to-multipoint radio
location and associated hardware and software. A Hub may also be
referred to as a Node.
(pp) "Information" shall have the meaning set forth in Article 14.
(qq) "Initial Invoice Price" means, with respect to any Product,
Licensed Materials, Services, or Related Services, (i) if such
item is listed on Exhibits I or G as of the date hereof, the
Invoice Price or RS Price, as of the date hereof or (ii) if such
item is added to Exhibits I or G after the date hereof, the
Invoice Price or RS Price at the date such item is added to
Exhibits I or G.
-5-
<PAGE>
(rr) "Initial Measurement Period" shall mean the period commencing on
April 24, 1998 and ending on the first month end after the date
which is two years after the Final Acceptance and commercial
operation of at least one Initial Phase meeting Minimum
Requirements.
(ss) "Initial Phase" means a Phase in the construction of the Network
which involves the installation of a new Seller Provided
Switching Center and associated Seller provided Products and
Licensed Materials.
(tt) "Initiation Request" shall have the meaning set forth in
Section 6.1.
(uu) "Invoice Prices" shall have the meaning set forth in Section 6.8.
(vv) "IP Platform" means any electronic device capable of correctly
routing a data stream consisting of data and address packets by
using the Internet Protocol (IP).
(ww) "Licensed Materials" means Software, Firmware and Related
Documentation including Seller's Software, Firmware and Related
Documentation and such Software, Firmware and Related
Documentation as is provided to Seller by its Subcontractors and
suppliers in each case for which perpetual, royalty free licenses
are granted by Seller under this Agreement.
(xx) "Lucent Competitor" means a competitor of Seller in the business
of manufacturing and distributing communications systems, and
related software and products.
(yy) "Metropolitan Area Network" ("MAN") means a portion of the
Network containing a Switching Center and all Hubs, Customer
Sites and other associated Products and Licensed Materials
connected thereto.
(zz) "Minimum Requirements" means, with respect to any Phase, the use
of point-to-multipoint radio technology and the installation of a
Switching Center, at least two Hubs and at least ten Customer
Sites, bringing service to at least twenty users.
(aaa) "Net-Care" means the suite of Seller Services described on
Exhibits E and G.
(bbb) "Network" means a state-of-the-art, fully installed and
integrated nationwide, wireless, packet-based, broadband data
network, to be designed, configured, engineered, equipped, built,
installed, integrated, tested and warranted by the Seller, which
will utilize among other things point-to-multipoint and point-to-
point radio technology and meet the Network Specifications set
forth on Exhibit B
-6-
<PAGE>
and can include, among other services, (i) use of ********* for
use in planning and designing the Network, (ii)
********************************** which are used in connection
with the design and construction of the Network, (iii) network
integration, planning and optimization services, (iv)
communications software systems integration, (v) designing
Network capability in the areas of customer care, surveillance,
fault management and billing, (vi) installation, turn-up and a
start-up period of technical and operations support, (vii)
provisioning services related to the design and construction of
the Network and management and provisioning software, (viii) Net-
Care services related to network planning and construction, and
(ix) program management services, including Switching Center, Hub
site and Customer Site acquisition, civil engineering,
construction and zoning services (which may be provided through a
Subcontractor) (x) warranties and Extended Warranties on Products
and Licensed Materials; provided, however, "Network" shall
-------- -------
not include (a) access to Seller's Network Reliability Center and
on-going Network Reliability Center surveillance, fault
management, customer care and data collection services beyond a
defined start-up or Extended Warranty period, (b) technical and
operations support services provided beyond a defined start-up or
Extended Warranty period or (c) Net-Care services unrelated to
the planning and construction of the Network, all of which shall
be available under this Agreement as Related Services.
(ccc) "Network Infrastructure" shall mean all Products and Licensed
Materials comprising the Network.
(ddd) "Network Reliability Center" means a service center performing
surveillance, remote maintenance and diagnostic activities.
(eee) "Network Specifications" means the technical specifications for
Function and Functionality of the Network, which specifications
shall include the representations set forth on Exhibit B.
(fff) "Node" means a Hub.
(ggg) "Notice of Completion" shall have the meaning set forth in
Section 6.14.
(hhh) "OEM Products" means third party Products and/or related
components purchased by Seller for the purpose of incorporation
into the Network other than Vendor Items.
(iii) "OEM Supplier" means a supplier to Seller of OEM Products.
*This confidential portion has been omitted and filed separtely with the
Commission.
-7-
<PAGE>
(jjj) "Optional Software Features" means Software features for Products
available to Seller's customers on an optional, separate fee,
basis.
(kkk) "Order" shall have the meaning set forth in Section 6.2.
(lll) "PMP Solution" shall have the meaning set forth in
Section 13.2(a).
(mmm) "Phase" means either an Initial Phase or an Expansion Phase.
(nnn) "Phase Plan" shall have the meaning set forth in Section 6.1.
(ooo) "Phase Proposal" shall have the meaning set forth in Section 6.1.
(ppp) "Phase Specifications" shall have the meaning set forth in
Section 6.1.
(qqq) "Primary Build" shall have the meaning set forth in Section 6.14.
(rrr) "Primary Contact Person" shall have the meaning set forth in
Section 10.1.
(sss) "Product" means individual items of equipment hardware, and parts
thereof to be included in the Network, but the term does not mean
Software whether or not such Software is part of Firmware.
(ttt) "Product ATP" means those Acceptance Test Procedures related to
the performance and Function of an individual Product.
(uuu) "Product Developments" shall have the meaning set forth in
Section 3.9.
(vvv) "Product Specifications" means technical specifications for Form,
Fit, Function and Functionality of particular Products or
Licensed Materials, which specifications shall include the
applicable representations regarding capacity and Functionality
set forth on Exhibits C and D (as amended from time to time by
mutual consent).
(www) "Provisional Acceptance" shall have the meaning set forth in
Section 6.14.
(xxx) "Provisional Acceptance Standards" means the criteria for
performance of Network Infrastructure and the Network which such
criteria are set out along with the procedures and tests for
determining compliance with such criteria on Exhibit Q.
-8-
<PAGE>
(yyy) "Punchlist" means a list of the remaining, non-service affecting
adjustments, additions, replacements and corrections, if any, to
be made to a Phase or to Products or Licensed Materials used in a
Phase at no cost to Customer, which list shall be negotiated in
good faith by Seller and Customer after (i) such Phase has been
installed and (ii) all applicable ATP's have been completed.
(zzz) "Purchase Price" shall have the meaning set forth in Section 2.2.
(aaaa) "Related Documentation" means materials useful in connection with
Software such as, but not limited to, flowcharts, logic diagrams
and listings, program descriptions and Specifications.
(bbbb) "Related Services" means any services performed by Seller under
this Agreement which are not performed in connection with the
design or construction of the Network or in accordance with
Sections 2.4 or 2.5. and are not included in the definition of
the Network. Related Services include services described on
Exhibit G and such other services agreed to by the parties from
time to time.
(cccc) "Responsibility Matrix" shall mean a comprehensive representation
of the major responsibilities of Customer and Seller as
determined for each Phase, the form of Responsibility Matrix
being set forth in Exhibit F.
(dddd) "RS Change Order" shall have the meaning set forth in
Section 4.3.
(eeee) "RS Prices" shall be the prices for Related Services as set forth
in Exhibit G.
(ffff) "RS Orders" shall have the meaning as set forth in Section 4.1.
(gggg) "Secondary Contact Person" shall have the meaning set forth in
Section 10.1.
(hhhh) "Seller Provided Product" means a Product manufactured by Seller
or a Product supplied by Seller or its Subcontractors as an OEM
Product.
(iiii) "Services" means Seller provided services, including but not
limited to, engineering, installation, warranty and/or extended
warranty repair services, design, site acquisition, architectural
and civil engineering services, provisioning, program management
and integration to be performed by Seller under this Agreement in
connection with the construction of the Network.
(jjjj) "Short Term Note" means the Promissory Note of Customer payable
to Seller dated June 10, 1998 in the stated principal amount of
$10,000,000.
-9-
<PAGE>
(kkkk) "Software" means individual computer programs which are included
in the Network consisting of a set of logical instructions and
tables of information that guide the functioning of a processor.
Such program may be contained in any medium whatsoever, including
hardware containing a pattern of bits, representing such program;
provided the term "Software" does not mean or include such
medium.
(llll) "Software Combined Release" means a Software Upgrade which is at
any time combined with any Software Enhancement.
(mmmm) "Software Enhancements" means modifications or improvements made
to the Software relating to Products which improve performance,
capabilities or capacity of the Software Revision Level with
which it is associated. A Software Enhancement may also correct
defects in earlier versions of the Software.
(nnnn) "Software Maintenance Releases" means issues of Software which
correct defects in preceding versions of the Software.
(oooo) "Software Revision Level" means each version of Software that
reflects any amendment, modification or change from the
immediately preceding version.
(pppp) "Software Upgrades" shall mean issues of Software which add to,
improve or enhance existing Software Features and capabilities
involving more extensive changes to the underlying source code or
the user interface than is the case in a Software Enhancement. A
Software Upgrade may also correct defects in earlier releases.
(qqqq) "Source Code" means any version of Software incorporating high-
level or assembly language that generally is not directly
executable by a processor.
(rrrr) "Specifications" means Network Specifications and Product
Specifications.
(ssss) "Standard Delivery Intervals" shall mean that Seller shall be
capable of shipping Customer Site equipment, shipping Switching
Center and Hubs, and supplying minimum defined amounts of
Customer Sites, Hubs and Switching Centers within minimum amounts
and in minimum time periods as defined on Exhibit 0.
-10-
<PAGE>
(tttt) "System ATP" means those Acceptance Test Procedures related to
how a set of Products and Licensed Materials in a Phase
integrates and functions together and with other portions of the
Network.
(uuuu) "Subcontractor" means a contractor, seller, supplier, licensor or
other person, having a direct or indirect contract with Seller or
with any other Subcontractor of Seller who has been hired
specifically to assist Seller in certain specified areas of its
performance of its obligations under this Agreement including,
without limitation, the design and/or construction of the
Network.
(vvvv) "Subsidiary" means a corporation the majority of whose shares or
other securities entitled to vote for election of directors is
now or hereafter owned or controlled by such company either
directly or indirectly, but such corporation shall be deemed to
be a Subsidiary of such company only as long as such ownership or
control exists.
(wwww) "Switching Center" shall mean the major point of presence (POP)
in a market, which may include a core ATM switching platform, IP
platforms and other associated Products and Licensed Materials
necessary to conduct data packet switching.
(xxxx) "Termination Notice" shall have the meaning set forth in
Section 16.10.
(yyyy) "Total Contract Value" means $240,000,000; provided, however, if
Seller provides or arranges financing of at least $600,000,000 on
or before the date which is eighteen months from the date hereof
on terms acceptable to Customer, the Total Contract Value shall
equal $1,200,000,000.
(zzzz) "United States" means United States of America, the District of
Columbia and Puerto Rico.
(aaaaa) "Vendor Item" means any Product or licensed material furnished by
Seller to Customer under this Agreement but neither manufactured
by Seller nor purchased by Seller pursuant to its procurement
specifications. Notwithstanding anything to the contrary in this
Agreement, no Product or licensed material shall be designated a
Vendor Item hereunder if Seller or any of its Affiliates (i)
manufactures such Product or licensed material, (ii) provides
such Product or licensed material to any other customer as, or
generally offers such products or licensed materials as, an "OEM"
product, or (iii) provides the Product or licensed material to
any other customer with a warranty of the Seller.
-11-
<PAGE>
ARTICLE 2
PURCHASE OF THE NETWORK AND RELATED SERVICES
2.1. Upon the terms and subject to all of the conditions contained herein,
Seller will configure, design, engineer, equip, construct, install, test,
service and sell to Customer, and Customer will purchase from Seller, the
Network in exchange for Customer's payment of the Purchase Price as provided in
(S) 2.2.
2.2. Upon the terms and subject to all of the conditions contained herein,
Customer will pay to Seller a total purchase price (the "Purchase Price") for
the Network that is not expected to exceed $1.2 billion. The actual Purchase
Price will be determined by the parties based on the final design and
specifications of the Network. The Purchase Price will be paid to Seller during
the course of the construction of the Network in accordance with Article 6.
2.3. In addition to the purchase of Network, Customer may purchase and the
Seller may provide Related Services for prices which are specified in Exhibit G.
2.4. In addition to the Network and Related Services provided under this
Agreement, the Seller will provide to the Customer the following marketing
support services at no cost to the Customer, so long as Customer is meeting the
Average Allocation Test:
(a) *** *** ******* *************** ******* ********** throughout the term
of this Agreement,
(b) *** ** ******** ********* ******* ********* ******* ********* for
activities related to the Seattle, Washington and Phoenix, Arizona
portions of the Network during the first year of this Agreement, and
(c) access to and use of ******** ******* ****** ******* ***********
****** **** *** ** ********* ********** ******* ******** ** *** ***
*** ** ******* ********** **** ******* ********* ********* ******
******** ********** ******* *** **** ******** *********, and other
Seller facilities mutually agreed upon throughout the term of this
Agreement, provided however that each party will be responsible for
the costs of transporting, maintaining and compensating its own
personnel and any invitees.
2.5. In addition to the Network and Related Services provided under this
Agreement, Seller will, throughout the term of this Agreement and so long as
Customer is meeting the Average Allocation Test, provide to Customer the support
services of the following personnel in accordance with the descriptions of
responsibilities set forth below ** ** **** ** ********:
*This confidential portion has been omitted and filed separtely with the
Commission.
-12-
<PAGE>
(a) *** *** ******* ******* **** **************,
(b) *** ** **** ********* ********* ********** ***********, as required,
(c) *** *** **** **** ***** **************, and
(d) *** *** ********* ******* ********* for Network support.
The above personnel shall provide support in accordance with the following
responsibilities:
(e) ******* **** ***************
(i) ******* **** ******** *** ************ ********** ***** **
****** *** *********** ********* **** ****** *** ******* ***
********;
(ii) **** ** * ***** ** ********** ** ******* *** ******** **
*********;
(iii) ******** ******** **** ******* *** ******** *********** **
******** *** ********.
(f) ********* ********** ********:
(i) ******** ********* *** ******** ***** ** ************ ********
** ********;
(ii) *********** *** ********* **** *** ******* ****** ******
************* ** ********* *********;
(iii) ********* ********* *** ******** ************* *** ******** **
*****.
(g) **** **** ***** **************:
(i) ******* ******* ******** *** **** **** *** ****** ** **** ****
********** ******** *******;
(ii) ********** *** ********* ************** **** **** **** *** ***
********** ***********;
(iii) ********** *** ******* ******** ** ************ ******** ** ***
********** ***** ** *** ***** ****** ** ***********.
(h) ****** ********:
(i) ******* ******** **** *********** ******* *** ******** *******;
*This confidential portion has been omitted and filed separtely with the
Commission.
-13-
<PAGE>
(ii) ******** ******** ******* ** ********* ******** *********
************ *** ********** ************* ******.
All on-site personnel will be located, from time to time, in such cities
and offices that Customer reasonably requests, provided that Customer will make
available office space in cities or locations where Seller does not have
available facilities. In the event that Seller's on-site personnel cannot
timely accomplish their responsibilities described in this Section 2.5 without
assistance from off-site Seller personnel, the on-site personnel shall request,
and Seller shall timely provide, such additional temporary personnel and
assistance as may be necessary to reasonably support Sellers obligations. The
on-site personnel shall be directly responsive to Customer's reasonable requests
for assistance, and shall not be required to seek approval or instruction from
off-site Seller personnel prior to providing requested assistance. Customer has
the right at any time to require the removal and replacement of a member of the
on-site personnel upon reasonable grounds and with reasonable prior notice to
Seller. The cost of transporting, maintaining and compensating on-site
personnel shall be borne by Seller.
2.6. ****** ****** **** ****** ** ** ******* ** *** ******** ** *
********* ***** ** ** *** *** ******* ********* ***** ********** ** *******
***** **** ** ******** ** ****** *** **** *** ***** ******** **** ** ******** **
****** ****** *** ******* ******* ***** **** ********* *** *** ****** *********
******** ********** ******** ******* ******** ** ***** ***** ******** ***
******* ***** **** ********** ************ *** ***** ********** ******* **
********* ******** ** *** ************ **** ********** ** *********
**** *** ********* **** ** **** ********** *** **** **** *** *****
********** ** ** ******** ***** *** *** ***** ******** ******* * ******** **
************* ****** ***** ******* ******** **** * ****** ** *** ******* *******
************ ** ** ******* ******* *** ********* ******* ** ** ****** **
******** ***** **** ******* **** **** **** ******** ** ******* ******* ***** **
****** ** ******* ** ******** ******** **** ** ******** ** ****** ****** ***
**** ********* ** ************* ** **** **** *** ******* ***** ** ********* ***
****** ***** ******* ******** **** *** **** ****** ** *** ******* *******
*************
2.7. Customer, at no charge to Seller, may suggest enhancements or provide
other intellectual property which may be utilized by Seller in the development
of Products for use in the Network and for sale by Seller. Customer agrees that
Seller shall have exclusive and sole ownership of any Products developed by
Seller using such information provided by Customer. If Seller utilizes
Customer's intellectual property in the development of Products for sale to
persons other than Customer, the parties agree to negotiate appropriate
consideration for use of such intellectual property.
*This confidential portion has ben omitted and filed separately with the
Commission.
-14-
<PAGE>
2.8. Total Contract Value.
--------------------
(a) Customer agrees that, subject to (i) the timely performance of
Seller's material design and delivery obligations under this
Agreement, (ii) the integration of point-to-multipoint technology
into the Network, in accordance with Exhibit H, (iii) the
availability of Seller's committed or arranged financing on terms
acceptable to Customer, and (iv) the availability to Customer
from Seller of a Network substantially all of which is comprised
of Seller Provided Products, Licensed Materials and Services
which are Best in Class at the time provided, with associated
Invoice Prices which are competitive with market prices of
similar products, licensed materials and services available from
third parties, the sum of (w) all Orders placed (calculated as
the sum of the Initial Invoice Prices of all Products, Licensed
Materials and Services ordered thereunder, plus all other fees
and charges paid under such Orders, excluding taxes and delivery
costs), (x) all RS Prices on Related Services ordered, (y) the
amount paid by Customer on Cure Purchases, and (z) any other
payments by Customer under this Agreement, shall equal or exceed
the Total Contract Value.
(b) The parties expect that, in connection with realizing such Total
Contract Value, Customer will place RS Orders and Orders which,
calculated at the Initial Invoice Prices, would result in an
Average Allocation of ************ of the Purchase Price for each
Allocation Period. For purposes of this Agreement, the "Average
Allocation" for any Allocation Period shall be calculated by
averaging such RS Orders and Orders for that Allocation Period
and all previous Allocation Periods, except that if during any
Allocation Period Seller does not provide Customer with Products
and Licensed Materials which are Best-In-Class and Customer
purchases substitute products or licensed materials from a party
other than Seller ("Cure Purchases"), the amount paid by Customer
on Cure Purchases shall be included in the calculation of Average
Allocation for that and all subsequent Allocation Periods,
******** **** *** ****** *** ******* *********** *******
******************* ******** ******* *** ****** **************
******** ** ******* * ***** ** ****** ** ** **** ** ***** ***
**** *** ********* **** *** *********** ** ****** ****** ****
******** ***** *** ** ******* *** ********* **** ********* ** ***
******* ********** ****** *** ******* *********** ******,
provided that Customer shall at all times have the right to
purchase products and licensed materials from vendors other than
Seller;
(c) Notwithstanding the foregoing, in light of the expectations noted
above and subject to (i) the timely performance of Seller's
material design and delivery obligations under this Agreement,
(ii) the availability of Seller's committed or
*This confidential portion has ben omitted and filed separately with the
Commission.
-15-
<PAGE>
arranged financing for **** ******* on terms acceptable to
Customer, (iii) the provision of Best in Class Products, Licensed
Materials and Services at the associated Invoice Prices on
Exhibit I, Customer commits to place RS Orders and Orders that
will result in an Average Allocation of at least
************(calculated in accordance with Section 2.8(b),
including Cure Purchases) by the end of the Initial Measurement
Period.
2.9. International Orders. The parties agree that if the parties agree
--------------------
upon the provision by Seller of products, licensed materials or services to
Customer or its Subsidiaries in any territories outside the United States, the
amount of any orders placed for such products, licensed materials and services
shall be included in the calculation of Average Allocation pursuant to Section
2.8(b) hereof and Total Contract Value pursuant to Section 2.8(a) hereof.
ARTICLE 3
DESIGN AND CONSTRUCTION OF THE NETWORK
3.1. Configuration of the Network. Seller will configure and engineer a
----------------------------
state of the art Network to provide wireless, packet-based, broadband data
services in 80 to 100 major metropolitan areas throughout the United States, in
accordance with the Specifications and Responsibility Matrix which may be
updated or amended from time to time by mutual written agreement. In designing
the Network, in order to accommodate the ultimate demands on the Network, Seller
will assist Customer in evaluating the size and potential requirements of the
market for wireless, broadband data services and in planning and structuring the
Network to best realize such potential.
3.2. Construction of the Network. Seller will construct, install and
---------------------------
integrate the Network in a manner consistent with the Specifications and Phase
Plans approved by the Customer, as they may be amended from time to time as
mutually agreed. Seller's obligations include, among other things, the
obligation to provide, install and integrate all necessary Products and Licensed
Materials into the Network as mutually agreed by the parties. The Products,
Licensed Materials and Services which Seller will make available include, but
are not limited to, those listed on Exhibits C, D and E, respectively, which
such Exhibits may be amended from time to time by mutual written consent or as
otherwise provided herein. Seller shall furnish all drawings of Products and
Network architecture and all other information reasonably requested in
sufficient detail to indicate that the Network and each portion thereof comply
with the Specifications.
3.3. Forecasts. Customer hereby agrees that within one month after the
---------
Effective Date, Customer shall provide Seller an initial, non-binding forecast
of the portions of the Network to be constructed and delivered during the first
year of this Agreement. Customer shall on a quarterly basis thereafter provide
Seller a 12 month forecast ("Forecast") of the portions of
*This confidential portion has ben omitted and filed separately with the
Commission.
-16-
<PAGE>
the Network expected to be constructed and delivered. Such Forecast shall
detail the quantity and network capacity requirements for Hubs, Switching
Centers, Customer Sites and the Services to be included in such portions. To
the extent Customer recognizes that the current Forecast is not accurate within
+/-25%, Customer will update the forecast, whether or not an update is scheduled
under this Section 3.3. The intent is to provide Seller with as much
information regarding Customer's anticipated needs as early as practicable so
that Seller may better respond to Customer's actual needs when they are
finalized and to better enable Seller to meet the required delivery intervals.
3.4. Best in Class. Seller shall provide Products and Licensed Materials
-------------
("Deliverables") that are the Best in Class as of the time any such Deliverable
is ordered by Customer. Each Deliverable shall be deemed to be in a class with
any other comparable products or licensed materials that are commercially
available from Seller or from any other vendors for use in materially similar
broadband services networks and which are compatible with Customer's Network.
*** *********** ******** ** ****** ***** ** ****** ** ** ***** ** ****** ****
*** ** ** ******** *** * *********** ** ***** **** ********* ************* ***
********** ** ******** ***** ******************* *** *** ******** *** **
********* *** *** ******* ************ ******* ******** ************ ********
*** ************** ***** ** *** **** ** **** ** *** *** **** *** ** **** **
****** **** ** ********* **** *** ***** ******** ** ******** ********* ** ***
***** *** **** ** ** ********** ************ ********* ******** ******
************ ******* ******** ************ ********* ************* ** **********
** ******** ***** ********** ******** ** **** ******** ** **** ***********
******** **** ***** ******** ** ******** ********* **** ***** ** ** **** ** ***
******** ******** ******* **** ******* *********** ******* *******************
***** ******** ******* **** ** *****
Customer shall determine (such a determination a "Customer Comparison")
whether each Deliverable made available by Seller under this Agreement is "Best
in Class" in accordance with the preceding paragraph. Customer shall promptly
give Seller written notice (a "Deficiency Notice") of the results of such a
Customer Comparison, including a copy of all tests, if any, performed by
Customer or its delegate, if Customer has concluded that the Deliverable is not
Best in Class (an "Affected Deliverable").
Seller shall, within ten (10) business days of a Deficiency Notice, notify
Customer if it agrees that the Deliverable is not Best in Class. If Seller
disagrees with the Deficiency Notice, it shall notify Customer within the ten
(10) business day period set forth above and the issue shall be mutually decided
by Primary Contact Persons within an additional ten (10) business day period.
Said decision will be binding on both Parties. If the Primary Contact Persons
are unable
*This confidential portion has ben omitted and filed separately with the
Commission.
-17-
<PAGE>
to agree, then the matter shall be referred to a panel of three independent
industry experts for resolution within twenty (20) business days, with one
expert selected by each of Seller and Customer and the third to be selected by
the first two.
If Seller agrees with the Deficiency Notice or if the relevant Deliverable
is determined to not be "Best in Class" in accordance with the immediately
preceding paragraph, then (i) Customer may, at its sole option, and without
prior notice or penalties pursuant to Section 6.6 or otherwise cancel any
outstanding but unfilled orders for Products or Licensed Materials determined
not to be Best in Class, and (ii) Seller shall, within ten (10) business days of
a Deficiency Notice, notify Customer if it intends to develop and implement the
changes necessary to regain the Best in Class status of the Affected Deliverable
by, at Seller's option, either (a) providing a firm development plan and
timetable to make the Affected Deliverable Best in Class, or (b) entering into
an OEM arrangement with the manufacturer/supplier of the other comparable
product or licensed materials, or (c) providing the relevant deliverable as a
Vendor Item, or (d) if applicable, adjusting its price. Until (a), (b), (c) or
(d) is fully implemented and completed so that the relevant Deliverable is "Best
in Class," Customer may purchase (or Seller may provide as a Vendor Item (if
such item may be so designated)) the comparable product or licensed materials
and related products or licensed materials directly from another
manufacturer/supplier and apply such purchases to the Average Allocation in
accordance with the provisions of Section 2.8(b) (except for Cure Purchases
during the Initial Measurement Period as provided in Section 2.8(b)(ii)).
If Customer disagrees with the development plan and timetable presented by
Seller, it shall notify Seller in writing within ten (10) business days and the
issue shall be mutually decided by the Primary Contact Persons within an
additional ten (10) business day period. Said decision will be binding on both
parties. If the Primary Contact Persons are in good faith unable to agree, then
the matter shall be referred to a panel of three independent industry experts
for resolution within twenty (20) business days, with one expert selected by
each of Seller and Customer and the third to be selected by the first two.
If Seller fails to meet its Best in Class obligations and such failure
materially and adversely affects the performance of the Network, Customer, as
its sole remedy, may, without liability and at the Customer's election,
terminate this Agreement and shall be entitled to any right under Section 16.2.
3.5. OEM Products. Before Seller requests that any OEM Products be part of
------------
Seller's solution for design or construction of the Network and in all cases
before the inclusion of any OEM Products in any Phase Proposal, Seller will (i)
present test plans to Customer for Customer's reasonable approval or
modification, (ii) give Customer the opportunity to participate in joint testing
of the OEM Products, and (iii) permit Customer to approve or reject the use of
any such OEM Products, provided however that Customer's right to reject a Seller
selected OEM
-18-
<PAGE>
Supplier must be based on noncompliance with Specifications, Allocation of
Purchase Price, Form, Fit, Function, Functionality or suitability of the Product
for ART's service offerings, as determined by ART.
3.6. Reserved.
--------
3.7. Radio Technology.
----------------
(a) Seller will provide and have available for integration into the
Network in accordance with the schedule on Exhibit H point-to-
multipoint radio technology capable of meeting the technical
requirements detailed on Exhibit H. The parties agree that the
inclusion of point-to-multipoint radio technology is fundamental
to the success of the Network. If Seller fails to meet the
development schedule on Exhibit H, Buyer will have the remedies
set forth in Section 13.2.
(b) To the extent requested by Customer, Seller will assist Customer
in the integration of Customer's existing supply of equipment
into the Network. Over the ninety (90) days from the date of this
Agreement, or such longer period as determined jointly by the
parties, Seller and Customer will jointly evaluate current point-
to-point technology offerings of suppliers and potential
suppliers. During this evaluation period, the parties will
jointly meet with such suppliers and potential suppliers and
assess the suitability of their capabilities for the needs of the
Network. At the end of such period, Customer and Seller shall
designate a supplier and agree upon radio specifications, ongoing
improvements in specifications and delivery dates for such point-
to-point technology, which will be included on Exhibit C to this
Agreement. Seller will cause such point-to-point technology to be
offered to Customer as an OEM Product as soon as practicable.
3.8. Permits and Approvals. The Responsibility Matrix included in each
---------------------
Phase Plan shall indicate whether or not any Applicable Permits (in connection
with the construction and sale of the Network) required by any Government Entity
relating to the manufacture, importation, safety or use of the Products,
Licensed Materials, or the subject Phase of the Network will be the sole
responsibility of Seller. With respect to Phases for which Seller is
responsible for the Applicable Permits, prior to the commencement of any
activities by Seller or any of its Subcontractors in connection with such Phase,
upon written request of Customer, Seller will furnish Customer with evidence
that such Applicable Permits have been obtained and are in full force and effect
to the extent that Applicable Permits are necessary for the commencement or
undertaking of such activities, and from time to time thereafter Seller, upon
the reasonable written request of Customer, will provide such further evidence
as Customer will deem reasonably necessary.
-19-
<PAGE>
3.9. Product Development. Seller shall provide Customer with reasonable
-------------------
notice of any Product or Licensed Materials developments, innovations and/or
technological advances (collectively "Product Developments") relevant to the
Network prior to or concurrent with giving such notice to any other customer or
otherwise making any such Product Development public within the relevant
marketplace; provided that Seller will not be obligated to provide Customer such
notice before any other customer if doing so would breach any contractual
obligation to any other customer; provided further that any such notice pursuant
to this Section 3.9 need not include any information originated by another
customer which is proprietary to such other customer of Seller. For the
purposes of this Section 3.9 the term "Seller" includes Seller and its
Affiliates. Customer is offered the option, (a) with respect to radio Products
Developments to witness and/or participate in any development and /or testing
process to the same extent Seller or its Affiliates participates in such
processes, and (b) with respect to non-radio Product Developments, to witness
and/or participate in any alpha testing, beta testing and, as determined on a
case-by-case basis in Seller's reasonable discretion, initial and early system
testing and/or application of any such Product Development. Customer's option
shall not apply to a Product Development originated by another customer of
Seller which includes information which is proprietary to such other customer;
and any such testing of Product Developments will be subject to (i) scheduling
as reasonably determined by Seller, and (ii) the qualification that the Network
meets the technical requirements for the testing of such Product Development (or
otherwise that Customer is willing to update the Network or a portion thereof to
meet such requirements).
3.10. Availability. Seller shall at all times be capable of meeting its
------------
Standard Delivery Intervals.
3.11. Spare Parts. For a period of three (3) years following the
-----------
discontinuation of availability of any Seller Provided Products or Licensed
Material which such discontinuation shall be preceded by written notice at least
one year prior to discontinuation, Seller shall make spare parts, or their
functional equivalent, available for purchase by Customer, so that Customer may
meet existing obligations relative to the Products or Licensed Materials
included in the Network. The prices charged for the spare parts following the
termination of this Agreement shall be Seller's then current published list
price or, if no list price is then published, its then current pricing policy.
3.12. Punchlists. Seller agrees to resolve any items on any Punchlist as
----------
quickly as practicable. Notwithstanding anything in this Agreement, Seller's
obligation to resolve Punchlist items shall not be subject to any financial
limitation, including without limitation, those limitations set forth in Section
13.
3.13. Facilities Access. Each Party shall provide the other reasonable
-----------------
access to its facilities required in connection with the performance of their
respective obligations under the Agreement. No charge shall be made for such
access. Reasonable prior notification will be
-20-
<PAGE>
given when access is required. Neither party shall require releases of any
personal rights in connection with visits to its premises.
ARTICLE 4
RELATED SERVICES
4.1. RS Orders for Related Services. Customer may from time to time submit
------------------------------
orders ("RS Orders") for Related Services, which RS Orders shall incorporate and
be subject to the terms and conditions of this Agreement. All RS Orders,
including electronic Orders, shall contain the information as detailed below:
(i) Complete and correct information regarding the place of
performance of such Related Services;
(ii) Quantity and type of Related Services being ordered;
(iii) Requested Delivery Date (in accordance with Seller's Standard
Delivery Intervals for Related Services); and
(iv) Reference to this Agreement.
RS Orders not rejected in writing within ten (10) days shall be deemed
accepted. Seller shall perform in accordance with any accepted RS Order. Terms
and conditions on Customer's RS Order which are inconsistent with the provisions
of this Agreement shall be ineffective, void and of no force and effect.
Seller reserves the right to place any order on hold or reject an RS Order due
to a payment default by Customer.
RS Orders which are not electronic shall be sent to the following address:
Lucent Technologies Inc.
Customer Service
6701 Roswell Road
Building D - 3rd Floor
Atlanta, GA 30328-2501
4.2. Electronic RS Orders. Electronic RS Orders shall be binding on
--------------------
Customer notwithstanding the absence of a signature. Electronic RS Orders shall
be sent in accordance with instructions to be provided by Seller.
-21-
<PAGE>
4.3. Changes in RS Orders. Other than changes to the "place of
--------------------
performance" or "bill to" addresses which may be changed at any time at least
ten (10) days prior to performance or billing, changes by Customer to an RS
Order which has been previously accepted by Seller (an "RS Change Order"), are
subject to acceptance by Seller. In the event Seller accepts an RS Change Order
and such change affects Seller's ability to meet its obligations under the
original order, any RS Price or RS Services completion date quoted by Seller
with respect to such original order is subject to change. Seller will provide
to Customer written quotations and expected completion dates for any requested
RS Change Orders.
4.4. Cancellation or Postponement of RS Orders. Customer has the right at
-----------------------------------------
any time before relevant RS Services have already been performed to cancel or
postpone any RS Order, in whole or in part, upon advance written notice to
Seller. If such a cancellation or postponement is made at least fifteen (15)
days prior the scheduled performance date for the subject RS Services to be
included in such RS Order (or portion thereof), Customer will not owe any
cancellation or postponement charge in connection with such Order (or portion
thereof). If Customer cancels an RS Order or portion thereof less than fifteen
(15) days prior to the scheduled performance date for RS Services to be
performed thereunder, Customer shall pay to Seller a cancellation charge equal
to Seller's reasonably incurred out of pocket expenses. For RS Services in
process, Customer agrees to pay a cancellation fee equal to the price of all RS
Services rendered to date and not paid for, plus Seller's reasonably incurred
out of pocket expenses for those RS Services ordered by Customer and
subsequently canceled. Notwithstanding the above, the termination provisions
related to maintenance and Extended Warranty type RS Services are as follows:
prior to commencement of maintenance service, Customer may cancel coverage at no
charge and receive a refund for any prepaid amount. After commencement of
maintenance service, Customer may terminate coverage upon 30 days written notice
and upon such termination shall pay a termination charge equal to 10% of the
monthly charges for twelve (12) months or ten percent (10%) of the charges for
the remainder of the maintenance period whichever is less. For prepaid
agreements, Seller will refund or credit the pro rata price for the remainder of
the maintenance period less a termination charge of ten percent (10%) of the
monthly charges for twelve months or ten percent (10%) of the charges for the
remainder of the maintenance period, whichever is less.
4.5. RS Prices. Unless otherwise agreed to by the parties, the prices to
---------
be paid for RS Services ("RS Prices"), shall be as set forth in Exhibit G. For
RS Services to be offered in the future which are not listed on Exhibit G as of
the date hereof, such RS Services will be offered at RS Prices to be mutually
agreed upon by the parties. At least every two years, beginning on the second
anniversary of the date of this Agreement, representatives of Seller and
Customer will negotiate in good faith to agree on amendments to Exhibit G.
Customer has the right to terminate this Agreement without penalty if, acting
reasonably and in good faith, Seller and Customer fail to agree on any scheduled
amendments to Exhibit G within one month of each anniversary.
-22-
<PAGE>
4.6. Terms of Payment. Seller shall bill Customer and shall submit
----------------
invoices to Customer covering RS Orders, or portions thereof, that became
billable under the terms of this Agreement. Such invoices shall be in
reasonable detail. Delivery of invoices shall be made in accordance with the
notice provisions of Section 17.2. Payment of all invoices shall be net 30 days
from effectiveness of such notice (as set forth in Section 17.2.)]
All amounts due for Related Services shall become billable in accordance
with Exhibit G.
Customer shall pay all amounts due Seller hereunder using Electronic Funds
Transfer ("EFT"). EFT payments by Customer shall be made to the following
account of Seller or such other account as is subsequently designated by Seller
in writing and, concurrent with the EFT payment, Customer shall fax a copy of
the remittal to Seller's Manager of Cash Operations at 770-750-4288.
Chase Manhattan Bank
New York, New York
Account Name: Lucent Technologies Inc.
***** ***********
*** *********
Customer agrees to review all invoices furnished by Seller hereunder upon
receipt and notify Seller of any billing discrepancies within fifteen (15) days
of receipt of the applicable invoice. Notice of such discrepancies can be
directed to Seller in writing or by telephone. Such notices shall be made to
the telephone number or, if in writing, to the address identified on the
invoice. Customer shall not be required to pay Seller on such disputed invoice
items in net 30 days as required by the first paragraph of this Section 4.6.
Irrespective of any failure to provide notice of any billing discrepancies
within the fifteen days provided for in this Section 4.6, Customer shall
maintain its right to seek resolution of billing discrepancies after payment and
lack of notice shall not be deemed a waiver of any rights.
*This confidential portion has ben omitted and filed separately with the
Commission.
-23-
<PAGE>
ARTICLE 5
SUBCONTRACTORS
5.1. Subcontractors. Seller will select Subcontractors in connection with
--------------
the performance of its obligations hereunder such that all Products, Licensed
Materials and Services provided by any such Subcontractors meet the Customer
Specifications and reliability and performance requirements set forth in this
Agreement. Regardless of whether or not Seller obtains approval from Customer
of a Subcontractor or whether Seller uses a Subcontractor recommended by
Customer, use by Seller of a Subcontractor will not, under any circumstances:
(i) give rise to any claim by Seller against Customer if such Subcontractor
breaches its subcontract or contract with Seller; (ii) give rise to any claim by
such Subcontractor against Customer; (iii) create any contractual obligation by
Customer to the Subcontractor; (iv) give rise to a waiver by Customer of its
rights to reject any Products, Licensed Materials or Services due to
deficiencies therein; or (v) in any way release Seller from being solely
responsible to Customer for the obligations to be performed under this
Agreement.
5.2. Seller's Liability. Seller is the general contractor for the design
------------------
and construction of the Network and remains responsible for all of its
obligations under this Agreement, regardless of whether a subcontract or supply
agreement is made or whether Seller relies upon any Subcontractor to any extent.
Seller's use of Subcontractors for any of the work will in no way increase
Seller's rights against or diminish Seller's liabilities to Customer with
respect to this Agreement, and in all events, except as otherwise expressly
provided for herein, Seller's rights and liabilities hereunder with respect to
Customer will be as though Seller had itself performed such work. Except to the
extent caused by Customer, Seller will be liable for any delays caused by any
Subcontractor as if such delays were caused by Seller.
5.3. No Effect of Inconsistent Terms in Subcontracts. The terms of this
-----------------------------------------------
Agreement will in all events be binding upon Seller regardless of and without
regard to the existence of any inconsistent terms in any agreement between
Seller and any Subcontractor whether or not and without regard to the fact that
Customer may have directly and/or indirectly had notice of any such inconsistent
term.
5.4. Assignability of Subcontracts to Customer. Seller shall use all
-----------------------------------------
reasonable efforts to have each agreement between Seller and a Subcontractor
contain a provision stating that, in the event that Seller is terminated for
cause, convenience, abandonment of this Agreement or otherwise, (i) each
Subcontractor will continue its portion of the work to be performed hereunder as
may be requested by Customer and (ii) such agreement permits assignment thereof
without penalty to Customer at the option of Customer and for the same price and
under the same terms and conditions as originally specified in such
Subcontractor's agreement with Seller.
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<PAGE>
5.5. Removal of Subcontractor or Subcontractor's Personnel. Customer has
-----------------------------------------------------
the right at any time to require removal of a Subcontractor and/or any of a
Subcontractor's personnel from work on the Network upon reasonable grounds and
reasonable prior notice to Seller. The exercise of such right by Customer will
have no effect on the provisions of subsections 5.1 and 5.2.
5.6. Subcontractor Insurance. Seller must require its Subcontractors to
-----------------------
obtain, maintain and keep in force during the time they are engaged in providing
Products, Licensed Materials and Services hereunder the following insurance
coverage (1) Worker's Compensation and related insurance as required by law;
and, (2) employer's liability insurance with a limit of at least five hundred
thousand ($500,000.00) dollars for each occurrence; (3) comprehensive general
liability insurance, with a limit of at least one million ($1,000,000.00)
dollars per occurrence; (4) comprehensive motor vehicle liability insurance with
limits of at least one million ($1,000,000.00) dollars for bodily injury
including death, to any one person, three hundred thousand ($300,000.00) dollars
for each occurrence of property damage, and one million ($1,000,000.00) dollars
for any one occurrence. Seller will, upon Customer's request, furnish Customer
with evidence of such insurance in form and substance reasonably satisfactory to
Customer. All such insurance will be subject to Customer's approval. All
Subcontractors must be of bondable financial condition. Nothing herein will be
deemed to bar Seller or any Subcontractor from obtaining such insurance on a
project basis for each of the Subcontractors participating in such project.
5.7. Review not Relief of Seller Liability. Any inspection or review by
-------------------------------------
Customer permitted under this Agreement of any portion of the work by the Seller
or any Subcontractor will not relieve Seller of any duties, liabilities or
obligations under this Agreement, but nothing contained in this Section 5.7 will
be deemed to limit the effect of any express waiver given by Customer to Seller
pursuant to and in accordance with the terms of this Agreement.
5.8. Evaluation of Subcontractors. Seller and Customer agree to develop a
----------------------------
plan to evaluate products and materials provided by Subcontractors (which shall
include product testing and integration testing). Any expenses of such agreed
upon evaluation shall be included in the Purchase Price of the Network.
5.9. Seller Warranties. Except as otherwise expressly provided in Article
-----------------
9, the warranties of Seller pursuant to Article 9 will be deemed to apply to all
Products or Licensed Materials supplied or work performed by any Subcontractor
as though Seller had itself performed such work. The parties agree that all
warranties relating to Products, Licensed Materials and work performed by any
third parties shall, to the extent permitted, be passed through to Customer.
Except as otherwise specifically provided in Article 9, the Parties agree that
such warranties will not be enforceable merely on a "pass-through" basis but
that Customer may proceed directly against Seller with respect to such
warranties. In addition, Customer may,
-25-
<PAGE>
but will not be obligated to, enforce such warranties of any Subcontractor to
the extent that Customer determines that Seller is not paying and/or performing
its warranties; provided that any such election by the Customer will not relieve
Seller from any obligations or liability with respect to any such warranty.
5.10. Payment of Subcontractors; Indemnity of Customer. Seller must make
------------------------------------------------
all payments to all Subcontractors (except in the case of legitimate disputes
between Seller and any such Subcontractor arising out of the agreement between
Seller an such Subcontractor) in accordance with the respective agreements
between Seller and its Subcontractors such that Subcontractors will not be in a
position to enforce liens and/or other rights against Customer, the Network or
any part thereof. Seller will indemnify and hold Customer and its Affiliates,
directors, officers, agents and employees (each an "Indemnitee") harmless from
and against all Subcontractor claims, demands, suits, proceedings, damages,
costs, expenses, liabilities or causes of action brought against or incurred by
an Indemnitee; provided, however, Seller shall not indemnify Customer for any
claims or liabilities which arise solely due to Customer's material breach of
this Agreement or gross negligence.
ARTICLE 6
NETWORK DESIGN, ORDERS AND INVOICES
6.1. Initiation of Phases. Phase Plans may be developed under either of
--------------------
the following two processes:
(a) Customer will from time to time initiate requests (an "Initiation
Request") for the design of Phases by delivering to Seller
written notice which may include the geographic area to be
covered or enhanced, traffic capacities, coverage requirements
and the required Functionality of the Phase ("Phase
Specifications"). Upon receipt of an Initiation Request, Seller
will, in cooperation with Customer, prepare a proposal,
incorporating the terms and conditions of this Agreement, for the
design, engineering, equipping, construction, installation,
integration and testing of the Phase required to comply with the
Initiation Request, which proposal will include the proposed
allocation of the Purchase Price, a detailed description of the
Products and Licensed Materials to be utilized and Services to be
provided, confirmation of the Phase Specifications, a
Responsibility Matrix, a development timeline incorporating
intermediate milestones and Delivery Dates (a "Phase Proposal").
Seller shall deliver Phase Proposals to Customer upon receipt of
an Initiation Request in accordance with the following schedule.
For the first 3 Phase
-26-
<PAGE>
Proposals, Seller shall deliver a Phase Proposal to Customer
within thirty (30) days of receipt of the Initiation Request. For
all Phase Proposals thereafter, Seller shall deliver the Phase
Proposal to Customer within fifteen (15) days of receipt of the
Initiation Request. Customer may approve of the Phase Proposal,
reject the Phase Proposal, or request modifications in the Phase
Proposal. If Customer rejects the Phase Proposal, Customer shall
provide Seller reason for such rejection. If Customer requests
modifications in the Phase Proposal, Customer and Seller will
cooperate in good faith to promptly revise the Phase Proposal so
that it is acceptable to both parties; or
(b) Customer may develop a Phase Proposal which shall include
intermediate milestones and Delivery Dates that are consistent
with Seller's Standard Delivery Intervals and which shall be
subject to Seller's reasonable acceptance.
If the Parties have been unable to agree on a Phase Proposal within 5
business days of the delivery of the Phase Proposal, the Phase Proposal will
automatically be referred to the Primary Contact Person of both parties in the
department(s) related to the issue(s) in dispute for their review and good faith
negotiation of an acceptable Phase Proposal within 10 business days. An accepted
Phase Proposal shall constitute a "Phase Plan." If a Phase Proposal has not
been agreed to within such 10 business days, such failure to agree shall be
resolved pursuant to Section 17.5.
6.2. Content of Orders. Based upon the Phase Plan and prior to the
-----------------
delivery and installation of any Products or Licensed Materials or performance
of any Services to be used in the construction of any portion of the Network,
the Customer will submit to the Seller an order (each an "Order") for such
items, which Order shall incorporate and be subject to the terms and conditions
of this Agreement. Orders will include all the requirements of either an
Initial Phase or an Expansion Phase in the mutually agreed upon construction
schedule for the portion of the Network subject to the Phase Plan. All Orders,
including electronic Orders, shall contain the information as detailed below:
(a) Complete and correct ship to and bill to address;
(b) The quantity and type of Products, Licensed Materials, and
Services being ordered;
(c) The Order completion schedule as defined by the relevant Phase
Plan;
(d) The Allocation of the Purchase Price set forth in the relevant
Phase Plan;
(e) Reference to this Agreement; and
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<PAGE>
(f) If an Order includes Bill and Hold Products, the phrase "Bill and
Hold" will be clearly and conspicuously stated in the Order and
the Products and Licensed Materials to be billed and held will be
clearly identified.
Orders not rejected in writing within ten (10) days shall be deemed
accepted, provided that no order which is consistent with the applicable Phase
Plan may be rejected by Seller. Seller shall perform in accordance with any
accepted Order. Terms and conditions on Customer's Orders which are
inconsistent with the provisions of this Agreement shall be ineffective, void
and of no force and effect. Seller reserves the right to place any Order on
hold, delay shipment or reject an Order due to a payment default by Customer.
Orders which are not electronic shall be sent to the following address:
Lucent Technologies Inc.
Customer Service
6701 Roswell Road
Building D - 3rd Floor
Atlanta, GA 30328-2501
6.3. Electronic Orders. Electronic Orders shall be binding on Customer
-----------------
notwithstanding the absence of a signature. Electronic Orders shall be sent in
accordance with instructions to be provided by Seller.
6.4. Bill and Hold Products. In the event Customer orders Bill and Hold
----------------------
Products, the parties will agree in writing on the terms and timing of the
storage and shipment of such Products.
6.5. Changes in Orders. Other than changes to the "ship to" or "bill to"
-----------------
addresses which may be changed at any time at least ten (10) business days prior
to shipment or billing, changes by Customer to an Order which has been
previously accepted by Seller (a "Change Order"), are subject to acceptance by
Seller. In the event Seller accepts a Change Order and such change affects
Seller's ability to meet its obligations under the original order, any Invoice
Price, shipment date or Services completion date quoted by Seller with respect
to such original order is subject to change. Seller will provide to Customer
written quotations and expected completion dates for any requested Change
Orders.
6.6. Cancellation or Postponement of Orders. Customer has the right at any
--------------------------------------
time before affected Products or Licensed Materials have already been shipped or
relevant Services have already been performed to cancel or postpone any Order,
in whole or in part, upon advance written notice to Seller.
-28-
<PAGE>
(a) For those Products and Licensed Materials not shipped and
considered stock items:
(i) if such cancellation or postponement is made at least thirty
(30) days' prior to the scheduled shipment date for the
subject Products and Licensed Material, Customer will not
owe any cancellation or postponement charge in connection
with such cancellation; and
(ii) if Customer cancels an Order or portion thereof less than
thirty (30) days prior to the scheduled shipment of Products
and Licensed Materials to be delivered thereunder, Customer
agrees to pay to Seller a cancellation charge equal to ***
******* ***** of the Invoice Prices of such Products and
Licensed Materials.
(b) For those Products and Licensed Materials not shipped and
considered customized or non-stock items, Customer agrees to pay
Seller the amount of Seller's reasonably incurred out of pocket
expenses.
(c) For a cancellation or postponement of Services, if such
cancellation or postponement is made at least fifteen (15) days
prior to the scheduled performance date for the subject Services
to be included in such Order (or portion thereof) Customer will
not owe any cancellation or postponement charge in connection
with such Order (or portion thereof). If Customer cancels an
Order or portion thereof less than fifteen (15) days prior to the
scheduled performance date for Services to be performed
thereunder, Customer shall pay Seller a cancellation charge equal
to Seller's reasonably incurred out of pocket expenses. For
Services in process, Customer agrees to pay a cancellation fee
equal to the price of all Services rendered to date and not paid
for, plus Seller's reasonably incurred out of pocket expenses for
those Services ordered by Customer and subsequently canceled.
Notwithstanding the above, the termination provisions related to
maintenance and Extended Warranty type Services are as follows:
prior to commencement of maintenance service, Customer may cancel
coverage at no charge and receive a refund for any prepaid
amount. After commencement of maintenance service, Customer may
terminate coverage upon 30 days written notice and upon such
termination shall pay a termination charge equal to ***** of the
monthly charges for twelve (12) months or *** ******* ***** of
the charges for the remainder of the maintenance period whichever
is less. For prepaid agreements, Seller will refund or credit the
pro rata price for the remainder of the maintenance period less
*This confidential portion has ben omitted and filed separately with
the Commission.
-29-
<PAGE>
a termination charge of *** ******* ***** of the monthly charges
for twelve months or *** ******* ***** of the charges for the
remainder of the maintenance period, whichever is less.
6.7. Changes in Products or Licensed Materials. Prior to shipment and with
-----------------------------------------
notice to Customer, Seller may at any time make changes in Products or Licensed
Materials. Seller may modify the Product(s) or Licensed Materials and
Specifications or substitute Products or Licensed Materials of later design so
long as such modifications do not diminish warranted performance specifications.
Seller agrees that such modifications or substitutions will not impact upon
Form, Fit, Function or Functionality under normal and proper use of the ordered
Product as provided in the Specifications. Seller shall not substitute Products
or Licensed Materials or make changes, modifications, or substitutions that
impact the Form, Fit, Function or Functionality of the ordered Products or
Licensed Materials unless Customer consents to such modifications. Unless
otherwise agreed in writing, such substitution shall not result in any
additional charges to Customer with respect to Products or Licensed Materials
for which Seller has quoted Invoice Prices to Customer.
6.8. Invoice Prices. The Purchase Price of the Network shall be paid
--------------
during the course of construction of the Network on the basis of Orders that
become payable in accordance with Section 6.9. Unless otherwise agreed to by
the parties, portions of the Purchase Price that become payable with respect to
Products, Licensed Materials or Services upon fulfillment of an Order shall be
as set forth in Exhibit I (the "Invoice Prices"), plus any related taxes and
transportation charges. Products, Licensed Materials and Services to be offered
which are not listed on Exhibit I as of the date hereof shall be introduced at
Invoice Prices to be mutually agreed upon by the parties. At least every two
years, beginning on the second anniversary of the date of this Agreement,
representatives of Seller and Customer will negotiate in good faith to agree on
amendments to Exhibit I. The parties agree that such amendments will include
price reductions which provide Customer with the benefit of ***** ******* *****
of the value, if any, of any efficiencies realized by Seller in the production
of point-to-multipoint radio Products over the course of this Agreement. If
Customer becomes aware through verifiable means that previous amendments to
Exhibit I have not given Customer the benefit of such efficiencies, Seller will
*** ****** *** ****** ********* ******** *** *** ******* **** *** *** ******
**** ***** ** ********* *** ********* ******** **** *** ****** ***** ** ***
****** ** ********* ********** *** **** **** **** ******* ***** *** ** **** **
******* ****** ****** ** *** ****** ******* ****** ** *** ************ ********
** ****** ***** ** **** ******* ** ****** ***** ****** ** *** **** ****** ****
*** ****** Customer has the right to terminate this Agreement without penalty
if, acting reasonably and in good faith, Seller and Customer fail to agree on
any scheduled amendments to Exhibit I within one month of each anniversary.
*This confidential portion has ben omitted and filed separately with the
Commission.
-30-
<PAGE>
Except as provided pursuant to the Change Order provisions of Section 6.5,
the Initial Invoice Prices for Products and Licensed Materials are the maximum
Invoice Prices Seller can use in allocating the Purchase Price to Products and
Licensed Materials which are generally available during the term of this
Agreement. In addition, with respect to Services, the Invoice Prices agreed to
during each review period described in the immediately preceding paragraph shall
be the maximum Invoice Prices Seller can use in allocating Purchase Price to
Services during the two year period commencing on the conclusion of each such
Invoice Price review.
6.9. Terms of Payment. Seller shall bill Customer and shall submit
----------------
invoices to Customer covering Orders, or portions thereof, that became billable
under the terms of this Agreement. Such invoices shall be in reasonable detail.
Delivery of invoices shall be made in accordance with the notice provisions of
Section 17.2, except that Invoices shall be sent to the Controller. Payment of
all invoices shall be net 30 days from effectiveness of such notice (as set
forth in Section 17.2.). Orders for the following Products, Licensed Materials
and Services shall become billable as follows:
(a) Upon the shipment of Products and Licensed Materials, which are
completely manufactured, tested, packed, marked, accompanied by all
necessary documentation (including up to date operating manuals
containing detailed procedures and specifications for the operation of
such portion of the Network) (collectively, "Complete") and included
in any Orders that are not subject to System ATP, the allocation of
Purchase Price related to such Products and Licensed Materials shall
become billable.
