SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
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) November 9, 1998
WINSTAR COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-10726 13-3585278
- - ---------------------------- ---------- -----------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
230 Park Avenue, New York, New York 10169
- - ---------------------------------------- -------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 584-4000
Not Applicable
------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index -- Page 4
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ITEM 5. OTHER EVENTS
Purchase of IRU from Williams. On December 17, 1998, our subsidiary,
WinStar Wireless, Inc., entered into an agreement with Williams Communications,
Inc. to purchase from Williams a 25-year indefeasible right of use ("IRU") for
four strands of fiber optic cable on a national route of 14,684 miles (58,736
fiber miles) and a seven-year option to purchase two additional strands over the
same route (29,638 fiber miles). This fiber capacity is being delivered as
routes are built and is expected to be completely available by the end of 2001,
until which time Williams will fulfill substantially all of our long-haul
transport requirements at no additional cost to us. We will pay Williams
approximately $640 million over the next seven years for the IRU, the capacity
option, certain long-haul transport and other network assets. We can exercise
the capacity option for approximately $51 million payable in cash and/or
services.
Sale of IRU to Williams. On December 17, 1998, WinStar Wireless, Inc.
and Williams entered into an agreement providing for the sale by us to Williams
of a 25-year IRU for up to 2% of our current and future local Wireless FiberK
capacity in the United States. Williams will pay us $400 million for this IRU,
with payments due ratably as we construct up to 270 hub sites. We expect to
complete construction of at least 270 hub sites over the next four years.
Williams will also pay us at least $45.6 million over a ten-year period for
network maintenance services that we will provide over the term of the IRU.
Purchase of Spectrum from CellularVision. On November 9, 1998, pursuant
to an Agreement to Purchase LMDS License ("Purchase Agreement") with
CellularVision USA, Inc. ("CVUSA") and CellularVision of New York, L.P.
("CVNY"), dated July 10, 1998, we purchased from CVNY 850 MHz of the spectrum
covered by the LMDS A Block License issued to CVNY by the Federal Communications
Commission for the New York Primary Metropolitan Statistical Area for a purchase
price of $32,500,000, payable in cash. The 850 MHz portion of spectrum was
disaggregated by CVNY from the remaining spectrum covered by its license.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS:
1 IRU Agreement between WinStar Wireless, Inc. and Williams
Communications, Inc. Dated December 17, 1998 (Long-Haul).
2 Wireless FiberK IRU Agreement By and Between WinStar Wireless,
Inc. and Williams Communications, Inc. Effective as of December
17, 1998.*
3 Agreement to Purchase LMDS License dated July 10, 1998 by and
between WinStar Communications, Inc., CellularVision USA, Inc.
and CellularVision of New York, L.P.
_______________________________
* Confidentiality for certain portions of these agreements is being sought by
WinStar Communications, Inc. from the Securities and Exchange Commission.
Accordingly, such portions have been redacted from these agreements.
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SIGNATURE
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.
Date: January 11, 1999
WINSTAR COMMUNICATIONS, INC.
/s/ Kenneth J. Zinghini
By: ____________________________
Kenneth J. Zinghini
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EXHIBIT INDEX
Exhibit Document
- - ------- ---------
10.1 IRU Agreement between WinStar Wireless, Inc. and Williams
Communications, Inc. Dated December 17, 1998 (Long-Hand).
10.2 Wireless FiberK IRU Agreement By and Between WinStar Wireless, Inc.
and Williams Communications, Inc. Effective as of December 17, 1998.
10.3 Agreement to Purchase LMDS License dated July 10, 1998 by and between
WinStar Communications, Inc., CellularVision USA, Inc. and
CellularVision of New York, L.P.
_______________________________
* Confidentiality for certain portions of these agreements is being sought by
WinStar Communications, Inc. from the Securities and Exchange Commission.
Accordingly, such portions have been redacted from these agreements.
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Confidential - WinStar/Williams
IRU AGREEMENT
BETWEEN
WINSTAR WIRELESS, INC.
AND
WILLIAMS COMMUNICATIONS, INC.
Dated December 17, 1998
(Long-Haul)
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS...........................................................1
2. CONVEYANCE OF DARK FIBER IRUS AND GRANT OF OPTION.....................7
2.1. Grant of Network IRU................................................7
2.2. Option..............................................................8
2.3. Financing Arrangements..............................................8
2.4. Preferred Provider Status...........................................8
2.5. Most Favored Customer Provision.....................................9
2.6. No Title to Realty or Personalty....................................9
3. CONSIDERATION FOR IRUS................................................10
3.1. Contract Price......................................................10
3.2. Exercise Price......................................................10
4. CONSTRUCTION..........................................................10
4.1. Construction Representations, Warranties and Covenants..............10
4.2. Delivery of System Segments.........................................10
4.3. Renewal of Required Rights..........................................11
4.4. As-Built Drawings...................................................11
4.5. Third-Party Consents................................................11
5. ORDERING AND PROVISIONING.............................................12
5.1. Provision of Interim Service........................................12
5.2. Service Orders for Interim Services.................................12
5.3. Changes in Service Parameters.......................................14
5.4. Assignment and Assumption of Backbone Agreements....................15
6. CONNECTION TO THE SYSTEM AND COLLOCATION..............................17
6.1. Collocation.........................................................17
6.2. Interconnection.....................................................17
6.3. Ancillary Services..................................................18
7. ACCEPTANCE AND TESTING OF FIBERS......................................18
7.1. Overview............................................................18
7.2. SSPFAT by Williams..................................................19
7.3. SSPFAT by WinStar...................................................19
7.4. Failure Notice......................................................20
7.5. Correction..........................................................20
7.6. Testing by Third Party..............................................20
7.7. System Segment Fiber Acceptance Testing and Acceptance Date.........21
7.8. Testing of Option Fibers............................................21
8. USE OF THE SYSTEM.....................................................21
8.1. Use of WinStar Fibers...............................................21
8.2. Notice of Damage....................................................21
8.3. Precautions.........................................................21
8.4. Use of Equipment....................................................22
8.5. Liens...............................................................22
9. TERM..................................................................22
9.1. Agreement Term......................................................22
9.2. IRU Terms...........................................................22
9.3. Effect of Termination...............................................22
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10. OPERATION, MAINTENANCE, AND REPAIR OF THE SYSTEM......................23
10.1. Routine Maintenance.................................................23
10.2. Non-Routine Maintenance.............................................23
10.3. Subcontractors......................................................23
10.4. Continued Breach of Routine Maintenance Obligations................23
10.5. WinStar Equipment...................................................23
10.6 Access to Systems...................................................23
11. RELOCATION............................................................24
11.1. Relocation..........................................................24
11.2. Cost of Relocation..................................................24
11.3. Updated As-Built Drawings...........................................24
12. INVOICING AND PAYMENT.................................................25
12.1. Due Date and Invoice................................................25
12.2. Form of Payment.....................................................25
12.3. Disputed Charges....................................................25
12.4. Late Interest.......................................................26
12.5. Adjustments.........................................................26
13. DISCLAIMER OF WARRANTIES..............................................26
13.1. Parties.............................................................26
13.2. Facility Owners/Lenders.............................................26
14. AUDIT RIGHTS..........................................................26
15. INDEMNIFICATION.......................................................27
15.1. Indemnification.....................................................27
15.2. Third Party Claims..................................................27
15.3. Indemnification of Providers........................................28
15.4. WinStar Customers...................................................28
16. LIMITATION OF LIABILITY...............................................28
16.1. General Intent......................................................28
16.2. Liability Restrictions..............................................28
16.3. Released Parties....................................................29
17. INSURANCE.............................................................29
17.1. Insurance...........................................................29
17.2. Documentation.......................................................30
17.3. Certificates........................................................30
17.4. Blanket Policies....................................................30
18. TAXES AND GOVERNMENTAL FEES...........................................30
18.1. Payment by WinStar..................................................30
18.2. Payment by Williams.................................................31
18.3. Reimbursement.......................................................31
18.4. Cooperation.........................................................31
18.5. Services............................................................31
19. NOTICE................................................................31
20. CONFIDENTIALITY.......................................................32
20.1. Confidential Information............................................32
20.2. Obligations.........................................................32
20.3. Exclusions..........................................................33
20.4. No Implied Rights...................................................34
21. DEFAULT...............................................................34
22. FORCE MAJEURE.........................................................34
22.1. Excusable Delay.....................................................34
22.2. Notice and Remedy...................................................35
<PAGE>
23. REMEDIES AND DISPUTE RESOLUTION.......................................35
23.1. Dispute Resolution..................................................35
23.2. Cumulative Remedies.................................................35
23.3. Informal Dispute Resolution.........................................35
23.4. Arbitration.........................................................36
23.5. Continued Performance...............................................38
23.6. Immediate Injunctive Relief.........................................38
24. GENERAL...............................................................38
24.1. Rules of Construction...............................................38
24.2. Assignment..........................................................40
24.3. Relationship of the Parties.........................................42
24.4. Prohibition on Improper Payments....................................42
24.5. Entire Agreement; Amendment; Execution..............................42
25. REPRESENTATIONS, WARRANTIES AND COVENANTS.............................43
25.1. Representations and Warranties......................................43
25.2. Additional Williams Covenants.......................................43
25.3. Infringement of Intellectual Property Rights........................44
26. USE OF TELECOMMUNICATIONS AND OTHER SERVICES..........................44
26.1. Condition to Provision of Services..................................44
26.2. Intrastate Interexchange Services...................................44
26.3. WinStar Responsibilities............................................45
26.4. Consents............................................................45
26.5. Restriction of Transmissions........................................45
26.6. Reasonableness, Consents and Approval...............................45
EXHIBITS
Exhibit A Williams System
Part 1 -- Route Map
Part 2 -- System Segments
Exhibit B Williams Network Pricing Schedules and Technical Specifications
Exhibit C Collocation Provisions
Part 1 - Transmission Sites
Part 2 - POPs
Exhibit D Fiber Splicing, Testing, and Acceptance Standards
Exhibit E Fiber Specifications
Exhibit F Cable Installation Specifications
Exhibit G Transmission Site Specifications
Exhibit H As-Built Drawing Specifications
Exhibit I Operations Specifications
Exhibit J Intentionally omitted
Exhibit K Payment Terms
Exhibit L Intentionally Omitted
Exhibit M Intentionally Omitted
Exhibit N Intentionally Omitted
Exhibit O Williams Cities and Location of POPs
<PAGE>
IRU AGREEMENT
(Long-Haul)
THIS IRU AGREEMENT (including the Exhibits and Schedules attached
hereto, this "Agreement") is made as of the Effective Date (hereafter defined)
by and between WINSTAR WIRELESS, INC. ("WinStar"), a Delaware corporation having
its principal office at 230 Park Avenue, New York City, New York, and WILLIAMS
COMMUNICATIONS, INC. ("Williams"), a Delaware corporation, having its principal
office at One Williams Center, Tulsa, Oklahoma 74172.
W I T N E S S E T H:
WHEREAS, Williams has constructed or will construct or obtain rights of
use in a fiber optic communication system (the "System") located approximately
along the routes depicted in Exhibit A, Part 1 (the "Route") and consisting of
the System Segments, as defined below; and
WHEREAS, WinStar desires to acquire from Williams, and Williams desires
to provide to WinStar, the Network IRU as defined below upon the terms and
conditions set forth below;
NOW, THEREFORE, in consideration of the mutual promises set forth below
and other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. DEFINITIONS
Capitalized terms and phrases used in this Agreement shall have the
following meanings:
(a) "Acceptance Date" means the date defined in Section 7.7 below.
(b) "Acceptance Standards" means the standards set forth in Exhibit D
with respect to the testing of the WinStar Fibers.
(c) "Additional Services" means telecommunications services in excess
of the Minimum Commitment, such excess is not included in the
Contract Price.
(d) "Affiliate" means, with respect to any entity, any other entity
Controlling, Controlled by or under common Control with such
entity, whether directly or indirectly through one or more
intermediaries.
(e) "Agreement" has the meaning set forth in the preamble to this
document.
(f) "Ancillary Collocation Services" has the meaning set forth in
Exhibit C, Part 1, Section 1(d).
(g) "Ancillary Services" has the meaning set forth in Section 6.3.
(h) "Assignment Agreement Effective Date" has the meaning set forth
in Section 5.4(a).
(i) "Assumed Backbone Agreement" means a Backbone Agreement that
WinStar assigns to Williams in accordance with Section 5.4.
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(j) "Backbone Agreements" means the agreements designated by WinStar
that WinStar is a party to as of the Effective Date and which
WinStar intends to assign to Williams or have Williams act as a
payment agent.
(k) "Backbone Agreement Service Provider" means each provider of
telecommunications services (other than WinStar) who is a party
to a Backbone Agreement.
(l) "Cable" means fiber optic cable installed pursuant to this
Agreement as part of the System (including any replacement cable)
and fibers contained therein, including the WinStar Fibers, and
associated splicing connections, splice boxes and vaults, and
conduit.
(m) "Circuit" means a communications path with a specified bandwidth.
(n) "Claim" means any claim, action, dispute, or proceeding of any
kind between WinStar (or any of its Affiliates, successors or
assigns) and Williams (or any of its Affiliates, successors, or
assigns) and any other claim, transaction, occurrence, loss,
liability, expense or other matter arising out of, in connection
with, or in any way related to, the Network IRU, the System, this
Agreement or any other instrument, arrangement or understanding
related to the Network IRU.
(o) "Claimant" has the meaning set forth in Section 15.1.
(p) "Collocation Service" has the meaning set forth in Exhibit C,
Part 2.
(q) "Connecting Point" means a point where the network or facilities
of WinStar will connect to the System.
(r) "Contract Price" has the meaning set forth in Section 3.1.
(s) "Control" and its derivatives mean legal, beneficial or equitable
ownership, directly or indirectly, of more than fifty percent
(50%) of the outstanding voting capital stock (or other ownership
interest, if not a corporation) of an entity or management or
operational control over such entity.
(t) "Costs" means actual, direct costs incurred and computed in
accordance with the established accounting procedures used by
Williams to bill third parties for reimbursable projects. All
Costs shall be computed in accordance with generally accepted
accounting principles. Such actual, direct costs include the
following:
(i) Labor costs, including wages and salaries, and benefits,
plus the overhead allocable to such labor costs (overhead
allocation percentage shall not exceed the lesser of: (i)
the percentage Williams allocates to its internal projects;
or (ii) thirty percent (30%)); and
(ii) Other direct costs and out-of-pocket expenses on a
pass-through basis (such as equipment, materials, supplies,
contract services, costs of capital, Required Rights, sales,
use or similar taxes, etc.) plus ten percent (10%) of such
expenses; but,
(iii) Less any cost or expense reimbursed by a third party.
