SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 17, 1997
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WINSTAR COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-10726 13-3585278
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
230 Park Avenue, New York, New York 10169
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 584-4000
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index -- Page 5
Page 1 of 4 Pages
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Item 5. Other Events.
Asset Acquisition
On October 17, 1997 (the "Closing Date"), WinStar Switch Acquisition
Corp. ("WSAC"), a wholly owned subsidiary of WinStar Communications, Inc.
("WinStar", and together with WSAC, the "WinStar Parties"), consummated a
purchase ("Asset Acquisition") of certain telecommunications assets (the
"Assets") from US ONE Communications Corp. ("US ONE"), US ONE Communications
Services Corp. and US ONE Communications of New York, Inc. (each individually a
"Seller" and collectively, the "Sellers"), pursuant to the terms of an asset
purchase agreement ("Asset Purchase Agreement"). The Assets included 12 Lucent 5
ESS-2000 switching systems and other non-switch assets. The Asset Acquisition
required and received the approval of the United States Bankruptcy Court,
District of Delaware ("Court"), because Sellers are debtors in possession under
Chapter 11 of the United States Bankruptcy Code of 1978, as amended.
The aggregate purchase price paid for the Assets was approximately
$81.1 million, of which approximately $61.1 million was paid in cash at the
closing and $20 million of which is payable by the WinStar Parties in cash
and/or shares of the common stock of WinStar, at WinStar's discretion, on the
effective date of Sellers' confirmed plan of reorganization.
There exists no material relationship between the Sellers and WinStar
or any of their respective affiliates.
Financing the Asset Acquisition
In order to finance the cash portion of the purchase price and to pay
certain expenses, on the Closing Date, WSAC borrowed $62.25 million (the "Loan")
from Salomon Brothers Holding Company Inc and Credit Suisse First Boston
(together, the "Lenders"). The Loan maturity date is April 22, 1998; provided,
however, that WSAC must prepay the Loan (or portions thereof) with the proceeds
of any sale by it of the purchased Assets and with proceeds obtained from
certain financings. The Loan is guaranteed by WinStar and is secured by the
telecommunications switches and related equipment, inventory and software
included in the Assets.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Financial Statements.
None.
Pro Forma Financial Information.
None
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Exhibits.
10.1 Amended and Restated Asset Purchase
Agreement between the Sellers, WinStar and
WSAC, dated as of October 17, 1997
10.2 Credit Agreement, between WinStar, as
guarantor, WSAC, as borrower, Salomon
Brothers Holding Company Inc. and Credit
Suisse First Boston (the "Lenders"), Credit
Suisse First Boston, as documentation agent
and Salomon Brothers Inc. as syndication
agent and as collateral and administrative
agent for the Lenders, dated as of October
17, 1997
10.3 Security Agreement between WSAC, as grantor,
and Salomon Brothers Inc., as collateral agent
and administrative agent for the Secured Parties
dated October 17, 1997
99.1 Press Release made October 16, 1997 announcing
execution of Asset Purchase Agreement
99.2 Press Release made October 20, 1997 announcing
consummation of the Asset Purchase
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: October 31, 1997 WINSTAR COMMUNICATIONS, INC.
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(Registrant)
/s/ Frederic E. Rubin
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Frederic E. Rubin
Treasurer
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EXHIBIT INDEX
Exhibit Number Description
10.1 Amended and Restated Asset Purchase
Agreement between the Sellers, WinStar and
WSAC, dated as of October 17, 1997
10.2 Credit Agreement, between WinStar, as
guarantor, WSAC, as borrower, Salomon
Brothers Holding Company Inc. and Credit
Suisse First Boston (the "Lenders"), Credit
Suisse First Boston, as documentation agent
and Salomon Brothers Inc. as syndication
agent and as collateral and administrative
agent for the Lenders, dated as of October
17, 1997
10.3 Security Agreement between WSAC, as grantor,
and Salomon Brothers Inc., as collateral agent
and administrative agent for the Secured Parties
dated October 17, 1997
99.1 Press Release made October 16, 1997 announcing
execution of Asset Purchase Agreement
99.2 Press Release made October 20, 1997 announcing
consummation of the Asset Purchase
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EXHIBIT 10.1
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
DATED AS OF OCTOBER 17, 1997
BY AND BETWEEN
US ONE COMMUNICATIONS CORP. ,
US ONE COMMUNICATIONS SERVICES CORP.
AND
US ONE COMMUNICATIONS OF NEW YORK, INC.
AND
WINSTAR COMMUNICATIONS, INC.
AND
WINSTAR SWITCH ACQUISITION CORP.
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 30th day of September, 1997, by and between US ONE Communications
Corp. ("US ONE"), a Delaware corporation, US ONE Communications Services Corp.,
a Delaware corporation, and US ONE Communications of New York, Inc., a Delaware
corporation (each individually a "Seller" and collectively, "Sellers"), and
WinStar Communications, Inc., a Delaware corporation ("WinStar"), and WinStar
Switch Acquisition Corp. (the "Purchaser").
.
RECITALS:
A. Sellers have developed a nationwide telecommunications network capable
of providing local and long distance telecommunications services (hereinafter
referred to as the "Business"); and
B. Sellers desire to sell and Purchaser desires to purchase certain assets
and rights of Seller and, in connection with such purchase and sale, Purchaser
is willing to assume certain obligations and liabilities relating to the
purchased assets, all on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I. PURCHASE OF ASSETS
1.1 Purchase and Sale of Assets. On the terms and subject to the
conditions hereof and subject to Sections 1.2 and 5.3.2, at the Closing (as
defined in Section 4.1), Seller will sell, transfer, convey, assign and deliver,
and Purchaser (or its "Designees," as defined in Section 5.3.1) will purchase
and accept, all right, title and interest of Sellers in all assets of Sellers as
listed or described on Schedule 1.1 and as listed or described on Schedules
1.1.1, 1.1.2, 1.1.3, 1.1.4 and 1.1.5, wherever located and shall include the
rights in Section 5.3.2 with respect to the "Designated Contracts"
(collectively, the "Purchased Assets"), free and clear of all mortgages, liens,
pledges, security interests, charges, claims, restrictions and encumbrances of
any nature whatsoever except Permitted Liens (as defined in Section 5.1.5) and
Assumed Liabilities (as defined in Section 2.1). In the event that there are
Assets on location at the Switch Sites in addition to those listed on Schedule
1.1, they shall be transferred to Purchasers pursuant to the terms of this
Agreement and shall be included within the Purchased Assets; provided, however,
that this provision shall not apply to any such assets which (i) were delivered
to Sellers prior to July 24, 1997 but were not ordered by Sellers, (ii) were
delivered to Sellers prior to July 24, 1997 pursuant to purchase orders which
were cancelled prior to delivery, or (iii) were delivered to Sellers on or after
July 24, 1997. The Purchased Assets include, but are not limited to:
1.1.1 Contract Rights. All rights and incidents of interest as
of the Closing in and to all leases, agreements and other contracts and legally
binding contractual rights and obligations of Sellers, limited to those listed
or described on Schedule 1.1.1 (together with the "Designated Contracts" defined
in Section 5.3.2 "Contracts");
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1.1.2 Manufacturers' and Vendors' Warranties. All rights under
manufacturers' and vendors' warranties relating to items included in the
Purchased Assets and all similar rights against third parties relating to items
included in the Purchased Assets, described on Schedule 1.1.2 (collectively,
"Warranties");
1.1.3 Intellectual Property. All right, title and interest in
and to all domestic and foreign letters patent, patents, patent applications,
patent licenses, software licenses and know-how licenses, trade names,
trademarks, registered copyrights, service marks, trademark registrations and
applications, service mark registrations and applications and copyright
registrations and applications owned or used by Sellers and all trade secrets,
technical knowledge, know-how and other confidential proprietary information and
related ownership, use and other rights of Sellers, limited to those listed or
described on Schedule 1.1.3 (collectively, the "Intellectual Property");
1.1.4 Governmental Licenses, Permits and Approvals. All rights
and incidents of interest of Sellers in and to all licenses, permits,
authorizations and approvals issued to Sellers by any domestic or foreign court,
government, governmental agency, authority, entity or instrumentality
("Governmental Entity"), including, without limitation, IXC, CAP and CLEC
authorizations, limited to those listed or described on Schedule 1.1.4
(collectively, "Permits"); and
1.1.5 Intangible Telecommunications Assets. All rights, title
and interest in and to the intangible telecommunications assets owned or used by
Sellers in connection with the Business, including, telecommunications numbering
codes, locating routing codes, carrier identification codes and other operating
codes, limited to those listed or described on Schedule 1.1.5 (collectively, the
"Intangibles").
1.2 Excluded Assets. Sellers represent and warrant to the Purchaser
that the Purchased Assets include all assets of Sellers, including all of
Sellers' fixed assets, Contracts, Warranties, Intellectual Property, Permits and
Intangibles, except for those assets set forth in Schedule 1.2 hereto
(collectively, the "Excluded Assets"). Purchaser may, at its option exercisable
in writing at any time prior to the Closing Date, elect to designate certain of
the Purchased Assets as Excluded Assets, provided however that Purchaser may not
designate the real estate leases for the locations where the telecommunications
switches are located ("Switch Sites") as Excluded Assets. In addition, as
described in Section 5.11, Purchaser shall have the right to elect to designate
any or all of the Collocation Schedules, as hereinafter defined, as Excluded
Assets.
ARTICLE II. ASSUMPTION OF LIABILITIES
2.1 Assumed Liabilities. As of the Closing, Purchaser or its Designees
shall assume and thereafter in due course pay and fully satisfy those
liabilities and obligations of Sellers to become due after the Closing Date and
associated with the Purchased Assets listed or described on Schedule 2.1, except
the Designated Contracts. As of the Closing, Purchaser or its Designees, other
than Allegiance Telecom, Inc., Allegiance Telecom of New York, Inc. and
Allegiance Telecom of Georgia, Inc.,shall, in due course pay and fully satisfy
those liabilities and obligations of Sellers to become due after the Closing and
associated with the Designated Contracts listed or described in Schedule 5.3.2.
The obligations set forth in the preceding two sentences collectively are
referred to as the "Assumed Liabilities". Except as provided herein, Purchaser
or its Designees, shall pay no other liabilities of Sellers. WinStar shall
indemnify Sellers from any and all claims or demands in respect of the Assumed
Liabilities from and after the Closing; provided, however that such
indemnification obligations with respect to any Designated Contract shall cease
upon the assignment of such Designated Contract to a third party under Section
5.3.2.
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ARTICLE III. PURCHASE PRICE
3.1 Purchase Price. In addition to assuming the Assumed Liabilities,
Purchaser or its Designees will pay for the Purchased Assets and the covenants
of Sellers included herein an aggregate purchase price of U.S. $100 million (the
"Purchase Price"), payable as follows:
(a) $80 million on the Closing Date (as defined in Section 4.1 hereof), by
wire transfer or certified or official bank check to the order of US ONE ("Cash
Portion") provided, however, that if the Sellers have not completed
construction, installation of generators and obtained a certificate of occupancy
for each Switch Site as set forth in Sections 5.1.12 and 5.7 hereof, an amount
equal to the cost allocable to each incomplete Switch Site, as set forth in
Schedule 5.1.12(c), shall be paid into escrow ("Construction Escrow Portion"),
to be held by the Escrow Agent in accordance with the Construction Escrow
Agreement (as defined in Section 3.4.2 hereof);
(b) $16 million on the effective date ("Plan Effective Date") of a
confirmed Chapter 11 Plan of Reorganization of Sellers ("Plan"), by the issuance
by WinStar of shares of its Common Stock ("WCI Shares"), valued for this purpose
at the average of the last sale prices of the WCI Shares on the twenty trading
days ending two business days preceding the Plan Effective Date ("Plan Date
Market Value"), to be issued pursuant to and in accordance with the Plan
("Initial Share Portion"); and
(c) $4 million on the Plan Effective Date by issuance of WCI Shares valued
at the Plan Date Market Value and delivered into escrow pursuant to Section
3.4.1 hereof ("Escrow Share Portion" and, together with the Initial Share
Portion, the "Share Portion"), also to be issued pursuant to and in accordance
with the Plan and to be held and distributed in accordance with the "Escrow
Agreement" (as defined in Section 3.4.1).
Notwithstanding the foregoing, in Purchaser's sole and absolute discretion,
it shall have the right to pay any or all of the $20 million represented by the
Share Portion in cash. To the extent that cash is used in lieu of all or any
portion of the Escrow Share Portion, then such cash shall be paid into escrow
and held in accordance with the terms of the Escrow Agreement.
3.2 Allocation of Purchase Price. Promptly following the Closing Date,
the Purchase Price shall be allocated among the Purchased Assets in such amounts
as shall be specified in a schedule to be prepared by the Purchaser, which
allocation, absent manifest error, shall be binding upon the Purchaser and the
Sellers, each of which agrees to report the effect of the transactions
contemplated hereby on all applicable tax returns or filings in a manner
consistent with such schedule. Each Seller hereby assumes liability for and
shall pay all sales, transfer and similar taxes incurred as a result of the sale
of the Purchased Assets to Purchaser.
3.3 Application of Purchase Price. Upon receipt of the Purchase Price,
Sellers shall be obligated to (i) cure the defaults under the Assumed Contracts
arising or existing prior to the Closing Date as set forth on Schedule 3.3
hereto and (ii) at such time as Sellers are obligated to do so under applicable
bankruptcy law, pay all post-petition expenses of the Sellers, including fees of
the Escrow Agent under the Escrow Agreement and Construction Escrow Agreement
and any taxes or other expenses relating to this Agreement.
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3.4 Escrow.
3.4.1 On the Plan Effective Date, Purchaser shall deliver the
Escrow Share Portion to Continental Stock Transfer & Trust Company, as escrow
agent ("Escrow Agent"), pursuant to the terms of the escrow agreement, in the
form attached hereto as Exhibit A ("Escrow Agreement"), to be executed by the
parties thereto on the Closing Date. The Escrow Share Portion shall be held in,
and released from, escrow pursuant to the terms of the Escrow Agreement to
secure Sellers' indemnity obligations pursuant to Section 5.2 hereof.
3.4.2 On the Closing Date, if Sellers have not completed the
work set forth in Section 5.7 hereof, Purchaser shall deliver the Construction
Escrow Portion to the Construction Escrow Agent (as defined in the Construction
Escrow Agreement) to be held pursuant to the terms of the escrow agreement, in
the form attached hereto as Exhibit B ("Construction Escrow Agreement"), to be
executed by the parties thereto on the Closing Date. The Construction Escrow
Portion shall be held in, and released from, escrow pursuant to the terms of the
Construction Escrow Agreement to secure Sellers' obligations pursuant to Section
5.7 hereof.
ARTICLE IV. THE CLOSING
4.1 Date of Closing. The consummation of the purchase and sale of the
Purchased Assets contemplated hereby (the "Closing") shall take place at the
offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York (or
at such other place as the parties may designate) on the first business day
after the date on which the last of the conditions specified in Article VI has
been fulfilled (or waived by the party entitled to waive that condition), or at
such other time, date or place as the parties may designate. The date on which
the Closing is effected is referred to in this Agreement as the "Closing Date."
At the Closing, the parties shall execute and deliver the documents referred to
in Article VII.
ARTICLE V. REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 Representations and Warranties of Sellers. Each Seller makes the
following representations and warranties to Purchaser and WinStar, each of which
representation and warranty is true and correct as of the date hereof and shall
be true and correct as of the Closing Date and shall be unaffected by any
investigation heretofore or hereafter made by Purchaser or WinStar:
5.1.1 Organization and Good Standing. Each Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each Seller has the requisite corporate power and
authority to own, lease or otherwise hold the Purchased Assets owned, leased or
otherwise held by it.
5.1.2 Authorization of Agreement; Binding Obligation. Each
Seller has the requisite corporate power to execute and deliver this Agreement
and the Escrow Agreement and perform the transactions contemplated hereby and
thereby to be performed by it. The execution and delivery by each Seller of this
Agreement and the Escrow Agreement and the performance by each Seller of the
transactions contemplated hereby and thereby to be performed by it have been
duly authorized by all necessary corporate and stockholder action on the part of
each Seller. This Agreement has been, and the Escrow Agreement will be, duly
executed and delivered by a duly authorized officer of each Seller and, assuming
the due execution and delivery of this Agreement and the Escrow Agreement
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by Purchaser, this Agreement constitutes and the Escrow Agreement will
constitute valid and binding obligations of each Seller enforceable against each
Seller in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
5.1.3 No Restrictions Against Sale of the Assets; Required
Consents. The execution and delivery of this Agreement and the Escrow Agreement
by Sellers does not, and upon approval of the Agreement by the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), the
performance by Sellers of the transactions contemplated hereby and thereby to be
performed by Sellers will not (a) conflict with the certificate of incorporation
or by-laws of any of Sellers, (b) conflict with, or result in any violation of,
or constitute a default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a benefit under, any contract, permit, order,
judgment or decree which is included in the Purchased Assets and to which any of
Sellers are parties or by which any of Sellers are bound, (c) constitute a
violation of any law or regulation applicable to any of Sellers, or (d) result
in the creation of any lien, charge or encumbrance upon any of the Purchased
Assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained
or made by or with respect to Sellers in connection with the execution and
delivery of this Agreement or the Escrow Agreement by Sellers or the performance
by Sellers of the transactions contemplated hereby or thereby to be performed by
Sellers, except for approval of the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"), such of the foregoing as are
listed or described on Schedule 5.1.3 and any filings, if required, with the
Federal Trade Commission ("FTC") and Department of Justice ("Justice") pursuant
to the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and approvals of the appropriate regulatory authorities with respect
to the transfer of any IXC, CAP or CLEC authorizations as referred to in
Schedule 1.1.4.
5.1.4 Contracts and Commitments.
(a) Except as described on Schedule 1.1.1, 1.2 and 5.3.2, Sellers are not
arties to any written or oral leases, agreements, other contracts or obligations
relating to the Business.
(b) Each of the agreements, contracts, commitments, leases, plans and other
instruments, documents and undertakings listed or required to be listed on
Schedule 1.1.1 and 5.3.2, under which Purchaser is to acquire rights or
obligations hereunder, is valid and enforceable in accordance with its terms; to
Sellers' knowledge, other than (i) payment defaults listed in the Consolidated
Schedule of Liabilities filed by Sellers with the Bankruptcy Court, (ii)
defaults triggered by the financial condition or insolvency of the Sellers or
the existence of the Sellers' chapter 11 cases, or (iii) as set forth on
Schedule 5.1.4(b), Sellers and all other parties thereto are in compliance with
the provisions thereof; to Sellers' knowledge, other than as set forth in
Schedule 3.3, neither Sellers nor any of the other parties thereto is in default
in the performance, observance or fulfillment or any obligation, covenant or
condition contained therein; and, other than as set forth on Schedule 5.1.4(b),
Sellers have not received notice that any event has occurred which with or
without the giving of notice or lapse of time, or both, would constitute a
default thereunder.
5.1.5 Title to Assets; Liens. Except for Liens (as hereinafter defined)
listed or described on Schedule 5.1.5, Sellers have, and as of the Closing Date,
Purchaser will have, good, valid and marketable title to the Purchased Assets
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free and clear of all title defects or objections, mortgages, liens,
claims, charges, pledges, or other encumbrances of any nature whatsoever,
including without limitation, licenses, leases, chattel or other mortgages,
collateral security arrangements, pledges, title imperfections, defect or
objection liens, security interests, conditional and installment sales
agreements, charges, easements, encroachments or restrictions, of any kind and
other title or interest retention arrangements, reservations or limitations of
any nature (collectively, "Liens"), other than Assumed Liabilities. The liens
listed or described on Schedule 5.1.5 and the Assumed Liabilities are
collectively referred to herein as the "Permitted Liens."
5.1.6 Intellectual Property and Intangibles. Except as set
forth on Schedule 5.1.6, Sellers own the entire right, title and interest in and
to the Intellectual Property and Intangibles included in the Purchased Assets
(including, without limitation, the right to use and license the same). Except
as set forth in Schedule 5.1.6, to the knowledge of the Sellers there are no
pending or threatened actions of any nature affecting the Intellectual Property.
Schedule 5.1.6 lists all notices or claims concurrently pending or received by
Sellers which claim infringement of any domestic or foreign letters patent,
patent applications, patent licenses, software licenses and know-how licenses,
trade names, trademark registrations and applications, service marks,
copyrights, copyright registrations or applications, trade secrets, technical
knowledge, know-how or other confidential proprietary information relating to
the Purchased Assets. All letters patent, registrations and certificates issued
by any Governmental Entity relating to any of the Intellectual Property or
Intangibles and all licenses and other agreements pursuant to which Sellers use
any of the Intellectual Property or Intangibles are valid and subsisting, have
been properly maintained and, to the knowledge of Sellers, neither Sellers nor
any other persons are in default or violation thereunder.
5.1.7 Condition of Certain Assets. The physical assets
comprising part of the Purchased Assets are, and on the Closing Date will be, in
good operating condition and repair, ordinary wear and tear excepted, suitable
for the purposes used for the Business.
5.1.8 Permits, Licenses and Tariffs. The Permits listed on
Schedule 1.1.4 represent all permits, tariffs, authorizations, variances,
exemptions, orders and approvals from federal, state, local and foreign
governmental and regulatory bodies required to be held by Sellers in order to
conduct the Business substantially in the manner heretofore conducted.
5.1.9 Employee Plans.
(a) The Sellers do not maintain any "employee benefit plans" and "employee
welfare plans", as defined in this Sections 3(1) and 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA") respectively and, except as set
forth on Schedule 5.1.9, have not maintained, contributed to, been required to
contribute to, or been a party to or a participating employer in, any "employee
pension benefit plan," as defined in Section 3(2) of ERISA, including any
multiemployer employee pension benefit plan (the "Employee Benefit Plans"). The
Sellers are not parties to any collective bargaining or other labor agreements.
(b) The Employee Benefit Plans (i) are qualified to the extent required by
law under Section 401 of the Internal Revenue Code of 1986, as amended and to
the best knowledge of Sellers there exists no fact which would adversely affect
the qualified status of any such Employee Benefit Plan; (ii) have been operated
and administered in all material respects in accordance with ERISA, the Internal
Revenue Code and all other applicable law; (iii) have not engaged in any
transactions (as such term is defined for purposes of ERISA and the Internal
Revenue Code); (iv) have not, since the last annual report filed, been amended
so as to materially
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increase benefits thereunder or experienced a material increase (more than 20%)
in the number of participants covered thereunder; and (v) v if terminated on the
date hereof, would not give rise to liability under Title IV of ERISA.
(c) Each Seller, at all times, has complied with all applicable provisions
of the Employee Benefit Plans and is not in default thereunder. Full payment has
been made of all amounts which any Seller is required to pay under the terms of
each of the Employee Benefit Plans as a contribution or premium to or in respect
of such plans as of the last day of the most recent fiscal year of each of the
Employee Benefit Plans ended prior to the date of this Agreement, any such
contribution has been accrued as a liability on the books of the Sellers and
none of the Employee Benefit Plans nor any trust established thereunder has
incurred and "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Internal Revenue Code), whether or not waived with
respect to the most recent fiscal year of each of the Employee Benefit Plans
ended prior to the date of this Agreement.
(d) There are no pending, anticipated or, to Sellers' knowledge, threatened
claims against or otherwise involving any of the Employee Benefit Plans, or any
fiduciary thereof, by or on behalf of such plans, any employee or beneficiary
covered under the plans or otherwise involving the plans (other than routine
claims for benefits). There is no judgment, decree, injunction, rule or order of
any court, governmental body, commission, agency or arbitrator outstanding
against or in favor of any plan or any fiduciary thereof.
5.1.10 Environmental Matters; Health and Safety and Other
Laws. The Sellers are, and on the Closing Date will be, in material compliance
with all federal, state and local laws, regulations, permits, orders and
decrees, including those relating to protection of the environment and employee
health and safety ("Applicable Requirements"). The Sellers have not received any
written notice to the effect that their operations are not in compliance with
any of the Applicable Requirements or the subject of any governmental
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or other substance (including petroleum
products) into the environment and no Seller knows of any facts which could
constitute the basis for any thereof.
5.1.11 Investor Representations.
(a) The WCI Shares which may be issued pursuant to Section 3.1 of this
Agreement will not be registered under the Securities Act of 1933, as amended
("Securities Act"). Accordingly, unless and until Sellers deliver to WinStar a
"No Action Letter" from the Securities and Exchange Commission or a final order
of the Bankruptcy Court providing that the WCI Shares which may be issued
herewith will be exempt from registration under the Securities Act and any state
law pursuant to Section 1145 of the Bankruptcy Code and such WCI Shares may be
issued without any restrictive legend, the WCI Shares will bear a legend
indicating that they are "restricted" and will not be able to be sold in the
open market or otherwise transferred, pledged or hypothecated until such time
that the resale and transfer of same is registered under the Securities Act or
until such time as the WCI Shares are saleable in accordance with Rule 144
promulgated under the Securities Act or some other exemption from registration
provided under the Securities Act or the Bankruptcy Code. WinStar is not
obligated to file any registration statement with respect to the WCI Shares.
(b) Sellers recognize that an investment in WCI Shares involves a high
degree of risk including, but not limited to, the risk of economic losses from
WinStar's operations and the total loss of its investment.
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(c) Sellers have been given access to full and complete information
regarding WinStar and have utilized such access to the extent deemed necessary
for the purpose of obtaining information, and its officers and directors have
either met with or been given reasonable opportunity to meet with officers of
WinStar for the purpose of asking questions of, and receiving answers to such
questions, from such officers concerning the business and operations of WinStar
and to obtain any additional information, to the extent reasonably available.
Sellers have received copies of all reports filed by WinStar under the
Securities Exchange Act of 1934 during the past two years.
5.1.12 The Sellers have not completed construction, installed
generators or obtained certificates of occupancy for all of the Switch Sites.
Schedule 5.1.12(a) lists the current status of the construction and generators
at each of the Switch Sites. Schedule 5.1.12(b) lists the current status of
certificates of occupancy for each of the Switch Sites and the date Sellers
anticipate receiving each such certificate of occupancy. Schedule 5.1.12(c)
lists the construction, inspections, and other work which has not been completed
and which is necessary to install an operational generator, obtain a certificate
of occupancy and complete construction at each of the Switch Sites and the
maximum cost of completing such work and obtaining such certificate of occupancy
and the timing thereof. The contractors identified on Schedule 5.1.12(c) (the
"Identified Contractors") have agreed to complete construction and obtain
certificates of occupancy for each of the Switch Sites in accordance with the
costs and timing set forth in Schedule 5.1.12(c).
5.1.13 There is no liability for pre-Closing actions taken by
Sellers under the "22 Cage Rental Agreements between US ONE Communications
Services of New York, Inc. and New York Telephone Company" listed on Schedule
5.3.2 ("Collocation Schedules").
5.2 Indemnification. The Sellers shall, jointly and severally,
indemnify and hold harmless Purchaser from and against, and shall reimburse
Purchaser or WinStar, solely through the return to Purchaser of all or a portion
of the Escrow Share Portion of the Purchase Price (or the cash which may be
deposited in escrow in lieu thereof) pursuant to the terms of the Escrow
Agreement, for any Damages (as hereinafter defined) which may be sustained,
suffered or incurred by Purchaser or WinStar, whether as a result of any third
party claims or otherwise, and which arise or result from or in connection with
or are attributable to the breach of any of a Sellers' covenants,
representations, warranties, agreements, obligations or undertakings contained
in this Agreement. "Damages" as used in this Agreement means the dollar amount
of any loss, damage, expense or liability, (including, without limitation,
reasonable attorneys' fees) sustained, suffered or incurred by the Purchaser or
WinStar, reduced by any amounts actually received by Purchaser or WinStar (net
of any deductibles, fees and expenses, but excluding any premiums) from: (i) any
insurance proceeds received by Purchaser or WinStar in respect of such damages;
and (ii) any recovery made by Purchaser or WinStar from a third party (other
than Sellers) in respect thereof. Notwithstanding the foregoing, Sellers shall
not be required to indemnify Purchaser or WinStar under this Section 5.2 unless
the aggregate of all amounts for which indemnity would otherwise be due against
Sellers exceeds $100,000, but in such event, the Sellers shall pay the party to
be indemnified all amounts for which indemnity is due including the first
$100,000 thereof. To the extent Sellers are required to indemnify Purchaser or
WinStar, the Purchase Price shall be deemed to be reduced by such amount.
5.3 Designees and Designated Contracts.
5.3.1 Designees. Subject to the approval of the Bankruptcy
Court, at any time prior to the Closing Date, Purchaser shall have the right to
assign to third parties ("Designees") the right to purchase such of the
Purchased Assets as Purchaser shall determine. If any such assignment
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is made, the Designees shall assume the Assumed Liabilities with respect to the
Purchased Assets to be purchased by them. Sellers shall cooperate with Purchaser
in all reasonable respects with respect to any such assignment.
5.3.2 Designated Contracts. Schedule 5.3.2 lists all contracts
and agreements ("Designated Contracts") which on or after the Closing Date and
through and including March 20, 1998, upon written notice by the Purchaser to
Sellers and to each party to any such Designated Contract, will be assigned by
the Sellers to either the Purchaser or, subject to approval of the Bankruptcy
Court pursuant to ss.365 of the United States Bankruptcy Code ("Bankruptcy
Code"), a designee of the Purchaser. Prior to March 20, 1998, without the prior
written consent of the Purchaser, Sellers will not seek authority to reject,
will not consent to the rejection of, and will use best efforts, including but
not limited to filing any appropriate pleadings to prevent the deemed rejection
of the contracts and agreements listed on Schedule 5.3.2. Promptly upon written
notice by the Purchaser to Sellers that the Purchaser desires Sellers to assume
and assign one or more of the Designated Contracts to the Purchaser or a
designee of the Purchaser, Sellers will file a motion with the Bankruptcy Court
seeking authorization pursuant to section 365 of the Bankruptcy Code of such
assumption and assignment. Until assumption and assignment or rejection of the
Designated Contracts, Sellers will comply with the provisions of section
365(d)(3) or 365(d)(10) of the Bankruptcy Code , as applicable, with respect to
each Designated Contract. As soon as practicable after Closing, Sellers will
provide to the Purchaser a schedule of regular, ongoing obligations to become
due under the Designated Contracts with respect to obligations arising or
incurred after the Closing and Sellers will provide as promptly as practicable
to the Purchaser any other invoices, bills and other requests for payment under
the Designated Contracts received with respect to obligations arising or
incurred after the Closing . Purchaser's obligations with respect to the
Designated Contracts, until specifically assumed will be solely to make payment
on behalf of Sellers (except as provided in section 5.11) for the payment
obligations arising and incurred after Closing (excluding pre-Closing cure
payments) and before such Designated Contracts are assigned to Purchaser or a
third party designee. Purchaser will pay any such liabilities and obligations
incurred and arising from and after Closing on behalf of Sellers directly to the
other party to the Designated Contract pursuant to section 2.1 of this
Agreement.