(b) Orders that are subject to System ATP, other than Orders for the first
two Initial Phases which use point-to multi-point radio technology,
shall become billable according to the following schedule of events:
(i) Shipment of Product. Upon the shipment of Products and Licensed
Materials included in an Order, which are Complete, ** ******* of
the allocation of Purchase Price related to such Products and
Licensed Materials shall become billable;
(ii) Final Acceptance. The remaining ** ******* of the allocation of
Purchase Price related to Products and Licensed Materials shall
become billable on the earlier of (a) the date when all items are
eliminated from the Punchlist or (b) the placement of such Phase
into Commercial Service.
Notwithstanding the foregoing, with respect to any Order which is subject to
System ATP, other than the first two Initial Phases which use point-to-
multipoint technology, in the event Customer takes any action (excluding any
good faith disputes with Seller regarding such Order or its
*This confidential portion has ben omitted and filed separately with the
Commission.
-31-
<PAGE>
Related Punchlist) which results in a delay in the creation of such Punchlist
for more than thirty (30) days after the completion of such System ATP, the
remaining ** ******* of such Order shall become immediately billable.
(c) The Orders for the first two Initial Phases which include point-to-
multipoint radio technology, shall become payable according to the
following schedule of events:
(i) Punchlist. After the Punchlist related to the Order has been
created and such Initial Phase has been operational without
service affecting problems or defects relating to Seller Provided
Products, Licensed Materials and Services for sixty (60) days, **
******* of the allocation of Purchase Price related to Products
and Licensed Materials shall become billable; and
(ii) Final Acceptance. The remaining ** ******* of the allocation of
Purchase Price related to Products and Licensed Materials shall
become billable when all items are eliminated from the Punchlist.
Notwithstanding the foregoing, with respect to the Orders for the Initial Phases
which include point-to-multipoint radio technology (such Orders being subject to
System ATP), in the event Customer takes any action (excluding any good faith
disputes with Seller regarding such Order or its Related Punchlist) which
results in a delay in the creation of such Punchlist for more than thirty (30)
days after the completion of such System ATP, 100 percent of such Orders shall
become immediately billable.
Notwithstanding Sections 6.9(a) - (c) above, the allocation of Purchase
Price related to (i) Services described on Exhibit E to be performed under any
Order or (ii) Services to be performed under any Order which is not subject to
Acceptance Test Procedures, shall become billable upon completion of such
Services. All other Services to be performed under an Order shall become
billable upon Final Acceptance of such Order.
Customer shall pay all amounts due Seller hereunder using Electronic Funds
Transfer ("EFT"). EFT payments by Customer shall be made to the following
account of Seller or such other account as is subsequently designated by Seller
in writing and, concurrent with the EFT payment, Customer shall fax a copy of
the remittal to Seller's Manager of Cash Operations at 770-750-4288.
*This confidential portion has ben omitted and filed separately with the
Commission.
-32-
<PAGE>
Chase Manhattan Bank
New York, New York
Account Name: Lucent Technologies Inc.
***** ***********
*** *********
Customer agrees to review all invoices furnished by Seller hereunder upon
receipt and to use good faith efforts to notify Seller of any billing
discrepancies within fifteen (15) days of receipt of the applicable invoice.
Notice of such discrepancies may be directed to Seller in writing or by
telephone to the telephone number or, if in writing, to the address identified
on the invoice. Customer shall not be required to pay Seller on such disputed
invoice items in net 30 days as required by the first paragraph of this Section
6.9. Irrespective of any failure to provide notice of any billing discrepancies
within the fifteen days provided for in this Section 6.9, Customer shall
maintain its right to seek resolution of billing discrepancies after payment and
lack of notice shall not be deemed a waiver of any rights. If Customer fails to
pay any undisputed invoiced amount when due, the invoiced amount will be subject
to a late payment charge at the rate of *** *** *** **** ****** *****per month,
or portion thereof, of the amount due (but limited to the maximum lawful rate)
provided, however, that, if the Short Term Note has not been paid or Seller has
not syndicated or transferred its obligations under the credit agreement
providing the financing between Seller and Customer, such failure to make
payment is not the result of Seller failing to extend credit under such the
Short Term Note or credit agreement in breach of Seller's obligations thereunder
if all the conditions for Customer to borrow thereunder have been fulfilled with
respect to a borrowing under the Short Term Note or credit agreement.
6.10. Security Interest. Seller retains and Customer hereby grants Seller
-----------------
a purchase money security interest in the Network to secure any and all amounts
due Seller under this Agreement for the Purchase Price of the Network. Seller
shall have the right, at any time during the Term, to file in any state or local
jurisdiction such financing statements (e.g., UCC-1 financing statements) as
Seller deems necessary to perfect its purchase money security interest
hereunder, provided Customer is furnished a copy of such financing statements
before filing. Upon Seller's reasonable request, Customer shall execute all
documents necessary or desirable to evidence or perfect Seller's purchase money
security interest in the Network including without limitation, UCC-1 financing
statements. Customer also agrees that this Agreement may be filed by Seller in
any state or local jurisdiction as a financing statement (or as other evidence
of the Seller's purchase money security interest). Seller acknowledges that
Customer will require additional capital in order to finance the Total Contract
Value hereunder to complete the Network and agrees to cooperate with Customer to
obtain such financing, including purchase money financing for portions of the
Network or equipment incorporated into the Network
*This confidential portion has ben omitted and filed separately with the
Commission.
-33-
<PAGE>
secured by purchase money security interests which Seller agrees shall
constitute a first lien on such equipment or portions of the Network, senior to
Seller's security interests hereunder.
6.11. Taxes. The Purchase Price shall include and Customer shall be
-----
responsible for all sales and all other taxes and related charges, however
designated, imposed upon, based upon or levied upon sale of the Network or the
provision, license or use of Products, Licensed Materials or Services in
constructing the Network, excluding taxes on Seller's net income, unless
Customer provides Seller with a valid tax exempt certificate.
6.12. Transportation and Packing. The Purchase Price shall also include
--------------------------
all transportation and packing charges incurred in the construction of the
Network. Seller, in accordance with its normal practices, shall arrange for
prepaid transportation to destinations in the contiguous United States and shall
invoice transportation charges to Customer. Premium transportation will be used
only at Customer's request. Seller shall pack Products for delivery in the
contiguous United States in accordance with its standard practices for domestic
shipments.
6.13. Delivery and Acceptance. The parties expect, among other things,
-----------------------
that Seller shall deliver Products and Licensed Materials by the Delivery
Date(s) specified in an Order pursuant to the schedule set forth in such Order.
Delivery Date shall mean the date on which Products and Licensed Materials
arrive at the destination specified Complete. With respect to Orders, or
portions thereof, subject to Acceptance Test Procedures, the Delivery Date is
the date on which the Products and Licensed Materials are delivered Complete and
pass all requisite Acceptance Testing Procedures.
If any item is not delivered in accordance with the terms of the relevant
Order (as it may be amended or changed from time to time), any additional
expenses incurred in delivering it to the correct point of delivery and the risk
of transportation shall be borne by Seller.
Customer's acceptance of and payment for certain Orders or portions of
Orders shall be subject to the Acceptance Test Procedures governing installation
and Final Acceptance set forth on Exhibit A.
6.14. Provisional Acceptance.
----------------------
(a) Acceptance of the Primary Build. At the point Seller has
-------------------------------
installed the following Products and Licensed Materials as part of
its deployment of an Initial Phase: one Switching Center, one Hub,
and 10 Customer Sites ("Primary Build"), Seller will test the Primary
Build in accordance with the Provisional Acceptance Standards and
promptly provide the test results to Customer. Within fourteen (14)
days of the receipt of such test results Customer shall determine and
notify
-34-
<PAGE>
Seller whether or not the Primary Build meets the Provisional
Acceptance Standards. If Customer has notified Seller that the
Primary Build meets the Provisional Acceptance Standards, Seller will
provide notice to Customer confirming completion of the Primary Build
(a "Notice of Completion"). If Seller has not received notification
from Customer by the fourteenth day, Seller shall so notify the
Primary Contact Person pursuant to Section 17.2. If within two
business days of Customer's receipt of such notice, Customer has not
notified Seller whether the Primary Build meets Provisional
Acceptance Standards, Seller may issue a Notice of Completion. The
issuance of the Notice of Completion shall be deemed "Provisional
Acceptance." In any event, Customer's placing of the Primary Build
into Commercial Service at any time after installation shall
automatically constitute Provisional Acceptance.
At reasonable times during the course of Seller's installation of the
Primary Build, Customer, at its request may inspect completed
portions of such installation. Seller shall provide Customer with at
least seven (7) days prior written notice before Seller commences
testing in connection with any Primary Build and Customer shall have
the right to observe Seller's testing to determine that such testing
and the test results are in accordance with Provisional Acceptance
Standards. Provided that Seller has given the required advance
notice, if Customer fails to appear (i) to observe or participate in
a test at the scheduled time or to request a rescheduling of such
tests to a mutually convenient time, or (ii) fails to appear at a
rescheduled time, Seller shall be entitled to perform the test and,
if Seller does so, Seller shall so indicate on the test completion
documents.
(b) Installation. After Provisional Acceptance of a Primary Build has
------------
occurred, all other Products and Licensed Materials included in the
same Phase as such Primary Build shall be provisionally accepted as
provided below:
At reasonable times during the course of Seller's installation of
Products or Licensed Materials to a Phase to which Provisional
Acceptance of the Primary Build has occurred, Customer may inspect
completed portions of such installation. Seller shall provide
Customer with at least seven (7) days prior written notice before
Seller commences testing in connection with installation of Products
or Licensed Materials to a Phase after Provisional Acceptance of the
Primary Build of such Phase has occurred and Customer shall have the
right to observe Seller's testing to determine that such testing and
the test results are in accordance with Provisional Acceptance
Standards. Provided that Seller has given the required advance
notice, if Customer fails to appear (i) to observe or
-35-
<PAGE>
participate in a test at the scheduled time or to request a
rescheduling of such tests to a mutually convenient time, or (ii)
fails to appear at a rescheduled time, Seller shall be entitled to
perform the test and, if Seller does so, Seller shall so indicate on
the test completion documents.
Seller will test the installation of such Products and Licensed
Materials in accordance with the test procedures for Provisional
Acceptance Standards detailed on Exhibit Q and promptly provide the
test results to Customer. Within fourteen (14) days of the receipt of
such test results Customer shall determine and notify Seller whether
or not such Products and Licensed Materials meet the Provisional
Acceptance Standards. If Customer has notified Seller that such
Products and Licensed Materials meet the Provisional Acceptance
Standards, Seller will provide notice to Customer confirming
completion of the installation of such Products and Licensed
Materials (a "Notice of Completion"). If Seller has not received
notification from Customer by the fourteenth day, Seller shall so
notify the Primary Contact Person pursuant to Section 17.2. If within
two business days of Customer's receipt of such notice, Customer has
not notified Seller whether the Primary Build meets Provisional
Acceptance Standards, Seller may issue a Notice of Completion. The
issuance of the Notice of Completion shall be deemed "Provisional
Acceptance" of such Products and Licensed Materials. In any event,
Customer's placing of the Primary Build into Commercial Service at
any time after installation shall automatically constitute
Provisional Acceptance of Products and Licensed Materials included in
the same Initial Phase.
Provisional Acceptance hereunder shall affect neither Seller's
warranty hereunder nor when Orders become billable. Final Acceptance
and the billing of Orders for Products, Licensed Materials and
Services shall occur as provided in Section 6.9 hereto.
ARTICLE 7
TITLE AND RISK OF LOSS
Title to Products only and risk of loss to Products and Licensed Materials
which are not being installed by Seller shall pass to Customer when such
Products and Licensed Materials arrive at the destination specified in the
relevant Order Complete, unless otherwise specifically agreed to by the parties.
Title to all Licensed Materials (whether or not part of Firmware) furnished by
Seller, and all copies thereof made by Customer, including translations,
compilations and partial copies are, and shall remain the property of Seller.
Title to Products only and risk of loss to Products and Licensed Materials which
are to be installed by Seller shall
-36-
<PAGE>
pass upon installation, unless otherwise specifically agreed to in writing by
the parties. Customer shall notify Seller promptly of any claim with respect to
loss which occurs while Seller has the risk of loss and will reasonably
cooperate to facilitate the settlement of any claim. Seller shall transfer
title to all Products made part of the Network, free and clear of all liens and
encumbrances, by appropriate documentation including warranty of title.
ARTICLE 8
LICENSED MATERIALS
8.1. License for Licensed Materials. Upon delivery of Licensed Materials
------------------------------
pursuant to this Agreement, Seller grants to Customer a personal, non-
transferable (except as set forth in Section 8.2), and non-exclusive, multi-site
license to use Licensed Materials on a designated processor in the United States
for its own business operations and specifically to operate Products used in the
Network and the Network itself (as a whole or any portion thereof). As used in
this Section 8.1, "designated processor" shall mean the specific product,
processor or product line for which licenses to use Licensed Materials are
granted. Except as provided in this Section 8.1 or by agreement as provided in
Section 2.9, no license is granted to Customer to use the Licensed Materials
outside the United States or to sublicense such Licensed Materials furnished by
Seller. The license granted hereunder includes and is deemed to cover any
Affiliate of Customer to the extent such Affiliate is developing, constructing
and/or operating a wireless data transmission network and is seeking to access
or use the Network or any portion thereof. Customer may retain an archival copy
of the Software for as long as such Software is relevant to Customer's
operations. Customer shall not reverse engineer, decompile or disassemble
Software furnished as object code to generate corresponding Source Code. Except
as provided below, Customer shall not modify Software furnished by Seller under
this Agreement.
Customer shall not make any copies of any Licensed Materials except as
necessary in connection with the rights granted hereunder. Customer shall
reproduce and include any Seller copyright and proprietary notice on all such
necessary copies of the Licensed Materials. To the extent reasonably possible,
Customer shall also mark all media containing such copies with a warning that
the Licensed Materials are subject to restrictions contained in an agreement
between Seller and Customer and that such Licensed Materials are the property of
Seller. Customer shall make reasonably available to Seller Customer's records,
maintained in the ordinary course, describing the number and location of copies
of Licensed Materials included in the Network. Customer shall take appropriate
action, by instruction, agreement, or otherwise, with the persons permitted
access to the Licensed Materials so as to enable Customer to satisfy its
obligations under this Agreement. If Customer's license is canceled or
terminated, or when the Licensed Materials are no longer needed by Customer,
Customer shall return all copies of such Licensed Materials to Seller or follow
written disposition instructions provided by Seller.
-37-
<PAGE>
8.2. Transfer and Relocation.
-----------------------
(a) Customer may relocate any Software or Licensed Material and associated
Products or Designated Processors anywhere within the United States at
no charge.
(b) Customer, or any successor to Customer's title in the Network or the
relevant portion thereof, may transfer its right-to-use any Software
and Designated Processor furnished under this Agreement without the
payment of an additional right-to-use fee by transferee, except where
size sensitive units such as additional memory, hard disk space, etc.
are a factor. Such transfer can be made to an end user only under the
following conditions:
(i) Such software and Designated Processor shall be used only
within the United States; however, Seller will not unreasonably
withhold its consent to use outside the United States provided
that, in the sole opinion of the Seller, the proprietary
information associated with the use can be adequately
protected, such transfer will be in compliance with all United
States export laws and regulations and any other reasonable
concerns of Seller are adequately addressed;
(ii) Except as otherwise provided in this agreement, the right to
use such Software and Designated Processor may be transferred
only together with the portion of the Network with which
Customer has a right to use such Software and Designated
Processor, and such right to use the Software and Designated
Processor shall continue to be limited to use with such portion
of the Network;
(iii) Before any such Software and Designated Processor shall be
transferred, Customer shall notify Seller of such transfer and
the transferee shall have agreed in writing (a copy of which
will be provided to Seller at its request) to keep such
Software in confidence and to comply with corresponding
conditions respecting use of Licensed Materials as those
imposed on Customer; and
(iv) The transferee shall have the same right to Software and
Designated Processor warranty or Software maintenance for such
Software as the transferor, provided the transferee continues
to pay the fees, if any, associated with such Software or
Software maintenance.
-38-
<PAGE>
(c) If Customer or such successor wishes to transfer a Product included in
the Network for which it does not under this Agreement have the right
to transfer related Software, Seller agrees that upon prior written
request of the transferee of such Product, or of Customer or such
successor, Seller will not without reasonable cause fail to grant its
consent to transfer such a license to use such Software with the
Products, to be located within the United States, upon payment of a
relicensing fee to Seller in an amount equal to fifty percent (50%) of
the Invoice Price for the Software originally paid by Customer to
Seller; provided that such relicensing fee will in no event exceed
fifteen percent (15%) of the price paid by the transferee to the Owner
for the Product with respect to which such Software is used.
(d) Customer may transfer and assign rights to use Software and Licensed
Materials in connection with a sale of all or a portion of the
Network.
Notwithstanding anything in this Section 8.2 to the contrary, under no
circumstances shall Customer have the right to transfer the Software to a
competitor of Seller engaged in the manufacture and distribution of
telecommunications equipment. In the event Customer transfers a Product without
the related Software or Software Independent of Processor, Customer shall bear
all responsibility for returning such related Software to Seller.
8.3. Installation of Software.
------------------------
(a) Where Customer is responsible for Software installation, Seller's sole
responsibility with respect to installation is to deliver the Software
to Customer on or before the scheduled date of delivery set forth in
the relevant Phase Plan. However, if the Order specifies that Seller
is responsible for such installation, Seller shall complete its
installation and associated testing on or before the scheduled
installation date set forth in the relevant Phase Plan.
(b) Where Customer has assumed responsibility for the installation of
newly licensed Software and in the event that Customer encounters
installation difficulties, at Customer's request, Seller will provide
technical assistance at an Invoice Price in effect for such Services
in effect at the time of such request.
8.4. Backwards Compatibility.
-----------------------
(a) In addition to the warranties contained in Article 9, Seller
represents and warrants that Software will be Backwards Compatible
with the two immediately preceding Software Revision Levels and with
all existing in-service Seller Provided Products included in the
Network.
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<PAGE>
(b) In the event that Software supplied by Seller for use in any portion
of the Network at any time does not provide Backwards Compatibility
as required by this Section 8.4, then Seller will provide, without
charge to Customer, the most current Software Updates of the Software
to each such portion of the Network, and otherwise take such steps as
may be necessary to achieve Backwards Compatibility.
8.5. Software Support. As long as Customer maintains an effective
----------------
Software Maintenance Agreement, Seller shall provide support services for the
standard version of Software for the Products furnished pursuant to this
Agreement.
8.6. Reserved
--------
8.7. Annual Release Maintenance. During the term of this Agreement,
--------------------------
Seller will provide to Customer at no extra cost, at such times as they become
generally available to Seller's customers, all Software Maintenance Releases
applicable to Software for which Customer has obtained a license pursuant to the
terms of this Agreement and has a Software subscription agreement in place with
Seller, which agreement shall be provided free of charge unless the third party
providing such Maintenance Releases or subscription agreement to Seller charges
Seller a fee therefore, in which case such fees shall be passed through at no
more than such fees. In addition, Seller will make available to Customer, at
agreed Invoice Prices or pursuant to a software maintenance agreement, if
Customer elects to enter into such Agreement, and at such times as they become
generally available to Seller's customers, all Software Upgrades, Software
Enhancements and Software Combined Releases.
8.8. Notice. Seller must give the Customer not less than ninety (90) days
------
prior written notice of the introduction of any Software Enhancement release or
any Software Combined Release or any Optional Software Features release for
Seller Provided Software. In addition, in each June and December of each year
during the term of this Agreement, Seller must provide Customer with a forecast
of future Software Enhancement releases or Software Combined Releases or any
Optional Software Features release, as the case may be, then currently being
developed by or on behalf of Seller.
8.9. Installation and Testing. The installation and testing of the
------------------------
Software by Seller and the acceptance thereof by Customer will be performed in
accordance with the criteria set forth in Exhibit A.
-40-
<PAGE>
8.10. Software Fixes.
--------------
In the event that any Software Upgrade, Software Enhancement, Software
Maintenance Release or Software Combined Release supplied by Seller has the
effect of preventing the Network and/or any Phase, as the case may be, or any
part thereof from satisfying, or performing in accordance with the
Specifications, or otherwise adversely affects the Functionality or Features of
the Network, any Phase or any part thereof, then Seller will promptly retrofit
or take such other corrective action (including the installation of any
additional Equipment, at Seller's sole cost and expense) as may be necessary to
assure that the Network or any such affected part thereof, as modified to
include each such Software Upgrade, Software Enhancement or Software Maintenance
Release and Software Combined Release, will satisfy, and perform in accordance
with, the Specifications, and restore all pre-existing Functionality and
Features, in each case without any cost or expense to Customer (other than
payment of the applicable Fees pursuant to the terms of this Contract).
Notwithstanding anything contained in this subsection to the contrary, Customer
will be responsible for the cost of any additional Equipment required to
accommodate additional capacity, memory or processing requirements necessitated
by any new Software feature contained in any such Software Enhancement Software
Combined Release or Software Upgrade.
ARTICLE 9
WARRANTY
9.1. ****** *********** ****** ******** **** *** ******* *** **** ***
***** ******* *** ********* ***** **** ******** *** ************* *** ***** **
*** ************** ****** ***** **** *** ***** ********* **** *** ****** **
****** ****** **** *** ****** ********* *** ** *** ******* ** *** ******* ** ***
******* ************** ***** ** ******* ** ********** **** *** ***************
******* ** *** **** ***** ***** ********** **** *** ********** ********
********* ** ******* *** ******** ********* ****** *** ********* ******* ******
******** ********** ********* ** ****** ******** *** ******** ********* **
********* ********** ************ *** ** ** ****** ** ********* ** *** ******
******* ** ***** ** ******** ******* ******* ****** **** **** ****** **
*********** ******** **** ** ******** ** ********** *** ***** ******** *********
** *** ***** **** ******* *********** ****** **** ** ** ********** ** *** ******
*** ** *** **** **** *** ******* ** ******* ******** ******** ********* *****
*** ** ******** ** ******* ** *** *********** ********** ** *** ******* ******
******** ** ******* **** *******
******** *********** ********** ******** ****** *** **********
*** ***** **** ************ ******** ********* ** ******* **
*This confidential portion has ben omitted and filed separately with the
Commission.
-41-
<PAGE>
**** **** ******* *** ******* ************** ******** ** ****** **** ****
*** ********** ** ******* * ******** ****** **** ******** ************* *****
***** ******* ********* ****** ******** **** **** ********* ****** ********
** *** ****** ***** ********** **** * ********** ** * ******** ****** ****
****** ** ******
**** ******* ************** ************* ****** ******** **** *** ***
******** ** **** ********* ********* ******** ********* *** ******** ******** **
****** ** *** ************** **** ******* ** ******* ** ****** ************ ****
*** ******* ****** *** **** *** ******** **** ******** ******** ********
*********** ******** *** ******** *********** ******** ******** ** ****** ***
****** ****** **** * *********** ******** **** ****** ** ******* ********
********* *** ********* *********** *********** *** ****** ********* ** **
****** **** **** ** **** *** ** ***** ****** *** ******** ******* ****** **
******** ** *** ******* ***** ** ******* ** ********** **** *** *** ** *****
********* ******* ** *** **** **** *** ********** ******** ********* ** *******
*** ********
**** ******** **** ************* ****** ******** **** *** *** ******** ***
**** ********* *** ****** ******** *** ********* ******** ******** ********
*********** ******** ** ****** *** ****** ****** **** ************ ******** ****
***** ** ******** ******** ********* *** ********** *********** *********** ***
****** ********* ** ** ****** **** **** ** ***** *** ** ***** ****** ***
******** ******* ****** ** ********* ** *** *** *** *** ******** *******
******** ** * ************ ***** *** **** ** **** ***** *** ***** ** ******* **
**** ********** ** **** **** ********** ****** ***** ******** ******* *** **
********** **** ** ********* ********* ********** ** ******** ********* **
******* *** ******** *** ********* *************
*************** *** ********** ****** ***** **** ** ********** *** ***
******* ** ****** **** *** ********** ** **** ******* *** ****** ******** ** ***
*** ** ******* ** ********* ******** ********* ** ******** ***** *** *** ******
******** ********* ******** ********* ** ******** ** *** **** ** **** ******* **
*******
9.2. Product, Software and Service Warranties. Seller warrants to Customer,
----------------------------------------
that during the applicable Warranty Periods set forth below, (i) Seller Provided
Products included in the Network (exclusive of Software) will be free from
defects which materially affect Functionality and performance in accordance with
the relevant Specifications and deficiencies in material and workmanship, will
conform to the relevant Specifications for such Products, Software and Services,
respectively; and (ii) Seller Provided Software included in the Network will be
free from those defects and deficiencies which materially affect performance in
accordance with relevant Specifications. With respect to Vendor Items, Seller,
to the extent permitted, does hereby assign to Customer the warranties given to
Seller by its vendor(s) of such Vendor Items. Additionally, Seller warrants for
the duration of this Agreement that all Seller
*This confidential portion has ben omitted and filed separately with the
Commission.
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<PAGE>
Provided Products and Licensed Materials will meet the performance and capacity
specifications shown in Exhibits C and D.
Seller warrants that all Deliverables comply with all applicable U.S.
Federal, state and local laws, regulations and ordinances then in effect. For
all Products, Licensed Materials and Services, compliance shall be assured as of
the Delivery Date.
For purposes of this Agreement the term "Warranty Period" means the period
of time listed in the table below which, unless otherwise stated, commences (i)
with respect to Products and Licensed Materials to be installed by Customer, on
delivery of such Products or Licensed Materials, (ii) with respect to Products
and Licensed Materials to be installed by Seller which are not subject to
Acceptance Test Procedures, on the earlier of (a) 30 days from the date Seller
submits to Customer notice of completion of its installation, (b) the date on
which Customer first puts such Products or Licensed Materials into Commercial
Service; (iii) with respect to Products and Licensed Materials subject to
Acceptance Test Procedures, the earlier of (x) Final Acceptance or (y) the date
on which Customer first puts such Products or Licensed Materials into Commercial
Service. The Warranty Period for any Product or Software (or part thereof)
repaired or replaced under this Section 9.2 is the period listed in the right
column below (beginning on Final Acceptance of the repaired or replaced item) or
the unexpired portion of the new Product Warranty Period, whichever is longer.
In addition, Customer may order for each Product and Licensed Material an
"Extended Warranty" as described in Exhibit J. The Invoice Price of any such
Product or Licensed Material shall be increased by the amounts set forth on such
Exhibit J if Customer elects to receive an Extended Warranty thereon.
-43-
<PAGE>
<TABLE>
<CAPTION>
SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE
WARRANTY PERIOD
- -------------------------------------------------------------------------------
PRODUCTS BASE PERIOD REPAIRED PRODUCT
----------------- ----------------
NEW PRODUCT OR PART
----------------- ----------------
<S> <C> <C>
- -------------------------------------------------------------------------------
Data Networking Systems Products ** ****** * ******
- -------------------------------------------------------------------------------
Data Networking Systems Software ** ****** * ******
- -------------------------------------------------------------------------------
Switching Systems Products ** ****** * ******
- -------------------------------------------------------------------------------
Central Office Power Equipment:
- -------------------------------------------------------------------------------
Associated with Switching Systems ** ****** * ******
- -------------------------------------------------------------------------------
Not Associated with Switching Systems ** ****** * ******
- -------------------------------------------------------------------------------
Transmission Systems Products:
- -------------------------------------------------------------------------------
DACS-IV 2000, ** ****** * ******
- -------------------------------------------------------------------------------
FT-2000 OC-48 ** ****** * ******
- -------------------------------------------------------------------------------
DDM-2000 OC-3/OC-12 ** ****** * ******
- -------------------------------------------------------------------------------
DDM-FIBER REACH ** ****** * ******
- -------------------------------------------------------------------------------
SLC 2000 Access System ** ****** * ******
- -------------------------------------------------------------------------------
SLC 2000 MSDT ** ****** * ******
- -------------------------------------------------------------------------------
SLC Series 5 (System and Plug In) ** ****** * ******
- -------------------------------------------------------------------------------
Other Transmission Products (i.e. DDM ** ****** * ******
Plus Repeater Cases)
- -------------------------------------------------------------------------------
Network Cable Systems Products ** ****** * ******
- -------------------------------------------------------------------------------
All Other Products ******* ** ****** ******* * ******
- -------------------------------------------------------------------------------
SOFTWARE
- -------------------------------------------------------------------------------
Switching System Software ** ****** * ******
- -------------------------------------------------------------------------------
Transmission Systems Software ** ****** * ******
- -------------------------------------------------------------------------------
Operations Systems Software ** ****** * ******
- -------------------------------------------------------------------------------
All other Software ******* ** ****** ******* * ******
- -------------------------------------------------------------------------------
</TABLE>
*This confidential portion has ben omitted and filed separately with the
Commission.
-44-
<PAGE>
If, under normal and proper use, a defect or non-conformity appears in the
Products or Software used in the Network during the applicable Warranty Period
and Customer notifies Seller in writing of such defect or non-conformance and
follows Seller's instructions regarding return of defective or non-conforming
Product or Software, Seller, at its option, will either repair, replace or
correct the same without charge at its manufacturing or repair facility as soon
as reasonably possible after identification or oral notification of such defect
or non-conformity. If, after using its best efforts to repair or replace such
Product or Software and after consultation with and with the consent of
Customer, Seller determines that it is unable to repair, replace or otherwise
correct such defect, Seller may provide a refund or credit of the Invoice Price
paid to Seller for such Product or Licensed Material. Notwithstanding the
foregoing, if defects or non-conformities result in a severity level one or two
problem, as defined in the Escalation Procedures, Seller shall remedy the defect
by whatever means will most quickly restore service (including, if necessary,
shipment of replacement Products or Licensed Materials). No Product or Software
will be accepted for repair or replacement without the written authorization of
and in accordance with instructions of Seller. Removal and reinstallation
expenses as well as transportation expenses associated with returning such
Product or Software to Seller shall be borne by Customer. Seller shall pay the
costs of transportation of the repaired or replacing Product or Software to any
United States destination designated by Customer. If Seller determines that
returned Product or Software is not defective, Customer shall pay Seller's costs
of handling, inspecting, testing and transportation and, if applicable, travel
and related expenses. In repairing or replacing any Product, part of Product or
Software medium under this warranty, Seller may use either new, remanufactured,
reconditioned, refurbished or functionally equivalent Products or parts.
Replaced Products or parts shall become Seller's property. With respect to
Products which Seller has ascertained are not readily returnable for repair,
Seller, at its option, may elect to repair or replace the Products at Customer's
site. Customer, at its expense, shall make the Products accessible for repair
or replacement. If the Seller fails to repair, replace and/or otherwise cure
any defect or deficiency that results in a degradation in or loss of fully
functioned service to Network subscribers in accordance with the Escalation
Procedures set forth on Exhibit L, Customer may, in addition to exercising any
other remedies available to it, cause such repair, replacement and/or cure to be
completed, at its option and at the sole cost and expense of Seller.
Seller agrees to perform Services and Related Services in a workmanlike
manner in accordance with good usage and accepted practices in the community in
which Services are performed and in accordance with the applicable
Specifications and representations set forth in Exhibits E and G (as amended
from time to time by mutual consent), using material free from defects;
provided, however, Seller makes no warranty regarding material provided by
Customer. If Services or Related Services performed by Seller prove not to have
been so performed, and if Customer notifies Seller to that effect within a sixty
(60) day period commencing on the date of completion of the service, Seller will
correct any defects and deficiencies. If Seller fails to cure
-45-
<PAGE>
any defect or deficiency that results in a degradation in or loss of fully
functional service to Network subscribers in accordance with the Escalation
Procedures set forth on Exhibit L, Customer may, in addition to exercising any
other remedies available to it, cause such cure to be completed, at its option
and at the sole cost and expense of Seller.
Seller makes no warranty under this Section 9 with respect to defective
conditions or non-conformities resulting from any of the following: Customer's
modifications which are not recommended or approved by Seller, misuse, neglect,
accident or abuse (except in each case to the extent that any such Product or
Software should in accordance with the Specifications be able to withstand any
such events); improper wiring, repairing, splicing, alteration, installation,
storage or maintenance, performed in each case by Customer; use in a manner not
in accordance with Network designs or the Specifications, or operating
instructions or failure of Customer to apply previously applicable Seller's
modifications or corrections. In addition, Seller makes no warranty with
respect to Products which have had their serial numbers or month and year of
manufacture removed, altered and with respect to expendable items, including,
without limitation, fuses, light bulbs, motor brushes and the like. Seller
makes no warranty with respect to defects related to Customer's data base
errors. In addition, no warranty is made that Software will run uninterrupted
or error free; provided, however, this specific exclusion in no way limits
Seller's warranties provided in Section 9.1.
THE FOREGOING WARRANTIES SET FORTH IN SECTIONS 9.1 AND 9.2 ARE EXCLUSIVE
AND ARE IN LIEU OF ALL OTHER EXPRESS AND IMPLIED WARRANTIES, INCLUDING BUT NOT
LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9.3. Scope of Warranties. Unless otherwise stated herein, the Seller's
-------------------
warranties under this Section 9 will not apply to:
(a) damage, defects or non-performance resulting primarily from the
negligence, gross negligence or willful misconduct of the Customer, or
any of its employees, agents, or contractors (other than Seller and
Seller's Subcontractors);
(b) any Products or Licensed Materials damaged due to a Force Majeure
event, other than to the extent that any such Products or Licensed
Materials should in accordance with the Specifications be able to
withstand any such event;
(c) damage, defects or non-performance resulting primarily from Customer's
failure to properly maintain the Network, unless such maintenance is
being provided by Seller;
-46-
<PAGE>
(d) damages, defects or non-performance resulting directly from products,
licensed materials, or services other than Seller Provided Products,
Licensed Materials, RS Services or Services; or
(e) damages, defects or nonperformance resulting primarily from Customer's
failure to install Software Maintenance Releases provided by Seller at
no charge.
9.4. Effect of Customer Approvals. If in the performance of Seller's
----------------------------
obligations hereunder, Customer implicitly or explicitly approves or accepts
(i) the use by Seller of Products, Licensed Materials, OEM Suppliers, or
Subcontractors, or (ii) the performance of Services, or the scope or manner of
the performance of Services, identified, defined or recommended by Seller,
Seller shall not thereby be relieved of its warranty obligations hereunder.
Notwithstanding the foregoing, Seller's warranty obligations hereunder will be
- --------------- --- ---------
limited to the extent Customer has expressly waived in writing its right to
enforce Seller's warranty obligations or Customer has requested Seller (a) to
use Vendor Items, or (b) to (i) use suppliers or Subcontractors, or (ii) to
perform Services or perform Services with such a scope or in such a manner
after, in the case of (i) or (ii) above, Seller has given Customer its express
prior good faith recommendation in writing against the use of such supplier or
Subcontractor or the performance or scope or manner of such Services requested
by Customer, stating the reason, and express prior notice in writing that such
use or performance will limit Seller's warranty obligations. In the case of
Vendor Items or subcontractors requested by Customer against Seller's contrary
recommendation, Seller shall use best efforts to obtain or negotiate the best
warranty practicable under the circumstances for such Products, Licensed
Materials and Services and shall pass such warranty protection through to
Customer directly.
9.5. Year 2000 Compliance Warranty.
-----------------------------
(a) The Seller represents and warrants that during period beginning on the
warranty start date and for the Warranty Periods set forth in Section
9.2, but in no event ending prior to December 31, 2001, any Seller
Provided Products and Licensed Materials delivered by the Seller to
the Customer under this Contract will:
(i) accurately and fully record, store, present and process
calendar dates falling on or after January 1, 2000, with
substantially the same functionality as such products record,
store, present and process calendar dates falling on or before
December 31, 1999; and
(ii) provide substantially the same functionality with respect to
the introduction of records containing dates falling on or
after January 1, 2000, as it provides
-47-
<PAGE>
with respect to the introduction of records containing dates
falling on or before December 31, 1999. All of the foregoing
functionality shall be known as "Year 2000 Capable."
(b) When Customer purchases more than one version of Year 2000 Capable
software, if they are intended by Seller to interoperate, all such
versions of Year 2000 Capable Software will be compatible and
interoperate in such manner as to process between them, as applicable,
date related data correctly as described in Section (a) above.
(c) The foregoing sets forth an additional warranty for Seller's Products
and Software. The failure of the Products and Software to meet the
foregoing requirements during the warranty period set forth in
subsection 9.2 entitles Customer to the remedies set forth therein.
(d) Nothing in the foregoing shall be deemed to make Seller responsible
for the Year 2000 capability of any third party Software
interoperating or intending to operate with Seller's Software.
Customer and/or the manufacturer or other supplier of such third party
Software shall be responsible for any Year 2000 compliance and
assuring the ability of such third party Software to successfully
operate while interoperating with Seller's Software.
ARTICLE 10
PROJECT ADMINISTRATION AND FAILURE RESOLUTION
10.1. Appointment of Primary Contact Person. As of the date hereof, and
-------------------------------------
until Final Acceptance of the last Order under this Agreement, both Customer and
Seller shall appoint "Primary Contact Persons" who shall oversee the management
of this Agreement and the execution of the obligations set out herein. In
addition, the parties will each appoint two "Secondary Contact Persons" who
shall assist their supervising Primary Contact Persons in the performance of the
responsibilities hereunder. Each Primary Contact Person shall work directly
with his or her counterpart in the other party's organization. The
responsibilities of these Contact Persons shall include the following:
(a) Customer Primary Contact Person.
-------------------------------
(i) Serve as Primary Seller contact.
(ii) Serve as focal point for all Customer internal and field issues
related to this Agreement.
(iii) Schedule, oversee, review and approve accomplishment of
Customer project responsibilities and milestones, as set out in
the Phase Plans or as otherwise may be necessary and/or
appropriate to fulfill Customer's obligations under this
Agreement.
-48-
<PAGE>
(iv) Establish, disseminate and maintain project reports and
measurement procedures within Customer's organization.
(v) Approve all modifications to Specifications.
(vi) Meet at least monthly with the Seller Contact Persons, either
by telephone or as necessary in person, to review progress and
project issues.
(b) Seller Primary Contact Person.
------ ----------------------
(i) Serve as primary Customer contact.
(ii) Serve as focal point for all Seller internal and field issues
related to this Agreement.
(iii) Establish Seller project team structure and staffing.
(iv) Schedule, oversee, review and approve accomplishment of Seller
project milestones, as set out in the Phase Plans or as
otherwise may be necessary and/or appropriate to fulfill
Seller's obligations under this Agreement.
(v) Establish, disseminate and maintain project reports and
measurement procedures within Seller's organization.
(vi) Oversee deliveries, subcontracts, installation, testing and
optimization, documentation, training and all duties required
to coordinate the work of the Seller team members.
(vii) Ensure fulfillment of all Customer and project requirements.
(viii) Meet at least monthly with the Customer Contact Persons, either
by telephone or as necessary in person, to review progress and
project issues.
10.2. Progress Updates. Commencing as of the date hereof, the Primary
----------------
Contact Person at each of Seller and Customer will meet at least as often as
monthly to discuss Seller's progress in developing and being able to timely
deliver Phase Proposals and all deliverables under pending Orders, including the
development and availability of point-to-multipoint radios.
10.3. Failure Reports; Response. In the event of failures in Products or
-------------------------
the Network, Seller will be required to provide emergency assistance or
technical assistance in order to cure such failure. Critical service outages,
and other problems in the functions or features of the Network, or any Software
or Product component thereof, will be reported to Seller in a failure report
("Failure Report"). The parties agree that Failure Reports shall be addressed
pursuant to the Escalation Policies detailed on Exhibit L, as amended by mutual
agreement from time to time.
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<PAGE>
ARTICLE 11
OPEN ARCHITECTURE
11.1. Open Architecture. Seller agrees that the Network and Seller Provided
-----------------
Products and Licensed Materials provided hereunder will facilitate and support
open architecture to the extent required to ensure such open architecture, and
Seller will make best efforts to comply, within a reasonable period of time,
with all applicable industry recognized standards. Customer and Seller will
agree, in writing, which standards bodies, and standards issued by said
standards bodies, are applicable, and will continue to amend such list of
applicable standards and standards bodies from time to time as necessary.
Seller shall work with such standards bodies to create (to the degree necessary
hereunder) and maintain industry recognized standards for the Network and Seller
Provided Products and Licensed Materials provided to Customer under this
Agreement.
ARTICLE 12
INFRINGEMENT
In the event of any claim, action, proceeding or suit by a third party
against Customer alleging an infringement of any United States patent, United
States copyright, or United States trademark, or a violation in the United
States of any trade secret or proprietary rights by reason of the use, in
accordance with the design of the Network, of the Network or any Product or
Licensed Materials furnished by Seller to construct the Network pursuant to this
Agreement, Seller, at its expense, will defend Customer, subject to certain
conditions and exceptions set forth below (an "Infringement Claim"). Seller will
reimburse Customer for any cost, expense or attorneys' fees incurred prior to
Seller's assumption of such defense or at Seller's written request or
authorization, and will indemnify Customer against any liability assessed
against Customer by final judgment or in settlement of any suit or claim on
account of such infringement or violation arising out of such use.
If Customer's use of any Product, Licensed Materials or any portion of the
Network shall be enjoined or in Seller's opinion is likely to be enjoined,
Seller will, at its expense and at its option, either (1) replace the enjoined
Product or Licensed Materials furnished pursuant to this Agreement with a
suitable substitute free of any infringement; (2) modify it so that it will be
free of the infringement; or (3) procure for Customer a license or other right
to use it. If none of the foregoing options are practical, Seller will refund to
Customer any amounts paid to Seller therefor.
Customer shall give Seller prompt written notice of all such claims,
actions, proceedings or suits alleging infringement or violation and Seller
shall have full and complete authority to assume the sole defense thereof,
including appeals, and to settle same; provided that Seller will
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<PAGE>
have no right to agree to injunctive relief against Customer, and; provided
further that Seller will notify Customer of any proposed settlement condition
prior to Seller's acceptance of such settlement. Customer shall, upon Seller's
request and at Seller's expense, cooperate in every reasonable way to facilitate
the defense and/or settlement of any such claim, action, proceeding or suit.
No undertaking of Seller under this clause shall extend to any such alleged
infringement or violation to the extent: (i) that it arises because the Product
or Licensed Materials provided by Seller are used in combinations with other
products furnished either by third parties where such combination was not
installed, recommended or otherwise approved (explicitly or by implication) by
Seller, or (ii) that it is caused by modification of the Product, Licensed
Materials, the Network or any component thereof by Customer, or any infringement
caused solely by Customer's use and maintenance of the Products other than in
accordance with the Specifications and the purposes contemplated by this
Agreement, except as expressly authorized or permitted by Seller. Customer will
indemnify Seller against all liabilities and costs, including reasonable
attorneys' fees, for defense and settlement (consented to by Customer) of any
and all claims against Seller for infringements or violations based upon this
paragraph.
ARTICLE 13
CUSTOMER'S REMEDIES
13.1. EXCLUSIVITY OF REMEDIES. CUSTOMER'S EXCLUSIVE REMEDIES AND THE ENTIRE
-----------------------
LIABILITY OF SELLER, ITS AFFILIATES AND THEIR EMPLOYEES, AND AGENTS, AND ITS
SUPPLIERS FOR ANY CLAIM, LOSS, DAMAGE OR EXPENSE OF CUSTOMER OR ANY OTHER ENTITY
ARISING OUT OF THIS AGREEMENT, OR THE USE OR PERFORMANCE OF ANY PRODUCT,
LICENSED MATERIALS, OR SERVICES, WHETHER IN AN ACTION FOR OR ARISING OUT OF
BREACH OF CONTRACT, TORT, INCLUDING NEGLIGENCE, INDEMNITY, OR STRICT LIABILITY,
SHALL BE EXPRESSLY SET FORTH HEREIN AND AS FOLLOWS:
(a) FOR INFRINGEMENT -- THE REMEDIES SET FORTH IN ARTICLE 12;
(b) FOR THE NON-PERFORMANCE OF PRODUCTS, SOFTWARE, AND SERVICES DURING THE
WARRANTY PERIOD -- THE REMEDIES SET FORTH IN THE APPLICABLE CLAUSE OF
ARTICLE 8 OR ARTICLE 9;
(c) FOR TANGIBLE PROPERTY DAMAGE AND PERSONAL INJURY CAUSED BY SELLER'S
NEGLIGENCE -- THE AMOUNT OF THE PROVEN DIRECT DAMAGES;
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<PAGE>
(d) FOR CLAIMS OF SUBCONTRACTORS -- THE REMEDIES SET FORTH IN THE
APPLICABLE CLAUSE OF ARTICLE 5;
(e) FOR CLAIMS UNDER SECTIONS 16.3 OR REIMBURSEMENTS UNDER 16.6, THE
AMOUNT OF THE COSTS OR AMOUNTS CONTEMPLATED BY SUCH SECTIONS.
(f) FOR EVERYTHING OTHER THAN AS SET FORTH ABOVE -- THE AMOUNT OF PROVEN
DIRECT DAMAGES NOT TO EXCEED $1,000,000 PER OCCURRENCE, INCLUDING
AWARDED COUNSEL FEES AND COSTS. THE TOTAL AMOUNT OF SUCH OCCURRENCES
SHALL NOT EXCEED 5% OF THE PAID PORTION OF THE PURCHASE PRICE AT THE
TIME OF PAYMENT, INCLUDING AWARDED COUNSEL FEES AND COSTS.
(g) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER PARTY,
THEIR AFFILIATES AND THEIR EMPLOYEES, AGENTS AND SUPPLIERS SHALL BE
LIABLE FOR ANY INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR LOST
PROFITS, REVENUES OR SAVINGS ARISING OUT OF THIS AGREEMENT OR THE USE
OR PERFORMANCE OF ANY PRODUCT, LICENSED MATERIALS, OR SERVICES,
WHETHER IN AN ACTION FOR OR ARISING OUT OF BREACH OF CONTRACT, TORT,
INCLUDING NEGLIGENCE, OR STRICT LIABILITY. THIS CLAUSE 13.1 SHALL
SURVIVE FAILURE OF AN EXCLUSIVE OR LIMITED REMEDY.
13.2. Remedies for Failure to Provide Point-to-Multipoint Radio Technology.
--------------------------------------------------------------------
(a) In the event of Seller's failure to make point-to-multipoint radios
meeting the Specifications of Exhibit H (the "PMP Solution")
commercially available by the date specified in Exhibit H, Seller and
Buyer shall consult and agree on an interim solution which may involve
either the purchase of other commercially available point-to-
multipoint radios or continued deployment of point-to-point radios.
The terms and conditions relating to such interim solution shall be
mutually agreed;
(b) In the event of Seller's failure to make the PMP Solution commercially
available by the date which is six months from the date specified in
Exhibit H for the delivery of the PMP Solution, Buyer, in its sole
discretion, may elect to terminate this agreement for convenience;
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<PAGE>
(c) In the event of Seller's failure to make the PMP Solution commercially
available by the date which is six months from the date specified in
Exhibit H for the delivery of the PMP Solution, Buyer and Seller may
agree to amend the provisions of Exhibit H so it will conform with the
specifications of the commercially available point-to-multipoint
radio. In such case, Seller shall use its best efforts to provide such
radios as a Seller Provided Product.
ARTICLE 14
USE OF INFORMATION
All technical and business information in whatever form recorded which
bears a legend or notice restricting its use, copying, or dissemination or, if
not in tangible form, is described as being proprietary or confidential at the
time of disclosure and is subsequently summarized in a writing so marked and
delivered to the receiving party within thirty (30) days of disclosure to the
receiving party (all hereinafter designated "Information") shall remain the
property of the furnishing party. The furnishing party grants the receiving
party the right to use such information only for purposes expressly permitted in
this Section. Such Information (1) shall not be reproduced or copied, in whole
or in part, except for use as authorized in this Agreement; and (2) shall,
together with any full or partial copies thereof, be returned or destroyed when
no longer needed. Moreover, when Seller is the receiving party, Seller shall use
such information only for the purpose of performing under this Agreement, and
when Customer is the receiving party, Customer shall use such information only
(1) to order; (2) to evaluate the Network, including Seller's Products, Licensed
Materials and Services used therein; or (3) to install, operate and maintain the
particular Products and Licensed Materials used in the Network for which it was
originally furnished. Unless the furnishing party consents in writing, such
information, except for that part, if any, which is known to the receiving party
free of any confidential obligation, or which becomes generally known to the
public through acts not attributable to the receiving party, shall be held in
confidence by the receiving party. The receiving party may disclose such
Information to other persons, upon the furnishing party's prior written
authorization, but solely to perform acts which this clause expressly authorizes
the receiving party to perform itself and further provided such other person
agrees in writing (a copy of which writing will be provided to the furnishing
party at its request) to the same conditions respecting use of Information
contained in this clause and to any other reasonable conditions requested by the
furnishing party.
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<PAGE>
ARTICLE 15
INSURANCE
Both parties shall maintain during the term of this Agreement the following
insurance coverage as well as all other insurance required by law in the
jurisdictions where the work is performed: (1) Worker's Compensation and
related insurance as required by law; and, (2) employer's liability insurance
with a limit of at least one million ($1,000,000.00) dollars for each
occurrence; (3) comprehensive general liability insurance, with a limit of at
least one million ($1,000,000.00) dollars per occurrence; (4) comprehensive
motor vehicle liability insurance with limits of at least one million
($1,000,000.00) dollars for bodily injury including death, to any one person,
one million ($1,000,000.00) dollars for each occurrence of property damage, and
one million ($1,000,000.00) dollars for any one occurrence. Each party shall
furnish the other prior to the start of the work, if requested by the other,
certificates or adequate proof of the insurance required by this clause. Each
party shall notify the other in writing at least thirty (30) days prior to
cancellation of or any material change in the policy. Notwithstanding the
above, each party shall have the option where permitted by law to self-insure
any or all of the foregoing risks.
ARTICLE 16
TERMINATION
16.1. Customer's Right to Terminate. Customer shall have the option to
-----------------------------
terminate this Agreement in all respects, without penalty and without prejudice
to any other rights or remedies of Customer herein or at law or equity, and to
be relieved of all obligations hereunder upon the occurrence of any of the
following:
(a) Seller files a voluntary petition in bankruptcy or has an involuntary
petition in bankruptcy filed against it that is not dismissed within
forty-five days of such involuntary filing; Seller admits the material
allegations of any petition in bankruptcy filed against it; Seller is
adjudged bankrupt; or Seller makes a general assignment for the
benefit of its creditors, or if a receiver is appointed for all or a
substantial portion of its assets and is not discharged within sixty
days after his appointment; or
(b) Seller commences any proceeding for relief from its creditors in any
court under any state insolvency statutes; or
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<PAGE>
(c) Seller materially disregards or materially violates material
applicable laws and such breach recurs, continues or remains uncured
after thirty days written notice; or
(d) Seller fails to provide Products, Services or Licensed Materials in
accordance with the Phase Plans agreed to pursuant to Section 6.1
hereof and such failure recurs, continues or remains uncured after
thirty days written notice; or
(e) Seller fails to promptly cure any material defects or non-conformities
(or defects or non-conformities which in the aggregate are material)
in accordance with Article 9 or to promptly and adequately cure any
failures which are the subject of Failure Reports, and such breach
recurs, continues or remains for thirty (30) days uncured after
written notice; or
(f) Seller fails to materially comply with any Change Order and such
failure recurs, continues or remains uncured after thirty days written
notice;
(g) an Infringement Claim occurs which materially adversely affects the
Network and Seller is unable to take within a reasonable time any of
the actions described in items (1), (2) and (3) of the second
paragraph of Article 12; or
(h) Seller otherwise materially breaches this agreement and such breach
recurs, continues or remains uncured after thirty days written notice.
16.2. Continuation of Work. If this Agreement is terminated for any reason
--------------------
set forth under Section 16.1 or pursuant to Section 3.4 or 3.7, Seller shall,
without prejudice to any other rights or remedies of Customer herein or at law
or equity, do the following:
(a) At Customer's request, work with Customer, at no additional charge, in
completing, causing the completion, or assisting others in the
completion of all ordered but unfinished Phases of the Network. Such
assistance shall, at Customer's discretion, include assistance with
the integration of another vendor's products and where necessary or
desirable for the completion of such unfinished Phases, the sharing
with Customer or other vendors or integrators of engineering and
design data, procurement data, manufacturing data, construction and
installation data, start-up and testing data, installation equipment,
machinery and tools; each under reasonably appropriate non-disclosure
agreements; and
(b) At Customer's request, assign its Subcontractor agreements which are
assignable to Customer without any change of price or conditions
therein or penalty or payment therefor
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<PAGE>
and will use its best efforts to have the benefits of all other
Subcontractor agreements assigned to Customer.
16.3. Costs. In the event of a termination pursuant to Section 16.1,
-----
Customer will be entitled to the costs in connection with finishing open Orders.
16.4. Surviving Obligations. Notwithstanding any other provision herein,
---------------------
termination of this Agreement for any reason (i) will not relieve either party
of its obligations under Sections 3.11, 16.2 and 17.7 and its obligations under
Articles 8, 9, 12 and 14, (ii) will not relieve either party of any obligation
which applies to it and which expressly or by implication survives termination
and (iii) except as otherwise provided in any provision of this Agreement
expressly limiting the liability of either party, will not relieve either party
of any obligations or liabilities for loss or damage to the other party arising
out of or caused by acts or omissions of such party prior to the effectiveness
of such termination or arising out of its obligations as to portions of the work
already performed or of obligations assumed by the Seller prior to the date of
such termination.
16.5. Seller's Right to Terminate. Seller shall have the option to
---------------------------
terminate this Agreement in all respects, without penalty and without prejudice
to any other rights or remedies of Seller herein or at law or equity, and to be
relieved of all obligations hereunder upon the occurrence of any of the
following:
(a) Customer files a voluntary petition in bankruptcy or has an
involuntary petition in bankruptcy filed against it that is not
dismissed within forty-five days of such involuntary filing; Customer
admits the material allegations of any petition in bankruptcy filed
against it; Customer is adjudged bankrupt; or Customer makes a general
assignment for the benefit of its creditors, or if a receiver is
appointed for all or a substantial portion of its assets and is not
discharged within sixty days after his appointment; or
(b) Customer commences any proceeding for relief from its creditors in any
court under any state insolvency statutes; or
(c) Customer persistently and materially breaches Article 8 and Article 14
notwithstanding the fact that Seller will have provided Customer with
prior written notice describing the alleged material breaches and will
have given Customer a reasonable time, and in no event less than
thirty days, to cure any such breaches; or
(d) Customer fails to make payments of undisputed amounts due to Seller
under this Agreement which are more than sixty days overdue, provided
that such failure has
-56-
<PAGE>
continued for at least thirty days after Seller has notified Customer
of its right and intent to so terminate on account of such overdue
amount and provided that if the Short Term Note has not been paid or
Seller has not syndicated or transferred its obligations under the
credit agreement providing the financing between Seller and Customer,
such failure to make payment is not the result of Seller failing to
extend credit under the Short Term Note or such credit agreement in
breach of Seller's obligations thereunder if all the material
conditions for Customer to borrow thereunder have been fulfilled with
respect to a borrowing under the Short Term Note or credit agreement
which would enable payment in full of all amounts for which Seller is
exercising its right to terminate this Agreement.