(u) "CPNIP" has the meaning set forth in Part I, Section 2.1 of
Schedule B, Williams Network Technical Specifications.
(v) "Deadline Date" has the meaning set forth in Section 4.2.
(w) "Deduction Sections" has the meaning set forth in Section
24.1(l).
(x) "Dispute Notice" has the meaning set forth in Section 23.4(a).
(y) "Disputing Party" has the meaning set forth in Section 23.4.
(z) "Due Date" has the meaning set forth in Section 12.1.
(aa) "Effective Date" means December 17, 1998.
(bb) "Equipment" has the meaning set forth in Section 1.1 of Schedule
C, Part 2.
(cc) "Exercise Date" means the date on which WinStar exercises its
Option in accordance with Section 2.2.
(dd) "Exercise Price" has the meaning set forth in Section 3.2.
(ee) "Facility Owners/Lenders" means any entity (other than Williams)
that: (a) owns any portion of the System or any property or
security interest therein, (b) leases to Williams, or provides an
IRU to Williams in, any portion of the System, or (c) is a Lender
with respect to Williams or any Affiliates of Williams.
(ff) "FCC" means the Federal Communications Commission.
(gg) "Fiber Acceptance Testing" means the fiber acceptance testing
described in Exhibit D and in Article 7.
(hh) "Fiber Collocation Provisions" means the provisions set forth in
Exhibit C, Part 1.
(ii) "Fibers" means any optical fibers contained in the System
including the WinStar Fibers, the fibers of Williams and the
fibers of any third party in the System excluding, however, any
fibers granted (whether through ownership, IRU, lease, or
otherwise) to governmental entities in exchange for the use of
streets, rights of way, or other property under the jurisdiction
of such entity.
(jj) "Force Majeure Events" has the meaning set forth in Article 22.
(kk) "Indefeasible Right of Use" or "IRU" means an exclusive,
indefeasible right to use the specified property or capacity in
the manner contemplated by this Agreement; provided, however,
that the grant of an IRU shall not convey title, ownership, or
rights of possession in the System, the WinStar Fibers, the
Cable, the Right-of-Way Agreements, or any other real or personal
property.
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(ll) "Indemnitor" has the meaning set forth in Section 15.1.
(mm) "Initial WinStar Fibers" has the meaning set forth in Section
2.1.
(nn) "Intellectual Property Rights" means patent, copyright,
trademark, trade secret or other proprietary rights with respect
to any work product in which such rights could inure.
(oo) "Interconnect/Collocation Notice" has the meaning set forth in
Exhibit C, Part 1, Section 3.
(pp) "Interconnect Facility" has the meaning set forth in Exhibit C,
Part 1, Section 2(a).
(qq) "Interconnection" has the meaning set forth in Section 6.2.
(rr) "Interim IRU" has the meaning set forth in Section 2.1(b).
(ss) "IRU Term" has the meaning set forth in Section 9.2.
(tt) "LEC" means a local exchange carrier.
(uu) "Lender" has the meaning set forth in Section 2.3.
(vv) "Losses" means all liabilities, damages and related costs and
expenses (including fines, levies, assessments, reasonable legal
fees and disbursements and costs of investigation, litigation,
settlement, judgment, interest and penalties) directly incurred
by a party.
(ww) "Material Improvements" has the meaning set forth in Section 10
of Exhibit C, Part 2.
(xx) "Mean Time to Restore" has the meaning set forth in Exhibit B.
(yy) "Minimum Commitment" means One Hundred Twenty Million Dollars
($120,000,000), which is the minimum amount of On-Net
Telecommunications Services in United States dollars to be
purchased by WinStar pursuant to the terms hereof prior to the
expiration of the fifth anniversary of the Effective Date. Such
amount is included in the Contract Price.
(zz) "Minimum Term Liability" has the meaning set forth in Section
5.3(b).
(aaa)"NCC" means Network Control Center, as set forth in Exhibit I,
Section 1(A).
(bbb) "Network IRU" has the meaning set forth in Section 2.1.
(ccc)"Notice of Election" has the meaning set forth in Section
15.2(a).
(ddd)"OOS" means Out-of-Spec, as set forth in Exhibit D, Section
1(B).
(eee) "Off Net" means a Circuit that is not On Net.
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(fff)"On Net" means a Circuit traversing the Williams Network between
two Williams points of presence.
(ggg) "Option Fibers" has the meaning set forth in Section 2.1.
(hhh) "Option" has the meaning set forth in Section 2.2.
(iii)"OTDR" means optical time domain reflectometer, as set forth in
Exhibit D, Section 1(A).
(jjj)"Other Services" means local access, Interconnection, Ancillary
Services and Collocation Services.
(kkk)"Payment Deductions" has the meaning set forth in Section
24.1(l).
(lll) "Payment Terms" has the meaning set forth in Section 3.1.
(mmm)"Point of Presence" means a specified location at which Williams
originates or terminates services.
(nnn) "Premises" has the meaning set forth in Exhibit C, Part 2.
(ooo)"Prime Rate" means, with respect of any period, the rate
published as Chase Manhattan's prime rate in the Wall Street
Journal, or any successor publication thereto, from time to time
during such period.
(ppp)"Pro-Rata Share" means a proportion equal to a fraction, the
numerator of which is the number of WinStar Fibers and the
denominator of which is all Fibers in the relevant System Segment
Portion(s). If this fraction varies over different System Segment
Portions, then the Pro Rata Share shall be equal to the weighted
average (weighted by length as set forth in Williams' as-built
drawings) of the relevant System Segment Portions. For example,
if the fraction for 100 feet of the relevant System Segment
Portion is 0.1 and the fraction for the remaining 50 feet of the
relevant System Segment Portion is 0.07, the weighted average for
the entire System Segment Portion would be 0.09.
(qqq)"Released Party" means each of the following (but excludes
Williams and WinStar):
(i) Any Affiliates or Lenders of the other party and any
Facility Owners/Lenders;
(ii) Any employee, officer, director, stockholder, partner,
member, or trustee of the other party or of its Affiliates,
Lenders, or Facility Owners/Lenders; or
(iii)Assignees of the entities included in the above
subparagraphs (a) or (b) and any employee, officer,
director, stockholder, partner, member, or trustee of such
assignees.
(rrr)"Renegotiated Backbone Agreement" means an Assumed Backbone
Agreement that Williams has renegotiated as set forth in Section
5.4(b).
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(sss) "Representatives" has the meaning set forth in Section 20.2.
(ttt)"Requested Start Date" has the meaning set forth in Section
5.2(b).
(uuu) "Required Rights" has the meaning set forth in Section 4.1.
(vvv) "Restricted Fiber" has the meaning set forth in Section 26.1.
(www)"Right-of-Way Agreements" means rights, licenses,
authorizations, easements, leases, fee interests, or agreements
that provide for the occupancy by the System of real property or
fixtures (such as conduit, bridges, river crossings, or
transmission towers).
(xxx) "Route" has the meaning set forth in the Recitals above.
(yyy) "Routine Maintenance" has the meaning set forth in Section 10.1.
(zzz)"Service Orders" has the meaning set forth in Section 5.2(a).
(aaaa) "Service Term" means with respect to the provision of
Telecommunications Services, Additional Services or Other
Services, the length of time specified in the applicable Service
Order during which Williams will provide such Telecommunications
Services, Additional Services or Other Services.
(bbbb) "Space" has the meaning set forth in Section 1.1 of Schedule C,
Part 2.
(cccc) "Start Date" means, with respect to any Telecommunications
Services or Other Services WinStar requests Williams to provide
hereunder, the first day on which such services are provided.
(dddd) "Start of Service Notice" or "SOSN" has the meaning set forth
in Section 5.2(e) .
(eeee) "System" shall have the meaning set forth in the Recitals
above.
(ffff) "System Segment" means one of the System Segment Portions
identified as a System Segment in Exhibit A, Part 2.
(gggg) "System Segment Portion" means a discrete portion of the System
and may refer to a span (a portion of the System between two
Transmission Sites or between a Transmission Site and a point of
presence or System end point), a portion between two points of
presence or a point of presence and a System end point, or a
portion of the System affected by a relocation or other
circumstance.
(hhhh) "Telecommunications Services" means interexchange
telecommunications capacity on Williams' Network (or third
parties' telecommunications facilities) at the DS-3, OC-3, OC-12
and OC-48 levels but excluding Other Service.
(iiii) "Term" has the meaning set forth in Section 9.1.
(jjjj) "Third Party Service Provider" means any third party provider,
operator or maintenance repair contractor of facilities employed
by Williams in connection with the provision of the Network IRU,
Telecommunications Services or Other Services.
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(kkkk) "Transmission Sites" means the optical amplifier, regenerator,
and junction sites along each System Segment.
(llll) "Williams" means Williams Communications, Inc., a Delaware
corporation, formerly known as Vyvx, Inc.
(mmmm) "Williams Network" means the telecommunications facilities
owned or operated by Williams and used to provide services
between the cities listed on Exhibit O, as such may be added to
as Williams grows its network during the Term.
(nnnn) "WinStar" has the meaning set forth in the first paragraph of
this document.
(oooo) "WinStar Equipment" means optronic (opto-electrical),
electronic, or optical equipment, or materials, facilities, or
other equipment (other than the System) owned, possessed, or
utilized by WinStar.
(pppp) "WinStar Facilities" has the meaning set forth in Section 26.3.
(qqqq) "WinStar Fibers" means the Initial WinStar Fibers and, upon
WinStar's exercise of the Option in accordance with Section 2.2,
the Option Fibers.
(rrrr) "WinStar IRU" has the meaning set forth in Section 2.1.
2. CONVEYANCE OF DARK FIBER IRUS AND GRANT OF OPTION
2.1. Grant of Network IRU.
Williams hereby grants the "Network IRU" to WinStar for the purposes
described herein and on the terms and subject to the conditions set forth
herein. The Network IRU comprises:
(a) An exclusive Indefeasible Right of Use (the "WinStar IRU"), effective
as of the Acceptance Date for each System Segment, in:
(i) Four (4) strands of optical fiber (the "Initial WinStar Fibers"),
as identified by Williams in each System Segment, throughout the
length of the Route; and
(ii) If the Exercise Date occurs, two (2) additional strands of
optical fiber (the "Option Fibers"), as identified by Williams in
each System Segment, throughout the length of the Route; and
(b) An exclusive Indefeasible Right of Use in On-Net Telecommunications
Services (the "Interim IRU"), effective as of the Effective Date,
which is further defined in Article 5.
2.2. Option.
(a) WinStar is hereby granted an option (the "Option") to an exclusive
Indefeasible Right of Use in the Option Fibers in all System Segments.
The Option is not divisible (i.e. it may not be exercised in part) by
System Segment or strand of Option Fiber. If not exercised, the Option
shall expire on the seventh (7th) anniversary of the Effective Date.
(b) WinStar may exercise the Option only by delivery of an irrevocable
written notice to that effect by an authorized representative. If
WinStar so exercises the Option:
(i) The Option Fibers will be deemed to be WinStar Fibers (except for
purposes of Article 7, for which separate treatment is indicated
in Section 7.8) and will be deemed to be subject to the WinStar
IRU; and
(ii) WinStar's rights to use the Option Fibers shall begin upon the
initial payment of the Exercise Price (or, if later, the
Acceptance Date for each System Segment) and shall continue until
the last day of the IRU Term of the corresponding System Segment.
2.3. Financing Arrangements.
Each party may, directly or through an Affiliate, enter into financing
arrangements (including secured loans, leases, sales with lease-back,
leases with lease-back arrangements, purchase-money or vendor financing,
conditional sales transactions or other arrangements) with one or more
financial institutions, vendors, suppliers or other financing sources (each
a "Lender"), that, with respect to Williams, relate to the System and, with
respect to WinStar, relate to the Network IRU (and not to any physical
property right in the System), subject to Williams' rights pursuant to the
Payment Terms.
2.4. Preferred Provider Status.
(a) During the Term, WinStar shall first seek to obtain its domestic
interexchange telecommunications requirements (including dark fiber,
data, voice and video circuits) from Williams. WinStar will fulfill
such requirements with Williams' telecommunications products if
Williams is responsive to WinStar's requests and those products, when
compared to similar offerings in the marketplace, are of equivalent or
better quality, availability and price.
(b) Within 180 days after the Effective Date, the parties will jointly
establish a benchmarking measurement and comparison process (the
"Benchmarking Process") designed to objectively evaluate whether the
Williams Telecommunications Services, Additional Services or Other
Services, as applicable, are of equivalent or better quality,
availability and price as compared to similar services generally
available in the market for similar size and scope requirements
("Market Level Charges"). The Benchmarking Process will take into
consideration relevant factors such as quality and delivery terms.
2.5. Most Favored Customer Provision.
During the Term, if Williams sells On-Net Telecommunications Services,
On-Net Additional Services, and/or Other Services (but not including any
local access or dark/dim fiber) to a third party on Financial Terms (as
hereinafter defined) that are not Comparable (as hereinafter defined) to
those provided hereunder, WinStar shall be entitled to an adjustment of the
amounts paid with regard to the On-Net Telecommunications Services, On-Net
Additional Services, and/or Other Services in question. Williams shall
promptly notify WinStar in writing of such more favorable Financial Terms.
Williams shall be under no obligation to disclose to WinStar the identity
of any such third party or any other provisions of such a contract that are
not more favorable than those provided to WinStar. Such adjustment shall be
equal to the aggregate amount necessary to make the Financial Terms
Comparable (pro rated to follow the cash timing of this Agreement). Upon
payment or credit of such adjustment to WinStar, the Financial Terms of
this Agreement shall be deemed to be those more favorable Financial Terms
for the purpose of future applications of this Section. Nothing in this
Section shall be deemed to require Williams to sell more than the Minimum
Commitment contained herein. "Comparable" means not less than the price,
after adjustments to take into account all differences attributable to
volume, terms and conditions, advances in technology, passage of time,
market conditions or strategic relationship value. "Financial Terms" means
the overall pricing of services to the third-party.
2.6 No Title to Realty or Personalty.
Neither this Agreement nor the grant of the Network IRU effected hereby
conveys any form or type of title in any real or personal property,
including the System or any portion thereof or in any transmission or other
facilities and equipment related to the provision of Telecommunications
Services, Other Services, or Additional Services. Williams and WinStar
intend that this Agreement constitutes a true lease of the WinStar Fibers
and not a sale of the WinStar Fibers. Notwithstanding such express intent
of the parties, if a court of competent jurisdiction determines that this
Agreement is not a true lease, but a security interest in the WinStar
Fibers, then solely in that event and solely for the limited purpose
thereof, WinStar shall be deemed to have granted Williams a security
interest as described in Section 7 of Exhibit K hereto. WinStar shall
provide an inventory of any equipment to be located on Williams' sites.