5.4 Representations and Warranties of WinStar and Purchaser. Each of
WinStar and Purchaser makes the following representations and warranties to the
Sellers, each of which is true and correct as of the date hereof and shall be
true and correct as of the Closing Date and shall be unaffected by any
investigation heretofore or hereafter made by the Sellers:
5.4.1 Corporate Organization. Each of WinStar and Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to own, lease or otherwise hold its properties and assets and to carry
on its business as presently conducted. WinStar owns all issued and outstanding
shares of Purchaser, either directly or indirectly through a wholly owned
subsidiary of WinStar.
5.4.2 Authorization and Effect of Agreement. Each of WinStar
and Purchaser has the requisite corporate power to execute and deliver this
Agreement and the Escrow Agreement and to consummate the transactions
contemplated hereby and thereby to be consummated by it. The execution and
delivery by it of this Agreement and the Escrow Agreement and the consummation
by it of the transactions contemplated hereby and thereby to be consummated by
it, including without limitation the issuance of the WCI Shares, have been duly
authorized by all necessary corporate action. This Agreement has been and the
Escrow Agreement will be duly executed and delivered by a duly authorized
officer of it and, assuming the due execution and delivery of this Agreement by
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the Sellers, this Agreement constitutes and the Escrow Agreement will constitute
a valid and binding obligation of it, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and subject to general principles of
equity (regardless of whether such enforcement is considered in a proceeding in
equity or at law).
5.4.3 Restrictions Against Purchase of the Assets. The
execution and delivery of this Agreement and the Escrow Agreement by each of
WinStar and Purchaser does not, and the performance by each of the transactions
contemplated hereby and thereby to be performed by each will not (a) conflict
with its certificate of incorporation or by-laws of it, (b) conflict with, or
result in any violation of, or constitute a default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit under,
any material contract or permit, order, judgment or decree to which it is a
party or by which it is bound, or (c) constitute a violation of any law or
regulation applicable to it. Except for approval of the Bankruptcy Court and any
applicable requirements of the HSR Act, no consent, approval, order or
authorization of, or registration, declaration or filing with any Governmental
Entity is required to be obtained or made by or with respect to each of WinStar
and Purchaser in connection with the execution and delivery of this Agreement or
the Escrow Agreement by each or the consummation by each of the transactions
contemplated hereby to be consummated by it, except as listed or described on
Schedule 5.4.3.
5.4.4 No Implied Representations or Warranties. WinStar and
Purchaser each hereby acknowledges and agrees that the Sellers are not making
any representation or warranty whatsoever, express or implied, except those
representations and warranties of Sellers explicitly set forth in this
Agreement. SUBJECT TO THE FOREGOING, THE PURCHASED ASSETS BEING ACQUIRED BY THE
PURCHASER AS A RESULT OF THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY
SHALL BE ACQUIRED BY PURCHASER ON AN "AS IS, WHERE IS" BASIS AND IN THEIR THEN
PRESENT CONDITION, AND PURCHASER SHALL RELY SOLELY UPON ITS OWN EXAMINATION
THEREOF. In any event, except as explicitly set forth in this Agreement, none of
Sellers or any of their officers, directors, partners, employees, affiliates or
representatives has made or is making any representation, express or implied, as
to the value of any Purchased Asset being acquired, or any warranty of
merchantability, suitability or fitness for a particular purpose or quality,
with respect to any of the Purchased Assets being acquired, or as to the
condition or workmanship thereof, or as to the absence of any defects therein,
whether latent or patent.
5.4.5 WCI Shares. The WCI Shares have been duly authorized
and, if and when issued in accordance with the terms hereof, will be fully paid
and non-assessable and will not have been issued in violation of any preemptive
rights.
5.4.6 Good Faith Purchaser. WinStar and Purchaser have acted
in good faith as defined in ss.363(m) of the Bankruptcy Code, in accordance with
the terms and provisions of the Bankruptcy Court's Procedures Order, dated
August 4, 1997, the Bankruptcy Code and other applicable law.
5.5 HSR Filing. Within two business days after the execution and
delivery of this Agreement, Sellers and Purchaser each shall make any necessary
filings with the FTC and Justice pursuant to the HSR Act. Sellers and Purchaser
shall cooperate in connection with such filing and shall request early
termination under the HSR Act. Purchaser shall pay the filing fees related to
the filings under the HSR Act. In the event this Agreement is terminated in
accordance with Section
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8(b), 8(c), 8(d) or 8(e) of this Agreement, Sellers shall pay to Purchaser the
full amount of any filing fees paid by Purchaser relating to the HSR Act filing
("HSR Refund").
5.6 Bankruptcy Court Filings.
5.6.1 Motion to Approve Procedures. Sellers shall file motions
with the Bankruptcy Court by 5:00 p.m. (New York City time) on Wednesday,
October 1,, 1997, to approve the provisions of this Agreement relating to the
Break-up Fee (as defined in Section 9.2 hereof), the Upset Price and Right of
First Refusal (as defined in Section 9.3 hereof) and the HSR Refund (as defined
in Section 5.5 hereof) and shall have given notice as required by the Bankruptcy
Court.
5.6.2 Motion to Approve Sale. Sellers shall file motions with
the Bankruptcy Court by 5:00 p.m. (New York City time) on Wednesday, October 1,
1997, to approve the sale of the Purchased Assets pursuant to ss.ss. 363(b) and
363(f) of the Bankruptcy Code and to authorize Sellers to assume and assign to
Purchaser or its Designees the executory contracts identified in Schedule 1.1.1
pursuant to ss. 365 of the Bankruptcy Code, and have given notice to all of
Sellers' creditors, all parties having or claiming an interest in the Business,
to the U.S. Trustee and all other parties in interest in accordance with Rules
6004 and 6006 of the Bankruptcy Rules in connection with such motions. As part
of the motion to approve the sale, Sellers shall request that the Bankruptcy
Court's order provide that (i) it retains jurisdiction through and including
March 20, 1998, to entertain motions to authorize Sellers to assign the
Designated Contracts to Purchaser's designees pursuant to ss. 365 of the
Bankruptcy Code, (ii) Purchaser and WinStar shall not be deemed to be successors
to Sellers for any purpose, including claims arising out of the Employee Benefit
Plans, other than ss.1145 of the Bankruptcy Code, (iii) in the event the WCI
Shares which may be issued pursuant to a Section 3.1 of this Agreement
subsequently are distributed to the creditors or equity security holders of any
of the Sellers in exchange for a claim against or interest in any of the
Sellers, Purchaser and WinStar shall be deemed to be persons that participate in
good faith in the offer, issuance or sale of a security offered or sold under
the plan or plans of the Sellers as provided in ss.1125(e) of the Bankruptcy
Code and (iv) the transfer of the Purchased Assets to Purchaser is not subject
to taxation under any state or local law imposing a stamp or similar tax in
accordance with ss.ss.1146(c) and 105 of the Bankruptcy Code.
5.6.3 Motions to Approve Assignment of Designated Contracts.
Within five business days after Purchaser designates in writing, whether all or
any one of the Designated Contracts are to be assigned to Purchaser or its
designees, Sellers shall assign such Designated Contracts to Purchaser, or file
motions with the Bankruptcy Court to approve the assignment of such Designated
Contracts to such designees and give notice of such motions as may be required.
5.6.4 Retention of Jurisdiction in the Plan. Except as set
forth herein, any plan of reorganization proposed by Sellers shall provide for
the Bankruptcy Court to retain jurisdiction through and including March 20,
1998, to entertain motions to authorize Sellers to assign the Designated
Contracts to Purchaser's designees pursuant to ss. 365 of the Bankruptcy Code.
In the event that the Bankruptcy Court refuses to confirm a plan based in whole
or in part on the foregoing retention of jurisdiction provision, Sellers shall
be entitled to propose a plan of reorganization which omits such retention of
jurisdiction provision, provided, however that Sellers shall not seek or obtain
confirmation of such plan of reorganization on or before March 20, 1998.
5.7 Completion of Construction. On or prior to the Closing Date Sellers
will complete construction of the Switch Sites in accordance with the
construction plans submitted to Purchaser, install generators for the Switch
Sites and obtain certificates of occupancy for the Switch Sites as set forth
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on Schedules 5.1.12(a), 5.1.12(b) and 5.1.12(c) at no cost to Purchaser or
WinStar. If Sellers have not completed such construction in accordance with the
plans and specifications set forth in the motions and the Bankruptcy Court
orders authorizing such completion and obtained the certificates of occupancy by
the Closing Date, Sellers shall cause the Identified Contractors to use their
best efforts to complete construction, install generators and obtain
certificates of occupancy as soon as possible; provided, however, that Sellers
shall be entitled to draw the cost of such work, to be paid directly to the
Identified Contractors, from the Construction Escrow Account as provided
therein. The Sellers will use their best efforts to complete the construction
and obtain a certificate of occupancy for the Switch Site located in Boston,
Massachusetts on or before the Closing Date or by the Closing Date will contract
with a contractor (which will be deemed an Identified Contractor) to complete
such work and obtain a certificate of occupancy as soon thereafter as possible.
Sellers shall cause all certificates of occupancy issued with respect to Switch
Sites after the Closing Date to be issued to the Lessee under the related switch
lease at the time of issuance. If a certificate of occupancy issued after the
Closing Date is issued to Sellers and Purchaser subsequently requests a transfer
of the certificate of occupancy to Purchaser or its designee, the costs of such
transfer charged by the issuing authority shall be paid by Purchaser.
5.8 Copies of Agreements. Sellers will use its best efforts to provide
Purchaser with a true and complete copy of each of the Agreements listed on
Schedule 1.1.1 hereof on or before October 3, 1997, and shall provide such
copies no later than October 13, 1997.
5.9 Applications for Sellers Permits. Prior to Closing, Purchaser will
file applications for "Sellers Permits" with the State Department of Revenue or
a similar State taxing authority for each State in which a Switch Site is
located and will provide Sellers with a copy of each application.
5.10 Delivery of Employee Benefit Plan Documentation. Sellers will
furnish to Purchaser, not less than three days before the Closing Date, true and
complete copies of the following items, to the extent they exist, with respect
to each Employee Benefit Plan: (i) each plan document; (ii) each trust document;
(iii) all determination letters and other correspondence relating to
qualification of the respective plans under the Internal Revenue Code ; (iv) all
tax returns and annual reports; (v) all financial statements; and (vi) all
actuarial valuations.
5.11 Collocation Schedules. Notwithstanding the provisions of Sections
2.1 and 5.3.2, with respect to each of the Collocation Schedules listed on
Schedule 5.3.2, Purchaser shall have the option until March 20, 1998, to remove
such Collocation Schedules from Schedule 5.3.2 and to add any such Collocation
Schedule to Schedule 1.2 as an Excluded Asset. If Purchaser does not elect to
exclude any such Collocation Schedule, then such Collocation Schedule shall be
treated as a Designated Contract under Section 5.3.2. If Purchaser notifies
Sellers that it wishes Sellers to assume and assign any such Collocation
Schedule to Purchaser or its Designee, then Sellers shall use their best efforts
to obtain such assumption and assignment, or alternatively transfer such
Collocation Schedules to Purchaser or its Designee as Intangible Assets under
Schedule 1.1, including filing and prosecuting appropriate pleadings to
accomplish such result. If the Bankruptcy Court finds that Sellers' rights under
the Collocation Schedules are not assignable or transferable to Purchaser or a
Designee, then the Collocation Schedules will be deemed to be moved to Schedule
1.2 as Excluded Assets. Under no circumstances shall Sellers have any liability
for any additional costs, including, without limitation, the nonrecurring
charges listed in the respective Collocation Schedules, under the documents
relating to the Collocation Schedules, nor will Sellers
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have any liability to Purchaser or its Designee if the Bankruptcy Court denies
transfer or assumption and assignment of Sellers' rights under the Collocation
Schedules.
5.12 Sellers shall take no affirmative action which shall have the
effect of creating any post-Closing obligation or liability under the
Collocation Schedules.
ARTICLE VI. CONDITIONS TO CLOSING
6.1 Conditions Precedent to Obligations of WinStar and Purchaser. The
obligations of WinStar and Purchaser under this Agreement to consummate the
transactions contemplated hereby will be subject to the satisfaction, at or
prior to closing, of all of the following conditions, any one or more of which
may be waived at the option of Purchaser:
6.1.1 Representations, Warranties and Covenants.
(a) All representations and warranties of the Sellers made in this
Agreement or in any Exhibit, Schedule or document delivered pursuant hereto,
shall be true and complete in all material respects as of the date hereof and on
and as of the Closing Date as if made on and as of that date.
(b) All of the terms, covenants and conditions to be complied with and
performed by the Sellers on or prior to the Closing Date shall have been
complied with or performed in all material respects.
(c) Purchaser shall have received a certificate, dated as of the Closing
Date, executed on behalf of each of Sellers by an authorized officer thereof,
certifying in such detail as Purchaser may reasonably request that the
conditions specified in Sections 6.1.1(a) and (b) hereof have been fulfilled.
6.1.2 Closing Documents. Sellers shall have delivered to
Purchaser the documents identified in Section 7.1.
6.1.3 Bankruptcy Court Approval. The Bankruptcy Court shall
have entered the order approving the transactions contemplated by this Agreement
("Order") and the Order shall not be subject to stay pending appeal. The Order
shall provide that (i) this Agreement and the transactions contemplated herein
are approved, (ii) the Sellers had good and marketable title to the Purchased
Assets and such title shall be transferred to Purchaser or its designees free of
all Liens and claims, other than Permitted Liens, and any such Liens or claims
which existed prior to the sale of the Purchased Assets or which arise as a
result of the Employee Benefit Plans shall attach to the Purchase Price paid to
the Sellers, (iii) Purchaser is purchasing the Purchased Assets in good faith
within the meaning of ss. 363(m) of the Bankruptcy Code, (iv) the consideration
to be paid by the Purchaser for the Business is fair and reasonable, (v) there
exist exigent business reasons for the sale, (vi) the sale is in the best
interests of the debtors' (Sellers') estates, their creditors and equity
security holders, (vii) there has been proper and adequate notice given to all
parties required by law to receive notice of the sale, (viii) the Business and
Purchased Assets have been adequately marketed and will lose value absent a
sale, and (ix) the requirements of ss. 363 of the Bankruptcy Code have been met.
The Order shall not impose any material obligations on WinStar, the Purchaser or
Sellers not contemplated herein.
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6.1.4 Governmental Consents or Approvals. Each of the
governmental approvals, consents or waivers listed on Schedules 5.1.3 and 5.4.3
shall have been obtained.
6.1.5 HSR Act. If applicable, the waiting period under the HSR
Act shall have expired or terminated.
6.1.6 No Adverse Proceedings. No suit, action, claim or
governmental proceeding shall be pending against, and no order, decree or
judgment of any court, agency or Governmental Entity shall have been rendered
against, any party hereto which would render it unlawful, as of the Closing
Date, to effect the transactions contemplated by this Agreement in accordance
with its terms.
6.2 Conditions Precedent to Obligations of Sellers. The obligations of
the Sellers under this Agreement to consummate the transactions contemplated
hereby will be subject to the satisfaction, at or prior to the Closing, of all
the following conditions, any one or more of which may be waived at the option
of the Sellers:
6.2.1 Representations, Warranties and Covenants.
(a) All representations and warranties of WinStar and the Purchaser made in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, shall be true and complete in all material respects as of the date
hereof and on and as of the Closing Date as if made on and as of that date.
(b) All of the terms, covenants and conditions to be complied with and
performed by the Purchaser on or prior to the Closing Date shall have been
complied with or performed in all material respects.
(c) Sellers shall have received a certificate, dated as of the Closing
Date, executed on behalf of Purchaser by an authorized officer thereof,
certifying in such detail as Sellers may reasonably request that the conditions
specified in Sections 6.2.1(a) and (b) have been fulfilled.
6.2.2 Closing Documents. Purchaser shall have delivered to
Sellers the documents identified in Section 7.2.
6.2.3 Bankruptcy Court Approval. The Bankruptcy Court shall
have entered the Order and the Order shall not be subject to stay pending
appeal.
6.2.4 Governmental Consents or Approvals. Each of the
governmental approvals, consents or waivers listed on Schedules 5.1.3 and 5.4.3
shall have been obtained.
6.2.5 HSR Act. If applicable, the waiting period under the HSR
Act shall have expired or terminated.
6.2.6 No Adverse Proceedings. No suit, action, claim or
governmental proceeding shall be pending against, and no order, decree or
judgment of any court, agency or Governmental Entity shall have been rendered
against, any party hereto which would render it unlawful, as of the Closing
Date, to effect the transactions contemplated by this Agreement in accordance
with its terms.
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6.2.7 Purchase Price. Purchaser shall have delivered to the
Sellers the Cash Portion of the Purchase Price, less any Construction Escrow
Portion delivered to the Escrow Agent pursuant to Section 3 hereof.
ARTICLE VII. DOCUMENTS TO BE DELIVERED AT THE CLOSING
7.1 Documents to be Delivered by Sellers. At the Closing, the Sellers
will deliver to Purchaser the following, at the expense of the Sellers and in
proper form for recording when appropriate:
7.1.1 Transfer Documents. Such bills of sale, assignments,
general warranty deeds and other good and sufficient instruments of transfer as
Purchaser may reasonably request conveying and transferring to Purchaser title
to the Purchased Assets.
7.1.2 Officer's Certificate. A certificate, dated the Closing
Date, executed on behalf of the Sellers in the form described in Section
6.1.1(c).
7.1.3 Escrow Agreements. An executed copy of the Escrow
Agreement and, if necessary, the Construction Escrow Agreement.
7.2 Documents to be Delivered by Purchaser. At the Closing, Purchaser
will deliver to the Sellers, at the expense of Purchaser:
7.2.1 Purchase Price. The Cash Portion of the Purchase Price.
7.2.2 Assumption Agreement. Such assumption agreement relating
to Purchaser's or Designees' assumption of the Assumed Liabilities as Sellers
may reasonably request.
7.2.3 Officer's Certificate. A certificate, dated the Closing
Date, executed on behalf of the Sellers in the form described in Section
6.2.1(c).
7.2.4 Escrow Agreements. An executed copy of the Escrow
Agreement and, if necessary, the Construction Escrow Agreement.
ARTICLE VIII. TERMINATION
8.1 Termination. Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated at any time prior to the
Closing:
(a) Upon the written consent of both Purchaser and the Sellers;
(b) By Purchaser in the event Sellers shall not, by 5:00 p.m. (New York
City time) on Wednesday, October 1, 1997 have filed motions with the Bankruptcy
Court in accordance with Sections 5.6.1 and 5.6.2 hereof;
(c) If Sellers accept a Higher and Better offer in accordance with the
provisions of Section 9.3, in which event this Agreement shall terminate and
Sellers shall transfer the Break-up Fee to Purchaser in accordance with Section
9.2 hereof;
(d) By Purchaser in the event that (i) the Break-up Fee, Upset Price,
Expense Reimbursement, Delay Penalties and Right of First Refusal are not
approved by the Bankruptcy Court on or before October 7, 1997; (ii) the Order
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is not entered by the Bankruptcy Court on or before October 17, 1997; or
(iii) the Closing has not occurred on or before October 17, 1997; or
(e) By either Purchaser or Sellers if (i) on the Closing Date a condition
precedent to the obligations of such party has not been satisfied by the other
party; or (ii) a material default or breach shall be made by the other party
with respect to the due and timely performance of, or compliance with, any of
its covenants, agreements, representations or warranties herein, and such
default cannot be cured within a reasonable period of time and has not been
waived.
ARTICLE IX. BREAK-UP PROVISIONS
9.1 Specific Performance. The parties recognize that if Purchaser
refuses to perform under the provisions of this Agreement, monetary damages
alone will not be adequate to compensate the Sellers for their injuries. Sellers
shall therefore be entitled, in addition to any other remedies that may be
available, to obtain specific performance of the terms of this Agreement. If any
action is brought by the Sellers to enforce this Agreement, Purchaser shall
waive the defense that there is an adequate remedy at law. In the event of a
default by Purchaser which results in the filing of a lawsuit for damages,
specific performances, or other remedies, the Sellers shall be entitled to
reimbursement by Purchaser of reasonable legal fees and expenses incurred by the
Sellers.
9.2 Break-up Fee. In the event Sellers shall accept a Higher and Better
offer and this Agreement shall terminate in accordance with Section 8(c) hereof,
within five business days of such event Sellers shall pay or cause to be paid to
the Purchaser a Break-up Fee in the amount of $3,000,000 ("Break-up Fee").
9.3 Expense Reimbursement. In the event this Agreement is terminated by
Purchaser in accordance with Section 8(e) hereof, within five business days of
such event Sellers shall pay or cause to be paid to the Purchaser expense
reimbursement in the amount of $1,000,000 ("Expense Reimbursement").
9.4 Upset Price. This Agreement is subject to the receipt by Sellers of
a "higher and better" offer to purchase the Business in an amount not less than
$7,000,000 more than the Purchase Price ("Upset Price"). Thereafter, all bids
above the Upset Price shall be in increments of $2,500,000. In addition, as a
condition to Sellers' acceptance of such Higher and Better offer, at the time of
making such offer, the offeror of such Higher and Better offer ("Offeror") must
present a certified check or official bank check equivalent in the amount of 10%
of its proposed purchase price to serve as a good faith deposit against the
Offeror's purchase price ("Higher and Better" offer). Notwithstanding the
foregoing, Sellers must offer Purchaser the right, exercisable for a period of
four hours, to acquire the Purchased Assets at the Offeror's price, upon the
terms and conditions set forth herein, except that the Purchaser shall receive a
credit from Sellers toward the Purchase Price in the amount of $3,000,000
("Right of First Refusal"). In the event Purchaser exercises its right to
acquire the Purchased Assets after a Higher and Better offer, the amount of the
Purchase Price in excess of $100,000,000 shall be paid in the same manner and on
the same terms as specified in Section 3.1 (i.e., (i) 80% in cash on the Closing
Date and (ii) 20% in cash or WCI Shares on the Plan Effective Date; with 1/5 of
such 20% being deposited into escrow under the Escrow Agreement).
ARTICLE X. MISCELLANEOUS PROVISIONS
10.1 Notices. All notices and other communications required or
permitted hereunder will be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been duly
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given when delivered in person or when dispatched by electronic facsimile
transfer or one business day after having been dispatched by a nationally
recognized overnight courier service to the appropriate party at the address
specified below:
(a) If to Sellers, to:
US ONE Communications Corp.
One Lincoln Centre
5400 LBJ Freeway, Suite 700
Dallas, Texas 75240
Facsimile No.: (972) 371-5248
Attention: Larry Akin
with a copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Facsimile No.: (214) 746-7777
Attention: Mary R. Korby
(b) If to Purchaser, to:
c/o WinStar Communications, Inc.
230 Park Avenue, Suite 2700
New York, New York 10169
Facsimile No.:
Attention: Timothy Graham
with a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
Facsimile No.: (212) 818-8881
Attention: David Alan Miller, Esq.
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
10.2 Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns (including the Designees), but will not be assignable or
delegable by any party, except pursuant to Section 5.3, without the prior
written consent of the other party which shall not be unreasonably withheld.
10.3 Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants of Sellers and Purchaser contained in
this Agreement shall survive the Closing Date.
10.4 Waiver. Purchaser and Sellers by written notice to the other may (a)
extend the time for performance of any of the obligations of the other under
this Agreement, (b) waive any inaccuracies in the representations or warranties
17
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of the other contained in this Agreement or in any document delivered in
connection herewith, (c) waive compliance with any of the conditions or
covenants of the other contained in this Agreement, or (d) waive or modify
performance of any of the obligations of the other under this Agreement;
provided, however, that no such party may, without the prior written consent of
the other party, make or grant such extension of time, waiver of inaccuracies or
compliance or waiver or modification of performance with respect to its (or any
of its affiliates') representations, warranties, conditions or covenants
hereunder. Except as provided in the immediately preceding sentence, no action
taken pursuant to this Agreement will be deemed to constitute a waiver of
compliance with any representations, warranties, conditions or covenants
contained in this Agreement and will not operate or be construed as a waiver of
any subsequent breach, whether of a similar or dissimilar nature.
10.5 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) supersedes any other agreement, whether written or oral, that
may have been made or entered into by any party or any of their respective
affiliates (or by any director, officer or representative thereof) relating to
the matters contemplated hereby. This Agreement (together with the Exhibits and
Schedules hereto) constitutes the entire agreement by and among the parties
hereto and there are no agreements or commitments by or among such parties or
their Affiliates except as expressly set forth herein.
10.6 Amendments and Supplements. This Agreement may be amended or
supplemented at any time by additional written agreements signed by the parties
hereto.
10.7 Rights of the Parties. Nothing expressed or implied in this
Agreement is intended or will be construed to confer upon or give any person or
entity other than the parties hereto, their respective Affiliates and the
Designees any rights or remedies under or by reason of this Agreement or any
transaction contemplated hereby.
10.8 Further Assurances. From time to time, as and when requested by
either party, the other party will execute and deliver, or cause to be executed
and delivered, all such documents and instruments as may be reasonably necessary
to consummate the transactions contemplated by this Agreement; provided,
however, with respect to any CAP, CLEC or IXC Authority which is requested to be
transferred to the Purchaser or any third party by Purchaser, Sellers shall have
no obligation to do anything other than to execute transfer and related filings
prepared by the Purchaser or such third party at no cost to the Sellers..
10.9 Transfers. Purchaser and Sellers will cooperate and take such
action as may be reasonably requested by the other in order to effect an orderly
transfer of the Purchased Assets. Each Seller covenants and agrees that it will,
on the Closing Date and from time to time thereafter, do all such further acts
and things as may be requested by Purchaser for the effective transfer and
delivery of the Purchased Assets to Purchaser or the Designees, or for aiding
and assisting Purchaser to put Purchaser or the Designees in possession and
operating control of the Purchased Assets and Business; provided, however, with
respect to any CAP, CLEC or IXC Authority which is requested to be transferred
to the Purchaser or any third party by Purchaser, Sellers shall have no
obligation to do anything other than to execute transfer and related filings
prepared by the Purchaser or such third party at no cost to the Sellers..
10.10 Governing Law; Consent to Jurisdiction. This Agreement, including
without limitation, the interpretation, construction and validity hereof, shall
be governed by the laws of the State of New York. Notwithstanding that the
matters set forth in Section 5.6 hereof will be submitted to the
18
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Bankruptcy Court for determination, each party hereby agrees that after
confirmation of a plan, all disputes hereunder shall be submitted for
determination by arbitration by Judicial Arbitration Meditation Services, Inc.
("JAMS") in accordance with the rules and regulations of JAMS, or by any other
body mutually agreed upon by the parties. Purchaser and Sellers shall each
select one independent, qualified arbitrator and the two arbitrators so selected
shall select the third arbitrator. Arbitration shall take place in New York, New
York (or such other location as to which Purchaser and the Sellers may agree).
The arbitrators, who act by majority vote, shall be able to decree any and all
relief of an equitable nature, including but not limited to such relief as a
temporary retraining order, a temporary injunction, or a permanent injunction,
and shall also be able to award damages, with or without an accounting and
costs. The decree or judgment of an award rendered by the arbitrators may be
entered in any court of competent jurisdiction located in the County of New
York, State of New York ("NY Court") and the parties agree to submit to the
jurisdiction of the NY Court. Service of process in any such arbitration, action
or proceeding brought against a party may be made by registered mail addressed
to such party at the address set forth in Section 10.1 or to such other address
as such party shall notify the other party in writing is to be used for such
purpose pursuant to Section 10.1. For purposes hereof, the address designated
for the Sellers shall also be the address designated for each Seller's
shareholders. Each party hereby waives the right to trial by jury.
10.11 Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable domestic or foreign statute,
law, ordinance, rule or regulation, this Agreement shall be construed with the
invalid, illegal or unenforceable provision deleted, and the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected or impaired thereby.
10.12 Execution in Counterparts. This Agreement may be executed in two
or more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
10.13 Titles and Headings. Titles and headings to sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
10.14 Passage of Title and Risk of Loss. Legal title, equitable title
and risk of loss with respect to the Purchased Assets will not pass to Purchaser
until such Purchased Assets are transferred at the Closing, which transfer, once
it has occurred, will be deemed effective for tax, accounting and other
computational purposes as of 11:59 P.M. (New York City time) on the Closing
Date.
10.15 Certain Interpretive Matters and Definitions.
(a) Unless the context otherwise requires, (i) all references to Sections,
Articles or Schedules are to Sections, Articles or Schedules of or to this
Agreement, (ii) each term defined in this Agreement has the meaning assigned to
it, (iii) each accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with GAAP, (iv) "or" is disjunctive but not
necessarily exclusive, (v) words in the singular include the plural and vice
versa, and (viii) the terms "Subsidiary" and "Affiliate" have the meanings given
to those terms in Rule 12b-2 of Regulation 12B under the Securities Exchange Act
of 1934, as amended. All references to "$" or dollar amounts will be to lawful
currency of the United States of America.
19
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(b) No provision of this Agreement will be interpreted in favor of, or
against, either of the parties hereto by reason of the extent to which either
such party or its counsel participated in the drafting thereof or by reason of
the extent to which any such provision is inconsistent with any prior draft
hereof or thereof.
20
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10.16 No Recourse. Notwithstanding any of the terms or provisions of this
Agreement, each of the Purchaser, on the one hand, and the Sellers, on the other
hand, agree that neither it nor any person acting on its behalf may assert any
21
<PAGE>
claims or cause of action against any officer or director of the other
party (or parties) or stockholder of such other party (or parties) in connection
with or arising out of this Agreement or the transactions contemplated hereby.
10.17 Press Releases. The Sellers shall not issue a press release or
engage in any other publicity regarding the subject matter of this Agreement
without the Purchaser's prior written approval.
[Remainder of page intentionally left blank.]
22
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
SELLERS:
US ONE COMMUNICATIONS CORP.
By:_______________________________________
Name:___________________________________
Title:____________________________________
US ONE COMMUNICATIONS SERVICES CORP.
By:_______________________________________
Name:___________________________________
Title:____________________________________
US ONE COMMUNICATIONS OF NEW YORK, INC.
By:_______________________________________
Name:___________________________________
Title:____________________________________
PURCHASER:
WINSTAR SWITCH ACQUISITION CORP.
By:_______________________________________
Name:___________________________________
Title:____________________________________
WINSTAR:
WINSTAR COMMUNICATIONS, INC.