16.6. Effect on Open Orders. If this Agreement is terminated for any reason
---------------------
other than those set forth under Section 16.1, Customer shall, at its option,
either return all Products and Licensed Materials delivered to Customer for
which the Invoice Prices have not been paid and which are in new or unused
condition, or pay to Seller the portion of the Purchase Price attributable to
such Products and Licensed Materials and as yet unpaid; provided, however, if
termination is effected pursuant to Section 16.5(d), Customer must return all
Products and Licensed Materials the non-payment for which is the reason for
termination. If any portion of the Invoice Prices for Products and Licensed
Materials returned to Seller pursuant to this Section 16.6 has already been paid
by Customer, Seller shall reimburse Customer for such amounts.
16.7. Termination of License. In the event that Seller terminates this
----------------------
Agreement pursuant to Section 16.5 (c), Seller may terminate Customer's right to
use the Software. In the event that Seller terminates this Agreement pursuant
to Section 16.5(d) for failure by Customer to pay software service fees under
Section 8.7, Seller may terminate Customer's right to use the Software to which
such fees apply. In no event other than as set forth in this Section 16.7 may
Seller terminate Customer's right to use the Software. Notwithstanding any
other provision of this Agreement, if there is a dispute, pending the final
resolution of any dispute between Seller and Customer, all of Customer's rights
under this Agreement shall continue in full force and effect, and Seller will
not terminate the license to use the Software, so long as Customer continues to
pay Seller customary and usual support service fees, and will not terminate,
suspend, interrupt or delay maintenance and support of the Software. Seller
acknowledges that the license of the Software is a strategic asset of Customer
and that consequently any violation of this provision will result in irreparable
harm to Customer and that Customer is entitled to an order of specific
performance.
16.8. Special Termination Provisions. Customer may by written notice to
------------------------------
Seller terminate this Agreement without penalty and without prejudice to any
other rights or remedies of Customer herein or at law or equity, and shall be
relieved of all obligations hereunder in the event that any law, statute,
regulation, rule, order, decision, or other action of any Governmental Entity
(i) materially adversely impacts the Customer's licenses or authorizations (ii)
makes the provision of services by Customer materially more burdensome to
Customer or (iii) makes Customer's compliance with applicable law materially
more burdensome.
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<PAGE>
16.9. Financing. Neither the Seller nor the Customer shall be obligated to
---------
perform under this Agreement if financing for the purpose of acquiring Network
Products, Licensed Materials and Services sufficient to cover the Customer's
current payment obligations hereunder, on terms that are acceptable to the
Customer, has not been secured. Unless acceptable financing is available,
either Party may terminate this Agreement without recourse, except as noted
below, by notifying the other party in writing. Further, the Parties agree that
the delivery and performance schedules shall be extended by the period of time
required to secure acceptable financing. In the event of a termination of this
Agreement pursuant to this provision, the Customer will remain liable for
reasonable amounts due to the Seller for all Services performed or Products
delivered by the Seller pursuant to the terms and conditions of this Agreement
which had been delivered to or performed for the Customer in connection with the
design and construction of the Network.
16.10. Change of Control. In the event of a Change of Control of Customer
-----------------
(a) that results in a Lucent Competitor owning or controlling more than 50% of
the securities entitled to vote for Customer's Board of Directors, or (b) that
involves a recapitalization of Customer that materially and adversely affects
Customer's ability to pay indebtedness to Seller as such indebtedness comes due,
Seller shall have the right, within twenty-one (21) days of the earlier of (i)
such Change of Control or (ii) written notice of a proposed Change of Control
setting forth the name of the party which proposes to control Customer after the
Change of Control, to terminate this Agreement by giving written notice (a
"Termination Notice"). A termination pursuant to this Section 16.10(a) shall be
effective on the later of (x) such Change of Control, or (y) receipt of the
Termination Notice. A Termination Notice shall only be effective if the Change
of Control to which it relates occurs. At least three (3) days prior to any
Change of Control of which Customer has prior knowledge, Customer shall give
Seller written notice of such expected Change of Control.
16.11. Material Adverse Change. Customer may terminate this Agreement
-----------------------
without prejudice or penalty in the event of a material adverse change in
Customer's business which materially diminishes Customer's demand for Products,
Licensed Materials and Services.
16.12. Termination Process. In the event of a termination of this
-------------------
Agreement, Customer and Seller shall cooperate in good faith to manage the
termination process, the compliance with covenants and agreements which by their
nature survive termination and all public relations and disclosure regarding
such termination.
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<PAGE>
ARTICLE 17
MISCELLANEOUS
17.1. Documentation. Seller shall furnish to Customer, at no additional
-------------
charge, one (1) copy of the documentation for Products and/or one (1) copy of
the Related Documentation for Software used in the construction of the Network.
Such documentation shall be that which is customarily provided by Seller to its
Customers at no additional charge. Such documentation shall be sufficient to
enable Customer to operate and maintain such Products and Software in accordance
with Seller's specifications. Such documentation shall be provided either prior
to, included with, or shortly after shipment of Products and/or Software from
Seller to Customer.
17.2. Notices. Any notice, demand or other communication (other than an
-------
order) required, or which may be given, under this Agreement shall, unless
specifically otherwise provided in this Agreement, be in writing and shall be
given or made by personal delivery, mail (postage prepaid), nationally
recognized overnight courier service or confirmed facsimile and shall be
addressed to the respective parties as follows:
If to Customer: If to Seller:
President Sales Vice President
Advanced Radio Telecom Corp. Lucent Technologies Inc.
500-108th Ave. NE., Ste. 2600 8400 East Prentice Avenue, Ninth Floor
Bellevue, WA 98004 Englewood, CO 80111-2912
Tel: 425.688.8700 Tel: 303.409.3440
Fax: 425.688.0703 Fax: 303.717.0442
with a copy to: with a copy to:
General Counsel Lucent Technologies Inc.
Advanced Radio Telecom, Corp. Global Commercial Markets
500 - 108th Ave. NE, Ste. 2600 5440 Millstream Rd., E@N32
Bellevue, WA 98004 McLeansville, North Carolina 27301
Attn: Contract Management
Tel: 425.688.8700 Tel: 336.279.5310
Fax: 425.990.1642 Fax: 336.279.5544
Any such notice shall be effective as follows: (i) four days after deposit
in the mail, (ii) upon personal delivery, (iii) two days after delivery to an
overnight courier service (for one day service), and (iv) when sent by
facsimile, upon receipt. Each party may change its designated representative who
is to receive communications and notices and/or the applicable address for such
communications and notices by giving notice thereof to the other party provided
herein.
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<PAGE>
17.3. Force Majeure. Neither party shall be held responsible for any delay
-------------
or failure in performance to the extent that such delay or failure is caused by
fires, strikes, embargoes, explosions, earthquakes, floods, wars, water, the
elements, labor disputes, government requirements, civil or military
authorities, acts of God or by the public enemy, inability to secure raw
materials or transportation facilities, acts or omissions of carriers or
suppliers, or other causes beyond its control whether or not similar to the
foregoing (each a "Force Majeure").
17.4. Assignment. Except as provided in this clause, neither party shall
----------
assign this Agreement or any right or interest under this Agreement, nor
delegate any work or obligation to be performed under this Agreement, (an
"Assignment") without the other party's prior written consent. Any attempted
assignment in contravention of this shall be void and ineffective. Requests for
authorization to assign rights and obligations should be directed in writing to:
If to Customer: If to Seller:
General Counsel Senior Contract Specialist
Advanced Radio Telecom Corp. Lucent Technologies Inc.
500-108th Ave. NE., Ste. 2600 8400 East Prentice Avenue, Ninth Floor
Bellevue, WA 98004 Englewood, CO 80111-2912
Tel: 425.688.8700 Tel: 303.409.3472
Fax: 425.990.1642 Fax: 303.714.0420
with a copy to: with a copy to:
President Assistant Vice President - Sales
Advanced Radio Telecom, Corp. Lucent Technologies Inc.
500 - 108th Ave. NE, Ste. 2600 8400 East Prentice Avenue, Ninth Floor
Bellevue, WA 98004 Englewood, CO 80111-2912
Tel: 425.688.8700 Tel: 303.714.0440
Fax: 425.688.0703 Fax: 303.714.0442
17.5. Arbitration. If a dispute arises out of or relates to this Agreement,
-----------
or its breach, the parties agree to escalate such dispute to their respective
senior executives for good faith negotiations seeking a mutually agreeable
resolution. This demand for escalation shall be in writing and notice shall be
served in accordance with the notice provision of this Agreement. If the
dispute is not resolved through such escalation within fifteen (15) days after
the date of escalation, the parties shall in good faith submit the dispute to a
sole mediator selected by the
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<PAGE>
parties or, at any time at the option of a party, to mediation by the American
Arbitration Association ("AAA"). If the dispute is not resolved within thirty
(30) days of the date of escalation or such longer period as may be agreed by
the parties, it shall be referred to a sole arbitrator selected by the parties
or, in the absence of such selection, to AAA arbitration which shall be governed
by the United States Arbitration Act, and judgment on the award may be entered
in any court having jurisdiction. The arbitrator may determine issues of
arbitrability, but may not award punitive damages or limit, expand or otherwise
modify the terms of this Agreement. The parties, their representatives, other
participants and the mediator and arbitrator shall hold the existence, content
and result of mediation and arbitration in confidence, except as such disclosure
may be necessary for the purpose of recording or otherwise acting upon the
arbitrator's award or as may be required to comply with applicable law.
17.6. Independent Contractor. All work performed by either party under
----------------------
this Agreement shall be performed as an independent contractor and not as an
agent of the other, and no persons furnished by the performing party shall be
considered the employees or agents of the other.
17.7. Confidentiality of Agreement. Notwithstanding the obligations
----------------------------
contained in Article 12 (Use of Information) of this Agreement the parties shall
keep all provisions of this Agreement, all Network designs and plans and any
Order submitted hereunder (including, without limitation, Invoice Prices and
related information) confidential except as reasonably necessary for performance
by the parties hereunder and except to the extent disclosure may be required by
applicable laws or regulations, in which latter case, the party required to make
such disclosure shall promptly inform the other prior to such disclosure in
sufficient time to enable such other party to make known any objections it may
have to such disclosure. The disclosing party shall take all reasonable steps
in compliance with applicable law and exercise all reasonable efforts directed
by the non-disclosing party to secure a protective order, seek confidential
treatment, or otherwise assure that this Agreement and/or any order will be
withheld from the public record.
17.8. Amendments. Any supplement, modification or waiver of any provision
----------
of this Agreement must be in writing and signed by authorized representatives of
both parties.
17.9. Severability. If any portion of this Agreement is found to be
------------
invalid or unenforceable, the parties agree that the remaining portions shall
remain in effect. The parties further agree that in the event such invalid or
unenforceable portion is an essential part of this Agreement, they will
immediately begin negotiations for a replacement.
17.10. Waiver. If either party fails to enforce any right or remedy
------
available under this Agreement, that failure shall not be construed as a waiver
of any right or remedy with respect to any other breach or failure by the other
party.
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<PAGE>
17.11. Survival. The rights and obligations of the parties which by their
--------
nature would continue beyond the termination, cancellation, or expiration of
this Agreement, shall survive such termination, cancellation or expiration.
17.12. Section Headings. The section headings in this Agreement are
----------------
inserted for convenience only and are not intended to affect the meaning or
interpretation of this Agreement.
17.13. Choice of Law. The construction and interpretation of, and the
-------------
rights and obligations of the parties pursuant to this Agreement, shall be
governed by the laws of the State of New York without regard to its conflict of
laws provision.
17.14. Counterparts. This agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
ARTICLE 18
ENTIRE AGREEMENT
18.1. Entire Agreement. The terms and conditions contained in this
----------------
Purchase Agreement supersede all prior oral or written understandings between
the parties with respect to the subject matter hereof (including the General
Agreement dated March 30, 1998) and constitute the entire agreement between the
parties with respect to such subject matter. The preprinted terms and conditions
on Customer's Orders or Seller's sales forms are deleted. The typed or
handwritten provisions of an Order which are consistent with the terms of this
Purchase Agreement along with the terms of this Purchase Agreement shall
constitute the entire Agreement between the parties relating to said order.
Notwithstanding the foregoing, the Co-Marketing Agreement attached hereto as
Exhibit N remains in full force and effect.
[Remainder of Page Intentionally Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives on the date(s) indicated.
LUCENT TECHNOLOGIES, INC. ADVANCED RADIO TELECOM CORP.
By: ____________________________ By: _________________________________
Name: __________________________ Name: _______________________________
Title: _________________________ Title: ______________________________
Date: __________________________ Date: _______________________________
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<PAGE>
Schedule of Exhibits
--------------------
Exhibit A Acceptance Test Procedures
Exhibit B Network Specifications
Exhibit C Products
Exhibit D Licensed Materials
Exhibit E Services
Exhibit F Form of Responsibility Matrix
Exhibit G Related Services
Exhibit H Design Program for Point-to-Multipoint Radio Technology
Exhibit I Invoice Prices
Exhibit J Extended Warranties
Exhibit K [Reserved]
Exhibit L Escalation Procedures
Exhibit M *********
Exhibit N Co-Marketing Agreement
Exhibit O Standard Delivery Intervals
Exhibit P Form of Order
Exhibit Q Provisional Acceptance Standards
*This confidential portion has been omitted and filed separately with the
Commission.
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<PAGE>
EXHIBIT 10.5
================================================================================
CREDIT AGREEMENT
dated as of
September 17, 1998
among
ADVANCED RADIO TELECOM CORP.,
The Lenders Party Hereto,
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent,
and
LUCENT TECHNOLOGIES INC.,
as Administrative Agent
================================================================================
[Reference No. 7725-029]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
Definitions
-----------
SECTION 1.01. Defined Terms............................................ 1
SECTION 1.02. Classification of Loans and
Borrowings............................................... 31
SECTION 1.03. Terms Generally.......................................... 31
SECTION 1.04. Accounting Terms; GAAP................................... 32
ARTICLE II
The Loans
---------
SECTION 2.01. Tranche A Commitments.................................... 32
SECTION 2.02. Loans and Borrowings..................................... 33
SECTION 2.03. Requests for Borrowings.................................. 34
SECTION 2.04. Funding of Borrowings.................................... 35
SECTION 2.05. Interest Elections....................................... 36
SECTION 2.06. Termination and Reduction of
Commitments............................................ 38
SECTION 2.07. Repayment of Loans; Evidence of Debt..................... 38
SECTION 2.08. Amortization of Loans.................................... 39
SECTION 2.09. Prepayment of Loans...................................... 41
SECTION 2.10. Fees..................................................... 44
SECTION 2.11. Interest................................................. 44
SECTION 2.12. Alternate Rate of Interest............................... 46
SECTION 2.13. Increased Costs.......................................... 46
SECTION 2.14. Break Funding Payments; Prepayment
Fees................................................... 47
SECTION 2.15. Taxes.................................................... 48
SECTION 2.16. Payments Generally; Pro Rata
Treatment; Sharing of Set-Offs........................... 49
SECTION 2.17. Mitigation Obligations; Replacement
of Lenders............................................... 51
SECTION 2.18. Additional Loan Supplements.............................. 52
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Organization; Powers..................................... 53
SECTION 3.02. Authorization; Enforceability............................ 53
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 3.03. Governmental Approvals;
No Conflicts........................................... 53
SECTION 3.04. Financial Condition; No Material
Adverse Change........................................... 53
SECTION 3.05. Properties and Licenses.................................. 54
SECTION 3.06. Litigation and Environmental
Matters................................................ 55
SECTION 3.07. Compliance with Laws and Agreements...................... 55
SECTION 3.08. Investment and Holding Company
Status................................................. 55
SECTION 3.09. Taxes.................................................... 55
SECTION 3.10. ERISA.................................................... 56
SECTION 3.11. Disclosure............................................... 56
SECTION 3.12. Subsidiaries............................................. 56
SECTION 3.13. Insurance................................................ 56
SECTION 3.14. Labor Matters............................................ 56
SECTION 3.15. Purchase Agreement....................................... 57
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date........................................... 57
SECTION 4.02. Tranche A Full Availability Date......................... 60
SECTION 4.03. Each Borrowing........................................... 61
ARTICLE V
Affirmative Covenants
----------------------
SECTION 5.01. Financial Statements and Other
Information............................................ 61
SECTION 5.02. Notices of Material Events............................... 64
SECTION 5.03. Information Regarding Collateral......................... 64
SECTION 5.04. Existence; Conduct of Business........................... 65
SECTION 5.05. Payment of Obligations................................... 65
SECTION 5.06. Maintenance of Properties................................ 66
SECTION 5.07. Insurance................................................ 66
SECTION 5.08. Books and Records; Inspection
Rights................................................. 67
SECTION 5.09. Compliance with Laws and Agreements...................... 67
SECTION 5.10. Use of Proceeds.......................................... 67
SECTION 5.11. Further Assurances....................................... 68
SECTION 5.12. Casualty and Condemnation................................ 68
SECTION 5.13. Interest Rate Protection................................. 68
SECTION 5.14. FCC Licenses............................................. 69
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VI
Negative Covenants
------------------
<S> <C> <C>
SECTION 6.01. Indebtedness............................................. 69
SECTION 6.02. Liens.................................................... 71
SECTION 6.03. Fundamental Changes...................................... 73
SECTION 6.04. Investments, Loans, Advances,
Guarantees and Acquisitions;
Asset Sales............................................ 73
SECTION 6.05. Hedging Agreements....................................... 76
SECTION 6.06. Restricted Payments...................................... 76
SECTION 6.07. Transactions with Affiliates............................. 77
SECTION 6.08. Restrictive Agreements................................... 77
SECTION 6.09. Repayment of Indebtedness................................ 77
SECTION 6.10. Intercompany Agreements.................................. 78
SECTION 6.11. Limitation on Sale-Leaseback
Transactions........................................... 78
SECTION 6.12. Restricted Subsidiaries.................................. 78
SECTION 6.13. FCC Licenses and License
Subsidiaries........................................... 79
SECTION 6.14. ERISA.................................................... 79
SECTION 6.15. Secured Indebtedness to Total
Capitalization......................................... 79
SECTION 6.16. Total Indebtedness to Total
Capitalization......................................... 80
SECTION 6.17. Senior Indebtedness to Consolidated
EBITDA................................................. 80
SECTION 6.18. Total Indebtedness to Consolidated
EBITDA................................................. 80
SECTION 6.19. Consolidated EBITDA to Consolidated
Debt Service........................................... 81
SECTION 6.20. Consolidated EBITDA to Consolidated
Cash Interest
Expense................................................. 82
SECTION 6.21. Minimum Revenues......................................... 82
SECTION 6.22. Minimum Buildings on Network............................. 83
SECTION 6.23. Minimum Customers........................................ 83
ARTICLE VII
Events of Default
-----------------
Events of Default................................................................. 83
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VIII
The Agents
----------
<S> <C> <C>
The Agents........................................................................ 87
ARTICLE IX
Miscellaneous
-------------
<S> <C> <C>
SECTION 9.01. Notices.................................................. 89
SECTION 9.02. Waivers; Amendments...................................... 90
SECTION 9.03. Expenses; Indemnity; Damage Waiver....................... 91
SECTION 9.04. Successors and Assigns................................... 93
SECTION 9.05. Survival................................................. 96
SECTION 9.06. Counterparts; Integration;
Effectiveness.......................................... 97
SECTION 9.07. Severability............................................. 97
SECTION 9.08. Right of Setoff.......................................... 97
SECTION 9.09. Governing Law; Jurisdiction; Consent
to Service of Process.................................. 98
SECTION 9.10. WAIVER OF JURY TRIAL..................................... 99
SECTION 9.11. Headings................................................. 99
SECTION 9.12. Confidentiality.......................................... 99
SECTION 9.13. Interest Rate Limitation................................. 100
SCHEDULES:
- ---------
Schedule 2.01 -- Tranche A Commitments
Schedule 3.05 -- Licenses
Schedule 6.02 -- Existing Liens
Schedule 6.04 -- Permitted Asset Sales
Schedule 6.08 -- Existing Restrictions
Schedule 9.04 -- Certain Permitted Assignees
EXHIBITS:
- --------
Exhibit A -- Form of Escrow Agreement
Exhibit B -- Form of Perfection Certificate
Exhibit C -- Form of Security Agreement
Exhibit D-1 -- Form of Opinion of Ropes & Gray
Exhibit D-2 -- Form of Opinion of Wiley, Rein & Fielding
Exhibit D-3 -- Form of Opinion of Cravath, Swaine & Moore
</TABLE>
<PAGE>
CREDIT AGREEMENT dated as of September 17, 1998, among
ADVANCED RADIO TELECOM CORP., a Delaware corporation, the LENDERS
party hereto, STATE STREET BANK AND TRUST COMPANY, as Collateral
Agent, and LUCENT TECHNOLOGIES INC., as Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.01. Defined Terms. As used in this Agreement, the
--------------
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
---
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Additional Assets" means any real property, improvements thereto,
-----------------
tangible personal property or FCC licenses owned by and used or useful in the
business of the Borrower and the Restricted Subsidiaries.
"Additional Commitment" means, with respect to each Lender, the
---------------------
commitment, if any, of such Lender to make Additional Loans of any Class,
expressed as an amount representing the maximum aggregate amount of the
Additional Loans of such Class to be made by such Lender hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.06 and (b)
reduced or increased from time to time pursuant to Additional Loan Supplements
entered into by such Lender or assignments by or to such Lender pursuant to
Section 9.04. The initial amount of each Lender's Additional Commitment of any
Class will be set forth in the relevant Additional Loan Supplement, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Additional Commitment, as applicable.
"Additional Loan" means a loan made pursuant to an Additional Loan
---------------
Supplement.
"Additional Loan Supplement" means a supplement to this Agreement
--------------------------
entered into by the Borrower, the Administrative Agent and one or more Lenders,
as contemplated by Section 2.18, providing for (a) the
<PAGE>
2
commitments of such Lender or Lenders to make loans pursuant to this Agreement,
(b) the maturity of, and scheduled repayment of, such loans, (c) the interest
rates applicable to such loans, (d) any fees payable by the Borrower in respect
of such commitments or loans and (e) any other terms and conditions (not
inconsistent with the terms and conditions set forth in this Agreement)
applicable to such commitments or loans. Each Additional Loan Supplement shall
designate the Class of the commitments and loans provided for therein.
"Adjusted Consolidated Net Tangible Assets" means the total amount of
-----------------------------------------
assets of the Borrower and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), except to the extent
resulting from write-ups of capital assets (excluding write-ups in connection
with accounting for acquisitions in accordance with GAAP), after deducting
therefrom (a) all current liabilities of the Borrower and its Restricted
Subsidiaries (excluding intercompany items) and (b) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles (other than FCC Licenses), all as set forth on the quarterly or
annual consolidated balance sheet of the Borrower and its Restricted
Subsidiaries, prepared in accordance with GAAP and most recently delivered to
the Lenders pursuant to Section 5.01(a) or (b); provided that the value of any
--------
FCC Licenses shall, in the event of an auction for similar licenses, be equal to
the fair market value ascribed thereto in good faith by the Board of Directors
of the Borrower and evidenced by a resolution of such board.
"Adjusted LIBO Rate" means, with respect to any LIBOR Borrowing for
------------------
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means Lucent, in its capacity as administrative
--------------------
agent for the Lenders hereunder.
"Administrative Questionnaire" means an administrative questionnaire
----------------------------
in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person
---------
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
<PAGE>
3
"Agents" means the Administrative Agent and the Collateral Agent.
------
"Aggregate Capital" means, as of any date, the aggregate amount of Net
-----------------
Proceeds received by the Borrower after April 27, 1998, and on or prior to such
date from contributions of equity capital and issuance of Other Debt.
"Alternate Base Rate" means, for any day, a rate per annum equal to
-------------------
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Rate" means, for any day, with respect to any Tranche A
---------------
Loan, the applicable rate per annum set forth below under the caption "ABR
Spread" or "Eurodollar Spread", as the case may be, based on the Leverage Ratio
as of the most recent determination date; provided that after the date that the
--------
Aggregate Capital exceeds $350,000,000, 1.00% shall be subtracted from the
applicable spreads set forth below:
<TABLE>
<CAPTION>
==============================================================================================
Leverage Ratio ABR Spread Eurodollar Spread
-------------- ---------- -----------------
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Category 1 less than 4.0 to 1.0 3.00% 4.00%
- ----------------------------------------------------------------------------------------------
Category 2 greater than or equal to 3.25% 4.25%
4.0 to 1.0 but less than
6.0 to 1.0
- ----------------------------------------------------------------------------------------------
Category 3 greater than or equal to 3.50% 4.50%
6.0 to 1.0 but less than
10.0 to 1.0
- ----------------------------------------------------------------------------------------------
Category 4 greater than or equal to 4.00% 5.00%
10.0 to 1.0
===============================================================================================
</TABLE>
For purposes of the foregoing, (i) the Leverage Ratio shall be determined as of
the end of each fiscal quarter of the Borrower's fiscal year based upon the
Borrower's consolidated financial statements delivered pursuant to Section
5.01(a) or (b) and (ii) each change in the Applicable Rate resulting from a
change in the Leverage Ratio shall be effective during the period commencing on
and including the date of delivery to the Administrative Agent of such
consolidated financial statements indicating such change and ending on the date
immediately preceding the effective date of the next such change; provided that
--------
the Leverage Ratio shall be deemed to be in Category 4 (A) at any time that an
Event of Default has occurred and is
<PAGE>
4
continuing or (B) if the Borrower fails to deliver the consolidated financial
statements required to be delivered by it pursuant to Section 5.01(a) or (b)
within the period specified therein for delivery thereof, during the period from
the expiration of the period specified therein for delivery thereof until such
consolidated financial statements are delivered.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in a form
approved by the Administrative Agent.
"Board" means the Board of Governors of the Federal Reserve System of
-----
the United States of America.
"Borrower" means Advanced Radio Telecom Corp., a Delaware corporation.
--------
"Borrowing" means a Loan or group of Loans of the same Class and Type,
---------
made, converted or continued on the same date and, in the case of LIBOR Loans,
as to which a single Interest Period is in effect.
"Borrowing Request" means a request by the Borrower for a Borrowing in
-----------------
accordance with Section 2.03.
"Bridge Loans" means loans outstanding under the Bridge Note.
------------
"Bridge Note" means the promissory note dated June 10, 1998, issued by
-----------
the Borrower to Lucent.
"Business Day" means any day that is not a Saturday, Sunday or other
------------
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a LIBOR Loan, the
--------
term "Business Day" shall also exclude any day on which banks are not open for
------------
dealings in dollar deposits in the London interbank market.
"Business Plan" means, for any fiscal year, the business plan of the
-------------
Borrower and the Restricted Subsidiaries for such fiscal year.
"Capital Expenditures" means, for any period, (a) the additions to
--------------------
property, plant and equipment and other capital expenditures of the Borrower and
its Restricted Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of the Borrower for
<PAGE>
5
such period prepared in accordance with GAAP and (b) Capital Lease Obligations
incurred by the Borrower and its Restricted Subsidiaries during such period.
"Capital Lease Obligations" of any Person means the obligations of
-------------------------
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of ownership, directly
-----------------
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 35% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Borrower; or (b) occupation of a
majority of the seats (other than vacant seats) on the Board of Directors of the
Borrower by Persons who were neither (i) nominated by the Board of Directors of
the Borrower nor (ii) appointed by directors so nominated.
"Change in Law" means (a) the adoption of any law, rule or regulation
-------------
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 2.13(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
-----
whether such Loan, or the Loans comprising such Borrowing, are Tranche A Loans
or Additional Loans of a particular Class and, when used in reference to any
Commitment, refers to whether such Commitment is a Tranche A Commitment or an
Additional Commitment of a particular Class. The designation of Classes of
Additional Loans and Additional Commitments shall be specified in the applicable
Additional Loan Supplements.
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time.
<PAGE>
6
"Collateral" means any and all "Collateral", as defined in the
----------
Security Agreement.
"Collateral Agent" means State Street Bank and Trust Company in its
----------------
capacity as collateral agent for the Secured Parties (as defined in the Security
Agreement) under the Security Agreement.
"Collateral Cost" means, with respect to any property or asset, the
---------------
portion of the Purchase Price attributable to such property or asset, determined
by reference to Lucent's invoice therefor, disregarding amounts attributable to
services, installation, other intangibles and sales taxes.
"Collateral Prepayment Amount" means, with respect to any Collateral
----------------------------
Trigger Event:
(a) in the case of a Collateral Trigger Event referred to in clause
(a) of the definition of the term "Collateral Trigger Event", an amount
equal to the Net Proceeds of such Collateral Trigger Event (determined
without giving effect to clause (b)(ii) of the definition of the term "Net
Proceeds"); or
(b) in the case of a Collateral Trigger Event referred to in clause
(b) of the definition of the term "Collateral Trigger Event", an amount
equal to the replacement cost, at the time of such Collateral Trigger
Event, of properties or assets of the same model and type as the properties
or assets affected by such Collateral Trigger Event;
provided that if, at the time of and after giving effect to the applicable
- --------
Collateral Trigger Event, the total Collateral Cost of all properties and assets
that have been the subject of Collateral Trigger Events exceeds 25% of the total
Collateral Cost of all properties and assets that constitute or previously
constituted Collateral (including properties and assets that have ceased to
constitute Collateral as a result of Collateral Trigger Events), then the
"Collateral Prepayment Amount" shall be an amount equal to the product of (i)
the sum of the aggregate principal amount of the Loans outstanding at the time
plus all Deferred Interest thereon, multiplied by (ii) a fraction, the numerator
of which shall be the total Collateral Cost of the properties or assets that are
the subject of the applicable Collateral Trigger Event, and the denominator of
which shall be the total Collateral Cost of all properties and assets
constituting Collateral immediately prior to such Collateral Trigger Event;
provided further that if a
- ----------------
<PAGE>
7
Collateral Trigger Event occurs and if the Borrower has replaced the affected
property or asset, or purchased additional property or assets constituting
Collateral, as contemplated by the proviso to the definition of "Collateral
Trigger Event", but the property or assets so acquired do not have a value
equivalent to or greater than the property or asset that was the subject of such
Collateral Trigger Event, then the "Collateral Prepayment Amount" in respect of
such Collateral Trigger Event shall be reduced by an amount equal to the
Collateral Cost of the property or assets so acquired.
"Collateral Trigger Event" means:
------------------------
(a) any direct or indirect sale, transfer or other disposition
(including pursuant to a sale and leaseback transaction) of any property or
asset constituting Collateral; or
(b) any casualty or other damage to, or any taking under power of
eminent domain or by condemnation or similar proceeding of, any property or
asset constituting Collateral;
provided that an event referred to in clause (a) or (b) above shall not
- --------
constitute a "Collateral Trigger Event" if (i) the Borrower elects to repair,
restore or replace the affected property or asset, or to purchase additional
property or assets, as promptly as practicable, but in any event within 180
days, after receipt of the Net Proceeds of such event in accordance with the
requirements of this proviso (and the Borrower shall be deemed to have so
elected unless the Borrower notifies the Administrative Agent that it intends to
prepay Borrowings with the Net Proceeds of such event within three Business Days
after receipt of the Net Proceeds of such event), (ii) all Net Proceeds from
such event are deposited with the Collateral Agent to be held as cash collateral
pursuant to the Security Agreement, subject to release to pay the costs of such
repair, restoration, replacement or purchase as and when due, (iii) the Borrower
promptly commences and diligently pursues such repair, restoration, replacement
or purchase and (iv) in the case of a replacement or purchase, each property or
asset acquired pursuant to such replacement or purchase (A) is acquired by the
Borrower pursuant to the Purchase Agreement, (B) has a value equivalent to or
greater than the property or asset that was the subject of the applicable event
(prior to giving effect to the applicable event), (C) becomes Collateral
effective upon such replacement or purchase, free and clear of all Liens (other
than the Lien of the Security Agreement), and (D) is not financed with any
Borrowings
<PAGE>
8
hereunder (except to the extent the purchase price thereof exceeds the greater
of (i) the Collateral Cost of the property or asset subject to such event and
(ii) the Net Proceeds of such event); provided further that, if at the
----------------
expiration of the 180-day period commencing on the date of receipt of the Net
Proceeds of such event the Borrower has not completed the repair, restoration or
replacement of the affected property or asset or purchased additional property
or assets constituting Collateral in accordance with all the requirements of the
foregoing proviso, then a "Collateral Trigger Event" shall be deemed to have
occurred at the expiration of such 180-day period; provided further that such
----------------
180-day period shall be extended by an additional 90 days to the extent that the
Borrower has issued binding purchase orders with respect to the purchase of
additional property or assets constituting Collateral by the expiration of such
180-day period.
"Commitment" means a Tranche A Commitment or an Additional Commitment,
----------
or any combination thereof (as the context requires).
"Consolidated Cash Interest Expense" means, for any period,
----------------------------------
Consolidated Interest Expense for such period, less (i) any interest on
Indebtedness outstanding under the Indenture paid in cash during such period out
of the escrow account established for such purpose, (ii) any amortization of
capitalized fees and expenses included in Consolidated Interest Expense for such
period, (iii) any amortization of original issue discount included in interest
expense for such period and (iv) any Deferred Interest or other interest
deferred or paid in kind and included in Consolidated Interest Expense for such
period.
"Consolidated Debt Service" means, for any period, Consolidated Cash
-------------------------
Interest Expense for such period plus any scheduled payments of principal of
Indebtedness of the Borrower and the Restricted Subsidiaries during such period.
"Consolidated EBITDA" means, for any period, Consolidated Net Income
-------------------
for such period (adjusted to exclude all extraordinary items), plus, without
duplication and to the extent deducted from revenues in determining Consolidated
Net Income, the sum of (a) the aggregate amount of Consolidated Interest Expense
for such period, (b) the aggregate amount of income tax expense for such period,
(c) all amounts attributable to depreciation and amortization for such period
and (d) all other non-cash adjustments to depreciable assets for such period,
minus, without duplication and to the extent added to revenues in determining
Consolidated Net Income, all non-cash
<PAGE>
9
adjustments to depreciable assets for such period, all as determined on a
consolidated basis with respect to the Borrower and the Restricted Subsidiaries
in accordance with GAAP.
"Consolidated Indebtedness" means, as of any date of determination,
-------------------------
the aggregate principal amount of Indebtedness of the Borrower and the
Restricted Subsidiaries outstanding as of such date (including Indebtedness of
Unrestricted Subsidiaries to the extent Guaranteed by the Borrower or any
Restricted Subsidiary), which shall be net of all cash held in escrow for the
satisfaction of such Indebtedness as of such date, determined on a consolidated
basis in accordance with GAAP; provided that, for purposes of this definition,
--------
the term "Indebtedness" shall exclude obligations as an account party in respect
of letters of credit to the extent that such letters of credit have not been
drawn upon.
"Consolidated Interest Expense" means, for any period, the interest
-----------------------------
expense, both expensed and capitalized (including the interest component in
respect of Capital Lease Obligations and any financing expenses), accrued by the
Borrower and the Restricted Subsidiaries during such period, determined on a
consolidated basis in accordance with GAAP; provided that interest expense of an
--------
Unrestricted Subsidiary shall be deemed to be interest expense of the Borrower
to the extent such interest expense relates to Indebtedness Guaranteed by the
Borrower or a Restricted Subsidiary.
"Consolidated Net Income" means, for any period, net income or loss of
-----------------------
the Borrower and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
--------
excluded (a) the income of any Person in which any other Person (other than the
Borrower or any Restricted Subsidiary or any director holding qualifying shares
in compliance with applicable law) has a joint interest, except to the extent of
the amount of dividends or other distributions (including distributions made as
a return of capital or repayment of principal of advances) actually paid to the
Borrower or any Restricted Subsidiary by such Person, (b) the income of any
Unrestricted Subsidiary, except to the extent of the amount of dividends or
other distributions (including distributions made as a return of capital or
repayment of principal of advances) actually paid to the Borrower or any
Restricted Subsidiary by such Unrestricted Subsidiary during such period, and
(c) the income (or loss) of any Person accrued prior to the date it becomes a
Restricted Subsidiary or is merged into or consolidated with the Borrower or any
<PAGE>
10
Restricted Subsidiary or the date such Person's assets are acquired by the
Borrower or any Restricted Subsidiary.
"Contributed Capital" means, as of any date of determination, the
-------------------
amount of paid-in capital of the Borrower as of such date, including equity
issued for cash and noncash consideration, determined on a consolidated basis in
accordance with GAAP.
"Control" means the possession, directly or indirectly, of the power
-------
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
----------- ----------
"Default" means any event or condition which constitutes an Event of
-------
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Deferred Interest" means any interest on any Loan, or any interest on
-----------------
any Deferred Interest on such Loan, that is deferred rather than paid when due
as provided in (a) clause (iv) of Section 2.11(d), in the case of Tranche A
Loans, or (b) the applicable Additional Loan Supplement, in the case of
Additional Loans of any Class that expressly provides for deferral of interest.
Deferred Interest on any Loan shall continue to constitute interest on (and not
principal of) such Loan for all purposes hereof, including for purposes of
determining a Lender's remaining Tranche A Commitment pursuant to Section 2.01
hereof and the amount of Additional Loans pursuant to Section 2.18 hereof.
"Disclosed Matters" means the actions, suits and proceedings and the
-----------------
environmental matters disclosed in Schedule 3.06.
"Disqualified Stock" means any capital stock of the Borrower which by
------------------
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable or exercisable) or upon the happening of any event (i)
matures or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified
Stock, (iii) requires the payment of dividends other than dividends payable
solely in additional shares of capital stock of the Borrower (other than
Disqualified Stock) or (iv) is redeemable or subject to required repurchase at
the option of the holder thereof, in whole or in part, in each case on
<PAGE>
11
or prior to the second anniversary of the latest Maturity Date.
"dollars" or "$" refers to lawful money of the United States of
------- -
America.
"Effective Date" means the date on which the conditions specified in
--------------
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
------------------
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
-----------------------
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
-----------
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of
<PAGE>
12
ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Escrow Agreement" means the Escrow Agreement between the Borrower,
----------------
the Administrative Agent and the Collateral Agent, substantially in the form of
Exhibit A.
"Event of Default" has the meaning assigned to such term in Article
----------------
VII.
"Excess Cash Flow" means, for any fiscal year of the Borrower, the sum
----------------
(without duplication) of:
(a) the consolidated net income (or loss) of the Borrower and its
Restricted Subsidiaries for such fiscal year, adjusted to exclude any gains
or losses attributable to Prepayment Events or Collateral Trigger Events;
plus
----
(b) depreciation, amortization and other non-cash charges or losses
deducted in determining such consolidated net income (or loss) for such
fiscal year (including Deferred Interest and any other interest expense
accrued for such fiscal year that is not payable currently in cash); plus
----
(c) the sum of (i) the amount, if any, by which Net Working Capital
decreased during such fiscal year plus (ii) the amount, if any, by which
the consolidated deferred revenues of the Borrower and its Restricted
Subsidiaries increased during such fiscal year plus (iii) the aggregate
principal amount of Capital Lease Obligations and other Indebtedness
incurred by the Borrower or any of its Restricted Subsidiaries during such
fiscal year to finance Capital Expenditures, to
<PAGE>
13
the extent that principal payments in respect of such Indebtedness would
not be excluded from clause (f) below when made; minus
-----
(d) the sum of (i) any non-cash gains included in determining such
consolidated net income (or loss) for such fiscal year plus (ii) the
amount, if any, by which Net Working Capital increased during such fiscal
year plus (iii) the amount, if any, by which the consolidated deferred
revenues of the Borrower and its consolidated Subsidiaries decreased during
such fiscal year; minus
-----
(e) the excess, if any, of (i) the sum of (A) Capital Expenditures for
such fiscal year, plus (B) Capital Expenditures that the Borrower expects
to make in the next fiscal year (excluding any such Capital Expenditures
that are expected to be financed pursuant to Capital Lease Obligations or
other Indebtedness) in an amount not to exceed (I) with respect to the
fiscal year during which the Tranche A Availability Termination Date
occurs, $15,000,000, and (II) with respect to each fiscal year thereafter,
100% of Capital Expenditures (excluding any such Capital Expenditures that
were financed pursuant to Capital Lease Obligations or other Indebtedness)
made in the previous fiscal year, over (ii) the amount, if any, of Capital
Expenditures deducted in calculating Excess Cash Flow for any previous
fiscal year pursuant to sub-clause (i) (B) of this clause (e), to the
extent that an adjustment pursuant to this sub-clause (ii) has not yet been
made in respect of such previous deduction; minus
-----
(f) the aggregate principal amount of Indebtedness, and the aggregate
amount of Deferred Interest, repaid or prepaid by the Borrower and its
Restricted Subsidiaries during such period, excluding (i) Loans and
Deferred Interest prepaid pursuant to Section 2.09(b), (c) or (d), (ii)
repayments or prepayments of Indebtedness financed by incurring other
Indebtedness, to the extent that mandatory principal payments in respect of
such other Indebtedness would not be excluded from this clause (f) when
made and (iii) Indebtedness referred to in clause (i) of Section 6.01.
"Excluded Taxes" means, with respect to either Agent, any Lender or
--------------
any other recipient of any payment to be made by or on account of any obligation
of the Borrower hereunder, (a) income or franchise taxes imposed on (or
<PAGE>
14
measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.17(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 2.15(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.15(a).
"FCC" means the Federal Communications Commission.
---
"FCC License" means any license granted by the FCC to the Borrower or
-----------
any Restricted Subsidiary.
"Federal Funds Effective Rate" means, for any day, the weighted
----------------------------
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
-----------------
accounting officer, treasurer or controller of the Borrower.
"Foreign Lender" means any Lender that is organized under the laws of
--------------
a jurisdiction other than the United States of America, any State thereof or the
District of Columbia.
"GAAP" means, subject to Section 1.04(b), generally accepted
----
accounting principles in the United States of America.
<PAGE>
15
"Governmental Authority" means the government of the United States of
----------------------
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
--------- ---------
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
---------------
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
--------
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances or
-------------------
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
-----------------
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
------------
obligations of such Person for borrowed money or with respect to advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person under conditional
sale or other title retention
<PAGE>
16
agreements relating to property acquired by such Person, (d) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding current accounts payable incurred in the ordinary course of
business), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (i) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
-----------------
"Indenture" means the Indenture dated as of February 6, 1997, between
---------
the Borrower and The Bank of New York, as trustee.
"Initial Loan Limit" means $10,000,000.
------------------
"Intercompany Agreements" has the meaning set forth in paragraph (m)
-----------------------
of Section 4.01.
"Interest Election Request" means a request by the Borrower to convert
-------------------------
or continue a Borrowing in accordance with Section 2.05.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
---------------------
last day of each March, June, September and December and (b) with respect to any
LIBOR Loan, the last day of the Interest Period applicable to the Borrowing of
which such Loan is a part and, in the case of a LIBOR Borrowing with an Interest
Period of more than three months' duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months' duration after
the first day of such Interest Period.
"Interest Period" means, with respect to any LIBOR Borrowing, the
---------------
period commencing on the date of such
<PAGE>
17
Borrowing and ending on the numerically corresponding day in the calendar month
that is one, two, three or six months thereafter, as the Borrower may elect;
provided, that (a) if any Interest Period would end on a day other than a
- --------
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (b) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period. For
purposes hereof, the date of a Borrowing initially shall be the date on which
such Borrowing is made and thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.
"Lenders" means the Persons listed on Schedule 2.01, the Persons that
-------
make Additional Commitments pursuant to any Additional Loan Supplements as
specified therein and any other Person that shall have become a party hereto
pursuant to an Assignment and Acceptance, other than any such Person (a) that
ceases to be a party hereto pursuant to an Assignment and Acceptance or (b)
whose Commitments have terminated and whose Loans, and all interest thereon,
have been repaid.
"Leverage Ratio" means, on any date, the ratio of (a) Consolidated
--------------
Indebtedness as of such date to (b) 200% of Consolidated EBITDA for the period
of two consecutive fiscal quarters of the Borrower ended on such date or, if
such date is not the last day of a fiscal quarter, ended on the last day of the
fiscal quarter of the Borrower most recently ended prior to such date.
"LIBOR", when used in reference to any Loan or Borrowing, refers to
-----
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
"LIBO Rate" means, with respect to any LIBOR Borrowing for any
---------
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank
<PAGE>
18
market) at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
---------
LIBOR Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent (or, if the
Administrative Agent at the time is not a commercial bank, any commercial bank
based in New York City selected by the Administrative Agent for the purpose of
quoting such rate, provided that such commercial bank has a combined capital and
surplus and undivided profits of not less than $500,000,000) in immediately
available funds in the London interbank market at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period.
"License Subsidiary" has the meaning assigned to such term in Section
------------------
6.13.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
----
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement (including any Additional Loan
--------------
Supplements), the Working Capital Credit Agreement, the Escrow Agreement and the
Security Agreement.
"Loan Parties" means the Borrower and the Restricted Subsidiaries.
------------
"Loans" means Tranche A Loans and Additional Loans.
-----
"Lucent" means Lucent Technologies Inc.
------
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, condition (financial or otherwise), operations, performance or
properties of the Borrower and the Restricted Subsidiaries taken as a whole, (b)
the ability of the Borrower to perform any of its material obligations under any
Loan Document or (c) the
<PAGE>
19
rights of or benefits available to the Lenders under any Loan Document.
"Material Indebtedness" means Indebtedness (other than the Loans), or
---------------------
obligations in respect of one or more Hedging Agreements, of any one or more of
the Loan Parties in an aggregate principal amount exceeding $10,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of a Loan Party in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that such Loan Party would be required to pay if such Hedging Agreement were
terminated at such time.
"Maturity Date" means (a) in respect of the Tranche A Loans, the
-------------
Tranche A Maturity Date, or (b) in respect of the Additional Loans of any Class,
the maturity date in respect of such Additional Loans as specified in the
applicable Additional Loan Supplement.
"Moody's" means Moody's Investors Service, Inc.
-------
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any event (a) the cash proceeds
------------
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum of (i) all
fees and out-of-pocket expenses paid by the Borrower and the Restricted
Subsidiaries to third parties in connection with such event, (ii) in the case of
a sale or other disposition of an asset (including pursuant to a casualty or
condemnation), the amount of all payments required to be made by the Borrower
and the Restricted Subsidiaries as a result of such event to repay Indebtedness
(other than Loans) secured by such asset or otherwise subject to mandatory
prepayment as a result of such event, and (iii) the amount of all taxes paid (or
reasonably estimated to be payable) by the Borrower and the Restricted
Subsidiaries, and the amount of any reserves established by the Borrower and the
Restricted Subsidiaries to fund contingent liabilities reasonably estimated to
be payable, in each case during the year that such event occurred or the next
succeeding year and that are directly attributable to such event (as determined
reasonably and in good faith by the chief financial officer of the Borrower).
<PAGE>
20
"Net Working Capital" means, at any date, (a) the consolidated current
-------------------
assets of the Borrower and its Restricted Subsidiaries as of such date
(excluding cash and Permitted Investments) minus (b) the consolidated current
liabilities of the Borrower and its Restricted Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness), determined on a
consolidated basis in accordance with GAAP. Net Working Capital at any date may
be a positive or negative number. Net Working Capital increases when it becomes
more positive or less negative and decreases when it becomes less positive or
more negative.
"Network" means (a) the nationwide, wireless, broadband data network
-------
contemplated to be purchased by the Borrower from Lucent pursuant to the
Purchase Agreement or (b) the portion thereof theretofore purchased by the
Borrower, as the context requires.
"Non-Recourse Debt" means Indebtedness (a) as to which neither the
-----------------
Borrower nor any of the Restricted Subsidiaries (i) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness) or (ii) is directly or indirectly liable (pursuant to a
Guarantee or otherwise); (b) no default with respect to which (including any
rights that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness (other than the Loans) of the Borrower or any
of the Restricted Subsidiaries to declare a default on such other Indebtedness
or cause the payment thereof to be accelerated or payable prior to its stated
maturity; and (c) as to which the lender or lenders of any indebtedness for
borrowed money in an aggregate amount in excess of $5,000,000 has been notified
in writing that such lender shall not have any recourse to the stock or assets
of the Borrower or any of the Restricted Subsidiaries.
"Obligations" has the meaning assigned to such term in the Security
-----------
Agreement.
"Other Debt" means (a) Indebtedness in respect of debt securities
----------
issued by the Borrower pursuant to a public offering registered with the
Securities and Exchange Commission or pursuant to a private placement made in
accordance with Rule 144A under the Securities Act of 1933 and in any event (i)
which are unsecured, (ii) which mature after the latest Maturity Date
established in respect of any Loans provided for herein or in any Additional
Loan Supplement at the time such debt securities are issued, (iii) which do not
require any scheduled repayments of
<PAGE>
21
principal prior to maturity, (iv) which are not Guaranteed by any Subsidiary and
(v) the other terms and conditions of which are customary market terms for debt
securities issued by companies of comparable credit quality in the same market
and (b) Indebtedness in respect of debt securities issued by the Borrower
pursuant to a private placement to institutional investors made in reliance on
Section 4(2) of the Securities Act of 1933, satisfying the conditions set forth
in clauses (a)(i) through (a)(iv) above and having other terms and conditions
which are reasonably satisfactory to the Required Lenders.
"Other Taxes" means any and all present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
----
defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" means a certificate in the form of Exhibit B
----------------------
or any other form approved by the Collateral Agent.
"Permitted Acquisition" means any acquisition of all or substantially
---------------------
all the assets of, or shares or other equity interests in, a Person or division
or line of business of a Person if, immediately after giving effect thereto, (a)
no Default has occurred and is continuing or would result therefrom, (b) all
transactions related thereto are consummated in accordance with applicable laws,
(c) in the case of an acquisition of shares or other equity interests in a
Person, such acquisition results in such Person being merged with and into the
Borrower or a wholly owned Restricted Subsidiary or becoming a wholly owned
Restricted Subsidiary of the Borrower, (d) the Borrower and the Restricted
Subsidiaries are in compliance, on a pro forma basis after giving effect to such
acquisition, with the covenants contained in Sections 6.15, 6.16, 6.17, 6.18,
6.19 and 6.20 recomputed as of the last day of the most recently ended fiscal
quarter of the Borrower for which financial statements are available as if such
acquisition had occurred on the first day of each relevant period for testing
such compliance, (e) the consideration for such acquisition shall consist solely
of common stock or Permitted Preferred Stock of the Borrower, cash, Indebtedness
of the Borrower or a Restricted Subsidiary, or a combination of the foregoing,
(f) after giving effect to
<PAGE>
22
such acquisition, the aggregate amount of cash consideration paid in connection
with all acquisitions constituting "Permitted Acquisitions", plus the aggregate
principal amount of all Indebtedness issued as consideration in connection
therewith and all Indebtedness incurred, assumed or otherwise resulting from
such acquisitions, shall not exceed the sum of (i) $20,000,000, (ii) the
aggregate Net Proceeds received by the Borrower from contributions of equity
capital subsequent to the date hereof and (iii) 50% of Excess Cash Flow for each
fiscal year of the Borrower, commencing with the fiscal year during which the
Tranche A Availability Termination Date occurs, and (g) the Borrower has
delivered to the Administrative Agent an officer's certificate to the effect set
forth in clauses (a) through (f) above, together with all relevant financial
information for the business or entity being acquired.
"Permitted Assignment" means (a) any assignment to Lucent or any
--------------------
Affiliate of Lucent, (b) any assignment to any existing Lender or any Affiliate
thereof or (c) any assignment to a Person listed on Schedule 9.04 or any
Affiliate of any such Person.
"Permitted Encumbrances" means:
----------------------
(a) Liens imposed by law for taxes, fees, assessments or other
governmental charges that are not yet due or are being contested in
compliance with Section 5.05;
(b) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 60 days or are being contested in compliance with Section 5.05;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII;
<PAGE>
23
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any Restricted
Subsidiary; and
(g) bankers' rights of setoff and other like Liens imposed by law;
provided that the term "Permitted Encumbrances" shall not include any Lien
- --------
securing Indebtedness.
"Permitted Investments" means:
---------------------
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within one year from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof which
has a combined capital and surplus and undivided profits of not less than
$500,000,000;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in clause
(c) above; and
(e) shares of any mutual fund the investment guidelines of which
restrict such fund's investments to those closely resembling the criteria
set forth in any one or more of clauses (a) through (d) above; provided
--------
<PAGE>
24
such fund has total assets of not less than $1,000,000,000.
"Permitted Preferred Stock" means capital stock of the Borrower (other
-------------------------
than Disqualified Stock) of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of the Borrower,
over shares of capital stock of any other class of the Borrower.
"Person" means any natural person, corporation, limited liability
------
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Prepayment Event" means:
----------------
(a) any direct or indirect sale, transfer or other disposition (other
than a sale of FCC Licenses pursuant to the exercise of the option granted
by the Borrower to Commco, L.L.C. pursuant to the Option Agreement dated as
of July 3, 1996) after the Tranche A Full Availability Date (including
pursuant to a sale and leaseback transaction) of any property or asset
(other than Collateral) of the Borrower or any Restricted Subsidiary (other
than dispositions described in clauses (i), (ii) and (iii) of Section
6.04(b)); or
(b) any casualty or other damage to, or any taking under power of
eminent domain or by condemnation or similar proceeding of, any property or
asset (other than Collateral) of the Borrower or any Restricted Subsidiary
after the Tranche A Full Availability Date;
provided that (i) any such event, or combination of related events, involving
- --------
Net Proceeds of less than $500,000 shall not constitute a "Prepayment Event",
(ii) any such event referred to in clause (a) above shall not constitute a
"Prepayment Event" if (A) the Borrower elects to reinvest the Net Proceeds of
such event in Additional Assets as promptly as practicable, but in any event
within 180 days, after the receipt of the Net Proceeds of such event (and the
<PAGE>
25
Borrower shall be deemed to have so elected unless the Borrower notifies the
Administrative Agent that it intends to prepay Borrowings with the Net Proceeds
of such event within three Business Days after receipt of the Net Proceeds of
such event) and (B) all Net Proceeds from such event (and any related events) in
excess of $1,000,000 are escrowed pursuant to the Escrow Agreement, and (iii)
any such event referred to in clause (b) above shall not constitute a
"Prepayment Event" if (A) the Borrower elects to apply the Net Proceeds of such
event to repair, restore or replace the affected property or asset or to
reinvest such Net Proceeds in Additional Assets as promptly as practicable, but
in any event within 180 days, after the receipt of the Net Proceeds of such
event (and the Borrower shall be deemed to have so elected unless the Borrower
notifies the Administrative Agent that it intends to prepay Borrowings with the
Net Proceeds of such event within three Business Days of such event), and (B)
all Net Proceeds from such event (and any related events) in excess of
$1,000,000 are escrowed pursuant to the Escrow Agreement; provided further that,
----------------
if at the expiration of the 180-day period referred to in clause (ii) or (iii)
above less than all the Net Proceeds of such event have been reinvested or
applied as provided therein, then a "Prepayment Event" shall be deemed to have
occurred at the expiration of such 180-day period with Net Proceeds equal to the
Net Proceeds that have not been so reinvested or applied; provided further that
----------------
the 180-day period referred to in clause (ii) above shall be extended by the
length of any FCC review period to the extent that the Borrower has entered into
a binding commitment to purchase FCC Licenses by the expiration of such 180-day
period.