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3. CONSIDERATION FOR IRUS
3.1. Contract Price.
As consideration for the Network IRU, WinStar shall pay Williams Five
Hundred and Fifty Million Dollars ($550,000,000) (the "Contract Price") in
accordance with the payment and other terms set forth in Exhibit K hereto
(the "Payment Terms"), plus the Exercise Price if the Option is exercised.
3.2. Exercise Price.
The price payable if WinStar exercises the Option (the "Exercise Price")
shall be Fifty-One Million Eight Hundred Thirty-Four Thousand One Hundred
Dollars ($51,834,100), allocated to each System Segment as set forth in
Exhibit A, Part 2. The Exercise Price for each System Segment shall be
chargeable upon the later of (a) the date WinStar exercises the Option or
(b) the Acceptance Date of that System Segment.
4. CONSTRUCTION
4.1. Construction Representations, Warranties and Covenants.
(a) Williams represents, warrants and covenants that, as of the Acceptance
Date for each System Segment, it (or the underlying facility owner on
Williams' behalf) shall have obtained the following rights
(collectively, the "Required Rights"):
(i) All Right-of-Way Agreements necessary for the installation and
use of that System Segment;
(ii) The rights to use those System Segment Portions it does not own
and the right to grant the Network IRU with respect to such
System Segment Portions;
(b) Williams represents, warrants and covenants that, for each System
Segment,
(i) That System Segment has been designed, engineered, installed, and
constructed in accordance with the specifications set forth in
Exhibits D, E, F and G; and
(ii) Throughout the relevant IRU Term, the exercise of rights by or on
behalf of Williams' Facilities Owners/Lenders shall not deprive
WinStar of the peaceful and quiet enjoyment of the WinStar IRU in
that System Segment.
4.2. Delivery of System Segments.
(a) Deadline Date. The planned Acceptance Date for each System Segment
shall be the date sixty (60) days after the Planned Construction Date
set forth as such in Exhibit A, Part 2. The "Deadline Date" shall be
sixty (60) days after the later of (a) such planned Acceptance Date or
(b) the planned Acceptance Date as extended due to unforseen events
not in the reasonable control of Williams (other than as due to
Williams' negligence), Force Majeure Events or as expressly permitted
by this Agreement. Williams shall implement each System Segment so
that it achieves its Acceptance Date by the Deadline Date. Williams
shall give WinStar as much prior notice as reasonably possible if , to
the best of Williams' knowledge, there is a forseeable risk that it
may miss a Deadline Date for any System Segment.
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(b) Failure to Meet Deadline Date. If Williams does not meet the Deadline
Date for any System Segment, and the parties are unable, in good
faith, to agree to an alternative Deadline Date, WinStar's sole and
exclusive monetary remedy for such failure shall be to obtain Cover
(as hereinafter defined) beginning on the Deadline Date for the System
Segments not made available. Such "Cover" shall be satisfied by
Williams' providing, at Williams' expense: (a) such capacity as is
required for WinStar to carry those Circuits it would have migrated to
the WinStar Fibers, and (b) such other capacity as is needed to
fulfill WinStar's increase in usage (based on actual orders of its
customers), until Williams delivers the WinStar Fibers. In any event,
Williams will provide such Cover capacity in ATM, private line, or
frame relay formats, at WinStar's option.
4.3. Renewal of Required Rights.
Williams shall renew or replace existing Required Rights for each
System Segment through at least the applicable IRU Term.
4.4. As-Built Drawings.
Within six (6) months after the Acceptance Date for any System
Segment, Williams shall provide WinStar with as-built drawings for
that System Segment, in compliance with the specifications for
as-built drawings set forth in Exhibit H.
4.5. Third-Party Consents.
WinStar acknowledges that Williams requires the consent of a third
party in order to grant WinStar an IRU with respect to the
Washington-Houston and Houston-Dallas System Segments. WinStar shall
not unreasonably withhold consent to changes to this Agreement
required by such third party that do not adversely affect WinStar's
rights and obligations under this Agreement and do not require payment
of additional consideration by WinStar. If WinStar consents to such
changes, the parties shall execute an appropriate amendment. If
WinStar does not consent to such changes, or the Required Consents
cannot be obtained for other reasons, then the Contract Price and
Exercise Price shall each be reduced by the corresponding amount
allocated to the affected System Segment(s) in Exhibit A, Part 2.
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5. ORDERING AND PROVISIONING
5.1. Provision of Interim Service.
(a) Inasmuch as the deployment of the System does not currently reach all
locations set forth in Part 1 of Exhibit A, Williams shall provide,
subject to availability and on a non-discriminatory basis,
Telecommunications Services on the Williams Network in accordance with
the terms of this Agreement. Such Telecommunications Services may be
part of the Minimum Commitment or may be Additional Services.
(b) At the request of Williams, WinStar shall pay for Other Services or
Additional Services requested by WinStar in accordance with the terms
of this Agreement.
(c) Within ninety (90) days after each of the first five (5) anniversaries
of the Effective Date, Williams shall determine WinStar's actual use
of Minimum Commitment for the year ending on such anniversary and
shall send such information to WinStar for review. Irrespective of any
shortfall in Minimum Commitment actually used by WinStar during any
period, in no event shall any refund, rebate or reduction in the
Contract Price be granted or paid to WinStar as a result of any such
shortfall. Williams shall be obligated to accept any conforming
Service Orders issued by WinStar for On-Net Telecommunications
Services up to the Minimum Commitment during the first five
anniversaries of the Effective Date. Williams shall permit WinStar to
take up to two (2) months beyond the fifth anniversary beyond the
Effective Date to use Telecommunications Services requested and paid
for under a Service Order for On-Net Telecommunications Services
issued prior to the end of the fifth anniversary of the Effective Date
to enable WinStar to meet the Minimum Commitment. Notwithstanding the
foregoing, WinStar shall have additional time beyond the foregoing
five year period to meet the Minimum Commitment to the extent
WinStar's failure to meet the Minimum Commitment is due to delays by
Williams' in providing any of the On-Net Telecommunications Services
by the firm order commitment date issued by Williams during such five
year period.
5.2. Service Orders for Interim Services.
(a) Telecommunications Services, Additional Services, and Other Services
requested by WinStar hereunder shall be requested on Williams Service
Order forms in effect from time to time ("Service Orders"). Each
Service Order shall reference this Agreement. Williams reserves the
right not to accept a Service Order that does not conform with the
terms and conditions of this Agreement and such non-conforming Service
Order shall have no force or effect hereunder.
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(b) Each Service Order will indicate a requested due date (the "Requested
Start Date") for the Circuit, the desired term of the Circuit,
specific city pairs, applicable bandwidth, whether the Circuit(s) are
to be expedited or provided in normal intervals and any other
parameters required. Williams shall acknowledge receipt of the Service
Order, on average, within forty-eight (48) hours (an
"Acknowledgement"). Within four (4) business days of the
Acknowledgement, Williams will advise WinStar as to network
availability. With respect to On-Net Circuits, when WinStar requests
to order its own local loops Williams will provide a Letter of Agency
within seven to ten business days after Williams' receipt of the
Service Order. Within twenty-four (24) hours after Williams' receipt
of the Design Layout Record (as provided by the applicable local
access provider), Williams will provide a firm order commitment for
On-Net Circuits. All Service Order intervals for Off-net Circuits or
Backbone Agreement Circuits are on an individual case basis. Williams
will use reasonable efforts to assist WinStar in obtaining a Letter of
Agency and delivering service from a Third-Party Provider. All On-Net
DS-3/OC-3 Circuits ordered by WinStar pursuant to Service Orders under
this Agreement will be provisioned by Williams within a target
timeframe of forty-five (45) days from the date of the Service Order
for POP to POP service.
(c) Once a Service Order is placed, WinStar may cancel it only by notice
of cancellation not less then ten days prior to delivery of the
corresponding Circuit, and payment of any specified cancellation fee.
WinStar agrees that the actual damages in the event of such
cancellation would be difficult or impossible to ascertain, and that
the cancellation charge set forth in herein is consequently intended
to establish liquidated damages and not a penalty.
(d) Any conflicting, different or additional terms and conditions
contained in WinStar's acknowledgment or Service Order or elsewhere
are deemed objected to by Williams and shall not constitute part of
this Agreement. No action by Williams (including fulfillment of such
Service Order) shall be construed as binding or estopping Williams
with respect to such conflicting, different or additional term or
condition, unless the Service Order containing said term or condition
has been signed by an authorized representative of Williams.
(e) Williams shall make reasonable efforts to provide Telecommunications
Services, Other Services and Additional Services within its standard
service implementation interval, as set forth herein or on WinStar's
Requested Start Date. Telecommunications Services, Other Services or
Additional Services, as applicable, shall begin on the date Williams
issues a notice that service is available (the "Start of Service
Notice" or "SOSN"), indicating the service has been tested by Williams
in accordance with Williams' standard specifications and that the
service meets or exceeds those specifications.
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(f) WinStar may reasonably request one or more delays in the Requested
Start Date of a Service Order, a move, or rearrangement if Williams
receives the delay request at least fifteen (15) days prior to the
Requested Start Date and the requested delay does not extend the
Requested Start Date more than thirty (30) days from the original date
thereof. If WinStar delays the Requested Start Date (or as gauged by
the SOSN, if issued for a date after the Requested Start Date) by more
than thirty (30) days, WinStar has the option to (a) accept the
billing for the Service Order, (b) in the case of On-Net
Telecommunications Services, Other Services, or Additional Services,
cancel the Service Order and pay the applicable cancellation charges
for the facilities ordered, or (c) in the case of Off-Net
Telecommunications Services, Other Services, or Additional Services,
cancel the Service Order and pay any charges or other costs Williams
incurs as a result of such cancellation. The billing or cancellation
will be effective thirty (30) days after the Requested Start Date. If
WinStar elects to accept billing, the installation will be completed
as soon as reasonably practical after WinStar advises Williams that
the installation can be completed.
(g) Subject to the terms of Section 24.1(l), if, after the relevant Start
Date, Williams is in material breach of its obligation to issue a SOSN
for On-Net Telecommunications Services (excluding any breach arising
from delays in obtaining or failures to obtain or maintain service
such as local access or Off-Net service, but excluding POP-to-POP
On-Net service) for a period of more than one hundred twenty (120)
consecutive days after WinStar provides written notice of such breach,
WinStar may deduct from each succeeding monthly invoice, so long as
that breach continues, the amount by which such Telecommunications
Services would otherwise have contributed toward the Minimum
Commitment during any month following such one hundred twenty (120)
day period. Upon Williams' issuance of the corresponding SOSN, no
further deductions shall be available to WinStar for such
Telecommunications Services.
5.3. Changes in Service Parameters.
(a) WinStar may disconnect Off-Net Telecommunications Service, Other
Services, or Additional Services provided by a Third-Party Service
Provider pursuant to a Service Order by providing sixty (60) days'
prior written notice and paying any and all amounts properly due that
Provider for the affected Service Order.
(b) Following the relevant Start Date for any On-Net service, WinStar may
disconnect or reconfigure that service upon sixty (60) days' prior
written notice. If that action relates to a Circuit that has not been
in place for at least one (1) year from its Start Date, (i) WinStar
shall pay Williams an amount equal to the total of the monthly charges
for one year of service of such Circuit, less the amount of monthly
charges actually paid at the time of service disconnection (the
"Minimum Term Liability") and (ii), WinStar shall also pay Williams
the additional charges set forth in this Agreement that are associated
with that disconnection or reconfiguration. Subsection (ii) shall also
apply in the event of a cancellation in accordance with Section
5.2(c).
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5.4. Assignment and Assumption of Backbone Agreements.
(a) Assumption. Subject to subsection (i) below and WinStar obtaining any
necessary required consents, WinStar will assign to Williams pursuant
to a mutually acceptable assignment and assumption agreement, all
Backbone Agreements that can be assigned, to the extent that Williams
has the requisite intrastate or international authority to provide the
services encompassed by such Backbone Agreements. The date of the
assignment shall be the "Assignment Agreement Effective Date". After
such assumption, the terms and conditions of such Assumed Backbone
Agreements or such Renegotiated Backbone Agreement, as applicable,
(including all technical standards and service provisioning intervals)
shall prevail solely with regard to services provided by Williams to
WinStar thereunder, except as to any Circuit which has been migrated
on Williams Network as provided below.
(b) Renegotiation. Williams shall renegotiate the Assumed Backbone
Agreements, as it is reasonably able, to improve on the terms and
pricing thereof. Any such renegotiated terms shall only be applicable
to WinStar to the extent it improves the terms and pricing of the
Backbone Agreement as assigned to Williams. Once an Assumed Backbone
Agreement is renegotiated, it shall be considered a Renegotiated
Backbone Agreement for all purposes herein. Williams will only pass
through to WinStar, and WinStar shall be entitled to, its pro-rata
share of such cost savings achieved in any Renegotiated Backbone
Agreement. WinStar's pro-rata share will be determined by dividing the
then current WinStar Circuit or billing volumes by the total new
Circuit or billing volume under the Renegotiated Backbone Agreement.
(c) Payment Agent. WinStar shall designate Williams as its payment agent
with respect to all Backbone Agreements that cannot be assigned to
Williams pursuant to subsection (a) above.
(d) Payment and Minimum Commitments. WinStar shall pay Williams for
services rendered under the Assumed Backbone Agreements and
Renegotiated Backbone Agreements at the rates therein and shall also
remain responsible for meeting the associated minimum revenue or
volume commitments, if any (the "Minimums"). With respect to any
Renegotiated Backbone Agreement, WinStar shall abide by the
renegotiated terms and conditions, including paying the reduced price
as set forth in subsection (b) above. WinStar shall, in all instances
and to the extent such amounts are pre-calculated, pay the
non-recurring and monthly recurring charges to Williams in immediately
available funds at least one billing cycle prior to the date that
payment is due from Williams to the Backbone Agreement Service
Provider under an Assumed Backbone Agreement or a Renegotiated
Backbone Agreement.
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(e) Administration. The parties will work together to identify the
Circuits related to each Backbone Agreement and, after assignment,
minimum revenue or volume commitments of WinStar, if any, associated
with the Assumed Backbone Agreements and Renegotiated Backbone
Agreements. In no event shall WinStar be responsible for any minimum
revenue or volume commitments under a Renegotiated Backbone Agreement
beyond such commitments agreed to by WinStar prior the Effective Date.