By:_______________________________________
Name:___________________________________
Title:____________________________________
23
<PAGE>
EXHIBIT 10.2
CREDIT AGREEMENT
Dated as of October 17, 1997
among
WINSTAR SWITCH ACQUISITION CORP.,
as Borrower,
WINSTAR COMMUNICATIONS, INC.,
as Guarantor,
THE LENDERS NAMED HEREIN,
SALOMON BROTHERS INC,
as Syndication Agent,
Collateral Agent and Administrative Agent
and
CREDIT SUISSE FIRST BOSTON,
as Documentation Agent
[CS&M Ref. No. 2041-181]
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01 Defined Terms ....................................... 1
SECTION 1.02 Terms Generally .......................... 17
SECTION 1.03 Designation of Loans and Other Obligations............. 18
ARTICLE II
The Credits
SECTION 2.01. Commitments........................................... 18
SECTION 2.02. Loans ............................................. 18
SECTION 2.03. Borrowing Procedure................................... 19
SECTION 2.04. Evidence of Debt; Repayment of Loans.................. 19
SECTION 2.05. Fees ............................................. 19
SECTION 2.06. Interest on Loans..................................... 20
SECTION 2.07. Default Interest...................................... 20
SECTION 2.08. Alternate Rate of Interest............................ 20
SECTION 2.09. Termination and Reduction of Commitments.............. 20
SECTION 2.10. Conversion and Continuation of Borrowings............. 20
SECTION 2.11. Repayment of Term Borrowings.......................... 22
SECTION 2.12. Prepayment............................................ 22
SECTION 2.13. Mandatory Prepayments................................. 22
SECTION 2.14. Reserve Requirements; Change in Circumstances......... 22
SECTION 2.15. Change in Legality.................................... 23
SECTION 2.16. Indemnity............................................. 24
SECTION 2.17. Pro Rata Treatment.................................... 24
SECTION 2.18 Payments..................................... 24
SECTION 2.19. Taxes ............................................. 25
SECTION 2.20. Assignment of Interests Under Certain Circumstances;
Duty to Mitigate............................. 26
ARTICLE III
Representations and Warranties
SECTION 3.01 Organization; Powers ................................... 27
SECTION 3.02 Organization and Powers of Subsidiaries ................ 27
-i-
<PAGE>
Page
SECTION 3.03 Authorization ......................................... 28
SECTION 3.04 Enforceability ........................................ 28
SECTION 3.05 Government Approvals .................................. 28
SECTION 3.06 Financial Statements .................................. 28
SECTION 3.07 Title to Properties ................................... 29
SECTION 3.08 Litigation; Compliance with Laws ...................... 29
SECTION 3.09 Agreements ............................................ 29
SECTION 3.10 Federal Reserve Regulations ........................... 29
SECTION 3.11 Investment Company Act ................................ 29
SECTION 3.12 Use of Proceeds ....................................... 29
SECTION 3.13 Tax Matters ........................................... 30
SECTION 3.14 No Material Misstatements ............................. 30
SECTION 3.15 Employee Benefit Plans ................................ 30
SECTION 3.16 Environmental Matters ................................. 30
SECTION 3.17 Insurance ............................................. 31
SECTION 3.18 Security Documents .................................... 31
SECTION 3.19 Labor Matters ......................................... 31
SECTION 3.20 Copyrights, Trademarks, etc ........................... 31
SECTION 3.21 Telecommunications Act ................................ 31
SECTION 3.22 Licenses .............................................. 32
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Borrowings...................................... 32
SECTION 4.02. Closing Date........................................ 32
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence........................................... 34
SECTION 5.02. Insurance........................................... 34
SECTION 5.03. Obligations and Taxes............................... 34
SECTION 5.04. Defaults and Other Notices.......................... 35
SECTION 5.05. Use of Proceeds..................................... 35
SECTION 5.06. Further Assurances.................................. 35
SECTION 5.07. Ownership of the Company............................ 36
SECTION 5.08. Financial Statements, Reports, etc.................. 36
-ii-
<PAGE>
Page
ARTICLE VI
Negative Covenants
SECTION 6.01. Limitation on Indebtedness........................... 36
SECTION 6.02 Limitation on Restricted Payments.................... 38
SECTION 6.03 Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries................ 40
SECTION 6.04 Limitation on the Issuance of Capital Stock of Restricted
Subsidiaries..................................... 41
SECTION 6.05 Limitation on Issuances of Guarantees by Restricted
Subsidiaries..................................... 41
SECTION 6.06 Limitation on Transactions with Shareholders and
Affiliates....................................... 41
SECTION 6.07. Liens................................................ 42
SECTION 6.08. Sale and Lease-Back Transactions..................... 42
SECTION 6.09. Limitation on Asset Sales............................ 43
SECTION 6.10. Waiver of Stay, Extension or Usury Laws.............. 43
SECTION 6.11. Mergers, Consolidations, Etc. of WCI and the Borrower. 43
SECTION 6.12. Limitation on the Borrower's Business Activities..... 44
SECTION 6.13. Impairment of Security Interest...................... 44
ARTICLE VII
Events of Default..................................................... 45
ARTICLE VIII
The Syndication Agent and the Administrative Agent.................... 47
ARTICLE IX
Guarantee
SECTION 9.01. Guarantee............................................. 48
SECTION 9.02. Successors and Assigns................................ 50
SECTION 9.03. No Waiver............................................. 50
SECTION 9.04. Modification.......................................... 50
-iii-
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Page
ARTICLE X
Miscellaneous
SECTION 10.01. Notices................................................ 50
SECTION 10.02. Survival of Agreement.................................. 50
SECTION 10.03. Binding Effect......................................... 51
SECTION 10.04. Successors and Assigns................................. 51
SECTION 10.05. Expenses; Indemnity.................................... 53
SECTION 10.06. Applicable Law......................................... 53
SECTION 10.07. Waivers; Amendment..................................... 53
SECTION 10.08. Interest Rate Limitation............................... 54
SECTION 10.09. Entire Agreement....................................... 54
SECTION 10.10. Waiver of Jury Trial................................... 54
SECTION 10.11. Severability........................................... 54
SECTION 10.12. Counterparts........................................... 55
SECTION 10.13. Headings............................................... 55
SECTION 10.14. No Recourse Against Others............................. 55
SECTION 10.15. Jurisdiction; Consent to Service of Process............ 55
Exhibits and Schedules
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Opinions
Schedule 2.01 Lenders and Commitments
Schedule 3.18 Insurance
-iv-
<PAGE>
CREDIT AGREEMENT dated as of October 17, 1997,
among WINSTAR SWITCH ACQUISITION CORP., a Delaware
corporation (the "Borrower"), WINSTAR COMMUNICATIONS,
INC., a Delaware corporation ("WCI"), as guarantor,
the Lenders (as defined in Article I), CREDIT SUISSE
FIRST BOSTON, as documentation agent (in such
capacity, the "Documentation Agent") and SALOMON
BROTHERS INC, as syndication agent (in such capacity,
the "Syndication Agent") for the Lenders and as
collateral and administrative agent (in such
capacities, the "Administrative Agent") for the
Lenders.
Pursuant to an Asset Purchase Agreement dated as of September 30, 1997
(as in effect on the date hereof, the "Asset Purchase Agreement"), by and
between US ONE Communications Corp., a Delaware corporation ("US ONE"), US ONE
Communications Services Corp., a Delaware corporation, and US ONE Communications
of New York, Inc., a Delaware corporation, and WCI and the Borrower, the
Borrower will acquire certain telecommunications switches and related assets)
and assume certain liabilities in connection therewith for an aggregate
consideration of approximately $61 million in cash and $20 million payable, at
the option of WCI, in cash or common stock of WCI (the "Acquisition"). In
addition, simultaneously with the consummation of the Acquisition a third party
is purchasing, for approximately $19 million, certain other telecommunications
assets from US One (the "Co-Purchase"). The Acquisition, the Co-Purchase, the
execution, delivery and performance of the Loan Documents (as defined herein)
and the borrowings hereunder, are referred to herein collectively as the
"Transactions."
The Borrower has requested the Lenders to extend credit in the form of
Loans (such term and each other capitalized term used but not defined herein
having the meaning given it in Article I) on the Closing Date, in an aggregate
principal amount not in excess of $62,250,000. The proceeds of the Loans are to
be used solely for the purchase price of the Acquisition and the payment of fees
and expenses associated herewith.
The Lenders are willing to extend such credit to the Borrower on the
terms and subject to the conditions set forth herein. Accordingly, the parties
hereto agree as follows:
ARTICLE I.
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms
shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean a Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"Adjusted Consolidated Net Income" shall mean, for any period, the
aggregate net income (or loss) of WCI and its Restricted Subsidiaries for such
period determined in conformity with GAAP; provided, however, that the following
items shall be excluded in computing Adjusted
<PAGE>
2
Consolidated Net Income (without duplication): (i) the net income of any Person
(other than net income attributable to a Restricted Subsidiary) in which any
Person (other than WCI or any of its Restricted Subsidiaries) has a joint
interest and the net income of any Unrestricted Subsidiary, except to the extent
of the amount of dividends or other distributions actually paid to WCI or any of
its Restricted Subsidiaries by such other Person, including, without limitation,
an Unrestricted Subsidiary during such period; (ii) solely for the purposes of
calculating the amount of Restricted Payments that may be made pursuant to
clause (C) of the first paragraph of Section 6.02 (and, in such case, except to
the extent includable pursuant to clause (i) above), the net income (or loss) of
any Person accrued prior to the date it becomes a Restricted Subsidiary or is
merged into or consolidated with WCI or any of its Restricted Subsidiaries or
all or substantially all of the property and assets of such Person are acquired
by WCI or any of its Restricted Subsidiaries; (iii) the net income of any
Restricted Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary of such net income is not
at the time permitted by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Restricted Subsidiary; (iv) any gains or losses
(on an after-tax basis) attributable to Asset Sales; (v) except for purposes of
calculating the amount of Restricted Payments that may be made pursuant to
clause (C) of the first paragraph of Section 6.02, any amount paid as, or
accrued for, cash dividends on Preferred Stock of WCI or any Restricted
Subsidiary owned by Persons other than WCI and any of its Restricted
Subsidiaries; and (vi) all extraordinary gains and extraordinary losses.
"Adjusted Consolidated Net Tangible Assets" shall mean the total amount
of assets of WCI 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 conformity with GAAP), after deducting therefrom (i) all
current liabilities of WCI and its Restricted Subsidiaries (excluding
intercompany items) and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles (other than
licenses issued by the FCC), all as set forth on the quarterly or annual
consolidated balance sheet of WCI and its Restricted Subsidiaries, prepared in
conformity with GAAP and most recently filed with the SEC; provided, however,
that the value of any licenses issued by the FCC 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 and evidenced by a Board Resolution. As
used in this Agreement, references to financial statements of WCI and its
Restricted Subsidiaries shall be adjusted to exclude Unrestricted Subsidiaries
if the context requires.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate
in effect for such Interest Period and (b) Statutory Reserves.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A.
"Affiliate" shall mean, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession,
<PAGE>
3
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest 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%. If the Administrative Agent shall
have determined (which determination shall be conclusive absent manifest error)
that it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms of the definition thereof,
the Alternate Base Rate shall be determined without regard to clause (b) of the
preceding sentence until the circumstances giving rise to such inability no
longer exist. Any change in the Alternate Base Rate due to a change in the Prime
Rate or the Federal Funds Effective Rate shall be effective on the effective
date of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively. The term "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by Credit Suisse, New York Branch, as its
prime rate in effect at its principal office in New York City; each change in
the Prime Rate shall be effective on the date such change is publicly announced
as being effective. The term "Federal Funds Effective Rate" shall mean, for any
day, the weighted average 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 of the quotations for the day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"Assessment Rate" shall mean for any date the annual assessment rate
(rounded upwards, if necessary, to the next 1/100 of 1%) in effect on such day
payable by a member of the Bank Insurance Fund classified as "well-capitalized"
and within supervisory subgroup "B" (or a comparable successor risk
classification) within the meaning of 12 C.F.R. Part 327 (or any successor
provision) to the Federal Deposit Insurance Corporation (or any successor
thereto) for insurance by such Corporation (or such successor) of time deposits
made in dollars at the offices of such member in the United States.
"Asset Acquisition" shall mean (i) an investment by WCI or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary of WCI or shall be merged into or consolidated
with WCI or any of its Restricted Subsidiaries or (ii) an acquisition by WCI or
any of its Restricted Subsidiaries of the property and assets of any Person
other than WCI or any of its Restricted Subsidiaries that constitute
substantially all of a division or line of business of such Person.
"Asset Sale" shall mean any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transactions) in
one transaction or a series of related transactions by WCI or any of its
Restricted Subsidiaries to any Person other than WCI or any of its Restricted
Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of WCI or any of its Restricted Subsidiaries or (iii)
any other property or assets of WCI or any of its Restricted Subsidiaries
outside the ordinary course of business of WCI or such Restricted Subsidiary
and, in each case, that is not governed by the provisions of Section 6.11;
provided, however, that the following shall not be
<PAGE>
4
included within the meaning of "Asset Sale": (A) sales or other dispositions of
inventory, receivables and other current assets; (B) sales or other dispositions
of equipment that has become worn out, obsolete or damaged or otherwise
unsuitable for use in connection with the business of WCI or its Restricted
Subsidiaries and (C) a substantially simultaneous exchange of, or a sale or
disposition (other than 85% or more for cash or cash equivalents) by WCI or any
of its Restricted Subsidiaries of, licenses issued by the FCC or applications or
bids therefor; provided, however, that the consideration received by WCI or any
such Restricted Subsidiary in connection with such exchange, sale or disposition
shall be equal to the fair market value of licenses so exchanged, sold or
disposed of, as determined by the Board of Directors; and (D) except for
purposes of the definition of "Indebtedness to EBITDA Ratio", any sale or other
disposition of securities of an Unrestricted Subsidiary. Notwithstanding
anything to the contrary in this definition, any sale, transfer or other
disposition (other than a lease to an Affiliate in the ordinary course of
business (provided that such lease is terminable by the lessor upon an Event of
Default) but including the receipt of insurance proceeds in respect of
Collateral) of any Collateral shall be deemed to be an Asset Sale of such
Collateral.
"August 1997 Notes" means the 12 1/2% Guaranteed Senior Secured Notes
of WinStar Equipment II Corp., issued pursuant to the August 1997 Notes
Indenture.
"August 1997 Notes Indenture" means the indenture dated as of August 1,
1997 among WinStar Equipment II Corp., WCI, as guarantor, and United States
Trust Company of New York, as trustee.
"Average Life" means, at any date of determination with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
(a) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"Board of Directors" means the Board of Directors of the Borrower or
WCI, as the context requires, or any committee of such Board of Directors duly
authorized to act with respect to this Agreement.
"Board Resolution" means a copy of a resolution, certified by the
Secretary or Assistant Secretary of the Borrower or WCI, as the context
requires, to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification, and delivered to the
Administrative Agent.
"Borrowing" shall mean a borrowing hereunder consisting of the Term
Loan made by the Lenders to the Borrower on the Closing Date, or a new Loan
created pursuant to Section 2.10
<PAGE>
5
(which shall in all respects be the same as the Term Loan except for the changes
made pursuant to Section 2.10).
"Borrowing Request" shall mean a request by the Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit C.
"Business Day" shall mean any day except a Saturday, Sunday or other
day on which commercial banks in The City of New York are authorized by law to
close.
"Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) in equity of such Person, whether now outstanding
or issued after the Closing Date, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" shall mean, as applied to any Person, any lease of
any property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person as lessee, in conformity with
GAAP, is required to be capitalized on the balance sheet of such Person; and
"Capitalized Lease Obligations" shall mean the discounted present value of the
rental obligations under such lease.
"Change of Control" shall mean such time as (i) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other
than the Permitted Investor, becomes the ultimate "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act) of Voting Stock representing more than 50%
of the total voting power of the Voting Stock of the Borrower on a fully diluted
basis or (ii) individuals who on the Closing Date constituted the Board of
Directors (together with any new directors whose election by the Board of
Directors or whose nomination for election by the Borrower's stockholders was
approved by a vote of at least two-thirds of the members of the Board of
Directors then in office who either were members of the Board of Directors on
the Closing Date or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the members of the
Board of Directors then in office.
"Closing Date" shall mean the date hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all the "Collateral" as defined in any Security
Document.
"Commitment" shall mean, with respect to any Lender, such Lender's Term
Loan Commitment.
"Common Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the Closing Date, including, without limitation, all
series and classes of such common stock.
"Company Order" shall mean a written request or order signed in the
name of WCI or the Borrower, as the case may be, (i) by its Chairman, a Vice
Chairman, its President or a Vice President
<PAGE>
6
and (ii) by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary and delivered to the Administrative Agent; provided, however, that
such written request or order may be signed by any two of the officers or
directors listed in clause (i) above in lieu of being signed by one of such
officers or directors listed in such clause (i) and one of the officers listed
in clause (ii) above.
"Consolidated EBITDA" shall mean, for any period, the sum of the
amounts for such period of (i) Adjusted Consolidated Net Income, (ii)
Consolidated Interest Expense, to the extent such amount was deducted in
calculating Adjusted Consolidated Net Income, (iii) income taxes, to the extent
such amount was deducted in calculating Adjusted Consolidated Net Income (other
than income taxes (either positive or negative) attributable to extraordinary
and nonrecurring gains or losses or sales of assets), (iv) depreciation expense,
to the extent such amount was deducted in calculating Adjusted Consolidated Net
Income, (v) amortization expense, to the extent such amount was deducted in
calculating Adjusted Consolidated Net Income, and (vi) all other noncash items
reducing Adjusted Consolidated Net Income (other than items that will require
cash payments and for which an accrual or reserve is, or is required by GAAP to
be, made), less all noncash items increasing Adjusted Consolidated Net Income,
all as determined on a consolidated basis for WCI and its Restricted
Subsidiaries in conformity with GAAP; provided, however, that, if any Restricted
Subsidiary is not a Wholly Owned Restricted Subsidiary, Consolidated EBITDA
shall be reduced (to the extent not otherwise reduced in accordance with GAAP)
by an amount equal to (A) the amount of the Adjusted Consolidated Net Income
attributable to such Restricted Subsidiary multiplied by (B) the quotient of (1)
the number of shares of outstanding Common Stock of such Restricted Subsidiary
not owned on the last day of such period by WCI or any of its Restricted
Subsidiaries divided by (2) the total number of shares of outstanding Common
Stock of such Restricted Subsidiary on the last day of such period.
"Consolidated Indebtedness" shall mean the aggregate amount of
Indebtedness of WCI and its Restricted Subsidiaries on a consolidated basis.
"Consolidated Interest Expense" shall mean, for any period, the
aggregate amount of interest in respect of Indebtedness (including amortization
of original issue discount on any Indebtedness and the interest portion of any
deferred payment obligation, calculated in accordance with the effective
interest method of accounting; all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is Guaranteed or secured by WCI or any of its Restricted
Subsidiaries) and all but the principal component of rentals in respect of
Capitalized Lease Obligations paid, accrued or scheduled to be paid or to be
accrued by WCI and its Restricted Subsidiaries during such period; excluding,
however, (i) any amount of such interest of any Restricted Subsidiary if the net
income of such Restricted Subsidiary is excluded in the calculation of Adjusted
Consolidated Net Income pursuant to clause (iii) of the definition thereof (but
only in the same proportion as the net income of such Restricted Subsidiary is
excluded from the calculation of Adjusted Consolidated Net Income pursuant to
clause (iii) of the definition thereof) and (ii) any premiums, fees and expenses
(and any amortization thereof) payable in connection with the making of the Term
Loans hereunder, the offering of the March 1997 Notes, the offering of the
August 1997 Notes and the offering of the October 1997 Notes, all as determined
on a consolidated basis (without taking into account Unrestricted Subsidiaries)
in conformity with GAAP.
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7
"Consolidated Net Worth" shall mean, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of WCI and its Restricted Subsidiaries (which
shall be as of a date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
less any amounts attributable to Redeemable Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of the
Capital Stock of WCI or any of its Restricted Subsidiaries, each item to be
determined in conformity with GAAP (excluding the effects of foreign currency
exchange adjustments under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 52).
"Convertible Notes" shall mean the 14% Convertible Senior Subordinated
Discount Notes due 2005 of WCI.
"Convertible Notes Indenture" shall mean the indenture dated as of
October 23, 1995, between WCI and United States Trust Company of New York, as
trustee.
"Currency Agreement" shall mean any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect WCI
or any of its Restricted Subsidiaries against fluctuations in currency values to
or under which WCI or any of its Restricted Subsidiaries is a party or a
beneficiary on the Closing Date or becomes a party or a beneficiary thereafter.
"Default" means any event that is, or after notice or passage of time
or both would be, an Event of Default.
"dollars" or "$" shall mean lawful money of the United States of America.
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, tangible or intangible
property damage, natural resource damages, nuisance, pollution, any adverse
effect on the environment caused by any Hazardous Material, or for fines,
penalties or restrictions, resulting from or based upon (a) the existence, or
the continuation of the existence, of a Release (including sudden or nonsudden,
accidental or non-accidental Releases), (b) exposure to any Hazardous Material,
(c) the presence, use, handling, transportation, storage, treatment or disposal
of any Hazardous Material or (d) the violation or alleged violation of any
Environmental Law or Environmental Permit.
"Environmental Law" shall mean any and all applicable present and
future treaties, 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.
<PAGE>
8
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"Equity Issuance" shall mean any issuance or sale by WCI or the
Borrower or any Restricted Subsidiary of any capital stock or other equity
interests of the Borrower or any such Restricted Subsidiary, as applicable, or
any obligations convertible into or exchangeable for, or giving any person a
right, option or warrant to acquire such securities or interests or such
convertible or exchangeable obligations, except in each case for (a) any
issuance or sale to WCI, the Borrower or any Restricted Subsidiary, (b) any
issuance of directors' qualifying shares or equity interests, (c) sales or
issuances (i) to management, employees, directors or consultants of the Borrower
or any Restricted Subsidiary under any employee equity security option or equity
security purchase plan in existence from time to time, (ii) pursuant to other
employee benefit plans in existence from time to time or (iii) in connection
with the exercise of outstanding rights, options or warrants,(d) other issuances
and sales the proceeds of which shall not exceed $1 million and (e) any issuance
or sale to an Investment Grade Entity which is primarily engaged in a
Telecommunications Business pursuant to which WCI or any Restricted Subsidiary
realizes Net Cash Proceeds of at least $100 million and agrees to use such
proceeds for the general development and growth of the telecommunications
operations of WCI and its Restricted Subsidiaries.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA Affiliate" shall mean 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.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Loan" shall mean a Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Indebtedness" means (i) up to $10 million aggregate principal
amount of Indebtedness permitted under Section 4.03(a)(vii) of the August 1997
Notes Indenture (or under the applicable section of any other indentures which
have a substantially identical provision) which is used on the date of
Incurrence to acquire specifically identified assets, (ii) in addition to the
Indebtedness referred to in clause (i), up to $15 million of vendor financing
from Siemens/BNI for multiple point to point related equipment; and (iii) up to
$10 million principal amount of accounts receivable financing outstanding at any
one time.
"fair market value" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing
<PAGE>
9
buyer under no compulsion to buy, as determined in good faith by the Board of
Directors (whose determination shall be conclusive) and evidenced by a Board
Resolution.
"FCC" means the United States Federal Communications Commission and any
state or local telecommunications authority, department, commission or agency
(and any successors thereto).
"Fee Letter" shall mean the Fee Letter dated October 17, 1997, among
the Borrower, WCI, SBHCI and the Administrative Agent and any fee letter
hereinafter entered into between the Borrower and any successor Administrative
Agent.
"Fees" shall mean the fees set forth in the Fee Letter.
"Financial Officer" of any entity shall mean the chief financial
officer, principal accounting officer, Treasurer or Controller of such entity,
or a member of such entity having similar responsibilities.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect as of the date hereof, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations contained herein shall
be computed in conformity with GAAP applied on a consistent basis, except that
calculations made for purposes of determining compliance with the terms of the
covenants set forth in Article Five and Article Six and with other provisions of
this Agreement shall be made without giving effect to (i) the amortization of
any expenses incurred in connection with the making of the Loans or the March
1997 Notes, the August 1997 Notes or the October 1997 Notes and (ii) except as
otherwise provided, the amortization of any amounts required or permitted by
Accounting Principles Board Opinion Nos. 16 and 17.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" shall mean any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such other Person (whether arising by virtue
of partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, however, that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guaranteed Indebtedness" has the meaning provided in Section 6.05.
<PAGE>
10
"Guaranteed Obligations" has the meaning provided in Section 9.01.
"Guarantor" shall mean WCI, and the permitted successors and assigns of
WCI.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants,
solid, liquid or gaseous wastes, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Incur" shall mean, with respect to any Indebtedness, to incur, create,
issue, assume, Guarantee or otherwise become liable for or with respect to, or
become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including, with respect to WCI and its Restricted Subsidiaries, an
"Incurrence" of Indebtedness by reason of a Person becoming a Restricted
Subsidiary of WCI; provided, however, that neither the accrual of interest nor
the accretion of original issue discount shall be considered an Incurrence of
Indebtedness.
"Indebtedness" shall mean, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments (whether negotiable or
non-negotiable), (iii) all obligations of such Person in respect of letters of
credit or other similar instruments (including reimbursement obligations with
respect thereto), (iv) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services, which purchase price is due more
than six months after the date of placing such property in service or taking
delivery and title thereto or the completion of such services, except trade
payables, (v) all obligations of such Person as lessee under Capitalized Leases,
(vi) all Indebtedness of other Persons secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person; provided,
however, that the amount of such Indebtedness shall be the lesser of (A) the
fair market value of such asset at such date of determination and (B) the amount
of such Indebtedness, (vii) all Indebtedness of other Persons Guaranteed by such
Person to the extent such Indebtedness is Guaranteed by such Person and (viii)
to the extent not otherwise included in this definition, obligations under
Currency Agreements and Interest Rate Agreements. The amount of Indebtedness of
any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations that are included in any of clauses (i) through (viii) above, the
maximum liability upon the occurrence of the contingency giving rise to the
obligation, provided, however, that (A) the amount outstanding at any time of
any Indebtedness issued with original issue discount is (1) for purposes of
determining the Indebtedness to EBITDA Ratio, the face amount of such
Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with GAAP
and (2) for all other purposes, the amount determined in clause (1) on the date
such Indebtedness is originally Incurred and (B) Indebtedness shall not include
any liability for federal, state, local or other taxes.
"Indebtedness to EBITDA Ratio" shall mean, as at any date of
determination, the ratio of (i) the aggregate amount of Indebtedness of WCI and
its Restricted Subsidiaries on a consolidated basis ("Consolidated
Indebtedness") as at the date of determination (the "Transaction Date") to
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11
(ii) the Consolidated EBITDA of WCI for the then most recent four full fiscal
quarters for which reports have been filed with the SEC (such four full fiscal
quarter period being referred to herein as the "Four Quarter Period"); provided,
however, that (x) pro forma effect shall be given to any Indebtedness Incurred
from the beginning of the Four Quarter Period through the Transaction Date
(including any Indebtedness Incurred on the Transaction Date), to the extent
outstanding on the Transaction Date, (y) if during the period commencing on the
first day of such Four Quarter Period through the Transaction Date (the
"Reference Period"), WCI or any of the Restricted Subsidiaries shall have
engaged in any Asset Sale, Consolidated EBITDA for such period shall be reduced
by an amount equal to the EBITDA (if positive), or increased by an amount equal
to the EBITDA (if negative), directly attributable to the assets which are the
subject of such Asset Sale and any related retirement of Indebtedness as if such
Asset Sale and related retirement of Indebtedness had occurred on the first day
of such Reference Period or (z) if during such Reference Period WCI or any of
the Restricted Subsidiaries shall have made any Asset Acquisition, Consolidated
EBITDA of WCI shall be calculated on a pro forma basis as if such Asset
Acquisition and any Incurrence of Indebtedness to finance such Asset Acquisition
had taken place on the first day of such Reference Period.
"Interest Payment Date" shall mean (a) with respect to any ABR Loan,
the first day of each calendar month and the Term Loan Maturity Date and (b)
with respect to any Eurodollar 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
Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day that would have been an Interest Payment Date had successive
Interest Periods of three months' duration been applicable to such Borrowing,
and, in addition, the date of any prepayment of such Borrowing or conversion of
such Borrowing to a Borrowing of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrower may elect and (b) as to any ABR Borrowing, the period commencing on the
date of such Borrowing and ending on the earliest of (i) the last day of the
calender month in which such Borrowing was made, (ii) the Term Loan Maturity
Date and (iii) the date such Borrowing is converted to a Borrowing of a
different Type in accordance with Section 2.10 or repaid or prepaid in
accordance with Section 2.11 or 2.12; provided, however, that 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, in the case of a
Eurodollar Borrowing only, 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. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.
"Interest Rate Agreement" shall mean any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement or other similar agreement or
arrangement designed to protect WCI or any of its Restricted Subsidiaries
against fluctuations in interest rates in respect of Indebtedness to or under
which WCI or any of its Restricted Subsidiaries is a party or a beneficiary on
the Closing Date or becomes a party or a beneficiary hereafter; provided,
however, that the notional principal amount thereof does not exceed the
principal amount of the Indebtedness of WCI and its Restricted Subsidiaries that
bears interest at floating rates.
<PAGE>
12
"Investment" in any Person means any direct or indirect advance, loan
or other extension of credit (including, without limitation, by way of Guarantee
or similar arrangement; but excluding advances to customers in the ordinary
course of business that are, in conformity with GAAP, recorded as accounts
receivable on the balance sheet of WCI or its Restricted Subsidiaries) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, bonds, notes,
debentures or other similar instruments issued by, such Person and shall include
(i) the designation of a Restricted Subsidiary as an Unrestricted Subsidiary and
(ii) the fair market value of the Capital Stock held by WCI and the Restricted
Subsidiaries of any Person that has ceased to be a Restricted Subsidiary by
reason of any transaction permitted by clause (iii) of Section 6.04. For
purposes of the definition of "Unrestricted Subsidiary" and Section 6.02, (i)
"Investment" shall include the fair market value of the assets (net of
liabilities) of any Restricted Subsidiary of WCI at the time that such
Restricted Subsidiary of WCI is designated an Unrestricted Subsidiary and shall
exclude the fair market value of the assets (net of liabilities) of any
Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is
designated a Restricted Subsidiary of WCI and (ii) any property transferred to
or from an Unrestricted Subsidiary shall be valued at its fair market value at
the time of such transfer, in each case as determined by the Board of Directors
in good faith.
"Investment Grade Entity" shall mean any entity whose debt securities
are rated (i) BBBor above by S&P (or its equivalent under any successor rating
categories of S&P), (ii) Baa3 or above, in the case of Moody's (or its
equivalent under any successor rating categories of Moody's), and (iii) the
equivalent in respect of the rating categories of any rating agency substituted
for S&P or Moody's.
"Lenders" shall mean (a) the financial institutions listed on Schedule
2.01 (other than any such financial institution that has ceased to be a party
hereto pursuant to an Assignment and Acceptance) and (b) any financial
institution that has become a party hereto pursuant to an Assignment and
Acceptance.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum equal to the arithmetic mean
(rounded upwards, if necessary, to the next 1/16 of 1%) of the offered rates for
Dollar deposits with a maturity comparable to such Interest Period which appear
on Page 3750 of Dow Jones Market (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 the 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; provided, however, that
if there shall no longer exist a Dow Jones Market, "LIBO Rate" shall mean an
interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to the rate at which dollar deposits approximately equal in principal
amount to the Administrative Agent's portion of such Eurodollar Borrowing and
for a maturity comparable to such Interest Period are offered to the principal
London office of the Administrative Agent, if it is a banking institution, or
otherwise to a prime bank in the London interbank market selected by the
Administrative Agent, 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.
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13
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof, any sale with
recourse against the seller or any Affiliate of the seller, or any agreement to
give any security interest).