"Prime Rate" means the rate of interest per annum published from time
----------
to time in the "Money Rates" column (or any successor column) of The Wall Street
Journal as the prime rate or, if such rate shall cease to be so published or is
not available for any reason, the rate of interest publicly announced from time
to time by any commercial bank based in New York City selected by the
Administrative Agent for the purpose of quoting such rate, provided such
commercial bank has a combined capital and surplus and undivided profits of not
less than $500,000,000. Each change in the Prime Rate shall be effective from
and including the date such change is published.
"Purchase Agreement" means the Purchase Agreement dated April 24,
------------------
1998, as amended and restated as of July 24, 1998, between Lucent and the
Borrower.
"Purchase Price" means the "Purchase Price", as defined in the
--------------
Purchase Agreement.
<PAGE>
26
"Register" has the meaning set forth in Section 9.04.
--------
"Related Parties" means, with respect to any specified Person, such
---------------
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Repayment" means, in respect of any Indebtedness, the direct or
---------
indirect repayment, prepayment, redemption, purchase, acquisition, defeasance,
retirement or other satisfaction of the principal of such Indebtedness, in whole
or in part, whether optional or mandatory. "Repay" has a meaning correlative
-----
thereto.
"Required Lenders" means, at any time, Lenders having outstanding
----------------
Loans, Deferred Interest and Commitments representing more than 50% of the sum
of the total outstanding Loans, Deferred Interest and Commitments at such time;
provided that at any time that Lucent and its Affiliates, if any, who are
- --------
Lenders have outstanding Loans, Deferred Interest and Commitments representing
more than 50% of the sum of all outstanding Loans, Deferred Interest and
Commitments at such time, and all other Lenders taken together have more than
35% of all such outstanding Loans, Deferred Interest and Commitments, "Required
Lenders" means each of (i) Lucent and such Affiliates who are Lenders at such
time and (ii) other Lenders holding more than 50% of the outstanding Loans,
Deferred Interest and Commitments (excluding those held by Lucent and such
Affiliates of Lucent) at such time; provided further that, if at the time of and
----------------
immediately prior to giving effect to any Additional Loan Supplement all Lenders
other than Lucent and its Affiliates have more than 35% of all outstanding
Loans, Deferred Interest and Commitments, and if after giving effect to such
Additional Loan Supplement Lucent and its Affiliates, if any, who are Lenders
will have Loans, Deferred Interest and Commitments representing more than 50% of
the sum of all outstanding Loans, Deferred Interest and Commitments, then the
"Required Lenders" shall be determined in accordance with the immediately
preceding proviso until Lucent and its affiliates who are Lenders cease to have
more than 50% of the sum of all outstanding Loans, Deferred Interest and
Commitments.
"Restricted Payment" means (a) any dividend or other distribution
------------------
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of the Borrower or any Restricted Subsidiary, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of
<PAGE>
27
the purchase, redemption, retirement, acquisition, cancelation or termination of
any shares of any class of capital stock of the Borrower or any Restricted
Subsidiary or any option, warrant or other right to acquire any such shares of
capital stock of the Borrower or any Restricted Subsidiary or (b) any Repayment
in respect of any Subordinated Indebtedness.
"Restricted Subsidiary" means any Subsidiary that is not an
---------------------
Unrestricted Subsidiary.
"S&P" means Standard & Poor's.
---
"Secured Indebtedness" means any Indebtedness of the Borrower or any
--------------------
Restricted Subsidiary (other than Indebtedness outstanding under the Indenture)
to the extent secured by a Lien on any asset of the Borrower or any Subsidiary.
"Security Agreement" means the Security Agreement between the Borrower
------------------
and the Collateral Agent, substantially in the form of Exhibit C.
"Senior Indebtedness" means the principal of, but not premium (if any)
-------------------
and accrued and unpaid interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization of the Borrower,
regardless of whether or not a claim for post-petition filing interest is
allowed in such proceedings) on, or fees, expenses, indemnity and reimbursement
obligations and other amounts owing in respect of, all Indebtedness of the
Borrower and the Restricted Subsidiaries for borrowed money, unless in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding it is provided that such obligations are not superior or pari passu
in right of payment to the Obligations.
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
----------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which any commercial banks subject to regulation by
the Board are subject with respect to the Adjusted LIBO Rate, for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D. LIBOR Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for
<PAGE>
28
proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D or any comparable regulation. The Statutory
Reserve Rate shall be adjusted automatically on and as of the effective date of
any change in any reserve percentage.
"Subordinated Indebtedness" means any Indebtedness of the Borrower
-------------------------
that is, by its terms, subordinated in right of payment to the payment of any of
the Obligations and the Loans (as defined in the Working Capital Credit
Agreement).
"subsidiary" means, with respect to any Person (the "parent") at any
---------- ------
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
----------
"Taxes" means any and all present or future taxes, levies, imposts,
-----
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Telecommunications Assets" means all assets (including FCC Licenses
-------------------------
and assets consisting of subscribers), rights (contractual or otherwise) and
properties, whether tangible or intangible, used in connection with the business
of (i) providing voice, video or data communications services, (ii) creating,
developing, marketing or selling communications related equipment, software and
other devices or (iii) evaluating, participating in or pursuing any other
activity or opportunity that is related or incidental to those identified in
clauses (i) or (ii); provided that "Telecommunications Assets" shall not include
any asset constituting Collateral.
"Total Capitalization" means, as of any date of determination, the sum
--------------------
of (a) Total Indebtedness as of such date and (b) Contributed Capital as of such
date.
<PAGE>
29
"Total Indebtedness" means, as of any date of determination, the sum
------------------
of (a) Consolidated Indebtedness as of such date and (b) the amount of accrued
interest on such Indebtedness that has been capitalized as of such date.
"Tranche A Availability Period" means the period from and including
-----------------------------
the Effective Date to but excluding the earlier of the Tranche A Availability
Termination Date and the date of termination of the Tranche A Commitments.
"Tranche A Availability Termination Date" means the earlier of (i) the
---------------------------------------
fourth anniversary of the Tranche A Full Availability Date and (ii) June 30,
2003.
"Tranche A Commitment" means, with respect to each Lender, the
--------------------
commitment, if any, of such Lender to make Tranche A Loans hereunder during the
Tranche A Availability Period, expressed as an amount representing the maximum
principal amount of the Tranche A Loans to be made by such Lender hereunder, as
such commitment may be (a) reduced from time to time pursuant to Section 2.06
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 9.04. The initial amount of each Lender's
Tranche A Commitment is set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Tranche A
Commitment, as applicable. The initial aggregate amount of the Lenders' Tranche
A Commitments is $200,000,000.
"Tranche A Full Availability Date" means the date on which the
--------------------------------
conditions specified in Section 4.02 are satisfied (or waived in accordance with
Section 9.02).
"Tranche A Lender" means a Lender with a Tranche A Commitment or an
----------------
outstanding Tranche A Loan.
"Tranche A Loans" means loans made or deemed made by the Lenders
---------------
pursuant to Section 2.01 of this Agreement.
"Tranche A Maturity Date" means the date that is the ninth anniversary
-----------------------
of the Tranche A Full Availability Date.
"Tranche A Payment Date" means each March 31, June 30, September 30
----------------------
and December 31, commencing on and including the first such date that is on or
after the Tranche A Availability Termination Date, and ending on and including
the Tranche A Maturity Date.
<PAGE>
30
"Transactions" means the execution, delivery and performance by the
------------
Borrower of the Loan Documents, the borrowing of Loans and the use of the
proceeds thereof.
"Type", when used in reference to any Loan or Borrowing, refers to
----
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Unrestricted Subsidiary" means any Subsidiary that is designated as
-----------------------
an Unrestricted Subsidiary by the Board of Directors of the Borrower (and any
subsidiary of an Unrestricted Subsidiary); provided that a Subsidiary shall not
--------
be an Unrestricted Subsidiary unless such Subsidiary and each of its
subsidiaries (a) has no Indebtedness other than Non-Recourse Debt; (b) is not
party to any agreement, contract, arrangement or understanding with the Borrower
or any Restricted Subsidiary unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Borrower or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Borrower; (c) is a Person with respect to which
neither the Borrower nor any Restricted Subsidiary has any direct or indirect
obligation (i) to subscribe for additional equity interests, except to the
extent that such obligation complies with Section 6.04, or (ii) to maintain or
preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; and (d) prior to the time such
Subsidiary is designated an Unrestricted Subsidiary, does not Guarantee or
otherwise directly or indirectly provide credit support for any Indebtedness of
the Borrower or any Restricted Subsidiary. Any such designation by the Board of
Directors of the Borrower shall be evidenced to the Administrative Agent by
filing with the Administrative Agent a certified copy of the resolution of the
Board of Directors of the Borrower giving effect to such designation and a
Financial Officer's certificate certifying that such designation complied with
the foregoing conditions and was permitted by Section 6.04. If, at any time,
any Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Agreement and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary as of such
date (and, if such Indebtedness is not permitted to be incurred hereunder as of
such date an Event of Default shall be deemed to have occurred). The Board of
Directors of the Borrower may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary;
<PAGE>
31
provided that such designation shall be deemed to be an incurrence of
- --------
Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted hereunder at the time and (ii) no Default shall have
occurred and be continuing at the time of, or would result from, such
designation.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
--------------------
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Working Capital Credit Agreement" means the Working Capital Credit
--------------------------------
Agreement dated as of September 17, 1998, among the Borrower, the Lenders party
thereto, and Lucent, as Administrative Agent.
SECTION 1.02. Classification of Loans and Borrowings. For purposes
---------------------------------------
of this Agreement, Loans may be classified and referred to by Class (e.g., a
----
"Tranche A Loan") or by Type (e.g., a "LIBOR Loan") or by Class and Type (e.g.,
---- ----
a "Tranche A LIBOR Loan"). Borrowings also may be classified and referred to by
Class (e.g., a "Tranche A Borrowing") or by Type (e.g., a "LIBOR Borrowing") or
---- ----
by Class and Type (e.g., a "Tranche A LIBOR Borrowing").
----
SECTION 1.03. Terms Generally. The definitions of terms herein shall
----------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset"
<PAGE>
32
and "property" shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, including
cash, securities, accounts, contract rights, licenses and intellectual property.
SECTION 1.04. Accounting Terms; GAAP. (a) Except as otherwise
-----------------------
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
--------
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
(b) Each reference herein to any financial term, definition or
computation that is to be calculated for or with respect to the Borrower and the
Restricted Subsidiaries on a consolidated basis in accordance with GAAP shall be
calculated excluding and without giving effect to Unrestricted Subsidiaries or
any investment therein or earnings thereon, except to the extent otherwise
expressly provided herein.
ARTICLE II
The Loans
---------
SECTION 2.01. Tranche A Commitments. (a) Subject to the terms and
----------------------
conditions set forth herein, each Lender agrees to make Tranche A Loans to the
Borrower at any time and from time to time during the Tranche A Availability
Period in an aggregate principal amount not exceeding its remaining Tranche A
Commitment at the time; provided that (i) the aggregate principal amount of
Tranche A Loans made prior to the Tranche A Full Availability Date shall not
exceed the Initial Loan Limit and (ii) on and after the Tranche A Full
Availability Date, the Lenders shall not be required to make Tranche A Loans in
an amount that would result in the aggregate principal
<PAGE>
33
amount of all Tranche A Loans made hereunder exceeding 200% of the aggregate Net
Proceeds received by the Borrower from contributions of equity capital or the
issuance of Other Debt subsequent to April 27, 1998. Amounts repaid in respect
of Tranche A Loans may not be reborrowed.
(b) On and as of the Effective Date, all Bridge Loans outstanding as
of such date shall become and be converted into Tranche A Loans outstanding
hereunder and, for purposes of Section 2.06(b), the Tranche A Lenders shall be
deemed to have made Tranche A Loans on the Effective Date in an aggregate
principal amount equal to such Bridge Loans. All Deferred Interest on, and all
other accrued interest on the outstanding principal of or Deferred Interest on,
such Bridge Loans as of the Effective Date shall continue to constitute Deferred
Interest on, or accrued interest on the outstanding principal of or Deferred
Interest on, the Tranche A Loans resulting from the conversion of such Bridge
Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as
---------------------
part of a Borrowing consisting of Loans of the same Class and Type made by the
Lenders ratably in accordance with their respective Commitments of the
applicable Class. The failure of any Lender to make any Loan required to be
made by it shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments of the Lenders are several and no Lender shall be
- --------
responsible for any other Lender's failure to make Loans as required.
(b) Subject to Section 2.12, each Borrowing shall be comprised
entirely of LIBOR Loans or ABR Loans as the Borrower may request in accordance
herewith. Each Lender at its option may make any LIBOR Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of the
- --------
Borrower to repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any LIBOR
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $500,000 and not less than $2,500,000. At the time that each ABR
Borrowing is made, such Borrowing shall be in an aggregate amount that is not
less than $500,000; provided that (i) an ABR Borrowing may be in an aggregate
--------
amount that is equal to the entire remaining Commitments of the applicable Class
and (ii) the limitations of this sentence shall not be applicable so long as
Lucent and its Affiliates are the only
<PAGE>
34
Lenders. Borrowings of more than one Type and Class may be outstanding at the
same time.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing as a LIBOR Borrowing if the Interest Period requested with respect
thereto would end after the Maturity Date for the Loans included in such
Borrowing.
SECTION 2.03. Requests for Borrowings. To request a Borrowing, the
------------------------
Borrower shall notify the Administrative Agent of such request by telephone (a)
in the case of a LIBOR Borrowing, not later than 2:00 p.m., New York City time,
three Business Days before the date of the proposed Borrowing or (b) in the case
of an ABR Borrowing, not later than 2:00 p.m., New York City time, on the
Business Day before the date of the proposed Borrowing; provided that the
--------
Borrower may make only one request for a Borrowing in any single calendar month
(it being understood that all Borrowings made by the Borrower on the same date
shall be treated as a single request for a Borrowing for purposes of this
limitation). Each such telephonic Borrowing Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Borrowing Request in a form approved by the Administrative
Agent and signed by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:
(i) the Class of, and the aggregate amount of, such Borrowing and the
portion of the Purchase Price to be paid with the proceeds therefrom (and
each written Borrowing Request shall attach copies of Lucent's invoices for
such portion of the Purchase Price);
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be a LIBOR Borrowing or an ABR
Borrowing; and
(iv) in the case of a LIBOR Borrowing, the initial Interest Period to
be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period".
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any
<PAGE>
35
requested LIBOR Borrowing, then the Borrower shall be deemed to have selected an
Interest Period of one month's duration. Promptly following receipt of a
Borrowing Request in accordance with this Section, the Administrative Agent
shall advise each Lender of the details thereof and of the amount of such
Lender's Loan to be made as part of the requested Borrowing. A Borrowing Request
shall not be required with respect to the Tranche A Loans that will result from
the conversion of Bridge Loans on the Effective Date pursuant to Section
2.01(b).
SECTION 2.04. Funding of Borrowings. (a) Each Lender shall make
----------------------
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in like
funds, to an account of Lucent maintained with the Administrative Agent and
designated by Lucent for such purpose (for application to pay an equivalent
amount of the Purchase Price to be paid with the proceeds of such Loans as
specified in the applicable Borrowing Request). Notwithstanding the foregoing,
(i) if Lucent or any Affiliate thereof is a Lender, then Lucent or such
Affiliate may make its Loan by crediting the amount thereof against an
equivalent amount of the Purchase Price to be paid with such Loan and shall be
deemed to have made a Loan in the amount of such credit and (ii) the
Administrative Agent will make the Loans of the other Lenders available as
provided in the preceding sentence.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate
<PAGE>
36
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans of the same Class. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
SECTION 2.05. Interest Elections. (a) Each Borrowing initially
-------------------
shall be of the Type specified in the applicable Borrowing Request and, in the
case of a LIBOR Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request, except that each Tranche A Loan resulting from the
conversion of a Bridge Loan on the Effective Date pursuant to Section 2.01(b)
initially shall be of the same Type as the converted Bridge Loan and, in the
case of any such Tranche A Loan that is a LIBOR Loan, shall have a remaining
Interest Period equal to the remaining Interest Period of such converted Bridge
Loan. Thereafter, the Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a LIBOR
Borrowing, may elect Interest Periods therefor, all as provided in this Section.
The Borrower may elect different options with respect to different portions of
the affected Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans comprising such Borrowing, and the
Loans comprising each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and paragraph
(f) of this Section:
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing
(in which case the information to be
<PAGE>
37
specified pursuant to clauses (iii) and (iv) below shall be specified for
each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be a LIBOR Borrowing or an
ABR Borrowing; and
(iv) if the resulting Borrowing is a LIBOR Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a LIBOR Borrowing but does not
specify an Interest Period, then the Borrower shall be deemed to have selected
an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a LIBOR Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
a one month LIBOR Borrowing. Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing and the Administrative Agent,
at the request of the Required Lenders, so notifies the Borrower, then, so long
as an Event of Default is continuing (i) no outstanding Borrowing may be
converted to or continued as a LIBOR Borrowing and (ii) unless repaid, each
LIBOR Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
(f) A Borrowing of any Class may not be converted to or continued as
a LIBOR Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal amount of outstanding LIBOR Borrowings of such Class with
Interest Periods ending on or prior to such scheduled repayment date plus the
aggregate principal amount of outstanding ABR Borrowings of such Class would be
less than the aggregate principal amount of Loans
<PAGE>
38
of such Class required to be repaid on such scheduled repayment date.
SECTION 2.06. Termination and Reduction of Commitments. (a) Unless
-----------------------------------------
previously terminated, (i) the Tranche A Commitments shall terminate on the
Tranche A Availability Termination Date and (ii) the Additional Commitments of
any Class shall terminate on the date specified in the Additional Loan
Supplement applicable to such Class.
(b) On the date of each Loan of any Class made by any Lender such
Lender's Commitment of such Class shall be reduced by an amount equal to such
Loan.
(c) In the event that a prepayment would be required pursuant to
paragraph (b), (c), (d) or (e) of Section 2.09, all Commitments then in effect
shall be reduced ratably by an aggregate amount equal to the excess, if any, of
the amount of the required prepayment over the aggregate principal amount of
Loans and Deferred Interest outstanding immediately prior to giving effect to
such prepayment.
(d) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that each reduction of the
--------
Commitments pursuant to this paragraph (d) shall be in an amount that is an
integral multiple of $1,000,000 and not less than $5,000,000.
(e) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments of any Class under paragraph (d)
of this Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any such notice, the Administrative
Agent shall advise the Lenders of the contents thereof. Each notice delivered
by the Borrower pursuant to this Section shall be irrevocable. Any termination
or reduction of the Commitments of any Class shall be permanent. Each reduction
of the Commitments of any Class pursuant to paragraph (d) of this Section shall
be made ratably among the Lenders in accordance with their respective
Commitments of such Class.
SECTION 2.07. Repayment of Loans; Evidence of Debt. (a) The
-------------------------------------
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each Lender (i) the then unpaid principal amount of each Tranche
A Loan of such Lender as provided in Section 2.08 and (ii) the then unpaid
principal amount of each Additional
<PAGE>
39
Loan of such Lender as provided in the Additional Loan Supplement applicable to
Additional Loans of such Class.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest (including Deferred Interest) payable and paid to such
Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest (including Deferred Interest) due and payable or to become
due and payable from the Borrower to each Lender hereunder and (iii) the amount
of any sum received by the Administrative Agent hereunder for the account of the
Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
----- -----
amounts of the obligations recorded therein; provided that the failure of any
--------
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it be
evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender such a promissory note payable to the order
of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest thereon
(including Deferred Interest) shall at all times (including after assignment
pursuant to Section 9.04) be represented by one or more promissory notes in such
form payable to the order of the payee named therein (or, if such promissory
note is a registered note, to such payee and its registered assigns).
SECTION 2.08. Amortization of Loans. (a) Subject to adjustment
----------------------
pursuant to paragraph (d) of this Section, the Borrower shall repay Tranche A
Borrowings and Deferred Interest thereon on each Tranche A Payment Date set
forth below in an aggregate amount equal to the percentage set forth opposite
such Tranche A Payment Date multiplied by an amount equal to the sum of all
Tranche A Loans and
<PAGE>
40
Deferred Interest thereon outstanding as of the close of business on the Tranche
A Availability Termination Date:
<TABLE>
<CAPTION>
Tranche A Payment Date Percentage
- ------------------------------------------- -------------------------
<S> <C>
First 1.25%
Second 1.25%
Third 1.25%
Fourth 1.25%
Fifth 2.50%
Sixth 2.50%
Seventh 2.50%
Eighth 2.50%
Ninth 6.25%
Tenth 6.25%
Eleventh 6.25%
Twelfth 6.25%
Thirteenth and
thereafter prior to 7.50%
the Tranche A
Maturity Date
Tranche A Maturity Date Balance
</TABLE>
(b) Subject to adjustment pursuant to paragraph (d) of this Section,
the Borrower shall repay Borrowings of Additional Loans of each Class (and
Deferred Interest thereon, if applicable) as provided in the Additional Loan
Supplement applicable to Additional Loans of such Class.
(c) To the extent not previously paid, all Loans of each Class and
Deferred Interest thereon shall be due and payable on the Maturity Date with
respect to Loans of such Class.
(d) Any prepayment of a Borrowing or Deferred Interest of any Class
shall be applied to reduce ratably the subsequent scheduled repayments of the
Borrowings and Deferred Interest of such Class to be made pursuant to this
Section; provided that (i) prepayments of Tranche A Borrowings and Deferred
--------
Interest thereon that are made prior
<PAGE>
41
to the Tranche A Availability Termination Date shall not affect the scheduled
repayments to be made pursuant to paragraph (a) of this Section and (ii) in the
case of Additional Loans of any Class, the provisions of this paragraph (d)
shall be subject to any contrary provisions specified in the Additional Loan
Supplement applicable to Additional Loans of such Class.
(e) Prior to any repayment of any Borrowings of any Class hereunder,
the Borrower shall select the Borrowing or Borrowings of the applicable Class to
be repaid and shall notify the Administrative Agent by telephone (confirmed by
telecopy) of such selection not later than 2:00 p.m., New York City time, three
Business Days before the scheduled date of such repayment; provided that each
--------
repayment of Borrowings of any Class shall be applied to repay any outstanding
ABR Borrowings of such Class before any other Borrowings of such Class. If the
Borrower fails to make a timely selection of the Borrowing or Borrowings to be
repaid, such repayment shall be applied, first, to repay any outstanding ABR
Borrowings of the applicable Class and, second, to other Borrowings of the
applicable Class in the order of the remaining duration of their respective
Interest Periods (the Borrowing with the shortest remaining Interest Period to
be repaid first). Each repayment of a Borrowing or Deferred Interest thereon
shall be applied, first, ratably to Deferred Interest on the Loans included in
the repaid Borrowing and, second, ratably to the Loans included in the repaid
Borrowing. Repayments of Borrowings or Deferred Interest thereon shall be
accompanied by the payment of accrued interest (other than Deferred Interest) on
the amount thereof.
SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have the
--------------------
right at any time and from time to time to prepay any Borrowing or Deferred
Interest thereon in whole or in part, without premium or penalty (except as
provided in Section 2.14), subject to the requirements of this Section.
(b) In the event and on each occasion that any Net Proceeds are
received by or on behalf of the Borrower or any Restricted Subsidiary in respect
of any Prepayment Event, the Borrower shall, within three Business Days after
such Net Proceeds are received, prepay Borrowings and Deferred Interest in an
aggregate amount equal to such Net Proceeds.
(c) In the event and on each occasion that any Collateral Trigger
Event occurs, the Borrower shall, within three Business Days after the date that
such Collateral
<PAGE>
42
Trigger Event occurs, prepay Borrowings and Deferred Interest in an aggregate
amount equal to the Collateral Prepayment Amount with respect to such Collateral
Trigger Event.
(d) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year during which the Tranche A Availability Termination Date
occurs, the Borrower shall prepay Borrowings and Deferred Interest in an
aggregate amount equal to 50% of Excess Cash Flow for such fiscal year. Each
prepayment pursuant to this paragraph shall be made on or before the date on
which financial statements are delivered pursuant to Section 5.01 with respect
to the fiscal year for which Excess Cash Flow is being calculated (and in any
event within 90 days after the end of such fiscal year).
(e) In the event and on each occasion that the Borrower or any
Restricted Subsidiary Repays any Indebtedness of the Borrower or any Restricted
Subsidiary then the Borrower shall, within three Business Days after the date of
such Repayment, prepay Borrowings and Deferred Interest in an aggregate amount
equal to the product of (x) the sum of the aggregate principal amount of the
Loans outstanding at the time plus Deferred Interest thereon, multiplied by (y)
a fraction, the numerator of which is the aggregate principal amount of such
Repayment, and the denominator of which is the amount of Consolidated
Indebtedness immediately prior to such Repayment (excluding Indebtedness in
respect of the Loans and Deferred Interest and Indebtedness outstanding under
revolving credit facilities); provided that prepayments of Borrowings and
--------
Deferred Interest shall not be required pursuant to this paragraph in respect of
(i) Repayments of Loans or Deferred Interest or loans under the Working Capital
Credit Agreement, (ii) any Repayment of Indebtedness to the extent such
Repayment is refinanced by incurring Other Debt or by incurring other
Indebtedness that (A) has a scheduled maturity date that is on or after the
scheduled maturity date of the Indebtedness being refinanced, (B) has a weighted
average life to maturity that is equal to or longer than the remaining weighted
average life to maturity of the Indebtedness being refinanced, determined
immediately prior to giving effect to such Repayment and (C) does not include
any provisions that may require mandatory Repayment thereof prior to scheduled
maturity, other than scheduled repayments taken into consideration in
determining compliance with clause (B) above and other provisions that are not
materially more burdensome than any such provisions included in the Indebtedness
being refinanced, (iii) any Repayment of Indebtedness outstanding under a
revolving credit facility
<PAGE>
43
to the extent that the commitments of the lenders to make loans thereunder
remain in effect after giving effect to such Repayment or are replaced by
commitments under a replacement revolving credit facility, (iv) any Repayment of
secured Indebtedness in connection with the sale of the assets securing such
Indebtedness, or (v) any Repayment of Indebtedness at the scheduled final
maturity thereof or in accordance with regularly scheduled amortization
requirements prior to maturity.
(f) Prior to any optional or mandatory prepayment of Borrowings or
Deferred Interest hereunder, the Borrower shall select the Borrowing or
Borrowings (and Deferred Interest thereon) to be prepaid and shall specify such
selection in the notice of such prepayment pursuant to paragraph (g) of this
Section; provided that each prepayment of Borrowings of any Class shall be
--------
applied to prepay ABR Borrowings of such Class before any other Borrowings of
such Class. In the event of any optional or mandatory prepayment of Borrowings
or Deferred Interest made at a time when Borrowings of more than one Class are
outstanding, the Borrower shall select Borrowings to be prepaid so that the
aggregate amount of such prepayment is allocated among the Classes pro rata
based on the aggregate principal amount of outstanding Borrowings (plus the
aggregate amount of Deferred Interest thereon at the time) of each such Class.
(g) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder not later than 11:00 a.m.,
New York City time, three Business Days before the date of prepayment. Each
such notice shall be irrevocable and shall specify the prepayment date, the
principal amount of each Borrowing or portion thereof (and Deferred Interest
thereon) to be prepaid and, in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment. Promptly following
receipt of any such notice, the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing (and Deferred
Interest thereon) shall be in an amount that would be permitted in the case of
an advance of a Borrowing of the same Type as provided in Section 2.02, except
as necessary to apply fully the required amount of a mandatory prepayment. Each
prepayment of a Borrowing or Deferred Interest thereon shall be applied, first,
ratably to Deferred Interest on the Loans included in the repaid Borrowing and,
second, ratably to the Loans included in the prepaid Borrowing. Prepayments of
Borrowings or Deferred Interest thereon shall be accompanied by the payment of
accrued interest (other than Deferred Interest) on the amount prepaid.
<PAGE>
44
(h) The Borrower shall prepay all outstanding Borrowings and Deferred
Interest on June 30, 1999, unless the Tranche A Full Availability Date has
occurred.
SECTION 2.10. Fees. (a) The Borrower agrees to pay to the
-----
Administrative Agent for the account of each Tranche A Lender a commitment fee,
which shall accrue at the rate of 0.50% per annum on the average daily amount of
the Tranche A Commitment of such Lender during the period from and including the
Tranche A Full Availability Date to but excluding the date on which the Tranche
A Commitments terminate. Accrued commitment fees shall be payable in arrears on
the last day of March, June, September and December of each year and on the date
on which the Tranche A Commitments terminate, commencing on the first such date
to occur after the Tranche A Full Availability Date. All commitment fees shall
be computed on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day). The commitment fees payable pursuant to this paragraph shall not apply to
Additional Commitments, it being understood that any fees payable with respect
to Additional Commitments shall be set forth in the applicable Additional Loan
Supplement.
(b) The Borrower agrees to pay to Lucent, for its own account, fees
in the amounts and at the times separately agreed.
(c) The Borrower agrees to pay to the Administrative Agent and the
Collateral Agent (if other than Lucent), for its own account, fees in the
amounts and at the times separately agreed.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, (i) to the applicable Agent, (ii) to Lucent, in the
case of fees payable to it, or (iii) to the Administrative Agent, in the case of
commitment fees, for distribution to the Lenders entitled thereto. Fees paid
shall not be refundable under any circumstances.
SECTION 2.11. Interest. (a) The Tranche A Loans comprising each
---------
Tranche A ABR Borrowing (and Deferred Interest thereon) shall bear interest at
the Alternate Base Rate plus the Applicable Rate.
(b) The Tranche A Loans comprising each Tranche A LIBOR Borrowing
(and Deferred Interest thereon) shall bear interest at the Adjusted LIBO Rate
for the Interest Period in effect for such Borrowing plus the Applicable Rate.
<PAGE>
45
(c) Notwithstanding the foregoing and subject to clause (iv) of
paragraph (d) of this Section, if any principal of or interest on any Tranche A
Loan or any fee or other amount payable by the Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to 2% plus the rate applicable to Tranche A ABR Loans as
provided in paragraph (a) of this Section.
(d) All accrued interest (other than Deferred Interest) on each
Tranche A Loan and all accrued interest on the Deferred Interest on such Tranche
A Loan (other than Deferred Interest) shall be payable in arrears on each
Interest Payment Date for such Tranche A Loan; provided that (i) interest
--------
accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Tranche A Loan (or
Deferred Interest thereon), accrued interest on the principal amount of such
Tranche A Loan (or on such Deferred Interest, as the case may be) repaid or
prepaid shall be payable on the date of such repayment or prepayment, (iii) in
the event of any conversion of any Tranche A Loan prior to the end of the
current Interest Period therefor, accrued interest on such Tranche A Loan
(including accrued interest on any Deferred Interest thereon) shall be payable
on the effective date of such conversion and (iv) the Borrower may, at its
option, elect to defer payment of any interest payable on any Tranche A Loan
(including interest payable on Deferred Interest thereon, but excluding Deferred
Interest that becomes due pursuant to the terms of this Agreement) until the
earlier of (A) the date on which such Tranche A Loan and Deferred Interest
thereon are repaid or prepaid and (B) the end of the Tranche A Availability
Period; provided further that (1) any Deferred Interest on any Tranche A Loan
----------------
(including Deferred Interest on Deferred Interest) shall accrue interest from
and including the date on which such Deferred Interest was initially due at the
same rate as the principal amount of such Tranche A Loan and (2) the aggregate
amount of Deferred Interest on all Tranche A Loans shall not exceed $75,000,000.
(e) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the
<PAGE>
46
Administrative Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.12. Alternate Rate of Interest. If prior to the
---------------------------
commencement of any Interest Period for a LIBOR Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by a majority in interest of
the Lenders participating in such Borrowing that the Adjusted LIBO Rate for
such Interest Period will not adequately and fairly reflect the cost to
such Lenders of making or maintaining their Loans included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a LIBOR Borrowing shall be ineffective and
(ii) if any Borrowing Request requests a LIBOR Borrowing, such Borrowing shall
be made as an ABR Borrowing.
SECTION 2.13. Increased Costs. (a) If any Change in Law shall:
----------------
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any other
condition affecting this Agreement or LIBOR Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBOR Loan (or of maintaining its obligation
to make any such Loan) or to reduce the amount of any sum received or receivable
by such Lender hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such
<PAGE>
47
Lender such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement or the Loans made by such Lender to a level
below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be,
as specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such compensation; provided that the Borrower shall not be required to
--------
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 180 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs
- -------- -------
or reductions is retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof.
SECTION 2.14. Break Funding Payments; Prepayment Fees. In the event
----------------------------------------
of (a) the payment of any principal of any LIBOR Loan other than on the last day
of an Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any LIBOR Loan other than on the last day of the
Interest Period applicable thereto, (c) the failure to borrow, convert, continue
or prepay any Loan on the date specified in any notice delivered pursuant
hereto, or (d) the assignment of any LIBOR Loan other than
<PAGE>
48
on the last day of the Interest Period applicable thereto as a result of a
request by the Borrower pursuant to Section 2.17, then, in any such event, the
Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a LIBOR Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.
SECTION 2.15. Taxes. (a) Any and all payments by or on account of
------
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if the Borrower shall be required to deduct any
--------
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent or Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and each
Lender, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative
<PAGE>
49
Agent or such Lender on or with respect to any payment by or on account of any
obligation of the Borrower hereunder or under any other Loan Document (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender, or by the
Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the United States of America, or
any treaty to which the United States of America is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-
------------------------------------------------------
offs. (a) The Borrower shall make each payment required to be made by it
- -----
hereunder or under any other Loan Document (whether of principal, interest or
fees, or of amounts payable under Section 2.13, 2.14 or 2.15, or otherwise)
prior to 2:00 p.m., New York City time, on the date when due, in immediately
available funds, without set-off or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent at The Chase Manhattan Bank, New York, New York, ABA no.
021000021, account no. 9101449099, phone no. (212) 552-2222 (or such other
account as the Administrative Agent shall from time to time specify
<PAGE>
50
by notice), except that payments pursuant to Sections 2.10(b), 2.10(c), 2.13,
2.14, 2.15 and 9.03 shall be made directly to the Persons entitled thereto and
payments pursuant to other Loan Documents shall be made to the Persons specified
therein. The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment under any Loan Document shall be due
on a day that is not a Business Day, the date for payment shall be extended to
the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; provided that (i) if any such participations are
--------
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this
<PAGE>
51
paragraph shall apply). The Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders hereunder that the Borrower will not make
such payment, the Administrative Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
(e) Without limiting the generality of paragraph (a) above, the
Borrower's obligations to make each payment required to be made by it hereunder
or under any other Loan Document (whether of principal, interest, fees or
otherwise) shall be absolute and unconditional and shall not be subject to any
delay, reduction, set-off, counterclaim, defense or recoupment for any reason,
including any failure of the Network or any part thereof, or any dispute with,
breach of representation or warranty by or claim against any supplier,
manufacturer, installer, vendor or distributer, including Lucent.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a)
-----------------------------------------------
If any Lender requests compensation under Section 2.13, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
<PAGE>
52
amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
--------
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii)
such assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
SECTION 2.18. Additional Loan Supplements. The Borrower and the
----------------------------
Administrative Agent may, at any time and from time to time, enter into one or
more Additional Loan Supplements with one or more Persons who agree to become
Lenders pursuant to such Additional Loan Supplements and undertake Additional
Commitments pursuant thereto; provided that the aggregate principal amount of
--------
Additional Loans made pursuant to all Additional Loan Supplements shall not
exceed $400,000,000 (excluding Deferred Interest, if any). An Additional Loan
Supplement shall not require the consent or approval of any Lender, other than
Lenders that undertake Additional Commitments thereunder. No Lender shall have
any obligation to enter into any Additional Loan Supplement or to undertake any
Additional Commitment.
<PAGE>
53
ARTICLE III
Representations and Warranties
------------------------------
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and the
---------------------
Restricted Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions are
------------------------------
within the Borrower's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. Each of the Loan
Documents has been duly executed and delivered by the Borrower and constitutes a
legal, valid and binding obligation of the Borrower, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
-------------------------------------
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect and except filings necessary
to perfect Liens created under the Security Agreement, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of any Loan Party or any order of any Governmental Authority, (c) will
not violate or result in a default under any indenture, agreement or other
instrument binding upon any Loan Party or its assets, or give rise to a right
thereunder to require any payment to be made by any Loan Party, and (d) will not
result in the creation or imposition of any Lien on any asset of any Loan Party,
except Liens created under the Security Agreement.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a)
------------------------------------------------
The Borrower has heretofore furnished to the Lenders its consolidated balance
sheet and statements
<PAGE>
54
of income, stockholders equity and cash flows (i) as of and for the fiscal year
ended December 31, 1997, reported on by PricewaterhouseCoopers LLP (successor to
Coopers & Lybrand, L.L.P.), independent public accountants, and (ii) as of and
for the fiscal quarter and the portion of the fiscal year ended June 30, 1998,
certified by its chief financial officer. Such financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its consolidated subsidiaries as
of such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the statements
referred to in clause (ii) above.
(b) Since June 30, 1998, there has been no material adverse change in
the business, condition (financial or otherwise), operations, performance or
properties of the Borrower and the Restricted Subsidiaries, taken as a whole.
SECTION 3.05. Properties and Licenses. (a) Each of the Loan Parties
------------------------
has good title to, or valid leasehold interests in, all the real and personal
property material to its business owned or leased by it, except for defects in
title that do not interfere with its ability to conduct its business as
currently conducted and could not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
(b) Each of the Loan Parties owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Loan Parties does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
(c) Schedule 3.05 sets forth all FCC Licenses existing as of the
Effective Date and all other licenses and permits in effect as of the Effective
Date that are material to the business of the Borrower and the Restricted
Subsidiaries. Each of the FCC Licenses, and each other license or permit that
is material to the business of the Borrower and the Restricted Subsidiaries, is
valid and in full force and effect, and the Borrower and the Restricted
Subsidiaries are in compliance with the terms and conditions thereof except
where the failure to so comply could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
<PAGE>
55
SECTION 3.06. Litigation and Environmental Matters. (a) There are
-------------------------------------
no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve any of the Loan Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, none of the Borrower or any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the
------------------------------------
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
SECTION 3.08. Investment and Holding Company Status. None of the
--------------------------------------
Loan Parties is (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding company"
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.
SECTION 3.09. Taxes. Each of the Loan Parties has timely filed or
------
caused to be filed all Tax returns and reports required to have been filed and
has paid or caused to be paid all Taxes required to have been paid by it,
<PAGE>
56
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the applicable Loan Party has set aside on its books
adequate reserves or (b) the filing of state or local Tax returns and reports,
or the payment of state or local Taxes, to the extent that the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred.
------
SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders
-----------
all material agreements, instruments and corporate or other restrictions to
which any of the Loan Parties is subject, and all other matters known to any of
them, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. None of the reports, financial statements,
certificates or other written information concerning the Borrower or its
Subsidiaries furnished by or on behalf of any Loan Party to the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or thereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
--------
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth as of the
-------------
Effective Date the name of, and the ownership interest of the Borrower in, each
Subsidiary of the Borrower and identifies each such Subsidiary (if any) that is
an Unrestricted Subsidiary or a License Subsidiary.
SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of
----------
all insurance maintained by or on behalf of the Borrower and its Subsidiaries as
of the Effective Date. As of the Effective Date, all premiums then due and
payable in respect of such insurance have been paid.
SECTION 3.14. Labor Matters. As of the Effective Date, there are no
--------------
strikes, lockouts or slowdowns against any Loan Party pending or, to the
knowledge of the Borrower, threatened. The hours worked by and payments made to
employees of the Loan Parties have not been in violation of the Fair Labor
Standards Act or any other applicable
<PAGE>
57
Federal, state, local or foreign law dealing with such matters, except for such
violations that could not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect. All payments due from any
Loan Party, or for which any claim may be made against any Loan Party, on
account of wages and employee health and welfare insurance and other benefits,
have been paid or accrued as a liability on the books of the applicable Loan
Party, except for such failures to so pay or accrue that could not reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect. The consummation of the Transactions will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any Loan Party is bound.
SECTION 3.15. Purchase Agreement. The Purchase Agreement is in full
-------------------
force and effect. The Borrower is in substantial compliance with the terms and
conditions of the Purchase Agreement.
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date. The obligations of the Lenders to make
---------------
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart
of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of each of (i) Ropes & Gray, counsel for the Borrower,
substantially in the form of Exhibit D-1, (ii) Wiley, Rein & Fielding,
special FCC counsel for the Borrower, substantially in the form of Exhibit
D-2, and (iii) Cravath, Swaine & Moore, counsel for Lucent, substantially
in the form of Exhibit D-3, and, in the case of each such opinion required
by this
<PAGE>
58
paragraph, covering such other matters relating to the Loan Parties, the
Loan Documents or the Transactions as the Administrative Agent shall
reasonably request. The Borrower hereby requests its counsel referred to in
clauses (i) and (ii) of this paragraph to deliver such opinions.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of the
Borrower, the authorization of the Transactions and any other legal matters
relating to the Loan Parties, the Loan Documents or the Transactions, all
in form and substance satisfactory to the Administrative Agent and its
counsel.
(d) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (a), (b) and (c) of Section 4.03.
(e) The Administrative Agent and Lucent shall have received all fees
and other amounts due and payable to them hereunder on or prior to the
Effective Date, including, to the extent invoiced, reimbursement or payment
of all expenses required to be reimbursed or paid by the Borrower hereunder
or under any other Loan Document.
(f) The Lenders shall be satisfied with the corporate and legal
structure and capitalization of the Borrower and the Restricted
Subsidiaries, including the charter and by-laws of the Borrower and each
Restricted Subsidiary and each agreement or instrument evidencing
Indebtedness.
(g) The Collateral Agent shall have received (i) counterparts of the
Security Agreement signed on behalf of the Borrower and (ii) evidence
satisfactory to it that all documents and instruments, including Uniform
Commercial Code financing statements, required by law or reasonably
requested by the Collateral Agent to be filed, registered or recorded to
create or perfect the Liens intended to be created under the Security
Agreement have been so filed, registered or recorded.
<PAGE>
59
(h) The Collateral Agent shall have received a completed Perfection
Certificate dated the Effective Date and signed by a Financial Officer of
the Borrower, together with all attachments contemplated thereby, including
(i) the results of a search of the Uniform Commercial Code (or equivalent)
filings made with respect to the Borrower in the jurisdictions contemplated
by the Perfection Certificate and (ii) copies of the financing statements
(or similar documents) disclosed by such search and evidence reasonably
satisfactory to the Collateral Agent that the Liens indicated by such
financing statements (or similar documents) are permitted by Section 6.02
or have been released.
(i) The Administrative Agent shall have received evidence
satisfactory to it that the insurance required by Section 5.07 is in effect
and that the Collateral Agent has been named as an additional insured and
loss payee under all insurance policies to be maintained with respect to
the properties of the Borrower constituting the Collateral.
(j) All FCC Licenses shall be owned by the Borrower or a License
Subsidiary. No event shall have occurred that would subject any FCC
License to revocation by the FCC, except for such FCC Licenses the loss of
which could not reasonably be expected, individually or in the aggregate,
to result in a Material Adverse Effect.
(k) The Lenders shall have received the Borrower's most recent
Business Plan, including financial projections, and there shall have been
no material adverse changes in the Business Plan compared to the
information disclosed to Lucent prior to June 18, 1998.
(l) All material intercompany agreements and arrangements between the
Borrower or any wholly owned Restricted Subsidiary, on the one hand, and
any Unrestricted Subsidiary, any Restricted Subsidiary that is not a wholly
owned Restricted Subsidiary or any other Affiliate of the Borrower or any
wholly owned Restricted Subsidiary, on the other hand, with respect to tax
sharing, management fee or servicing fee agreements, arrangements or
relationships shall have been completed on terms and conditions (including
with respect to the subordination of any obligations to pay any fees
thereunder to the prior payment in full of the Obligations) reasonably
satisfactory to the Lenders and
<PAGE>
60
shall have been set forth in written agreements (the "Intercompany
------------
Agreements") reasonably satisfactory in form and substance to the Lenders.
----------
True and correct copies of all Intercompany Agreements shall have been
delivered to the Lenders.
(m) The Administrative Agent shall have received counterparts of the
Escrow Agreement signed on behalf of the Borrower.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New
York City time, on December 31, 1998 (and, in the event such conditions are not
so satisfied or waived, the Commitments shall terminate at such time).
SECTION 4.02. Tranche A Full Availability Date. The obligations of
---------------------------------
the Lenders to make Tranche A Loans hereunder in an aggregate principal amount
exceeding the Initial Loan Limit shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance
with Section 9.02):
(a) The Borrower shall have received aggregate Net Proceeds of not
less than $50,000,000 from contributions of equity capital or the issuance
of Other Debt subsequent to April 27, 1998.
(b) The lending commitments under the Working Capital Credit
Agreement shall have been terminated and the Borrower shall have paid in
full the principal of and accrued interest on all loans and all other
amounts owed by the Borrower under such Agreement.
(c) The Administrative Agent shall have received a certificate signed
by the President, a Vice President or a Financial Officer of the Borrower
confirming compliance with paragraphs (a) and (b) of this Section.
The Administrative Agent shall notify the Borrower and the Lenders of the
Tranche A Full Availability Date, and such notice shall be conclusive and
binding. Notwithstanding the foregoing, the obligations of the Lenders to make
Loans hereunder in an aggregate principal amount exceeding the Initial Loan
Limit shall not become effective unless the conditions set forth in this Section
are satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m.,
<PAGE>
61
New York City time, on June 30, 1999 (and, in the event such conditions are not
so satisfied or waived, the Commitments shall terminate at such time).
SECTION 4.03. Each Borrowing. The obligation of each Lender to make
---------------
a Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
(a) At the time of and immediately after giving effect to such
Borrowing, the representations and warranties of the Borrower set forth in
the Loan Documents shall be true and correct (or, in the case of
representations and warranties that are not qualified as to materiality,
true and correct in all material respects) on and as of the date of such
Borrowing (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and
correct as of such earlier date).
(b) At the time of and immediately after giving effect to such
Borrowing no Default shall have occurred and be continuing.
(c) At the time of and immediately after giving effect to such
Borrowing, the Purchase Agreement shall be in full force and effect and the
Borrower shall be in substantial compliance therewith.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a),
(b) and (c) of this Section.
ARTICLE V
Affirmative Covenants
---------------------
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, the Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The
-------------------------------------------
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the Borrower,
the audited consolidated balance sheet of the Borrower and related
statements of
<PAGE>
62
operations, stockholders' equity and cash flows as of the end
of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by
PricewaterhouseCoopers LLP (successor to Coopers & Lybrand, L.L.P.) or
other independent public accountants of recognized national standing
(without, except for the audit with respect to the Borrower's 1998 fiscal
year, a "going concern" or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect
that such consolidated financial statements present fairly in all material
respects the financial condition and results of operations of the Borrower
and its consolidated subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, the consolidated balance
sheet of the Borrower and related statements of operations, stockholders'
equity and cash flows as of the end of and for such fiscal quarter and the
then elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of
(or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial Officers as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of the Borrower's financial
statements under clause (a) or (b) above, a certificate of a Financial
Officer of the Borrower (i) certifying as to whether a Default has occurred
and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (ii) setting
forth reasonably detailed calculations demonstrating compliance with
Sections 6.15, 6.16, 6.17, 6.18, 6.19, 6.20, 6.21, 6.22 and 6.23 (to the
extent such Sections are operative during such fiscal period), (iii)
stating whether any change in GAAP or in the application thereof has
occurred since the date of the Borrower's audited financial statements
referred to in Section 3.04 and, if any such change has occurred,
specifying the effect of such change on the financial
<PAGE>
63
statements accompanying such certificate, and (iv) if the financial
statements accompanying such certificate include consolidated financial
information for any Unrestricted Subsidiary, setting forth on a schedule
attached to such certificate a reasonably detailed calculation of all
adjustments to such financial statements necessary in order to reflect the
financial condition and results of operations of the Borrower and the
Restricted Subsidiaries on a consolidated basis in accordance with GAAP;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any Default
(which certificate may be limited to the extent required by accounting
rules or guidelines);
(e) promptly after the same become available but in any event within
90 days after the end of each fiscal year of the Borrower, the Business
Plan for the current fiscal year and updated financial projections through
the latest Maturity Date;
(f) within 15 days after the end of each fiscal quarter of the
Borrower, a report setting forth (i) the number of buildings connected to
the Network and (ii) the number of the Borrower's customers (treating each
office location of a Person purchasing services from the Borrower as a
separate customer to the extent such office locations are in separate
buildings);
(g) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Borrower or any Subsidiary with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, or distributed
by the Borrower to its shareholders generally, as the case may be; and
(h) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of any Loan
Document, as either Agent or any Lender may reasonably request.
<PAGE>
64
SECTION 5.02. Notices of Material Events. (a) The Borrower will
---------------------------
furnish to the Administrative Agent and each Lender prompt written notice of the
following:
(i) the occurrence of any Default;
(ii) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect; and
(iii) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
(b) The Borrower will furnish to the Administrative Agent written
notice of the occurrence of any Collateral Trigger Event or Prepayment Event
promptly, but in any event within 30 days, after the occurrence of such event.
(c) Each notice delivered under this Section shall be accompanied by
a statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
SECTION 5.03. Information Regarding Collateral. (a) The Borrower
---------------------------------
will furnish to the Collateral Agent prompt written notice of any change (i) in
the Borrower's corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of the Borrower's chief executive office, its principal place of
business or any asset constituting Collateral (including the installation of any
asset constituting Collateral at a location where Collateral has not previously
been located), (iii) in the Borrower's identity or corporate structure or (iv)
in the Borrower's Federal Taxpayer Identification Number. The Borrower agrees
not to effect or permit any change referred to in the preceding sentence unless
all filings have been made under the Uniform Commercial Code or otherwise that
are required in order for the Collateral Agent to continue at all times
following such change to have a valid, legal and perfected security interest in
all the Collateral. The Borrower also agrees promptly to notify the Collateral
Agent if any material portion of the Collateral is damaged or destroyed.
<PAGE>
65
(b) Each year, at the time of delivery of annual financial statements
for the Borrower with respect to the preceding fiscal year pursuant to clause
(a) of Section 5.01, the Borrower shall deliver to the Collateral Agent a
certificate of a Financial Officer of the Borrower (i) setting forth the
information required pursuant to Sections 1 and 2 of the Perfection Certificate
or confirming that there has been no change in such information since the date
of the Perfection Certificate delivered on the Effective Date or the date of the
most recent certificate delivered pursuant to this Section and (ii) certifying
that all Uniform Commercial Code financing statements (including fixture
filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to the extent necessary to protect and
perfect the security interests under the Security Agreement for a period of not
less than 18 months after the date of such certificate (except as noted therein
with respect to any continuation statements to be filed within such period).
SECTION 5.04. Existence; Conduct of Business. The Borrower will, and
-------------------------------
will cause each of the Restricted Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of the business of the Borrower and the Restricted Subsidiaries,
taken as a whole; provided that the foregoing shall not prohibit any merger,
--------
consolidation, liquidation or dissolution permitted under Section 6.03.
SECTION 5.05. Payment of Obligations. The Borrower will, and will
-----------------------
cause each of the Restricted Subsidiaries to, pay its material Indebtedness and
other material obligations, including Tax liabilities, before the same shall
become delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) the Borrower or
such Restricted Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP, (c) such contest effectively suspends
collection of the contested obligation and the enforcement of any Lien securing
such obligation and (d) the failure to make payment pending the resolution of
such contest could not reasonably be expected to result in a Material Adverse
Effect.
<PAGE>
66
SECTION 5.06. Maintenance of Properties. The Borrower will, and will
--------------------------
cause each of the Restricted Subsidiaries to, keep and maintain all property
material to the conduct of the business of the Borrower and the Restricted
Subsidiaries, taken as a whole, in good working order and condition, ordinary
wear and tear excepted.
SECTION 5.07. Insurance. (a) The Borrower will, and will cause each
----------
of the Restricted Subsidiaries to, maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
(including fire and other risks insured by extended coverage) as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations, including public liability insurance against
claims for personal injury, death or property damage occurring upon, about or in
connection with the use of any properties owned, occupied or controlled by it as
well as such other insurance as may be required by law.
(b) All policies of casualty insurance maintained by or for the
benefit of the Borrower with respect to the Collateral shall be endorsed or
otherwise amended to include a "standard" or "New York" lender's loss payable
endorsement, in favor of and satisfactory to the Collateral Agent, which
endorsement shall provide that the insurance carrier shall pay all proceeds
otherwise payable to any Loan Party under such policies directly to the
Collateral Agent. All such policies also shall provide that none of the
Borrower, the Administrative Agent, the Collateral Agent nor any other party
shall be a coinsurer thereunder and shall contain a "Replacement Cost
Endorsement", without any deduction for depreciation, "mortgagee's
interest"/"breach of warranty coverage" and such other provisions as the
Administrative Agent or the Collateral Agent may reasonably require from time to
time to protect the interests of the Lenders. Each such policy also shall
provide that it shall not be canceled, modified or not renewed (i) by reason of
nonpayment of premium except upon not less than 10 days' prior written notice
thereof by the insurer to the Administrative Agent and the Collateral Agent
(giving the Administrative Agent and the Collateral Agent the right to cure
defaults in the payment of premiums) or (ii) for any other reason except upon
not less than 30 days' prior written notice thereof by the insurer to the
Administrative Agent and the Collateral Agent. The Borrower shall deliver to
the Administrative Agent and the Collateral Agent, prior to the cancelation,
modification or nonrenewal of any such policy of insurance, a copy of a renewal
or replacement policy (or other evidence of renewal of a policy previously
delivered to the Administrative Agent and the Collateral
<PAGE>
67
Agent) together with evidence satisfactory to the Administrative Agent and the
Collateral Agent of payment of the premium therefor.
(c) The Borrower shall notify the Administrative Agent and the
Collateral Agent immediately whenever any separate insurance concurrent in form
or contributing in the event of loss with that required to be maintained under
this Section is taken out by any Loan Party, and shall promptly deliver to the
Administrative Agent and the Collateral Agent a duplicate original copy of such
policy or policies.
SECTION 5.08. Books and Records; Inspection Rights. The Borrower
-------------------------------------
will, and will cause each of the Restricted Subsidiaries to, keep proper books
of record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of the Restricted Subsidiaries to, permit any
representatives designated by either Agent or any Lender, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all during normal business hours and
as often as reasonably requested, without unreasonable interference with the
Borrower's business.
SECTION 5.09. Compliance with Laws and Agreements. The Borrower
------------------------------------
will, and will cause each of the Subsidiaries to, comply with all laws, rules,
regulations and orders of any Governmental Authority (including ERISA and all
Environmental Laws) applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except (a)
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, or (b) where (i)
the failure to so comply is being contested in good faith by appropriate
proceedings, (ii) the Borrower or such Restricted Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP or, in
the case of a foreign Restricted Subsidiary, in accordance with applicable
accounting principles in the relevant jurisdiction, (iii) such contest
effectively suspends the requirement to so comply and (iv) the failure to so
comply pending the resolution of such contest could not reasonably be expected
to result in a Material Adverse Effect.
SECTION 5.10. Use of Proceeds. The proceeds of the Loans will be
----------------
used solely to make payments of portions of the Purchase Price.