Subject to WinStar's confidentiality obligations, WinStar will provide
Williams reasonable access to its records, books and other documents
and data related to each Backbone Agreement, Assumed Backbone
Agreement and Renegotiated Backbone Agreement. WinStar will also
cooperate with Williams in the administration of such agreements.
Williams is not obligated to assume any Circuit until such Circuit is
identified by the parties.
(f) WinStar Disputes. Williams will endeavor to resolve, on behalf of
WinStar and at WinStar's expense, any back-billing dispute which
accrued prior to the applicable Assignment Agreement Effective Date
(provided that notice of any such dispute is received by Williams
before any such Assignment Agreement Effective Date) and WinStar will
cooperate fully in any such effort.
(g) Orders Under Assumed and Renegotiated Backbone Agreements. Unless
otherwise permitted by Williams, WinStar will place orders under
Assumed Backbone Agreements and Renegotiated Backbone Agreements
through Williams. Williams will not be obligated to accept any Circuit
arranged by WinStar in contravention of this provision and such
Circuit will not become subject to the Assignment and Assumption
Agreement unless otherwise agreed to by Williams, such agreement not
to be unreasonably withheld.
(h) Relationship to the Minimum Commitment and Migration. Provision of
service under any Backbone Agreement (including the Assumed Backbone
Agreements and Renegotiated Backbone Agreements) will not count toward
satisfaction of the Minimum Commitment until such time as such
Circuits are migrated onto the Williams Network. Subject to WinStar's
prior approval in each instance, Williams shall migrate Circuits
provided under any Assumed Backbone Agreements or Renegotiated
Backbone Agreements as soon as reasonably possible, taking into
account any Circuit terms, early termination fees or Minimums.
(i) Assumption Proviso. Williams shall not be obligated to assume any
Backbone Agreement that would materially conflict with another
Williams contract, have a materially adverse effect on Williams, or
that contains any material usage commitment based upon a percentage of
WinStar's telecommunications needs. In the event Williams does not
assume such Backbone Agreement, Williams will act as a payment agent
as provided in Section 5.4(c).
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6. CONNECTION TO THE SYSTEM AND COLLOCATION
6.1. Collocation.
(a) WinStar shall have the right to use Transmission Sites along the Route
pursuant to the Fiber Collocation Provisions. Such Transmission Sites
shall meet or exceed the power and building requirements specified in
Exhibit G. WinStar shall provide, maintain, and for all purposes be
solely responsible for all WinStar Equipment at Transmission Sites or
other locations.
(b) Collocations in Williams Points of Presence will be provided in
accordance with the terms contained in Exhibit C, Part 2.
(c) Subject to the terms of Section 24.1(l), if, after the Acceptance Date
for any System Segment, Williams is in material breach of its
obligation to provide the rack space or square footage specified by
the Collocation Provisions at any Transmission Site (excluding
Transmission Sites on the Dallas-Houston System Segment) for a period
of more than one hundred twenty (120) consecutive days after WinStar
provides written notice of such breach, WinStar may deduct the
following amount from its monthly invoice, pro-rated for partial
months, so long as that material breach continues beyond such one
hundred twenty (120) day period: (i) Five Thousand Dollars ($5,000)
per month prior to the eighth anniversary of the relevant Acceptance
Date, (ii) one thousand dollars ($1,000) per month from the the eighth
anniversary of the relevant Acceptance Date up to but not including
the tenth anniversary of the relevant Acceptance Date, and (iii) five
hundred dollars ($500) per month thereafter. The preceding provision
shall apply on a per-Transmission Site basis for each relevant
Transmission Site.
6.2. Interconnection.
(a) With respect to each of the cities served by the WinStar Fibers, the
parties shall mutually determine the most efficient manner of
providing the required connectivity ("Interconnection") between the
WinStar and Williams points of presence, whether through then-existing
installed capacity, implementation of new capacity or third party
arrangements. In addition, the parties shall set and periodically
review the schedule (timing and priority) of implementation of those
Interconnection facilities and shall adhere to that schedule in
implementing such facilities.
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(b) The parties shall allocate the costs of each Interconnection facility
as follows:
(i) The parties shall mutually agree upon a forecast of each party's
usage of that Interconnection facility during the first year
after implementation (the "Forecast"). The non-recurring costs
associated with the implementation of that facility and the
recurring cost thereof in the first month of operation (in
aggregate, the "Start-up Costs") will be allocated pro rata
between the parties based upon the Forecast. One year thereafter
the parties shall re-calculate the allocation of the Start-up
Costs by substituting actual usage during the preceding year in
place of the Forecast. Based upon that recalculation, Williams
shall pay or receive a refund, in either case equal to the
difference between the initial allocation of the Start-up Costs
and the recalculated amount, plus interest at the Prime Rate for
the applicable period.
(ii) On a quarterly basis, the parties shall allocate the periodic
recurring costs of that Interconnection facility pro rata between
the parties based upon actual usage during the preceding quarter.
(iii)Following the Effective Date, the parties will mutually develop
appropriate procedures to implement the foregoing.
6.3. Ancillary Services.
Williams may also provide other services to WinStar for reasons
including, but not limited to: (a) WinStar's request to expedite
Telecommunications Services availability to a date earlier than
Williams' published installation interval or a previously accepted
Start Date; (b) Telecommunications Services redesign or other activity
occasioned by receipt of inaccurate information from WinStar; (c)
WinStar's request for use of routes or facilities other than those
selected by Williams for provision of the Telecommunications Services;
and (d) other circumstances in which extraordinary costs and expenses
are generated at the written request of WinStar and incurred by
Williams (collectively, "Ancillary Services").
7. ACCEPTANCE AND TESTING OF FIBERS
7.1. Overview.
Fiber Acceptance Testing of the WinStar Fibers shall be conducted for
each System Segment Portion ("System Segment Portion Fiber Acceptance
Testing" or "SSPFAT"). The provisions set forth below address the
acceptance procedures and provisions regarding failure notices,
corrections, third party testing and testing of the Option Fibers.
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7.2. SSPFAT by Williams.
Williams shall perform SSPFAT of the WinStar Fibers in accordance with
Exhibit D. SSPFAT shall progress System Segment Portion by System
Segment Portion along the Route of each System Segment as cable
splicing progresses, so that test results may be reviewed in a timely
manner. WinStar shall have the right, but not the obligation, to have
an individual present to observe Williams' SSPFAT or to conduct its
own SSPFAT in accordance with Section 7.3 below (except, in either
case, to the extent Williams' System Segment Portion Fiber Acceptance
Testing takes place prior to the period ending twenty (20) days after
the Effective Date). Williams shall provide WinStar at least ten (10)
days prior notice of Williams' testing schedule or any change thereto.
Within twenty (20) days after the conclusion of any SSPFAT of the
WinStar Fibers conducted by Williams in any given System Segment
Portion, Williams shall provide WinStar with a copy of the test
results provided that in no case shall Williams be obligated to
provide copies of such test results before January 11, 1999.
7.3. SSPFAT by WinStar.
WinStar shall have the right, but not the obligation, at its sole
expense, to conduct its own SSPFAT of the WinStar Fibers to verify
that they meet the Acceptance Standards. If WinStar elects to conduct
its own SSPFAT of the WinStar Fibers, it shall notify Williams of its
intent to do so (including dates and locations) at least three (3)
days prior to the date of Williams' scheduled commencement of the
SSPFAT of a particular System Segment Portion as specified in
Williams' ten day prior written notice to WinStar as provided in
Section 7.2. WinStar may elect to perform such testing (i) itself
subsequent to the Williams testing or (ii) concurrently with Williams'
testing (except to the extent Williams' testing take place prior to
the period ending twenty (20) days after the Effective Date), in which
case both parties shall reasonably cooperate with the other to
facilitate such concurrent testing. If WinStar elects to perform the
testing itself subsequent to Williams' testing, WinStar will complete
such testing within ten (10) days after Williams completes its SSPFAT
of the relevant System Segment Portion (except to the extent such
Williams testing takes place prior to the period ending twenty (20)
days after the Effective Date in which case WinStar shall complete
such SSPFAT by January 25, 1999). Williams shall have the right, but
not the obligation, to have an individual present to observe WinStar's
SSPFAT. Within twenty (20) days after the conclusion of WinStar's
SSPFAT of the WinStar Fibers, WinStar shall provide Williams with a
copy of the test results. WinStar's exercise or non-exercise of its
right to conduct SSPFAT shall not extend or shorten the time periods
for WinStar to determine, pursuant to Section 7.4, if the System
Segment Portion meets the Acceptance Standards. Williams shall
reasonably cooperate with WinStar to facilitate SSPFAT. Changes in
testing schedules may be mutually agreed upon by the Parties.
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7.4. Failure Notice.
If, within fourteen (14) days after the later of (i) receipt by
WinStar from Williams of the test results referred to in Section 7.2
or of the results of re-testing as set forth below and (ii) WinStar
conclusion of its own testing as provided in Section 7.3, WinStar
reasonably determines that Williams' or WinStar's test results show
that the System Segment Portion of the WinStar Fibers do not meet the
Acceptance Standards, WinStar shall, within such fourteen (14) day
period, notify Williams of such determination and shall identify in
writing the specific data that indicate such failure to meet the
Acceptance Standards. Notwithstanding the foregoing, if the fourteen
(14) day period ends prior to January 25, 1999 for any System Segment
Portion, WinStar will have until January 25, 1999 to give Williams
notice of failures of the System Segment Portion to meet the
Acceptance Standard.
7.5. Correction.
(a) Upon receiving notice pursuant to Section 7.4 that a System Segment
Portion of the WinStar Fibers do not meet the Acceptance Standards,
Williams shall either:
(i) Expeditiously take such action as reasonably necessary to cause
such System Segment Portion to meet the Acceptance Standards and
then re-test in accordance with the provisions of this Article;
or
(ii) Notify WinStar that Williams disputes WinStar's determination
that the System Segment Portion of the WinStar Fibers do not meet
the Acceptance Standards.
(b) After taking corrective actions and re-testing the WinStar Fibers (if
appropriate), Williams shall provide WinStar with a copy of the new
test results and WinStar shall again have all rights provided in this
Article with respect to such new test results. The cycle described
above of testing, taking corrective action and re-testing shall take
place until the WinStar Fibers meet the Acceptance Standards;
provided, however, repeating this cycle shall not in any manner
whatsoever limit any other right or remedy WinStar may have under this
Agreement.
7.6. Testing by Third Party.
If Williams provides notice to WinStar pursuant to Subsection
7.5(a)(ii), and the parties are unable to otherwise mutually agree,
the parties shall appoint a mutually acceptable fiber optic testing
company and such company shall re-test the applicable System Segment
Portion of the WinStar Fibers. If that test demonstrates that the
tested System Segment Portion of the WinStar Fibers meet the
Acceptance Standards without any changes to such portion by Williams
as tested by WinStar, then WinStar shall pay the testing company's
charges and shall be deemed to have accepted the relevant System
Segment Portion of the WinStar Fibers. If that test demonstrates that
the relevant System Segment Portion of the WinStar Fibers do not meet
the Acceptance Standards or that they do meet the Acceptance Standards
due to changes made by Williams following WinStar's acceptance
testing, then Williams shall pay the testing company's charges for
performing the testing and shall perform the corrective action and
re-testing set forth in Subsection 7.5(a)(i).
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7.7. System Segment Fiber Acceptance Testing and Acceptance Date.
If the Fiber Acceptance Testing for all System Segment Portions of a
System Segment shows that the WinStar Fibers meet the Acceptance
Standards and WinStar does not object to the results of any SSPFAT by
written notice within the time periods specified in Section 7.4,
WinStar shall be deemed to have accepted the particular System
Segment. The date of WinStar's notice accepting the System Segment of
the WinStar Fibers or the date of deemed acceptance under this Article
for the last of all of the System Segment Portions for a System
Segment to be accepted shall be the "Acceptance Date" of the WinStar
Fibers for that System Segment. The provisions of this Section shall
not be deemed to relieve Williams of its obligation to provide Routine
Maintenance or non-Routine Maintenance as set forth in this Agreement.
7.8. Testing of Option Fibers.
Williams shall include the Option Fibers in the SSPFAT of each System
Segment. Upon WinStar's exercise of the Option, Williams shall provide
copies of the results of all SSPFAT of the Option Fibers. The
provisions above shall be applicable to the Option Fibers if WinStar
exercises its Option.
8. USE OF THE SYSTEM
8.1. Use of WinStar Fibers.
WinStar may use the WinStar Fibers for any lawful purpose.
8.2. Notice of Damage.
WinStar shall promptly notify Williams of any matters pertaining to
any damage or impending damage to or loss of System that are actually
known to it and that could reasonably be expected to adversely affect
the System.
8.3. Precautions.
WinStar shall take all reasonable precautions against any damage
proximately caused by WinStar to the System or to fibers used or owned
by Williams or third parties.
8.4. Use of Equipment.
Neither party shall use, or allow others to use, equipment,
technologies, or methods of operation that adversely affect the
Williams Network or the System or the permitted use of the Williams
Network or the System by Williams or third parties or their respective
Fibers, equipment, or facilities associated therewith. If WinStar uses
equipment, technologies, and methods of operation that are
collectively either in accord with Williams' practices or generally
accepted industry standards, Williams shall have the burden of
demonstrating that WinStar has breached the requirements of the
preceding sentence.
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8.5. Liens.
WinStar shall not, directly or indirectly, cause any part of the
System to become subject to any mechanic's lien, materialman's lien,
vendor's lien, or any similar lien whether by operation of law or
otherwise. If WinStar becomes aware that it has breached its
obligations under this Section, it shall promptly: notify Williams in
writing, cause such lien to be discharged and released of record
without cost to Williams and indemnify Williams against all costs and
expenses (including reasonable attorneys' fees and court costs at
trial and on appeal) incurred in discharging and releasing such lien.
9. TERM
9.1. Agreement Term.
The term of this Agreement (the "Term") shall begin on the Effective
Date and shall end upon expiration of the last IRU Term to expire,
provided that, with respect to the Interim IRU, the Term shall extend
twenty-five years from the Effective Date.
9.2. IRU Terms.
The term of this Agreement in respect of each System Segment (the "IRU
Term") shall begin on the applicable Acceptance Date and shall end on
the twenty-fifth (25th) anniversary of such Acceptance Date.
9.3. Effect of Termination.
No termination of this Agreement, an IRU Term, or of the Interim IRU
shall affect the rights or obligations of any party hereto:
(a) With respect to any payment hereunder for services rendered during the
Term; or
(b) Pursuant to Articles 14, 15, 16, 17, 18, 20, 23 and 24.1 entitled
Audit Rights; Indemnification; Limitation of Liability; Insurance;
Taxes and Governmental Fees; Confidentiality; Remedies and Dispute
Resolution; and Rules of Construction, respectively.