"Loan Documents" shall mean this Agreement and the Security Documents.
"Loan Parties" shall mean the Borrower and the Guarantor.
"Loans" shall mean the Term Loan and any new Loan created pursuant to
Section 2.10 (which shall in all respects be the same as the Term Loan except
for changes made pursuant to Section 2.10).
"March 1997 Equipment Notes" shall mean the 12 1/2% Guaranteed Senior
Secured Notes Due 2004 of WinStar Equipment Corp.
"March 1997 Notes" shall mean the March 1997 Senior Notes and the March
1997 Equipment Notes.
"March 1997 Senior Notes" shall mean the 14 1/2% Senior Deferred
Interest Notes Due 2005 of WCI.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Moody's" means Moody's Investor Service, Inc. and its successors.
"Net Cash Proceeds" shall mean, (a) with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or cash equivalents (except to the extent such obligations are financed
or sold with recourse to WCI or any Restricted Subsidiary of WCI) and proceeds
from the conversion of other property received when converted to cash or cash
equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of WCI and its Restricted
Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either (A) is
secured by a Lien on the property or assets sold or (B) is required to be paid
as a result of such sale and (iv) appropriate amounts to be provided by WCI or
any Restricted Subsidiary of WCI as a reserve against any liabilities associated
with such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP and (b) with respect
to any issuance or sale of Capital Stock, or Indebtedness, the proceeds of such
issuance or sale in the form of cash or cash equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to
<PAGE>
14
WCI or any Restricted Subsidiary of WCI) and proceeds from the conversion of
other property received when converted to cash or cash equivalents, net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees incurred in
connection with such issuance or sale and net of taxes paid or payable by WCI or
any of its subsidiaries as a result thereof.
"October 1997 Notes" means the 15% Senior Subordinated Deferred
Interest Notes of WCI, issued pursuant to the October 1997 Notes Indenture.
"October 1997 Notes Indenture" means the indenture dated as of October
1, 1997 between WCI and United States Trust Company of New York, as trustee.
"October Offering Document" means the Confidential Offering Circular
dated October 1, 1997 of WCI, pursuant to which the October 1997 Notes were
offered.
"Officer" means, with respect to WCI or the Borrower, as the context
requires, (i) the Chairman of the Board of Directors, the Vice-Chairman of the
Board of Directors, the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, and (ii) the Treasurer or any Assistant
Treasurer, or the Secretary or any Assistant Secretary.
"Officers' Certificate" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof; provided, however, that any such certificate may
be signed by any two of the Officers listed in clause (i) of the definition
thereof in lieu of being signed by one Officer listed in clause (i) of the
definition thereof and one Officer listed in clause (ii) of the definition
thereof.
"Opinion of Counsel" means a written opinion signed by legal counsel
who may be an employee of or counsel to the Borrower.
"Old Senior Notes" shall mean the 14% Senior Discount Notes due 2005 of
WCI.
"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex 1 to the Security Agreement.
"Permitted Investment" shall mean (i) an Investment in a Restricted
Subsidiary or a Person which will, upon the making of such Investment, become a
Restricted Subsidiary or be merged or consolidated with or into or transfer or
convey all or substantially all its assets to, WCI or a Restricted Subsidiary;
(ii) Temporary Cash Investments; (iii) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses in accordance with GAAP; (iv) loans or advances to employees
in a principal amount not to exceed $1,000,000 at any one time outstanding; (v)
stock, obligations or securities received in satisfaction of judgments; (vi)
Investments, to the extent that the consideration provided by WCI or any of its
Restricted Subsidiaries consists solely of Capital Stock (other than Redeemable
Stock) of WCI; (vii) notes payable to WCI that are received by WCI as payment of
the purchase price for Capital Stock (other than Redeemable Stock) of WCI; and
(viii) acquisitions of a minority equity interest in entities engaged in the
telecommunications business; provided, however, that (A) the acquisition of a
majority equity interest in such entities is not permitted under U.S. law
without FCC consent,
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15
(B) WCI or one of its Restricted Subsidiaries has the right to acquire Capital
Stock representing a majority of the voting power of the Voting Stock of such
entity upon receipt of FCC consent and (C) in the event that such consent has
not been obtained within 18 months of funding such Investment, WCI or one of its
Restricted Subsidiaries has the right to sell such minority equity interest in
the seller thereof for consideration consisting of the consideration originally
paid by WCI and its Restricted Subsidiaries for such minority equity interest.
"Permitted Investor" shall mean William J. Rouhana, Jr.
"Permitted Liens" shall mean (i) Liens for taxes, assessments,
governmental charges or claims that are being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be required
in conformity with GAAP shall have been made; (ii) statutory or common law Liens
of landlords and carriers, warehousemen, mechanics, suppliers, materialmen,
repairmen or other similar Liens arising in the ordinary course of business and
with respect to amounts not yet delinquent or being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be required
in conformity with GAAP shall have been made; (iii) Liens incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (iv)
Liens incurred or deposits made to secure the performance of tenders, bids,
leases, statutory or regulatory obligations, bankers' acceptances, surety and
appeal bonds, government contracts, performance and return-of-money bonds and
other obligations of a similar nature incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money) and a
bank's unexercised right of set-off with respect to deposits made in the
ordinary course; (v) easements, rights-of-way, municipal and zoning ordinances
and similar charges, encumbrances, title defects or other irregularities that do
not materially interfere with the ordinary course of business of WCI or any of
its Restricted Subsidiaries; (vi) Liens (including extensions and renewals
thereof) upon real or personal property acquired after the Closing Date;
provided, however, that (a) such Lien is created solely for the purpose of
securing Indebtedness Incurred in accordance with Section 6.01 either (1) to
finance the cost (including the cost of improvement or construction) of the item
of property or assets subject thereto and such Lien is created prior to, at the
time of or within six months after the later of the acquisition, the completion
of construction or the commencement of full operation of such property or (2) to
refinance any Indebtedness previously so secured, (b) the principal amount of
the Indebtedness secured by such Lien does not exceed 100% of such cost and (c)
any such Lien shall not extend to or cover any property or assets other than
such item of property or assets and any improvements on such item; (vii) leases
or subleases granted to others that do not materially interfere with the
ordinary course of business of WCI and its Restricted Subsidiaries, taken as a
whole; (viii) Liens encumbering property or assets under construction arising
from progress or partial payments by a customer of WCI or its Restricted
Subsidiaries relating to such property or assets; (ix) any interest or title of
a lessor in the property subject to any Capitalized Lease or operating lease;
(x) Liens arising from filing Uniform Commercial Code financing statements
regarding leases; (xi) Liens on property of, or on shares of stock or
Indebtedness of, any corporation existing at the time such corporation becomes,
or becomes a part of, any Restricted Subsidiary; provided, however, that such
Liens do not extend to or cover any property or assets of WCI or any Restricted
Subsidiary other than the property or assets acquired; (xii) Liens in favor of
WCI or any Restricted Subsidiary; (xiii) Liens arising from the rendering of a
final judgment or order against WCI or any Restricted Subsidiary of WCI that
does not give rise
<PAGE>
16
to an Event of Default; (xiv) Liens securing reimbursement obligations with
respect to letters of credit that encumber documents and other property relating
to such letters of credit and the products and proceeds thereof; (xv) Liens in
favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods; (xvi)
Liens encumbering customary initial deposits and margin deposits, and other
Liens that are either within the general parameters customary in the industry
and incurred in the ordinary course of business, in each case, securing
Indebtedness under Interest Rate Agreements and Currency Agreements and forward
contracts, options, futures contracts, futures options or similar agreements or
arrangements designed to protect WCI or any of its Restricted Subsidiaries from
fluctuations in the price of commodities; (xvii) Liens arising out of
conditional sale, title retention, consignment or similar arrangements for the
sale of goods entered into by WCI or any of its Restricted Subsidiaries in the
ordinary course of business in accordance with the past practices of WCI and its
Restricted Subsidiaries prior to the Closing Date; and (xviii) Liens on or sales
of receivables.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan as defined in ERISA) subject to the provisions of Title IV of
ERISA or Section 412 of the Code or Section 307 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.
"Preferred Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now outstanding or issued after the date hereof, including, without
limitation, all series and classes of such preferred or preference stock.
"Principal" of a debt security means the principal amount due on the
Stated Maturity as shown on such debt security.
"Protected Property" has the meaning provided in Section 6.07.
"Redeemable Stock" shall mean any class or series of Capital Stock of
any Person that by its terms or otherwise is (i) required to be redeemed prior
to the Term Loan Maturity Date, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Term Loan
Maturity Date (unless the redemption price is, at WCI's option, without
conditions precedent, payable solely in Common Stock (other than Redeemable
Stock) of WCI) or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Term Loan Maturity Date; provided, however, that any
Capital Stock that would not constitute Redeemable Stock but for provisions
thereof giving holders thereof the right to require such Person to repurchase or
redeem such Capital Stock upon the occurrence of an "asset sale" or "change of
control" occurring prior to the Term Loan Maturity Date shall not constitute
Redeemable Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions of Section 4.11 and Section 4.12 of the August
1997 Notes Indenture and such Capital
<PAGE>
17
Stock specifically provides that such Person will not repurchase or redeem any
such stock pursuant to such provision prior to WCI's repurchase the securities
that are required to be repurchased pursuant to the provisions of Section 4.11
and Section 4.12 of the August 1997 Notes Indenture.
"Register" shall have the meaning given such term in Section 10.04(d).
"Regulation G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation T" shall mean Regulation T of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority or voluntarily undertaken to: (i)
cleanup, remove, treat, abate or in any other way address any Hazardous Material
in the environment; (ii) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it does not migrate or endanger
or threaten to endanger public health, welfare or the environment; or (iii)
perform studies and investigations in connection with, or as a precondition to,
(i) or (ii) above.
"Required Lenders" shall mean, at any time, Lenders having Loans,
representing at least 662/3% of the sum of all Loans outstanding at such time.
"Responsible Officer" of any entity shall mean any executive officer or
Financial Officer of such entity (or of its managing member, in the case of a
limited liability company) and any other member, officer or similar official
thereof (or of such managing member) responsible for the administration of the
obligations of such entity in respect of this Agreement.
"Restricted Payments" has the meaning provided in Section 6.02.
"Restricted Subsidiary" shall mean any Subsidiary of WCI other than an
Unrestricted Subsidiary.
"S&P" means Standard & Poor's Rating Group, a division of McGraw Hill
Inc., and its successors.
"SBHCI" shall mean Salomon Brothers Holding Company Inc.
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18
"SEC" shall mean the Securities and Exchange Commission and any
successor agency.
"SEC Filings" has the meaning provided in Section 3.15.
"Secured Parties" shall have the meaning assigned to such term in the
Security Agreement.
"Security Agreement" shall mean the Security Agreement, dated as of
October 17, 1997 among the Borrower, the Guarantor and the Administrative Agent
for the benefit of the Secured Parties.
"Security Documents" shall mean the Security Agreement and each of the
security agreements and other instruments and documents executed and delivered
pursuant to any of the foregoing or pursuant to Section 5.07.
"Significant Subsidiary" shall mean, at any date of determination, any
Restricted Subsidiary of WCI that, together with its Subsidiaries, (i) for the
most recent fiscal year of WCI, accounted for more than 10% of the consolidated
revenues of WCI and its Restricted Subsidiaries or (ii) as of the end of such
fiscal year, was the owner of more than 10% of the consolidated assets of WCI
and its Restricted Subsidiaries, all as set forth on the most recently available
consolidated financial statements of WCI for such fiscal year. Notwithstanding
the foregoing, the Borrower shall be deemed to be a "Significant Subsidiary" for
all purposes and at all times under this Agreement.
"Stated Maturity" shall mean, (i) with respect to any debt security,
the date specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable and (ii) with
respect to any scheduled installment of principal of or interest on any debt
security, the date specified in such debt security as the fixed date on which
such installment is due and payable.
"Statutory Reserves" shall mean 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 and any other banking authority, domestic or foreign,
to which the Administrative Agent or any Lender (including any branch,
Affiliate, or other fronting office making or holding a Loan) is subject, with
respect to the Adjusted LIBO Rate, for Eurocurrency Liabilities (as defined in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities 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. Statutory Reserves
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subsidiary" shall mean, with respect to any Person, any corporation,
association or other business entity of which Voting Stock representing more
than 50% of the voting power of the outstanding Voting Stock is owned, directly
or indirectly, by such Person and one or more other Subsidiaries of such Person.
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19
"Telecommunications Assets" shall mean any (i) entity or business
substantially all the revenues of which are derived from (a) providing
transmission of sound, data or video; (b) the sale or provision of phone cards,
"800" services, voice mail, switching, enhanced telecommunications services,
telephone directory or telephone number information services or
telecommunications network intelligence; or (c) any business ancillary or
directly related to the businesses referred to in clause (a) or (b) above and
(ii) any assets used primarily to effect such transmission or provide the
products or services referred to in clause (a) or (b) above and any directly
related or ancillary assets including, without limitation, licenses and
applications, bids and agreements to acquire licenses, or other authority to
provide transmission services previously granted, or to be granted, by the FCC.
"Telecommunications Business" shall mean any entity or business
substantially all the revenues of which are derived from (a) providing
transmission of sound, data or video; (b) the sale or provision of phone cards,
"800" services, voice mail, switching, enhanced telecommunications services,
telephone directory or telephone number information services or
telecommunications network intelligence; or (c) any business ancillary or
directly related to the businesses referred to in clause (a) or (b) above.
"Telecommunications Subsidiary" shall mean (i) WCI Gateway, WinStar
Wireless, WinStar Telecommunications, Inc., WinStar Milliwave, Inc., WinStar
Locate, Inc., WinStar Wireless Fiber Corp. and, in each case, its successors and
(ii) any other Restricted Subsidiary of WCI that holds more than a de minimis
amount of Telecommunications Assets.
"Temporary Cash Investment" shall mean any of the following: (i) direct
obligations of the United States or any agency thereof or obligations fully and
unconditionally guaranteed by the United States or any agency thereof; (ii) time
deposit accounts, certificates of deposit and money market deposits maturing
within 180 days of the date of acquisition thereof issued by a bank or trust
company which is organized under the laws of the United States, any state
thereof or any foreign country recognized by the United States, and which bank
or trust company has capital, surplus and undivided profits aggregating in
excess of $50,000,000 (or the foreign currency equivalent thereof) and has
outstanding deposits or debt which is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor; (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above; (iv)
commercial paper, maturing not more than six months after the date of
acquisition, issued by a corporation (other than an Affiliate of WCI) organized
and in existence under the laws of the United States, any state thereof or any
foreign country recognized by the United States with a rating at the time as of
which any investment therein is made of "P-1" (or higher) according to Moody's
Investors Service, Inc. or "A-1" (or higher) according to Standard & Poor's
Ratings Group; and (v) securities with maturities of six months or less from the
date of acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States, or by any political subdivision
or taxing authority thereof, and rated at least "A" by Standard & Poor's Ratings
Group or Moody's Investors Service, Inc.
"Term Borrowing" shall mean a Borrowing comprised of the Term Loan.
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20
"Term Loan" shall mean the term loan (which for all purposes shall be
comprised of separate loans made to the Borrower pursuant to Section 2.01) made
by the Lenders to the Borrower pursuant to Section 2.01. The Term Loan shall be
a Eurodollar Loan or an ABR Loan.
"Term Loan Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Term Loans hereunder as set forth on Schedule
2.01, or in the Assignment and Acceptance pursuant to which such Lender assumed
its Term Loan Commitment, as applicable, as the same may be reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 10.04.
"Term Loan Maturity Date" shall mean April 22, 1998.
"Transaction Date" shall mean, with respect to the Incurrence of any
Indebtedness by WCI or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "Rate" shall include
the Adjusted LIBO Rate and the Alternate Base Rate.
"United States Bankruptcy Code" shall mean the Bankruptcy Reform Act of
1978, as amended and as codified in Title 11 of the United States Code, as
amended from time to time hereafter, or any successor federal bankruptcy law.
"Unrestricted Subsidiary" shall mean (i) any Subsidiary of WCI that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Restricted
Subsidiary of WCI (including any newly acquired or newly formed Subsidiary of
WCI), other than a guarantor of the Loans, to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, WCI or any Restricted Subsidiary; provided, however, that
neither WCI nor its Restricted Subsidiaries has any Guarantee of any
Indebtedness of such Subsidiary outstanding at the time of such designation and
either (A) the Subsidiary to be so designated has total assets of $1,000 or less
or (B) if such Subsidiary has assets greater than $1,000, that such designation
would be permitted under the provisions of Section 6.02. Notwithstanding the
foregoing, WinStar New Media Company Inc., Non Fiction Films Inc. and WinStar
Global Products, Inc. and their Subsidiaries are Unrestricted Subsidiaries. The
Board of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary of WCI; provided, however, that immediately after giving effect to
such designation (x) WCI could Incur $1.00 of additional Indebtedness under the
first paragraph of Section 6.01 and (y) no Default or Event of Default shall
have occurred and be continuing. Any such designation by the Board of Directors
shall be evidenced to the Administrative Agent by promptly filing with the
Administrative Agent a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions. Anything to the contrary contained in
this Agreement notwithstanding, no Telecommunications Subsidiary may be
designated an Unrestricted Subsidiary.
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"U.S. Government Obligations" shall mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Term Loan Maturity Date, and shall also include a depositary receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of the
holder of a depositary receipt; provided, however, that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation evidenced by such
depositary receipt.
"Voting Stock" shall mean with respect to any Person, Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"WCI Gateway" shall mean WinStar Gateway Network, Inc. and its
successors.
"WCI Guarantee" means the Guarantee of the Loans by the Guarantor
pursuant to Article IX hereof.
"Wholly Owned" shall mean, with respect to any Subsidiary of any
Person, such Subsidiary if all of the outstanding Capital Stock in such
Subsidiary (other than any director's qualifying shares or Investments by
foreign nationals mandated by applicable law) is owned by such Person or one or
more Wholly Owned Subsidiaries of such Person.
"WinStar Wireless" shall mean WinStar Wireless, Inc.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both 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".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature not otherwise defined shall be construed in accordance with
GAAP.
SECTION 1.03. Designation of Loans and Other Obligations. The Loans
hereunder and all other Obligations shall be Designated Senior Indebtedness (as
defined in the Convertible Notes Indenture and the October 1997 Notes Indenture)
for the purposes of the Convertible Notes Indenture and the October 1997 Notes
Indenture.
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22
ARTICLE II.
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make a Term Loan to the Borrower on the
Closing Date in a principal amount not to exceed its Term Loan Commitment.
Amounts paid or prepaid in respect of the Term Loan may not be reborrowed.
SECTION 2.02. Loans. (a) The Term Loan must be drawn in a single
drawing in its entire principal amount on the Closing Date..
(b) Subject to Sections 2.08 and 2.15, the Term Loan shall initially be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.03. Each Lender may at its option make any Eurodollar 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. Borrowings of more than one Type may be outstanding at the same
time; provided, however, that the Borrower shall not be entitled to request any
Borrowing that, if made, would result in more than four Eurodollar Borrowings
outstanding hereunder at any time. For purposes of the foregoing, Borrowings
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Borrowings.
(c) Each Lender shall make its proportion of the Term Loan to be made
by it hereunder on the Closing Date by wire transfer of immediately available
funds to such account in New York City or another location agreed to by the
Borrower and the Administrative Agent as the Administrative Agent may designate
not later than 11:00 a.m., New York City time, and the Administrative Agent
shall by 12:00 (noon), New York City time, credit the amounts so received to an
account in the name of the Borrower, maintained with the Administrative Agent
and designated by the Borrower in the applicable Borrowing Request or, if a
Borrowing shall not occur on such date because any condition precedent herein
specified shall not have been met, return the amounts so received to the
respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of the Term Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, a rate determined by the Administrative Agent
to represent its cost of overnight or short-term funds (which determination
shall be conclusive absent manifest error).
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If such Lender shall repay to the Administrative Agent such corresponding
amount, such amount shall constitute such Lender's Loan as part of such
Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Term Loan Maturity Date.
SECTION 2.03. Borrowing Procedure. In order to effect the Term
Borrowing, the Borrower shall hand deliver or telecopy to the Administrative
Agent or give the Administrative Agent telephonic notice (followed by a hard
copy delivered by first class mail) of a duly completed Borrowing Request (a) in
the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the Closing Date, and (b) in the case of an ABR
Borrowing, not later than 11:00 a.m., New York City time, on the Closing Date.
The Borrowing Request shall be irrevocable, shall be signed by or on behalf of
the Borrower and shall specify the following information: (i) whether the
Borrowing then being requested is to be a Eurodollar Borrowing or an ABR
Borrowing; (ii) the date of such Borrowing (which shall be the Closing Date),
(iii) the number and location of the account to which funds are to be disbursed
(which shall be an account that complies with the requirements of Section
2.02(c)); (iv) the amount of such Borrowing; and (v) if such Borrowing is to be
a Eurodollar Borrowing, the Interest Period with respect thereto; provided,
however, that, notwithstanding any contrary specification in any Borrowing
Request, the requested Borrowing shall comply with the requirements set forth in
Section 2.02. If no election as to the Type of Borrowing is specified in any
such notice, then the requested Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Eurodollar Borrowing is specified in any
such notice, then the Borrower shall be deemed to have selected an Interest
Period of one month's duration. The Administrative Agent shall promptly advise
the applicable Lenders of any notice given pursuant to this Section 2.03 (and
the contents thereof), and of each Lender's portion of the requested Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the principal amount of its proportion of the Term Loans
as provided in Section 2.11.
(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 from time to time, including the
amounts of principal and interest payable and paid such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
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 from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower or the Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such
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24
accounts or any error therein shall not in any manner affect the obligations of
the Borrower to repay the Loans in accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in the event
any Lender shall request and receive a promissory note payable to such Lender
and its registered assigns, the interests represented by such note shall at all
times (including after any assignment of all or part of such interests pursuant
to Section 10.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.05. Fees. (a) The Borrower agrees to pay the Fees set forth
in the Fee Letter at the times and in the amounts specified therein. All Fees
shall be paid on the dates due, in immediately available funds, to the
Administrative Agent for distribution, if and as appropriate, among the Lenders.
Once paid, none of the Fees shall be refundable under any circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when the Alternate Base Rate is determined by
reference to the Prime Rate and over a year of 360 days at all other times) at a
rate per annum equal to the Alternate Base Rate plus 2.00%.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus 3.50%.
Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.07. Default Interest. If (a) the Borrower shall default in
the payment of the principal of or interest on any Loan or any other amount
becoming due hereunder, by acceleration or otherwise, or under any other Loan
Document, or (b) upon the occurrence and continuance of an Event of Default
specified in clauses (d), (e), (g) or (h) of Article VII, the Borrower shall
upon the demand of the Required Lenders from time to time pay interest, to the
extent permitted by law, on all amounts outstanding hereunder on but excluding
the date of actual payment (after as well as before judgment) or the date that
such Event of Default is otherwise cured (a) in the case of principal amounts,
at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus
2.00% per annum and (b) in all other cases, at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 365 or 366 days, as
the case may be, when determined by reference to the Prime Rate and over a year
of 360 days at all other times) equal to the sum of the Alternate Base Rate plus
2.00%.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal
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25
amounts of the Loans comprising such Borrowing are not generally available in
the London interbank market, or that the rates at which such dollar deposits are
being offered will not adequately and fairly reflect the cost to the Lenders
holding at least 51% of such Loans, of making or maintaining their Eurodollar
Loan during such Interest Period, or that reasonable means do not exist for
ascertaining the Adjusted LIBO Rate, the Administrative Agent shall, as soon as
practicable thereafter, give hand delivered written or telecopy notice of such
determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.09. Termination and Reduction of Commitments. The Term
Loan Commitments shall automatically terminate at 5:00 p.m., New York City time,
on the Closing Date.
SECTION 2.10. Conversion and Continuation of Borrowings. The Borrower
shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 12:00 (noon), New York City time, one
Business Day prior to conversion, to convert any Eurodollar Borrowing into an
ABR Borrowing, (b) not later than 11:00 a.m., New York City time, three Business
Days prior to conversion or continuation, to convert any ABR Borrowing into a
Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar
Borrowing for an additional Interest Period, and (c) not later than 11:00 a.m.,
New York City time, three Business Days prior to conversion, to convert the
Interest Period with respect to any Eurodollar Borrowing to another permissible
Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Borrowing; provided
that each Borrowing shall be in a principal amount that is an integral
multiple of $100,000;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the
new Loan of such Lender resulting from such conversion and reducing the
Loan (or portion thereof) of such Lender being converted by an
equivalent principal amount; accrued interest on any Eurodollar Loan
(or portion thereof) being converted shall be paid by the Borrower at
the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Lenders pursuant to
Section 2.16;
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26
(v) any portion of a Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as
a Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be
converted into or contin ued as a Eurodollar Borrowing by reason of the
immediately preceding clause shall be automatically converted at the
end of the Interest Period in effect for such Borrowing into an ABR
Borrowing;
(vii) no Interest Period may be selected for any Eurodollar
Borrowing that would end later than the Term Loan Maturity Date; and
(viii) upon notice to the Borrower from the Administrative
Agent given at the request of the Required Lenders, after the
occurrence and during the continuance of a Default or Event of Default,
no outstanding Loan may be converted into, or continued after the
then-current Interest Period as, a Eurodollar Loan.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (w) the identity and amount of the
Borrowing that the Borrower requests be converted or continued, (x) whether such
Borrowing is to be converted to or continued as a Eurodollar Borrowing or an ABR
Borrowing, (y) if such notice requests a conversion, the date of such conversion
(which shall be a Business Day) and (z) if such Borrowing is to be converted to
or continued as a Eurodollar Borrowing, the Interest Period with respect
thereto. If no Interest Period is specified in any such notice with respect to
any conversion to or continuation as a Eurodollar Borrowing, the Borrower shall
be deemed to have selected an Interest Period of one month's duration. The
Administrative Agent shall advise the Lenders of any notice given pursuant to
this Section 2.10 and of each Lender's portion of any converted or continued
Borrowing. If the Borrower shall not have given notice in accordance with this
Section 2.10 to continue any Borrowing into a subsequent Interest Period (and
shall not otherwise have given notice in accordance with this Section 2.10 to
convert such Borrowing), such Borrowing shall, at the end of the Interest Period
applicable thereto (unless repaid pursuant to the terms hereof), automatically
be continued into a new Interest Period as an ABR Borrowing.
SECTION 2.11. Repayment of Borrowings. To the extent not previously
paid, all Borrowings shall be due and payable on the Term Loan Maturity Date.
The payment of the Borrowings pursuant to this Section 2.11 shall be accompanied
by accrued interest on the principal amount paid to but excluding the date of
payment.
SECTION 2.12. Optional Prepayment. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing, in whole or in
part, upon at least 3 Business Days prior written or telecopy notice (or
telephone notice promptly confirmed by written or telecopy notice) to the
Administrative Agent before 11:00 a.m., New York City time; provided, however,
that each partial prepayment shall be in an amount that is an integral multiple
of $100,000 and not less than $500,000.
(b) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid,
shall be irrevocable and shall commit the Borrower to prepay such Borrowing by
the amount stated therein on the date stated therein. All
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27
prepayments under this Section 2.12 shall be subject to Section 2.16 but
otherwise without premium or penalty. All prepayments under this Section 2.12
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment.
SECTION 2.13. Mandatory Prepayments. (a) In the event of any Asset Sale
with respect to the Collateral, the Borrower shall apply an amount equal to 100%
of the Net Cash Proceeds received with respect thereto to prepay outstanding
Loans on the date of such Asset Sale.
(b) In the event and on each occasion that WCI, the Borrower or any
Restricted Subsidiary shall receive Net Cash Proceeds from an Equity Issuance,
the Borrower shall, substantially simultaneously with (and in any event not
later than the third Business Day next following) the occurrence of such Equity
Issuance, apply an amount equal to the lesser of 100% of the Net Cash Proceeds
therefrom on the amount then outstanding under the Loans to prepay or cause to
be prepaid outstanding Loans.
(c) In the event that WCI, the Borrower or any Restricted Subsidiary
shall receive Net Cash Proceeds from the issuance of any Indebtedness other than
Excluded Indebtedness, the Borrower shall, substantially simultaneously with
(and in any event not later than the third Business Day next following) the
receipt of such Net Cash Proceeds by WCI, the Borrower or such Restricted
Subsidiary, apply an amount equal to the lesser of 100% of such Net Cash
Proceeds or the amount then outstanding under the Loans to prepay or cause to be
prepaid outstanding Loans.
(d) The Borrower shall deliver to the Administrative Agent, at the time
of each prepayment required under this Section 2.13, (i) a certificate signed by
a Responsible Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent practicable,
at least three days prior written notice of such prepayment. Each notice of pre
payment shall specify the prepayment date, the Type of each Loan being prepaid
and the principal amount of each Loan (or portion thereof) to be prepaid. All
prepayments of Borrowings under this Section 2.13 shall be subject to Section
2.16, but shall otherwise be without premium or penalty.
(e) Amounts to be applied pursuant to this Section 2.13 to the
prepayment of Loans shall be applied first to reduce outstanding ABR Loans. Any
amounts remaining after each such application shall be immediately applied to
prepay Eurodollar Loans. All prepayments of Borrowings under this Section 2.13
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment.
SECTION 2.14. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender of the
principal of or interest on any Eurodollar Loan made by such Lender or any Fees
or other amounts payable hereunder (other than changes in respect of taxes
imposed on the overall net income of such Lender by the jurisdiction in which
such Lender has its principal office or by any political subdivision or taxing
authority therein), or shall 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 which is reflected in the Adjusted LIBO Rate) or shall impose
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28
on such Lender or the London interbank market any other condition affecting this
Agreement or Eurodollar 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 Eurodollar Loan or to reduce the amount of any sum received or receivable by
such Lender hereunder (whether of principal, interest or otherwise) by an amount
reasonably deemed by such Lender to be material, then the Borrower will pay to
such Lender, upon demand, such additional amount or amounts as will compensate
such Lender for such additional costs incurred or reduction suffered.
(b) If any Lender shall have reasonably determined that the adoption
after the date hereof of any law, rule, regulation, agreement or guideline
regarding capital adequacy, or any change after the date hereof in any such law,
rule, regulation, agreement or guideline (whether such law, rule, regulation,
agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or any Lender's holding company with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any Governmental Authority 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 pursuant hereto to a level below that which such Lender or such Lender's
holding company could have achieved but for such applicability, adoption, change
or compliance (taking into consideration such Lender's policies and the policies
of such Lender's holding company with respect to capital adequacy and using
reasonable allocation methods) by an amount deemed by such Lender to be
material, then from time to time the Borrower shall 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 specified in
paragraph (a) or (b) above 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 delivered by it within 10 days after its
receipt of the same.