<PAGE>
68
SECTION 5.11. Further Assurances. The Borrower will execute any and
-------------------
all further documents, financing statements, agreements and instruments, and
take all such further actions (including the filing and recording of financing
statements, fixture filings and other documents), which may be required under
any applicable law, or which either Agent or the Required Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan Documents or to
grant, preserve, protect or perfect the Liens created or intended to be created
by the Security Agreement or the validity or priority of any such Lien, all at
the expense of the Borrower. The Borrower also agrees to provide to either
Agent, upon request, evidence reasonably satisfactory to such Agent as to the
perfection and priority of the Liens created or intended to be created by the
Security Agreement.
SECTION 5.12. Casualty and Condemnation. (a) The Borrower will
--------------------------
furnish to the Agents and the Lenders prompt written notice of any casualty or
other damage to any portion of any Collateral or the commencement of any action
or proceeding for the taking of any Collateral or any part thereof or interest
therein under power of eminent domain or by condemnation or similar proceeding.
(b) If any event described in paragraph (a) of this Section results
in Net Proceeds (whether in the form of insurance proceeds, condemnation award
or otherwise), the Collateral Agent is authorized to collect such Net Proceeds
and, if received by the Borrower or any Subsidiary, such Net Proceeds shall be
paid over to the Collateral Agent. All such Net Proceeds retained by or paid
over to the Collateral Agent shall be held by the Collateral Agent and released
from time to time to pay the costs of repairing, restoring or replacing the
affected property or purchasing additional property constituting Collateral in
accordance with the terms of this Agreement and the applicable provisions of the
Security Agreement, subject to the provisions of the Security Agreement
regarding application of such Net Proceeds during a Default.
(c) If any Net Proceeds retained by or paid over to the Collateral
Agent as provided above continue to be held by the Collateral Agent on the date
that any prepayment is due pursuant to Section 2.09(c) in respect of the event
resulting in such Net Proceeds, then such Net Proceeds shall be applied to
prepay Borrowings as provided in Section 2.09(c).
SECTION 5.13. Interest Rate Protection. Beginning on the Tranche A
-------------------------
Full Availability Date, the
<PAGE>
69
Borrower will from time to time enter into and maintain in effect one or more
Hedging Agreements satisfactory to the Required Lenders, the effect of which
shall be to fix or limit the interest cost to the Borrower with respect to such
portion of the Loans and Deferred Interest as shall be necessary in order that,
at all times, at least 50% of Consolidated Indebtedness shall be comprised of a
combination of (a) Indebtedness bearing interest at a fixed rate and (b) the
portion of the Loans and Deferred Interest covered by such Hedging Agreements.
SECTION 5.14. FCC Licenses. The Borrower will, and will cause each
------------
of the Restricted Subsidiaries to, maintain each FCC License in full force and
effect and comply with all terms and conditions thereof, except to the extent
that the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
ARTICLE VI
Negative Covenants
------------------
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full,
the Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Indebtedness. The Borrower will not, nor will it
-------------
permit any Restricted Subsidiary to, create, incur, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness created under the Loan Documents or the Purchase
Agreement;
(b) subject to Sections 6.04 and 6.12, Indebtedness of the Borrower to
any Restricted Subsidiary and of any Restricted Subsidiary to the Borrower or
any other Restricted Subsidiary;
(c) subject to Section 6.04, Guarantees by the Borrower of
Indebtedness of any Restricted Subsidiary;
(d) Indebtedness of the Borrower or, subject to Section 6.12, any
Restricted Subsidiary incurred to finance the acquisition, construction or
improvement of any fixed or capital assets or FCC licenses by the Borrower or
such Restricted Subsidiary (other than assets constituting Collateral or other
assets that become accessions to assets
<PAGE>
70
constituting Collateral or the removal or loss of which would adversely affect
the value of any assets constituting Collateral), including Capital Lease
Obligations and any Indebtedness assumed in connection with the acquisition of
any such assets or secured by a Lien on any such assets prior to the acquisition
thereof; provided that (A) such Indebtedness is incurred prior to or within 90
--------
days after such acquisition or the completion of such construction or
improvement and (B) any such Indebtedness incurred in connection with any
particular acquisition, construction or improvement shall not exceed the cost of
such acquisition, construction or improvement; provided further that, prior to
----------------
the Tranche A Full Availability Date, the aggregate principal amount of such
Indebtedness shall not exceed $20,000,000;
(e) Other Debt;
(f) Indebtedness outstanding on the Effective Date and set forth on
Schedule 6.01;
(g) Indebtedness of the Borrower incurred to refinance any
Indebtedness referred to in clause (d) or (f) above and Indebtedness of any
Restricted Subsidiary incurred to refinance any Indebtedness of such Restricted
Subsidiary referred to in clause (d) or (f) above; provided that (i) the
--------
principal amount of any such Indebtedness does not exceed the principal amount
of, plus accrued interest and any prepayment premiums applicable to, the
Indebtedness refinanced thereby, (ii) any such Indebtedness has a scheduled
maturity date that is on or after the scheduled maturity date of the
Indebtedness refinanced thereby, (iii) any such Indebtedness has a weighted
average life to maturity that is equal to or longer than the remaining weighted
average life to maturity of the Indebtedness refinanced thereby (determined
immediately prior to giving effect to such refinancing), (iv) any such
Indebtedness does not include any provisions that may require mandatory
Repayment thereof prior to scheduled maturity, other than scheduled repayments
taken into account in determining compliance with clause (iii) above and other
provisions that are not materially more burdensome than any such provisions
included in the Indebtedness refinanced thereby, and (v) any such Indebtedness
shall not be secured by any Lien other than Liens on assets securing the
Indebtedness being refinanced thereby;
(h) on and after the Tranche A Full Availability Date, Indebtedness
incurred or assumed in connection with a Permitted Acquisition; provided that
--------
the aggregate principal amount of such Indebtedness shall be subject to the
<PAGE>
71
limitation set forth in clause (f) of the definition of "Permitted Acquisition";
and
(i) on and after the Tranche A Full Availability Date, other unsecured
Indebtedness of the Borrower and, subject to Section 6.12, Restricted
Subsidiaries, in an aggregate principal amount not exceeding $50,000,000 (or, if
the Borrower has received aggregate Net Proceeds of not less than $30,000,000
from contributions of equity capital subsequent to the date hereof,
$100,000,000) at any time outstanding; provided that, to the extent such
--------
Indebtedness consists of loans incurred pursuant to revolving credit facilities
with commercial banks or other financial institutions for working capital
purposes, such Indebtedness may be secured by accounts receivable.
SECTION 6.02. Liens. (a) The Borrower will not, nor will it permit
------
any Restricted Subsidiary to, create, incur, assume or permit to exist any Lien
on any property or asset now owned or hereafter acquired by it, or assign or
sell any income or revenues (including accounts receivable) or rights in respect
of any thereof, except:
(i) Liens created under the Security Agreement and the Purchase
Agreement;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the Borrower or any
Restricted Subsidiary existing on the date hereof and set forth in Schedule
6.02; provided that (A) such Lien shall not apply to any other property or
--------
asset of the Borrower or any Restricted Subsidiary and (B) such Lien shall
secure only those obligations which it secures on the date hereof and
refinancings thereof that satisfy the criteria set forth in clause (g) of
Section 6.01;
(iv) any Lien existing on any property or asset prior to the date that
such property or asset was first acquired by the Borrower or any Subsidiary
or any Affiliate thereof or existing on any property or asset of any Person
that becomes a Subsidiary after the date hereof prior to the time such
Person becomes a Subsidiary; provided that (A) such Lien is not created in
--------
contemplation of or in connection with such acquisition or such Person
becoming a Subsidiary, (B) such Lien shall not apply to any other property
or assets of the Borrower or any Subsidiary and (C) such Lien shall secure
only those obligations which it secures on the date of such acquisition or
the date such Person
<PAGE>
72
becomes a Subsidiary, as the case may be, and refinancings thereof that
satisfy the criteria set forth in clause (g) of Section 6.01;
(v) Liens on fixed or capital assets (other than assets constituting
Collateral or other assets that become accessions to assets constituting
Collateral or the removal or loss of which would adversely affect the value
of any assets constituting Collateral) acquired, constructed or improved by
the Borrower or a Restricted Subsidiary; provided that (A) such Liens
--------
secure only Indebtedness permitted by clause (d) of Section 6.01 or a
refinancing thereof permitted by clause (g) of Section 6.01, (B) such Liens
and the Indebtedness secured thereby are incurred prior to or within 90
days after such acquisition or the completion of such construction or
improvement, (C) the Indebtedness secured thereby does not exceed 100% of
the cost of acquiring, constructing or improving such fixed or capital
assets and (D) such Liens shall not apply to any other property or assets
of the Borrower or any Restricted Subsidiary;
(vi) Liens existing under the Collateral Pledge and Security Agreement
dated as of February 6, 1997, between the Borrower and the Bank of New
York; provided that such Liens secure only Indebtedness in a principal
--------
amount not to exceed the principal amount secured under such agreement on
the date hereof and do not apply to any other property or assets of the
Borrower or any Restricted Subsidiary;
(vii) Liens on accounts receivable (including related documents,
instruments and other general intangibles customarily pledged in connection
with a pledge of accounts receivable) securing Indebtedness permitted by
clause (i) of Section 6.01 incurred pursuant to revolving credit facilities
with commercial banks and other financial institutions for working capital
purposes; and
(viii) other Liens on assets of the Borrower and the Restricted
Subsidiaries (other than assets constituting Collateral or other assets
that become accessions to or otherwise are integrated with assets
constituting Collateral) securing monetary obligations in an aggregate
amount not exceeding (A) $1,000,000 at any time prior to the Tranche A Full
Availability Date and (B) $10,000,000 at any time on and after the Tranche
A Full Availability Date.
<PAGE>
73
(b) Notwithstanding the foregoing, the Borrower will not, nor will it
permit any Restricted Subsidiary to, create any Lien (other than any Permitted
Encumbrance) on any FCC License or on any capital stock of or other ownership
interest in or Indebtedness of any License Subsidiary.
SECTION 6.03. Fundamental Changes. (a) The Borrower will not, nor
--------------------
will it permit any Restricted Subsidiary to, merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with it,
or sell, transfer, lease or otherwise dispose of (in one transaction or in a
series of transactions) all or substantially all of its assets, or all or
substantially all of the stock of any of its Restricted Subsidiaries (in each
case, whether now owned or hereafter acquired), or liquidate or dissolve, except
that, if at the time thereof and immediately after giving effect thereto no
Default shall have occurred and be continuing (i) any Person may merge into the
Borrower or a Restricted Subsidiary (other than a License Subsidiary) pursuant
to a transaction that constitutes a Permitted Acquisition, provided that the
--------
survivor of such merger is the Borrower or a Restricted Subsidiary, as
applicable; (ii) any Restricted Subsidiary (other than a License Subsidiary) may
merge into any other Restricted Subsidiary (other than a License Subsidiary) in
a transaction in which the surviving entity is a Restricted Subsidiary, (iii)
any Restricted Subsidiary may sell, transfer, lease or otherwise dispose of its
assets to the Borrower or to another Restricted Subsidiary (other than a License
Subsidiary) or (iv) any Restricted Subsidiary may liquidate or dissolve if the
Borrower determines in good faith that such liquidation or dissolution is in its
best interests and is not materially disadvantageous to the Lenders; provided
--------
that any such merger involving the Borrower or any Person that is not a wholly
owned Restricted Subsidiary immediately prior to such merger shall not be
permitted unless also permitted by Section 6.04.
(b) The Borrower will not, nor will it permit any of its Restricted
Subsidiaries to, engage to any material extent in any business other than
telecommunications and data networking business and businesses related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
--------------------------------------------
Acquisitions; Asset Sales. (a) The Borrower will not, nor will it permit any
- --------------------------
of its Restricted Subsidiaries to, purchase, hold or acquire (including pursuant
to any merger with any Person that was not a wholly owned Restricted Subsidiary
prior to such merger) any capital stock, evidences of indebtedness or other
securities
<PAGE>
74
(including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, Guarantee any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) any assets of any other Person constituting a business
unit, except:
(i) Permitted Investments;
(ii) subject to Section 6.12, investments by the Borrower and its
Restricted Subsidiaries in the capital stock of their respective Restricted
Subsidiaries; provided that the aggregate amount of outstanding investments
--------
made by the Borrower and its wholly owned Restricted Subsidiaries in, and
loans and advances made by the Borrower and its wholly owned Restricted
Subsidiaries to, Restricted Subsidiaries that are not wholly owned
Restricted Subsidiaries shall not exceed (A) $5,000,000 at any time prior
to the Tranche A Full Availability Date and (B) $20,000,000 at any time on
and after the Tranche A Full Availability Date;
(iii) subject to Section 6.12, loans or advances made by the Borrower
to any Restricted Subsidiary and made by any Restricted Subsidiary to the
Borrower or any other Restricted Subsidiary; provided that the aggregate
--------
amount of such loans and advances made by the Borrower and its wholly owned
Restricted Subsidiaries to Restricted Subsidiaries that are not wholly
owned Restricted Subsidiaries shall be subject to the limitation set forth
in clause (ii) above;
(iv) Guarantees by the Borrower of obligations of the Restricted
Subsidiaries; provided that the aggregate amount of outstanding obligations
--------
Guaranteed by the Borrower of Restricted Subsidiaries that are not wholly
owned Restricted Subsidiaries shall be treated as investments in such
Restricted Subsidiaries for purposes of the limitation set forth in the
proviso to clause (ii) above;
(v) Permitted Acquisitions;
(vi) (A) promissory notes received by the Borrower or any Restricted
Subsidiary in connection with sales of assets (other than assets
constituting Collateral) permitted by paragraph (b) below and (B) the
common stock of Pentriad North America, Inc. ("Pentriad") received by the
--------
Borrower in connection with the sale of assets to Pentriad described on
Schedule 6.04;
<PAGE>
75
(vii) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(viii) (A) promissory notes of directors, officers or employees of the
Borrower or any Restricted Subsidiary issued to the Borrower in exchange
for common stock of the Borrower and (B) other loans and advances by the
Borrower or any Restricted Subsidiary to their respective directors,
officers or employees in an aggregate principal amount not exceeding
$1,000,000 at any one time outstanding; or
(ix) other investments by the Borrower or any of the Restricted
Subsidiaries (including (x) investments in Unrestricted Subsidiaries and
joint ventures and (y) investments in any Restricted Subsidiary existing at
the time such Subsidiary is designated as an Unrestricted Subsidiary) in an
aggregate amount not exceeding (A) $3,000,000 at any time prior to the
Tranche A Full Availability Date and (B) $10,000,000 on and after the
Tranche A Full Availability Date (in each case, valued at cost, without
regard to any write down or write up thereof).
(b) The Borrower will not, nor will it permit any of its Restricted
Subsidiaries to, sell, transfer, lease or otherwise dispose of any asset,
including any capital stock of or ownership interest in any other Person owned
by it, nor will the Borrower permit any Restricted Subsidiary to issue (other
than to the Borrower or a wholly owned Restricted Subsidiary) any additional
shares of its capital stock or other ownership interest in such Restricted
Subsidiary, except:
(i) sales of (A) inventory, (B) obsolete, uneconomic or surplus
assets not exceeding, in the aggregate, $1,000,000 during any fiscal year
of the Borrower and (C) Permitted Investments, in each case in the ordinary
course of business;
(ii) transfers constituting investments permitted by paragraph (a) of
this Section or Restricted Payments permitted by Section 6.06;
(iii) sales, transfers and dispositions to the Borrower or, subject to
Section 6.12, a Restricted Subsidiary;
<PAGE>
76
(iv) other sales, transfers and dispositions of obsolete, uneconomic
or surplus assets made when no Default has occurred and is continuing;
(v) prior to the Tranche A Full Availability Date, sales of assets not
exceeding, in the aggregate, $10,000,000; provided at least 85% of the
--------
consideration received for each such sale consists of cash;
(vi) on and after the Tranche A Full Availability Date, sales of assets
not exceeding, in the aggregate, 10% of Adjusted Consolidated Net Tangible
Assets during any period of 12 consecutive fiscal months (determined as of
the date closest to the commencement of such 12-month period for which a
consolidated balance sheet of the Borrower and its Restricted Subsidiaries
has been prepared); provided at least 85% of the consideration received for
each such sale consists of cash;
(vii) dispositions of Telecommunications Assets in exchange for
comparable Telecommunications Assets; provided that the Board of Directors
--------
of the Borrower shall have approved such disposition and exchange and
determined the fair market value of the Telecommunications Assets subject
to such transaction as evidenced by a resolution of such Board; and
(viii) sales, transfers and dispositions of the assets set forth on
Schedule 6.04;
provided that all sales, transfers, leases and other dispositions permitted
- --------
hereby (other than pursuant to clause (iii) above) shall be made for fair value
and, if such asset constitutes Collateral, solely for cash consideration.
SECTION 6.05. Hedging Agreements. The Borrower will not, nor will it
-------------------
permit any of its Restricted Subsidiaries to, enter into any Hedging Agreement,
other than Hedging Agreements required by Section 5.13 and other Hedging
Agreements entered into in the ordinary course of business to hedge or mitigate
risks to which the Borrower or any Restricted Subsidiary is exposed in the
conduct of its business or the management of its liabilities.
SECTION 6.06. Restricted Payments. The Borrower will not, nor will
--------------------
it permit any Restricted Subsidiary to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except (a) the Borrower
may declare and pay dividends with respect to its capital
<PAGE>
77
stock payable solely in additional shares of its common stock or Permitted
Preferred Stock, (b) Restricted Subsidiaries may declare and pay dividends and
distributions ratably with respect to their common stock, and (c) the Borrower
may make regularly scheduled payments of principal of and interest on
Subordinated Indebtedness as and when due, subject to the subordination
provisions thereof.
SECTION 6.07. Transactions with Affiliates. The Borrower will not,
-----------------------------
nor will it permit any Restricted Subsidiary to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Unrestricted Subsidiaries or other Affiliates, except (a) transactions
that are at prices and on terms and conditions not less favorable to the
Borrower or such Restricted Subsidiary than could be obtained on an arm's-length
basis from unrelated third parties, (b) transactions between or among the
Borrower and its wholly owned Restricted Subsidiaries not involving any other
Affiliate, (c) any Restricted Payment permitted by Section 6.06, (d)
transactions expressly contemplated by the Intercompany Agreements that are
conducted in accordance with the terms of the Intercompany Agreements and (e)
purchases by the Borrower from any Affiliate of equipment and services for the
Network at prices not exceeding the applicable Affiliate's cost therefor.
SECTION 6.08. Restrictive Agreements. The Borrower will not, and
-----------------------
will not permit any Restricted Subsidiary to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon the ability of any Restricted
Subsidiary to pay dividends or other distributions with respect to any shares of
its capital stock or to make or repay loans or advances to the Borrower or to
Guarantee Indebtedness of the Borrower; provided that (a) the foregoing shall
--------
not apply to restrictions and conditions imposed by law or by any Loan Document
and (b) the foregoing shall not apply to restrictions and conditions existing on
the date hereof identified on Schedule 6.08 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition).
SECTION 6.09. Repayment of Indebtedness. The Borrower will not, nor
--------------------------
will it permit any Restricted Subsidiary to, make any Repayment in respect of,
or make any payment in violation of any subordination terms of, any Indebtedness
of the Borrower or any Restricted Subsidiary
<PAGE>
78
except (a) any Repayment of Indebtedness resulting in a prepayment of Loans and
Deferred Interest pursuant to Section 2.09(e) and (b) Repayments described in
any of the clauses of the proviso to Section 2.09(e).
SECTION 6.10. Intercompany Agreements. The Borrower will not, nor
------------------------
will it permit any Restricted Subsidiary to, enter into any material agreement
or arrangement after the date hereof that would constitute an Intercompany
Agreement without the prior written approval of the Required Lenders.
SECTION 6.11. Limitation on Sale-Leaseback Transactions. The
-----------------------------------------
Borrower will not, nor will it permit any Restricted Subsidiary to, enter into
any arrangement, directly or indirectly, whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the
property sold or transferred, except for any such sale of any fixed or capital
asset that is made for cash consideration in an amount not less than the cost of
such fixed or capital asset and is consummated within 90 days after the Borrower
or such Restricted Subsidiary acquires or completes the construction of such
fixed or capital asset.
SECTION 6.12. Restricted Subsidiaries. The Borrower will not permit
------------------------
any substantial part of the assets (other than FCC Licenses owned by License
Subsidiaries) and operations of the Borrower and the Restricted Subsidiaries
taken as a whole to be owned or conducted by the Restricted Subsidiaries taken
as a whole. Without limiting the generality of the foregoing, the Borrower will
not:
(a) sell, transfer, lease or otherwise dispose of any asset
constituting Collateral to any Restricted Subsidiary;
(b) permit the consolidated assets (excluding FCC Licenses owned by
License Subsidiaries) of the Restricted Subsidiaries (determined in accordance
with GAAP) at any time to exceed 15% of the consolidated assets of the Borrower
and the Restricted Subsidiaries (determined in accordance with GAAP) at such
time;
(c) permit the consolidated operating revenues of the Restricted
Subsidiaries for any fiscal quarter of the Borrower to exceed 15% of the
consolidated operating
<PAGE>
79
revenues of the Borrower and the Restricted Subsidiaries for such fiscal
quarter;
(d) permit any Restricted Subsidiary to Guarantee any Indebtedness or
other obligation of the Borrower; or
(e) permit the aggregate principal amount of Indebtedness of the
Restricted Subsidiaries outstanding at any time (excluding Indebtedness owed to
the Borrower or to a Restricted Subsidiary and otherwise determined on a
consolidated basis in accordance with GAAP) to exceed $20,000,000.
SECTION 6.13. FCC Licenses and License Subsidiaries. The Borrower
--------------------------------------
will not permit any FCC License to be owned or acquired by any Person other than
the Borrower or a Restricted Subsidiary that (a) is wholly owned directly by the
Borrower, (b) does not engage in any business or activity other than the
ownership of one or more FCC Licenses and activities incidental thereto, (c)
does not own or acquire any assets other than one or more FCC Licenses, cash and
Permitted Investments and (d) does not have or incur any Indebtedness or other
liabilities other than liabilities imposed by law, including tax liabilities,
and other liabilities incidental to its existence and permitted business and
activities (any Restricted Subsidiary satisfying the foregoing requirements, a
"License Subsidiary"); provided that, to the extent the Borrower is advised by
- ------------------- --------
counsel that, in order to preserve the tax status of any tax-free reorganization
involving any Restricted Subsidiary (a "Tax-Free Merger Sub"), any FCC License
-------------------
cannot be held by the Borrower or a License Subsidiary, such FCC License shall
be held by such Tax-Free Merger Sub until such time as such FCC License may be
transferred to the Borrower or a License Subsidiary without adverse tax
consequences to the Borrower or the other parties to the transaction pursuant to
which such Tax-Free Merger Sub became a Subsidiary of the Borrower.
SECTION 6.14. ERISA. The Borrower will not permit the present value
------
of all accumulated benefit obligations under any Plan (based on the assumptions
used for purposes of Statement of Financial Accounting Standards No. 87) to
exceed the fair market value of the assets of such Plan.
SECTION 6.15. Secured Indebtedness to Total Capitalization. The
---------------------------------------------
Borrower will not permit the ratio of Secured Indebtedness to Total
Capitalization as of the last day of any fiscal quarter ending after the Tranche
A Full Availability Date to be more than .45 to 1.00.
<PAGE>
80
SECTION 6.16. Total Indebtedness to Total Capitalization. The
-------------------------------------------
Borrower will not permit the ratio of Total Indebtedness to Total Capitalization
as of the last day of any fiscal quarter ending after the Tranche A Full
Availability Date to be more than .75 to 1.00.
SECTION 6.17. Senior Indebtedness to Consolidated EBITDA. The
-------------------------------------------
Borrower will not permit the ratio of (a) Senior Indebtedness as of the last day
of any fiscal quarter ending on any date during any period set forth below to
(b) 200% of Consolidated EBITDA for the period of two consecutive fiscal
quarters of the Borrower ending on such day to be greater than the ratio set
forth below opposite such date:
<TABLE>
<CAPTION>
Date Ratio
- ----- -----
<S> <C>
December 31, 2001; 10.0 to 1.0
March 31, 2002;
June 30, 2002; and
September 30, 2002
December 31, 2002; 6.5 to 1.0
March 31, 2003;
June 30, 2003; and
September 30, 2003
December 31, 2003; 3.5 to 1.0
March 31, 2004;
June 30, 2004; and
September 30, 2004
December 31, 2004; 2.5 to 1.0
March 31, 2005;
June 30, 2005; and
September 30, 2005
December 31, 2005 and 2.0 to 1.0
thereafter
</TABLE>
SECTION 6.18. Total Indebtedness to Consolidated EBITDA. The
------------------------------------------
Borrower will not permit the ratio of (a) Total Indebtedness as of the last day
of any fiscal quarter ending on any date during any period set forth below to
(b) 200% of Consolidated EBITDA for the period of two consecutive fiscal
<PAGE>
81
quarters of the Borrower ending on such day to be greater than the ratio set
forth below opposite such date:
<TABLE>
<CAPTION>
Date Ratio
- ---- -----
<S> <C>
December 31, 2001; 15.0 to 1.0
March 31, 2002;
June 30, 2002; and
September 30, 2002
December 31, 2002; 10.0 to 1.0
March 31, 2003;
June 30, 2003; and
September 30, 2003
December 31, 2003; 5.0 to 1.0
March 31, 2004;
June 30, 2004; and
September 30, 2004
December 31, 2004 and 4.0 to 1.0
thereafter
</TABLE>
SECTION 6.19. Consolidated EBITDA to Consolidated Debt Service. The
-------------------------------------------------
Borrower will not permit the ratio of (a) 200% of Consolidated EBITDA for the
period of two consecutive fiscal quarters of the Borrower ending on any date
during any period set forth below to (b) Consolidated Debt Service for the
period of four consecutive fiscal quarters of the Borrower ending on such date
to be less than the ratio set forth below opposite such date:
Date Ratio
- ---- -----
September 30, 2001; 0.50 to 1.00
December 31, 2001; and
March 31, 2002
June 30, 2002; 0.75 to 1.00
September 30, 2002; and
December 31, 2002
March 31, 2003; 1.00 to 1.00
June 30, 2003;
September 30, 2003; and
December 31, 2003
March 31, 2004;
June 30, 2004; 1.05 to 1.00
September 30, 2004; and
December 31, 2004
<PAGE>
82
March 31, 2005; 1.15 to 1.00
June 30, 2005;
September 30, 2005; and
December 31, 2005
March 31, 2006 and 1.25 to 1.00
thereafter
SECTION 6.20. Consolidated EBITDA to Consolidated Cash Interest
-------------------------------------------------
Expense. The Borrower will not permit the ratio of (a) 200% of Consolidated
- --------
EBITDA for the period of two consecutive fiscal quarters of the Borrower ending
on any date during any period set forth below to (b) Consolidated Cash Interest
Expense for the period of four consecutive fiscal quarters of the Borrower
ending on such date to be less than the ratio set forth below opposite such
date:
Date Ratio
- ---- -----
September 30, 2001; 0.5 to 1.0
December 31, 2001; and
March 31, 2002
June 30, 2002; 1.0 to 1.0
September 30, 2002; and
December 31, 2002
March 31, 2003; 2.0 to 1.0
June 30, 2003;
September 30, 2003; and
December 31, 2003
March 31, 2004 and 2.5 to 1.0
thereafter
SECTION 6.21. Minimum Revenues. The Borrower will not permit the
-----------------
consolidated revenue of the Borrower and the Restricted Subsidiaries for any
fiscal quarter ending on a date listed below to be less than the amount listed
opposite such date:
Date Amount
---- ------
September 30, 1998 $ 3,900
December 31, 1998 83,700
March 31, 1999 335,300
June 30, 1999 718,500
September 30, 1999 2,957,300
December 31, 1999 5,710,600
March 31, 2000 10,047,000
June 30, 2000 15,962,500
<PAGE>
83
<TABLE>
<S> <C>
September 30, 2000 28,450,800
December 31, 2000 39,436,700
</TABLE>
SECTION 6.22. Minimum Buildings on Network. The Borrower will not
-----------------------------
permit the number of buildings connected to the Network (i.e. buildings for
----
which the Borrower or a Restricted Subsidiary possesses roof rights, has
installed equipment and is capable of transmitting to a hub site) as of any date
listed below to be less than the number listed opposite such date:
<TABLE>
<CAPTION>
Date Number
---- ------
<S> <C>
September 30, 1998 14
December 31, 1998 81
March 31, 1999 142
June 30, 1999 190
</TABLE>
SECTION 6.23. Minimum Customers. The Borrower will not permit the
------------------
number of customers of the Borrower and its Restricted Subsidiaries (treating
each office location of a Person purchasing services from the Borrower as a
separate customer to the extent such office locations are in separate buildings)
as of any date listed below to be less than the number listed opposite such
date:
<TABLE>
<CAPTION>
Date Number
---- ------
<S> <C>
September 30, 1998 16
December 31, 1998 116
March 31, 1999 342
June 30, 1999 620
</TABLE>
ARTICLE VII
Events of Default
-----------------
If any of the following events ("Events of Default") shall occur:
-----------------
(a) the Borrower shall fail to pay any principal of or Deferred
Interest on any Loan when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment thereof
or otherwise;
(b) the Borrower shall fail to pay any interest (other than Deferred
Interest) on any Loan or any fee or any other amount (other than an amount
referred to in clause (a) of this Article) payable under this Agreement,
when and as the same shall become due and
<PAGE>
84
payable, and such failure shall continue unremedied for a period of three
Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of any Loan Party in or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or
in connection with any Loan Document or any amendment or modification
thereof or waiver thereunder, shall prove to have been incorrect in any
respect (or, in the case of any representation or warranty that is not
qualified as to materiality, in any material respect) when made or deemed
made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.04 (with respect to the
existence of the Borrower) or 5.10 or in Article VI;
(e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof from
the Administrative Agent to the Borrower (which notice will be given at the
request of any Lender);
(f) any Loan Party shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable and such
failure shall continue for more than any expressly applicable period of
grace with respect thereto (without giving effect to any waiver, consent or
amendment for which any Loan Party gave any consideration or benefit of any
kind (including any increased compensation, prepayment, shortening of
maturities, security or other credit support) during the continuation of
such failure or within 30 days before such failure would otherwise have
occurred);
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (or would enable or permit, but for a waiver, consent or
amendment for which any Loan Party gave any consideration or benefit of any
kind (including any increased compensation, prepayment, shortening of
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85
maturities, security or other credit support) during the continuation of
such event or condition or within 30 days before such event or condition
would otherwise have occurred) the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause any
Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to secured
--------
Indebtedness that becomes due as a result of the voluntary sale or transfer
of the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of any Loan Party or its debts, or of a substantial part
of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Loan Party or for a substantial part of its
assets, and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered;
(i) any Loan Party shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under
any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Loan Party or for a substantial
part of its assets, (iv) file an answer admitting the material allegations
of a petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) any Loan Party shall become unable, admit in writing its inability
or fail generally to pay its debts as they become due;
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86
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000 shall be rendered against any Loan Party or
any combination thereof and the same shall remain undischarged for a period
of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to
attach or levy upon any assets of any Loan Party to enforce any such
judgment;
(l) any Lien purported to be created under the Security Agreement
shall cease to be, or shall be asserted by the Borrower not to be, a valid
and perfected Lien on any Collateral, with the priority required by the
Security Agreement, except (i) as a result of the sale or other disposition
of the applicable Collateral in a transaction permitted under the Loan
Documents or (ii) with respect to Collateral with an aggregate Collateral
Cost not exceeding the lesser of $5,000,000 and 5% of the Collateral Cost
of all Collateral at the time;
(m) a Change in Control shall occur;
(n) the loss, revocation, suspension or material impairment of any
material FCC License shall occur; or
(o) an "Event of Default" (as defined in the Working Capital Credit
Agreement) shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
(including Deferred Interest) thereon and all fees and other obligations of the
Borrower accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; and in case of any event with respect to the
Borrower described in clause (h) or (i) of this Article, the Commitments shall
automatically terminate and the principal
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87
of the Loans then outstanding, together with accrued interest (including
Deferred Interest) thereon and all fees and other obligations of the Borrower
accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
ARTICLE VIII
The Agents
----------
Each of the Lenders hereby irrevocably appoints each Agent as its
agent and authorizes each Agent to take such actions on its behalf and to
exercise such powers as are delegated to such Agent by the terms of the Loan
Documents, together with such actions and powers as are reasonably incidental
thereto.
Any Person serving as an Agent hereunder shall have the same rights
and powers in its capacity as a Lender as any other Lender and may exercise the
same as though it were not an Agent, and such Person and its Affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with the Borrower or any Subsidiary or other Affiliate thereof as if it were not
an Agent hereunder.
Neither Agent shall have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) neither Agent shall be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(b) neither Agent shall have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that such Agent is required to
exercise in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 9.02), and (c) except as expressly set forth in the Loan Documents,
neither Agent shall have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
Subsidiaries that is communicated to or obtained by the Person serving as Agent
or any of its Affiliates in any capacity. Neither Agent shall be liable for any
action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02) or in the absence
of its own
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88
gross negligence or wilful misconduct. Each Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to
such Agent by the Borrower or a Lender, and neither Agent shall be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered thereunder or in
connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to such Agent.
Each Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. Each Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
Each Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by such Agent.
Each Agent and any such sub-agent may perform any and all its duties and
exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding paragraphs shall apply to any such sub-
agent and to the Related Parties of each Agent and any such sub-agent, and shall
apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as Agent.
Subject to the appointment and acceptance of a successor Agent as
provided in this paragraph, an Agent may resign at any time by notifying the
Lenders and the Borrower. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor. If no successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within
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89
30 days after the retiring Agent gives notice of its resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. Upon the acceptance of its appointment as Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After an Agent's resignation hereunder, the provisions of this
Article and Section 9.03 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while it was acting
as Agent.
Each Lender acknowledges that it has, independently and without
reliance upon either Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon either Agent or any other Lender
and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or related agreement
or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Notices. Except in the case of notices and other
--------
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 500-108th Avenue N.E., Suite 2600,
Bellevue, Washington 98004, Attention of General Counsel (Telecopy No.
(425) 990-1642), with a copy of any notice of a Default to Ropes & Gray,
One International Place, Boston, Massachusetts 02110,
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90
Attention of Mary E. Weber, Esq. (Telecopy No. (617) 951-7050);
(b) if to the Collateral Agent, to it at Two International Place,
Boston, Massachusetts 02110, Attention of Corporate Trust Division
(Telecopy No. (617) 664-5371); and
(b) if to the Administrative Agent, to it at 283 King George Road,
Warren, New Jersey 07059, Attention of Assistant Treasurer-Project Finance
(Telecopy No. (908) 559-1711); and
(c) if to Lucent, to it at 283 King George Road, Warren, New Jersey
07059, Attention of Assistant Treasurer-Project Finance (Telecopy No. (908)
559-1711); and
(d) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by
--------------------
either Agent or any Lender in exercising any right or power hereunder or under
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Agents and the Lenders hereunder and under the other
Loan Documents are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provision of any Loan Document
or consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether an Agent or any Lender may have had notice or
knowledge of such Default at the time.
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91
(b) Neither this Agreement nor the Security Agreement nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or, in the case of the
Security Agreement, pursuant to an agreement or agreements in writing entered
into by the Collateral Agent and the Borrower with the consent of the Required
Lenders; provided that no such agreement shall (i) increase the Commitment of
--------
any Lender without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or the amount of Deferred Interest thereon or reduce the rate
of interest on such Loan or Deferred Interest, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan or
any interest (including Deferred Interest) thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.16(b) or (c) in a
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) change any of the provisions of
this Section or the definition of "Required Lenders" or any other provision of
any Loan Document specifying the number or percentage of Lenders required to
waive, amend or modify any rights thereunder or make any determination or grant
any consent thereunder, without the written consent of each Lender, (vi) release
all or any substantial part of the Collateral from the Lien of the Security
Agreement (except as expressly provided in the Security Agreement), without the
written consent of each Lender, or (vii) change any provisions of any Loan
Document in a manner that by its terms adversely affects the rights in respect
of payments due to Lenders holding Loans of any Class differently than those
holding Loans of any other Class, without the written consent of Lenders holding
a majority in interest of the outstanding Loans, Deferred Interest thereon and
Commitments of each affected Class (in addition to any other consents required
by this sentence); provided further that no such agreement shall amend, modify
----------------
or otherwise affect the rights or duties of either Agent without the prior
written consent of such Agent.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
-----------------------------------
shall pay (i) all reasonable costs and expenses incurred by Lucent and each
Agent, including the reasonable fees, charges and disbursements of counsel for
Lucent or the Agents, in connection with the preparation, execution and delivery
of the Loan Documents (including, in
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92
the case of Lucent, the Commitment Letter dated April 27, 1998, between Lucent
and the Borrower, and the Bridge Note); provided that (A) the fees of Cravath,
--------
Swaine & Moore shall be subject to the limitations set forth in the letter from
Cravath, Swaine & Moore dated April 22, 1998, and (B) the payment of such costs
and expenses shall not be required prior to the earlier of the Effective Date
and the Effective Date (as defined in the Working Capital Credit Agreement) and
(ii) all reasonable costs and expenses incurred by either Agent or any Lender,
including the reasonable fees, charges and disbursements of any counsel for
either Agent or any Lender, in connection with (A) the enforcement or protection
of its rights in connection with the Loan Documents, including its rights under
this Section, or in connection with the Loans made hereunder, including all such
costs and expenses incurred during any workout, restructuring or negotiations in
respect of such Loans, and (B) in the case of Lucent and the Agents, the
administration of, and any amendments, modifications, waivers or supplements of
or to the provisions of, any of the Loan Documents.
(b) The Borrower shall indemnify each Agent and each Lender, and each
Related Party of any of the foregoing Persons (each such Person being called an
"Indemnitee") against, and hold each Indemnitee harmless from, any and all
----------
losses, claims, damages, liabilities and related expenses, including the fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of any Loan Document or any other
agreement or instrument contemplated hereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or the use of the proceeds therefrom, (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned or
operated by the Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries, or (iv)
any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether any Indemnitee is a party thereto; provided
--------
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses have resulted
from the gross negligence or wilful misconduct of such Indemnitee.
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93
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to either Agent under paragraph (a) or (b) of this Section,
each Lender severally agrees to pay to such Agent such Lender's pro rata share
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense
--------
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against such Agent in its capacity as such.
For purposes hereof, a Lender's "pro rata share" shall be determined based upon
its share of the sum of the total outstanding Loans, Deferred Interest and
Commitments at the time.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable not later
than 30 days after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
-----------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Agents and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.
(b) Subject to Section 9.04(h), any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans and Deferred
Interest at the time owing to it); provided that (i) in the case of an
--------
assignment that is not a Permitted Assignment, the Borrower must give its prior
written consent to such assignment (which consent shall not be unreasonably
withheld
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94
or delayed), (ii) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment, Loans and Deferred Interest of any Class, the
amount of the Commitment, Loans and Deferred Interest of such Class of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $10,000,000 unless the Borrower
otherwise consents, (iii) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and obligations
under this Agreement, except that this clause (iii) shall not be construed to
prohibit the assignment of a proportionate part of all of the assigning Lender's
rights and obligations in respect of (A) one or more Classes of Commitments,
Loans and Deferred Interest, (B) one or more Classes of Loans and Deferred
Interest separately from (or without assigning) Commitments or (C) one or more
Classes of Commitments separately from (or without assigning) Loans or Deferred
Interest, (iv) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, and (v) the assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire; provided further that any consent of the Borrower
----------------
otherwise required under this paragraph shall not be required if an Event of
Default under clause (h) or (i) of Article VII has occurred and is continuing.
Subject to acceptance and recording thereof pursuant to paragraph (d) of this
Section, from and after the effective date specified in each Assignment and
Acceptance the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.13,
2.14, 2.15 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e) of
this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one
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95
of its offices a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of the Loans and amount of Deferred
Interest owing to, each Lender pursuant to the terms hereof from time to time
(the "Register"). The entries in the Register shall be conclusive, and the
--------
Borrower, the Agents and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder) and any written consent to such assignment required by paragraph (b)
of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
-----------
under this Agreement (including all or a portion of its Commitments and the
Loans and Deferred Interest owing to it); provided that (i) such Lender's
--------
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Agents and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce the Loan Documents and
to approve any amendment, modification or waiver of any provision of the Loan
Documents; provided that such agreement or instrument may provide that such
--------
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. Subject to paragraph (f) of this Section, the
Borrower agrees that each Participant shall be entitled to the
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96
benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.16(c) as though it were a
Lender.
(f) A Participant that would be a Foreign Lender if it were a Lender
shall not be entitled to the benefits of Section 2.15 unless the Borrower is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as
though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
--------
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
(h) Notwithstanding the foregoing, Lucent hereby agrees that it will
not assign or sell a participation in (other than to any Affiliate of Lucent
that agrees to be bound by this paragraph) any of its rights as a Lender until
the earlier of (i) the date that is 18 months after the Effective Date and (ii)
the date on which Loans having an aggregate principal amount of $200,000,000
have been borrowed by the Borrower hereunder.
SECTION 9.05. Survival. All covenants, agreements, representations
---------
and warranties made by the Borrower in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that either Agent or any Lender may have had notice or knowledge of any Default
or incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid and so long as the
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97
Commitments have not expired or terminated. The provisions of Sections 2.13,
2.14, 2.15 and 9.03 and Article VIII shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans, the expiration or termination of the Commitments or
the termination of this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
-----------------------------------------
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and any separate letter agreements with respect to the
Borrower's agreement to cooperate with Lucent with respect to marketing, selling
or syndicating Loans and Commitments or with respect to fees payable to Lucent
or either Agent constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to
-------------
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
----------------
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender
<PAGE>
98
or Affiliate to or for the credit or the account of the Borrower against any of
and all the obligations of the Borrower now or hereafter existing under this
Agreement held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement and although such obligations may be
unmatured. The rights of each Lender under this Section are in addition to other
rights and remedies (including other rights of setoff) which such Lender may
have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
--------------------------------------------------
Process. (a) This Agreement shall be construed in accordance with and governed
- --------
by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to any
Loan Document, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement or any other Loan Document shall affect any right that either Agent or
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against the Borrower or its properties in
the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for
<PAGE>
99
notices in Section 9.01. Nothing in this Agreement or any other Loan Document
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
---------------------
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table
---------
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Agents and the Lenders
----------------
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement, (g) with
the consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to either Agent or any Lender on a nonconfidential basis from
a source
<PAGE>
100
other than the Borrower. For the purposes of this Section, "Information" means
-----------
all information received from the Borrower relating to the Borrower or its
business, other than any such information that is publicly available or
available to either Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower. Any Person required to maintain the confidentiality
of Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything
-------------------------
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
-------
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
------------
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon
<PAGE>
101
at the Federal Funds Effective Rate to the date of repayment, shall have been
received by such Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
ADVANCED RADIO TELECOM CORP.,
by
---------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, as Collateral
Agent,
by
---------------------------------
Name:
Title:
LUCENT TECHNOLOGIES INC., individually and as
Administrative Agent,
by
---------------------------------
Name:
Title:
<PAGE>
Schedule 2.01
TRANCHE A COMMITMENTS
---------------------
<TABLE>
<CAPTION>
Lender Tranche A Commitment
- ------ --------------------
Amount
------
<S> <C>
Lucent Technologies Inc. $200,000,000
</TABLE>
<PAGE>
Schedule 9.04
CERTAIN PERMITTED ASSIGNEES
---------------------------
ABN AMRO Bank, N.V.
Bank One, N.A.
Bank of America National Trust & Savings Association
Bank of Hawaii
The Bank of New York
Bank of Tokyo-Mitsubishi Trust Company
BankBoston, N.A.
Banque Nationale de Paris
Banque Paribas
Barclays Bank
Bayerische Vereinsbank AG
The Chase Manhattan Bank
Citibank, N.A.
Credit Suisse
Deutsche Bank AG
The Dai-ichi Kangyo Bank Ltd.
Dresdner Bank AG
First National Bank of Chicago
First Union National Bank
Fleet National Bank
The Fuji Bank Limited
General Electric Capital Corporation
Hong Kong & Shanghai Bank
Industrial Bank of Japan
ING Bank N.V.
Mellon Bank, N.A.
Morgan Guaranty Trust Company of New York
NationsBank, N.A.
NBD Bank
NewCourt Capital Corporation
The Northern Trust Company
PNC Bank, National Association
Royal Bank of Canada
Sakura
The Sanwa Bank Limited
Scotia Bank
Societe Generale
The Sumitomo Trust & Banking Co., Ltd.
Summit Bank
Swiss Bank Corporation
The Tokai Bank, Limited
Toronto Dominion Bank
The Toyo Trust and Banking Co., Ltd.
Union Bank of Switzerland
Wachovia Bank, N.A.
Wells Fargo Bank
Westdeusche Landesbank
Yasuda
<PAGE>
EXHIBIT 10.6
================================================================================
WORKING CAPITAL CREDIT AGREEMENT
dated as of
September 17, 1998
among
ADVANCED RADIO TELECOM CORP.,
The Lenders Party Hereto,
and
LUCENT TECHNOLOGIES INC.,
as Administrative Agent
================================================================================
[Reference No. 7725-029]
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
----------
<S> <C>
SECTION 1.01. Defined Terms............................................ 1
SECTION 1.02. Classification of Loans and
Borrowings........................................... 20
SECTION 1.03. Terms Generally.......................................... 20
SECTION 1.04. Accounting Terms; GAAP................................... 21
ARTICLE II
The Loans
---------
SECTION 2.01. Commitments.............................................. 21
SECTION 2.02. Loans and Borrowings..................................... 21
SECTION 2.03. Requests for Borrowings.................................. 22
SECTION 2.04. Funding of Borrowings.................................... 23
SECTION 2.05. Interest Elections....................................... 24
SECTION 2.06. Termination and Reduction of Commitments................. 26
SECTION 2.07. Repayment of Loans; Evidence of Debt..................... 26
SECTION 2.08. Prepayment of Loans...................................... 27
SECTION 2.09. Interest; Warrants....................................... 28
SECTION 2.10. Alternate Rate of Interest............................... 30
SECTION 2.11. Increased Costs.......................................... 30
SECTION 2.12. Break Funding Payments................................... 32
SECTION 2.13. Taxes.................................................... 32
SECTION 2.14. Payments Generally; Pro Rata Treatment; Sharing of
Set-Offs............................................. 33
SECTION 2.15. Mitigation Obligations; Replacement
of Lenders........................................... 35
SECTION 2.16. Extension of Maturity Date............................... 36
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE III
Representations and Warranties
------------------------------
<S> <C>
SECTION 3.01. Organization; Powers..................................... 37
SECTION 3.02. Authorization; Enforceability............................ 37
SECTION 3.03. Governmental Approvals; No Conflicts..................... 37
SECTION 3.04. Financial Condition; No Material
Adverse Change...................................... 38
SECTION 3.05. Properties and Licenses.................................. 38
SECTION 3.06. Litigation and Environmental Matters..................... 39
SECTION 3.07. Compliance with Laws and Agreements...................... 39
SECTION 3.08. Investment and Holding Company Status.................... 40
SECTION 3.09. Taxes.................................................... 40
SECTION 3.10. ERISA.................................................... 40
SECTION 3.11. Disclosure............................................... 40
SECTION 3.12. Subsidiaries............................................. 40
SECTION 3.13. Insurance................................................ 41
SECTION 3.14. Labor Matters............................................ 41
SECTION 3.15. Purchase Agreement....................................... 41
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date........................................... 41
SECTION 4.02. Each Borrowing........................................... 44
ARTICLE V
Affirmative Covenants
----------------------
SECTION 5.01. Financial Statements and Other Information 45
SECTION 5.02. Notices of Material Events................................ 47
SECTION 5.03. Existence; Conduct of Business........................... 47
SECTION 5.04. Payment of Obligations................................... 47
SECTION 5.05. Maintenance of Properties................................ 48
SECTION 5.06. Insurance................................................ 48
SECTION 5.07. Books and Records; Inspection Rights..................... 48
SECTION 5.08. Compliance with Laws and Agreements...................... 48
SECTION 5.09. Use of Proceeds.......................................... 49
SECTION 5.10 FCC Licenses............................................. 49
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE VI
Negative Covenants
------------------
<S> <C>
SECTION 6.01. Indebtedness............................................... 49
SECTION 6.02. Liens...................................................... 50
SECTION 6.03. Fundamental Changes........................................ 52
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions;
Asset Sales.............................................. 53
SECTION 6.05. Hedging Agreements......................................... 55
SECTION 6.06. Restricted Payments........................................ 55
SECTION 6.07. Transactions with Affiliates............................... 56
SECTION 6.08. Restrictive Agreements..................................... 56
SECTION 6.09. Repayment of Indebtedness.................................. 56
SECTION 6.10. Intercompany Agreements.................................... 57
SECTION 6.11. Limitation on Sale-Leaseback Transactions.................. 57
SECTION 6.12. Restricted Subsidiaries.................................... 57
SECTION 6.13. FCC Licenses and License Subsidiaries...................... 58
SECTION 6.14. ERISA...................................................... 58
SECTION 6.15. Minimum Revenues........................................... 59
SECTION 6.16. Minimum Customers.......................................... 59
ARTICLE VII
Events of Default
-----------------
Events of Default.............................................................. 60
ARTICLE VIII
The Administrative Agent
------------------------
The Administrative Agent....................................................... 63
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Notices.................................................... 65
SECTION 9.02. Waivers; Amendments........................................ 66
SECTION 9.03. Expenses; Indemnity; Damage Waiver......................... 67
SECTION 9.04. Successors and Assigns..................................... 69
SECTION 9.05. Survival................................................... 70
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 9.06. Counterparts; Integration; Effectiveness................. 71
SECTION 9.07. Severability............................................. 71
SECTION 9.08. Right of Setoff.......................................... 71
SECTION 9.09. Governing Law; Jurisdiction; Consent
to Service of Process................................. 71
SECTION 9.10. WAIVER OF JURY TRIAL..................................... 72
SECTION 9.11. Headings................................................. 73
SECTION 9.12. Confidentiality.......................................... 73
SECTION 9.13. Interest Rate Limitation................................. 76
SCHEDULES:
- ---------
Schedule 2.01 -- Commitments
Schedule 3.05 -- Licenses
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.04 -- Permitted Asset Sales
Schedule 6.08 -- Existing Restrictions
EXHIBITS:
- --------
Exhibit A-1 -- Form of Opinion of Ropes & Gray
Exhibit A-2 -- Form of Opinion of Wiley, Rein & Fielding
Exhibit A-3 -- Form of Opinion of Cravath, Swaine & Moore
Exhibit B -- Form of Fair Market Warrant
Exhibit C -- Form of Penny Warrant
</TABLE>
<PAGE>
WORKING CAPITAL CREDIT AGREEMENT dated as of September 17,
1998, among ADVANCED RADIO TELECOM CORP., a Delaware corporation,
the LENDERS party hereto and LUCENT TECHNOLOGIES INC., as
Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.01. Defined Terms. As used in this Agreement, the
--------------
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
---
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Adjusted Consolidated Net Tangible Assets" means the total amount of
-----------------------------------------
assets of the Borrower and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), except to the extent
resulting from write-ups of capital assets (excluding write-ups in connection
with accounting for acquisitions in accordance with GAAP), after deducting
therefrom (a) all current liabilities of the Borrower and its Restricted
Subsidiaries (excluding intercompany items) and (b) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles (other than FCC Licenses), all as set forth on the quarterly or
annual consolidated balance sheet of the Borrower and its Restricted
Subsidiaries, prepared in accordance with GAAP and most recently delivered to
the Lenders pursuant to Section 5.01(a) or (b); provided that the value of any
--------
FCC Licenses shall, in the event of an auction for similar licenses, be equal to
the fair market value ascribed thereto in good faith by the Board of Directors
of the Borrower and evidenced by a resolution of such board.
"Adjusted LIBO Rate" means, with respect to any LIBOR Borrowing for
------------------
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means Lucent, in its capacity as administrative
--------------------
agent for the Lenders hereunder.
<PAGE>
2
"Affiliate" means, with respect to a specified Person, another Person
---------
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum equal to
-------------------
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in a form
approved by the Administrative Agent.
"Availability Period" means the period from and including the
-------------------
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
"Board" means the Board of Governors of the Federal Reserve System of
-----
the United States of America.
"Borrower" means Advanced Radio Telecom Corp., a Delaware corporation.
--------
"Borrowing" means a Loan or group of Loans of the same Type, made,
---------
converted or continued on the same date and, in the case of LIBOR Loans, as to
which a single Interest Period is in effect.
"Borrowing Request" means a request by the Borrower for a Borrowing in
-----------------
accordance with Section 2.03.
"Bridge Note" means the promissory note dated June 10, 1998, issued by
-----------
the Borrower to Lucent.
"Business Day" means any day that is not a Saturday, Sunday or other
------------
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a LIBOR Loan, the
--------
term "Business Day" shall also exclude any day on which banks are not open for
------------
dealings in dollar deposits in the London interbank market.
<PAGE>
3
"Business Plan" means, for any fiscal year, the business plan of the
-------------
Borrower and the Restricted Subsidiaries for such fiscal year.
"Capital Lease Obligations" of any Person means the obligations of
-------------------------
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of ownership, directly
-----------------
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 35% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Borrower; or (b) occupation of a
majority of the seats (other than vacant seats) on the Board of Directors of the
Borrower by Persons who were neither (i) nominated by the Board of Directors of
the Borrower nor (ii) appointed by directors so nominated.
"Change in Law" means (a) the adoption of any law, rule or regulation
-------------
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 2.11(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time.
"Commitment" means, with respect to each Lender, the commitment, if
----------
any, of such Lender to make Loans hereunder during the Availability Period,
expressed as an amount representing the maximum principal amount of the Loans to
be made by such Lender hereunder, as such commitment may be (a) reduced from
time to time pursuant to Section 2.06 and (b) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to Section 9.04. The
initial amount of each Lender's Commitment is set forth on Schedule 2.01, or in
the
<PAGE>
4
Assignment and Acceptance pursuant to which such Lender shall have assumed
its Commitment, as applicable. The initial aggregate amount of the Lenders'
Commitments is $25,000,000.
"Control" means the possession, directly or indirectly, of the power
-------
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
----------- ----------
"Credit Exposure" means, with respect to any Lender at any time, the
---------------
sum of the outstanding principal amount of such Lender's Loans at such time.
"Default" means any event or condition which constitutes an Event of
-------
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
-----------------
environmental matters disclosed in Schedule 3.06.
"Disqualified Stock" means any capital stock of the Borrower which by
------------------
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable or exercisable) or upon the happening of any event (i)
matures or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified
Stock, (iii) requires the payment of dividends other than dividends payable
solely in additional shares of capital stock of the Borrower (other than
Disqualified Stock) or (iv) is redeemable or subject to required repurchase at
the option of the holder thereof, in whole or in part, in each case on or prior
to the second anniversary of the latest Maturity Date (as defined in the
Purchase Money Credit Agreement).
"dollars" or "$" refers to lawful money of the United States of
------- -
America.
"Effective Date" means the date on which the conditions specified in
--------------
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
------------------
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
<PAGE>
5
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
-----------------------
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
-----------
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
<PAGE>
6
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Event of Default" has the meaning assigned to such term in Article
----------------
VII.