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10. OPERATION, MAINTENANCE, AND REPAIR OF THE SYSTEM
10.1. Routine Maintenance.
During the IRU Term, Williams shall perform all required Routine
Maintenance at no additional cost to WinStar. "Routine Maintenance"
means the work specifically identified as Routine Maintenance in
Exhibit I, provided that Routine Maintenance excludes work for which
WinStar is obligated to reimburse Williams for all or a portion of the
Costs incurred pursuant to other Articles of this Agreement (including
the Fiber Collocation Provisions).
10.2. Non-Routine Maintenance.
WinStar shall pay its Pro-Rata Share of Williams' direct Costs of
non-Routine Maintenance of the System, if the Cost of such work
relating to any single event or multiple related events is greater
than five thousand dollars ($5,000.00).
10.3. Subcontractors.
Williams may subcontract provisioning, testing, maintenance, repair,
restoration, relocation, or other operational and technical services
it is obligated to provide hereunder or may have the underlying
facility owner or its contractor perform such obligations. Such
subcontracting shall not relieve Williams of any obligations under
this Agreement.
10.4. Continued Breach of Routine Maintenance Obligations.
Subject to the terms of Section 24.1(l), if, after the Acceptance Date
for any System Segment, Williams is in material breach of its
obligation to provide Routine Maintenance for a period of more than
one hundred twenty (120) consecutive days after WinStar provides
written notice of such breach, WinStar may deduct the following amount
per month, pro-rated for partial months, per each relevant Route mile
from its monthly invoice so long as that material breach continues
beyond such one hundred twenty (120) day period: (i) seventy dollars
($70) per month prior to the eighth anniversary of the relevant
Acceptance Date, (ii) ten dollars ($10) per month from the eighth
anniversary of the relevant Acceptance Date up to but not including
the tenth anniversary of the relevant Acceptance Date, and (iii) five
dollars ($5) per month thereafter.
10.5. WinStar Equipment.
Williams' maintenance and repair obligations under this Agreement
shall not include maintenance, repair or replacement of WinStar
Equipment.
10.6 Access to Systems.
WinStar shall not access any physical part of any System Segment
(other than pursuant to the Fiber Collocation Provisions) without the
prior written consent of Williams, and then only upon the terms and
conditions specified by Williams.
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11. RELOCATION
11.1. Relocation.
If, following the Acceptance Date for any System Segment, Williams
determines for bona fide operational reasons, or is required by a
third party acting pursuant to condemnation or similar authority or by
a governmental entity, to relocate all or any portion of such System
Segment or any of the facilities used or required in providing WinStar
with the WinStar IRU, Williams shall, to the extent practicable,
provide WinStar sixty (60) days' prior notice of any such relocation
and shall proceed with such relocation. Williams shall have the right
to direct such relocation, including the right to determine the extent
of, the timing of, and methods to be used for such relocation,
provided that any such relocation:
(a) Shall be constructed and tested in accordance with the
specifications and requirements set forth in this Agreement and
applicable Exhibits;
(b) Shall not result in a materially adverse change to the
operations, performance, Connecting Points with the network of
WinStar, or end points of the System Segment; and
(c) Shall not unreasonably interrupt service on the System Segment.
For purposes of this Section, a Williams' relocation shall be for bona
fide operational reasons if it is undertaken in good faith (i) to
settle or avoid a bona fide threatened or filed condemnation action or
order by a governmental authority to relocate, (ii) to reduce the
likelihood of physical damage to the System, (iii) as the result of a
Force Majeure Event, or (iv) for other operational reasons to which
WinStar has consented, provided that WinStar shall not unreasonably
withhold such consent. Williams shall use reasonable efforts to
contest any exercise of condemnation authority that would require a
relocation that would require WinStar to reimburse Williams pursuant
to this Article 11.
11.2. Cost of Relocation.
Unless such relocation is necessitated by a breach of Williams'
obligations under this Agreement, any Costs Williams incurs shall not
be Routine Maintenance Costs, and WinStar shall reimburse Williams for
the Costs incurred in the same manner and to the same extent as is set
forth for reimbursement of non-Routine Maintenance Costs in Section
10.2.
11.3. Updated As-Built Drawings.
At WinStar's written request, Williams shall deliver to WinStar
updated as-built drawings with respect to a relocated portion of the
System Segment within the later of one-hundred eighty (180) days
following the completion of such relocation or thirty (30) days after
receipt of WinStar's request.
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12. INVOICING AND PAYMENT
12.1. Due Date and Invoice.
(a) Payments of the Contract Price and Exercise Price shall be made
in accordance with the Payment Terms.
(b) All amounts stated on each monthly invoice are due and payable
thirty (30) days from WinStar's receipt of the invoice ("Due
Date"). WinStar agrees to remit payment to Williams at the
remittance address set forth in the applicable invoice.
12.2. Form of Payment.
WinStar shall pay the Contract Price and Exercise Price by wire
transfer of immediately available funds to the United States account
or accounts designated by Williams. All other payments to be made
pursuant to this Agreement may be made by check or draft of
immediately available funds delivered to the address designated in
writing by the other party (e.g., in a statement or invoice) or,
failing such designation, to the address for notice to such other
party provided pursuant to Article 19.
12.3. Disputed Charges.
(a) WinStar shall pay undisputed charges when such payments are due
under this Agreement. WinStar may withhold payment of particular
charges that WinStar disputes in good faith and for which it
promptly gives written notice to Williams, stating the details of
such dispute. The parties shall promptly refer such matter to
dispute resolution in accordance with Section 23. If WinStar
withholds any disputed charges and such charges are ultimately
determined to be proper and payable to Williams, WinStar shall
pay such charges to Williams plus interest at the Prime Rate from
the date such charges were originally due until the date such
charges are paid. No payment dispute shall be grounds for
Williams to withhold or diminish the quality or quantity of any
of the connectivity and services provided hereunder.
(b) If WinStar fails to pay undisputed charges provided for under
this Agreement when such charges are due, Williams may, in
addition to any other remedies that it may have under this
Agreement or by law, terminate this Agreement only as it applies
to the System Segment(s) or Telecommunications Services to which
such failure applies, upon at least thirty (30) days' notice, if
such payment (together with applicable interest) is not made
within such thirty (30) day notice period subject to WinStar's
thirty-day right to cure, provided however, that this remedy of
termination shall be available to Williams only with respect to
System Segments for which the unpaid amount exceeds two hundred
thousand dollars ($200,000) at the time of such notice.
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12.4. Late Interest.
If either Williams or WinStar fails to make any payment under this
Agreement when due, such amounts shall accrue interest, from the date
such payment is due until paid, including accrued interest, at the
Prime Rate.
12.5. Adjustments.
Williams may make corrections to its invoices to reflect undercharges
only for the period of two (2) years following the Due Date of each
invoice, or two (2) years following the date the corresponding service
is rendered, whichever is later.
13. DISCLAIMER OF WARRANTIES
13.1. Parties.
EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE PARTIES MAKE
NO WARRANTY TO EACH OTHER OR ANY OTHER ENTITY, WHETHER EXPRESS,
IMPLIED OR STATUTORY, AS TO THE MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OF ANY FIBERS, THE SYSTEM, THE TELECOMMUNICATIONS
SERVICES, ANY OTHER SERVICES OR ANY ADDITIONAL SERVICES PROVIDED
HEREUNDER OR DESCRIBED HEREIN, OR AS TO ANY OTHER MATTER, ALL OF WHICH
WARRANTIES ARE HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED.
13.2. Facility Owners/Lenders.
NO FACILITY OWNERS/LENDERS HAVE MADE ANY REPRESENTATION OR WARRANTY OF
ANY KIND, EXPRESS OR IMPLIED, TO WINSTAR CONCERNING WILLIAMS, THE
WINSTAR FIBERS, THE CABLE, OR THE SYSTEM OR AS TO ANY OF THE MATTERS
SET FORTH IN SECTIONS 12.1 OR 24.2(a).
14. AUDIT RIGHTS
Each party shall keep such books and records (which shall be maintained on
a consistent basis and substantially in accordance with generally accepted
accounting principles) as shall readily disclose the basis for any charges
(except charges fixed in advance by this Agreement or by separate written
agreement of the parties) or credits, ordinary or extraordinary, billed or
due to the other party under this Agreement and shall make them available,
upon reasonable notice and during normal working hours, for examination,
audit, and reproduction by the other party and its agents for a period of
one (1) year after such charge or credit is billed or due.
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15. INDEMNIFICATION
15.1. Indemnification.
Each party ("Indemnitor") shall indemnify, defend, protect, and hold
harmless the other party, its employees, members, managers, officers,
agents, contractors, Facility Owners/Lenders, and Affiliates
(collectively and individually, "Claimant"), from and against any and
all Losses resulting or arising from, relating to or incurred in
connection with:
(a) The Indemnitor's failure to observe or perform its duties or
obligations to third parties (e.g., duties or obligations to its
customers);
(b) The Indemnitor's infringement or misappropriation of Intellectual
Property Rights of any third party;
(c) The death or bodily injury of any agent, employee, customer,
business invitee or any other person to the extent caused by the
tortious conduct of the Indemnitor;
(d) The damage, loss or destruction of any real or tangible personal
property to the extent caused by the tortious conduct of the
Indemnitor;
(e) Fines, penalties or other amounts payable due to the Indemnitor's
violation of applicable laws or regulation; and
(f) Any claim, demand, charge, action, cause of action, or other
proceeding asserted against the Claimant but resulting from an
act or omission of the Indemnitor in its capacity as an employer
of a person.
15.2. Third Party Claims.
With respect to third-party claims, the following procedures shall
apply:
(a) Promptly after receipt of notice of the commencement or
threatened commencement of any civil, criminal, administrative,
or investigative action or proceeding involving a claim in
respect of which the Claimant will seek indemnification pursuant
to this Article 15, the Claimant will notify the Indemnitor of
such claim in writing. No failure to so notify the Indemnitor
will relieve the Indemnitor of its obligations under this
Agreement except to the extent that its ability to defend such
claim is materially prejudiced by such failure. Within fifteen
(15) calendar days following receipt of written notice from the
Claimant relating to any claim, but no later than ten (10)
calendar days before the date on which any response to a
complaint or summons is due, the Indemnitor will notify the
Claimant in writing if the Indemnitor elects to assume control of
the defense and settlement of that claim (a "Notice of
Election").
(b) If the Indemnitor delivers a Notice of Election relating to any
claim within the required notice period, the Indemnitor shall be
entitled to have sole control over the defense and settlement of
such claim; provided that (i) the Claimant shall be entitled to
observe the defense of such claim and to employ counsel at its
own expense to observe the defense of such claim, and (ii) the
Indemnitor shall obtain the prior written approval, not to be
unreasonably withheld or delayed, of the Claimant before ceasing
to defend against such claim or entering into any settlement of
such claim. After the Indemnitor has delivered a Notice of
Election relating to any claim in accordance with the preceding
paragraph, the Indemnitor shall not be liable to the Claimant for
any legal expenses incurred by the Claimant in connection with
the defense of that claim. In addition, the Indemnitor shall not
be required to indemnify the Claimant for any amount paid or
payable by the Claimant in the settlement of any claim for which
the Indemnitor has delivered a timely Notice of Election if such
amount was agreed to without the written consent of the
Indemnitor.
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(c) If the Indemnitor does not deliver a Notice of Election relating
to any claim within the required notice period or after
delivering a Notice of Election fails to defend the claim, the
Claimant shall have the right to defend the claim in such manner
as it may deem appropriate. The Indemnitor shall promptly
reimburse the Claimant for all reasonable costs and expenses of
such defense.
15.3. Indemnification of Providers.
WinStar shall indemnify and hold harmless Williams and any Third Party
Service Providers from and against all Losses arising out of or
relating to the content of any transmission by WinStar, including
claims relating to any violation or alleged violation of export
control laws or other laws or failure to comply with WinStar's
obligations as set forth in Sections 26.4 and 26.5.
15.4. WinStar Customers.
WinStar shall indemnify and hold Williams harmless from and against
all Losses arising out of or relating to the use of the WinStar Fibers
by any WinStar customer.
16. LIMITATION OF LIABILITY
16.1. General Intent.
Subject to the specific provisions of this Article 16, it is the
intent of the Parties that each party shall be liable to the other
party for any actual damages incurred by the non-breaching party as a
result of the breaching party's failure to perform its obligations in
the manner required by this Agreement.
16.2. Liability Restrictions.
(a) IN NO EVENT, WHETHER IN CONTRACT OR IN TORT (INCLUDING BREACH OF
WARRANTY, NEGLIGENCE AND STRICT LIABILITY IN TORT), SHALL A PARTY
BE LIABLE FOR INDIRECT OR CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR
SPECIAL DAMAGES EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
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(b) Subject to Subsection (c), below, each party's total liability to
the other, whether in contract or in tort (including breach of
warranty, negligence and strict liability in tort) shall be
limited to two hundred million dollars ($200,000,000).
(c) The limitation set forth in Subsections (b), above, shall not
apply with respect to: (i) third-party claims subject to
indemnification pursuant to the Agreement; (ii) fees due and
owing under this Agreement at the time of the claim; and (iii)
amounts subject of Cover as provided in Section 4.2(b).
(d) For the purposes of this Section 16.2, all amounts payable or
paid to third parties in connection with claims that are eligible
for indemnification pursuant to this Agreement shall be deemed
direct damages.
16.3. Released Parties.
Neither party shall have any recourse of any kind against any Released
Party or any assets of a Released Party in respect of any Claim that
is not directly or indirectly caused by the Released Party, it being
expressly agreed and understood that no liability whatsoever shall
attach to or be incurred by any Released Party in respect of any Claim
under or by reason of this Agreement or any other instrument,
arrangement or understanding relating to the Network IRU, the System,
the Interim IRU, the Telecommunications Services, the Other Services
or Additional Services, except to the extent such Claim is directly or
indirectly caused by the Released Party. Each party waives all such
recourse to the extent set forth in this Section on behalf of its
successors, assigns, and any entity claiming by, through, or under
such party.
17. INSURANCE
17.1. Insurance.
During the Term, the parties shall each obtain and maintain not less
than the following insurance:
(a) Commercial General Liability Insurance, including coverage for
sudden and accidental pollution legal liability, with a combined
single limit of $10,000,000 for bodily injury and property damage
per occurrence and in the aggregate.
(b) Worker's Compensation Insurance in amounts required by applicable
law and Employers Liability Insurance with limits not less than
$1,000,000 each accident. If work is to be performed in Nevada,
North Dakota, Ohio, Washington, Wyoming or West Virginia, the
party shall participate in the appropriate state fund(s) to cover
all eligible employees and provide a stop gap endorsement.