(d) Failure or delay on the part of any Lender to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital shall not constitute a waiver of such Lender's
right to demand such compensation; provided that unless a retroactive change in
the applicable laws, rules, regulations, agreements or guidelines shall have
occurred, each Lender shall request such compensation within six months of
incurring any such increased costs or reductions. The protection of this Section
shall be available to each Lender regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation, agreement, guideline
or other change or condition that shall have occurred or been imposed; provided,
however, if subsequent to the payment of such compensation the basis for such
compensation is conclusively determined to be invalid or inapplicable, such
compensation will be refunded by such Lender to the Borrower.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
provision of this Agreement, if, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to
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29
its obligations as contemplated hereby with respect to any Eurodollar Loan,
then, by written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or be continued for additional Interest Periods and
ABR Loans will not thereafter (for such duration) be converted into
Eurodollar Loans), whereupon any request for a Eurodollar Borrowing (or
to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a
Eurodollar Borrowing for an additional Interest Period) shall, as to
such Lender only, be deemed a request for an ABR Loan (or a request to
continue an ABR Loan as such for an additional Interest Period or to
convert a Eurodollar Loan into an ABR Loan, as the case may be), unless
such declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar
Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans as of
the effective date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of
the Interest Period with respect to any Eurodollar Loan, in each case other than
on the last day of the Interest Period in effect therefor, or (iii) any
Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be
made pursuant to a conversion or continuation under Section 2.10) not being made
after notice of such Loan shall have been given by the Borrower hereunder (any
of the events referred to in this clause (a) being called a "Breakage Event") or
(b) any default in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to
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30
receive pursuant to this Section 2.16 shall be delivered to the Borrower and
shall be conclusive absent manifest error.
SECTION 2.17. Pro Rata Treatment. Except as required under Section
2.15, each Borrowing, each payment or prepayment of principal of any Borrowing,
each payment of interest on the Loans, and each conversion of any Borrowing to
or continuation of any Borrowing as a Borrowing of any Type shall be allocated
pro rata among the Lenders in accordance with their respective principal amount
of the outstanding Loans. Each Lender agrees that in computing such Lender's
portion of any Borrowing to be made hereunder, the Administrative Agent may, in
its discretion, round each Lender's percentage of such Borrowing to the next
higher or lower whole dollar amount.
SECTION 2.18. Payments. (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any Fees or other
amounts) hereunder and under any other Loan Document not later than 12:00
(noon), New York City time, on the date when due in immediately available
dollars, without setoff, defense or counterclaim. Each such payment shall be
made to the Administrative Agent to such accounts in New York City, New York, or
such other place as the Administrative Agent may from time to time reasonably
direct the Borrower.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.19. Taxes. (a) Any and all payments by or on behalf of the
Borrower or any Loan Party hereunder and under any other Loan Document shall be
made, in accordance with Section 2.18, free and clear of and without deduction
for any and all current or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities, costs and expenses with respect thereto,
excluding (i) income taxes imposed on the net income of the Administrative Agent
or any Lender (or any transferee or assignee thereof, including a participation
holder (any such entity a "Transferee")) and (ii) franchise or similar taxes
imposed on or determined by reference to the net income of the Administrative
Agent or any Lender (or Transferee), in each case by the United States of
America or by the jurisdiction under the laws of which the Administrative Agent
or such Lender (or Transferee) (A) is organized or any political subdivision
thereof or (B) has its applicable lending office located (in each case, all such
nonexcluded taxes, levies, imposts, deductions, charges, and withholdings, and
related liabilities, costs and expenses, collectively or individually, being
called "Taxes"). If the Borrower or any Loan Party shall be required to deduct
any Taxes from or in respect of any sum payable hereunder or under any other
Loan Document to the Administrative Agent or any Lender (or any Transferee), (i)
the sum payable shall be increased by the amount (an "additional amount")
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.19) the
Administrative Agent or such Lender (or Transferee), as the case may be, shall
receive an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower or such Loan Party shall make such deductions and
(iii) the Borrower or such Loan Party shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
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31
(b) In addition, the Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp, transfer or documentary taxes or any other excise or property taxes,
charges or similar levies that arise from any payment made hereunder or under
any other Loan Document or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Document ("Other
Taxes").
(c) The Borrower will indemnify the Administrative Agent and each
Lender (or Transferee) for the full amount of Taxes and Other Taxes paid by the
Administrative Agent or such Lender (or Transferee), as the case may be, and any
liability (including penalties, interest and expenses (including reasonable
attorney's fees and expenses)) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally assessed by
the relevant Governmental Authority. A certificate as to the amount of such
payment or liability prepared by the Administrative Agent or a Lender (or
Transferee), or the Administrative Agent on its behalf, absent manifest error,
shall be final, conclusive and binding for all purposes. Such indemnification
shall be made within 30 days after the date the Administrative Agent or any
Lender (or Transferee), as the case may be, makes written demand therefor. If
any Lender (or Transferee) or the Administrative Agent receives a refund in
respect of any Taxes or Other Taxes for which such Lender (or Transferee) or the
Administrative Agent has received payment from the Borrower hereunder, it shall
promptly repay such refund (plus any interest received) to the Borrower (but
only to the extent of indemnity payments made, or additional amounts paid, by
the Borrower under this Section 2.19 with respect to the Taxes or Other Taxes
giving rise to such refund); provided that the Borrower, upon the request of
such Lender (or Transferee) or the Administrative Agent, agrees to return such
refund (plus any penalties, interest or other charges required to be paid) to
such Lender or the Administrative Agent in the event such Lender or the
Administrative Agent is required to repay such refund to the relevant taxing
authority.
(d) As soon as practicable after the date of any payment of Taxes or
Other Taxes by the Borrower or any other Loan Party to the relevant Governmental
Authority, the Borrower or such other Loan Party will deliver to the
Administrative Agent, at its address referred to in Section 10.01, the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing payment thereof.
(e) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District of
Columbia (a "Non-U.S. Lender") shall deliver to the Borrower and the
Administrative Agent two copies of either United States Internal Revenue Service
Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest", a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, a certificate representing that such Non-U.S. Lender is not a bank for
purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Borrower under this Agreement and the
other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on
or before the date it becomes a party to this Agreement (or, in the case of a
Transferee that is a participation holder, on or before the date such
participation holder becomes a Transferee hereunder)
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32
and on or before the date, if any, such Non-U.S. Lender changes its applicable
lending office by designating a different lending office (a "New Lending
Office"). In addition, each Non-U.S. Lender shall upon written notice from the
Borrower promptly deliver such new forms as are required by the Code or the
regulations issued thereunder to claim exemption from, or reduction in the rate
of, U.S. Federal withholding tax upon the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Lender. Notwithstanding any other
provision of this Section 2.19(e), a Non-U.S. Lender shall not be required to
deliver any form pursuant to this Section 2.19(e) that such Non-U.S.
Lender is not legally able to deliver.
(f) The Borrower shall not be required to indemnify any Non-U.S. Lender
or to pay any additional amounts to any Non-U.S. Lender, in respect of United
States Federal withholding tax pursuant to paragraph (a) or (c) above to the
extent that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax was applicable on the date such Non-U.S. Lender became a
party to this Agreement (or, in the case of a Transferee that is a participation
holder, on the date such participation holder became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Non-U.S. Lender
designated such New Lending Office with respect to a Loan; provided, however,
that this paragraph (f) shall not apply (x) to any Transferee or New Lending
Office that becomes a Transferee or New Lending Office as a result of an
assignment, participation, transfer or designation made at the request of the
Borrower and (y) to the extent the indemnity payment or additional amounts any
Transferee, or any Lender (or Transferee), acting through a New Lending Office,
would be entitled to receive (without regard to this paragraph (f)) do not
exceed the indemnity payment or additional amounts that the person making the
assignment, participation or transfer to such Transferee, or Lender (or
Transferee) making the designation of such New Lending Office, would have been
entitled to receive in the absence of such assignment, participation, transfer
or designation or (ii) the obligation to pay such additional amounts would not
have arisen but for a failure by such Non-U.S. Lender to comply with the
provisions of paragraph (e) above.
(g) Nothing contained in this Section 2.19 shall require any Lender (or
any Transferee) or the Administrative Agent to make available any of its tax
returns (or any other information that it deems in its reasonable discretion to
be confidential or proprietary).
SECTION 2.20. Assignment of Interests Under Certain Circumstances; Duty
to Mitigate. (a) In the event (i) any Lender delivers a certificate requesting
compensation pursuant to Section 2.14, (ii) any Lender delivers a notice
described in Section 2.15 or (iii) the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority on account of any
Lender pursuant to Section 2.19, the Borrower may, at its sole expense and
effort (including with respect to the processing and recordation fee referred to
in Section 10.04(b)), upon notice to such Lender and the Administrative Agent,
require such Lender to transfer and assign, without recourse (in accordance with
and subject to the restrictions contained in Section 10.04), all of its
interests, rights and obligations under this Agreement to an assignee that shall
assume such assigned obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (x) such assignment shall not
conflict with any law, rule or regulation or order of any court or other
Governmental Authority having jurisdiction, (y) the Borrower shall have received
the prior written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, and (z) the Borrower or such assignee shall have paid
to the affected Lender in immediately available funds an amount equal to the sum
of the principal of and interest accrued to the date of such payment
<PAGE>
33
on the outstanding Loans of such Lender plus all Fees and other amounts accrued
for the account of such Lender hereunder (including any amounts under Section
2.14 and Section 2.16); provided further that, if prior to any such transfer and
assignment the circumstances or event that resulted in such Lender's claim for
compensation under Section 2.14 or notice under Section 2.15 or the amounts paid
pursuant to Section 2.19, as the case may be, cease to cause such Lender to
suffer increased costs or reductions in amounts received or receivable or
reduction in return on capital, or cease to have the consequences specified in
Section 2.15, or cease to result in amounts being payable under Section 2.19, as
the case may be (including as a result of any action taken by such Lender
pursuant to paragraph (b) below), or if such Lender shall waive its right to
claim further compensation under Section 2.14 in respect of such circumstances
or event or shall withdraw its notice under Section 2.15 or shall waive its
right to further payments under Section 2.19 in respect of such circumstances or
event, as the case may be, then such Lender shall not thereafter be required to
make any such transfer and assignment hereunder.
(b) If (i) any Lender shall request compensation under Section 2.14,
(ii) any Lender delivers a notice described in Section 2.15 or (iii) the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority on account of any Lender, pursuant to Section 2.19, then
such Lender shall use reasonable efforts (which shall not require such Lender to
incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any
action inconsistent with legal or regulatory restrictions or suffer any
disadvantage or burden deemed by it to be significant) (x) to file any
certificate or document reasonably requested in writing by the Borrower or (y)
to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would reduce its claims for compensation under Section 2.14 or enable it to
withdraw its notice pursuant to Section 2.15 or would reduce amounts payable
pursuant to Section 2.19, as the case may be, in the future. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such filing or assignment, delegation and transfer.
ARTICLE III.
Representations and Warranties
The Borrower and WCI represent and warrant to the Syndication Agent,
the Administrative Agent and each of the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and WCI has
been duly incorporated and is an existing corporation in good standing under the
laws of the State of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the October Offering
Document or the SEC Filings; and each of the Borrower and WCI is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions in which its owner ship or lease of property or the conduct of its
business requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material adverse effect
on the condition (financial or other), business, properties or results of
operations of each of the Borrower and WCI and their respective Subsidiaries,
taken as a whole (a "Material Adverse Effect"). Each of the Borrower and WCI is
qualified to do business as a foreign corporation in the State of New York.
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34
SECTION 3.02. Organization and Powers of Subsidiaries. Each Subsidiary
of the Borrower and WCI has been duly incorporated and is an existing
corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own its properties and
conduct its business as described in the October Offering Document or the SEC
Filings; and each Subsidiary of the Borrower and each Subsidiary of WCI is duly
qualified to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a Material Adverse Effect;
all of the issued and outstanding capital stock of each Subsidiary of the
Borrower and each Subsidiary of WCI has been duly authorized and validly issued
and is fully paid and nonassessable; and the capital stock of each Subsidiary
owned by the Borrower and each Subsidiary of WCI, is owned free from liens,
encumbrances and defects.
SECTION 3.03. Authorization. The execution, delivery and performance by
each Loan Party of each of the Loan Documents to which it is a party, the
Borrowings hereunder and the other Transactions and compliance with the terms
and provisions thereof (a) have been duly authorized and (b) will not result in
a breach or violation of any of the terms and provisions of, or constitute a
default under, (i) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Borrower, WCI or any Subsidiary of the Borrower or WCI or any of their
properties, (ii) any agreement or instrument to which the Borrower, WCI or any
such Subsidiary is a party or by which the Borrower, WCI or any such Subsidiary
is bound or to which any of the properties of the Borrower, WCI or any such
Subsidiary is subject, or (iii) the charter or by-laws of the Borrower, WCI or
any such Subsidiary, except, in the case of clause (i) or (ii), such breaches,
violations or defaults that individually or in the aggregate would not have a
Material Adverse Effect.
SECTION 3.04. Enforceability. This Agreement has been duly executed and
delivered by each Loan Party and constitutes, and each other Loan Document when
executed and delivered by each Loan Party thereto will constitute, a legal,
valid and binding obligation of such Loan Party enforceable against such Loan
Party in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
SECTION 3.05. Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
(a) the filing of Uniform Commercial Code financing statements and (b) such as
have been made or obtained and are in full force and effect.
SECTION 3.06. Financial Statements. (a) The financial statements
included or incorporated by reference in the SEC Filings present fairly in all
material respects the financial position of WCI and its consolidated
Subsidiaries as of the dates shown and their results of operations and cash
flows for the periods shown, and such financial statements have been prepared in
conformity with generally accepted accounting principles in the United States
applied on a consistent basis; and the assumptions used in preparing the pro
forma financial statements included or incorporated by reference in the SEC
Filings provide a reasonable basis for presenting the significant effects
directly attributable to the transactions or events described therein, the
<PAGE>
35
related pro forma adjustments give appropriate effect to those assumptions,
and the pro forma columns therein reflect the proper application of those
adjustments to the corresponding historical financial statement amounts.
(b) Except as disclosed in the October Offering Document or the SEC
Filings, since the date of the latest audited financial statements included in
the SEC Filings, there has been no material adverse change, nor any development
or event involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of each of
the Borrower and WCI and their respective Subsidiaries taken as a whole (it
being understood that a change in WCI's stock price or the continuation of
operating losses consistent with WCI's historical results shall be deemed not to
be, in and of itself, such a material adverse change), and, except as disclosed
in or contemplated by the October Offering Document or the SEC Filings, there
has been no dividend or distribution of any kind declared, paid or made by the
Borrower or WCI on any class of their capital stock.
SECTION 3.07. Title to Properties. (a) Except as disclosed in the
October Offering Document or the SEC Filings, the Borrower, WCI and their
respective Subsidiaries have good and marketable title to all real properties
(if any) and all other properties and assets owned by them, in each case free
from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made thereof by them;
and except as disclosed in the October Offering Document or the SEC Filings, the
Borrower, WCI and their Subsidiaries hold any leased real or personal property
under valid and enforceable leases with no exceptions that would materially
interfere with the use made or to be made thereof by them.
SECTION 3.08. Litigation; Compliance with Laws. (a) Except as disclosed
in the October Offering Document or the SEC Filings, there are no pending
actions, suits or proceedings against or affecting the Borrower, WCI, any of
their respective Subsidiaries or any of their respective properties that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, or to materially and adversely affect the ability of
either of the Borrower or WCI to perform its obligations under this Agreement or
any other Loan Document, or which are otherwise material in the context of the
borrowings hereunder; and to the best of the Borrower's and Guarantor's
knowledge, no such actions, suits or proceedings are threatened or contemplated.
(b) None of the Borrower, WCI or any of their respective Subsidiaries
or any of their respective material properties or assets is in violation of, nor
will the continued operation of their material properties and assets as
currently conducted violate, any law, rule or regulation, or is in default with
respect to any judgment, writ, injunction, decree or order of any Governmental
Authority, where any such violations or defaults, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
SECTION 3.09. Agreements. Neither the Borrower, WCI nor any of their
respective Subsidiaries is in default in any manner under any provision of any
indenture or other agreement or instrument evidencing Indebtedness, or any other
agreement or instrument to which it is a party or by which it or any of its
properties or assets is or may be bound, where any such defaults, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.
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36
SECTION 3.10. Federal Reserve Regulations. (a) Neither the Borrower,
WCI nor any of their respective Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, to purchase
or carry Margin Stock or for any purpose that entails a violation of, or that is
inconsistent with, the provisions of the Regulations of the Board, including
Regulation G, T, U or X.
SECTION 3.11. Investment Company Act. Neither the Borrower nor WCI is
an open-end investment company, unit investment trust or face-amount certificate
company that is or is required to be registered under Section 8 of the United
States Investment Company Act of 1940 (the "Investment Company Act"), nor are
either of them a closed-end investment company required to be registered, but
not registered, thereunder.
SECTION 3.12. Use of Proceeds. The Borrower will use the proceeds of
the Loans only for the purposes specified in the preamble to this Agreement and
such uses are specifically permitted by the October 1997 Notes Indenture, the
August 1997 Notes Indenture, the indentures each dated as of March 1, 1997, in
respect of the March 1997 Equipment Notes and the March 1997 Senior Notes, the
indenture dated as of October 23, 1995, between WCI and the United States Trust
Company of New York, as trustee, in respect of WCI's $150,000,577 14% Senior
Discount Notes due 2005 and the Convertible Notes Indenture.
SECTION 3.13. Tax Matters. Each of the Borrower, WCI and their
respective Subsidiaries has filed or caused to be filed all Federal, state,
local and foreign tax and information returns or materials required to have been
filed by it and has paid or caused to be paid all taxes due and payable by it
and all assessments received by it, except taxes that are being contested in
good faith by appropriate proceedings and for which the Borrower, WCI or such
Subsidiary, as applicable, shall have set aside on its books adequate reserves,
and except where the failure to make such filing or payment could not reasonably
be expected to result in a Material Adverse Effect.
SECTION 3.14. No Material Misstatements. WCI's Annual Report on Form
10-K most recently filed with the SEC and all subsequent reports (collectively,
the "Exchange Act Reports") which have been filed by WCI with the SEC or sent to
stockholders pursuant to the Exchange Act, when they were filed with the SEC,
conformed in all material respects to the requirements of the Exchange Act and
the rules and regulations of the SEC thereunder. Each of (i) the registration
statement on Form S-4 under the Securities Act (Registration No. 333-26367)
filed by WCI and WinStar Equipment Corp. on May 2, 1997, as amended pursuant to
Amendment No. 1 on July 22, 1997, and Amendment No. 2 on August 5, 1997, and as
amended by the filing of a revised Prospectus pursuant to Rule 424(b) of the
Securities Act on August 13, 1997 (as so amended, the "May S-4 Registration
Statement"), (ii) the registration statement on Form S-3 under the Securities
Act (Registration No. 333-18465) filed by WCI on December 20, 1996, as amended
pursuant to Amendment No. 1 on June 10, 1997, and Amendment No. 2 on August 5,
1997, and as amended by the filing of a revised Prospectus pursuant to Rule
424(b) of the Securities Act on August 13, 1997 (as so amended, the "S-3
Registration Statement") and (iii) the registration statement on Form S-4 under
the Securities Act (Registration No. 333-35961) filed by WCI and WinStar
Equipment II Corp. ("WEC-II") on September 19, 1997 (the "September S-4
Registration Statement" and, together
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37
with the S-3 Registration Statement, the May S-4 Registration Statement and the
Exchange Act Reports, the "SEC Filings"), as of the date hereof, conforms in all
material respects to the requirements of the Securities Act and the rules and
regulations of the SEC thereunder, and such registration statement (as amended)
neither includes any untrue statement of a material fact nor omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading (except that (i) neither the May S-4 Registration
Statement nor the S-3 Registration Statement includes WCI's quarterly financial
information for the period ended June 30, 1997, (ii) neither the S-3
Registration Statement, the May S-4 Registration Statement nor the September S-4
Registration Statement includes a description of the October 1997 Notes, and
(iii) none of the SEC Filings includes a description of the Acquisition.
SECTION 3.15. Employee Benefit Plans. Each of the Borrower and its
ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the regulations and published
interpretations thereunder. Neither the Borrower nor WCI has a funded Plan.
SECTION 3.16. Environmental Matters. (a) The properties owned or
operated by the Borrower, WCI and their respective Subsidiaries (the
"Properties") do not contain any Hazardous Materials in amounts or
concentrations which (i) constitute a violation of, (ii) require Remedial Action
under, or (iii) could give rise to liability under, Environmental Laws, which
violations, Remedial Actions and liabilities, in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
(b) The Properties and all operations of the Borrower, WCI and their
respective Subsidiaries are in compliance, and in the last three years have been
in compliance, with all Environmental Laws and all necessary Environmental
Permits have been obtained and are in effect, except to the extent that such
non-compliance or failure to obtain any necessary permits, in the aggregate,
would not have a Material Adverse Effect.
(c) There have been no Releases or threatened Releases at, from, under
or proximate to the Properties or otherwise in connection with the operations of
the Borrower, WCI or their respective Subsidiaries, which Releases or threatened
Releases, in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.
(d) Neither the Borrower, WCI nor any of their respective Subsidiaries
has received any notice of an Environmental Claim in connection with the
Properties or the operations of the Borrower, WCI and their respective
Subsidiaries or with regard to any person whose liabilities for environmental
matters the Borrower, WCI or their respective Subsidiaries has retained or
assumed, in whole or in part, contractually, by operation of law or otherwise,
which, in the aggregate, could reasonably be expected to result in a Material
Adverse Effect, nor do the Borrower, WCI or their respective Subsidiaries have
reason to believe that any such notice will be received or is being threatened.
(e) Hazardous Materials have not been transported from the Properties,
nor have Hazardous Materials been generated, treated, stored or disposed of at,
on or under any of the Properties in a manner that could give rise to liability
under any Environmental Law, nor have the Borrower, WCI or their respective
Subsidiaries retained or assumed any liability, contractually, by operation of
law or otherwise, with respect to the generation, treatment, storage or disposal
of Hazardous Materials,
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38
which transportation, generation, treatment, storage or disposal, or retained or
assumed liabilities, in the aggregate, could reasonably be expected to result in
a Material Adverse Effect.
SECTION 3.17. Insurance. Schedule 3.17 sets forth a true, complete and
correct description of all insurance maintained by the Borrower or by WCI as of
the date hereof and the Closing Date. As of each such date, such insurance is in
full force and effect and all premiums have been duly paid. The Borrower and WCI
have insurance in such amounts and covering such risks and liabilities as are in
accordance with normal industry practice.
SECTION 3.18. Security Documents. The Security Agreement is effective
to create in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Security Agreement) and, when financing statements
in appropriate form are filed in the offices specified on Schedule 4 to the
Perfection Certificate, the Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the grantors thereunder in such Collateral, in each case prior and superior in
right to any other person, other than with respect to those Liens included
within clause (i) or (ii) of the definition of Permitted Liens.
SECTION 3.19. Labor Matters. As of the date hereof and the Closing
Date, no labor dispute with the employees of the Borrower, WCI or any of their
respective Subsidiaries exists or, to the best of knowledge of the Borrower or
WCI, is imminent that could reasonably be expected to have a Material Adverse
Effect.
SECTION 3.20. Copyrights, Trademarks, etc. The Borrower, WCI and their
respective Subsidiaries own, possess or can acquire on reasonable terms,
adequate trademarks, trade names and other rights to inventions, know-how,
patents, copyrights, confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to conduct the business
as now operated by them, or used in the conduct of the business as now operated
by them, except to the extent that the failure to own or possess or the
inability to acquire such intellectual property rights would not individually or
in the aggregate have a Material Adverse Effect; and the Borrower and WCI have
not received any notice of infringement of or conflict with asserted rights of
others with respect to any intellectual property rights that, if determined
adversely to the Borrower, WCI or any of their respective Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
SECTION 3.21. Telecommunications Act. The Borrower, WCI and their
respective Subsidiaries are in compliance in all material respects with the
Communications Act of 1934, as amended by the Telecommunications Act of 1996
(the "Communications Act") and with all applicable rules, regulations and
policies of the Federal Communications Commission (the "FCC").
(b) The Borrower, WCI and their respective Subsidiaries have duly filed
in a timely manner all material filings, reports, applications, documents,
instruments and information required to be filed by them under the
Communications Act, and all such filings are true, correct and complete in all
material respects.
SECTION 3.22 Licenses. (a) The Borrower and WCI have provided to the
Purchasers a complete and accurate list of all licenses granted to the Borrower,
WCI and their respective Subsidi aries (other than experimental licenses in the
31 GHz and 38 GHz portion of the radio spectrum and licenses acquired from Local
Area Telecommunications, Inc. that are not in the 38 GHz portion of the radio
spectrum) by the FCC (the "Licenses"). All of the Licenses are currently valid
and in full force and effect. Neither of the Borrower and WCI nor any of their
respective Subsidiaries have any knowledge of any investigation, notice of
apparent liability, violation, forfeiture or other order or complaint issued by
or before any court or regulatory body, including the FCC, or of any other
proceedings (other than proceedings relating to the wireless communications
industries generally) which could in any manner materially threaten or adversely
affect the validity or continued effectiveness of any of the Licenses.
(b) No event has occurred which (i) results in, or after notice or
lapse of time or both would result in, revocation, suspension, adverse
modification, non-renewal, impairment, restriction or termination of, or order
of forfeiture with respect to, any License or (ii) materially and adversely
affects or could reasonably be expected in the future to materially adversely
affect any of the rights of the Borrower, WCI or any of their respective
Subsidiaries thereunder.
(c) Neither of the Borrower and WCI nor any of their respective
Subsidiaries have any reason to believe that any of the Licenses will not be
renewed in the ordinary course.
ARTICLE IV.
Conditions of Lending
The obligations of the Lenders to make Loans hereunder are subject to
the satisfaction of the following conditions:
SECTION 4.01. All Borrowings. On the date on which any Borrowing is
made (including the date of conversion or continuation of any Loans pursuant to
Section 2.10):
(a) the Administrative Agent shall have received in respect of
such Borrowing a Borrowing Request as required by Section 2.03.
(b) The representations and warranties set forth in Article
III hereof shall be true and correct in all material respects on and as
of the date on which such Borrowing is made with the same effect as
though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.
(c) The Borrower and each other Loan Party shall be in
compliance with all the terms and provisions set forth herein and in
each other Loan Document on its part to be observed or performed, and
at the time of and immediately after such Borrowing, no Event of
Default or Default shall have occurred and be continuing.
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SECTION 4.02. Closing Date. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of
itself and the Lenders, a favorable written opinion of (i) Graubard,
Mollen & Miller, counsel for the Borrower, substantially to the effect
set forth in Exhibit D-1, and (ii) Willkie, Farr & Gallagher, special
FCC counsel to the Borrower, substantially to the effect set forth in
Exhibit D-2, in each case (A) dated the Closing Date, (B) addressed to
the Administrative Agent and the Lenders, and (C) covering such other
matters relating to the Loan Documents and the Transactions as the
Administrative Agent shall reasonably request, and the Borrower hereby
requests such counsel to deliver such opinions.
(b) All legal matters incident to this Agreement, the
Borrowings and extensions of credit hereunder and the other Loan
Documents shall be reasonably satisfactory to the Lenders and to
Cravath, Swaine & Moore, counsel for the Syndication Agent, the
Administrative Agent and the Documentation.
(c) The Administrative Agent shall have received (i) a copy of
the certificate of incorporation, including all amendments thereto, of
each Loan Party, certified as of a recent date by the Secretary of
State of the state of its organization, and a certificate or copy
thereof as to the good standing of each Loan Party as of a recent date,
from such Secretary of State; (ii) a certificate of the Secretary or
Assistant Secretary of each Loan Party dated the Closing Date and
certifying (A) that attached thereto is a true and complete copy of the
certificate of incorporation of such Loan Party as in effect on the
Closing Date and at all times since a date prior to the date of the
resolutions described in clause (B) below, (B) that attached thereto is
a true and complete copy of resolutions duly adopted by the Board of
Directors of such Loan Party authorizing the execution, delivery and
performance of the Loan Documents to which such person is a party and,
in the case of the Borrower, the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in
full force and effect, (C) that the certificate of incorporation of
such Loan Party have not been amended since the date of the last
amendment thereto shown on the certificate of good standing furnished
pursuant to clause (i) above, and (D) as to the incumbency and specimen
signature of each officer or member executing any Loan Document or any
other document delivered in connection herewith on behalf of such Loan
Party; (iii) a certificate of another officer as to the incumbency and
specimen signature of the Secretary or Assistant Secretary executing
the certificate pursuant to (ii) above; and (iv) such other documents
as the Lenders or Cravath, Swaine & Moore, counsel for the Syndication
Agent and the Administrative Agent, may reasonably request.
(d) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a Financial Officer
of the Borrower, confirming (i) that the representations and warranties
set forth in Article III hereof are true and correct in all material
respects on and as of the Closing Date with the same effect as though
made on and as of such date, except to the extent such representations
and warranties expressly relate to an earlier date and (ii) the
Borrower and each other Loan Party are in material compliance with all
the terms and provisions set forth herein and in each other Loan
Document on its part to be observed or performed, and at the Closing
Date, no Event of Default or Default shall have occurred and be
continuing.
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(e) The Administrative Agent shall have received all Fees and
other amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Loan Document.
(f) The Security Agreement shall have been duly executed by
the Loan Parties thereto and shall have been delivered to the
Administrative Agent and shall be in full force and effect on such date
and each document (including each Uniform Commercial Code financing
statement) required by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent for the benefit of the
Secured Parties a valid, legal and perfected (to the extent that a
security interest in such Collateral can be perfected by filing,
registering or recording a financing statement or such other document)
first-priority security interest in and lien on the Collateral (subject
to those Liens included within clause (i) or (ii) of the definition of
Permitted Liens) described in such agreement shall have been delivered
to the Administrative Agent.
(g) The Administrative Agent shall have received a Perfection
Certificate with respect to the Borrower dated the Closing Date and
duly executed by a Responsible Officer of the Borrower.
(h) The Acquisition and the other Transactions shall have been
consummated or shall be consummated simultaneously with the first
Borrowing hereunder on the Closing Date in accordance with applicable
law and with the Asset Purchase Agreement and other documentation
relating to the Acquisition and the Transactions that is reasonably
satisfactory to the Lenders.
(i) There shall have been no material adverse change in the
business, assets, operations, prospects or, condition (financial or
other) of the Borrower, WCI and their respective Subsidiaries, taken as
a whole, since December 31, 1996.
ARTICLE V.
Affirmative Covenants
WCI and the Borrower covenant and agree with each Lender that so long
as this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document shall have been paid
in full, unless the Required Lenders shall otherwise consent in writing, WCI
will, and will cause each Restricted Subsidiary to comply with the following:
SECTION 5.01. Existence. Subject to Article VI, WCI will do or cause to
be done all things necessary to preserve and keep in full force and effect its
existence and the existence of each of its Restricted Subsidiaries in accordance
with the respective organizational documents of WCI and each such Subsidiary and
the rights (whether pursuant to charter, partnership certificate, agreement,
statute or otherwise), material licenses and franchises of WCI and each such
Subsidiary; provided, however, that WCI shall not be required to preserve any
such right, license or franchise,
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or the existence of any Restricted Subsidiary (other than of WCI), if the
maintenance or preservation thereof is no longer desirable in the conduct of the
business of WCI and its Restricted Subsidiaries taken as a whole.