"Excluded Taxes" means, with respect to the Administrative Agent, any
--------------
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.15(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 2.13(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.13(a).
"Fair Market Warrant" means a warrant to purchase shares of common
-------------------
stock of the Borrower, substantially in the form of Exhibit B. The initial
Exercise Price of each Fair Market Warrant on the date of issuance thereof shall
be $3.33 per share, subject to adjustment as provided in Section 2.09(g).
"FCC" means the Federal Communications Commission.
---
"FCC License" means any license granted by the FCC to the Borrower or
-----------
any Restricted Subsidiary.
"Federal Funds Effective Rate" means, for any day, the weighted
----------------------------
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day
<PAGE>
7
that is a Business Day, the average (rounded upwards, if necessary, to the next
1/100 of 1%) of the quotations for such day for such transactions received by
the Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"Financial Officer" means the chief financial officer, principal
-----------------
accounting officer, treasurer or controller of the Borrower.
"Foreign Lender" means any Lender that is organized under the laws of
--------------
a jurisdiction other than the United States of America, any State thereof or the
District of Columbia.
"Full Availability Date" means September 30, 1998.
----------------------
"GAAP" means, subject to Section 1.04(b), generally accepted
----
accounting principles in the United States of America.
"Governmental Authority" means the government of the United States of
----------------------
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
--------- ---------
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
---------------
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
--------
endorsements for collection or deposit in the ordinary course of business.
<PAGE>
8
"Hazardous Materials" means all explosive or radioactive substances
-------------------
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
-----------------
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
------------
obligations of such Person for borrowed money or with respect to advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to property acquired by such
Person, (d) all obligations of such Person in respect of the deferred purchase
price of property or services (excluding current accounts payable incurred in
the ordinary course of business), (e) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (f)
all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease
Obligations of such Person, (h) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty and (i) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
-----------------
"Initial Loan Limit" means $10,000,000.
------------------
"Intercompany Agreements" has the meaning set forth in paragraph (i)
-----------------------
of Section 4.01.
<PAGE>
9
"Interest Election Request" means a request by the Borrower to convert
-------------------------
or continue a Borrowing in accordance with Section 2.05.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
---------------------
last day of each March, June, September and December and (b) with respect to any
LIBOR Loan, the last day of the Interest Period applicable to the Borrowing of
which such Loan is a part and, in the case of a LIBOR Borrowing with an Interest
Period of more than three months' duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months' duration after
the first day of such Interest Period.
"Interest Period" means, with respect to any LIBOR Borrowing, the
---------------
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (a) if any Interest Period
--------
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.
"Lenders" means the Persons listed on Schedule 2.01 and any other
-------
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person (a) that ceases to be a party hereto
pursuant to an Assignment and Acceptance or (b) whose Commitments have
terminated and whose Loans, and all interest thereon, have been repaid.
"LIBOR", when used in reference to any Loan or Borrowing, refers to
-----
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
"LIBO Rate" means, with respect to any LIBOR Borrowing for any
---------
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or
<PAGE>
10
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided
on such page of such Service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period, as the rate for dollar deposits with a maturity comparable to
such Interest Period. In the event that such rate is not available at such time
for any reason, then the "LIBO Rate" with respect to such LIBOR Borrowing for
---------
such Interest Period shall be the rate at which dollar deposits of $5,000,000
and for a maturity comparable to such Interest Period are offered by the
principal London office of the Administrative Agent (or, if the Administrative
Agent at the time is not a commercial bank, any commercial bank based in New
York City selected by the Administrative Agent for the purpose of quoting such
rate, provided that such commercial bank has a combined capital and surplus and
undivided profits of not less than $500,000,000) in immediately available funds
in the London interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period.
"License Subsidiary" has the meaning assigned to such term in Section
------------------
6.13.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
----
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement, the Warrants and the
--------------
Registration Rights Agreement.
"Loan Parties" means the Borrower and the Restricted Subsidiaries.
------------
"Loans" means loans made by the Lenders pursuant to Section 2.01 of
-----
this Agreement.
"Lucent" means Lucent Technologies Inc.
------
<PAGE>
11
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, condition (financial or otherwise), operations, performance or
properties of the Borrower and the Restricted Subsidiaries taken as a whole, (b)
the ability of the Borrower to perform any of its material obligations under any
Loan Document or (c) the rights of or benefits available to the Lenders under
any Loan Document.
"Material Indebtedness" means Indebtedness (other than the Loans), or
---------------------
obligations in respect of one or more Hedging Agreements, of any one or more of
the Loan Parties in an aggregate principal amount exceeding $10,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of a Loan Party in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that such Loan Party would be required to pay if such Hedging Agreement were
terminated at such time.
"Maturity Date" means June 30, 1999, subject to extension pursuant to
-------------
Section 2.16.
"Moody's" means Moody's Investors Service, Inc.
-------
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any Prepayment Event (a) the
------------
cash proceeds received in respect of such event including any cash received in
respect of any non-cash proceeds, but only as and when received, net of (b) the
sum of (i) all fees and out-of-pocket expenses paid by the Borrower and the
Restricted Subsidiaries to third parties in connection with such event and (ii)
the amount of all taxes paid (or reasonably estimated to be payable) by the
Borrower and the Restricted Subsidiaries, and the amount of any reserves
established by the Borrower and the Restricted Subsidiaries to fund contingent
liabilities reasonably estimated to be payable, in each case during the year
that such event occurred or the next succeeding year and that are directly
attributable to such event (as determined reasonably and in good faith by the
chief financial officer of the Borrower).
"Net Working Capital" means, at any date, (a) the consolidated current
-------------------
assets of the Borrower and its Restricted Subsidiaries as of such date
(excluding cash and Permitted Investments) minus (b) the consolidated current
liabilities of the Borrower and its Restricted Subsidiaries as of such date
(excluding current liabilities in respect of
<PAGE>
12
Indebtedness), determined on a consolidated basis in accordance with GAAP. Net
Working Capital at any date may be a positive or negative number. Net Working
Capital increases when it becomes more positive or less negative and decreases
when it becomes less positive or more negative.
"Network" means (a) the nationwide, wireless, broadband data network
-------
contemplated to be purchased by the Borrower from Lucent pursuant to the
Purchase Agreement or (b) the portion thereof theretofore purchased by the
Borrower, as the context requires.
"Non-Recourse Debt" means Indebtedness (a) as to which neither the
-----------------
Borrower nor any of the Restricted Subsidiaries (i) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness) or (ii) is directly or indirectly liable (pursuant to a
Guarantee or otherwise); (b) no default with respect to which (including any
rights that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness (other than the Loans) of the Borrower or any
of the Restricted Subsidiaries to declare a default on such other Indebtedness
or cause the payment thereof to be accelerated or payable prior to its stated
maturity; and (c) as to which the lender or lenders of any indebtedness for
borrowed money in an aggregate amount in excess of $5,000,000 has been notified
in writing that such lender shall not have any recourse to the stock or assets
of the Borrower or any of the Restricted Subsidiaries.
"Other Debt" means (a) Indebtedness in respect of debt securities
----------
issued by the Borrower pursuant to a public offering registered with the
Securities and Exchange Commission or pursuant to a private placement made in
accordance with Rule 144A under the Securities Act of 1933 and in any event (i)
which are unsecured, (ii) which mature after the latest Maturity Date (as
defined in the Purchase Money Credit Agreement as in effect at the time of
issuance of such Indebtedness) established in respect of any loans provided for
in the Purchase Money Credit Agreement, (iii) which do not require any scheduled
repayments of principal prior to maturity, (iv) which are not Guaranteed by any
Subsidiary and (v) the other terms and conditions of which are customary market
terms for debt securities issued by companies of comparable credit quality in
the same market and (b) Indebtedness in respect of debt securities issued by the
Borrower pursuant to a private placement to institutional investors made in
reliance on Section 4(2) of the Securities Act of 1933, satisfying the
conditions set
<PAGE>
13
forth in clauses (a)(i) through (a)(iv) above and having other terms and
conditions which are reasonably satisfactory to the Required Lenders.
"Other Taxes" means any and all present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
----
defined in ERISA and any successor entity performing similar functions.
"Penny Warrant" means a warrant to purchase common stock of the
-------------
Borrower, substantially in the form of Exhibit C.
"Permitted Acquisition" means any acquisition of all or substantially
---------------------
all the assets of, or shares or other equity interests in, a Person or division
or line of business of a Person if, immediately after giving effect thereto, (a)
no Default has occurred and is continuing or would result therefrom, (b) all
transactions related thereto are consummated in accordance with applicable laws,
(c) in the case of an acquisition of shares or other equity interests in a
Person, such acquisition results in such Person being merged with and into the
Borrower or a wholly owned Restricted Subsidiary or becoming a wholly owned
Restricted Subsidiary of the Borrower, (d) the consideration for such
acquisition shall consist solely of common stock or Permitted Preferred Stock of
the Borrower, cash, Indebtedness of the Borrower or a Restricted Subsidiary, or
a combination of the foregoing, (e) after giving effect to such acquisition, the
aggregate amount of cash consideration paid in connection with all acquisitions
constituting "Permitted Acquisitions", plus the aggregate principal amount of
all Indebtedness issued as consideration in connection therewith and all
Indebtedness incurred, assumed or otherwise resulting from such acquisitions,
shall not exceed the sum of (i) $20,000,000 and (ii) the aggregate Net Proceeds
received by the Borrower from contributions of equity capital subsequent to the
date hereof, and (f) the Borrower has delivered to the Administrative Agent an
officer's certificate to the effect set forth in clauses (a) through (e) above,
together with all relevant financial information for the business or entity
being acquired.
"Permitted Assignment" means any assignment to Lucent or any Affiliate
--------------------
of Lucent.
<PAGE>
14
"Permitted Encumbrances" means:
----------------------
(a) Liens imposed by law for taxes, fees, assessments or other
governmental charges that are not yet due or are being contested in
compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 60 days or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII;
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any Restricted
Subsidiary; and
(g) bankers' rights of setoff and other like Liens imposed by law;
provided that the term "Permitted Encumbrances" shall not include any Lien
- --------
securing Indebtedness.
"Permitted Investments" means:
---------------------
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United
<PAGE>
15
States of America), in each case maturing within one year from the date of
acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within one year from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof which
has a combined capital and surplus and undivided profits of not less than
$500,000,000;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in clause
(c) above; and
(e) shares of any mutual fund the investment guidelines of which
restrict such fund's investments to those closely resembling the criteria
set forth in any one or more of clauses (a) through (d) above; provided
--------
such fund has total assets of not less than $1,000,000,000.
"Permitted Preferred Stock" means capital stock of the Borrower (other
-------------------------
than Disqualified Stock) of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of the Borrower,
over shares of capital stock of any other class of the Borrower.
"Person" means any natural person, corporation, limited liability
------
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
<PAGE>
16
"Prepayment Event" means:
----------------
(a) the issuance on or after the date hereof by the Borrower of any
equity securities, or the receipt by the Borrower of any capital
contribution, other than (i) the issuance of equity securities pursuant to
stock option, stock purchase and other similar plans for officers,
directors or employees of the Borrower or any Subsidiary and (ii) the
issuance of equity securities pursuant to the exercise of the Warrants and
any warrants or stock options outstanding on the date hereof; or
(b) the incurrence on or after the date hereof by the Borrower or any
Restricted Subsidiary of any Indebtedness described in clause (a), (b) or
(c) of the definition of "Indebtedness" and having a stated maturity more
than one year from the date of incurrence thereof, other than (i)
Indebtedness in respect of the Loans, (ii) Indebtedness incurred under the
Purchase Money Credit Agreement, (iii) Indebtedness owed to the Borrower or
a Subsidiary, (iv) Indebtedness to the extent such Indebtedness is incurred
to refinance other Indebtedness or (v) Indebtedness described in Section
6.01(d);
provided that the first $50,000,000 of Net Proceeds received in respect of
- --------
events described in clauses (a) and (b) above (combined) shall be deemed not to
be Net Proceeds of a "Prepayment Event".
"Prime Rate" means the rate of interest per annum published from time
----------
to time in the "Money Rates" column (or any successor column) of The Wall Street
Journal as the prime rate or, if such rate shall cease to be so published or is
not available for any reason, the rate of interest publicly announced from time
to time by any commercial bank based in New York City selected by the
Administrative Agent for the purpose of quoting such rate, provided such
commercial bank has a combined capital and surplus and undivided profits of not
less than $500,000,000. Each change in the Prime Rate shall be effective from
and including the date such change is published.
"Purchase Agreement" means the Purchase Agreement dated April 24,
------------------
1998, as amended and restated as of July 24, 1998, between Lucent and the
Borrower.
"Purchase Money Credit Agreement" means the Credit Agreement dated as
----
of the date hereof among the Borrower, the lenders party thereto and Lucent, as
Administrative
<PAGE>
17
Agent, including any Additional Loan Supplements (as defined therein).
"Register" has the meaning set forth in Section 9.04.
--------
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated as of August 26, 1998, between the Borrower and Lucent.
"Related Parties" means, with respect to any specified Person, such
---------------
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Repayment" means, in respect of any Indebtedness, the direct or
---------
indirect repayment, prepayment, redemption, purchase, acquisition, defeasance,
retirement or other satisfaction of the principal of such Indebtedness, in whole
or in part, whether optional or mandatory. "Repay" has a meaning correlative
-----
thereto.
"Required Lenders" means, at any time, Lenders having outstanding
----------------
Loans and Commitments representing more than 50% of the sum of the total
outstanding Loans and Commitments at such time.
"Restricted Payment" means (a) any dividend or other distribution
------------------
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of the Borrower or any Restricted Subsidiary, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancelation or termination of any shares of any class of capital
stock of the Borrower or any Restricted Subsidiary or any option, warrant or
other right to acquire any such shares of capital stock of the Borrower or any
Restricted Subsidiary or (b) any Repayment in respect of any Subordinated
Indebtedness.
"Restricted Subsidiary" means any Subsidiary that is not an
---------------------
Unrestricted Subsidiary.
"S&P" means Standard & Poor's.
---
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
----------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental
<PAGE>
18
reserves) expressed as a decimal established by the Board to which any
commercial banks subject to regulation by the Board are subject with respect to
the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D. LIBOR
Loans shall be deemed to constitute eurocurrency funding and to be subject to
such reserve requirements without benefit of or credit for proration, exemptions
or offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.
"Subordinated Indebtedness" means any Indebtedness of the Borrower
-------------------------
that is, by its terms, subordinated in right of payment to the payment of the
obligations of the Borrower hereunder.
"subsidiary" means, with respect to any Person (the "parent") at any
---------- ------
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
----------
"Taxes" means any and all present or future taxes, levies, imposts,
-----
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Telecommunications Assets" means all assets (including FCC Licenses
-------------------------
and assets consisting of subscribers), rights (contractual or otherwise) and
properties, whether tangible or intangible, used in connection with the business
of (i) providing voice, video or data communications services, (ii) creating,
developing, marketing or selling communications related equipment, software and
other devices or (iii) evaluating,
<PAGE>
19
participating in or pursuing any other activity or opportunity that is related
or incidental to those identified in clauses (i) or (ii).
"Transactions" means the execution, delivery and performance by the
------------
Borrower of the Loan Documents, the borrowing of Loans and the use of the
proceeds thereof.
"Type", when used in reference to any Loan or Borrowing, refers to
----
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Unrestricted Subsidiary" means any Subsidiary that is designated as
-----------------------
an Unrestricted Subsidiary by the Board of Directors of the Borrower (and any
subsidiary of an Unrestricted Subsidiary); provided that a Subsidiary shall not
--------
be an Unrestricted Subsidiary unless such Subsidiary and each of its
subsidiaries (a) has no Indebtedness other than Non-Recourse Debt; (b) is not
party to any agreement, contract, arrangement or understanding with the Borrower
or any Restricted Subsidiary unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Borrower or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Borrower; (c) is a Person with respect to which
neither the Borrower nor any Restricted Subsidiary has any direct or indirect
obligation (i) to subscribe for additional equity interests, except to the
extent that such obligation complies with Section 6.04, or (ii) to maintain or
preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; and (d) prior to the time such
Subsidiary is designated an Unrestricted Subsidiary, does not Guarantee or
otherwise directly or indirectly provide credit support for any Indebtedness of
the Borrower or any Restricted Subsidiary. Any such designation by the Board of
Directors of the Borrower shall be evidenced to the Administrative Agent by
filing with the Administrative Agent a certified copy of the resolution of the
Board of Directors of the Borrower giving effect to such designation and a
Financial Officer's certificate certifying that such designation complied with
the foregoing conditions and was permitted by Section 6.04. If, at any time,
any Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Agreement and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary as of such
date (and, if such Indebtedness is not
<PAGE>
20
permitted to be incurred hereunder as of such date an Event of Default shall be
deemed to have occurred). The Board of Directors of the Borrower may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
--------
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted hereunder at the time and (ii) no Default shall have occurred and
be continuing at the time of, or would result from, such designation.
"Warrant" means a Fair Market Warrant or a Penny Warrant.
-------
"Withdrawal Liability" means liability to a Multiemployer Plan as a
--------------------
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes
------------
of this Agreement, Loans and Borrowings may be classified and referred to by
Type (e.g., a "LIBOR Loan" or a "LIBOR Borrowing").
----
SECTION 1.03. Terms Generally. The definitions of terms herein shall
----------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash,
<PAGE>
21
securities, accounts, contract rights, licenses and intellectual property.
SECTION 1.04. Accounting Terms; GAAP. (a) Except as otherwise
-----------------------
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
--------
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.
(b) Each reference herein to any financial term, definition or
computation that is to be calculated for or with respect to the Borrower and the
Restricted Subsidiaries on a consolidated basis in accordance with GAAP shall be
calculated excluding and without giving effect to Unrestricted Subsidiaries or
any investment therein or earnings thereon, except to the extent otherwise
expressly provided herein.
ARTICLE II
The Loans
---------
SECTION 2.01. Commitments. Subject to the terms and conditions set
------------
forth herein, each Lender agrees to make Loans to the Borrower at any time and
from time to time during the Availability Period in an aggregate principal
amount that will not result in (a) such Lender's Credit Exposure exceeding such
Lender's Commitment or (b) the sum of the total Credit Exposures exceeding the
total Commitments; provided that the aggregate principal amount of Loans made
--------
prior to the Full Availability Date shall not exceed the Initial Loan Limit.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as
---------------------
part of a Borrowing consisting of
<PAGE>
22
Loans of the same Type made by the Lenders ratably in accordance with their
respective Commitments. The failure of any Lender to make any Loan required to
be made by it shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments of the Lenders are several and no Lender shall be
- --------
responsible for any other Lender's failure to make Loans as required.
(b) Subject to Section 2.10, each Borrowing shall be comprised
entirely of LIBOR Loans or ABR Loans as the Borrower may request in accordance
herewith. Each Lender at its option may make any LIBOR Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of the
- --------
Borrower to repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any LIBOR
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $500,000 and not less than $2,500,000. At the time that each ABR
Borrowing is made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $500,000 and not less than $2,500,000; provided that an ABR
--------
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the Commitments. Borrowings of more than one Type may be outstanding
at the same time; provided that there shall not at any time be more than a total
--------
of five LIBOR Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing as a LIBOR Borrowing if the Interest Period requested with respect
thereto would end after the Maturity Date.
SECTION 2.03. Requests for Borrowings. To request a Borrowing, the
------------------------
Borrower shall notify the Administrative Agent of such request by telephone (a)
in the case of a LIBOR Borrowing, not later than 2:00 p.m., New York City time,
three Business Days before the date of the proposed Borrowing or (b) in the case
of an ABR Borrowing, not later than 2:00 p.m., New York City time, three
Business Day before the date of the proposed Borrowing; provided that the
--------
Borrower may make only three requests for Borrowings in any single calendar
month (it being understood that all Borrowings made by the Borrower on the same
date shall be treated as a single request for a Borrowing for purposes of this
limitation). Each such telephonic Borrowing Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a
<PAGE>
23
written Borrowing Request in a form approved by the Administrative Agent and
signed by the Borrower. Each such telephonic and written Borrowing Request shall
specify the following information in compliance with Section 2.02:
(i) the aggregate amount of such Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be a LIBOR Borrowing or an ABR
Borrowing;
(iv) in the case of a LIBOR Borrowing, the initial Interest Period to
be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.04.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested LIBOR Borrowing, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Funding of Borrowings. (a) Each Lender shall make
----------------------
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in like
funds, to an account of the Borrower maintained with the Administrative Agent
(or a bank designated by the Administrative Agent) and designated by the
Borrower in the applicable Borrowing Request.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such
<PAGE>
24
Lender has made such share available on such date in accordance with paragraph
(a) of this Section and may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.
SECTION 2.05. Interest Elections. (a) Each Borrowing initially
-------------------
shall be of the Type specified in the applicable Borrowing Request and, in the
case of a LIBOR Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request. Thereafter, the Borrower may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a LIBOR Borrowing, may elect Interest Periods therefor, all as provided in this
Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.
<PAGE>
25
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be a LIBOR Borrowing or an
ABR Borrowing; and
(iv) if the resulting Borrowing is a LIBOR Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a LIBOR Borrowing but does not
specify an Interest Period, then the Borrower shall be deemed to have selected
an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a LIBOR Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i) no outstanding Borrowing may be converted to
or continued as a LIBOR Borrowing and (ii) unless repaid, each LIBOR Borrowing
shall be converted to an ABR Borrowing at the end of the Interest Period
applicable thereto.
<PAGE>
26
SECTION 2.06. Termination and Reduction of Commitments. (a) Unless
-----------------------------------------
previously terminated, the Commitments shall terminate on the Maturity Date.
(b) The Commitments shall be reduced as and when required by Section
2.08(b).
(c) The Borrower may at any time terminate, or from time to time
reduce, the Commitments; provided that (i) each reduction of the Commitments
--------
pursuant to this paragraph (c) shall be in an amount that is an integral
multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall
not terminate or reduce the Commitments if, after giving effect to any
concurrent prepayment of the Loans in accordance with Section 2.08, the sum of
the Credit Exposures would exceed the total Commitments.
(d) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (c) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any such notice, the Administrative
Agent shall advise the Lenders of the contents thereof. Each notice delivered
by the Borrower pursuant to this Section shall be irrevocable. Any termination
or reduction of the Commitments shall be permanent. Each reduction of the
Commitments pursuant to paragraph (b) or (c) of this Section shall be made
ratably among the Lenders in accordance with their respective Commitments.
SECTION 2.07. Repayment of Loans; Evidence of Debt. (a) The
-------------------------------------
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each Loan on the
Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Type thereof and
the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable
<PAGE>
27
from the Borrower to each Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder for the account of the Lenders
and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
----- -----
amounts of the obligations recorded therein; provided that the failure of any
--------
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender such a promissory note payable to the order of such Lender (or,
if requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.08. Prepayment of Loans. (a) The Borrower shall have the
--------------------
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section.
(b) In the event and on each occasion that any Net Proceeds are
received by or on behalf of the Borrower or any Restricted Subsidiary in respect
of any Prepayment Event, then (i) the Commitments shall be ratably reduced by an
amount equal to such Net Proceeds and (ii) the Borrower shall prepay Borrowings
in an aggregate amount equal to the excess, if any, of the sum of the Credit
Exposures over the total Commitments after giving effect to such reduction.
(c) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
paragraph (d) of this Section; provided that each prepayment of Borrowings shall
--------
be applied to prepay ABR Borrowings before any other Borrowings.
<PAGE>
28
(d) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder, and of any reduction of the
Commitments pursuant to paragraph (b) of this Section, not later than 11:00
a.m., New York City time, three Business Days before the date of such prepayment
or reduction, as the case may be. Each such notice shall be irrevocable and
shall specify (i) in the case of a prepayment, the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid or (ii) in
the case of a reduction of Commitments, the date of such reduction and a
reasonably detailed calculation of the amount thereof. Promptly following
receipt of any such notice, the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02, except as necessary to apply fully the
required amount of a mandatory prepayment. Each prepayment of a Borrowing shall
be applied ratably to the Loans included in the prepaid Borrowing. Prepayments
of Borrowings shall be accompanied by the payment of accrued interest on the
amount prepaid.
SECTION 2.09. Interest; Warrants. (a) The Loans comprising each ABR
-------------------
Borrowing shall bear interest at the Alternate Base Rate plus 4.00%, subject to
increase as provided in paragraph (c) of this Section.
(b) The Loans comprising each LIBOR Borrowing shall bear interest at
the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus
5.00%, subject to increase as provided in paragraph (c) of this Section.
(c) The interest rates set forth in paragraphs (a) and (b) of this
Section shall increase by 0.50% effective on the last day of each calendar
month, commencing on the last day of January, 1999 (with successive increases
effective on the last day of each calendar month thereafter).
(d) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any other amount payable by the Borrower hereunder is not paid when
due, whether at stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a rate per
annum equal to 2.00% plus the rate then applicable to ABR Loans as provided in
paragraph (a) of this Section (giving effect to any increases thereto pursuant
to paragraph (c) of this Section).
<PAGE>
29
(e) All accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and upon termination of the
Commitments; provided that (i) interest accrued pursuant to paragraph (d) of
--------
this Section shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan, accrued interest on the principal amount of such Loan
repaid or prepaid shall be payable on the date of such repayment or prepayment
and (iii) in the event of any conversion of any Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion.
(f) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
(g) As additional consideration for the Commitments and Loans
hereunder, the Borrower agrees to issue to Lucent (in addition to the Penny
Warrant previously issued to Lucent on August 26, 1998): (i) on the Effective
Date, a Penny Warrant to purchase 139,122 shares of common stock of the Borrower
(which the Borrower represents and warrants to represent 0.5% of the Borrower's
outstanding shares of common stock as of the Effective Date, on a fully diluted
basis) and (ii) within five Business Days of the date of each Borrowing that
results in the sum of the Credit Exposures equaling or exceeding $2,500,000 or
any integral multiple of $2,500,000, a Fair Market Warrant to purchase the
number of shares of common stock of the Borrower determined by multiplying (A)
63,996 shares of common stock of the Borrower (which the Borrower represents and
warrants to represent 0.23% of the Borrower's outstanding shares of common stock
as of the Effective Date, on a fully diluted basis) by (B) an amount equal to
the sum of the Credit Exposures after giving effect to such Borrowing (rounded
down, if not an integral multiple of $2,500,000, to the nearest integral
multiple of $2,500,000) divided by $2,500,000; provided that, if the Borrower
--------
has previously issued any Fair Market Warrants hereunder at the time any Fair
Market Warrants are required to be issued pursuant to this paragraph, the amount
determined pursuant to clause (B) above shall be reduced by the amount (or the
sum of the
<PAGE>
30
amounts, if applicable) previously determined pursuant to clause (B) for
purposes of issuing such previously issued Fair Market Warrants. The number of
shares of common stock set forth in clause (ii)(A) of the preceding sentence,
and the "Exercise Price" specified in the definition of "Fair Market Warrant",
shall be subject to adjustment after the Effective Date in accordance with the
adjustment provisions of the form of Fair Market Warrant attached as Exhibit B
hereto, such that, upon the issuance of any Fair Market Warrant, the number of
shares of the Borrower's common stock subject to purchase thereunder and the
Exercise Price thereof are the same as would then be in effect if such Fair
Market Warrant had been issued on the Effective Date.
SECTION 2.10. Alternate Rate of Interest. If prior to the
---------------------------
commencement of any Interest Period for a LIBOR Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining their
Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a LIBOR Borrowing shall be ineffective and
(ii) if any Borrowing Request requests a LIBOR Borrowing, such Borrowing shall
be made as an ABR Borrowing.
SECTION 2.11. Increased Costs. (a) If any Change in Law shall:
----------------
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate); or
<PAGE>
31
(ii) impose on any Lender or the London interbank market any other
condition affecting this Agreement or LIBOR Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBOR Loan (or of maintaining its obligation
to make any such Loan) or to reduce the amount of any sum received or receivable
by such Lender hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement or the Loans made by such Lender to a level
below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be,
as specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such compensation; provided that the Borrower shall not be required to
--------
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 180 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs
- -------- -------
or reductions is retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof.
<PAGE>
32
SECTION 2.12. Break Funding Payments. In the event of (a) the
-----------------------
payment of any principal of any LIBOR Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any LIBOR Loan other than on the last day of the
Interest Period applicable thereto, (c) the failure to borrow, convert, continue
or prepay any Loan on the date specified in any notice delivered pursuant
hereto, or (d) the assignment of any LIBOR Loan other than on the last day of
the Interest Period applicable thereto as a result of a request by the Borrower
pursuant to Section 2.15, then, in any such event, the Borrower shall compensate
each Lender for the loss, cost and expense attributable to such event. In the
case of a LIBOR Loan, such loss, cost or expense to any Lender shall be deemed
to include an amount determined by such Lender to be the excess, if any, of (i)
the amount of interest which would have accrued on the principal amount of such
Loan had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.
SECTION 2.13. Taxes. (a) Any and all payments by or on account of
------
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if the Borrower shall be required to deduct any
--------
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent or Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
<PAGE>
33
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and each
Lender, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender
on or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender, or by the Administrative Agent
on its own behalf or on behalf of a Lender, shall be conclusive absent manifest
error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the United States of America, or
any treaty to which the United States of America is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.
SECTION 2.14. Payments Generally; Pro Rata Treatment; Sharing of Set-
------------------------------------------------------
offs. (a) The Borrower shall make each payment required to be made by it
- -----
hereunder or under any other Loan Document (whether of principal or interest, or
of amounts payable under Section 2.11, 2.12 or 2.13 or otherwise) prior to 2:00
p.m., New York City time, on the date when due, in immediately available funds,
without set-off or counterclaim. Any amounts received after
<PAGE>
34
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent at The Chase Manhattan Bank, New York, New York, ABA no.
021000021, account no. 9101449099, phone no. (212) 552-2222 (or such other
account as the Administrative Agent shall from time to time specify by notice),
except that payments pursuant to Sections 2.11, 2.12, 2.13 and 9.03 shall be
made directly to the Persons entitled thereto and payments pursuant to other
Loan Documents shall be made to the Persons specified therein. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment under any Loan Document shall be due on a day
that is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; provided that (i) if any such participations are
--------
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph
<PAGE>
35
shall not be construed to apply to any payment made by the Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders hereunder that the Borrower will not make
such payment, the Administrative Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
(e) Without limiting the generality of paragraph (a) above, the
Borrower's obligations to make each payment required to be made by it hereunder
or under any other Loan Document (whether of principal, interest, fees or
otherwise) shall be absolute and unconditional and shall not be subject to any
delay, reduction, set-off, counterclaim, defense or recoupment for any reason,
including any failure of the Network or any part thereof, or any dispute with,
breach of representation or warranty by or claim against any supplier,
manufacturer, installer, vendor or distributer, including Lucent.
SECTION 2.15. Mitigation Obligations; Replacement of Lenders. (a)
-----------------------------------------------
If any Lender requests compensation under Section 2.11, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
<PAGE>
36
Authority for the account of any Lender pursuant to Section 2.13, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.11 or 2.13, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.11, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.13,
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
--------
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii)
such assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
SECTION 2.16. Extension of Maturity Date. The Borrower may at any
---------------------------
time request that the Maturity Date then in effect be extended to a date that is
up to three months after such Maturity Date. Any such request shall be made by
written notice to the Administrative Agent not more than 30 days and not less
than 15 days prior to the Maturity Date then in effect, and the Administrative
Agent shall promptly notify each Lender of such request and shall respond to
such
<PAGE>
37
request in writing within five Business Days after receipt thereof; provided
--------
that if the Administrative Agent fails to respond to such request within such
period, the Lenders shall be deemed to have declined such request. The
Administrative Agent shall consent to any such request only if all the Lenders
shall consent to such request. If (and only if) all the Lenders consent to such
request, then the Maturity Date then in effect shall be extended to the date
specified in such request; provided that in no event shall the Maturity
--------
Date be extended to a date that is later than the first anniversary of the
Effective Date.
ARTICLE III
Representations and Warranties
------------------------------
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and the
---------------------
Restricted Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions are
-----------------------------
within the Borrower's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. Each of the Loan
Documents has been duly executed and delivered by the Borrower and constitutes a
legal, valid and binding obligation of the Borrower, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
-------------------------------------
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect and except as contemplated by
the Registration Rights Agreement
<PAGE>
38
in connection with the performance thereof, (b) will not violate any applicable
law or regulation or the charter, by-laws or other organizational documents of
any Loan Party or any order of any Governmental Authority, (c) will not violate
or result in a default under any indenture, agreement or other instrument
binding upon any Loan Party or its assets, or give rise to a right thereunder to
require any payment to be made by any Loan Party, and (d) will not result in the
creation or imposition of any Lien on any asset of any Loan Party.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a)
------------------------------------------------
The Borrower has heretofore furnished to the Lenders its consolidated balance
sheet and statements of income, stockholders equity and cash flows (i) as of and
for the fiscal year ended December 31, 1997, reported on by
PricewaterhouseCoopers LLP (successor to Coopers & Lybrand, L.L.P.), independent
public accountants, and (ii) as of and for the fiscal quarter and the portion of
the fiscal year ended June 30, 1998, certified by its chief financial officer.
Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and
its consolidated subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) above.
(b) Since June 30, 1998, there has been no material adverse change in
the business, condition (financial or otherwise), operations, performance or
properties of the Borrower and the Restricted Subsidiaries, taken as a whole.
SECTION 3.05. Properties and Licenses. (a) Each of the Loan Parties
------------------------
has good title to, or valid leasehold interests in, all the real and personal
property material to its business owned or leased by it, except for defects in
title that do not interfere with its ability to conduct its business as
currently conducted and could not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
(b) Each of the Loan Parties owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Loan Parties does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
<PAGE>
39
(c) Schedule 3.05 sets forth all FCC Licenses existing as of the
Effective Date and all other licenses and permits in effect as of the Effective
Date that are material to the business of the Borrower and the Restricted
Subsidiaries. Each of the FCC Licenses, and each other license or permit that
is material to the business of the Borrower and the Restricted Subsidiaries, is
valid and in full force and effect, and the Borrower and the Restricted
Subsidiaries are in compliance with the terms and conditions thereof except
where the failure to so comply could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters. (a) There are
-------------------------------------
no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve any of the Loan Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, none of the Borrower or any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the
------------------------------------
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be
<PAGE>
40
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status. None of the
--------------------------------------
Loan Parties is (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding company"
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.
SECTION 3.09. Taxes. Each of the Loan Parties has timely filed or
------
caused to be filed all Tax returns and reports required to have been filed and
has paid or caused to be paid all Taxes required to have been paid by it, except
(a) Taxes that are being contested in good faith by appropriate proceedings and
for which the applicable Loan Party has set aside on its books adequate reserves
or (b) the filing of state or local Tax returns and reports, or the payment of
state or local Taxes, to the extent that the failure to do so, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred.
------
SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders
-----------
all material agreements, instruments and corporate or other restrictions to
which any of the Loan Parties is subject, and all other matters known to any of
them, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. None of the reports, financial statements,
certificates or other written information concerning the Borrower or its
Subsidiaries furnished by or on behalf of any Loan Party to the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or thereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
--------
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth as of the
-------------
Effective Date the name of, and the ownership interest of the Borrower in, each
Subsidiary of
<PAGE>
41
the Borrower and identifies each such Subsidiary (if any) that is an
Unrestricted Subsidiary or a License Subsidiary.
SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of
----------
all insurance maintained by or on behalf of the Borrower and its Subsidiaries as
of the Effective Date. As of the Effective Date, all premiums then due and
payable in respect of such insurance have been paid.
SECTION 3.14. Labor Matters. As of the Effective Date, there are no
--------------
strikes, lockouts or slowdowns against any Loan Party pending or, to the
knowledge of the Borrower, threatened. The hours worked by and payments made to
employees of the Loan Parties have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters, except for such violations that could not reasonably
be expected, individually or in the aggregate, to result in a Material Adverse
Effect. All payments due from any Loan Party, or for which any claim may be
made against any Loan Party, on account of wages and employee health and welfare
insurance and other benefits, have been paid or accrued as a liability on the
books of the applicable Loan Party, except for such failures to so pay or accrue
that could not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect. The consummation of the Transactions will
not give rise to any right of termination or right of renegotiation on the part
of any union under any collective bargaining agreement to which any Loan Party
is bound.
SECTION 3.15. Purchase Agreement. The Purchase Agreement is in full
-------------------
force and effect. The Borrower is in substantial compliance with the terms and
conditions of the Purchase Agreement.
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date. The obligations of the Lenders to make
---------------
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the
<PAGE>
42
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart
of this Agreement;
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of each of (i) Ropes & Gray, counsel for the Borrower,
substantially in the form of Exhibit A-1, (ii) Wiley, Rein & Fielding,
special FCC counsel for the Borrower, substantially in the form of Exhibit
A-2, and (iii) Cravath, Swaine & Moore, counsel for Lucent, substantially
in the form of Exhibit A-3, and, in the case of each such opinion required
by this paragraph, covering such other matters relating to the Loan
Parties, the Loan Documents or the Transactions as the Administrative Agent
shall reasonably request. The Borrower hereby requests its counsel
referred to in clauses (i) and (ii) of this paragraph to deliver such
opinions.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of the
Borrower, the authorization of the Transactions and any other legal matters
relating to the Loan Parties, the Loan Documents or the Transactions, all
in form and substance satisfactory to the Administrative Agent and its
counsel.
(d) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (a), (b) and (c) of Section 4.02.
(e) The Administrative Agent and Lucent shall have received all
amounts due and payable to them hereunder on or prior to the Effective
Date, including, to the extent invoiced, reimbursement or payment of all
expenses required to be reimbursed or paid by the Borrower hereunder.
(f) The Lenders shall be satisfied with the corporate and legal
structure and capitalization of the Borrower and the Restricted
Subsidiaries, including the charter and by-laws of the Borrower and each
Restricted
<PAGE>
43
Subsidiary and each agreement or instrument evidencing Indebtedness.
(g) All FCC Licenses shall be owned by the Borrower or a License
Subsidiary. No event shall have occurred that would subject any FCC
License to revocation by the FCC, except for such FCC Licenses the loss of
which could not reasonably be expected, individually or in the aggregate,
to result in a Material Adverse Effect.
(h) The Lenders shall have received the Borrower's most recent
Business Plan, including financial projections, and there shall have been
no material adverse changes in the Business Plan compared to the
information disclosed to Lucent prior to June 18, 1998.
(i) All material intercompany agreements and arrangements between the
Borrower or any wholly owned Restricted Subsidiary, on the one hand, and
any Unrestricted Subsidiary, any Restricted Subsidiary that is not a wholly
owned Restricted Subsidiary or any other Affiliate of the Borrower or any
wholly owned Restricted Subsidiary, on the other hand, with respect to tax
sharing, management fee or servicing fee agreements, arrangements or
relationships shall have been completed on terms and conditions (including
with respect to the subordination of any obligations to pay any fees
thereunder to the prior payment in full of the obligations of the Borrower
hereunder) reasonably satisfactory to the Lenders and shall have been set
forth in written agreements (the "Intercompany Agreements") reasonably
-----------------------
satisfactory in form and substance to the Lenders. True and correct copies
of all Intercompany Agreements shall have been delivered to the Lenders.
(j) The Borrower shall have executed and delivered to Lucent the
Penny Warrant required to be issued on the Effective Date as contemplated
by Section 2.09(g).
(k) The Purchase Money Credit Agreement shall have been executed and
delivered by the parties thereto.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
hereunder shall not
<PAGE>
44
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on
September 30, 1998 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Borrowing. The obligation of each Lender to make
---------------
a Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
(a) At the time of and immediately after giving effect to such
Borrowing, the representations and warranties of the Borrower set forth
herein shall be true and correct (or, in the case of representations and
warranties that are not qualified as to materiality, true and correct in
all material respects) on and as of the date of such Borrowing (except to
the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of such
earlier date).
(b) At the time of and immediately after giving effect to such
Borrowing no Default shall have occurred and be continuing.
(c) At the time of and immediately after giving effect to such
Borrowing, the Purchase Agreement shall be in full force and effect and the
Borrower shall be in substantial compliance therewith.
(d) At the time of such Borrowing, the Borrower shall have issued to
Lucent all Warrants then required to be issued pursuant to Section 2.09(g).
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a),
(b), (c) and (d) of this Section.
ARTICLE V
Affirmative Covenants
---------------------
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, the Borrower covenants and agrees with the Lenders that:
<PAGE>
45
SECTION 5.01. Financial Statements and Other Information. The
-------------------------------------------
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the Borrower,
the audited consolidated balance sheet of the Borrower and related
statements of operations, stockholders' equity and cash flows as of the end
of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by
PricewaterhouseCoopers LLP (successor to Coopers & Lybrand, L.L.P.) or
other independent public accountants of recognized national standing
(without, except for the audit with respect to the Borrower's 1998 fiscal
year, a "going concern" or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect
that such consolidated financial statements present fairly in all material
respects the financial condition and results of operations of the Borrower
and its consolidated subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, the consolidated balance
sheet of the Borrower and related statements of operations, stockholders'
equity and cash flows as of the end of and for such fiscal quarter and the
then elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of
(or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial Officers as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of the Borrower's financial
statements under clause (a) or (b) above, a certificate of a Financial
Officer of the Borrower (i) certifying as to whether a Default has occurred
and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (ii) stating
whether any change in GAAP or in the application thereof has occurred since
the date of the Borrower's audited
<PAGE>
46
financial statements referred to in Section 3.04 and, if any such change
has occurred, specifying the effect of such change on the financial
statements accompanying such certificate, and (iii) if the financial
statements accompanying such certificate include consolidated financial
information for any Unrestricted Subsidiary, setting forth on a schedule
attached to such certificate a reasonably detailed calculation of all
adjustments to such financial statements necessary in order to reflect the
financial condition and results of operations of the Borrower and the
Restricted Subsidiaries on a consolidated basis in accordance with GAAP;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any Default
(which certificate may be limited to the extent required by accounting
rules or guidelines);
(e) promptly after the same become available but in any event within
90 days after the end of each fiscal year of the Borrower, the Business
Plan for the current fiscal year and updated financial projections through
the Maturity Date;
(f) within 15 days after the end of each fiscal quarter of the
Borrower, a report setting forth (i) the number of buildings connected to
the Network and (ii) the number of the Borrower's customers (treating each
office location of a Person purchasing services from the Borrower as a
separate customer to the extent such office locations are in separate
buildings);
(g) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Borrower or any Subsidiary with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, or distributed
by the Borrower to its shareholders generally, as the case may be; and
(h) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of any Loan
<PAGE>
47
Document, as the Administrative Agent may reasonably request.
SECTION 5.02. Notices of Material Events. The Borrower will furnish
---------------------------
to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect; and
(c) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Borrower will, and
-------------------------------
will cause each of the Restricted Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of the business of the Borrower and the Restricted Subsidiaries,
taken as a whole; provided that the foregoing shall not prohibit any merger,
--------
consolidation, liquidation or dissolution permitted under Section 6.03.
SECTION 5.04. Payment of Obligations. The Borrower will, and will
-----------------------
cause each of the Restricted Subsidiaries to, pay its material Indebtedness and
other material obligations, including Tax liabilities, before the same shall
become delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) the Borrower or
such Restricted Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP, (c) such contest effectively suspends
collection of the contested obligation and the enforcement of any Lien securing
such obligation and (d) the failure to make payment pending the resolution of
such contest could not reasonably be expected to result in a Material Adverse
Effect.
<PAGE>
48
SECTION 5.05. Maintenance of Properties. The Borrower will, and will
--------------------------
cause each of the Restricted Subsidiaries to, keep and maintain all property
material to the conduct of the business of the Borrower and the Restricted
Subsidiaries, taken as a whole, in good working order and condition, ordinary
wear and tear excepted.
SECTION 5.06. Insurance. The Borrower will, and will cause each of
----------
the Restricted Subsidiaries to, maintain, with financially sound and reputable
insurance companies, insurance in such amounts and against such risks (including
fire and other risks insured by extended coverage) as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations, including public liability insurance against claims for
personal injury, death or property damage occurring upon, about or in connection
with the use of any properties owned, occupied or controlled by it as well as
such other insurance as may be required by law.
SECTION 5.07. Books and Records; Inspection Rights. The Borrower
-------------------------------------
will, and will cause each of the Restricted Subsidiaries to, keep proper books
of record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of the Restricted Subsidiaries to, permit any
representatives designated by the Administrative Agent, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all during normal business hours and
as often as reasonably requested, without unreasonable interference with the
Borrower's business.
SECTION 5.08. Compliance with Laws and Agreements. The Borrower
------------------------------------
will, and will cause each of the Subsidiaries to, comply with all laws, rules,
regulations and orders of any Governmental Authority (including ERISA and all
Environmental Laws) applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except (a)
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, or (b) where (i)
the failure to so comply is being contested in good faith by appropriate
proceedings, (ii) the Borrower or such Restricted Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP or, in
the case of a foreign Restricted Subsidiary, in accordance with applicable
accounting principles in the relevant jurisdiction, (iii) such contest
effectively
<PAGE>
49
suspends the requirement to so comply and (iv) the failure to so comply pending
the resolution of such contest could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 5.09. Use of Proceeds. The proceeds of the Loans will be
----------------
used solely for working capital purposes of the Borrower and its Restricted
Subsidiaries, including the payment of accrued interest on Loans, but excluding
the purchase of equipment or services from any vendor or supplier other than
Lucent if such equipment or services are available from Lucent and are of the
type listed on Schedule 5.09.
SECTION 5.10. FCC Licenses. The Borrower will, and will cause each
------------
of the Restricted Subsidiaries to, maintain each FCC License in full force and
effect and comply with all terms and conditions thereof, except to the extent
that the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
ARTICLE VI
Negative Covenants
------------------
Until the Commitments have expired or terminated and the principal of
and interest on each Loan have been paid in full, the Borrower covenants and
agrees with the Lenders that:
SECTION 6.01. Indebtedness. The Borrower will not, nor will it
-------------
permit any Restricted Subsidiary to, create, incur, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness created under this Agreement or the Purchase Money
Credit Agreement;
(b) subject to Sections 6.04 and 6.12, Indebtedness of the Borrower to
any Restricted Subsidiary and of any Restricted Subsidiary to the Borrower or
any other Restricted Subsidiary;
(c) subject to Section 6.04, Guarantees by the Borrower of
Indebtedness of any Restricted Subsidiary;
(d) Indebtedness of the Borrower or, subject to Section 6.12, any
Restricted Subsidiary incurred to finance the acquisition, construction or
improvement of any fixed or
<PAGE>
50
capital assets or FCC licenses by the Borrower or such Restricted Subsidiary,
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof; provided that (A) such Indebtedness is
--------
incurred prior to or within 90 days after such acquisition or the completion of
such construction or improvement and (B) any such Indebtedness incurred in
connection with any particular acquisition, construction or improvement shall
not exceed the cost of such acquisition, construction or improvement; provided
--------
further that the aggregate principal amount of such Indebtedness shall not
- -------
exceed $20,000,000;
(e) Other Debt;
(f) Indebtedness outstanding on the Effective Date and set forth on
Schedule 6.01; and
(g) Indebtedness of the Borrower incurred to refinance any
Indebtedness referred to in clause (d) or (f) above and Indebtedness of any
Restricted Subsidiary incurred to refinance any Indebtedness of such Restricted
Subsidiary referred to in clause (d) or (f) above; provided that (i) the
--------
principal amount of any such Indebtedness does not exceed the principal amount
of, plus accrued interest and any prepayment premiums applicable to, the
Indebtedness refinanced thereby, (ii) any such Indebtedness has a scheduled
maturity date that is on or after the scheduled maturity date of the
Indebtedness refinanced thereby, (iii) any such Indebtedness has a weighted
average life to maturity that is equal to or longer than the remaining weighted
average life to maturity of the Indebtedness refinanced thereby (determined
immediately prior to giving effect to such refinancing), (iv) any such
Indebtedness does not include any provisions that may require mandatory
Repayment thereof prior to scheduled maturity, other than scheduled repayments
taken into account in determining compliance with clause (iii) above and other
provisions that are not materially more burdensome than any such provisions
included in the Indebtedness refinanced thereby, and (v) any such Indebtedness
shall not be secured by any Lien other than Liens on assets securing the
Indebtedness being refinanced thereby.
SECTION 6.02. Liens. (a) The Borrower will not, nor will it permit
------
any Restricted Subsidiary to, create, incur, assume or permit to exist any Lien
on any property or asset now owned or hereafter acquired by it, or assign or
sell any income or revenues (including accounts receivable) or rights in respect
of any thereof, except:
<PAGE>
51
(i) Liens securing obligations under the Purchase Agreement or the
Purchase Money Credit Agreement;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the Borrower or any
Restricted Subsidiary existing on the date hereof and set forth in Schedule
6.02; provided that (A) such Lien shall not apply to any other property or
--------
asset of the Borrower or any Restricted Subsidiary and (B) such Lien shall
secure only those obligations which it secures on the date hereof and
refinancings thereof that satisfy the criteria set forth in clause (g) of
Section 6.01;
(iv) any Lien existing on any property or asset prior to the date that
such property or asset was first acquired by the Borrower or any Subsidiary
or any Affiliate thereof or existing on any property or asset of any Person
that becomes a Subsidiary after the date hereof prior to the time such
Person becomes a Subsidiary; provided that (A) such Lien is not created in
--------
contemplation of or in connection with such acquisition or such Person
becoming a Subsidiary, (B) such Lien shall not apply to any other property
or assets of the Borrower or any Subsidiary and (C) such Lien shall secure
only those obligations which it secures on the date of such acquisition or
the date such Person becomes a Subsidiary, as the case may be, and
refinancings thereof that satisfy the criteria set forth in clause (g) of
Section 6.01;
(v) Liens on fixed or capital assets acquired, constructed or improved
by the Borrower or a Restricted Subsidiary; provided that (A) such Liens
--------
secure only Indebtedness permitted by clause (d) of Section 6.01 or a
refinancing thereof permitted by clause (g) of Section 6.01, (B) such Liens
and the Indebtedness secured thereby are incurred prior to or within 90
days after such acquisition or the completion of such construction or
improvement, (C) the Indebtedness secured thereby does not exceed 100% of
the cost of acquiring, constructing or improving such fixed or capital
assets and (D) such Liens shall not apply to any other property or assets
of the Borrower or any Restricted Subsidiary;
(vi) Liens existing under the Collateral Pledge and Security Agreement
dated as of February 6, 1997, between the Borrower and the Bank of New
York; provided that such Liens secure only Indebtedness in a principal
--------
<PAGE>
52
amount not to exceed the principal amount secured under such agreement on
the date hereof and do not apply to any other property or assets of the
Borrower or any Restricted Subsidiary; and
(vii) other Liens on assets of the Borrower and the Restricted
Subsidiaries securing monetary obligations in an aggregate amount not
exceeding $1,000,000 at any time.
(b) Notwithstanding the foregoing, the Borrower will not, nor will
it permit any Restricted Subsidiary to, create any Lien (other than any
Permitted Encumbrance) on any FCC License or on any capital stock of or other
ownership interest in or Indebtedness of any License Subsidiary.
SECTION 6.03. Fundamental Changes. (a) The Borrower will not, nor
--------------------
will it permit any Restricted Subsidiary to, merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with it,
or sell, transfer, lease or otherwise dispose of (in one transaction or in a
series of transactions) all or substantially all of its assets, or all or
substantially all of the stock of any of its Restricted Subsidiaries (in each
case, whether now owned or hereafter acquired), or liquidate or dissolve, except
that, if at the time thereof and immediately after giving effect thereto no
Default shall have occurred and be continuing (i) any Person may merge into the
Borrower or a Restricted Subsidiary (other than a License Subsidiary) pursuant
to a transaction that constitutes a Permitted Acquisition, provided that the
--------
survivor of such merger is the Borrower or a Restricted Subsidiary, as
applicable; (ii) any Restricted Subsidiary (other than a License Subsidiary) may
merge into any other Restricted Subsidiary (other than a License Subsidiary) in
a transaction in which the surviving entity is a Restricted Subsidiary, (iii)
any Restricted Subsidiary may sell, transfer, lease or otherwise dispose of its
assets to the Borrower or to another Restricted Subsidiary (other than a License
Subsidiary) or (iv) any Restricted Subsidiary may liquidate or dissolve if the
Borrower determines in good faith that such liquidation or dissolution is in its
best interests and is not materially disadvantageous to the Lenders; provided
--------
that any such merger involving the Borrower or any Person that is not a wholly
owned Restricted Subsidiary immediately prior to such merger shall not be
permitted unless also permitted by Section 6.04.
(b) The Borrower will not, nor will it permit any of its Restricted
Subsidiaries to, engage to any material
<PAGE>
53
extent in any business other than telecommunications and data networking
business and businesses related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
--------------------------------------------
Acquisitions; Asset Sales. (a) The Borrower will not, nor will it permit any
- --------------------------
of its Restricted Subsidiaries to, purchase, hold or acquire (including pursuant
to any merger with any Person that was not a wholly owned Restricted Subsidiary
prior to such merger) any capital stock, evidences of indebtedness or other
securities (including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, Guarantee any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) any assets of any other Person constituting a business
unit, except:
(i) Permitted Investments;
(ii) subject to Section 6.12, investments by the Borrower and its
Restricted Subsidiaries in the capital stock of their respective Restricted
Subsidiaries; provided that the aggregate amount of outstanding investments
--------
made by the Borrower and its wholly owned Restricted Subsidiaries in, and
loans and advances made by the Borrower and its wholly owned Restricted
Subsidiaries to, Restricted Subsidiaries that are not wholly owned
Restricted Subsidiaries shall not exceed $5,000,000;
(iii) subject to Section 6.12, loans or advances made by the Borrower
to any Restricted Subsidiary and made by any Restricted Subsidiary to the
Borrower or any other Restricted Subsidiary; provided that the aggregate
--------
amount of such loans and advances made by the Borrower and its wholly owned
Restricted Subsidiaries to Restricted Subsidiaries that are not wholly
owned Restricted Subsidiaries shall be subject to the limitation set forth
in clause (ii) above;
(iv) Guarantees by the Borrower of obligations of the Restricted
Subsidiaries; provided that the aggregate amount of outstanding obligations
--------
Guaranteed by the Borrower of Restricted Subsidiaries that are not wholly
owned Restricted Subsidiaries shall be treated as investments in such
Restricted Subsidiaries for purposes of the limitation set forth in the
proviso to clause (ii) above;
(v) Permitted Acquisitions;
<PAGE>
54
(vi) (A) promissory notes received by the Borrower or any Restricted
Subsidiary in connection with sales of assets (other than assets
constituting Collateral) permitted by paragraph (b) below and (B) the
common stock of Pentriad North America, Inc. ("Pentriad") received by the
--------
Borrower in connection with the sale of assets to Pentriad described on
Schedule 6.04;
(vii) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(viii) (A) promissory notes of directors, officers or employees of the
Borrower or any Restricted Subsidiary issued to the Borrower in exchange
for common stock of the Borrower and (B) other loans and advances by the
Borrower or any Restricted Subsidiary to their respective directors,
officers or employees in an aggregate principal amount not exceeding
$1,000,000 at any one time outstanding; or
(ix) other investments by the Borrower or any of the Restricted
Subsidiaries (including (A) investments in Unrestricted Subsidiaries and
joint ventures and (B) investments in any Restricted Subsidiary existing at
the time such Subsidiary is designated as an Unrestricted Subsidiary) in an
aggregate amount not exceeding $3,000,000 at any one time outstanding.