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(c) Automobile Liability Insurance with a combined single limit of
$2,000,000 for bodily injury and property damage per occurrence,
to include coverage for all owned, non-owned, and hired vehicles.
The limits set forth above are minimum limits and shall not be construed to
limit the liability of either party.
17.2. Documentation.
(a) Each party shall obtain and maintain the insurance policies
required above with companies rated A- or better by Best's Key
Rating Guide or with a similar rating by another generally
recognized rating agency. The other party, its Affiliates,
officers, directors, and employees, and any other party entitled
to indemnification hereunder shall be named as additional
insureds to the extent of such indemnification. Each party shall
provide the other party with an insurance certificate confirming
compliance with the insurance requirements of this Article. The
insurance certificate shall indicate that the other party shall
be notified not less than thirty (30) days prior to any
cancellation or material change in coverage.
(b) If either party provides any of the foregoing coverages through a
claims made policy basis, that party shall cause such policy or
policies to be maintained for at least three (3) years beyond the
expiration of this Agreement.
17.3. Certificates.
The parties shall each obtain from the insurance companies providing
the coverages required by this Agreement a waiver of all rights of
subrogation or recovery in favor of the other party and, as
applicable, its members, managers, shareholders, Affiliates,
assignees, officers, directors, and employees or any other party
entitled to indemnity under this Agreement to the extent of such
indemnity.
17.4. Blanket Policies.
Nothing in this Agreement shall be construed to prevent either party
from satisfying its insurance obligations pursuant to this Agreement
under a blanket policy or policies of insurance that meet or exceed
the requirements of this Article.
18. TAXES AND GOVERNMENTAL FEES
18.1. Payment by WinStar.
WinStar shall timely report and pay any and all sales, use, income,
gross receipts, excise, transfer, ad valorem, or other taxes, and any
and all franchise fees or similar fees, if any, assessed against it
due to its ownership of the Network IRU, its use of the WinStar
Fibers, including the provision of services over the WinStar Fibers,
its use of any other part of the System, or its ownership or use of
facilities connected to the WinStar Fibers.
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18.2. Payment by Williams.
Subject to Section 18.1 above, Williams shall timely report and pay
any and all sales, use, income, gross receipts, excise, transfer, ad
valorem or other taxes, and any and all franchise fees or similar fees
assessed against it due to its construction, ownership or use of the
System, provided that WinStar shall reimburse Williams for its
Pro-Rata Share of property taxes (including ad valorem, use, property,
or similar taxes, franchise fees, or assessments that are based on the
value of property or of a property right) attributable to the System,
including taxes based on the value, operation, or existence of the
System.
18.3. Reimbursement.
If Williams is assessed for any taxes or fees (a) related to WinStar's
ownership of the Network IRU, WinStar's use of or rights in the
WinStar Fibers, or (b) that WinStar is obligated to pay pursuant to
Sections 18.1 or 18.2, WinStar shall reimburse Williams for any
payment of such taxes or fees within thirty (30) days of receipt of
Williams' invoice.
18.4. Cooperation.
The parties shall cooperate in any contest of any taxes or fees so as
to avoid, to the extent reasonably possible, prejudicing the interests
of the other party.
18.5. Services.
If any sales taxes, valued added taxes or similar charges or
impositions are assessed against Williams after, or as a result of,
WinStar's use of Telecommunications Services, any Other Services or
the Additional Services by any local, state, national, international,
public or quasi-public governmental entity or foreign government or
its political subdivision, including any tax or charge levied to
support the Universal Service Fund contemplated by the
Telecommunications Act of 1996, WinStar shall be solely responsible
for and shall pay such taxes, charges or impositions and hold Williams
harmless from any liability or expense associated with such taxes,
charges or impositions.
19. NOTICE
Unless otherwise provided in this Agreement, all notices and communications
concerning this Agreement shall be in writing and addressed to the other
party as follows, or at such other address as may be designated in writing
to the other party:
If to WinStar: If to Williams:
WinStar Wireless, Inc. Williams Communications, Inc.
230 Park Avenue One Williams Center, Suite 26-5
New York, NY 10169 Tulsa, Oklahoma 74172
Attn: EVP, General Counsel Attn: Contract Administration
Facsimile: 212/922-1637 Facsimile: 918/573-6578
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With a copy to: With a copy to:
WinStar Wireless, Inc. Williams Communications, Inc.
7799 Leesburg Pike One Williams Center, Suite 4100
Falls Church, Virginia 22043 Tulsa, Oklahoma 74172
Attn: VP, Commercial and Attn: General Counsel
Legal Operations
Facsimile: 703/288-6647 Facsimile: 918/573-3005
Unless otherwise provided herein, notices shall be hand delivered,
sent by registered or certified U.S. Mail, postage prepaid, or by
commercial overnight delivery service, or transmitted by facsimile,
and shall be deemed served or delivered to the addressee or its office
when received at the address for notice specified above when hand
delivered, upon confirmation of sending when sent by facsimile, on the
day after being sent when sent by overnight delivery service, three
(3) days after deposit in the mail when sent by U.S. mail or, in the
case of invoices, upon the Due Date (as defined in the
Telecommunications Services Purchase Provision).
20. CONFIDENTIALITY
20.1. Confidential Information.
Williams and WinStar each acknowledge that they may be furnished with,
receive, or otherwise have access to information of or concerning the
other party that such party considers to be confidential, proprietary,
a trade secret or otherwise restricted. As used in this Agreement and
subject to Section 20.3, "Confidential Information" means all
information, in any form, furnished or made available directly or
indirectly by one party (the "Disclosing Party") to the other (the
"Receiving Party") that (i) concerns the operations, facilities,
plans, affairs and businesses of the Disclosing Party, the financial
affairs of the Disclosing Party, and the relations of the Disclosing
Party with its customers, employees and service providers, or (ii) is
marked confidential, restricted, proprietary, or with a similar
designation. The terms and conditions of this Agreement shall be
deemed Confidential Information, but may be disclosed as provided
below and Section 24.6.
20.2. Obligations.
(a) Each party's Confidential Information shall remain the property
of that party except as expressly provided otherwise by the other
provisions of this Agreement. Each party shall each use at least
the same degree of care, but in any event no less than a
reasonable degree of care, to prevent unauthorized disclosure of
Confidential Information as it employs to avoid unauthorized
disclosure of its own information of a similar nature. Except as
otherwise permitted hereunder, the parties may disclose such
information (A) to their respective directors, officers,
managers, employees, agents, contractors and consultants
(collectively, "Representatives") and (B) entities performing
services required hereunder only where: (i) use of such entity is
authorized under this Agreement, (ii) such disclosure is
necessary or otherwise naturally occurs in that entity's scope of
responsibility, and (iii) the entity agrees in writing to assume
the obligations described in this Section 20.2. Any disclosure to
such entity shall be under substantially the same confidentiality
terms and conditions as provided herein.
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(b) Each party shall take reasonable steps to ensure that its (and
its Affiliates') Representatives comply with this Section 20.2.
In the event of any disclosure or loss of, or inability to
account for, any Confidential Information of the Disclosing
Party, the Receiving Party shall promptly, at its own expense:
(i) notify the Disclosing Party in writing; (ii) take such
actions as may be necessary and cooperate in all reasonable
respects with the Disclosing Party to minimize the violation and
any damage resulting therefrom.
(c) Either party may disclose the terms and conditions of this
Agreement to any third party that (i) has expressed a bona fide
interest in consummating a significant financing, merger or
acquisition transaction or other corporate transaction between
the third party and such party, (ii) has a reasonable ability
(financial or otherwise) to consummate such transaction, and
(iii) has executed a nondisclosure agreement that includes within
its scope the terms and conditions of this Agreement and also
includes a procedure to limit the extent of copying and
distribution thereof. Each party shall endeavor to delay the
disclosure of the terms and conditions of this Agreement until
the status of discussions concerning such transaction warrants
such disclosure. In addition, either party (or either party's
Affiliates) may disclose the terms and conditions of this
Agreement as such party deems appropriate to prepare for IPOs or
major corporate transactions. Any disclosure to such entity shall
be substantially under the same confidentiality terms and
conditions as provided herein.
20.3. Exclusions.
"Confidential Information" shall exclude any particular information
that the Receiving Party can demonstrate:
(a) At the time of disclosure, was in the public domain or in the
rightful possession of the Receiving Party;
(b) After disclosure, is published or otherwise becomes part of the
public domain through no fault of the Receiving Party;
(c) Was received after disclosure from a third party who had a lawful
right to disclose such information to the Receiving Party without
any obligation to restrict its further use or disclosure;
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(d) Was independently developed by the Receiving Party without
reference to Confidential Information of the Disclosing Party; or
(e) Was required to be disclosed to satisfy a legal requirement of a
competent government body; provided that, immediately upon
receiving such request and to the extent that it may legally do
so, the Receiving Party advises the Disclosing Party promptly and
prior to making such disclosure in order that the Disclosing
Party may interpose an objection to such disclosure, take action
to assure confidential handling of the Confidential Information,
or take such other action as it deems appropriate to protect the
Confidential Information.
20.4. No Implied Rights.
Nothing contained in this Section shall be construed as obligating a
party to disclose its Confidential Information to the other party, or
as granting to or conferring on a party, expressly or impliedly, any
rights or license to the Confidential Information of the other party.
20.5 Communication With FCC.
Communications by either party with the FCC regarding the subject
matter of this Agreement shall require the other's prior written
approval.
21 . DEFAULT
A party shall not be in material breach of this Agreement unless and until
the other party provides it written notice of default and the
non-performing party has failed to cure within thirty (30) days after
receipt of such notice. Any event of default may be waived in writing at
the non-defaulting party's option. Upon the failure of a party to timely
cure its material breach hereunder within the applicable cure period, the
non-defaulting party shall have the right to (i) terminate this Agreement
or (ii) subject to the terms of Article 23, pursue any legal remedies it
may have under applicable law or principles of equity relating to such
breach.
22. FORCE MAJEURE
22.1. Excusable Delay.
Neither Williams nor WinStar shall be in default under this Agreement
as a result of any delay in its performance (other than a failure to
make payments when due) caused by any elements of nature or acts of
God, fire, explosion, vandalism, power outage, earthquake, flood or
lightning; any civil or military authority; by national emergency,
insurrection, rebellion, revolution, riot, civil disorders, war or act
of terrorism; by cable cuts; or any other cause beyond the reasonable
control of such party (collectively, "Force Majeure Events");
provided, however, that (i) the non-performing party is without fault
in causing such default or delay, and (ii) such default or delay could
not have been prevented by reasonable precautions and cannot
reasonably be circumvented by the non-performing party through the use
of alternate sources (e.g., other suppliers of telecommunications
services or capacity), workaround plans or other means, including
means contemplated by applicable disaster recovery processes or
procedures).
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22.2. Notice and Remedy.
In such event the non-performing party shall be excused from further
performance or observance of the obligation(s) so affected for as long
as such circumstances prevail and such party continues to use
commercially reasonable efforts to recommence performance or
observance whenever and to whatever extent possible without delay. The
non-performing party shall immediately notify the other party by
telephone (to be confirmed in writing within two (2) business days of
the inception of such delay) and describe at a reasonable level of
detail the Force Majeure Event causing such delay and the expected
duration of the Force Majeure Event. The non-performing party will
provide the other party prompt written notice of the cessation or
termination of the Force Majeure Event.
23. REMEDIES AND DISPUTE RESOLUTION
23.1. Dispute Resolution.
Any dispute between the Parties arising out of or relating to this
Agreement, the interpretation of any provision hereof or the
performance or failure to perform of Williams or WinStar shall be
resolved as provided in this Article 23.
23.2. Cumulative Remedies.
Except as otherwise expressly provided herein, all remedies provided
for in this Agreement shall be cumulative and in addition to and not
in lieu of any other remedies available to either party at law, in
equity or otherwise.
23.3. Informal Dispute Resolution.
(a) Prior to the initiation of formal dispute resolution procedures
(i.e., arbitration), the parties shall first attempt to resolve
their dispute at the senior manager level. If that level of
dispute resolution is not successful, the parties shall proceed
informally, as follows:
(i) Upon the written request of either party, each party shall
appoint a designated representative who does not otherwise
devote substantially full time to performance under this
Agreement, whose task it will be to meet for the purpose of
endeavoring to resolve such dispute.
(ii) The designated representatives shall meet as often as the
parties reasonably deem necessary in order to gather and
furnish to the other all information with respect to the
matter in issue that the parties believe to be appropriate
and germane in connection with its resolution. The
representatives shall discuss the problem and attempt to
resolve the dispute without the necessity of any formal
proceeding.
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(iii)During the course of discussion, all reasonable requests
made by one party to another for non-privileged
non-confidential information reasonably related to this
Agreement shall be honored so that each of the parties may
be fully advised of the other's position.
(iv) The specific format for the discussions shall be left to the
discretion of the designated representatives.
(b) Prior to instituting formal proceedings, the parties will first
have their chief executive officers meet to discuss the dispute.
This requirement shall not delay the institution of formal
proceedings past any statute of limitations expiration or for
more than fifteen (15) days.
(c) Subject to Subsection (b), formal proceedings for the resolution
of a dispute may not be commenced until the earlier of:
(i) The designated representatives concluding in good faith that
amicable resolution through continued negotiation of the
matter does not appear likely; or
(ii) Thirty (30) days after the initial written request to
appoint a designated representative pursuant to Subsection
(a), above, (this period shall be deemed to run
notwithstanding any claim that the process described in this
Section 23.3 was not followed or completed).
(d) This Section 23.3 shall not be construed to prevent a party from
instituting, and a party is authorized to institute, formal
proceedings earlier to avoid the expiration of any applicable
limitations period, or to preserve a superior position with
respect to other creditors or as provided in Section 23.6.
23.4. Arbitration.
If the Parties are unable to resolve a dispute as contemplated by
Section 23.3, then except as provided by Section 23.6, such dispute
shall be submitted to mandatory and binding arbitration at the
election of either WinStar or Williams (the "Disputing Party")
pursuant to the following conditions:
(a) The Disputing Party shall notify the American Arbitration
Association ("AAA") and the other party, describing in reasonable
detail the nature of the dispute (the "Dispute Notice"); and
shall request that the AAA furnish a list of five (5) possible
arbitrators who have substantial experience in the
telecommunications industry. Each party shall have fifteen (15)
days to reject two (2) of the proposed arbitrators. If only one
individual has not been so rejected, that person shall serve as
arbitrator; if two (2) or more individuals have not been so
rejected, the AAA shall select the arbitrator from those
individuals.