SECTION 5.02. Insurance. (a) WCI will cause all properties used or
useful in the conduct of its business or the business of any of its Restricted
Subsidiaries, to be maintained and kept in reasonable condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of WCI may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section 5.02 shall prevent
WCI or any such Subsidiary from discontinuing the use, operation or maintenance
of any of such properties or disposing of any of them, if such discontinuance or
disposal is, in the judgment of WCI, desirable in the conduct of the business of
WCI or such Subsidiary.
(b) WCI will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, including, but not limited to,
public liability insurance, with reputable insurers or with the government of
the United States of America, or an agency or instrumentality thereof, in such
amounts, with such deductibles and by such methods as shall be customary for
corporations similarly situated in the industry in which WCI or such Restricted
Subsidiary, as the case may be, is then conducting business.
SECTION 5.03. Obligations and Taxes. WCI will pay or discharge and
shall cause each of its Subsidiaries to pay or discharge, or cause to be paid or
discharged, before the same shall become delinquent (i) all material taxes,
assessments and governmental charges levied or imposed upon (a) WCI or any such
Subsidiary, (b) the income or profits of any such Subsidiary which is a
corporation or (c) the property of WCI or any such Subsidiary and (ii) all
material lawful claims for labor, materials and supplies that, if unpaid, might
by law become a lien upon the property of WCI or any such Subsidiary; provided,
however, that WCI shall not be required to pay or discharge, or cause to be paid
or discharged, any such tax, assessment, charge or claim the amount,
applicability or validity of which is being contested in good faith by
appropriate proceedings and for which adequate reserves have been established.
SECTION 5.04. Defaults and Other Notices. (a) In the event that WCI or
the Borrower becomes aware of any Default or Event of Default, WCI or the
Borrower, as the case may be, promptly after it becomes aware thereof, will give
written notice thereof to the Administrative Agent.
(b) Each of WCI and the Borrower shall deliver to the Administrative
Agent, within 90 days after the end of WCI's fiscal year, an Officers'
Certificate stating whether or not the signers know of any Default or Event of
Default that occurred during such fiscal year. Such certificates shall contain a
certification from the principal executive officer, principal financial officer
or principal accounting officer of WCI and the Borrower that a review has been
conducted of the activities of WCI, the Borrower and the Restricted Subsidiaries
and WCI's, the Borrower's and the Restricted Subsidiaries' performance under
this Agreement and that, to the best knowledge of such officer, each of WCI and
the Borrower has complied with all conditions and covenants under this
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42
Agreement. For purposes of this Section 5.04, such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Agreement. If WCI or the Borrower knows of such an Event of
Default or Default, the certificate shall describe any such Event of Default or
Default and its status.
(c) WCI shall (to the extent not prohibited by applicable accounting
rules) deliver to the Administrative Agent, within 90 days after the end of its
fiscal year, a certificate signed by WCI's independent certified public
accountants stating (i) that their audit examination has included a review of
the terms of this Agreement and the Loans as they relate to accounting matters,
(ii) that they have read the most recent Officers' Certificate delivered to the
Administrative Agent pursuant to paragraph (b) of this Section 5.04 and (iii)
whether, in connection with their audit examination, anything came to their
attention that caused them to believe that WCI or the Borrower, as the case may
be, was not in compliance with any of the terms, covenants, provisions or
conditions of this Agreement as it pertains to accounting matters and, if any
Default or Event of Default has come to their attention, specifying the nature
and period of existence thereof; provided, however, that such independent
certified public accountants shall not be liable in respect of such statement by
reason of any failure to obtain knowledge of any such Default or Event of
Default that would not be disclosed in the course of an audit examination
conducted in accordance with generally accepted auditing standards in effect at
the date of such examination.
(d) Within 90 days after the end of WCI's fiscal year, WCI shall
deliver to the Administrative Agent a list of all Significant Subsidiaries. The
Administrative Agent shall have no duty with respect to any such list except to
keep it on file and available for inspection by the Lenders.
(e) On or prior to February 17, 1998, the Borrower shall deliver
written notice to the Administrative Agent of whether it intends to effect the
repayment of remaining Loans pursuant to Section 2.11 through (i) available cash
of the Borrower or (ii) the proceeds of a refinancing; provided, however, that
if the aggregate amount of Loans outstanding on such date are equal to or
greater than $40 million, (x) in the event that the Borrower has notified the
Administrative Agent of its intention to make repayment pursuant to clause (i)
above, the Borrower will deliver to the Administrative Agent information on its
current and projected cash balances in such detail as the Administrative Agent
reasonably requests, and (y) in the event that the Borrower has notified the
Administrative Agent of its intention to make repayment pursuant to clause (ii)
above, the Borrower shall, in accordance with the Fee Letter, use its good faith
efforts to consummate such refinancing prior to the Term Loan Maturity Date;
provided, however, that the Borrower's notification of its intentions pursuant
to this clause (e) shall not create a binding obligation to effect repayment in
such manner.
SECTION 5.05. Use of Proceeds. The Borrower shall use the proceeds of
the Loans only for the purposes set forth in the preamble to this Agreement.
SECTION 5.06. Further Assurances. WCI shall, and shall cause each of
its Subsidiaries to, execute any and all further documents, financing
statements, agreements and instruments, and take all further action (including
filing Uniform Commercial Code and other financing statements) that may be
required under applicable law, or that the Required Lenders or the
Administrative Agent may reasonably request, in order to effectuate the
transactions contemplated by the Loan Documents
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43
and in order to grant, preserve, protect and perfect the validity and first
priority of the security interests created or intended to be created by the
Security Documents.
SECTION 5.07. Ownership of the Borrower. WCI shall at all times own
all the Capital Stock of the Borrower.
SECTION 5.08. Financial Statements, Reports, etc. Whether or not WCI is
required to file reports with the SEC, if any Term Loans are outstanding, WCI
shall file with the SEC all such reports and other information as it would be
required to file with the SEC by Sections 13(a) or 15(d) under the Exchange Act.
WCI shall supply the Administrative Agent and each Lender or shall supply to the
Administrative Agent for forwarding to each such Lender, without cost to the
Administrative Agent or such Lender, copies of such reports or other
information.
ARTICLE VI.
Negative Covenants
WCI and the Borrower covenant and agree with each Lender that, so long
as this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document shall have been paid
in full, unless the Required Lenders shall otherwise consent in writing, WCI
will and will cause each Restricted Subsidiary to comply with the following:
SECTION 6.01. Limitation on Indebtedness. (a) WCI will not, and will
not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (other
than the Loans and Indebtedness existing on the Closing Date); provided,
however, that WCI may Incur Indebtedness if, after giving effect to the
Incurrence of such Indebtedness and the receipt and application of the proceeds
therefrom, the Indebtedness to EBITDA Ratio would be greater than zero and less
than 5:1.
Notwithstanding the foregoing, WCI and any Restricted Subsidiary
(except as specified below) may Incur each and all of the following:
(i) Indebtedness of WCI outstanding at any time in an
aggregate principal amount not to exceed $125,000,000, less any amount
of Indebtedness Incurred pursuant to this clause (i) and permanently
repaid as provided under Section 4.11 of the August 1997 Notes
Indenture;
(ii) Indebtedness (A) to WCI evidenced by an unsubordinated
promissory note or (B) to any of its Restricted Subsidiaries; provided,
however, that any event which results in any such Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any subsequent transfer of
such Indebtedness (other than to WCI or another Restricted Subsidiary)
shall be deemed, in each case, to constitute an Incurrence of such
Indebtedness not permitted by this clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds
of which are used to refinance or refund, then outstanding
Indebtedness, other than Indebtedness Incurred under
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44
clause (i), (ii), (v), (vi) or (viii) of this paragraph, and any
refinancings thereof in an amount not to exceed the amount so
refinanced or refunded (plus premiums, accrued interest, fees and
expenses); provided, however, that Indebtedness the proceeds of which
are used to refinance or refund the Loans or Indebtedness that is pari
passu with, or subordinated in right of payment to, the WCI Guarantee
shall only be permitted under this clause (iii) if (A) in case the
Loans are refinanced in part or the Indebtedness to be refinanced is
pari passu with the WCI Guarantee, such new Indebtedness, by its terms
or by the terms of any agreement or instrument pursuant to which such
new Indebtedness is outstanding, is expressly made pari passu with, or
subordinate in right of payment to, the WCI Guarantee, (B) in case the
Indebtedness to be refinanced is subordinated in right of payment to
the WCI Guarantee, such new Indebtedness, by its terms or by the terms
of any agreement or instrument pursuant to which such new Indebtedness
is outstanding, is expressly made subordinate in right of payment to
the WCI Guarantee at least to the extent that the Indebtedness to be
refinanced is subordinated to the WCI Guarantee and (C) such new
Indebtedness, determined as of the date of Incurrence of such new
Indebtedness, does not mature prior to the Stated Maturity of the
Indebtedness to be refinanced or refunded, and the Average Life of such
new Indebtedness is at least equal to the remaining Average Life of the
Indebtedness to be refinanced or refunded; provided further, however,
that in no event may Indebtedness of WCI be refinanced by means of any
Indebtedness of any Restricted Subsidiary of WCI pursuant to this
clause (iii);
(iv) Indebtedness (A) in respect of performance, surety or
appeal bonds provided in the ordinary course of business, (B) under
Currency Agreements and Interest Rate Agreements; provided, however,
that such agreements do not increase the Indebtedness of the obligor
outstanding at any time other than as a result of fluctuations in
foreign currency exchange rates or interest rates or by reason of fees,
indemnities and compensation payable thereunder; and (C) arising from
agreements providing for indemnification, adjustment of purchase price
or similar obligations, or from Guarantees or letters of credit, surety
bonds or performance bonds securing any obligations of WCI or any of
the Restricted Subsidiaries pursuant to such agreements, in any case
Incurred in connection with the disposition of any business, assets or
Restricted Subsidiary of WCI (other than Guarantees of Indebtedness
Incurred by any Person acquiring all or any portion of such business,
assets or Restricted Subsidiary of WCI for the purpose of financing
such acquisition), in a principal amount not to exceed the gross
proceeds actually received by WCI or any Restricted Subsidiary in
connection with such disposition;
(v) Indebtedness of WCI not to exceed, at any one time
outstanding, two times the Net Cash Proceeds received by WCI from and
after October 23, 1995, from the issuance and sale of its Capital Stock
(other than Redeemable Stock and Preferred Stock that provides for the
payment of dividends in cash); provided, however, that such
Indebtedness (x) does not mature prior to the Term Loan Maturity Date
and has an Average Life longer than the Loans and (y) is subordinated
to the WCI Guarantee at least to the extent that the Convertible Notes
are subordinated to Senior Indebtedness (as defined in the Convertible
Notes Indenture as in effect on the Closing Date);
(vi) Indebtedness of any Restricted Subsidiary Incurred
pursuant to any credit agreement of such Restricted Subsidiary in
effect on the Closing Date (and refinancings thereof), up to the
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45
amount of the commitment under such credit agreement on the Closing
Date;
(vii) Indebtedness to the extent such Indebtedness is secured
by Liens which are purchase money or other Liens upon equipment or
inventory acquired or held by WCI or any of its Restricted Subsidiaries
taken or obtained by (A) the seller or lessor of such equipment or
inventory to secure all or a part of the purchase price or lease
payments therefor or (B) the person who makes advances or incurs
obligations, thereby giving value to WCI to enable it to purchase or
acquire rights in such equipment or inventory, to secure the repayment
of all or a part of the advances so made or obligations so incurred;
provided, however, that such Liens do not extend to or cover any
property or assets of WCI or any Restricted Subsidiary other than the
equipment or inventory acquired; and
(viii) Indebtedness of any Restricted Subsidiary not to
exceed, at any one time outstanding, 80% of the accounts receivable net
of reserves and allowances for doubtful accounts, determined in
accordance with GAAP, of such Restricted Subsidiary and its Restricted
Subsidiaries (without duplication); provided, however, that such
Indebtedness is not Guaranteed by WCI or any of its Restricted
Subsidiaries.
(b) For purposes of determining any particular amount of Indebtedness
under this Section 6.01, Guarantees, Liens or obligations with respect to
letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included. For purposes of
determining compliance with this Section 6.01, in the event that an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
described in the above clauses, WCI, in its sole discretion, shall classify such
item of Indebtedness and only be required to include the amount and type of such
Indebtedness in one of such clauses.
(c) WCI will not, and will not permit any Restricted Subsidiary to,
Incur any Guarantee of Indebtedness of any Unrestricted Subsidiary.
SECTION 6.02. Limitation on Restricted Payments. WCI will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, (i) declare or
pay any dividend or make any distribution on its Capital Stock (other than
dividends or distributions payable solely in shares of its or such Restricted
Subsidiary's Capital Stock (other than Redeemable Stock) held by such holders or
in options, warrants or other rights to acquire such shares of Capital Stock)
other than such Capital Stock held by WCI or any of its Restricted Subsidiaries
(and other than pro rata dividends or distributions on Common Stock of
Restricted Subsidiaries); (ii) repurchase, redeem, retire or otherwise acquire
for value any shares of Capital Stock of WCI (including options, warrants or
other rights to acquire such shares of Capital Stock) held by Persons other than
any Wholly Owned Restricted Subsidiaries of WCI; (iii) make any voluntary or
optional principal payment, or voluntary or optional redemption, repurchase,
defeasance, or other acquisition or retirement for value, of Indebtedness of WCI
that is subordinated in right of payment to the WCI Guarantee; or (iv) make any
Investment, other than a Permitted Investment, in any Person (such payments or
any other actions described in clauses (i) through (iv) being collectively
"Restricted Payments") if, at the time of, and after giving effect to, the
proposed Restricted Payment: (A) a Default or Event of Default shall have
occurred and be continuing, (B) except with respect to any Investment (other
than an Investment consisting of the designation of a Restricted Subsidiary as
an Unrestricted Subsidiary),
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46
WCI could not Incur at least $1.00 of Indebtedness under the first paragraph of
Section 6.01 or (C) the aggregate amount expended for all Restricted Payments
(the amount so expended, if other than in cash, to be determined in good faith
by the Board of Directors, whose determination shall be conclusive and evidenced
by a Board Resolution) after the Closing Date shall exceed the sum of (1) 50% of
the aggregate amount of the Adjusted Consolidated Net Income (or, if the
Adjusted Consolidated Net Income is a loss, minus 100% of such amount)
(determined by excluding income resulting from transfers of assets by WCI or a
Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a cumulative
basis during the period (taken as one accounting period) beginning on the first
day of the fiscal quarter immediately following the Closing Date and ending on
the last day of the last fiscal quarter preceding the Transaction Date for which
reports have been filed with the SEC plus (2) the aggregate Net Cash Proceeds
received by WCI after the Closing Date from the issuance and sale permitted by
this Agreement of its Capital Stock (other than Redeemable Stock) to a Person
who is not a Subsidiary of WCI, or from the issuance to a Person who is not a
Subsidiary of WCI of any options, warrants or other rights to acquire Capital
Stock of WCI (in each case, exclusive of any convertible Indebtedness,
Redeemable Stock or any options, warrants or other rights that are redeemable at
the option of the Holder, or are required to be redeemed, prior to the Term Loan
Maturity Date) plus (3) an amount equal to the net reduction in Investments
(other than reductions in Permitted Investments and other than reductions in
Investments made pursuant to clauses (vi) or (vii) of the second paragraph of
this Section 6.02) in any Person resulting from payments of interest on
Indebtedness, dividends, repayments of loans or advances, or other transfers of
assets, in each case to WCI or any Restricted Subsidiary (except to the extent
any such payment is included in the calculation of Adjusted Consolidated Net
Income), or from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of
"Investments"), not to exceed the amount of Investments previously made by WCI
and its Restricted Subsidiaries in such Person.
The foregoing provision shall not be violated by reason of:
(i) the payment of any dividend within 60 days after the date
of declaration thereof if, at said date of declaration, such payment
would comply with the foregoing paragraph;
(ii) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness that is
subordinated in right of payment to the WCI Guarantee, including
premium, if any, and accrued and unpaid interest, with the proceeds of,
or in exchange for, Indebtedness Incurred under clause (iii) of the
second paragraph of Section 6.01;
(iii) the repurchase, redemption or other acquisition of
Capital Stock of WCI (or options, warrants or other rights to acquire
such Capital Stock) in exchange for, or out of the proceeds of a
substantially concurrent sale of, shares of Capital Stock or options,
warrants or other rights to purchase such Capital Stock (in each case
other than Redeemable Stock) of WCI;
(iv) the making of any other Restricted Payment made by
exchange for, or out of the proceeds of, a substantially concurrent
sale of, shares of the Capital Stock or options, warrants or other
rights to acquire such Capital Stock (in each case other than
Redeemable Stock) of the Borrower;
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47
(v) payments or distributions, in the nature of satisfaction
of dissenters' rights, pursuant to or in connection with a
consolidation, merger or transfer of assets that complies with the
provisions of this Agreement applicable to mergers, consolidations and
transfers of all or substantially all of the property and assets of
WCI;
(vi) Investments, not to exceed $15,000,000 at any one time
outstanding;
(vii) Investments, not to exceed $15,000,000 at any one time
outstanding, in entities, substantially all of the assets of which
consist of Telecommunications Assets;
(viii) (A) cash payments in lieu of the issuance of fractional
shares of Common Stock upon conversion (including mandatory conversion)
of the Convertible Notes provided for in the Convertible Notes
Indenture and (B) cash payments on the Convertible Notes required to be
made under Section 4.12 and Section 4.13 in the Convertible Notes
Indenture (as in effect on the Closing Date);
(ix) cash payments in lieu of the issuance of fractional
shares of Common Stock of WCI upon conversion of any class of Preferred
Stock of WCI; provided, however, that this exception shall not be
available with respect to more than two such conversions with respect
to any such class of Preferred Stock by any given Affiliate of WCI; and
(x) Investments in entities that directly (or indirectly
through subsidiaries) own licenses granted by the FCC or any other
governmental entity with authority to grant telecommunications
licenses; provided, however, that, in each case WCI or a Restricted
Subsidiary shall, at the time of making such Investment, have an active
role in the management or operation of such entity and in the provision
of telecommunications services by such entity;
provided, however, that, except in the case of clauses (i) and (iii) of this
paragraph, no Default or Event of Default shall have occurred and be continuing
or occur as a consequence of the actions or payments set forth herein. Any
Investments made other than in cash shall be valued, in good faith, by the Board
of Directors. Any Investment made pursuant to clause (vi) or (vii) of this
paragraph shall be deemed to be no longer outstanding (and repaid in full) if
and when the Person in which such Investment is made becomes a Restricted
Subsidiary of WCI.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (ii) thereof), and the
Net Cash Proceeds from any issuance and sale of Capital Stock referred to in
clauses (iii) or (iv) shall be included in calculating whether the conditions of
clause (C) of the first paragraph of this Section 6.02 have been met with
respect to any subsequent Restricted Payments. In the event the proceeds of an
issuance of Capital Stock of WCI are used for the repayment of the Loans or the
redemption, repurchase or other acquisition of Indebtedness that is pari passu
with the WCI Guarantee then the Net Cash Proceeds of such issuance shall be
included in clause (C) of the first paragraph of this Section 6.02 only to the
extent such proceeds are not used for such redemption, repurchase or other
acquisition of Indebtedness.
SECTION 6.03. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries. WCI will not, and will not permit any
Restricted Subsidiary to, create or
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48
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to:
(i) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Subsidiary owned
by WCI or any other Restricted Subsidiary;
(ii) pay any Indebtedness owed to WCI or any other Restricted
Subsidiary that owns, directly or indirectly, any Capital Stock of such
Restricted Subsidiary;
(iii) make loans or advances to WCI or any other Restricted
Subsidiary that owns, directly or indirectly, any Capital Stock of such
Restricted Subsidiary; or
(iv) transfer any of its property or assets to WCI or any
other Restricted Subsidiary that owns, directly or indirectly, any
Capital Stock of such Restricted Subsidiary.
The foregoing provisions shall not prohibit any encumbrances or
restrictions:
(i) existing on the Closing Date in this Agreement or any
other agreement in effect on the Closing Date, and any extensions,
refinancings, renewals or replacements of such agreements; provided,
however, that the encumbrances and restrictions in any such extensions,
refinancings, renewals or replacements are no less favorable in any
material respect to the Holders than those encumbrances or restrictions
that are then in effect and that are being extended, refinanced,
renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Person or the property or
assets of such Person acquired by WCI or any Restricted Subsidiary, at
the time of such acquisition and not incurred in contemplation thereof,
which encumbrances or restrictions are not applicable to any Person or
the property or assets of any Person other than such Person or the
property or assets of such Person so acquired;
(iv) in the case of clause (iv) of the first paragraph of this
Section 6.03, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B)
existing by virtue of any transfer of, agreement to transfer, option or
right with respect to, or Lien on, any property or assets of WCI or any
Restricted Subsidiary not otherwise prohibited by this Agreement or (C)
arising or agreed to in the ordinary course of business, not relating
to any Indebtedness, and that do not, individually or in the aggregate,
detract from the value of property or assets of WCI or any Restricted
Subsidiary in any manner material to WCI or any Restricted Subsidiary;
or
(v) with respect to a Restricted Subsidiary and imposed
pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock of, or
property and assets of, such Restricted Subsidiary.
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49
Nothing contained in this Section 6.03 shall prevent WCI or any Restricted
Subsidiary from (i) restricting the sale or other disposition of property or
assets of WCI or any of its Restricted Subsidiaries that secure Indebtedness of
WCI or any of its Restricted Subsidiaries or (ii) creating, incurring, assuming
or suffering to exist any Liens otherwise permitted under Section 6.07.
SECTION 6.04. Limitation on the Issuance of Capital Stock of Restricted
Subsidiaries. WCI will not sell, and will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell any shares of Capital Stock of a
Restricted Subsidiary (including options, warrants or other rights to purchase
shares of such Capital Stock) except:
(i) to WCI or a Wholly Owned Restricted Subsidiary;
(ii) issuances or sales to foreign nationals of shares of
Capital Stock of foreign Restricted Subsidiaries, to the extent
required by applicable law;
(iii) if, immediately after giving effect to such issuance or
sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary; or
(iv) issuances or sales of Common Stock of Restricted
Subsidiaries, other than the Telecommunications Subsidiaries in
compliance with Section 6.09.
SECTION 6.05. Limitation on Issuances of Guarantees by Restricted
Subsidiaries. WCI will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of WCI ("Guaranteed Indebtedness"),
unless (i) such Restricted Subsidiary simultaneously executes and delivers a
supplemental amendment to this Agreement providing for a Guarantee (a
"Subsidiary Guarantee") of payment of the Loans by such Restricted Subsidiary
and (ii) such Restricted Subsidiary waives and will not in any manner whatsoever
claim or take the benefit or advantage of, any rights of reimbursement,
indemnity or subrogation or any other rights against WCI or any other Restricted
Subsidiary as a result of any payment by such Restricted Subsidiary under its
Subsidiary Guarantee; provided, however, that this paragraph shall not be
applicable to any Guarantee of any Restricted Subsidiary that (x) existed at the
time such Person became a Restricted Subsidiary and (y) was not Incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary. If the Guaranteed Indebtedness is (A) pari passu with the WCI
Guarantee, then the Guarantee of such Guaranteed Indebtedness shall be pari
passu with, or subordinated to, the Subsidiary Guarantee or (B) subordinated to
the WCI Guarantee then the Guarantee of such Guaranteed Indebtedness shall be
subordinated to the Subsidiary Guarantee at least to the extent that the
Guaranteed Indebtedness is subordinated to the WCI Guarantee.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of WCI of all of WCI's and each Restricted
Subsidiary's Capital Stock in, or all or substantially all the assets of, such
Restricted Subsidiary (which sale, exchange or transfer is not prohibited by
this Agreement) or (ii) the release or discharge of the Guarantee which resulted
in the creation of such Subsidiary Guarantee, except a discharge or release by
or as a result of payment under such Guarantee.
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50
SECTION 6.06. Limitation on Transactions with Shareholders and
Affiliates. WCI will not, and will not permit any Restricted Subsidiary to,
directly or indirectly , enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or assets,
or the rendering of any service) with any holder (or any Affiliate of such
holder) of 5% or more of any class of Capital Stock of WCI or with any Affiliate
of WCI or any Restricted Subsidiary, except upon fair and reasonable terms no
less favorable to WCI or such Restricted Subsidiary than could be obtained, at
the time of such transaction or, if such transaction is pursuant to a written
agreement, at the time of the execution of the agreement providing therefor, in
a comparable arm's-length transaction with a Person that is not such a holder or
an Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors or (B) for which WCI or a Restricted Subsidiary delivers to
the Administrative Agent a written opinion of a nationally recognized investment
banking firm stating that the transaction is fair to WCI or such Restricted
Subsidiary from a financial point of view; (ii) any transaction solely between
WCI and any of its Wholly Owned Restricted Subsidiaries or solely between Wholly
Owned Restricted Subsidiaries; (iii) the payment of reasonable fees to directors
of WCI who are not employees of WCI; (iv) any payments or other transactions
pursuant to any tax-sharing agreement between WCI and any other Person with
which WCI files a consolidated tax return or with which WCI is part of a
consolidated group for tax purposes; or (v) any Restricted Payments not
prohibited by the provisions of Section 6.02 (other than pursuant to clause (iv)
of the definition of "Permitted Investment" or clause (vi) of the second
paragraph of Section 6.02). Notwithstanding the foregoing, any transaction
covered by the first paragraph of this Section 6.06 and not covered by clauses
(ii) through (iv) of this paragraph, the aggregate amount of which exceeds
$250,000 in value, must be approved or determined to be fair in the manner
provided for in clause (i)(A) or (B) above.
SECTION 6.07. Limitation on Liens. WCI will not, and will not permit
any Restricted Subsidiary to, create, incur, assume or suffer to exist any Lien
on any of its assets or properties of any character, or any shares of Capital
Stock or Indebtedness of any Restricted Subsidiary (collectively, "Protected
Property"), without making effective provision for the WCI Guarantee and all
other amounts due under this Agreement or any other Loan Document to be directly
secured equally and ratably with (or, if the obligation or liability to be
secured by such Lien is subordinated in right of payment to the WCI Guarantee
prior to) the obligation or liability secured by such Lien.
The foregoing limitation does not apply to:
(i) Liens existing on the Closing Date;
(ii) Liens granted after the Closing Date on any assets or
Capital Stock of WCI or its Restricted Subsidiaries created in favor of
the Holders;
(iii) Liens with respect to the assets of a Restricted
Subsidiary granted by such Restricted Subsidiary to WCI or a Wholly
Owned Restricted Subsidiary to secure Indebtedness owing to WCI or such
other Restricted Subsidiary;
(iv) Liens securing Indebtedness which is Incurred to
refinance secured Indebtedness which is permitted to be Incurred under
clause (iii) of the second paragraph
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51
of Section 6.01; provided, however, that such Liens do not extend to or
cover any property or assets of WCI or any Restricted Subsidiary other
than the property or assets securing the Indebtedness being refinanced;
(v) Liens securing Indebtedness Incurred pursuant to the first
sentence of Section 6.01;
(vi) purchase money or other Liens upon equipment or inventory
acquired or held by WCI or any of its Restricted Subsidiaries taken or
obtained by (A) the seller or lessor of such equipment or inventory to
secure all or a part of the purchase price or lease payments therefor
or (B) the person who makes advances or incurs obligations, thereby
giving value to WCI to enable it to purchase or acquire rights in such
equipment or inventory, to secure the repayment of all or a part of the
advances so made or obligations so incurred; provided, however, that
such Liens do not extend to or cover any property or assets of WCI or
any Restricted Subsidiary other than the equipment or inventory
acquired; or
(vii) Permitted Liens.
SECTION 6.08. Limitation on Sale-Leaseback Transactions. WCI will not,
and will not permit any Restricted Subsidiary to, enter into any sale-leaseback
transaction involving any of its assets or properties whether now owned or
hereafter acquired, whereby WCI or a Restricted Subsidiary sells or transfers
such assets or properties and then or thereafter leases such assets or
properties or any part thereof or any other assets or properties which WCI or
such Restricted Subsidiary, as the case may be, intends to use for substantially
the same purpose or purposes as the assets or properties sold or transferred.
The foregoing restriction does not apply to any sale-leaseback
transaction if:
(i) the lease is for a period, including renewal rights, of not
more than three years;
(ii) the lease secures or relates to industrial revenue or
pollution control bonds;
(iii) the transaction is solely between WCI and any Wholly
Owned Restricted Subsidiary or solely between Wholly Owned Restricted
Subsidiaries;
(iv) the assets or properties are sold and leased back within
30 days of the date that the account payable with respect to the
acquisition by WCI or any Restricted Subsidiary of such assets or
properties is due and payable; or
(v) WCI or such Restricted Subsidiary complies with Section
6.09.
SECTION 6.09. Limitation on Asset Sales. WCI will not, and will not
permit any Restricted Subsidiary to, consummate any Asset Sale, unless (i) the
consideration received by WCI or such Restricted Subsidiary is at least equal to
the fair market value of the assets sold or disposed of and (ii) at least 85% of
the consideration received consists of cash or Temporary Cash Investments.
Without limiting the foregoing, in the case of an Asset Sale with respect to the
Collateral 100% of the consideration received must consist of cash or temporary
cash Investments and an amount equal
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52
to the lesser of 100% of the Net Cash Proceeds of any Asset Sale with respect to
the Collateral or the then outstanding amount of the Loans shall be used to
prepay outstanding Loans on the date of such Asset Sale in accordance with
Section 2.13.
SECTION 6.10. Waiver of Stay, Extension or Usury Laws. The Borrower
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Borrower from paying all or any portion of
the principal of, premium, if any, or interest on the Loans as contemplated
herein, wherever enacted, now or at any time hereafter in force, or that may
affect the covenants or the performance of this Agreement; and (to the extent
that it may lawfully do so) the Borrower hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or impede
the execution of any power herein granted to the Administrative Agent, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 6.11. Mergers, Consolidations, Etc. of WCI and the Borrower.
(a) WCI shall not consolidate with, merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its property
and assets (as an entirety or substantially an entirety in one transaction or a
series of related transactions) to, any Person (other than a consolidation or
merger with or into a Wholly Owned Restricted Subsidiary with a positive net
worth; provided, however, that, in connection with any such merger or
consolidation, no consideration (other than Common Stock in the surviving Person
or WCI) shall be issued or distributed to the stockholders of WCI) or permit any
Person to merge with or into WCI unless:
(i) WCI shall be the continuing Person, or the Person (if
other than WCI) formed by such consolidation or into which WCI is
merged or that acquired or leased such property and assets of WCI shall
be a corporation organized and validly existing under the laws of the
United States of America or any jurisdiction thereof and shall
expressly assume, by a supplemental agreement, executed and delivered
to the Administrative Agent, all of the obligations of WCI on all of
the Loans and under this Agreement;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction on a
pro forma basis, WCI or any Person becoming the successor obligor of
the Loans shall have a Consolidated Net Worth equal to or greater than
the Consolidated Net Worth of WCI immediately prior to such
transaction;
(iv) immediately after giving effect to such transaction on a
pro forma basis WCI, or any Person becoming the successor obligor of
the Loans could Incur at least $1.00 of Indebtedness under the first
paragraph of Section 6.01; and
(v) WCI delivers to the Administrative Agent an Officers'
Certificate (attaching the arithmetic computations to demonstrate
compliance with clauses (iii) and, if applicable, (iv)) and Opinion of
Counsel, in each case stating that such consolidation, merger or
transfer and such supplemental indenture complies with the provisions
of this Section 6.11 and that
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53
all conditions precedent provided for herein relating to such
transaction have been complied with;
provided, however, that clauses (iii) and (iv) above do not apply if, in the
good faith determination of the Board of Directors of WCI, whose determination
shall be evidenced by a Board Resolution, the principal purpose of such
transaction is to change the state of incorporation of WCI; provided further,
however, that any such transaction shall not have as one of its purposes the
evasion of the foregoing limitations.