(b) The Borrower will not, nor will it permit any of its Restricted
Subsidiaries to, sell, transfer, lease or otherwise dispose of any asset,
including any capital stock of or ownership interest in any other Person owned
by it, nor will the Borrower permit any Restricted Subsidiary to issue (other
than to the Borrower or a wholly owned Restricted Subsidiary) any additional
shares of its capital stock or other ownership interest in such Restricted
Subsidiary, except:
(i) sales of (A) inventory, (B) obsolete, uneconomic or surplus
assets not exceeding, in the aggregate, $1,000,000 during any fiscal year
of the Borrower and (C) Permitted Investments, in each case in the ordinary
course of business;
(ii) transfers constituting investments permitted by paragraph (a)
of this Section or Restricted Payments permitted by Section 6.06;
<PAGE>
55
(iii) sales, transfers and dispositions to the Borrower or, subject
to Section 6.12, a Restricted Subsidiary;
(iv) other sales, transfers and dispositions of obsolete, uneconomic
or surplus assets made when no Default has occurred and is continuing;
(v) sales of assets not exceeding, in the aggregate, $10,000,000;
provided at least 85% of the consideration received for each such sale
--------
consists of cash;
(vii) dispositions of Telecommunications Assets in exchange for
comparable Telecommunications Assets; provided that the Board of Directors
--------
of the Borrower shall have approved such disposition and exchange and
determined the fair market value of the Telecommunications Assets subject
to such transaction as evidenced by a resolution of such Board; and
(viii) sales, transfers and dispositions of the assets set forth on
Schedule 6.04;
provided that all sales, transfers, leases and other dispositions permitted
- --------
hereby (other than pursuant to clause (iii) above) shall be made for fair value.
SECTION 6.05. Hedging Agreements. The Borrower will not, nor will it
-------------------
permit any of its Restricted Subsidiaries to, enter into any Hedging Agreement,
other than Hedging Agreements required by the Purchase Money Credit Agreement
and other Hedging Agreements entered into in the ordinary course of business to
hedge or mitigate risks to which the Borrower or any Restricted Subsidiary is
exposed in the conduct of its business or the management of its liabilities.
SECTION 6.06. Restricted Payments. The Borrower will not, nor will
--------------------
it permit any Restricted Subsidiary to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except (a) the Borrower
may declare and pay dividends with respect to its capital stock payable solely
in additional shares of its common stock or Permitted Preferred Stock, (b)
Restricted Subsidiaries may declare and pay dividends and distributions ratably
with respect to their common stock, and (c) the Borrower may make regularly
scheduled payments of principal of and interest on Subordinated Indebtedness as
and when due, subject to the subordination provisions thereof.
<PAGE>
56
SECTION 6.07. Transactions with Affiliates. The Borrower will not,
-----------------------------
nor will it permit any Restricted Subsidiary to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Unrestricted Subsidiaries or other Affiliates, except (a) transactions
that are at prices and on terms and conditions not less favorable to the
Borrower or such Restricted Subsidiary than could be obtained on an arm's-length
basis from unrelated third parties, (b) transactions between or among the
Borrower and its wholly owned Restricted Subsidiaries not involving any other
Affiliate, (c) any Restricted Payment permitted by Section 6.06, (d)
transactions expressly contemplated by the Intercompany Agreements that are
conducted in accordance with the terms of the Intercompany Agreements and (e)
purchases by the Borrower from any Affiliate of equipment and services for the
Network at prices not exceeding the applicable Affiliate's cost therefor.
SECTION 6.08. Restrictive Agreements. The Borrower will not, and
-----------------------
will not permit any Restricted Subsidiary to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon the ability of any Restricted
Subsidiary to pay dividends or other distributions with respect to any shares of
its capital stock or to make or repay loans or advances to the Borrower or to
Guarantee Indebtedness of the Borrower; provided that (a) the foregoing shall
--------
not apply to restrictions and conditions imposed by law or by any Loan Document
and (b) the foregoing shall not apply to restrictions and conditions existing on
the date hereof identified on Schedule 6.08 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition).
SECTION 6.09. Repayment of Indebtedness. The Borrower will not, nor
--------------------------
will it permit any Restricted Subsidiary to, make any Repayment in respect of,
or make any payment in violation of any subordination terms of, any Indebtedness
of the Borrower or any Restricted Subsidiary except (a) Repayments of Loans and
Indebtedness under the Purchase Money Credit Agreement, (b) any Repayment of
Indebtedness to the extent such Repayment is refinanced by incurring Other Debt
or by incurring other Indebtedness that (i) has a scheduled maturity date that
is on or after the scheduled maturity date of the Indebtedness being refinanced,
(ii) has a weighted average life to maturity that is equal to or longer than the
remaining weighted
<PAGE>
57
average life to maturity of the Indebtedness being refinanced, determined
immediately prior to giving effect to such Repayment, and (iii) does not include
any provisions that may require mandatory Repayment thereof prior to scheduled
maturity, other than scheduled repayments taken into consideration in
determining compliance with clause (ii) above and other provisions that are not
materially more burdensome than any such provisions included in the Indebtedness
being refinanced, or (c) any Repayment of Indebtedness at the scheduled final
maturity thereof or in accordance with regularly scheduled amortization
requirements prior to maturity.
SECTION 6.10. Intercompany Agreements. The Borrower will not, nor
------------------------
will it permit any Restricted Subsidiary to, enter into any material agreement
or arrangement after the date hereof that would constitute an Intercompany
Agreement without the prior written approval of the Required Lenders.
SECTION 6.11. Limitation on Sale-Leaseback Transactions. The
-----------------------------------------
Borrower will not, nor will it permit any Restricted Subsidiary to, enter into
any arrangement, directly or indirectly, whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the
property sold or transferred, except for any such sale of any fixed or capital
asset that is made for cash consideration in an amount not less than the cost of
such fixed or capital asset and is consummated within 90 days after the Borrower
or such Restricted Subsidiary acquires or completes the construction of such
fixed or capital asset.
SECTION 6.12. Restricted Subsidiaries. The Borrower will not permit
------------------------
any substantial part of the assets (other than FCC Licenses owned by License
Subsidiaries) and operations of the Borrower and the Restricted Subsidiaries
taken as a whole to be owned or conducted by the Restricted Subsidiaries taken
as a whole. Without limiting the generality of the foregoing, the Borrower will
not:
(a) sell, transfer, lease or otherwise dispose of any asset that is
part of the Network to any Restricted Subsidiary;
(b) permit the consolidated assets (excluding FCC Licenses owned by
License Subsidiaries) of the Restricted Subsidiaries (determined in accordance
with GAAP) at any
<PAGE>
58
time to exceed 15% of the consolidated assets of the Borrower and the Restricted
Subsidiaries (determined in accordance with GAAP) at such time;
(c) permit the consolidated operating revenues of the Restricted
Subsidiaries for any fiscal quarter of the Borrower to exceed 15% of the
consolidated operating revenues of the Borrower and the Restricted Subsidiaries
for such fiscal quarter;
(d) permit any Restricted Subsidiary to Guarantee any Indebtedness or
other obligation of the Borrower; or
(e) permit the aggregate principal amount of Indebtedness of the
Restricted Subsidiaries outstanding at any time (excluding Indebtedness owed to
the Borrower or to a Restricted Subsidiary and otherwise determined on a
consolidated basis in accordance with GAAP) to exceed $20,000,000.
SECTION 6.13. FCC Licenses and License Subsidiaries. The Borrower
--------------------------------------
will not permit any FCC License to be owned or acquired by any Person other than
the Borrower or a Restricted Subsidiary that (a) is wholly owned directly by the
Borrower, (b) does not engage in any business or activity other than the
ownership of one or more FCC Licenses and activities incidental thereto, (c)
does not own or acquire any assets other than one or more FCC Licenses, cash and
Permitted Investments and (d) does not have or incur any Indebtedness or other
liabilities other than liabilities imposed by law, including tax liabilities,
and other liabilities incidental to its existence and permitted business and
activities (any Restricted Subsidiary satisfying the foregoing requirements, a
"License Subsidiary"); provided that, to the extent the Borrower is advised by
- ------------------- --------
counsel that, in order to preserve the tax status of any tax-free reorganization
involving any Restricted Subsidiary (a "Tax-Free Merger Sub"), any FCC License
-------------------
cannot be held by the Borrower or a License Subsidiary, such FCC License shall
be held by such Tax-Free Merger Sub until such time as such FCC License may be
transferred to the Borrower or a License Subsidiary without adverse tax
consequences to the Borrower or the other parties to the transaction pursuant to
which such Tax-Free Merger Sub became a Subsidiary of the Borrower.
SECTION 6.14. ERISA. The Borrower will not permit the present value
------
of all accumulated benefit obligations under any Plan (based on the assumptions
used for purposes of Statement of Financial Accounting Standards
<PAGE>
59
No. 87) to exceed the fair market value of the assets of such Plan.
SECTION 6.15. Minimum Revenues. The Borrower will not permit the
-----------------
consolidated revenue of the Borrower and the Restricted Subsidiaries for any
fiscal quarter ending on a date listed below to be less than the amount listed
opposite such date:
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
September 30, 1998 $ 3,900
December 31, 1998 83,700
March 31, 1999 335,300
June 30, 1999 718,500
</TABLE>
SECTION 6.15. Minimum Buildings on Network. The Borrower will not
-----------------------------
permit the number of buildings connected to the Network (i.e. buildings for
----
which the Borrower or a Restricted Subsidiary possesses roof rights, has
installed equipment and is capable of transmitting to a hub site) as of any date
listed below to be less than the number listed opposite such date:
<TABLE>
<CAPTION>
Date Number
---- ------
<S> <C>
September 30, 1998 14
December 31, 1998 81
March 31, 1999 142
June 30, 1999 190
</TABLE>
SECTION 6.16. Minimum Customers. The Borrower will not permit the
------------------
number of customers of the Borrower and its Restricted Subsidiaries (treating
each office location of a Person purchasing services from the Borrower as a
separate customer to the extent such office locations are in separate buildings)
as of any date listed below to be less than the number listed opposite such
date:
<TABLE>
<CAPTION>
Date Number
---- ------
<S> <C>
September 30, 1998 16
December 31, 1998 116
March 31, 1999 342
June 30, 1999 620
</TABLE>
<PAGE>
60
ARTICLE VII
Events of Default
-----------------
If any of the following events ("Events of Default") shall occur:
-----------------
(a) the Borrower shall fail to pay any principal of any Loan when and
as the same shall become due and payable, whether at the due date thereof
or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any
other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become
due and payable, and such failure shall continue unremedied for a period of
three Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of the Borrower in or in connection with this Agreement or any amendment or
modification hereof or waiver hereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in
connection with this Agreement or any amendment or modification hereof or
waiver hereunder, shall prove to have been incorrect in any respect (or, in
the case of any representation or warranty that is not qualified as to
materiality, in any material respect) when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.03 (with respect to the
existence of the Borrower) or 5.09 or in Article VI;
(e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof from
the Administrative Agent to the Borrower (which notice will be given at the
request of any Lender);
(f) any Loan Party shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable and such
failure shall continue for more than any expressly applicable period of
grace with respect thereto
<PAGE>
61
(without giving effect to any waiver, consent or amendment for which any
Loan Party gave any consideration or benefit of any kind (including any
increased compensation, prepayment, shortening of maturities, security or
other credit support) during the continuation of such failure or within 30
days before such failure would otherwise have occurred);
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (or would enable or permit, but for a waiver, consent or
amendment for which any Loan Party gave any consideration or benefit of any
kind (including any increased compensation, prepayment, shortening of
maturities, security or other credit support) during the continuation of
such event or condition or within 30 days before such event or condition
would otherwise have occurred) the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause any
Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to secured
--------
Indebtedness that becomes due as a result of the voluntary sale or transfer
of the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of any Loan Party or its debts, or of a substantial part
of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Loan Party or for a substantial part of its
assets, and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered;
(i) any Loan Party shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under
any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article,
<PAGE>
62
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Loan Party
or for a substantial part of its assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any
action for the purpose of effecting any of the foregoing;
(j) any Loan Party shall become unable, admit in writing its inability
or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000 shall be rendered against any Loan Party or
any combination thereof and the same shall remain undischarged for a period
of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to
attach or levy upon any assets of any Loan Party to enforce any such
judgment;
(l) a Change in Control shall occur;
(m) the loss, revocation, suspension or material impairment of any
material FCC License shall occur; or
(n) an "Event of Default" (as defined in the Purchase Money Credit
Agreement) shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in
<PAGE>
63
clause (h) or (i) of this Article, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
The Administrative Agent
------------------------
Each of the Lenders hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms of this Agreement, together with such actions and powers as
are reasonably incidental thereto.
Any Person serving as the Administrative Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Administrative Agent, and such
Person and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth in this Agreement. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated by this Agreement
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 9.02), and (c) except as
expressly set forth in this Agreement, the Administrative Agent shall not have
any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the Person serving as the Administrative Agent or
any of its Affiliates in any capacity. The Administrative Agent shall
<PAGE>
64
not be liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02) or in the absence of its own gross negligence or wilful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and the Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement, (ii) the contents
of any certificate, report or other document delivered thereunder or in
connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in this Agreement,
(iv) the validity, enforceability, effectiveness or genuineness of or any other
agreement, instrument or document, or (v) the satisfaction of any condition set
forth in Article IV or elsewhere in this Agreement, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
<PAGE>
65
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor.
If no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent
may, on behalf of the Lenders, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement
or related agreement or any document furnished hereunder or thereunder.
<PAGE>
66
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Notices. Except in the case of notices and other
--------
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 500-108th Avenue N.E., Suite 2600,
Bellevue, WA 98004, Attention of General Counsel (Telecopy No. (425) 990-
1642), with a copy of any notice of a Default to Ropes & Gray, One
International Place, Boston, Massachusetts 02110, Attention of Mary E.
Weber, Esq. (Telecopy No. (617) 951-7050); and
(b) if to the Administrative Agent or any other Lender, to it at
Lucent Technologies Inc., 283 King George Road, Warren, New Jersey 07059,
Attention of Assistant Treasurer-Project Finance (Telecopy No. (908) 559-
1711).
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
--------------------
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which
<PAGE>
67
given. Without limiting the generality of the foregoing, the making of a Loan
shall not be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders; provided that no such
--------
agreement shall (i) increase the Commitment of any Lender without the written
consent of such Lender, (ii) reduce the principal amount of any Loan or reduce
the rate of interest on such Loan, without the written consent of each Lender
affected thereby, (iii) postpone the scheduled date of payment of the principal
amount of any Loan or any interest thereon, or reduce the amount of, waive or
excuse any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby, (iv)
change Section 2.14(b) or (c) in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each Lender, (v)
change any of the provisions of this Section or the definition of "Required
Lenders" or any other provision of any Loan Document specifying the number or
percentage of Lenders required to waive, amend or modify any rights thereunder
or make any determination or grant any consent thereunder, without the written
consent of each Lender or (vi) change any of the provisions of Section 2.09(g)
or Lucent's rights thereunder, or the form of any Warrant to be issued
thereunder, without the written consent of Lucent; provided further that no such
----------------
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent without the prior written consent of the Administrative
Agent.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
-----------------------------------
shall pay (i) all reasonable costs and expenses incurred by Lucent and the
Administrative Agent, including the reasonable fees, charges and disbursements
of counsel for Lucent or the Administrative Agent, in connection with the
preparation, execution and delivery of the Loan Documents (including, in the
case of Lucent, the Commitment Letter dated April 27, 1998, between Lucent and
the Borrower and the supplemental Commitment Letter dated July 17, 1998, between
Lucent and the Borrower); provided that the payment of such costs and expenses
--------
shall not be required prior to the earlier of the Effective Date and the
"Effective Date" (as defined in the Purchase Money Credit Agreement) and (ii)
all reasonable costs and expenses incurred by the Administrative Agent or any
Lender,
<PAGE>
68
including the reasonable fees, charges and disbursements of any counsel for the
Administrative Agent or any Lender, in connection with (A) the enforcement or
protection of its rights in connection with this Agreement, including its rights
under this Section, or in connection with the Loans made hereunder, including
all such costs and expenses incurred during any workout, restructuring or
negotiations in respect of such Loans, and (B) in the case of Lucent and the
Administrative Agent, the administration of, and any amendments, modifications,
waivers or supplements of or to the provisions of, this Agreement.
(b) The Borrower shall indemnify the Administrative Agent and each
Lender, and each Related Party of any of the foregoing Persons (each such Person
being called an "Indemnitee") against, and hold each Indemnitee harmless from,
----------
any and all losses, claims, damages, liabilities and related expenses, including
the fees, charges and disbursements of any counsel for any Indemnitee, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of any Loan Document or any other
agreement or instrument contemplated hereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or the use of the proceeds therefrom, (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned or
operated by the Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries, or (iv)
any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether any Indemnitee is a party thereto; provided
--------
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses have resulted
from the gross negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent such
Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
- --------
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent in
<PAGE>
69
its capacity as such. For purposes hereof, a Lender's "pro rata share" shall be
determined based upon its share of the sum of the total outstanding Loans and
Commitments at the time.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable not later
than 30 days after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
-----------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of the Administrative Agent and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans at the time owing to it); provided that (i)
--------
such assignment is a Permitted Assignment, (ii) each partial assignment shall be
made as an assignment of a proportionate part of all the assigning Lender's
rights and obligations under this Agreement, and (iii) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance. Subject to acceptance and recording thereof pursuant to
paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder
<PAGE>
70
shall, to the extent of the interest assigned by such Assignment and Acceptance,
be released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.11, 2.12, 2.13
and 9.03).
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive, and the Borrower,
--------
the Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agent
shall accept such Assignment and Acceptance and record the information contained
therein in the Register. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.
(e) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
--------
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations
---------
and warranties made by the Borrower in this Agreement and in the certificates or
other instruments delivered in connection with or pursuant to this Agreement
shall be considered to have been relied upon by
<PAGE>
71
the other parties hereto and shall survive the execution and delivery of the
Loan Documents and the making of any Loans, regardless of any investigation made
by any such other party or on its behalf and notwithstanding that the
Administrative Agent or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any other amount payable
under this Agreement is outstanding and unpaid and so long as the Commitments
have not expired or terminated. The provisions of Sections 2.11, 2.12, 2.13 and
9.03 and Article VIII shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Commitments or the
termination of this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
-----------------------------------------
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement
and the other Loan Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to
-------------
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
<PAGE>
72
SECTION 9.08. Right of Setoff. If an Event of Default shall have
----------------
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
--------------------------------------------------
Process. (a) This Agreement shall be construed in accordance with and governed
- --------
by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to any
Loan Document, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Administrative Agent or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement
against the Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred to
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the
<PAGE>
73
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
---------------------
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table
---------
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent and
----------------
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or
<PAGE>
74
obligations under this Agreement, (g) with the consent of the Borrower or (h) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than the Borrower. For the purposes of this Section, "Information" means
-----------
all information received from the Borrower relating to the Borrower or its
business, other than any such information that is publicly available or
available to the Administrative Agent or any Lender on a nonconfidential basis
prior to disclosure by the Borrower. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
<PAGE>
75
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<PAGE>
76
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything
-------------------------
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
-------
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
------------
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
ADVANCED RADIO TELECOM CORP.,
by______________________________________
Name:
Title:
LUCENT TECHNOLOGIES INC.,
individually and as
Administrative Agent,
by______________________________________
Name:
Title:
<PAGE>
Schedule 2.01
COMMITMENTS
-----------
<TABLE>
<CAPTION>
Lender Commitment Amount
- ------ -----------------
<S> <C>
Lucent Technologies Inc. $25,000,000
</TABLE>
<PAGE>
Schedule 5.09
KEY PRODUCTS
------------
PBX systems
Actual phone terminals
<PAGE>
EXHIBIT 10.7
WARRANT
ADVANCED RADIO TELECOM CORP.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, OR APPLICABLE STATE SECURITIES LAWS, AND,
ACCORDINGLY, SUCH SECURITIES MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED
OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM
AND IN ACCORDANCE WITH SECTION 2.03 HEREOF.
<TABLE>
<CAPTION>
Warrant No.: [ ]
<S> <C>
Name of Holder: Lucent Technologies Inc.
Date of Issuance: [ ]
Number of Shares of Common
Stock Which this Warrant
Initially Represents the
Right to Purchase: [ ]
Expiration Date: [ten years from issue date]
</TABLE>
THIS IS TO CERTIFY THAT, for value received, LUCENT TECHNOLOGIES INC.
or registered assigns (the "Holder") is entitled to purchase from ADVANCED RADIO
------
TELECOM CORP., a Delaware corporation (the "Company"), at any time or from time
-------
to time after 9:00 a.m., New York City time, on the date hereof and prior to
5:00 p.m., New York City time, on the date set forth above as the Expiration
Date, at the place where a Warrant Agency (as hereinafter defined) is located,
at the Exercise Price (as hereinafter defined), the number of shares of Common
Stock (as hereinafter defined) of the Company shown above, all subject to
adjustment and upon the terms and conditions as hereinafter provided, and is
entitled also to exercise the other appurtenant rights, powers and privileges
hereinafter described.
This Warrant is one of one or more warrants (the "Warrants") of the
--------
same form and having the same terms as this Warrant, entitling the holders to
purchase Common Stock. The Warrants have been issued pursuant to the Working
Capital Credit Agreement dated as of September 17,
<PAGE>
2
1998, between the Company, the lenders from time to time party thereto and
Lucent Technologies Inc., as administrative agent.
Certain terms used in this Warrant are defined in Article V.
ARTICLE I
Exercise of Warrant
-------------------
SECTION 1.01. Method of Exercise. To exercise this Warrant in whole
-------------------
or in part, the Holder shall deliver to the Company, at the Warrant Agency, (a)
this Warrant, (b) a written notice, in substantially the form of the
Subscription Notice attached hereto, of such Holder's election to exercise this
Warrant, which notice shall specify the number of shares of Common Stock to be
purchased, the denominations of the certificate or certificates desired and the
name or names in which such certificates are to be registered, and (c) payment
of the Exercise Price with respect to such Common Stock. Such payment may be
made, at the option of the Holder, by cash, money order, certified or bank
cashier's check or wire transfer. The Holder may also elect, in its notice to
exercise this Warrant, to exercise on a net basis without making any payment of
the Exercise Price, in which case the Holder shall receive that number of shares
of Common Stock to be purchased upon exercise of this Warrant less that number
of shares of Common Stock having an aggregate value (determined based on the
Fair Market Value of the Company per share of Common Stock as of the date of
exercise) equal to the aggregate Exercise Price that would otherwise have been
paid by the Holder.
The Company shall, as promptly as practicable and in any event within
seven days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in said
notice. The share certificate or certificates so delivered shall be in such
denominations as may be specified in such notice or, if such notice shall not
specify denominations, in a single certificate representing the aggregate number
of shares of Common Stock specified in said notice, and shall be issued in the
name of the Holder or such other name or names as shall be designated in such
notice. Such certificate or certificates shall be deemed to have been issued,
and such Holder or any other Person so designated to be named therein shall be
deemed for all
<PAGE>
3
purposes to have become a holder of record of such shares, as of the date the
aforementioned notice is received by the Company. If this Warrant shall have
been exercised only in part, the Company shall, at the time of delivery of the
certificate or certificates, deliver to the Holder a new Warrant evidencing the
rights to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical to this
Warrant, or, at the request of the Holder, appropriate notation may be made on
this Warrant which shall then be returned to the Holder. The Company shall pay
all expenses, taxes and other charges payable in connection with the
preparation, issuance and delivery of share certificates and new Warrants,
except that, if share certificates or new Warrants shall be registered in a name
or names other than the name of the Holder, funds sufficient to pay any transfer
taxes payable as a result of such transfer shall be paid by the Holder promptly
upon receipt of a written request of the Company for payment.
SECTION 1.02. Shares To Be Validly Issued and Listed or Quoted. All
-------------------------------------------------
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if shares of Common Stock of the
Company of any class are then listed on any national securities exchange (as
defined in the Exchange Act) or quoted on NASDAQ, shall be duly listed or quoted
thereon, as the case may be.
SECTION 1.03. No Fractional Interests To Be Issued. The Company
-------------------------------------
shall not be required to issue fractions of shares of Common Stock upon exercise
of this Warrant. If any fraction of a share of Common Stock would, but for this
Section, be issuable upon any exercise of this Warrant, in lieu of such
fractional share the Company shall pay to the Holder, in cash, an amount equal
to the same fraction of the Fair Market Value of the Company per outstanding
share of Common Stock on the Business Day immediately prior to the date of such
exercise.
SECTION 1.04. Legend. Each certificate for Common Stock issued upon
-------
exercise of this Warrant, unless at the time of exercise such shares are
registered under the Securities Act, shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, OR APPLICABLE STATE SECURITIES LAWS, AND,
ACCORDINGLY, SUCH SECURITIES MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE
<PAGE>
4
FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the Act)
shall also bear such legend unless counsel selected by the holder of such
certificate (who may be an employee of such holder) and reasonably acceptable to
the Company shall deliver an opinion reasonably acceptable to the Company to the
effect that the securities represented thereby need no longer be subject to
restrictions on resale under the Securities Act.
ARTICLE II
Warrant Agency; Transfer, Exchange and
--------------------------------------
Replacement of Warrants
-----------------------
SECTION 2.01. Warrant Agency. If, at any time after the Company
---------------
shall have failed in any material respect to perform any duties or obligations
to be performed by it as Warrant Agency, any Warrantholder shall request
appointment of an independent warrant agency with respect to the Warrants, the
Company shall promptly appoint and thereafter maintain, at its own expense, an
agency in New York, New York (the "Warrant Agency"), for certain purposes
--------------
specified herein, and shall give prompt notice of such appointment (and
appointment of any successor Warrant Agency) to holders of all Warrants. Until
an independent Warrant Agency is so appointed, the Company shall perform the
obligations of the Warrant Agency provided herein at its address at 500-108th
Avenue, N.E., Suite 2600, Bellevue, Washington 98004, or such other address as
the Company shall specify by notice to all Warrantholders.
SECTION 2.02. Ownership of Warrant. The Company may deem and treat
---------------------
the Person in whose name this Warrant is registered as the holder and owner
hereof (notwithstanding any notations of ownership or writing hereon made by any
Person other than the Company) for all purposes and shall not be affected by any
notice to the contrary, until presentation of this Warrant for registration of
transfer as provided in this Article II.
SECTION 2.03. Transfer of Warrant. The Company agrees to maintain at
--------------------
the Warrant Agency books for the registration of transfers of the Warrants, and
transfer of this Warrant and all rights hereunder shall be registered,
<PAGE>
5
in whole or in part, on such books, upon surrender of this Warrant at the
Warrant Agency, together with (i) a written assignment of this Warrant duly
executed by the Holder or his duly authorized agent or attorney, with (unless
the Holder is the original Warrantholder or another institutional investor)
signatures guaranteed by a bank or trust company or a broker or dealer
registered with the NASD, (ii) funds sufficient to pay any transfer taxes
payable upon such transfer, and (iii) upon the request of the Company, an
opinion of counsel reasonably acceptable to the Company to the effect that such
transfer is in compliance with the registration or qualification provisions of
applicable federal and state securities laws or applicable exemptions therefrom.
Upon surrender the Company shall execute and deliver a new Warrant or Warrants
in the name of the assignee or assignees and in the denominations specified in
the instrument of assignment, and this Warrant shall promptly be canceled.
SECTION 2.04. Division or Combination of Warrants. This Warrant may
------------------------------------
be divided or combined with other Warrants upon surrender hereof and of any
Warrant or Warrants with which this Warrant is to be combined at the Warrant
Agency, together with a written notice specifying the names and denominations in
which the new Warrant or Warrants are to be issued, signed by the holders hereof
and thereof or their respective duly authorized agents or attorneys. Subject to
compliance with Section 2.03 as to any transfer which may be involved in the
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
SECTION 2.05. Loss, Theft, Destruction of Warrant Certificates. Upon
-------------------------------------------------
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security reasonably
satisfactory to the Company (the original Warrantholder's indemnity being
satisfactory indemnity in the event of loss, theft or destruction of any Warrant
owned by such original or institutional holder), or, in the case of any such
mutilation, upon surrender and cancelation of such Warrant, the Company will
make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant,
a new Warrant of like tenor and representing the right to purchase the same
aggregate number of shares of Common Stock.
SECTION 2.06. Expenses of Delivery of Warrants. The Company shall
---------------------------------
pay all expenses, taxes (other than
<PAGE>
6
transfer taxes) and other charges payable in connection with the preparation,
issuance and delivery of Warrants and Common Stock hereunder.
ARTICLE III
Registration Rights
-------------------
This Warrant and the Other Warrants are entitled to the benefits of
the Registration Rights Agreement dated as of August 26, 1998, between the
Company and Lucent Technologies Inc. (the "Registration Rights Agreement"). The
-----------------------------
Company shall keep a copy of the Registration Rights Agreement, and any
amendments thereto, at the Warrant Agency and shall furnish copies thereof to
the Holder upon request.
ARTICLE IV
Antidilution Provisions
-----------------------
SECTION 4.01. Adjustments Generally. The Exercise Price and the
----------------------
number of shares of Common Stock (or other securities or property) issuable upon
exercise of this Warrant shall be subject to adjustment from time to time upon
the occurrence of certain events, as provided in this Article IV.
SECTION 4.02. Common Stock Reorganization. If the Company shall (a)
----------------------------
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or other distribution in shares of Common Stock, (b)
subdivide or reclassify its outstanding shares of Common Stock into a greater
number of shares or (c) combine or consolidate its outstanding shares of Common
Stock into a smaller number of shares (any such event being called a "Common
------
Stock Reorganization"), then (i) the Exercise Price shall be adjusted, effective
- --------------------
immediately after the record date at which the holders of shares of Common Stock
are determined for purposes of such Common Stock Reorganization, to a price
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding on such record date before giving effect to such
Common Stock Reorganization and the denominator of which shall be the number of
shares of Common Stock outstanding after giving effect to such Common Stock
Reorganization, and (ii) the number of shares of Common Stock subject to
purchase upon exercise of this Warrant shall be adjusted, effective at such
time, to equal the
<PAGE>
7
number of shares of Common Stock that the Holder would have owned after the
consummation of such Common Stock Reorganization if the Holder had owned the
number of shares of Common Stock subject to purchase upon exercise of this
Warrant immediately prior to such Common Stock Reorganization.
SECTION 4.03. Common Stock Distribution. (a) If the Company shall
--------------------------
issue or otherwise sell or distribute any shares of Common Stock, otherwise than
pursuant to a Common Stock Reorganization (any such event, including any event
described in paragraphs (b) and (c) below, being herein called a "Common Stock
------------
Distribution") for a consideration per share less than the Fair Market Value of
- ------------
the Company per share of outstanding Common Stock on the date of such Common
Stock Distribution (before giving effect to such Common Stock Distribution),
then, effective upon such Common Stock Distribution, the Exercise Price shall be
reduced to the amount obtained by multiplying the Exercise Price in effect
immediately prior to such Common Stock Distribution by a fraction, the numerator
of which shall be the sum of (A) the number of shares of Common Stock
outstanding immediately prior to such Common Stock Distribution multiplied by
the Fair Market Value per share on the date of such Common Stock Distribution,
plus (B) the consideration received by the Company upon such Common Stock
Distribution, and the denominator of which shall be the product of (1) the total
number of shares of Common Stock outstanding immediately after such Common Stock
Distribution, multiplied by (2) the Fair Market Value per share on the date of
such Common Stock Distribution.
If any Common Stock Distribution is made for a consideration per share
less than the Fair Market Value of the Company per share of outstanding Common
Stock on the date of such Common Stock Distribution (before giving effect to
such Common Stock Distribution) then, effective upon such Common Stock
Distribution, the number of shares of Common Stock subject to purchase upon
exercise of this Warrant shall be increased to a number determined by
multiplying the number of shares of Common Stock subject to purchase immediately
before such Common Stock Distribution by a fraction, the numerator of which
shall be the number of shares outstanding immediately after giving effect to
such Common Stock Distribution and the denominator shall be the sum of the
number of shares outstanding immediately before giving effect to such Common
Stock Distribution plus the number of shares of Common Stock which the aggregate
consideration received by the Company with respect to such Common Stock
Distribution would purchase at the Fair Market Value of the Company per share of
outstanding Common Stock
<PAGE>
8
on the date of such Common Stock Distribution (before giving effect to such
Common Stock Distribution).
The provisions of this paragraph (a), including by operation of
paragraph (b) or (c) below, shall not operate to increase the Exercise Price or
reduce the number of shares of Common Stock subject to purchase upon exercise of
this Warrant.
(b) If the Company shall issue, sell, distribute or otherwise grant
in any manner (whether directly or by assumption in a merger or otherwise) any
rights to subscribe for or to purchase, or any warrants or options for the
purchase of, Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (such rights, warrants or options being herein
called "Options" and such convertible or exchangeable stock or securities being
-------
herein called "Convertible Securities"), whether or not such Options or the
----------------------
rights to convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon the
exercise of such Options or upon conversion or exchange of such Convertible
Securities (determined by dividing (i) the aggregate amount, if any, received or
receivable by the Company as consideration for the granting of such Options,
plus the minimum aggregate amount of additional consideration payable to the
Company upon the exercise of all such Options, plus, in the case of Options to
acquire Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock issuable upon the exercise of such
Options or upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than the Fair Market
Value of the Company per share of outstanding Common Stock on the date of
granting such Options (before giving effect to such grant), then, for purposes
of paragraph (a) above, the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the exercise
of such Options shall be deemed to have been issued as of the date of granting
of such Options and thereafter shall be deemed to be outstanding and the Company
shall be deemed to have received as consideration such price per share,
determined as provided above, therefor. Except as otherwise provided in
paragraph (d) below, no additional adjustment of the Exercise Price shall be
made upon the actual exercise of such Options or upon conversion or exchange of
such Convertible Securities.
<PAGE>
9
(c) If the Company shall issue, sell or otherwise distribute (whether
directly or by assumption in a merger or otherwise) any Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable upon
such conversion or exchange (determined by dividing (i) the aggregate amount
received or receivable by the Company as consideration for the issue, sale or
distribution of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the conversion
or exchange thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities)
shall be less than the Fair Market Value of the Company per share of outstanding
Common Stock on the date of such issue, sale or distribution (before giving
effect to such issue, sale or distribution), then, for purposes of paragraph (a)
above, the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall be deemed to
have been issued as of the date of the issue, sale or distribution of such
Convertible Securities and thereafter shall be deemed to be outstanding and the
Company shall be deemed to have received as consideration such price per share,
determined as provided above, therefor. Except as otherwise provided in
paragraph (d) below, no additional adjustment of the Exercise Price shall be
made upon the actual conversion or exchange of such Convertible Securities.
(d) If (i) the purchase price provided for in any Option referred to
in paragraph (b) above, the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in paragraph
(b) or (c) above, or the rate at which any Convertible Securities referred to in
paragraph (b) or (c) above are convertible into or exchangeable for Common Stock
shall change at any time (other than under or by reason of provisions designed
to protect against dilution upon an event which results in a related adjustment
pursuant to this Article IV), (ii) any Option referred to in paragraph (b) above
shall expire unexercised or (iii) any Convertible Security referred to in
paragraph (b) or (c) above shall be redeemed and canceled, or the period during
which such Convertible Security is convertible into or exchangeable for Common
Stock shall lapse, without such Convertible Security being converted into or
exchanged for Common Stock, the Exercise Price then in effect and the number of
shares of Common Stock then subject to purchase upon exercise of this Warrant
shall forthwith be readjusted (effective only with respect to any exercise of
this Warrant after such
<PAGE>
10
readjustment) to the Exercise Price which would then be in effect and number of
shares which would then be subject to purchase upon exercise of this Warrant had
the adjustments made upon the issue, sale, distribution or grant of such Options
or Convertible Securities been made based upon (i) such changed purchase price,
additional consideration or conversion rate, as the case may be; provided,
--------
however, that such readjustment shall give effect to such change only with
- -------
respect to such Options and Convertible Securities as then remain outstanding;
or (ii) such reduced number of outstanding Options or Convertible Securities, as
the case may be.
(e) If the Company shall pay a dividend or make any other
distribution upon any capital stock of the Company payable in Common Stock,
Options or Convertible Securities, then, for purposes of paragraph (a) above,
such Common Stock, Options or Convertible Securities, as the case may be, shall
be deemed to have been issued or sold without consideration.
(f) If any shares of Common Stock, Options or Convertible Securities
shall be issued, sold or distributed for cash, the consideration received
therefor shall be deemed to be the amount received by the Company therefor,
before deduction therefrom of any expenses incurred and any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. If any shares of Common Stock, Options or Convertible Securities
shall be issued, sold or distributed for a consideration other than cash, the
amount of the consideration other than cash received by the Company shall be
deemed to be the Fair Market Value of such consideration, before deduction of
any expenses incurred and any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. If any shares of Common Stock,
Options or Convertible Securities shall be issued in connection with any merger
in which the Company is the surviving corporation, the amount of consideration
therefor shall be deemed to be the Fair Market Value of such portion of the
assets and business of the nonsurviving corporation as shall be fairly
attributable to such Common Stock, Options or Convertible Securities, as the
case may be. If any shares of Common Stock, Options or Convertible Securities
shall be issued in connection with the issue and sale of other securities of the
Company, together comprising one integral transaction, then the total
consideration received by the Company in such transaction shall be allocated
between such shares of Common Stock, Options or Convertible Securities, on the
one hand, and such other securities, on the other
<PAGE>
11
hand, ratably in accordance with the respective Fair Market Values thereof.
(g) If the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution payable in Common Stock, Options or Convertible Securities or to
subscribe for or purchase Common Stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue, sale, distribution
or grant of the shares of Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
SECTION 4.04. Special Dividends. If the Company shall issue or
------------------
distribute to all or substantially all holders of shares of Common Stock
evidences of indebtedness, any other securities of the Company or any cash,
property or other assets, and if such issuance or distribution does not
constitute a cash dividend or distribution out of surplus or net profits legally
available therefor, a Common Stock Reorganization or a Common Stock Distribution
(any such nonexcluded event being herein called a "Special Dividend"), (a) the
----------------
Exercise Price shall be decreased, effective immediately after the record date
at which the holders of shares of Common Stock are determined for purposes of
such Special Dividend, to a price determined by multiplying the Exercise Price
then in effect by a fraction, the numerator of which shall be the Fair Market
Value of the Company per share of outstanding Common Stock on such record date
less the then Fair Market Value of the evidences of indebtedness, securities or
property or other assets issued or distributed in such Special Dividend with
respect to one share of Common Stock, and the denominator of which shall be the
Fair Market Value per share on such record date, and (b) the number of shares of
Common Stock subject to purchase upon exercise of this Warrant shall be
increased to a number determined by multiplying the number of shares of Common
Stock subject to purchase immediately before such Special Dividend by a
fraction, the numerator of which shall be the Exercise Price in effect
immediately before such Special Dividend and the denominator of which shall be
the Exercise Price in effect immediately after such Special Dividend; provided,
--------
however, that for purposes of this clause (b), such adjustment shall be
- -------
determined without regard to the requirement that the related adjustment to the
Exercise Price be calculated to the nearest cent.
<PAGE>
12
SECTION 4.05. Capital Reorganizations. If there shall be any
------------------------
consolidation or merger to which the Company is a party, other than a
consolidation or a merger in which the Company is a continuing corporation and
which does not result in any reclassification of, or change (other than a Common
Stock Reorganization or a change in par value) in, outstanding shares of Common
Stock, or any sale or conveyance of the property of the Company as an entirety
or substantially as an entirety (any such event being called a "Capital
-------
Reorganization"), then, effective upon the effective date of such Capital
- --------------
Reorganization, the Holder shall have the right to purchase, upon exercise of
this Warrant, the kind and amount of shares of stock and other securities and
property (including cash) which the Holder would have owned or have been
entitled to receive after such Capital Reorganization if this Warrant had been
exercised immediately prior to such Capital Reorganization. As a condition to
effecting any Capital Reorganization, the Company or the successor or surviving
corporation, as the case may be, shall execute and deliver to each Warrantholder
and to the Warrant Agency an agreement as to the Warrantholders' rights in
accordance with this Section 4.05, providing for subsequent adjustments as
nearly equivalent as may be practicable to the adjustments provided for in this
Article IV. The provisions of this Section 4.05 shall similarly apply to
successive Capital Reorganizations.
SECTION 4.06. Certain Other Events. If any event occurs as to which
---------------------
the foregoing provisions of this Article IV are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board of
Directors of the Company, fairly protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such provisions, then
such Board shall make such adjustments in the application of such provisions, in
accordance with such essential intent and principles, as shall be reasonably
necessary, in the good faith opinion of such Board, to protect such purchase
rights as aforesaid, but in no event shall any such adjustment have the effect
of increasing the Exercise Price or decreasing the number of shares of Common
Stock subject to purchase upon exercise of this Warrant.
SECTION 4.07. Adjustment Rules. (a) Any adjustments pursuant to
-----------------
this Article IV shall be made successively whenever an event referred to herein
shall occur.
(b) No adjustment shall be made pursuant to this Article IV in
respect of (i) the issuance from time to time of shares of Common Stock upon the
exercise of Warrants,
<PAGE>
13
(ii) the issuance from time to time of shares of Common Stock upon the exercise
of Options outstanding on the date of issuance of this Warrant or (iii) the
issuance from time to time of shares of Common Stock upon the conversion of, or
in exchange for, Convertible Securities outstanding on the date of issuance of
this Warrant.
(c) If the Company shall set a record date to determine the holders
of shares of Common Stock for purposes of a Common Stock Reorganization, Common
Stock Distribution, Special Dividend or Capital Reorganization, and shall
legally abandon such action prior to effecting such action, then no adjustment
shall be made pursuant to this Article IV in respect of such action.
SECTION 4.08. Proceedings Prior to Any Action Requiring Adjustment.
-----------------------------------------------------
As a condition precedent to the taking of any action which would require an
adjustment pursuant to this Article IV, the Company shall take any action which
may be necessary, including obtaining regulatory approvals or exemptions, in
order that the Company may thereafter validly and legally issue as fully paid
and nonassessable all shares of Common Stock which the holders of Warrants are
entitled to receive upon exercise thereof.
SECTION 4.09. Notice of Adjustment. Not less than 5 Business Days
---------------------
nor more than 90 days prior to the record date or effective date, as the case
may be, of any action which requires or might require an adjustment or
readjustment pursuant to this Article IV, the Company shall give notice to each
Warrantholder of such event, describing such event in reasonable detail and
specifying the record date or effective date, as the case may be, and, if
determinable, the required adjustment and the computation thereof. If the
required adjustment is not determinable at the time of such notice, the Company
shall so state in such notice and give an additional notice to each
Warrantholder of such adjustment and computation promptly after such adjustment
becomes determinable.
ARTICLE V
Definitions
-----------
The following terms, as used in this Warrant, have the following
respective meanings:
"Business Day" means (a) if any class of Common Stock is listed or
------------
admitted to trading on a national
<PAGE>
14
securities exchange, a day on which the principal national securities exchange
on which such class of Common Stock is listed or admitted to trading is open for
business or (b) if no class of Common Stock is so listed or admitted to trading,
a day on which any New York Stock Exchange member firm is open for business.
"Capital Reorganization" shall have the meaning set forth in Section
----------------------
4.05.
"Closing Price" on any day means (a) if any class of Common Stock is
-------------
listed or admitted for trading on a national securities exchange, the reported
last sales price regular way or, if no such reported sale occurs on such day,
the average of the closing bid and asked prices regular way on such day, in each
case on the principal national securities exchange on which such class of Common
Stock is listed or admitted to trading, or (b) if no class of Common Stock is
listed or admitted to trading on any national securities exchange, the average
of the closing bid and asked prices in the over-the-counter market on such day
as reported by NASDAQ or any comparable system or, if not so reported, as
reported by any New York Stock Exchange member firm selected by the Company for
such purpose.
"Common Stock" means common stock of the Company, par value $0.001 per
------------
share, subject to adjustment pursuant to Article IV.
"Common Stock Distribution" shall have the meaning set forth in
-------------------------
Section 4.03(a).
"Common Stock Reorganization" shall have the meaning set forth in
---------------------------
Section 4.02.
"Company" shall have the meaning set forth in the first paragraph of
-------
this Warrant.
"Convertible Securities" shall have the meaning set forth in Section
----------------------
4.03(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and any similar or successor Federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as the
same shall be in effect at the time.
"Exercise Price" means $[ ] per share of Common Stock, subject to
--------------
adjustment pursuant to Article IV.
<PAGE>
15
"Fair Market Value" means the fair market value of the business,
-----------------
property or other consideration in question, as determined in good faith by the
Board of Directors of the Company. The Fair Market Value of the Company shall
be the greater of the Fair Market Value of the Company and its Subsidiaries
assuming the sale of the Company to an independent third party as a going
concern or the liquidation value thereof. Notwithstanding the foregoing, if, at
any date of determination of the Fair Market Value of the Company, any class of
Common Stock shall then be publicly traded, the Fair Market Value of the Company
on such date shall be the Market Price on such date multiplied by the number of
shares of Common Stock then outstanding.
"Holder" shall have the meaning set forth in the first paragraph of
------
this Warrant.
"Majority Warrantholders" means (a) in the case of any determination
-----------------------
hereunder that does not involve a comparable determination under any Other
Warrants then outstanding, the holders of a majority in interest of the
Warrants, or (b) in the case of any determination hereunder that involves a
comparable determination under any Other Warrants then outstanding, the holders
of a majority in interest of the Warrants and such Other Warrants, considered as
a single class. For purposes hereof, a "majority in interest" shall be
determined based on the number of shares of Common Stock subject to purchase
under the Warrants and, if applicable, Other Warrants.
"Market Price" on any day means the average of the daily Closing
------------
Prices of a share of Common Stock for the 20 consecutive Business Days ending on
the most recent Business Day for which a Closing Price is available.
"NASD" means the National Association of Securities Dealers, Inc.
----
"NASDAQ" means The Nasdaq Stock Market, an electronic securities
------
market operated by The Nasdaq Stock Market, Inc., a wholly owned subsidiary of
the NASD.
"Options" shall have the meaning set forth in Section 4.03(b).
-------
"Other Warrants" means, at any time, all "Warrants" (as defined in the
--------------
Registration Rights Agreement, without giving effect to any amendments thereto)
then outstanding other than the Warrants.
<PAGE>
16
"Person" means any natural person, corporation, limited liability
------
company, trust, joint venture, association, company, partnership or other
entity.
"Registration Rights Agreement" shall have the meaning set forth in
-----------------------------
Article III.
"Securities Act" means the Securities Act of 1933, as amended, and any
--------------
similar or successor Federal statute, and the rules and regulations of the
Securities and Exchange Commission (or its successor) thereunder, all as the
same shall be in effect at the time.
"Special Distribution" shall have the meaning set forth in Section
--------------------
4.04.
"Warrant Agency" shall have the meaning set forth in Section 2.01.
--------------
"Warrantholder" means a holder of a Warrant.
-------------
"Warrants" shall have the meaning set forth in the second paragraph of
--------
this Warrant.
ARTICLE VI
Purchase and Cancelation of Warrants
------------------------------------
SECTION 6.01. Purchase of Warrants by the Company. The Company shall
------------------------------------
have the right to purchase or otherwise acquire Warrants at such times, in such
manner and for such consideration as it and the holder or holders thereof may
deem appropriate; provided, however, that the foregoing shall not be construed
-------- -------
to impose any obligation upon any Warrantholder to sell any Warrant.
SECTION 6.02. Cancelation of Warrants. All Warrants purchased or
------------------------
otherwise acquired by the Company or any subsidiary thereof shall thereupon be
canceled and retired. The Warrant Agency shall cancel any Warrant surrendered
for exercise or registration of transfer or exchange.
ARTICLE VII
Covenants of the Company
------------------------
SECTION 7.01. Rule 144A. The Company shall, upon request of the
----------
Holder or any prospective transferee of the
<PAGE>
17
Holder, provide the information required by Rule 144A(d)(4) under the Securities
Act (or any successor rule or regulation thereto).
SECTION 7.02. Preemptive Rights. If at any time the Company shall
------------------
propose to issue, sell or otherwise dispose of (directly or indirectly,
including through any subsidiary of the Company) any Common Stock or other
equity securities (including equity appreciation rights) for cash, evidence of
indebtedness or other securities or property of any nature whatsoever, and if
the Company affords to all or substantially all of the holders of its
outstanding shares of Common Stock the opportunity to purchase such securities,
then the Company shall deliver to each Warrantholder a notice of such proposed
issuance, sale or other disposition, and each such Warrantholder shall, at its
option, have the right to purchase a pro rata (assuming the exercise of all of
the Warrants) portion of such securities, for the same consideration per
security as is paid or delivered or proposed to be paid or delivered to the
Company or its subsidiaries by the holders of outstanding shares of Common
Stock. Any notice required to be delivered by the Company pursuant to this
Section 7.02 shall be given at the same time notice is given to the holders of
its outstanding shares of Common Stock and shall specify the securities to be
issued and the consideration per security therefor.
ARTICLE VIII
Miscellaneous
-------------
SECTION 8.01. Notices. Notices and other communications provided for
--------
herein shall be in writing and:
(a) if to the Holder, such notices and communications shall be
delivered or sent by mail or telecopy transmission to such Holder at its
address (or telecopy number) as shown on the books maintained by the
Warrant Agency (which, in the case of the initial Holder, shall be Lucent
Technologies Inc., 283 King George Road, Room A1D14, Warren, NJ 07059,
Attention of Director, Financing Operations, telecopy no. (908) 559-1706),
unless the Holder shall notify the Company and the Warrant Agency that
notices and communications should be sent to a different address (or
telecopy number), in which case such notices and communications shall be
sent to the address (or telecopy number) specified by the Holder; or
<PAGE>
18
(b) if to the Company, shall be delivered or sent by mail or telecopy
transmission to Advanced Radio Telecom Corp., 500-108th Avenue N.E., Suite
2600, Bellevue, WA 98004 (telecopy no. (425) 990-1642), Attention of
General Counsel.
Any such notices or other communications shall take effect at the time of
receipt thereof.
SECTION 8.02. Waivers; Amendments. No failure or delay of the Holder
--------------------
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (x) the
written consent of the Company and the Holder of this Warrant or (y) with the
written consent of the Company and the holders of Warrants, voting as a single
class, entitling such holders to purchase a majority of the Common Stock subject
to purchase upon exercise of such Warrants at the time outstanding (exclusive of
Warrants then owned by the Company or any Subsidiary or affiliate thereof);
provided, however, that no such amendment, modification or waiver shall (a)
- -------- -------
without the written consent of the Holder, change the number of shares of Common
Stock subject to purchase upon exercise of this Warrant, the Exercise Price or
provisions for payment thereof or (b) without the written consent of all the
Warrantholders, amend, modify or waive the provisions of this Section or Article
IV hereof. The provisions of the Registration Rights Agreement may be amended,
modified or waived only in accordance with the provisions thereof.
Any such amendment, modification or waiver effected pursuant to this
Section or the applicable provisions of the Registration Rights Agreement shall
be binding upon the holders of all Warrants, upon each future holder thereof and
upon the Company. In the event of any such amendment, modification or waiver
the Company shall give prompt notice thereof to all holders of Warrants and, if
appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
SECTION 8.03. Governing Law. This Warrant shall be construed in
--------------
accordance with and governed by the laws of
<PAGE>
19
the State of New York, except to the extent that the laws of Delaware shall be
mandatorily applicable hereto.
SECTION 8.04. Representations and Warranties; Survival. (a) The
-----------------------------------------
Company represents and warrants to the Holder on and as of the date of the
issuance of this Warrant that:
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to so qualify would not, singularly or in the aggregate,
have a material adverse effect on the assets, condition (financial or
otherwise), results of operations, business or prospects of the Company and
its subsidiaries taken as a whole.
(ii) The Company has full right, power and authority to execute and
deliver this Warrant and the Registration Rights Agreement and to perform
its obligations hereunder and thereunder; and all action required to be
taken for the due and proper authorization, execution and delivery by it of
this Warrant and the Registration Rights Agreement and the consummation of
the transactions contemplated hereby and thereby has been duly and validly
taken.
(iii) Each of this Warrant and the Registration Rights Agreement has
been duly authorized, executed and delivered by the Company and constitutes
a valid and legally binding agreement of the Company enforceable against
the Company in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law).
(iv) The execution, delivery and performance by the Company of this
Warrant and the Registration Rights Agreement, compliance by the Company
with the terms hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any
<PAGE>
20
lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any material indenture, mortgage, deed
of trust, loan agreement or other material agreement or instrument to which
the Company or any of its subsidiaries is bound or which any of the
property or assets of the Company or any of its subsidiaries is subject,
nor will such actions result in any violation of the provisions of the
certificate of incorporation or by-laws, or other organizational documents,
as applicable, of the Company or any of its subsidiaries or any law or
statute or any judgment, order, decree, rule or regulation of any court or
arbitrator or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or assets;
and no consent, approval, authorization or order of, or filing or
registration with, any such court or arbitrator or governmental agency or
body under any such law, statute, judgment, order, decree, rule or
regulation is required for the execution, delivery and performance by the
Company of this Warrant and the Registration Rights Agreement, compliance
by the Company with the terms hereof and thereof and the consummation of
the transactions contemplated hereby and thereby, except for such consents,
approvals, authorizations, filings, registrations or qualifications which
shall have been obtained or made prior to the date required.
(b) All representations and warranties made by the Company in Section
8.04(a) and all covenants of the Company contained herein and in the
Registration Rights Agreement shall be considered to have been relied upon by
the Holder and shall survive the issuance and delivery of the Warrants,
regardless of any investigation made by the Holder, and shall continue in full
force and effect so long as this Warrant is outstanding.
SECTION 8.05. Covenants To Bind Successors and Assigns. All
-----------------------------------------
covenants, stipulations, promises and agreements in this Warrant contained by or
on behalf of the Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 8.06. Severability. In case any one or more of the
-------------
provisions contained in the Registration Rights Agreement or this Warrant shall
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good faith
<PAGE>
21
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 8.07. Section Headings. The section headings used herein are
-----------------
for convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
SECTION 8.08. No Rights as a Stockholder. This Warrant shall not
---------------------------
entitle the Holder to any rights as a stockholder of the Company.
SECTION 8.09. Tax Basis. The Company and the original Warrantholder
----------
agree that the original Warrantholder's basis in this Warrant for tax purposes,
upon issuance of this Warrant from the Company, shall be $[ ] and neither
the Company nor the original Warrantholder shall take any action inconsistent
therewith.
<PAGE>
22
IN WITNESS WHEREOF, ADVANCED RADIO TELECOM CORP. has caused this
Warrant to be executed in its corporate name by one of its officers thereunto
duly authorized, and its corporate seal to be hereunto affixed, attested by its
Secretary or an Assistant Secretary, all as of the day and year first above
written.
ADVANCED RADIO TELECOM CORP.,
By____________________________
Name:
Title:
[Corporate Seal]
Attest:
___________________________
Name:
Title:
<PAGE>
23
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
To ADVANCED RADIO TELECOM CORP.:
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the attached Warrant for, and to purchase thereunder,
_______________ shares of Common Stock, as provided for therein, and tenders
herewith payment of the Exercise Price in full in the form of cash or certified
or bank cashier's check or wire transfer.