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(b) The arbitration shall take place in Chicago, Illinois, in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association in effect on the date that such notice is
provided. The arbitration shall be commenced promptly and
conducted expeditiously. The parties shall be entitled to submit
expert testimony and/or written documentation on such arbitration
proceeding. The decision of the arbitrator shall be final and
binding upon Williams and WinStar and shall include written
findings of law and fact, and judgment may be obtained thereon by
either Williams or WinStar in a court of competent jurisdiction.
Williams and WinStar shall each bear the cost of preparing and
presenting its own case. The cost of the arbitration, including
the fees and expenses of the arbitrator, shall be shared equally
by Williams and WinStar unless the award otherwise provides. The
arbitrator shall be instructed to establish procedures such that
a decision can be rendered within sixty (60) days of the
appointment of the arbitrator.
(c) The obligation to arbitrate shall not be binding upon any party
with respect to requests for preliminary injunctions, temporary
restraining orders, specific performance, or other procedures in
a court of competent jurisdiction to obtain interim relief when
deemed necessary by such court to preserve the status quo or
prevent irreparable injury pending resolution by arbitration of
the actual dispute.
(d) Any arbitrator appointed to act under this Article must agree to
be bound by the provisions of this Agreement and any information
obtained during the course of the arbitration proceedings. In
particular, the arbitrator shall not have the authority to
exclude the right of a Party to terminate this Agreement when a
Party would otherwise have such right. The arbitration hearing
shall be commenced promptly and conducted expeditiously.
(e) Should the arbitrator refuse or be unable to proceed with
arbitration proceedings as called for by this Section, such
arbitrator shall be replaced and a rehearing shall take place in
accordance with the provisions of this Section. In such case, the
replacement for the arbitrator shall be either selected by the
AAA from the original group of potential arbitrators that were
not rejected by the parties or, if there are no such arbitrators
available, selected by repeating the process of selection
described in 23.4(a).
(f) The arbitrator is instructed that time is of the essence in the
arbitration proceeding, and that the arbitrator shall have the
right and authority to issue monetary sanctions against either of
the parties if, upon a showing of good cause, that party is
unreasonably delaying the proceeding. Recognizing the express
desire of the parties for an expeditious means of dispute
resolution, the arbitrator shall limit or allow the parties to
expand the scope of discovery as may be reasonable under the
circumstances.
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23.5. Continued Performance.
Each party agrees to continue performing its obligations under this
Agreement while any dispute is being resolved except to the extent the
issue in dispute precludes performance.
23.6. Immediate Injunctive Relief.
The only circumstance in which disputes between the parties shall not
be subject to the provisions of Section 23.3 and 23.4 is where a
party, in good faith, determines that a temporary restraining order or
other injunctive relief is its only appropriate and adequate remedy.
If a party seeks immediate injunctive relief and does not prevail in
substantial part, that party shall pay the other party's costs and
attorneys' fees to the extent incurred in responding to or challenging
the request for immediate injunctive relief.
24. GENERAL
24.1. Rules of Construction.
(a) The captions or headings in this Agreement are strictly for
convenience and shall not be considered in interpreting this
Agreement or as amplifying or limiting any of its content. Words
in this Agreement that import the singular connotation shall be
interpreted as plural, and words that import the plural
connotation shall be interpreted as singular, as the identity of
the parties or objects referred to may require. References to
"person" or "entity" each include natural persons and legal
entities, including corporations, limited liability companies,
partnerships, sole proprietorships, business divisions,
unincorporated associations, governmental entities, and any
entities entitled to bring an action in, or that are subject to
suit in an action before, any state or federal court of the
United States.
(b) Unless expressly defined herein, words having well-known
technical or trade meanings shall be so construed.
(c) Except as set forth to the contrary herein, any right or remedy
of Williams or WinStar shall be cumulative and without prejudice
to any other right or remedy, whether contained herein or not.
(d) Nothing in this Agreement is intended to provide any legal rights
to anyone not an executing party of this Agreement except under
the indemnification and insurance provisions and except that (i)
the Released Parties shall have the benefit of Sections 16.3,
24.2(a) and 24.5(a) and (ii) the Facility Owners/Lenders shall be
entitled to rely on and have the benefit of Sections 13.2 and
24.5(b).
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(e) This Agreement has been fully negotiated between Williams and
WinStar.
(f) In the event of a conflict between the provisions of this
Agreement and those of any Exhibit, the provisions of this
Agreement shall prevail and such Exhibit shall be corrected
accordingly, provided that the provisions of Exhibit K shall
prevail over conflicting provisions in the Agreement or in any
Exhibit. Notwithstanding the above, terms defined in Section 7 of
Exhibit K shall not supersede terms defined in the Agreement or
in other Exhibits except as used in Exhibit K.
(g) Except as otherwise set forth herein, for the purpose of this
Agreement the normal standards of performance within the
telecommunications industry in the relevant market shall be the
measure of whether a party's performance is reasonable and
timely.
(h) Except as the context otherwise indicates, all references to
Exhibits, Articles, Sections, Subsections, Clauses, and
Paragraphs refer to provisions of this Agreement.
(i) The failure of either Williams or WinStar to enforce any of the
provisions of this Agreement, or the waiver thereof in any
instance, shall not be construed as a general waiver or
relinquishment on its part of any such provision, but the same
shall nevertheless be and remain in full force and effect.
(j) This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of New York without reference
to its choice of law principles. All disputes referred to
arbitration and the statute of limitations and the remedies for
any wrongs that may be found shall be governed by the laws of
such state. If a proceeding is brought for the enforcement of
this Agreement or because of any alleged or actual dispute,
breach, default or misrepresentation in connection with any of
the provisions of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs
and expenses incurred in such action or proceeding in addition to
any other relief to which such party may be entitled.
(k) If any term, covenant or condition in this Agreement shall, to
any extent, be invalid or unenforceable in any respect under the
laws governing this Agreement, the remainder of this Agreement
shall not be affected thereby, and each term, covenant or
condition of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
(l) The parties acknowledge and agree that: (i) the payment
deductions ("Payment Deductions") set forth in Sections 5.2(g),
6.1(c) and 10.4 (collectively, the "Deduction Sections") shall
not limit Williams' liability or serve as a sole or exclusive
remedy for Williams' default under any portion of this Agreement;
(ii) WinStar may seek any other rights or remedies it may have
against Williams for any default hereunder; (iii) none of the
Deduction Sections modify or otherwise limit any other term or
condition of this Agreement; (iv) the one hundred and twenty
(120) day periods specified in the Deduction Sections shall only
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be applicable with respect to the Deduction Sections and such
periods shall in no manner whatsoever be construed or interpreted
to extend Williams' cure periods or other timing of any other
obligation set forth in any other provision of this Agreement;
and (v) WinStar's compliance with the Deduction Sections shall
not constitute a breach of the Payment Terms. Williams hereby
waives any rights it may have to use the Deduction Sections as a
claim or defense against any other provision in this Agreement.
24.2. Assignment.
(a) Except to the extent permitted by Section 24.2(d), neither party
may, or shall have the power to, assign this Agreement or
delegate such party's obligations hereunder without the prior
written consent of the other except to:
(i) An entity that acquires all or substantially all of the
assets of such party,
(ii) Any Affiliate,
(iii) A successor in a merger or acquisition of such party, or
(iv) In connection with any financing.
(b) Notwithstanding the foregoing, no assignment or other transfer of
this Agreement shall be effective without the written agreement
of the assignee to be bound by the terms and conditions of this
Agreement including the indemnification provisions and
limitations on liability and recourse set forth in this Agreement
(including those benefiting the Released Parties).
(c) Except with respect to the assignment of less than all of a
party's rights or obligations under this Agreement and except as
set forth in Section 24.2(e), the non-assigning party shall not
unreasonably withhold its consent to an assignment if neither the
assigning party nor the proposed assignee is in material default
under this Agreement or any other agreement with the
non-assigning party.
(d) The provisions of Section 24.2(a) notwithstanding, Williams may
assign some or all of its rights and obligations hereunder to
State Street Bank and Trust Company of Connecticut, National
Association, in connection with a financing by Williams of
construction of its fiber optic network; in addition, State
Street Bank and Trust Company of Connecticut, National
Association, may further assign this Agreement as collateral for
such financing. If Williams makes an assignment pursuant to this
Subsection 24.2(d), Williams (or its assignee pursuant to an
assignment made under the other provisions of this Section 24.2)
shall guarantee performance of the assignee's obligations.
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(e) Except in connection with an assignment of this Agreement as
provided herein, until the third (3rd) anniversary of the
Acceptance Date of any System Segment, WinStar shall not sell the
dark fiber, raw frequency (commonly known as "windows") but may
place optronics in such System Segment and resell capacity in any
increment. After such three (3) year period, WinStar may convey
such an interest provided that WinStar shall serve as the sole
point of contact with Williams and no party receiving such
interest shall have any contract rights against or be in privity
of contract with Williams as a result of such conveyance.
(f) This Agreement and the rights and obligations under this
Agreement (including the limitations on liability and recourse
set forth in this Agreement benefiting the other party and the
Released Parties) shall be binding upon and shall inure to the
benefit of Williams and WinStar and their respective permitted
successors and assigns.
(g) Neither the provisions of this Article nor any other provisions
of this Agreement shall limit the ability of any Facility
Owners/Lenders or of any Released Parties to assign their rights
under this Agreement and such Facility Owners/Lenders and
Released Parties may assign their rights hereunder at any time
and from time to time without the consent of, notice to, or any
other action by any other entity. The provisions of this
Agreement benefiting the Facility Owners/Lenders and Released
Parties shall inure to the benefit of such entities and their
respective Affiliates, successors, and assigns.
(h) Notwithstanding any presumptions under applicable state law that
a change in control of a party constitutes an assignment of an
agreement, a change in control of a party, not made for purposes
of circumventing restrictions on assignment or of depriving the
other party of rights under this Agreement, shall not be deemed
an assignment for purposes of this Agreement.
24.3. Relationship of the Parties.
The relationship between Williams and WinStar shall not be that of
partners, agents, or joint venturers for one another, and nothing
contained in this Agreement shall be deemed to constitute a
partnership or agency agreement between them for any purposes,
including federal income tax purposes. Williams and WinStar, in
performing any of their obligations hereunder, shall be independent
contractors or independent parties and shall discharge their
contractual obligations at their own risk.
24.4. Prohibition on Improper Payments.
Neither party shall use any funds received under this Agreement for
illegal or otherwise "improper" purposes. Neither party shall pay any
commission, fees or rebates to any employee of the other party. If
either party has reasonable cause to believe that one of the
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provisions in this Article has been violated, it, or its
representative, may audit the books and records of the other party for
the sole purpose of establishing compliance with such provisions.
24.5. Entire Agreement; Amendment; Execution.
(a) This Agreement constitutes the entire and final agreement and
understanding between Williams and WinStar with respect to the
subject matter hereof and supersedes all prior agreements (oral
or written) relating to the subject matter hereof, which are of
no further force or effect (including, in particular, the
Customer Services Agreement between Williams and WinStar GoodNet,
dated July 16, 1998, Contract Number 98R0675.00, provided that
any undisputed payment obligations accruing prior to the
Effective Date, shall be due and owing under the terms of this
Agreement). The Exhibits referred to herein are integral parts
hereof and are made a part of this Agreement by reference.
(b) This Agreement may only be amended, modified, or supplemented by
an instrument in a single writing executed by duly authorized
representatives of Williams and WinStar. No such amendment,
modification, or supplement shall result in any modification of
(i) any indemnity benefiting any Facility Owners/Lenders or their
respective Affiliates or (ii) any limitation of liability or
recourse benefiting any Released Parties that is adverse to such
Released Parties.
(c) This Agreement may be executed in one or more counterparts, all
of which taken together shall constitute one and the same
instrument.
(d) This Agreement may be duly executed and delivered by a party by
execution and facsimile delivery of the signature page of a
counterpart to the other party, provided that, if delivery is
made by facsimile, the executing party shall promptly deliver a
complete counterpart that it has executed to the other party.
(e) Unless otherwise expressly permitted in this Agreement, Williams
shall not make any changes to the Exhibits or Schedules attached
hereto that may have a material adverse impact on the performance
or usability of the Telecommunications Services, Additional
Services or Other Services without WinStar's prior written
consent.
24.6 Public Disclosures.
All media releases, public announcements, and public disclosures
relating to this Agreement or the subject matter of this Agreement,
including promotional or marketing material, but not including
announcements intended solely for internal distribution or disclosures
to the extent required to meet legal or regulatory requirements shall
be coordinated with and shall be subject to approval by both parties
prior to release.
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25. REPRESENTATIONS, WARRANTIES AND COVENANTS
25.1. Representations and Warranties.
In addition to any other representations and warranties contained in
this Agreement, each party hereto represents and warrants to the other
that:
(a) It has the requisite corporate power to enter into, execute,
deliver, and perform its obligations under this Agreement;
(b) It has taken all requisite corporate action to approve the
execution, delivery, and performance of this Agreement;
(c) This Agreement constitutes a legal, valid and binding obligation
enforceable against such party in accordance with its terms;
(d) Its execution of and performance under this Agreement shall not
violate any applicable existing regulations, rules, statutes, or
court orders of any local, state, or federal government agency,
court, or body;
(e) It is not subject to any contractual or other obligation that
would prevent it from entering into this relationship; and
(f) It has not offered or provided any inducements in violation of
law or the other party's policies, of which it has been given
notice, in connection with this Agreement.
25.2. Additional Williams Covenants.
Excluding services provided by third parties other than Williams'
subcontractors, Williams covenants that Telecommunications Services,
Additional Services, and Other Services shall be provided to WinStar
in accordance with the technical parameters set forth in the
applicable service schedule. Williams further covenants that it shall
use commercially reasonable efforts under the circumstances to remedy
any delays, interruptions, omissions, mistakes, accidents or errors in
the Telecommunications Services, Additional Services or Other Services
provided hereunder and to restore such Telecommunications Services or
Other Services to compliance with the terms hereof.
25.3. Infringement of Intellectual Property Rights.
Each party represents, warrants and covenants to the other that it
shall perform its responsibilities under this Agreement in a manner
that does not infringe, or constitute an infringement or
misappropriation of, any Intellectual Property Rights of any third
party.