(b) The Borrower shall not consolidate with, merge with or into, or
sell, convey, transfer, lease (other than in the ordinary course of business) or
otherwise dispose of all or substantially all of its property and assets to, any
Person or permit any Person to merge with and into the Borrower unless: (i) the
Borrower shall be the continuing Person, or the Person (if other than the
Borrower) formed by such consolidation or into which the Borrower is merged or
that acquired or leased such property and assets of the Borrower shall be a
corporation organized and validly existing under the laws of the United States
of America or any jurisdiction thereof and shall expressly assume, by a
supplemental agreement, executed and delivered to the Administrative Agent, all
of the obligations of the Borrower on all of the Loans and under this Agreement;
(ii) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; and (iii) the Borrower delivers
to the Administrative Agent an Officers' Certificate and Opinion of Counsel, in
each case stating that such consolidation, merger or transfer and such
supplemental agreement complies with this provision and that all conditions
precedent provided for herein relating to such transaction have been complied
with.
(c) Upon any consolidation or merger, or any sale, conveyance, transfer
or other disposition of all or substantially all of the property and assets of
WCI or the Borrower, as the case may be, in accordance with this Section 6.11,
the successor Person formed by such consolidation or into which WCI or the
Borrower, as the case may be, is merged or to which such sale, conveyance,
transfer or other disposition is made shall succeed to, and be substituted for,
and may exercise every right and power of, WCI or the Borrower, as the case may
be, under this Agreement with the same effect as if such successor Person had
been named as WCI or the Borrower, as the case may be, herein.
SECTION 6.12. Limitation on the Borrower's Business Activities. The
Borrower shall not, and WCI shall not permit the Borrower to,
(i) Incur any Indebtedness other than the Loans; or
(ii) engage in any business activities other than the
activities of owning, selling or leasing the Collateral and activities
related thereto.
SECTION 6.13. Impairment of Security Interest. The Borrower shall, and
WCI shall cause the Borrower to, on or prior to the date that is four business
days following the Issue Date, file UCC-1s or such other documents required to
be filed pursuant to Section 3.02 of the Security Agreement covering all
Collateral, and to file such UCC-3 continuation statements from time to time as
may be necessary to continue to vest in the Administrative Agent the security
interest in such Collateral, and the Borrower shall not, and WCI shall not and
shall not permit any of its Subsidiaries to, grant to any Person (other than the
Administrative Agent on behalf of Lenders) any
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54
security interest in the Collateral. The Borrower's obligations with respect to
UCC-1's may be met by delivering such financing statements to Cravath, Swaine &
Moore on the Closing Date.
ARTICLE VII.
Events of Default
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in or
in connection with any Loan Document or the Borrowings hereunder, or
any representation, warranty, statement or information contained in any
report, certificate, financial statement or other instrument furnished
in connection with or pursuant to any Loan Document, shall prove to
have been false or misleading in any material respect when so made,
deemed made or furnished;
(b) default shall be made in the payment of 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 by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on
any Loan or Fee or any other amount (other than an amount referred to
in (b) above) due under any Loan Document, when and as the same shall
become due and payable, and such default shall continue unremedied for
a period of three Business Days;
(d) the Borrower or WCI defaults in the performance of or
breaches any other covenant or agreement of the Borrower or WCI
contained in this Agreement or under the Security Documents and such
default or breach continues for a period of 10 consecutive days after
written notice to the Borrower and WCI by the Administrative Agent or
the Required Lenders;
(e) the Borrower, WCI or any Restricted Subsidiary shall (i)
default in any payment of any amount of principal of or interest on any
Indebtedness the aggregate principal amount of which Indebtedness is in
excess of $25,000,000, beyond the period of grace, if any, provided in
the instrument or agreement under which such Indebtedness was created;
or (ii) default in the observance or performance of any other agreement
or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which
default or other event or condition in each of the foregoing cases is
to cause, or permit the holder or holders or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with
giving of notice if required, such Indebtedness to become due prior to
its Stated Maturity;
(f) any final judgment or order (not covered by insurance) for
the payment of money in excess of $25,000,000 in the aggregate for all
such final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall
<PAGE>
55
be rendered against WCI or any Significant Subsidiary and shall not be
paid or discharged, and there shall be any period of 60 consecutive
days following entry of the final judgment or order that causes the
aggregate amount for all such final judgments or orders outstanding and
not paid or discharged against all such Persons to exceed $25,000,000
during which a stay of enforcement of such final judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of WCI or any Significant
Subsidiary in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, (B)
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of WCI or any Significant Subsidiary
or for all or substantially all of the property and assets of WCI or
any Significant Subsidiary or (C) the winding up or liquidation of the
affairs of WCI or any Significant Subsidiary and, in each case, such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days;
(h) WCI or any Significant Subsidiary (i) commences a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consents to the entry of an
order for relief in an involuntary case under any such law, (ii)
consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of WCI or any Significant Subsidiary or for all or
substantially all of the property and assets of WCI any Significant
Subsidiary or (iii) effects any general assignment for the benefit of
creditors;
(i) any of the provisions of this Agreement relating to the
Security Documents or the Security Documents shall cease to be in full
force and effect or shall cease to give the secured parties a first
priority perfected security interest in the Collateral (subject to
those prior interests included within clauses (i) or (ii) of the
definition of Permitted Liens);
(j) the WCI Guarantee shall cease to be in full force and
effect (other than in accordance with its terms) or the Guarantor shall
deny or disaffirm its obligations under the WCI Guarantee;
(k) there shall have occurred a Change in Control;
(l) WCI or any Restricted Subsidiary shall fail to maintain
cash or Temporary Cash Investments having an aggregate value of not less than
$63,417,000 (which amount shall be reduced upon each repayment of Loans in the
same proportion as such repayment represents of the principal amount of Loans
outstanding immediately prior to such repayment) of the outstanding Loans in a
brokerage account at Salomon Brothers Inc, or shall have delivered notice of an
intent to withdraw cash or Temporary Cash Investments in an amount that would
result in there being less than such amount in such account; provided, however,
that if the aggregate value of such account is or would remain after any
proposed withdrawal greater than 95% of the required amount such Default must
continue for 3 Business Days;
then, and in every such event (other than an event with respect to WCI or the
Borrower described in paragraph (g) or (h) above), and at any time thereafter
during the continuance of such event, the
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56
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 forthwith the Commitments and (ii)
declare the Loans then outstanding to be forthwith due and payable in whole or
in part, whereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued hereunder and under any other Loan Document,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding; and in any event with respect to WCI or the Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding. The provisions of paragraph (l) above shall not
prevent WCI or any Restricted Subsidiary from withdrawing, or confer upon the
Lenders a Lien upon, such cash or Temporary Cash Investments referred to in
paragraph (l) above.
ARTICLE VIII.
The Syndication Agent and the Administrative Agent
In order to expedite the transactions contemplated by this Agreement,
Salomon Brothers Inc is hereby appointed to act as Syndication Agent and
Administrative Agent on behalf of the Lenders (for purposes of this Article
VIII, the Syndication Agent and the Administrative Agent are referred to
collectively as the "Agents"). Each of the Lenders and each assignee of any such
Lender hereby irrevocably authorizes the Agents to take such actions on behalf
of such Lender or assignee and to exercise such powers as are specifically
delegated to the Agents by the terms and provisions hereof and of the other Loan
Documents, together with such actions and powers as are reasonably incidental
thereto. The Administrative Agent is hereby expressly authorized by the Lenders,
without hereby limiting any implied authority, (a) to receive on behalf of the
Lenders all payments of principal of and interest on the Loans and all other
amounts due to the Lenders hereunder, and promptly to distribute to each Lender
its proper share of each payment so received; (b) to give notice on behalf of
each of the Lenders to the Borrower of any Event of Default specified in this
Agreement of which the Administrative Agent has actual knowledge acquired in
connection with its agency hereunder; and (c) to distribute to each Lender
copies of all notices, financial statements and other materials delivered by the
Borrower or any other Loan Party pursuant to this Agreement or the other Loan
Documents as received by the Administrative Agent. Without limiting the
generality of the foregoing, the Agents are hereby expressly authorized to
execute any and all documents (including releases) with respect to the
Collateral and the rights of the Secured Parties with respect thereto, as
contemplated by and in accordance with the provisions of this Agreement and the
Security Documents.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation
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57
herein or the contents of any document delivered in connection herewith, or be
required to ascertain or to make any inquiry concerning the performance or
observance by the Borrower or any other Loan Party of any of the terms,
conditions, covenants or agreements contained in any Loan Document. The Agents
shall not be responsible to the Lenders for the due execution, genuineness,
validity, enforceability or effectiveness of this Agreement or any other Loan
Documents, instruments or agreements. The Agents shall in all cases be fully
protected in acting, or refraining from acting, in accordance with written
instructions signed by the Required Lenders and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders. Each Agent shall, in the
absence of knowledge to the contrary, be entitled to rely on any instrument or
document believed by it in good faith to be genuine and correct and to have been
signed or sent by the proper person or persons. Neither the Agents nor any of
their respective directors, officers, employees or agents shall have any
responsibility to the Borrower or any other Loan Party on account of the failure
of or delay in performance or breach by any Lender of any of its obligations
hereunder or to any Lender on account of the failure of or delay in performance
or breach by any other Lender or the Borrower or any other Loan Party of any of
their respective obligations hereunder or under any other Loan Document or in
connection herewith or therewith. Each of the Agents may execute any and all
duties hereunder by or through agents or employees and shall be entitled to rely
upon the advice of legal counsel selected by it with respect to all matters
arising hereunder and shall not be liable for any action taken or suffered in
good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be under any
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the retiring Agent shall have the
right, on behalf of the Lenders, to appoint a successor reasonably acceptable to
the Borrower from among the Lenders. If no successor shall have been so
appointed by the retiring Agent and shall have accepted such appointment within
30 days after the retiring Agent gives notice of its resignation, then the
Required Lenders may appoint a successor Agent which shall be a bank having a
combined capital and surplus of at least $500,000,000 or an Affiliate of any
such bank. Upon the acceptance of any appointment as Agent hereunder by a
successor bank, 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. After the
Agent's resignation hereunder, the provisions of this Article and Section 9.05
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
With respect to the Loans, if any, made by it hereunder, each Agent in
its individual capacity and not as Agent shall have the same rights and powers
as any other Lender and may exercise the same as though it were not an Agent,
and the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower, WCI or any of their
respective Subsidiaries or other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on its Commitments hereunder) of any
expenses incurred for the benefit of the Lenders
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58
by the Agents, including counsel fees and compensation of agents and employees
paid for services rendered on behalf of the Lenders, that shall not have been
reimbursed by the Borrower and (b) to indemnify and hold harmless each Agent and
any of its directors, officers, employees or agents, on demand, in the amount of
such pro rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against it in its capacity as Agent or any of them
in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by it or any of them under this
Agreement or any other Loan Document, to the extent the same shall not have been
reimbursed by the Borrower or any other Loan Party, provided that no Lender
shall be liable to an Agent or any such other indemnified person for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of such Agent or any of its directors,
officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents 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 Agents 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 any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Guarantee
SECTION 9.01. Guarantee. The Guarantor unconditionally and irrevocably
guarantees to each Lender and to the Administrative Agent and its successors and
assigns (a) the full and punctual payment of principal of and interest on the
Loans when due, whether at maturity, by acceleration, by redemption or
otherwise, and all other monetary obligations of the Borrower under this
Agreement and each other Loan Document and (b) the full and punctual performance
within applicable grace periods of all other obligations of the Borrower under
this Agreement and the other Loan Documents (all the foregoing being hereinafter
collectively called the "Guaranteed Obligations"). The Guarantor further agrees
that the Guaranteed Obligations may be extended or renewed, in whole or in part,
without notice or further assent from the Guarantor, and that the Guarantor will
remain bound under this Article IX notwithstanding any extension or renewal of
any Guaranteed Obligation.
The Guarantor waives presentation to, demand of, payment from and
protest to the Borrower of any of the Guaranteed Obligations and also waives
notice of protest for nonpayment. The Guarantor waives notice of any default
under the Guaranteed Obligations. The obligations of the Guarantor hereunder
shall not be affected by (a) the failure of any Lender or the Administrative
Agent to assert any claim or demand or to enforce any right or remedy against
the Borrower or any other Person under this Agreement, or any other Loan
Documents or otherwise; (b) any extension
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59
or renewal of any thereof; (c) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Agreement or any other Loan Documents;
(d) the release of any security held by any Lender or the Administrative Agent
for the Guaranteed Obligations or any of them; (e) the failure of any Lender or
the Administrative Agent to exercise any right or remedy against any other
guarantor of the Guaranteed Obligations; or (f) any change in the ownership of
the Guarantor.
The Guarantor further agrees that its Guarantee herein constitutes a
guarantee of payment, performance and compliance when due (and not a guarantee
of collection) and waives any right to require that any resort be had by Lender
or the Administrative Agent to any security held for payment of the Guaranteed
Obligations.
The obligations of the Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Guaranteed Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of the Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any Lender or the
Administrative Agent to assert any claim or demand or to enforce any remedy
under this Agreement or any other Loan Document, by any waiver or modification
of any thereof, by any default, failure or delay, willful or otherwise, in the
performance of the obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of the Guarantor or would otherwise operate as a discharge
of the Guarantor as a matter of law or equity.
The Guarantor further agrees that its Guarantee herein shall continue
to be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Guaranteed Obligation is
rescinded or must otherwise be restored by any Lender or the Administrative
Agent upon the bankruptcy or reorganization of the Borrower or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Lender or the Administrative Agent has at law or in equity
against the Guarantor by virtue hereof, upon the failure of the Borrower to pay
the principal of or interest on any Guaranteed Obligation when and as the same
shall become due, whether at maturity, by acceleration, by redemption or
otherwise, or to perform or comply with any other Guaranteed Obligation, the
Guarantor hereby promises to and will, upon receipt of written demand by the
Administrative Agent, forthwith pay, or cause to be paid, in cash, to the
Lenders or the Administrative Agent an amount equal to the sum of (i) the unpaid
amount of such Guaranteed Obligations, (ii) accrued and unpaid interest on such
Guaranteed Obligations (but only to the extent not prohibited by law) and (iii)
all other monetary Guaranteed Obligations of the Borrower to the Lenders and the
Administrative Agent.
The Guarantor agrees that it shall not be entitled to any right of
subrogation in respect of any Guaranteed Obligations guaranteed hereby until
payment in full of all Guaranteed Obligations. The Guarantor further agrees
that, as between it, on the one hand, and the Lender or the Administrative
Agent, on the other hand, (x) the maturity of the Guaranteed Obligations
guaranteed hereby may be accelerated as provided in Article VII for the purposes
of the Guarantor's Guarantee herein, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Guaranteed
Obligations guaranteed hereby, and (y) in the event of any declaration of
<PAGE>
60
acceleration of such obligations as provided in Article VII, such Guaranteed
Obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantor for the purposes of this Section 9.01.
The Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Administrative Agent or
any Lender in enforcing any rights under this Section.
SECTION 9.02. Successors and Assigns. This Article IX shall be binding
upon the Guarantor and its successors and assigns and shall enure to the benefit
of the successors and assigns of the Administrative Agent and the Lenders and,
in the event of any transfer or assignment of rights by any Lender or the
Administrative Agent, the rights and privileges conferred upon that party in
this Agreement and in the other Loan Documents shall automatically extend to and
be vested in such transferee or assignee, all subject to the terms and
conditions of this Agreement.
SECTION 9.03. No Waiver. Neither a failure nor a delay on the part of
either the Administrative Agent or the Lenders in exercising any right, power or
privilege under this Article IX shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the
Administrative Agent and the Lenders herein expressly specified are cumulative
and not exclusive of any other rights, remedies or benefits which either may
have under this Article IX at law, in equity, by statute or otherwise.
SECTION 9.04. Modification. No modification, amendment or
waiver of any provision of this Article IX, nor the consent to any departure by
the Guarantor therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Administrative Agent, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on the Guarantor in any case shall entitle
the Guarantor to any other or further notice or demand in the same, similar or
other circumstances.
ARTICLE X.
Miscellaneous
SECTION 10.01. Notices. 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 230 Park Avenue, New York,
NY, Attention of Timothy Graham (Telecopy No. (212) 922-1637) and with
a copy to David Miller, c/o Graubard, Mollen & Miller, 600 Third
Avenue, New York, NY 10016 (Telecopy No. (212) 818-8881);
(b) if to the Administrative Agent, to Salomon Brothers Inc,
Seven World Trade Center, New York, NY 10048, Attention of Chad Leat
(Telecopy No. (212) 783-2823); and
<PAGE>
61
(c) if to a Lender, to it at its address (or telecopy number)
set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant
to which such Lender shall have become a party 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 if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 10.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 10.01.
SECTION 10.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the Lenders
of the Loans, regardless of any investigation made by the Lenders or on their
behalf, 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 or any other Loan Document is outstanding and unpaid and so long
as the Commitments have not been terminated. The provisions of Sections 2.14,
2.16, 2.19 and 10.05 shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of
the transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Syndication Agent, the Administrative Agent or any
Lender.
SECTION 10.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and 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 permitted successors and assigns.
SECTION 10.04. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, the Administrative
Agent or the Lenders that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment to a Lender or an
Affiliate of such Lender, (x) the Administrative Agent and the Borrower must
give their prior written consent to such assignment (which consent shall not be
unreasonably withheld) and (y) the amount of the Commitment 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 $5,000,000 (or, if less, the entire
remaining amount of such Lender's Commitment), (ii) the parties to each such
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation
<PAGE>
62
fee of $3,500 and (iii) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire. Upon acceptance and
recording pursuant to paragraph (e) of this Section 10.04, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, (A) 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 (B) 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 or the remaining portion of an 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
2.14, 2.16, 2.19 and 10.05, as well as to any Fees accrued for its account and
not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Loan Commitment, and the outstanding balances of its Loans, in each
case without giving effect to assignments thereof which have not become
effective, are as set forth in such Assignment and Acceptance, (ii) except as
set forth in (i) above, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto, or the financial condition of the Borrower,
WCI or any of their respective Subsidiaries or the performance or observance by
the Borrower, WCI or any of their respective Subsidiaries of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.06(a) and those delivered pursuant to Section 5.08 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (v)
such assignee will independently and without reliance upon the Syndication
Agent, the Administrative Agent, such assigning Lender or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (vi) such assignee appoints and authorizes the Syndication
Agent and the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Syndication Agent and the Administrative Agent, respectively, by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York 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 Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
<PAGE>
63
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive and the Borrower, the Syndication Agent, 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, the Syndication Agent and any Lender,
at any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of the Administrative Agent and
the Borrower to such assignment, the Administrative Agent shall (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Lenders. No assignment
shall be effective unless it has been recorded in the Register as provided in
this paragraph (e).
(f) Each Lender may without the consent of the Borrower or the
Administrative Agent sell participations to one or more financial institutions
in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided, however, 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, (iii) the participating
financial institutions shall be entitled to the benefit of the cost protection
provisions contained in Sections 2.14, 2.16 and 2.19 to the same extent as if
they were Lenders and (iv) the Borrower, the Administrative Agent and the
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
Borrower relating to the Loans and to approve any amendment, modification or
waiver of any provision of this Agreement (other than amendments, modifications
or waivers decreasing any fees payable hereunder or the amount of principal of
or the rate at which interest is payable on the Loans, extending any scheduled
principal payment date or date fixed for the payment of interest on the Loans or
increasing or extending the Commitments).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure of
information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank to secure extensions of credit by
such Federal Reserve Bank to such Lender; provided that no such assignment shall
release a Lender from any of its obligations hereunder or substitute any such
Bank for such Lender as a party hereto. In order to facilitate such an
assignment to a Federal Reserve Bank, the Borrower shall, at the request of the
assigning Lender,
<PAGE>
64
duly execute and deliver to the assigning Lender a promissory note or notes
evidencing the Loans made to the Borrower by the assigning Lender hereunder.
(i) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Administrative Agent
and each Lender, and any attempted assignment without such consent shall be null
and void.
SECTION 10.05. Expenses; Indemnity. (a) The Borrower agrees to pay
all of the Fees referenced in the Fee Letter.
(b) The Borrower agrees to indemnify the Administrative Agent, the
Syndication Agent and each Lender, each Affiliate of any of the foregoing
persons and each of their respective directors, officers, employees and agents
(each such person being called an "Indemnitee") against, and to hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees, disbursements and other
charges incurred by or asserted against any Indemnitee arising out of any claim,
litigation, investigation or proceeding, whether or not any Indemnitee is a
party thereto, relating to, in any way connected with, or resulting from (i) the
execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated thereby, the performance by the parties
thereto of their respective obligations thereunder or the consummation of the
Acquisition, the Transactions and the other transactions contemplated thereby,
(ii) the use of the proceeds of the Loans or (iii) any actual or alleged
presence or Release of Hazardous Materials on any property owned or operated by
the Borrower or any Subsidiary, or any Environmental Claim related in any way to
the Borrower or any Subsidiary; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) The provisions of this Section 10.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the invalidity
or unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Administrative Agent,
the Syndication Agent or any Lender. All amounts due under this Section 10.05
shall be payable on written demand therefor.
SECTION 10.06. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
SECTION 10.07. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Syndication Agent or any Lender in exercising any
power or right 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 Administrative Agent, the
Syndication Agent and the Lenders
<PAGE>
65
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 this Agreement or any other Loan Document or consent to any
departure by the Borrower or any other Loan Party therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances.
(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, however, that
no such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Loan, without the prior written
consent of each Lender affected thereby, (ii) change or extend the Commitment of
any Lender without the prior written consent of such Lender, or (iii) amend or
modify the provisions of Section 2.17 or 10.04(i), the provisions of this
Section, the definition of the term "Required Lenders" or release any Guarantor
or all or any substantial part of the Collateral, without the prior written
consent of each Lender; provided further that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent or
the Syndication Agent hereunder or under any other Loan Document without the
prior written consent of the Administrative Agent or the Syndication Agent.
SECTION 10.08. 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 10.08 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.
SECTION 10.09. Entire Agreement. This Agreement, the Fee Letter and the
other Loan Documents constitute the entire contract between the parties relative
to the subject matter hereof. Any other previous agreement among the parties
with respect to the subject matter hereof is superseded by this Agreement and
the other Loan Documents. Nothing in this Agreement or in the other Loan
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
SECTION 10.10. 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 RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
<PAGE>
66
OR ANY OF THE OTHER LOAN DOCUMENTS. 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 AND THE OTHER LOAN
DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.10.
SECTION 10.11. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held 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 (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith 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 10.12. Counterparts. 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, and shall become effective as provided in Section
10.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 10.13. 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 are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 10.14. No Recourse Against Others. No recourse for the payment
of the principal of or inteest on any Loan, or for anyclaim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Borrower or WCI contained in this Agreement or
because of the creation of any Indebtedness represented therreby, shall be had
against the incorporator, stockholder, officer, director, employee or
controlling person, as such, of the Borroer, WCI or of any successor Person
thereof in such capacity; provided, however, that the foregoing shall not affect
WCI's obligations with respect to the WCI Guarantee; it being expressly
unerstood that all such liability is hereby expressly waivedand released as a
condition of, and as consideration for, the execution of this Agreement.
SECTION 10.15. Jurisdiction; Consent to Service of Process. (a) The
Borrower and WCI hereby irrevocably and unconditionally submit, for themselves
and their property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement or the other Loan Documents, 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
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67
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, the Syndication
Agent or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against the Borrower, WCI
or their respective proper ties in the courts of any jurisdiction.
(b) The Borrower and WCI hereby irrevocably and unconditionally waive,
to the fullest extent it may legally and effectively do so, any objection which
either 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 the other Loan
Documents in any New York State or Federal court. 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.
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68
(c) Each party to this Agreement irrevocably consents to service of
process by registered mail at the addresses provided for in Section 10.01.
Nothing in this Agreement will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.
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69
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.
WINSTAR SWITCH ACQUISITION CORP.,
by
___________________________
Name:
Title:
WINSTAR COMMUNICATIONS, INC.,
as Guarantor,
by
___________________________
Name:
Title:
SALOMON BROTHERS INC, as
Syndication Agent, Administrative Agent and
Collateral Agent,
by
___________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
individually and as
Documentation Agent
by
___________________________
Name:
Title:
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70
SALOMON BROTHERS HOLDING
COMPANY INC,
by
___________________________
Name:
Title:
<PAGE>
EXHIBIT 10.3
SECURITY AGREEMENT dated as of October 17,
1997, between WINSTAR SWITCH ACQUISITION CORP., a
Delaware corporation (the "Grantor"), and SALOMON
BROTHERS INC, a Delaware corporation, as collateral
agent and administrative agent (in such capacities,
the "Administrative Agent") for the Secured Parties
(as defined herein).
Reference is made to the Credit Agreement dated as of October
17, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the lenders from time to time party
thereto (the "Lenders"), WinStar Communications, Inc., a Delaware corporation,
as guarantor (the "Guarantor"), the Administrative Agent, Salomon Brothers Inc,
as syndication agent (in such capacity, the "Syndication Agent") for the Lenders
and Credit Suisse First Boston, as documentation agent (in such capacity, the
"Documentation Agent") for the Lenders.
The Lenders have agreed to make Loans to the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Guarantor has agreed to guarantee, among other things, all
the obligations of the Borrower under the Credit Agreement. The obligations of
the Lenders to make Loans are conditioned upon, among other things, the
execution and delivery by the Grantor of an agreement in the form hereof to
secure (a) the due and punctual payment by the Borrower of (i) the principal of
and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise and (ii) all other monetary
obligations, including fees, costs, expenses, and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Borrower to the Secured Parties under the
Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Borrower under or pursuant to the Credit Agreement and the other Loan Documents
and (c) the due and punctual payment and performance of all the covenants,
agreements, obligations and liabilities of the Borrower under or pursuant to
this Agreement and the other Loan Documents (all the monetary and other
obligations described in the preceding clauses (a) through (c) being
collectively called the "Obligations").
<PAGE>
2
Accordingly, the Grantor and the Administrative Agent, on
behalf of itself and each Secured Party (and each of their respective successors
or assigns), hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As used herein,
the following terms shall have the following meanings:
"Collateral" shall mean (i) all Designated Equipment acquired by the
Grantor pursuant to Section 1.1 of the Asset Purchase Agreement; and (ii) the
Proceeds of any sale or other disposition (other than leases to an Affiliate of
the Grantor in the ordinary course of business so long as no Event of Default
has occurred and is continuing as provided in Section 5.01(a) hereof) of such
Designated Equipment (including any insurance proceeds from the loss or
destruction of such Designated Equipment).
"Credit Agreement" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Designated Equipment" shall mean telecommunications switches and
related equipment and inventory and software related to the foregoing.
"Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Perfection Certificate" shall mean a certificate substantially in the
form of Annex 1, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by two executive officers of the
Grantor.
"Proceeds" shall mean any consideration received from the sale,
exchange, license, lease (other than consideration received from an Affiliate of
the Grantor solely from the lease of Designated Equipment in the ordinary course
of business so long as no Event of Default has occurred and is continuing) or
other disposition of any asset or property that constitutes Collateral, any
value received as a consequence of the possession of any Collateral and any
payment received from any insurer or other person or entity as a result of the
destruction, loss, theft, damage or other involuntary conversion of whatever
nature of any asset or property that constitutes Collateral, and shall include
all cash and negotiable instruments received or held
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3
on behalf of the Administrative Agent and any and all other amounts from time to
time paid or payable under or in connection with any of the Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the Administrative
Agent and (c) the permitted successors and assigns of each of the foregoing.
"Security Interest" shall have the meaning assigned to such term in
Section 2.01.
SECTION 1.03. Rules of Construction. The rules of construction
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, the Grantor hereby
bargains, sells, conveys, assigns, sets over, pledges, hypothecates and
transfers to the Administrative Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Administrative
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in all of the Grantor's right, title and interest
in, to and under the Collateral (the "Security Interest"). Without limiting the
foregoing, the Administrative Agent also is hereby authorized to file one or
more financing statements, continuation statements or other documents for the
purpose of perfecting, confirming, continuing, enforcing or protecting the
Security Interest granted by the Grantor, without the signature of the Grantor,
naming the Grantor as debtor and the Administrative Agent as secured party. The
Administrative Agent shall furnish the Grantor with copies of any such
statements and other documents so filed.
SECTION 2.02. No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Administrative Agent or any
other Secured Party to, or in any way alter or modify, any obligation or
liability of the Grantor with respect to or arising out of the Collateral.
ARTICLE III
Representations and Warranties
The Grantor represents and warrants to the Administrative Agent and the
Lenders that:
SECTION 3.01. Title and Authority. The Grantor has good and valid
rights in and title to the Collateral with respect to which it has purported to
grant a Security Interest hereunder and has full power and authority to grant to
the Administrative Agent the Security Interest in such Collateral pursuant
hereto and to execute, deliver and perform its obligations
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4
in accordance with the terms of this Agreement, without the consent or approval
of any other person other than any consent or approval which has been obtained.
SECTION 3.02. Filings. The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements, as applicable, or other appropriate filings, recordings or
registrations containing a description of the Collateral have been delivered to
the Administrative Agent for filing in each governmental, municipal or other
office specified in Schedule 4 to the Perfection Certificate, which are all the
filings, recordings and registrations that are necessary to publish notice of
and protect the validity of and to establish a legal, valid and perfected
security interest in favor of the Administrative Agent (for the ratable benefit
of the Secured Parties) in respect of all Collateral in which the Security
Interest may be perfected by filing, recording or registration in the United
States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements and amendments relating to changes in a debtor's
name, location or organizational form and to changes in the location of
Collateral.
SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations and (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financial statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions.
The Security Interest is and shall be prior to any other Lien on any of the
Collateral other than Liens expressly referred to in Section 3.18 of the Credit
Agreement.
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantor free and clear of any Lien, except for Liens expressly referred to in
Section 3.18 of the Credit Agreement. The Grantor has not filed or consented to
the filing of (a) any financing statement or analogous document under the
Uniform Commercial Code or any other applicable laws covering any Collateral or
(b) any assignment in which the Grantor assigns any Collateral or any security
agreement or similar instrument covering any Collateral with any foreign
governmental, municipal or other office, which financing statement or analogous
document is still in effect.