Please issue a certificate or certificates for such shares of Common
Stock in the following name or names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Dated:__________
___________________________________
NOTE: The above signature should correspond exactly
with the name on the face of the attached
Warrant or with the name of the assignee
appearing in the assignment form below.
<PAGE>
EXHIBIT 10.8
ADVANCED RADIO TELECOM CORP.
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is made as of August 6, 1998 (the
"Agreement") among Advanced Radio Telecom Corp., a Delaware corporation ("ART")
and ICG Telecom Group, Inc., a Colorado corporation ("Seller").
WHEREAS, ART, Seller and Pacific & Eastern Digital Transmission Services,
Inc. entered into a Services Agreement dated as of October 29, 1996 (the
"Services Agreement") providing for, among other things, a right of first
refusal in favor of ART with respect to the authorizations governed by the
Services Agreement ("ART's Right of First Refusal");
WHEREAS, on April 3, 1998 Seller provided ART with notice pursuant to the
Services Agreement that Seller had received a bona fide offer to purchase the
authorizations covered by ART's Right of First Refusal;
WHEREAS, on April 27, 1998 ART provided Seller with notice pursuant to the
Services Agreement of its election to purchase such authorizations; and
WHEREAS, ART wishes to purchase, and Seller wishes to sell, certain assets,
property and rights of Seller, listed in Section 1.1 hereof, and defined the
"Assets" therein, in exchange for $4,300,000 cash as set forth in Section 1.3
hereof (the "Transaction");
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, Seller agrees to sell and transfer to ART and ART agrees to acquire
from Seller, free and clear of any pledge, lien, options, warrants, security
interest, mortgage claim, charge, liability, right of first refusal, lease,
management agreement, contractual restriction on transfer or other encumbrance
of any kind whatsoever (the "Liens"), at the Closing (defined below) all of
Seller's right, title and interest in, to and under the following assets (the
"Assets"):
(a) the 38 GHz radio authorizations granted by the Federal
Communications Commission (the "FCC") listed on Schedule 1.1 hereto (the
"Authorizations") 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;
<PAGE>
1.2 No Assumption of any Liabilities. ART will not assume, satisfy or
--------------------------------
perform any of the debts, liabilities, obligations or commitments of Seller.
Seller will retain all such debts, liabilities, obligations and commitments.
1.3 Consideration. Subject to and upon the terms and conditions of this
-------------
Agreement, in consideration of sale and transfer of the Assets to ART, ART will
pay the Seller $4,300,000 (the "Consideration") at the Closing by check or wire
transfer in immediately available funds.
2. Closing.
-------
2.1 The closing of the Transaction (the "Closing") shall take place on
such date and at such time within 5 business days of the satisfaction of the
conditions contained in Sections 9 and 10 as mutually agreed by the parties (the
"Closing Date") (i) simultaneously at the offices of Ropes & Gray, One
International Place, Boston, Massachusetts 02110 and at Seller's offices located
at 161 Inverness Drive West, Englewood, Colorado 80112 or (ii) at such other
place and time as the parties agree.
2.2 Deliveries by the Seller at Closing. At Closing, the Seller 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 Seller authorizing Seller to enter into and perform
its obligations under this Agreement;
(c) a copy of the Articles of Incorporation of Seller certified by
the appropriate public official and a copy of the by-laws of Seller
certified by its Secretary;
(d) a certificate of the secretary or assistant secretary of the
Seller as to resolutions, Bylaws, Articles of Incorporation and incumbency;
and
(e) Certificate of the Secretary of State of the State of Colorado
as to the legal existence and good standing of Seller, listing all
documents on file with the Secretary of State.
2.3 Deliveries by ART at Closing. At Closing, ART shall pay to Seller the
----------------------------
Consideration and deliver to Seller:
(a) certified copies of resolutions of the board of directors of
Buyer authorizing Buyer to enter into and perform its obligations under
this Agreement;
-2-
<PAGE>
(b) a copy of the Certificate of Incorporation of Buyer certified
by the appropriate public official and a copy of the by-laws of Buyer
certified by its Secretary;
(c) a certificate of the Secretary or Assistant Secretary of Buyer
as to resolutions, Bylaws, Certificate of Incorporation and incumbency; and
(d) Certificate of the Secretary of State of the State of Delaware
as to the legal existence and good standing of Buyer, listing all documents
on file with the Secretary of State.
2.4 Certifications; Opinions. At Closing, ART and Seller shall deliver
------------------------
the certificates, opinion of counsel and other documents described in Sections 9
and 10 hereof, respectively, unless such delivery is waived by the party
entitled to receipt of such items.
2.5 Consents. At Closing, Seller shall deliver evidence satisfactory to
--------
ART that the Final Order required pursuant to Section 9.3 has been granted by
the FCC.
2.6 Form of Documents and Instruments. All of the documents and
---------------------------------
instruments delivered at Closing by a party shall be in form and substance, and
shall be executed and delivered in a manner, reasonably satisfactory to the
other party.
3. Representations and Warranties of Seller. Seller represents and warrants
----------------------------------------
to ART as follows:
3.1 Entity Status. Seller is a Colorado corporation, duly organized,
-------------
validly existing and in good standing in the state of its jurisdiction of
organization. Seller 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. Seller 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, except to the extent failure to be so qualified could
not have a material adverse effect on the Assets, ART or the Transaction.
Seller has delivered to ART complete and correct copies of any organizational,
by-laws or charter documents applicable to it, each as amended and in effect on
the date hereof.
3.2 Authority for Agreement; Conflicts.
----------------------------------
(a) Seller has all necessary power and authority, corporate or
otherwise, to enter into, execute and deliver this Agreement and the other
documents to be delivered by Seller at the Closing (such other documents
are collectively the "Seller 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 Seller Documents by Seller has been duly authorized by all
necessary corporate action.
-3-
<PAGE>
(b) This Agreement has been, and the other Seller Documents, at the
Closing, will have been, duly and validly executed and delivered by Seller
and this Agreement constitutes, and the other Seller Documents when
executed by ART where applicable will constitute, the legal, valid and
binding obligation of Seller, and this Agreement is, and when executed by
ART where applicable the Seller Documents will be, enforceable by and
against Seller 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 Seller
Documents by Seller 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 Seller or any of the Assets; (ii) any other statute,
regulation, order, judgment or decree applicable to Seller or any of the
Assets under or in any other applicable jurisdiction; (iii) any mortgage,
indenture, lease, agreement, instrument or other obligation to which Seller
is a party or by which any of the Assets are bound; or (iv) any permit,
concession, grant, franchise, license, of or applicable to Seller, except
to the extent that such a violation could not have a material adverse
effect on the Assets, ART or the Transaction. 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
--------------------------------------------------
consent of the FCC to the transfer of the Authorizations, no consent, approval
or filing with any governmental or regulatory authority is required to be made
or obtained by Seller in connection with its execution and delivery of and
performance of its obligations under, this Agreement.
3.4. FCC Regulatory Matters.
----------------------
(a) Seller 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 Seller or the
Assets, and Seller is in compliance with all other federal, state and local
laws, rules, regulations and ordinances applicable to Seller 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 Seller or the
Assets except to the extent that failure to be in compliance could not have
a material adverse effect on the Assets, ART or the Transaction and except
to the extent that any such failure to be in compliance is the direct
result of a breach by ART or ART's agents of the Services Agreement.
-4-
<PAGE>
(b) FCC Authorizations. Schedule 1.1 sets forth a true and complete
------------------
list of each Authorization that is being transferred to ART hereunder, the
name of the licensee or permit holder, the call sign, the Authorization
expiration date, the coverage area of such Authorization by latitude and
longitude and the status of any applications for assignment, transfer or
waiver of FCC rules filed (or to be filed) with the FCC. Seller has
provided to ART true and correct copies of the Authorizations received by
it from the FCC. None of such Authorizations are subject to any Lien, and
Seller owns all of the right, title and interest in, to and under such
Authorizations. Seller is qualified under all laws, rules and regulations
to hold the Authorizations held by it.
(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,
Authorizations, 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 , except to the extent that such failure to pay such fees could
not have a material adverse effect on the Assets, ART or the Transaction,
provided that all such fees with respect to the Assets will have been paid
by the Closing.
(d) Authorization Compliance. The Authorizations are valid and in
------------------------
full force and effect without materially adverse conditions except for such
conditions as are generally applicable to FCC 38 GHz authorizations or
holders of FCC 38 GHz authorizations. No event or omission has occurred
and is continuing that could: (i) result in the revocation, termination or
adverse modification of any Authorization listed on Schedule 1.1; or (ii)
materially and adversely affect any rights of Seller thereunder prior to
Closing or of ART after Closing except that Seller makes no representation
as to ART's qualification as a licensee and Seller makes no representation
as to any act or omission by ART or ART's agents in breach of the Services
Agreement that may have a material adverse effect on the Authorizations.
Seller has no knowledge of any event, omission, action, inaction, condition
or other basis to believe that the Authorizations will not be renewed by
the FCC in the ordinary course, except that Seller makes no representation
as to any act or omission by ART or ART's agents in breach of the Services
Agreement that may have a material adverse effect on the Authorizations.
The current ownership and operation by Seller, as applicable, of the
Authorizations comply in all material respects with all the regulations and
policies of the FCC, except that Seller makes no representation as to any
act or omission by ART or ART's agents in breach of the Services Agreement
that may have a material adverse effect on the Authorizations.
(e) Reports. Any and all reports and filings required to be filed
-------
with the FCC by Seller with respect to the Authorizations have been filed
and Seller has provided true and correct copies of all such reports and
filings to ART, except to the extent that such failure to file reports
could not have a material adverse effect on the Assets, ART or the
-5-
<PAGE>
Transaction. All such reports and filings were accurate and complete in
all material respects on the date thereof. From the date hereof through
the Closing, all such required reports and filings, if any, will be filed
by Seller on a timely basis.
(f) Disclosure. Seller has no knowledge of any 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 Authorizations.
3.5. Title to the Transferred Assets; Liens; Other Assets. Seller has
----------------------------------------------------
good, indefeasible and transferable title to all of the Assets, free and clear
of all Liens, except for ART's Right of First Refusal under the Services
Agreement.
3.6. Contracts. Except for this Agreement, the Services Agreement and
---------
generally applicable FCC requirements, Seller is not 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.
3.7. Litigation. There are no actions, claims, proceedings, suits and
----------
investigations pending, or, to the best knowledge of Seller threatened against
any of Seller, the Assets or any of its properties, assets or rights before any
court, arbitrator or administrative or governmental body: (i) relating to the
Assets or which seek to revoke, rescind, cancel, modify or refuse to renew any
Authorization or; (ii) relating to the transactions contemplated hereby, nor to
the best knowledge of Seller is there any basis for any such action. There is
no judgment, order or decree affecting the Assets or the transactions
contemplated hereby.
3.8. Disclosure. The representations and warranties contained in this
----------
Section 3, any disclosure schedule and any other schedule, exhibit or
certificate delivered by Sellers to ART at or prior to the Closing in connection
with this Agreement do not contain and will not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements contained herein and therein in the context in which they were
made not misleading. Except as otherwise disclosed herein, Seller does not know
of any information or fact that has or could have a material adverse effect on
the Assets.
3.9. Taxes. Seller 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 except where
failure to make such timely filing or payment could not have a material adverse
effect on the Assets, ART or the Transaction. There are no examinations in
progress or claims against Seller 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 except where such
examinations or claims could not have a material adverse effect on the Assets,
ART or the Transaction.
-6-
<PAGE>
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 Seller.
4. Representations and Warranties by ART. ART represents and warrants as
-------------------------------------
follows:
4.1. Entity Status. ART is a Delaware corporation, duly organized,
-------------
validly existing and in good standing under the laws of the State of Delaware.
ART 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. 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, except
to the extent failure to be so qualified could not have a material adverse
effect on Seller or the Transaction. ART has delivered to Seller complete and
correct copies of any organizational, by-laws or charter documents applicable to
it, each as amended and in effect on the date hereof.
4.2. Authority for Agreement; Conflicts.
----------------------------------
(a) ART has all necessary power and authority, corporate or
otherwise, to enter into, execute and deliver this Agreement and the other
documents to be delivered by ART at the Closing (such other documents are
collectively 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 applicable
ART Documents by ART has been duly authorized by all necessary corporate
action.
(b) This Agreement has been, and the other ART Documents, at the
Closing, will have been, duly and validly executed and delivered by ART and
this Agreement constitutes, and the other ART Documents when executed by
Seller where applicable will constitute, the legal, valid and binding
obligation of ART, and this Agreement is, and when executed by Seller where
applicable the 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 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;
(iii) any mortgage,
-7-
<PAGE>
indenture, lease, agreement, instrument or other obligation to which ART is
a party; or (iv) any permit, concession, grant, franchise, license, of or
applicable to ART, except to the extent that such a violation could not
have a material adverse effect on Seller or the Transaction.
4.3. Litigation. There are no judicial or administrative actions, suits,
----------
proceedings 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, suit, proceeding or
investigation.
4.4. Consents and Approvals of Government Authorities. Except for the
------------------------------------------------
approval by the FCC of the transfer of the Authorizations, 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.
4.5. 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.
4.6. Disclosure. The representations and warranties contained in this
----------
Section 4, any disclosure schedule and any other schedule, exhibit or
certificate delivered by ART to Seller at or prior to the Closing in connection
with this Agreement do not contain and will not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements contained herein and therein in the context in which they were
made not misleading.
5. Expenses. Each party to this Agreement shall assume and bear all of its
--------
own respective expenses, costs and fees incurred or assumed by each in the
preparation and execution of this Agreement and compliance herewith, whether or
not the transaction herein provided for shall be consummated.
6. Survival of Representations and Warranties. All representations,
------------------------------------------
warranties and agreements of each of 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 either party, the Closing and
the consummation of the transactions contemplated by this Agreement for a period
of three years from the Closing or, if terminated before Closing, the
termination of this Agreement.
7. Indemnities.
-----------
7.1 Indemnification by the Seller. From and after the Closing, the Seller
-----------------------------
shall indemnify ART and its successors and assigns for any and all damages,
claims, losses, liabilities,
-8-
<PAGE>
and expenses, including without limitation reasonable legal and accounting
expenses (collectively, "Losses"), in an amount not to exceed in the aggregate
$4,300,000, which may arise out of: (i) any breach of Seller's covenants and
agreements hereunder; (ii) any inaccuracy or misrepresentation in any
representation or warranty of Seller hereunder, in each case as such
representation or warranty would read if all materiality and knowledge standards
were deleted from it, or any inaccuracy or misrepresentation in any certificate
or document delivered in accordance with the terms of this Agreement by any
Seller; (iii) any liabilities of Seller accrued, contingent, known, unknown or
otherwise; 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 Date.
7.2. Indemnification by ART. From and after the Closing, ART shall
----------------------
indemnify and hold harmless the Seller from and against any and all Losses in an
amount not to exceed in the aggregate $4,300,000, which may arise out of: (i)
ART's breach of any of the covenants and agreements made in this Agreement by
ART; (ii) any inaccuracy or misrepresentation in any representation or warranty
of ART hereunder, in each case as such representation or warranty would read if
all materiality and knowledge standards were deleted from it, or any inaccuracy
or misrepresentation in any certificate or document delivered in conjunction
with this Agreement; or (iii) ART's ownership and operation of the Assets after
the Closing.
7.3. Limitation on Indemnification. Notwithstanding the foregoing neither
-----------------------------
party shall have any obligation to indemnify the other for Losses relating to
breaches of representations and warranties set forth herein or in any
certificate or document delivered in connection herewith until the aggregate
amount of Losses incurred by such other party exceeds one hundred thousand
dollars ($100,000), in which event the indemnifying party shall be obligated to
indemnify the other party for the entire amount of such Losses.
7.4. Liquidated Damages. In the event ART does not meet its obligation to
------------------
consummate the transaction despite the fulfillment of all the conditions of
Article 9 hereof, ART shall pay to seller within ten (10) business days the
amount of One Hundred Thousand Dollars ($100,000) and ART's rights under Article
5 of the Services Agreement shall terminate and such payment and termination of
right shall be Seller's sole remedy at law and equity.
7.5. Sole and Exclusive Remedy. Seller and ART agree that from and after
-------------------------
the Closing, the provisions of this Section 7 shall be the sole and exclusive
remedy of Seller and ART as a result of, in the case of ART, the occurrence of
any of the items described in Section 7.1 (i) through (iv) and in the case of
Seller, the occurrence of any of the items described in Section 7.2 (i) through
(iii).
8. Covenants.
---------
8.1 FCC and Other Approval.
----------------------
-9-
<PAGE>
(a) Seller and ART will use their reasonable efforts to join in and
submit as quickly as possible one or more applications (the "Applications")
to the FCC as deemed by ART and Seller to be appropriate requesting the
FCC's written consent to the transfer of the Authorizations to ART or
designees of ART.
(b) Except as otherwise provided herein, each party shall bear its
own expenses in connection with the preparation and prosecution of the
Applications. ART and the Sellers shall equally share in any application,
consent or other fees charged by the FCC in connection with the
Applications, and the cost of publishing any public notices in connection
therewith.
8.2. Further Assurances. At any time and from time to time at or after
------------------
the Closing, at the request of ART and without further consideration, Seller
will execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation or other documents 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 to put ART in actual possession and operating
control of the Assets.
8.3. Public Announcements. Neither Seller nor ART will at any time,
--------------------
without the prior written consent of the other party, such consent not to be
unreasonably withheld, delayed or conditioned, make any announcement, issue any
press release or make any statement to any third party with respect to this
Agreement or any of the specific matters discussed between the parties, except
as reasonably required to facilitate such party's financing or to comply with
law, the requirements of the Nasdaq Stock Market, or the terms of such party's
financing.
8.4. Information and Access; Compliance. During the period from the date
----------------------------------
of this Agreement and continuing until the Closing Date or until the termination
of this Agreement pursuant to Section 11 hereof, Seller shall afford to the
officers, independent certified public accountants, counsel and other
representatives of ART, reasonable access to the properties, books, records and
personnel of Seller used in or relating to the Assets. Seller's provisions of
access pursuant to this Section 8.4 shall in no way affect or otherwise obviate
or diminish any representations and warranties of Seller. ART and Seller shall
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on Seller or ART with respect to this
Agreement and the transactions contemplated hereby (including furnishing all
information required by the FCC in connection with transfer of the
Authorizations) and Seller or ART respectively 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 the other party in
connection with this Agreement and the transactions contemplated hereby.
Neither Seller nor ART shall take any action which, or reasonably fail to take
any action the failure of which, would cause such party's disqualification as an
assignor or assignee, as the case may be, of the Authorizations or would
materially adversely affect the Assets or ART's rights with respect thereto.
-10-
<PAGE>
8.5 Conduct of Business by Sellers. Seller covenants that the Seller
------------------------------
shall not, without the prior written consent of ART:
(a) sell, transfer, convey or otherwise dispose of any of the
Assets 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 or any right
thereto or interest therein, or
(c) enter into any contract, agreements or understanding with
respect to any of the Assets.
(d) enter into any agreements or commitments for any of 8.5(a)
through 8.5(c).
8.6 Fees and Reports. Seller covenants that Seller shall prior to the
----------------
Closing, (i) to the extent unpaid, pay any fees with respect to the Assets
referred to in Section 3.4(c).
9. Conditions Precedent to ART's Obligations. All obligations of ART under
-----------------------------------------
this Agreement are subject to the fulfillment to the reasonable satisfaction of
ART prior to or at the Closing of each of the following conditions, any of which
may be waived by ART in its sole discretion:
9.1. Representations and Warranties. The representations and warranties
------------------------------
made by the Seller 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 of Seller to the foregoing
effect.
9.2. Consents. All 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.
9.3. FCC Authorizations. Without limiting the generality of Section 9.2,
------------------
the FCC shall have authorized the transfer or change of control, as applicable,
of all of the Authorizations by a Final Order (as defined below), without any
conditions or restrictions that materially affect the value of the
Authorizations or operations pursuant to the Authorizations or any conditions or
restrictions materially different than the normal authorizations issued by the
FCC to other 38 GHz license holders at the date of this Agreement. In the event
that any FCC order approving the transfer of the Authorizations to ART imposes
such conditions, this condition shall not be satisfied until such conditions are
removed or eliminated, and Seller shall cooperate in all reasonable respects in
obtaining the removal or elimination of such restrictions. If such restrictions
cannot be removed without additional expense to the Seller not to exceed One
Hundred Thousand Dollars ($100,000), Seller may, at its option, elect to
terminate this agreement without any liability to ART by written notice of its
election to terminate pursuant to this Section 9.3. "Final Order"
-11-
<PAGE>
means an action by the FCC granting its consent to the assignment of a
Authorization, 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.
9.4. Performance by Seller; Certificate. Seller 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 Seller shall deliver to ART a
certificate dated the Closing Date to such effect.
9.5. Opinions of Counsel for Seller. ART shall have received opinions
------------------------------
addressed to it and dated the Closing Date of counsel and FCC counsel for
Seller, reasonably satisfactory to ART and its counsel.
9.6. 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 prevent or make illegal the consummation of
such transactions or which could be materially adverse to the Assets.
9.7. 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. Conditions Precedent to the Obligations of the Seller. All obligations of
-----------------------------------------------------
the Seller under this Agreement shall be subject to the fulfillment to the
reasonable satisfaction of Seller prior to or at the Closing, of each of the
following conditions any of which may be waived by Seller in its sole
discretion.
10.1. 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 as specifically provided for
herein, and Seller shall have received a certificate dated the date of Closing
signed by an officer of ART to the foregoing effect.
10.2. 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.
-12-
<PAGE>
10.3. 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 Seller to such effect.
10.4. 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 prevent or make illegal the consummation of
such transactions.
10.5. Consideration. The Consideration shall have been delivered to
-------------
Seller.
11. Termination. This Agreement may be terminated by the parties as set forth
-----------
in this Section 11:
(a) at any time by the mutual written consent of Seller and ART;
(b) by ART at any time after February 1, 1999, if the conditions
set forth in Section 9 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;
(c) by Seller at any time after February 1, 1999 (the "Seller
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 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 Authorizations, to ART, ART may extend the Seller Date until April 30,
1999 by notice to Seller;
(d) by the Sellers on the one hand, or by ART on the other, if
there shall have been a breach of any material 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; or
(e) by either party after 3 days from receipt of a Final Order from
the FCC that the Assets cannot be transferred as contemplated herein;
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
11, the provisions of Sections 7 and 8.3 hereof shall remain in full force and
effect. No termination of this Agreement pursuant to Section 11(b), (c) or (d)
shall relieve a breaching party of any liability hereunder for any such breach
occurring prior to termination.
-13-
<PAGE>
12. Entire Agreement; Assignability. This 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 (other than the Services Agreement,
which will be terminated as of the Closing), 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. ART or Seller may
assign this Agreement to any controlled affiliate or in conjunction with any
change of control, merger, or sale of all or substantially all of such
assignor's assets or stock provided that such assignment shall not release
assignor of liability hereunder.
13. 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.
14. 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.
15. Exhibits, etc. Exhibits, schedules and other documents referred to in this
-------------
Agreement are an integral part of this Agreement.
16. 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.
17. 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 Seller, to:
ICG Telecom Group, Inc.
161 Inverness Drive West
Englewood, CO 80112
Attention: H. Don Teague, Esq.
(b) if to ART to:
Advanced Radio Telecom Corp.
500 108th Avenue, NE, Suite 2600
Bellevue, Washington 98004
Attention: Thomas M. Walker, Esq.
-14-
<PAGE>
with a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Attention: Mary E. Weber, Esq.
18. 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.
19. 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.
20. 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]
-15-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
ICG TELECOM GROUP, INC.
By:
-------------------------------
Name:
Title:
ADVANCED RADIO TELECOM CORP.
By:
-------------------------------
Name:
Title:
-16-
<PAGE>
SCHEDULE 1.1 - ASSETS
AUTHORIZATIONS
<TABLE>
<CAPTION>
Location FCC File # Call Sign Latitude/Longitude Block
-------- ---------- --------- ------------------------
<S> <C> <C> <C> <C>
Beverly Hills, CA 565-CF-P/L-92 WMW449 34-22-30N/118-30-00W 33-40-00N/118-22-30W
Los Angeles, CA 566-CF-P/L-92 WMW450 34-22-30N/118-22-30W 33-37-30N/118-07-30W
Palm Springs, CA 567-CF-P/L-92 WMW451 33-52-30N/116-30-30W 33-45-00N/116-22-30W
Riverside, CA 568-CF-P/L-92 WMW452 34-00-00N/117-30-00W 33-52-00N/117-15-00W
Santa Barbara, CA 569-CF-P/L-92 WMW453 34-30-00N/120-00-00W 34-22-30N/119-22-30W
San Bernardino, CA 570-CF-P/L-92 WMW454 34-15-00N/117-30-00W 34-00-00N/117-07-30W
Santa Monica, CA 571-CF-P/L-92 WMW455 34-30-00N/119-00-00W 34-07-30N/118-30-00W
San Diego, CA 572-CF-P/L-92 WMW456 32-52-30N/117-15-00W 32-32-43N/116-52-30W
Santa Anna, CA 573-CF-P/L-92 WMW457 34-15-00N/118-07-30W 33-37-30N/117-45-00W
Ventura, CA 574-CF-P/L-92 WMW458 34-30-00N/119-22-30W 34-07-30N/119-00-00W
</TABLE>
-17-
<PAGE>
EXHIBIT 10.9
ADVANCED RADIO TELECOM CORP.
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement made as of July 3, 1998 (the "Agreement")
among Advanced Radio Telecom Corp., a Delaware corporation ("ART"), Astrolink
Communications, Inc., a Delaware corporation ("Seller"), James S. Eaton, John P.
Erlick, Rise D. Ochser, Michael R. Clark and Richard Ressa (Eaton, Erlick,
Ochser, Clark and Ressa are referred to herein as the "Selling Stockholders"
and, together with Seller, the "Sellers").
WHEREAS, ART wishes to purchase, and Seller wishes to sell, certain assets,
property and rights of Seller, listed in Section 1.1 hereof, and defined as the
"Assets" therein, in exchange for that number of shares of ART's Common Stock,
$.001 par value per share (the "Common Stock"), set forth in Section 1.3 hereof
(the "Transaction");
WHEREAS, the Assets comprise more than ninety (90%) of the assets of
Seller; and
WHEREAS, ART and the Sellers 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, Seller agrees to sell and transfer to ART and ART agrees to acquire
from Seller, 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"), at the Closing (defined below) all of
Seller's right, title and interest in, to and under the following assets (the
"Assets"):
(a) the 38 GHz radio authorizations granted by the Federal
Communications Commission (the "FCC") listed on Schedule 1.1 hereto (the
"Authorizations") 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
1.2. No Assumption of any Liabilities. ART will not assume, satisfy or
--------------------------------
perform any of the debts, liabilities, obligations or commitments of Seller
other than liabilities under any
<PAGE>
Leases included in the Assets arising after the Closing Date. Seller will retain
all such debts, liabilities, obligations and commitments.
1.3. Consideration. 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 the Seller at the Closing 154,114 shares of its Common Stock, subject
to adjustment for stock splits, stock combinations, stock dividends or
reclassifications (the "Consideration").
1.4. Contingent Licenses.
------------------
(a) If prior to the later of (i) January 1, 1999 and (ii) the
Closing Date, the FCC grants Seller any licenses ("Future Licenses") by
Final Order (as herein defined) with respect to any of the pending
applications ("Pending Licenses") listed under the heading "Pending
Licenses" on Schedule 1.1, then Sellers and ART shall enter into an asset
purchase agreement pursuant to which Seller shall sell and ART shall
acquire such granted Future License, which agreement shall be substantially
in the form of this Agreement, provided, that the term "Consideration"
--------
shall be that number of shares of Common Stock set forth opposite the
Pending License relating to such Future License on Schedule 1.1 and the
term "Authorizations" shall mean the Future Licenses subject to such asset
purchase agreement, and provided further, that, at ART's option, the
-------- -------
issuance of Consideration for such Future Licenses need not be registered
under the Securities Act of 1933, as amended (the "Act").
1.5. Option Licenses.
---------------
(a) Subject to the terms of this Section 1.5, Seller hereby grants
ART an option (the "Buy Option") to buy from Seller any Future License not
granted by Final Order prior to the later of (i) January 1, 1999 and (ii)
the Closing Date. Such Buy Option may be exercised with respect to any
Future License by written notice to Seller by ART at any time before ninety
(90) days after the grant of such Future License by Final Order and until
the first anniversary of the later of (i) January 1, 1999 and (ii) the
Closing.
(b) In the event of the exercise of the Buy Option, the purchase and
sale of the relevant Future License shall be made pursuant to one or more
agreements in substantially the form of this Agreement, which the parties
agree to execute within thirty (30) days of the exercise of the respective
option, provided, that the term "Consideration" shall be that number of
--------
shares of Common Stock set forth opposite the Pending License relating to
such Future License on Schedule 1.1 and the term "Authorizations" shall
mean the Future Licenses subject to such asset purchase agreement, and
provided further, that, at ART's option, the issuance of consideration for
-------- -------
such Future Licenses need not be registered under the Act.
(c) ART acknowledges that the Sellers intend to cause Seller to
liquidate within one
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<PAGE>
year of the Closing. The Sellers agree that any Future Licenses or Pending
Applications which may be included in the Seller's assets at the time of
such liquidation shall be placed in a liquidating trust and the Selling
Stockholders shall cause such trust to be bound by the obligations of the
Seller pursuant to Sections 1.4 and 1.5 of this Agreement. ART agrees that
the Seller may so liquidate subject to the trust being so bound.
2. Closing.
-------
2.1. The closing of the Transaction (the "Closing") shall take place on
such date and at such time within 30 days of the satisfaction of the conditions
contained in Sections 9 and 10 as mutually agreed by the parties (the "Closing
Date") (i) at the offices of Ropes & Gray, One International Place, Boston,
Massachusetts 02110 or (ii) at such other place and time as the parties agree.
2.2. Deliveries by the Company at Closing. At Closing, the Seller 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 Seller authorizing Seller to enter into and perform
its obligations under this Agreement;
(c) a copy of the charter documents of Seller certified by the
appropriate public official and a copy of the by-laws of Seller 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.
2.3. Deliveries by ART at Closing. At Closing, ART shall deliver to
----------------------------
Seller one or more stock certificates representing the Consideration registered
in the name of the Seller (or in the name of the Selling Stockholders as the
Seller may direct) and such documents and instruments as Seller or its counsel
shall reasonably request to consummate or evidence the transactions contemplated
hereby.
2.4. Certifications; Opinions. At Closing, ART and Seller shall deliver
------------------------
the certificates, opinion of counsel and other documents described in Sections 9
and 10 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 Seller and the Selling Stockholders
---------------------------------------------------------------------
Seller and each
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<PAGE>
Selling Stockholder jointly and severally represent and warrant to ART as
follows:
3.1. Entity Status. Seller is a Delaware corporation duly organized,
-------------
validly existing and in good standing in the state of its jurisdiction of
organization. Seller 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. Seller, as of the Closing, will
be 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. Seller has delivered to ART complete and correct
copies of any organizational, by-laws or charter documents applicable to it,
each as amended and in effect on the date hereof. The Selling Stockholders own
100% of the outstanding capital stock of Seller, and there are no outstanding
subscriptions, options, warrants or other rights convertible into or exercisable
for, or any agreements to issue, capital stock of Seller.
3.2. Authority for Agreement; Conflicts.
----------------------------------
(a) Seller and each of the Selling Stockholders have all necessary
power and authority, corporate or otherwise, to enter into, execute and
deliver this Agreement and the other documents to be delivered by Sellers
at the Closing (such other documents are collectively 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 Seller
has been duly authorized by all necessary corporate action.
(b) This Agreement has been, and the Seller Documents, at the
Closing, will have been, duly and validly executed and delivered by Seller
and each Selling Stockholder and this Agreement constitutes, and the Seller
Documents will constitute, the legal, valid and binding obligation of
Seller and each Selling Stockholder and this Agreement is, and the Seller
Documents will be, enforceable by and against Seller and each Selling
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 and the Seller
Documents by Seller and each Selling Stockholder and (assuming the FCC has
granted its consent to the assignment of the Authorizations to ART and that
such consent is in full force and effect at the time of the Closing) 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 Seller,
-4-
<PAGE>
any Selling Stockholder or any of the Assets; (ii) any other statute,
regulation, order, judgment or decree applicable to Seller, any Selling
Stockholder or any of the Assets under or in any other applicable
jurisdiction; (iii) any mortgage, indenture, lease, agreement, instrument
or other obligation to which Seller or any Selling Stockholder is a party
or by which any of the Assets are bound; or (iv) any permit, concession,
grant, franchise, license, of or applicable to Seller or any Selling
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
--------------------------------------------------
consent of the FCC to the assignment of the Authorizations to ART, no consent,
approval or filing with any governmental or regulatory authority is required to
be made or obtained by Seller or any Selling Stockholder in connection with its
execution and delivery of and performance of its or his obligations under, this
Agreement.
3.4. FCC Regulatory Matters.
----------------------
(a) The Seller 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 Seller
or the Assets, and Seller is in compliance with all other federal, state
and local laws, rules, regulations and ordinances applicable to either
Seller 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 Seller or the Assets, except for any non-compliance or
default which in either case would not have a material adverse effect on
the Sellers' ability to consummate the transactions contemplated by this
Agreement or on the Assets.
(b) FCC Authorizations. Schedule 1.1 sets forth for each
------------------
Authorization the name of the licensee, the call sign, the Authorization
expiration date, the coverage area of such Authorization by latitude and
longitude and the status of any applications for assignment, transfer or
waiver of FCC rules filed with the FCC. Schedule 1.1 sets forth for each
Pending Licensee, the name of the applicant, the FCC file number and the
coverage area of such Authorization by latitude and longitude. Seller has
provided to ART true and correct copies of the authorizations received by
it from the FCC. None of the Authorizations and Pending Licenses are
subject to any Lien, and Seller validly holds each of the Authorizations
and Pending Licenses. Seller is qualified under all laws, rules and
regulations to hold the Authorizations held by it.
(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,
authorizations, 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.
-5-
<PAGE>
(d) Authorization Compliance. The Authorizations are valid and in
------------------------
full force and effect without materially adverse conditions except for such
conditions as are generally applicable to FCC 38 GHz authorizations or
holders of FCC 38 GHz authorizations. No event has occurred and is
continuing that could: (i) result in the revocation, termination or adverse
modification of any Authorization listed on Schedule 1.1; or (ii)
materially and adversely affect any rights of Seller thereunder prior to
Closing or of ART after Closing, except in either case for events which
affect holders of FCC 38 GHz authorizations generally. Seller has no reason
to believe that the Authorizations will not be renewed by the FCC in the
ordinary course. The current ownership and operation by Seller, as
applicable, of the Authorizations comply in all material respects with all
the regulations and policies of the FCC, provided, however, that Seller
-------- -------
makes no representation as to whether any action by ART under the Services
Agreement dated as of November 1, 1996 between Seller and ART (the
"Services Agreement") is in compliance with any law including the
regulations and policies of the FCC.
(e) Reports. Any and all reports and filings required to be filed
-------
with the FCC by Seller with respect to the Authorizations have been filed
and Seller 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 on the date thereof. From the date hereof through the
Closing, all such required reports and filings will be filed by Seller on a
timely basis.
(f) Disclosure. Seller knows of no facts pertaining to its
----------
qualifications to be an FCC 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 Authorizations.
3.5. Equipment. Schedule 1.1 includes a correct description of any
---------
Equipment included in the Assets. Any Equipment included in the Assets is in
good operating condition and repair, is suitable, adequate and sufficient for
the purposes for which it is used and complies with any applicable FCC rules and
regulations and other applicable laws, provided, that Seller makes no
--------
representation as to the absence of any defect in such Equipment which has
arisen as a result of the actions of ART under the Services Agreement.
3.6. Title to the Transferred Assets; Liens; Other Assets. Seller has
----------------------------------------------------
good, indefeasible and transferable title to all of the Assets, free and clear
of all Liens.
3.7. 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, the monthly rent and any unusually burdensome terms. A true,
complete and correct copy of each Lease included in the Assets has been provided
to ART. Each such Lease is a legal, valid, binding enforceable agreement, in
full force and effect. 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.
-6-
<PAGE>
3.8. Contracts. Except for this Agreement and the Services Agreement,
---------
Seller is not 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.
3.9. Litigation. Other than proceedings affecting holders of FCC 38 GHz
----------
authorizations generally, there are no actions, claims, proceedings, suits and
investigations pending, or, to the best knowledge of each of Sellers threatened
against any of Seller, the Assets or any of its properties, assets or rights
before any court, arbitrator or administrative or governmental body: (i)
relating to the Assets or which seek to revoke, rescind, cancel, modify or
refuse to renew any Authorization 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 the transactions contemplated
hereby.
3.10. 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, none of Seller or the
Selling Stockholders know of any information or fact that has or could have a
material adverse effect on the Assets.
3.11. Taxes. Seller 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 Seller 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.
3.12. 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 of the Sellers.
3.13. Sophistication. Each of the Sellers has knowledge and experience in
--------------
financial and business matters and investments in general and is capable of
evaluating the merits and risks of the acquisition of the Common Stock issued as
the consideration in exchange for the Assets. Each of the Sellers is an
"accredited investor" as such term is defined in the rules promulgated under the
Act.
3.14. Prospectus. Sellers have each received at least twenty business days
----------
prior to taking the stockholder vote to approve this transaction a copy of ART's
Prospectus dated April 22, 1998, as amended through the date of this Agreement
(as amended, the "Prospectus"), which is part of the Registration Statement on
Form S-4 (the "Registration Statement") filed with the Securities and
-7-
<PAGE>
Exchange Commission (the "SEC") under the Act, covering the issuance of the
Consideration to the Seller.
4. Representations and Warranties by ART. ART represents and warrants as
-------------------------------------
follows:
4.1. Corporate Status; Authority.
---------------------------
(a) ART is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full corporate
power and authority to carry on its business as now conducted and to own or
lease and operate its properties as and in the places where such business
is now conducted and as such properties are now owned, leased or operated.
(b) ART has all necessary corporate power and authority to execute
and deliver this Agreement and to carry out its obligations hereunder. At
the Closing Date, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby shall have been duly
authorized by the Board of Directors of ART. This Agreement constitutes the
valid and legally binding obligation of ART and is enforceable against it
in accordance with its 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. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, will not conflict with or result in
any violation of or default under any provision of the charter documents or
by-laws of ART or any material mortgage, indenture, lease, agreement or
other instrument, permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to it
or any of its respective properties.
4.2. Litigation. There are no judicial or administrative actions, suits,
----------
proceedings 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, suit, proceeding or
investigation.
4.3. Consents and Approvals of Government Authorities. Except for the
------------------------------------------------
approval by the FCC of the transfer or change of control, as applicable, of the
Authorizations 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.
4.4. Prospectus. ART has furnished each of the Sellers a copy of the
----------
Prospectus, which is part of the Registration Statement filed with the SEC under
the Act, covering the issuance of
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<PAGE>
the Consideration to the Seller. The Prospectus does not, as amended as of the
date hereof, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.5. Stock. The Registration Statement is effective, and to ART's
-----
knowledge, there is no stop order pending, threatened or in effect with respect
to the Registration Statement. The Common Stock issued as the Consideration,
when issued hereunder, will be duly authorized, validly issued, fully paid and
nonassessable.
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.
4.7. Qualifications. ART knows of no facts pertaining to its
--------------
qualifications to be an FCC 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 Authorizations.
5. Expenses. Each party to this Agreement shall assume and bear all of its
--------
own respective expenses, costs and fees incurred or assumed by each in the
preparation and execution of this Agreement and compliance herewith, whether or
not the transaction herein provided for shall be consummated. Notwithstanding
the foregoing, ART will be responsible, at its sole cost and expense, for
preparing and filing any assignment applications with the FCC required for the
transfer or assignment of the Authorizations.
6. Survival of Representations and Warranties. All representations,
------------------------------------------
warranties and agreements of each of Seller, the Selling Stockholders 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 until July __, 2001.
7. Indemnities.
-----------
7.1. Indemnification by the Sellers. The Sellers shall jointly and
------------------------------
severally indemnify 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 Sellers' covenants and agreements hereunder;
(ii) any inaccuracy or misrepresentation in any representation or warranty of
any Seller hereunder, in each case as such representation or warranty would read
if all qualifiers as to materiality and as to knowledge and any disclosure
schedules were deleted from it, and any inaccuracy or misrepresentation in any
certificate or document delivered in accordance with the
-9-
<PAGE>
terms of this Agreement by any Seller; (iii) any liabilities (accrued,
contingent, known, unknown or otherwise) of Seller not assumed by ART; 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 Date; provided, however, that Sellers shall not be obligated under
-------- -------
this Section 7.1 to make any indemnification unless and until the aggregate of
such Losses of ART exceeds $10,000, in which case Sellers shall be liable for
all such Losses of ART.
7.2. Indemnification by ART. ART shall indemnify and hold harmless the
----------------------
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, in each case as such representation or warranty would read if all
materiality and knowledge standards and disclosure schedules were deleted from
it, or any inaccuracy or misrepresentation in any certificate or document
delivered in conjunction with this Agreement; provided, however, that ART shall
-------- -------
not be obligated under this Section 7.2 to make any indemnification unless and
until the aggregate of such Losses of Seller exceeds $10,000, in which case ART
shall be liable for all of such Losses of Sellers.
8. Covenants.
---------
8.1. FCC and Other Approval. Subject to Section 5, the Sellers and ART
----------------------
will use their best efforts to join in and submit timely such applications (the
"Applications") to the FCC as are appropriate requesting the FCC's written
consent to the assignment of the Authorizations to ART or designees of ART.
8.2. 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 Seller
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 to put ART in actual possession and operating
control of the Assets and to assist ART in exercising all rights with respect
thereto.
8.3. Public Announcements. Neither Seller nor any of the Selling
--------------------
Stockholders will, 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 any of the specific matters discussed
between the parties.
8.4. Information and Access; Compliance. During the period from the date
----------------------------------
of this Agreement and continuing until the Closing Date or until the termination
of this Agreement pursuant to Section 11 hereof, Seller shall afford to the
officers, independent certified public accountants, counsel and other
representatives of ART, access to the properties, books, records and personnel
of Seller used in or relating to the Assets. Seller shall take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on Seller with respect to this Agreement and the transactions
contemplated hereby (including furnishing promptly
-10-
<PAGE>
upon request all information required by the FCC in connection with transfer of
the Authorizations) and shall take all reasonable actions necessary to cooperate
promptly with and furnish information to ART in connection with any such
requirements imposed upon ART in connection with this Agreement and the
transactions contemplated hereby. Seller shall not take any action which , or
reasonably fail to take any action the failure of which, would cause its
disqualification as an assignor of the Authorizations or would materially
adversely affect the Assets or ART's rights with respect thereto.
8.5. Conduct of Business by Sellers. Sellers covenant that the Seller
------------------------------
shall not:
(a) sell, transfer, convey or otherwise dispose of any of the Assets
or the Pending Licenses or any right thereto or interest therein,
(b) encumber with any Lien, or agree to encumber with any Lien, in
any way, or enter into any consensual restriction with respect to, any of
the Assets or the Pending Licenses or any right thereto or interest
therein, or
(c) enter into any contract, agreements or understanding with
respect to any of the Assets or the Pending Licenses.
(d) enter into any agreements or commitments for any of 8.5(a)
through 8.5(c).
9. Conditions Precedent to ART's Obligations. All obligations of ART under
-----------------------------------------
this Agreement are subject to the fulfillment to the reasonable satisfaction of
ART prior to or at the Closing of each of the following conditions, any of which
may be waived by ART in its sole discretion:
9.1. 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 of Seller to the foregoing
effect.
9.2. Consents. All 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.
9.3. FCC Authorizations. Without limiting the generality of Section 9.2,
------------------
the FCC shall have authorized the assignment of all of the Authorizations by a
Final Order (as defined below), without any conditions or restrictions that
materially affect the value of the Authorizations or operations pursuant to the
Authorizations or any conditions or restrictions materially different than the
normal authorizations issued by the FCC to other 38 GHz license holders at the
date of this Agreement. In the event that any FCC order approving the transfer
of the Authorizations to ART imposes such conditions, this condition shall not
be satisfied until such conditions are removed or
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<PAGE>
eliminated, and Sellers shall fully cooperate in obtaining the removal or
elimination of such restrictions. "Final Order" means an action by the FCC
granting its consent to the assignment of a Authorization, 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.
9.4. Performance by Seller; Certificate. Seller 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, and the chief
executive officer of Seller shall deliver to ART a certificate dated the Closing
Date to such effect.
9.5. 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 the
Sellers on or prior to the date of Closing.
9.6. Opinions of Counsel for Seller. ART shall have received favorable
------------------------------
opinions addressed to it and dated the Closing Date of counsel and FCC counsel
for Seller, reasonably satisfactory to ART, in form and substance acceptable to
ART and its counsel.
9.7. 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 prevent or make illegal the consummation of
such transactions or which could be materially adverse to the Assets.
9.8. UCC Searches. ART shall have received Uniform Commercial Code
------------
(including fixture filings) and state and federal tax and judgment lien searches
against Seller all dated within 20 days of the Closing Date.
9.9. 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.
9.10. Registration Statement. The Registration Statement shall be
----------------------
effective, and no stop order shall be pending or in effect with respect to the
Registration Statement.
10. Conditions Precedent to the Obligations of the Sellers. The obligations of
------------------------------------------------------
the 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:
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<PAGE>
10.1. 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 as specifically provided for
herein, and Seller shall have received a certificate dated the date of Closing
signed by an officer of ART to the foregoing effect.
10.2. 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,
including the consent of the FCC to the assignment or transfer of the
Authorization to ART.
10.3. 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 Seller to such effect.
10.4. 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 prevent or make illegal the consummation of
such transactions.
10.5. Consideration. The Consideration shall have been delivered to
-------------
Seller.
11. Termination. This Agreement may be terminated by the parties as set forth
-----------
in this Section 11:
(a) at any time by the mutual written consent of Seller and ART;
(b) by ART at any time after the first anniversary of the date of
this Agreement, if the conditions set forth in Section 9 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;
(c) by Seller at any time after the first anniversary of the date of
this Agreement (the "Seller 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
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 Authorizations, to ART, ART may
extend the Seller Date until the second anniversary of the date of this
Agreement by notice to Seller; or
(d) by the Sellers on the one hand, or by ART on the other, if there
shall have been a breach of any material representation, warranty, covenant
or agreement on the part of
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<PAGE>
the other set forth or contemplated by this Agreement, which breach cannot
be cured prior to the Closing;
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
11, the provisions of Sections 7 and 8.3 hereof shall remain in full force and
effect. No termination of this Agreement pursuant to Section 11(b), (c) or (d)
shall relieve a breaching party of any liability hereunder for any such breach
occurring prior to termination.
12. Entire Agreement; Assignability. This Agreement, together with 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
does not in any way affect or amend the Services Agreement, dated November 1,
1996, as amended, between the Seller and ART; provided, however, such Services
-------- -------
Agreement shall terminate at the Closing with respect to any Authorization
acquired by ART hereunder. This Agreement may not be assigned by any of the
Sellers without the prior written consent of ART and any such attempted
assignment shall be null and void.
13. Amendment. This Agreement may be amended at any time, but only by an
---------
instrument in writing duly executed and delivered on behalf of ART and Seller.
14. 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.
15. Exhibits, etc. Exhibits, schedules and other documents referred to in this
-------------
Agreement are an integral part of this Agreement.
16. 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.
17. 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 any of the Sellers, to:
-14-
<PAGE>
Astrolink Communications, Inc.
1925 Federal Avenue, East
Seattle, Washington 98102
Attention: John Erlick
with a copy to:
Paul Hastings Janofsky and Walker LLP
1299 Pennsylvania Avenue, 10th Floor
Washington, DC 20004
Attention: David D. Burns, Esq.
(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:
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Attention: Mary E. Weber, Esq.
18. 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.
19. 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.
20. 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.
-15-
<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:
ASTROLINK COMMUNICATIONS, INC.
By: ________________________________
Name:
Title:
SELLING STOCKHOLDERS:
____________________________________
James S. Eaton
____________________________________
John P. Erlick
____________________________________
Rise D. Ochser
____________________________________
Michael R. Clark
____________________________________
Richard Ressa
-16-
<PAGE>
SCHEDULE 1.1 - ASSETS
---------------------
<TABLE>
<CAPTION>
AUTHORIZATIONS
Maximum Maximum Minimum Minimum
Owner Location Call Sign Latitude Longitude Latitude Longitude
- ----- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Astrolink Anchorage, AK WPNI225 61-45-55 149-30-00 60-00-00 148-00-00
Astrolink Baton Rouge, WPJD370 31-00-00 91-55-00 30-00-00 90-55-00
LA
Astrolink Bellingham, WPJD371 49-00-00 122-45-00 48-15-00 121-45-00
WA
Astrolink Biloxi- WPJD369 31-00-00 89-20-10 30-00-00 87-55-10
Gulfport, MS
Astrolink Fargo, ND WPNH556 47-15-00 97-00-00 46-15-00 96-00-00
Astrolink Greenville- WPNE693 35-20-00 82-45-00 34-20-00 81-30-00
Spartanburg,
SC
Astrolink Monterey, CA WPNE200 36-47-27 122-00-00 36-00-00 121-30-00
Astrolink Palm Springs, WPJD368 34-20-00 117-00-00 33-40-15 116-00-00
CA
Astrolink Santa Barbara, WPNE692 35-00-00 120-00-00 34-00-00 119-14-00
CA
PENDING LICENSES
Channel Maximum Maximum Minimum Minimum
Applicant City, State Number Latitude Longitude Latitude Longitude Shares
- --------- ----------- --------- -------- --------- -------- --------- ------
Astrolink Austin, TX 14A/14B 30-50-15 98-18-49 29-45-20 97-09-35 39,288
Astrolink Columbus, OH 9A/9B 40-30-00 83-29-00 39-30-00 82-30-00 55,285
Astrolink Santa Fe, NM 7A/7B 36-50-00 106-30-00 35-50-00 105-30-00 3,260
</TABLE>
-17-
<PAGE>
EXHIBIT 10.10
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement (the "Amendment") is made
as of August 25, 1998 by and among Advanced Radio Telecom Corp., a Delaware
corporation ("ART") and Astrolink Communications, Inc., a Delaware corporation
("Seller").
RECITALS
--------
1. ART and Seller are parties to a certain Asset Purchase Agreement dated
as of July 2, 1998 (the "Asset Purchase Agreement"). Capitalized terms used in
this Amendment without definition shall have the same meaning as in the Asset
Purchase Agreement.
2. The parties wish to amend the Asset Purchase Agreement by deleting from
Schedule 1.1 thereto the Columbus, Ohio pending license and adjusting the
geographic coordinates and allocated shares for Sante Fe, New Mexico.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties hereto, the
parties hereto agree as follows:
1. Pending Licenses. Schedule 1.1 is amended and restated as Schedule
----------------
1.1A by (a) deleting Columbus, Ohio from the listed pending licenses; (b)
revising the minimum latitude for Sante Fe, New Mexico to 36-00-00; and (c)
changing the number of shares fro Sante Fe, New Mexico to 1,777. All references
in the Asset Purchase Agreement to "Schedule 1.1" shall be deemed to be
references to Schedule 1.1A, which is attached hereto and hereby made part of
this Amendment.
2. Ratification. Except as modified by this Amendment, the Asset Purchase
------------
Agreement is hereby ratified and reconfirmed in all respects.
3. Counterparts. The Amendment may be executed simultaneously in one or
------------
more counterparts hereof, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
4. Effectiveness. This Amendment shall be effective upon execution by ART
-------------
and the Seller.
<PAGE>
The foregoing Amendment is hereby executed as of the date first above
written.
ADVANCED RADIO TELECOM CORP.
By:
---------------------------------------
Name:
Title:
ASTROLINK COMMUNICATIONS, INC.
By:
---------------------------------------
Name:
Title:
-2-
<PAGE>
SCHEDULE 1.1A - ASSETS
----------------------
AUTHORIZATIONS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Maximum Maximum Minimum Minimum
Owner Location Call Sign Latitude Longitude Latitude Longitude
- ----- -------- --------- -------- --------- -------- ---------
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Astrolink Anchorage, WPNI225 61-45-55 149-30-00 60-00-00 148-00-00
AK
- ---------------------------------------------------------------------------------
Astrolink Baton WPJD370 31-00-00 91-55-00 30-00-00 90-55-00
Rouge, LA
- ---------------------------------------------------------------------------------
Astrolink Bellingham, WPJD371 49-00-00 122-45-00 48-15-00 121-45-00
WA
- ---------------------------------------------------------------------------------
Astrolink Biloxi- WPJD369 31-00-00 89-20-10 30-00-00 87-55-10
Gulfport, MS
- ---------------------------------------------------------------------------------
Astrolink Fargo, ND WPNH556 47-15-000 97-00-00 46-15-00 96-00-00
- ---------------------------------------------------------------------------------
Astrolink Greenville- WPNE693 35-20-00 82-45-00 34-20-00 81-30-00
Spartanburg,
SC
- ---------------------------------------------------------------------------------
Astrolink Monterey, WPNE200 36-47-27 122-00-00 36-00-00 121-30-00
CA
- ---------------------------------------------------------------------------------
Astrolink Palm Springs WPJD368 34-20-00 117-00-00 33-40-15 116-00-00
- ---------------------------------------------------------------------------------
Astrolink Santa WPNE692 35-00-00 120-00-00 34-00-00 119-14-00
Barbara, CA
- ---------------------------------------------------------------------------------
</TABLE>
PENDING LICENSES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
City, Channel Maximum Maximum Minimum Minimum
Applicant State Number Latitude Longitude Latitude Longitude Shares
- --------- ----- ------- -------- --------- -------- --------- ------
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Astrolink Austin, 14A/14B 30-50-15 98-18-49 29-45-20 97-09-35 39,288
TX
- -----------------------------------------------------------------------------------
Astrolink Santa 7A/7B 36-50-00 106-30-00 36-00-00 105-30-00 1,777
Fe, NM
- -----------------------------------------------------------------------------------
</TABLE>
-3-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1998 AND THE RELATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTH PERIOD ENDED
SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 10,766,718
<SECURITIES> 0
<RECEIVABLES> 165,570
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,230,481
<PP&E> 30,245,587
<DEPRECIATION> 3,813,205
<TOTAL-ASSETS> 262,387,834
<CURRENT-LIABILITIES> 20,650,107
<BONDS> 107,128,973
0
0
<COMMON> 26,701
<OTHER-SE> 92,425,198
<TOTAL-LIABILITY-AND-EQUITY> 262,387,834
<SALES> 629,083
<TOTAL-REVENUES> 629,083
<CGS> 0
<TOTAL-COSTS> 25,120,470
<OTHER-EXPENSES> 830,118
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,253,895<F1>
<INCOME-PRETAX> (38,575,400)
<INCOME-TAX> 2,602,197
<INCOME-CONTINUING> (35,973,203)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (35,973,203)
<EPS-PRIMARY> (1.48)
<EPS-DILUTED> (1.48)
<FN>
<F1>NET OF INTEREST INCOME OF $2,173,830
</FN>
</TABLE>