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5
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business. (a) The Grantor agrees promptly to notify the Administrative Agent, in
writing, of any change (i) in its legal 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 its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in its identity or legal structure or (iv) in its Federal Taxpayer
Identification Number(s). The Grantor 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
Administrative Agent to continue at all times following such change to have a
valid, legal and preferred first priority (subject to liens expressly referred
to Section 3.18 of the Credit Agreement) security interest in all the
Collateral. The Grantor agrees to notify the Administrative Agent, as soon as
practicable after an executive officer of the Grantor learns thereof, if any
material portion of the Collateral owned or held by the Grantor is damaged or
destroyed.
(b) The Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned or held by it
as is consistent with its current practices and in accordance with such prudent
and standard practices used in industries that are the same as or similar to
those in which the Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, and, at such time or times as the Administrative
Agent may reasonably request, promptly to prepare and deliver to the
Administrative Agent a duly certified schedule or schedules in form and detail
reasonably satisfactory to the Administrative Agent showing the identity, amount
and location of any and all Collateral.
SECTION 4.02. Protection of Security. The Grantor shall, at its own
cost and expense, take any and all actions reasonably necessary to defend title
to the Collateral against all persons and to defend the Security Interest of the
Administrative Agent in the Collateral and the priority thereof against any Lien
not expressly referred to in Section 3.18 of the Credit Agreement.
SECTION 4.03. Continuation Statements. The Grantor agrees, at its
expense, to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and to take all such actions as the
Administrative Agent may from time to time reasonably request to better assure,
protect, perfect and preserve the Security Interest and the rights and remedies
created hereby, including the payment of any fees and taxes required in
connection with the execution and delivery of this Agreement, the granting of
the Security Interest and the filing of any financing statements or other
documents in connection herewith or therewith. If any amount payable under or in
connection with any of the Collateral shall
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6
be or become evidenced by any promissory note or other instrument, such note or
instrument shall be immediately pledged and delivered to the Administrative
Agent, duly endorsed in a manner satisfactory to the Administrative Agent.
SECTION 4.04. Inspection and Verification. The Administrative Agent and
such persons as the Collateral Agent may reasonably designate shall have the
right, at the Grantor's own cost and expense, to inspect the Collateral, all
records related thereto (and to make extracts and copies from such records) and
the premises upon which any of the Collateral is located, where such premises is
within the control of the Grantor or any affiliate of the Grantor, to discuss
the Grantor's affairs with the officers of the Grantor and its independent
accountants and to verify under reasonable procedures the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to, the Collateral, including, in the case of Collateral in the possession of
any third person, by contacting the third party possessing such Collateral
(after two days' notice to the Grantor) for the purpose of making such a
verification. Where the premises upon which any of the Collateral is located are
not within the control of the Grantor, the Grantor shall reasonably request such
person(s) controlling such premises to allow the Administrative Agent and its
designees to inspect such premises for the purposes, and subject to the
limitations, of the foregoing sentence. The Administrative Agent shall have the
absolute right to share any information it gains from such inspection or
verification with any Secured Party.
SECTION 4.05. Taxes; Encumbrances. At its option, upon not less than 10
days' prior written notice to the Grantor, the Administrative Agent may
discharge past due taxes, assessments, charges, fees, liens, security interests
or other encumbrances at any time levied or placed on the Collateral and not
permitted under the Credit Agreement, may pay for the maintenance and
preservation of the Collateral (including amounts due in respect of real
property leases pursuant to which the Grantor occupies premises in or upon which
Collateral is located) to the extent the Grantor fails to do so as required by
the Credit Agreement or this Agreement, and may pay any amounts owed by the
Grantor in order to cure any default in any lease with respect to any real
property in or on which Collateral is situated and the Grantor agrees to
reimburse the Administrative Agent on demand for any reasonable payment or other
expenses incurred by the Administrative Agent pursuant to the foregoing
authorization; provided, however, that nothing in this Section shall be
interpreted as excusing the Grantor from the performance of, or imposing any
obligation on the Administrative Agent or any Secured Party to cure or perform,
any covenants or other promises of the Grantor with respect to taxes,
assessments, charges, fees, liens, security interests or other encumbrances and
maintenance as set forth herein or in the other Loan Documents.
SECTION 4.06. Continuing Obligations of the Grantor. The Grantor shall
remain liable to observe and perform all the conditions and obligations to be
observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and the Grantor agrees to indemnify and hold harmless the
Administrative Agent and the Secured Parties from and against any and all
liability for such performance.
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7
SECTION 4.07. Insurance. (a) The Grantor, at its own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Designated Equipment, in accordance with Section 5.02 of the Credit
Agreement. The Grantor irrevocably makes, constitutes and appoints the
Administrative Agent (and all officers, employees or agents designated by the
Administrative Agent) as the Grantor's true and lawful agent (and
attorney-in-fact) for the purpose, during the continuance of an Event of
Default, of making, settling and adjusting claims in respect of Collateral under
policies of insurance, endorsing the name of the Grantor on any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect thereto.
(b) In the event that the Grantor at any time or times shall fail to
obtain or maintain any of the policies of insurance required hereby or to pay
any premium in whole or part relating thereto, the Administrative Agent may,
without waiving or releasing any obligation or liability of the Grantor
hereunder or any Event of Default, in its sole discretion, obtain and maintain
such policies of insurance and pay such premium and take any other actions with
respect thereto as the Administrative Agent deems advisable. All sums disbursed
by the Administrative Agent in connection with this Section, including
reasonable attorneys' fees, court costs, expenses and other charges relating
thereto, shall be payable, upon demand, by the Grantor to the Administrative
Agent and shall be additional Obligations secured hereby.
SECTION 4.08. Posting of Notices. The Grantor shall, with respect to
any telecommunications switch that constitutes Designated Equipment, post a
notice on, or in the location housing, such telecommunications switch,
identifying the Grantor as the owner of the telecommunications switch and
stating that such telecommunications switch is subject to the Security Interest
under the Credit Agreement and the Loan Documents.
ARTICLE V
Transfer and Sales of Collateral
SECTION 5.01. Transfer and Sales of Collateral. (a) Grantor shall not,
except as permitted by the terms of the Credit Agreement from time to time in
effect, sell, assign (by operation of law or otherwise) or otherwise dispose of
any of the Collateral. Notwithstanding the foregoing, Grantor may lease
Designated Equipment in the ordinary course of business to an Affiliate of the
Grantor without such lease constituting a sale, assignment or other disposition
prohibited by the preceding sentence, and any consideration received by Grantor
in respect of any such lease as payments pursuant to such lease may be
transferred by the Grantor free and clear of such security interests in the
Collateral until such time as an Event of Default has occurred and is
continuing; provided, however, that any such lease shall expressly provide that
it may be terminated immediately without liability to the lessee by the
Administrative Agent or any other Person designated by the Administrative Agent
if an Event of Default shall have occurred and be continuing and that the
Administrative Agent or such
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8
designee may sell any or all Collateral subject to such lease free and clear of
any claims against such Collateral or the proceeds thereof by the lessee.
(b) As long as no Event of Default shall have occurred and be
continuing, and no event which, with the lapse of time or after notice, would
become an Event of Default shall have occurred and be continuing, Grantor shall
be entitled from time to time to request the Administrative Agent to release all
or a portion of the Collateral owned by it and subject to this Agreement;
provided, however, that such request must be in writing and accompanied by an
Officers' Certificate of Grantor and an Opinion of Counsel to Grantor (which
counsel shall be reasonably satisfactory to the Administrative Agent) stating
that all conditions precedent to the release of such Collateral pursuant to this
Article V and the Credit Agreement have been complied with. Upon satisfaction of
the conditions in this Article V and the Credit Agreement, the Lien of this
Agreement on all Collateral shall be released without any further action on the
part of the Administrative Agent or any other person. In furtherance of the
foregoing, the Administrative Agent shall execute and deliver to Grantor an
instrument or instruments acknowledging the release of such Collateral from this
Agreement and the discharge of the Lien on such Collateral created by this
Agreement, and will duly assign, transfer and deliver to Grantor (without
recourse and without any representation or warranty) such Collateral to be
released.
(c) No Collateral shall be released from the Lien of this Agreement
pursuant to any request described in paragraph (b) above unless (i) the
Administrative Agent shall, in its sole discretion, consent to such release,
(ii) as promptly as is practicable thereafter, the Grantor shall sell such
Collateral, (iii) at the closing of such sale, the Grantor provides to the
Administrative Agent, in order to reduce the outstanding principal amount of the
Loans, cash or cash equivalents representing the Net Cash Proceeds from the sale
of such Collateral (which shall be no less than the fair market value of such
Collateral); and (iv) Grantor delivers to the Administrative Agent an Officers'
Certificate and an Opinion of Counsel to the effect that all conditions
precedent contained in the Credit Agreement to the sale and release of such
Collateral shall have been satisfied in full.
(d) The release of any Collateral from the terms hereof and of the
other Loan Documents or the release of, in whole or in part, the Liens created
by the Loan Documents, will not be deemed to impair the Lien on the Collateral
in contravention of the provisions of the Credit Agreement if and to the extent
the Collateral or Liens are released pursuant to the applicable Loan Documents
and pursuant to the terms of the Credit Agreement. Each of the Secured Parties
acknowledge that a release of Collateral strictly in accordance with the terms
of the Loan Documents and of the Credit Agreement will not be deemed for any
purpose to be an impairment of the Lien on the Collateral in contravention of
the terms of the Credit Agreement.
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9
ARTICLE VI
Power of Attorney
SECTION 6.01. Power of Attorney. The Grantor irrevocably makes,
constitutes and appoints the Administrative Agent (and all officers, employees
or agents designated by the Administrative Agent) as the Grantor's true and
lawful agent and attorney-in-fact, and in such capacity the Administrative Agent
shall have the right, with power of substitution for the Grantor and in the
Grantor's name or otherwise, for the use and benefit of the Administrative Agent
and the Secured Parties, upon the occurrence and during the continuance of an
Event of Default (a) to receive, endorse, assign and/or deliver any and all
notes, acceptances, checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (b) to demand, collect, receive
payment of, give receipt for and give discharges and releases of all or any of
the Collateral; (c) to sign the name of the Grantor on any invoice or bill of
lading relating to any of the Collateral; (d) to commence and prosecute any and
all suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (e) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral; (f) to notify, or to require the Grantor to notify, third
parties to make payment directly to the Administrative Agent; and (g) to use,
sell, assign, transfer, pledge, make any agreement with respect to or otherwise
deal with all or any of the Collateral, and to do all other acts and things
necessary to carry out the purposes of this Agreement, as fully and completely
as though the Administrative Agent were the absolute owner of the Collateral for
all purposes; provided, however, that nothing herein contained shall be
construed as requiring or obligating the Administrative Agent or any Secured
Party to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Administrative Agent or any Secured
Party, or to present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys due or to become due
in respect thereof or any property covered thereby, and no action taken or
omitted to be taken by the Administrative Agent or any Secured Party with
respect to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of the Grantor or to any claim or action against
the Administrative Agent or any Secured Party. It is understood and agreed that
the appointment of the Administrative Agent as the agent and attorney-in-fact of
the Grantor for the purposes set forth above is coupled with an interest and is
irrevocable. The provisions of this Section shall in no event relieve the
Grantor of any of its obligations hereunder or under any other Loan Document
with respect to the Collateral or any part thereof or impose any obligation on
the Administrative Agent or any Secured Party to proceed in any particular
manner with respect to the Collateral or any part thereof, or in any way limit
the exercise by the Administrative Agent or any Secured Party of any other or
further right which it may have on the date of this Agreement or hereafter,
whether hereunder, under any other Loan Document, by law or otherwise.
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ARTICLE VII
Remedies
SECTION 7.01. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, the Grantor agrees to deliver each item of
Collateral to the Administrative Agent on demand, and it is agreed that the
Administrative Agent shall have the right (subject to applicable law) to take
any of or all the following actions at the same or different times: to terminate
any leases of Collateral, with or without legal process and with or without
previous notice or demand for performance, to take possession of the Collateral
and without liability for trespass to enter any premises where the Collateral
may be located for the purpose of taking possession of or removing the
Collateral and, generally, to exercise any and all rights afforded to a secured
party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, the Grantor agrees that the
Administrative Agent shall have the right, subject to the mandatory requirements
of applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale, for cash, upon credit or for future
delivery as the Administrative Agent shall deem appropriate. Each such purchaser
at any such sale shall hold the property sold absolutely, free from any claim or
right on the part of the Grantor, and the Grantor hereby waives (to the extent
permitted by law) all rights of redemption, stay and appraisal which the Grantor
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted.
The Administrative Agent shall give the Grantor 15 days' written notice
(which the Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions)
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11
of the Administrative Agent's intention to make any sale of Collateral. Such
notice, in the case of a public sale, shall state the time and place for such
sale. Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Administrative Agent may fix
and state in the notice (if any) of such sale. At any such sale, the Collateral,
or portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Administrative Agent may (in its sole and absolute
discretion) determine. The Administrative Agent shall not be obligated to make
any sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given. The
Administrative Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case any
sale of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the Administrative Agent
until the sale price is paid by the purchaser or purchasers thereof, but the
Administrative Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice. At any
public sale made pursuant to this Section, any Secured Party may bid for or
purchase, free (to the extent permitted by law) from any right of redemption,
stay, valuation or appraisal on the part of the Grantor (all said rights being
also hereby waived and released to the extent permitted by law), the Collateral
or any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Secured Party from the Grantor as a
credit against the purchase price, and such Secured Party may, upon compliance
with the terms of sale, hold, retain and dispose of such property without
further accountability to the Grantor therefor. For purposes hereof, a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof; the Administrative Agent shall be free to carry out such sale
pursuant to such agreement and the Grantor shall not be entitled to the return
of the Collateral or any portion thereof subject thereto, notwithstanding the
fact that after the Administrative Agent shall have entered into such an
agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, the Administrative Agent may proceed by a suit or suits at law or in
equity to foreclose this Agreement and to sell the Collateral or any portion
thereof pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.
SECTION 7.02. Application of Proceeds. The Administrative Agent shall apply
the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent (in its capacity as such hereunder or under
any other Loan Document) in connection with such collection or sale or
otherwise in connection with this Agreement or any of the Obligations,
including all court costs and the reasonable fees and
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expenses of its agents and legal counsel, the repayment of all advances
made by the Administrative Agent hereunder or under any other Loan
Document on behalf of the Grantor and any other costs or expenses
incurred in connection with the exercise of any right or remedy
hereunder or under any other Loan Document;
SECOND, to the payment of the fees and expenses of the Secured
Parties on an equal and ratable basis;
THIRD, to the payment of interest on and fees, if any, with
respect to the Obligations on an equal and ratable basis;
FOURTH, to the payment of the unpaid principal amount of the
Obligations on an equal and ratable basis;
FIFTH, to the payment of costs and expenses of, all premiums
on, and all other amounts due with respect to, the Obligations on an
equal and ratable basis; and
SIXTH, to the Grantor, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Administrative Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Administrative Agent
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Administrative Agent or of the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Administrative Agent or such officer or be answerable in any way for the
misapplication thereof.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices. All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and
given as provided in Section 10.01 of the Credit Agreement.
SECTION 8.02. Security Interest Absolute. All rights of the
Administrative Agent hereunder, the Security Interest and all obligations of the
Grantor hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement or any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
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13
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any other Loan Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Grantor in respect of the
Obligations or this Agreement.
SECTION 8.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Secured Parties and shall survive the making by the
Lenders of the Loans, and the execution and delivery to the Lenders of any notes
evidencing such Loans, regardless of any investigation made by the Lenders or on
their behalf, and shall continue in full force and effect until this Agreement
shall terminate.
SECTION 8.04. Binding Effect; Several Agreement. This Agreement shall
become effective as to the Grantor when a counterpart hereof executed on behalf
of the Grantor shall have been delivered to the Administrative Agent and a
counterpart hereof shall have been executed on behalf of the Administrative
Agent, and thereafter shall be binding upon the Grantor and the Administrative
Agent and their respective successors and assigns, and shall inure to the
benefit of the Grantor, the Administrative and the other Secured Parties and
their respective successors and assigns, except that the Grantor shall not have
the right to assign its rights hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement.
SECTION 8.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Grantor or the Administrative Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 8.06. Administrative Agent's Fees and Expenses;
Indemnification. (a) The Grantor agrees to pay upon demand to the Administrative
Agent the amount of any and all reasonable expenses, including the reasonable
fees, disbursements and other charges of its counsel and of any experts or
agents, which the Administrative Agent may incur in connection with (i) the
administration of this Agreement (including the customary fees of the
Administrative Agent for any ongoing monitoring or audits conducted by it with
respect to the Collateral), (ii) the custody or preservation of, or the sale of,
collection from or other realization upon any of the Collateral, (iii) the
exercise, enforcement or protection of any of
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the rights of the Administrative Agent hereunder or (iv) the failure of the
Grantor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, the Grantor agrees to indemnify the Administrative Agent
and the other Secured Parties (collectively, "Indemnitees") against, and hold
each of them harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable fees, disbursements and other charges of
counsel, incurred by or asserted against any of them arising out of, in any way
connected with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding relating
hereto or to the Collateral, whether or not 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
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby. The provisions of this Section shall remain
operative and in full force and effect regardless of the termination of this
Agreement or any other Loan Document, the consummation of the transactions
contemplated hereby, the repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Administrative Agent,
the Syndication Agent or any Lender. All amounts due under this Section shall be
payable on written demand therefor.
SECTION 8.07. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK, EXCLUDING (TO THE EXTENT PERMISSIBLE BY LAW) ANY
RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
SECTION 8.08. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent 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 Collateral Agent hereunder
and of the Administrative Agent, the Syndication Agent and the Lenders under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies which they would otherwise have. No waiver of any provisions of this
Agreement or any other Loan Document or consent to any departure by the Grantor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which
<PAGE>
15
given. No notice or demand on the Grantor in any case shall entitle the Grantor
to any other or further notice or demand in similar or other circumstances.
(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 Administrative Agent and the Grantor with respect to which
such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 10.08 of the Credit Agreement.
SECTION 8.09. 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 RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
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 AND THE OTHER SECURITY DOCUMENTS, AS APPLICABLE, BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 8.10. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held 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 (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith 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 8.11. Counterparts. 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, and shall become effective as provided in Section
8.04. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be effective as delivery of a manually signed counterpart of
this Agreement.
SECTION 8.12. Headings. Article and Section headings used herein are
for the convenience of reference only, are not part of this Agreement and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
<PAGE>
16
SECTION 8.13. Jurisdiction; Consent to Service of Process. (a) The
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, 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, the Syndication Agent or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or the other Loan
Documents against the Grantor or its properties in the courts of any
jurisdiction.
(b) The Grantor 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 the other Loan Documents in any
New York State or Federal court. 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.
(c) Each party to this Agreement irrevocably consents to service of
process by registered mail, postage prepaid. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
<PAGE>
17
SECTION 8.14. Termination of Leases. The Grantor hereby agrees (i) to
take all actions necessary (including making all required payments) in order to
cause each lease with respect to any real property in or on which Collateral is
situated to remain in effect free and clear of any default or any right of the
applicable landlord to terminate such lease prior to its scheduled date of
maturity and (ii) not to terminate any such lease prior to its scheduled date of
maturity or to modify such lease to shorten such maturity.
Subject to the foregoing and to Section 4.05, the
Administrative Agent agrees to move the telecommunications switch (if required
by the lessor of the property on which the switch is located) based in Boston,
Massachusetts and forming part of the Collateral if such lease is terminated
prior to the Term Loan Maturity Date.
<PAGE>
18
SECTION 8.15. Termination or Release. (a) Except as provided in Section
8.06, this Agreement and the Security Interest shall terminate when all the
Obligations have been indefeasibly paid in full and the Grantor and the
Guarantor have no further obligations to the Lenders.
(b) In connection with any termination pursuant to paragraph (a) above,
upon the request of the Grantor accompanied by an Officers' Certificate and
Opinion of Counsel stating that all conditions precedent to the termination of
the Lien in the Collateral pursuant to this Agreement and the Credit Agreement
have been satisfied, the Administrative Agent shall execute and deliver to the
Grantor, at the Grantor's expense, all Uniform Commercial Code termination
statements and similar documents which the Grantor shall reasonably request to
evidence such termination. Any execution and delivery of termination statements
or documents pursuant to this Section 8.15 shall be without recourse to or
warranty by the Administrative Agent.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
WINSTAR SWITCH ACQUISITION
CORP., as Grantor,
by
-----------------------------
Name: Timothy R. Graham
Title: President
SALOMON BROTHERS INC,
as Administrative Agent,
by
-----------------------------
Name:
Title:
<PAGE>
1
Annex 1 to the
Security Agreement
[Form of]
PERFECTION CERTIFICATE
Reference is made to the Credit Agreement dated as of October
17, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among WINSTAR SWITCH ACQUISITION CORP., a Delaware
corporation (the "Borrower"), the lenders from time to time party thereto (the
"Lenders"), WINSTAR COMMUNICATIONS, INC., a Delaware corporation (the
"Guarantor"), CREDIT SUISSE FIRST BOSTON, as documentation agent (in such
capacity, the "Documentation Agent") and SALOMON BROTHERS INC, as syndication
agent (in such capacity, the "Syndication Agent") for the Lenders and as
collateral and administrative agent (in such capacities, the "Administrative
Agent"). Capitalized terms used herein and not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
Under the Security Agreement, the Borrower is the Grantor of security
interests in the Collateral as defined therein. In order to facilitate the
perfection of such security interests, the Administrative Agent has requested
that the Borrower provide the information specified in this certificate for the
Grantor.
The undersigned, executive officers of the Grantor, hereby certify to
the Administrative Agent and each other Secured Party as follows:
1. Names. (a) The exact corporate name of the Grantor, as such name
appears in itscertificate of incorporation, is as follows:
(b) Set forth below is each other corporate name the Grantor has had in
the past five years, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, the Grantor has not
changed its identity or corporate structure in any way within the past five
years. Changes in identity or corporate structure would include mergers,
consolidations and acquisitions, as well as any change in the form, nature or
jurisdiction of corporate organization. If any such change has occurred, include
in Schedule 1 the information required by Sections 1 and 2 of this certificate
as to each acquiree or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade names
or similar appellations) used by the Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:
(e) Set forth below is the Federal Taxpayer Identification Number of
the Grantor:
<PAGE>
2
2. Current Locations. (a) The chief executive office of the Grantor is
located at the address set forth on Schedule 2(a) hereto.
(b) Set forth on Schedule 2(b) hereto are all locations where the
Grantor maintains (or intends to maintain) any Collateral.
(c) Set forth on Schedule 2(c) hereto are all the places where the
Grantor maintains an office or other facility not identified in paragraph (a) or
(b) above.
3. UCC Filings. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 4 hereto have been prepared for filing in the
Uniform Commercial Code filing offices in each jurisdiction where the Grantor
has Collateral as identified in Section 2 hereof.
4. Schedule of Filings. Attached hereto as Schedule 4 is a schedule
setting forth, with respect to the filings described in Section 3 above, each
filing and the filing office in which such filing is to be made.
5. Filing Fees. All filing fees and taxes payable in connection with
the filings described in Section 4 above will have been paid at the time such
filings are made.
IN WITNESS WHEREOF, the undersigned has duly executed this certificate
on this _____ day of ________________, 199 .
WINSTAR SWITCH ACQUISITION
CORP.,
by
-----------------------------
Name:
Title:
by
-----------------------------
Name:
Title:
<PAGE>
3
SCHEDULE 1
CHANGES
NONE
<PAGE>
4
SCHEDULE 2(a)
CHIEF EXECUTIVE OFFICE
1577 Spring Hill Road, 6th Floor
Vienna, VA 22182
<PAGE>
5
SCHEDULE 2(b)
LOCATIONS OF COLLATERAL
Boston
230 Congress Street, 2nd Floor, Suite 201 Boston, MA 02110
Chicago
Printers Square
600-780 S. Federal, Ste. 660
Chicago, IL 60605
Columbus
240 North Fifth Street, Ste. 220
Columbus, OH 43215-2611
Dallas
2323 Bryan Street, Ste. 950
Dallas, TX 75201
Denver
910 15th Street, Ste. 140
Denver, CO 80202-2935
Kansas City
324 East 11th Street
Suite 1000, Tenth Floor
Kansas City, MO 64106
Los Angeles
800 West Sixth Street
Los Angeles, CA 90017
Minneapolis
608 Second Avenue South, Ste. 121
Minneapolis, MN 55402
San Francisco
525 Market Street
San Francisco, CA 94105
Seattle
Second Avenue Building
1000 Second Avenue
Seattle, WA 98104
Tampa
4200 W. Cypress Street, 6th Floor
Tampa, FL 33607
Washington DC
1275 K Street #775
Washington, DC 20005
New York, N.Y.
various locations
Garden City, N.Y.
White Plains, N.Y.
<PAGE>
6
OFFICES AND OTHER FACILITIES
230 Park Avenue
New York, NY 10169
<PAGE>
7
SCHEDULE 3
FORM UCC-1
<PAGE>
1
SCHEDULE 4
UCC-1 FILINGS
<PAGE>
EXHIBIT 99.1
WINSTAR
CONTACTS:
Financial Community Press
Michelle Davis Louise Goodman
Manager of Investor Relations (212) 584-4083
(212) 584-4053 [email protected]
WINSTAR ACCELERATES NATIONWIDE DEPLOYMENT
OF SWITCHED BROADBAND NETWORK
Agrees To Acquire 14 Lucent Class 5 Switches and Other
Telecommunications Assets of US One Communications Corp.
Acquisition Completes 70% of Original 1998
Switch Deployment Plan
NEW YORK - OCTOBER 16, 1997, WINSTAR COMMUNICATIONS, INC. (NASDAQ-
WCII) announced today it will significantly accelerate the nationwide deployment
of its switched broadband telecommunications network by acquiring certain
telecommunications assets of US One Communications Corp. The assets include 14
newly-installed Lucent 5ESS- 2000 switches, as well as a 10-year pre-paid lease
for fiber optic capacity in the New York City Metropolitan area. Through this
transaction, WinStar will accomplish 70% of its original switch installation
plan for 1998. The company said the acquisition will enable it to provide
facilities-based CLEC services early next year to customers in 7 new markets
where US One switches are located: Minneapolis, Seattle, Tampa, Denver, Kansas
City, San Francisco, and Columbus, Ohio. This network expansion is six-to-twelve
months ahead of WinStar's original plan.
WinStar will pay $100 million for the 14 switches and other assets. Of this
amount, $80 million is payable in cash at the time of closing, which is expected
to occur within one week. An additional $20 million will be due in approximately
90-120 days, when there should be a confirmation of U.S. One's bankruptcy plan.
WinStar has the option of making the final payment in cash or WinStar stock, the
value of which will be set at the time of that payment. The transaction will be
financed on an interim basis through a new credit facility. The company expects
this facility will be replaced with long-term equipment financing.
Seven of the switches being acquired from US One are located in major cities
where WinStar already has installed switch capacity. WinStar has entered into an
agreement to sell two of these duplicate switches for a total of approximately
$19 million. The sale is expected to occur simultaneously with WinStar's
purchase of the US One assets. WinStar has also received offers to purchase the
remaining five switches from a variety of parties. The company is considering
whether is should retain the incremental capacity represented by the
WinStar Communications Inc.
230 Park Avenue, Suite 2700, New York, NY 10159
Tel 212 84 4000 Fax 212 867 1565
<PAGE>
remaining five switches, and how such enhanced switching capabilities may
support the company's plans to offer its broadband services to other
telecommunications firms.
William J. Rouhana, Jr., WinStar Chairman, and Chief Executive Officer, said
today the US One transaction represented a unique opportunity to virtually
double WinStar's local and long distance network on a much faster timetable than
originally planned. He noted that WinStar's number of switched cities will grow
from 8 to 15 in the next few months as a result of this transaction, and pointed
out that WinStar's 38 GHz spectrum holdings average greater than 500 MHz in the
new markets that will be served by the retained switches.
Rouhana also stated that the price paid for the switches is less than what would
have been spent to create the same amount of switch capacity in the seven
cities, when all related costs are considered. He went on to say "It is a great
advantage to be able to sell switched services in new markets where we would
typically have started out as a reseller of lines belonging to the local
exchange carrier. We will now be able to bring local traffic onto our own switch
from the outset, thereby reducing the EBITDA losses that generally accompany our
entry into new cities."
WinStar Communications, Inc. is a national local communications company, serving
business customers, long distance carriers, fiber-based competitive access
providers, mobile communications companies, local telephone companies, and other
customers with broadband local communications needs. The company provided its
Wireless Fiber(sm) services using its licenses in the 38 GHz spectrum. The
company also provides long distance and information services.
Except for any historical information contained herein, the matters discussed in
this press release contain forward-looking statements that involve risks and
uncertainties which are described in the company's SEC reports, including the
10-K for the period ended December 31, 1996, and the 10-Qs for the period ended
March 31 and June 30, 1997.
WinStar is a registered trademark and Wireless Fiber is a service mark of
WinStar Communications, Inc.
WinStar Communications Inc.
230 Park Avenue, Suite 2700, New York, NY 10159
Tel 212 84 4000 Fax 212 867 1565
<PAGE>
EXHIBIT 99.2
WINSTAR
CONTACTS:
Financial Community Press
Michelle Davis Louise Goodman
Manager of Investor Relations (212) 584-4083
(212) 584-4053 [email protected]
WINSTAR COMPLETES ACQUISITION OF 14 LUCENT CLASS 5 SWITCHES
AND OTHER TELECOMMUNICATIONS ASSETS OF US ONE
NEW YORK - OCTOBER 20, 1997, WINSTAR COMMUNICATIONS, INC. (NASDAQ- WCII)
announced today it has completed the acquisition of 14 Lucent 5ESS-2000 switches
and other telecommunications assets of US One Communications Corp. WinStar
announced on October 16, 1997 its plans to purchase the switches and to
accelerate the deployment of its broadband telecommunications network.
WinStar paid $100 million for the acquisition, $80 million of which was paid in
cash at the closing. A final payment of $20 million, which WinStar can choose to
make in the form of cash or WinStar stock, will be made in approximately 90-120
days, when US One's bankruptcy plan receives final court approval. In a separate
transaction, the company has also received approximately $19 million in cash
from the sale of two of the former US One switches which duplicated capacity
already in place. WinStar said today it is discussing purchase offers from
various parties for five other switches.
WinStar received a credit facility from Salomon Brothers and Credit Suisse First
Boston to finance the transaction on an interim basis. The company expects to
replace this facility with long-term equipment financing.
WinStar Communications, Inc. is a national local communications company, serving
business customers, long distance carriers, fiber-based competitive access
providers, mobile communications companies, local telephone companies, and other
customers with broadband local communications needs. The company provides its
Wireless Fiber(sm) services using its licenses in the 38 GHz spectrum. The
company also provides long distance and information services.
WinStar is a registered trademark and Wireless Fiber is a service mark of
WinStar Communications, Inc.
WinStar Communications Inc.
230 Park Avenue, Suite 2700, New York, NY 10159
Tel 212 84 4000 Fax 212 867 1565
<PAGE>