26. USE OF TELECOMMUNICATIONS AND OTHER SERVICES
26.1. Condition to Provision of Services.
Telecommunications Services or Other Services shall not be used for
any unlawful purpose. More than ten percent (10%) of the transmissions
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will be interstate transmissions. The parties represent to each other
that this Agreement, to the extent it is subject to FCC regulation, is
an inter-carrier agreement not subject to the filing requirements of
Section 211 (a) of the Communications Act of 1934, as amended. One
strand of the Williams Network is contractually limited to use for
multimedia transmission (i.e. internet traffic, video and radio
transmission services and/or related applications, including, graphic,
visual, imaging, interactive and multimedia transmissions) (the
"Restricted Fiber"). If the parties want to use such Restricted Fiber,
upon request from Williams, WinStar agrees within a reasonable period
of time to identify the nature of its proposed use of the Other
Service so as to permit Williams to determine whether the Other
Service may be carried over the Restricted Fiber. The fact that
Williams may not utilize the Restricted Fiber for such transmissions
shall not affect Williams' obligation to provide Telecommunications
Services or Other Services unless otherwise specifically set forth in
this Agreement.
26.2. Intrastate Interexchange Services.
WinStar may use any interexchange service provided under this
Agreement including any service provided by means of a Backbone
Agreement only if such interexchange service is used for carrying
inter-state (as defined by the FCC) telecommunications (i.e.,
telecommunications subject to the jurisdiction of the Federal
Communications Commission). Williams and its Affiliates shall not be
obligated to make available Telecommunications Services, Additional
Services, or other interexchange service on a Circuit with end points
within a single state or service on a Circuit which
originates/terminates at points both of which are situated within a
single state unless WinStar represents in writing that such
interexchange service or Circuits shall be used to carry inter-state
telecommunications (as defined by the FCC).
26.3. WinStar Responsibilities.
WinStar has sole responsibility for installation, testing and
operation of facilities, services and equipment ("WinStar Facilities")
other than those specifically provided by Williams as part of the
Telecommunications Services or Other Services as described in a
Service Order. In no event will the untimely installation or
non-operation of WinStar Facilities relieve WinStar of its obligation
to pay charges for the Service or Other Service after the Requested
Start Date as set forth in the Service Order.
26.4. Consents.
As between the parties, WinStar shall be responsible for all
arrangements with copyright holders, music licensing organizations,
performers' representatives or other parties for necessary
authorizations, clearances or consents with respect to transmission
contents.
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26.5. Restriction of Transmissions.
WinStar will not transmit content, nor permit its customers to
transmit content that violates applicable law or carries an
unreasonable risk of leading to criminal, civil or administrative
proceedings or investigations against Williams or WinStar.
26.6 Compliance with Regulations.
If the FCC, any state regulatory body, or any court, in each case
having competent jurisdiction, determines that any provision of this
Agreement violates any applicable rules, policies, or regulations,
both parties shall reasonably cooperate to immediately bring this
Agreement into compliance, consistent with the intent of this
Agreement.
26.6. Reasonableness, Consents and Approval.
(a) Where this Agreement requires a party to assist or cooperate,
such requirement shall not be interpreted to require materially
more than a commercially reasonable level of effort (i.e. the
standard applicable will not be "best efforts" or "exhausting all
available means").
(b) Except where expressly provided as being in the sole discretion
of a party, where agreement, approval, acceptance, consent, or
similar action by either party is required under this Agreement,
such action shall not be unreasonably delayed or withheld. An
approval or consent given by a party under this Agreement shall
not relieve the other party from responsibility for complying
with the requirements of this Agreement, nor shall it be
construed as a waiver of any rights under this Agreement, except
as and to the extent otherwise expressly provided in such
approval or consent.
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IN WITNESS WHEREOF and in confirmation of their consent to the terms
and conditions contained in this Agreement and intending to be legally bound
hereby, Williams and WinStar have executed and delivered this Agreement as of
the dates set forth below.
<TABLE>
<S> <C>
WINSTAR WIRELESS, INC. WILLIAMS COMMUNICATIONS, INC.
/s/ Timothy R. Graham /s/ Frank Semple
By: -------------------------------------------- By: ----------------------------------------
Timothy R. Graham Frank Semple
Name: -------------------------------------------- Name: ----------------------------------------
Vice President President, Williams Network
Title -------------------------------------------- Title: ----------------------------------------
December 17, 1998 December 17, 1998
Date: -------------------------------------------- Date: ----------------------------------------
</TABLE>
46
Confidential - WinStar/Williams
WIRELESS FIBERsm IRU AGREEMENT
BY AND BETWEEN
WINSTAR WIRELESS, INC.
AND
WILLIAMS COMMUNICATIONS, INC.
Effective as of December 17, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS..................................................................................................1
1.1. Particular Terms...........................................................................................1
1.2. Other Terms................................................................................................4
2. SCOPE AND STRUCTURE..........................................................................................4
2.1. General....................................................................................................4
2.2. Term.......................................................................................................5
2.3. Strategic Relationship.....................................................................................5
3. GRANTS, RIGHTS AND RESPONSIBILITIES..........................................................................6
3.1. WinStar Grant, Rights and Responsibilities.................................................................6
3.2. WinStar Acceptance and Testing.............................................................................7
3.3. Control of Facilities......................................................................................7
3.4. Provisioning of Williams T-1s..............................................................................8
3.5. Service Orders for Williams T-1s...........................................................................9
3.6. Changes in Service Parameters.............................................................................10
3.7. Delivery of Minimum Williams T-1 Inventory................................................................10
4. OTHER PERFORMANCE AND SERVICES..............................................................................11
4.1. Interconnection...........................................................................................11
4.2. Collocation...............................................................................................11
4.3. Maintenance...............................................................................................11
4.4. Routine Maintenance.......................................................................................11
4.5. Non-Routine Maintenance...................................................................................12
4.6. Subcontractors............................................................................................12
4.7. Williams Equipment........................................................................................12
4.8. Performance Standards.....................................................................................12
4.9. Disengagement Assistance..................................................................................12
4.10. Relocation................................................................................................12
4.11. Ancillary Services........................................................................................13
5. CONTRACT ADMINISTRATION.....................................................................................13
5.1. Reports and Meetings......................................................................................13
5.2. Confidentiality...........................................................................................14
6. CHARGES.....................................................................................................16
6.1. General...................................................................................................16
6.2. Taxes.....................................................................................................16
6.3. Pass-Through Expenses.....................................................................................17
6.4. Most Favored Customer Status..............................................................................17
6.5. Benchmarking..............................................................................................18
7. INVOICING AND PAYMENT.......................................................................................18
7.1. Invoicing.................................................................................................18
7.2. Payment Due...............................................................................................18
7.3. Disputed Charges..........................................................................................19
7.4. Late Interest.............................................................................................19
8. COVENANTS, REPRESENTATIONS AND WARRANTIES...................................................................19
8.1. Non-Infringement..........................................................................................19
8.2. Authorization.............................................................................................19
8.3. Wireless Fiber Connectivity...............................................................................20
8.4. Disclaimer................................................................................................20
9. INDEMNIFICATION.............................................................................................20
9.1. Indemnities by Williams...................................................................................20
9.2. Indemnities by WinStar....................................................................................21
9.3. Indemnification Procedures................................................................................22
</TABLE>
- i -
<PAGE>
<TABLE>
<S> <C>
10. LIABILITY, RISK OF LOSS AND INSURANCE.......................................................................22
10.1. General Intent............................................................................................22
10.2. Liability Restrictions....................................................................................23
10.3. Insurance Requirements....................................................................................23
10.4. Risk of Loss..............................................................................................24
10.5. Force Majeure.............................................................................................24
11. REMEDIES AND DISPUTE RESOLUTION.............................................................................25
11.1. Cumulative Nature.........................................................................................25
11.2. Informal Dispute Resolution...............................................................................25
11.3. Arbitration...............................................................................................26
11.4. Termination...............................................................................................27
11.5. Suspension of Service.....................................................................................27
11.6. Litigation................................................................................................27
11.7. Continued Performance.....................................................................................28
12. GENERAL.....................................................................................................28
12.1. Binding Nature and Assignment.............................................................................28
12.2. Entire Agreement..........................................................................................28
12.3. Tariff....................................................................................................28
12.4. Consents..................................................................................................29
12.5. Restriction of Transmissions..............................................................................29
12.6. Use and Ownership.........................................................................................29
12.7. Non-Solicitation..........................................................................................29
12.8. Notices...................................................................................................29
12.9. Counterparts..............................................................................................30
12.10. Relationship of Parties...................................................................................30
12.11. Severability..............................................................................................30
12.12. Reasonableness, Consents and Approval.....................................................................30
12.13. Waiver of Default.........................................................................................30
12.14. Survival..................................................................................................31
12.15. Public Disclosures........................................................................................31
12.16. Third Party Beneficiaries.................................................................................31
12.17. Amendment.................................................................................................31
12.18. Order of Precedence.......................................................................................31
12.19. Interpretation............................................................................................32
12.20. Covenant of Good Faith....................................................................................32
</TABLE>
LIST OF SCHEDULES AND EXHIBITS
- - --------------------------------------------------------------------------------
Schedule A Scope and Services
Exhibit A-1: WinStar Target Markets
Exhibit A-2: Implementation Schedule
Exhibit A-3: Collocation
Exhibit A-4: Standards and Specifications
Exhibit A-5: Hub Implementation Forecast
Exhibit A-6: Williams Connectivity
Schedule B Performance Standards
Schedule C Charges
ii
<PAGE>
WIRELESS FIBERsm IRU AGREEMENT
BY AND BETWEEN
WINSTAR WIRELESS, INC.
AND
WILLIAMS COMMUNICATIONS, INC.
This WIRELESS FIBER IRU AGREEMENT (including the Exhibits and Schedules
attached hereto, the "Agreement"), effective as of December 17, 1998 (the
"Effective Date"), is entered into by and between WINSTAR WIRELESS, INC., a
Delaware corporation with offices located at 230 Park Avenue, New York, New York
10169 ("WinStar"), and WILLIAMS COMMUNICATIONS, INC., a Delaware corporation
with offices located at One Williams Center, Tulsa, Oklahoma 74172 ("Williams").
WHEREAS, WinStar is a fixed wireless services telecommunications
provider currently planning to build-out in the domestic major metropolitan
markets set forth in Exhibit A-1;
WHEREAS, Williams is a provider of high capacity long haul fiber optic
network transport and desires to utilize WinStar's Wireless Fiber Connectivity
(as hereinafter defined) in conjunction with its long haul network services; and
WHEREAS, upon the terms and subject to the conditions set forth below,
Williams desires to acquire from WinStar, and WinStar desires to provide to
Williams, an exclusive, indefeasible right to use certain of WinStar's Wireless
Fiber Connectivity on a private, non-common-carrier basis.
NOW THEREFORE, in consideration of the mutual promises set forth below
and other good and valid consideration, the receipt of which is hereby
acknowledged, WinStar and Williams (collectively, the "Parties" and each, a
"Party") agree as follows:
1. DEFINITIONS
1.1. Particular Terms.
As used in this Agreement:
(a) "Acceptance" has the meaning set forth in Exhibit A-4.
(b) "Acceptance Date" means, for each Hub, the date of Acceptance as
provided in Exhibit A-4.
(c) "Acceptance Standards" means the standards set forth in Exhibit
A-4 with respect to the testing of the Hubs.
(d) "Affiliate" means, with respect to any entity, any other entity
that directly, or indirectly through one or more intermediaries,
Controls, or is Controlled by, or is under common Control with,
such entity.
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(e) "Agreement" has the meaning set forth in the preamble to this
Agreement.
(f) "Confidential Information" has the meaning set forth in Section
5.2.
(g) "Control" and its derivatives means legal, beneficial or
equitable ownership, directly or indirectly, of more than fifty
percent (50%) of outstanding voting capital stock (or other
ownership interest, if not a corporation) of an entity or
management or operational control over such entity.
(h) "Cost" means actual, direct costs incurred and computed in
accordance with the established accounting procedures used by
WinStar to bill third parties for reimbursable projects. All
Costs shall be computed in accordance with generally accepted
accounting principles. Such actual, direct costs include:
(i) Labor costs, including wages and salaries, and benefits,
plus the overhead allocable to such labor costs (overhead
allocation percentage shall not exceed the lesser of: (i)
the percentage WinStar allocates to its internal projects;
or (ii) ______ percent (__%)); and
(ii) Other direct costs and Out-of-Pocket Expenses on a
Pass-Through Expenses basis (such as equipment, materials,
supplies, contract services, costs of capital, Required
Rights, sales, use or similar taxes, etc.) plus ___ percent
(__%) of such expenses, but
(iii) Less any cost or expense reimbursed by a third party.
(i) "Domestic Hub Capacity" means, at the time in question, the
aggregate capacity of WinStar's deployed Hubs within the United
States.
(j) "Effective Date" has the meaning set forth in the preamble to
this Agreement.
(k) "Governmental Authorizations" means all licenses, permits and
authorizations from the Federal Communications Commission,
Federal Aviation Administration, state public utility
commissions, municipal authorities or any other governmental body
that are materially necessary or required for or used in the
business and operations of WinStar or the provision of the
Wireless Fiber Connectivity.
(l) "Hub" has the meaning set forth in Schedule A.
(m) "Indefeasible Right of Use" or "IRU" means an exclusive,
indefeasible right to use the specified Wireless Fiber
Connectivity as contemplated by this Agreement.
(n) "Intellectual Property Rights" means patent, copyright,
trademark, trade secret or other proprietary rights with respect
to any work product in which such rights could inure.
2
<PAGE>
(o) "Lit Building" means a building that, at the time in question, is
either a Hub provided by WinStar or equipped with a radio
connection to a Hub provided by WinStar utilizing spectrum in
which WinStar holds a license.
(p) "Losses" means all liabilities, damages and related costs and
expenses (including fines, levies, assessments, reasonable legal
fees and disbursements and costs of investigation, litigation,
settlement, judgment, interest and penalties) directly incurred
by a Party.
(q) "Maintenance" means the network operations, administration and
maintenance required for the continued performance of the WinStar
Fiberless Connectivity.
(r) "Minimum Williams T-1 Inventory" has the meaning set forth in
Exhibit A-6.
(s) "Out-of-Pocket Expenses" means reasonable and actual
out-of-pocket expenses incurred by a Party, but not including
that Party's overhead costs (or allocations thereof),
administrative expenses or other mark-ups.
(t) "Party" and "Parties" have the meanings set forth in the preamble
to this Agreement.
(u) "Pass-Through Expenses" means certain WinStar expenses, as agreed
to between the Parties in writing, which Williams agrees to pay
directly or reimburse on an Out-of-Pocket Expenses basis.
(v) "Prime Rate" means, in respect of any period, the rate published
as Chase Manhattan's prime rate in the Wall Street Journal, or
any successor publication thereto, from time to time during such
period.
(w) "Pro Rata Share" means a proportion equal, for Williams, to the
Williams Connectivity and, for WinStar, the complement of the
Williams Connectivity.
(x) "Qualified Building" means a building that, at the time in
question, has a verified line of sight (per WinStar's standard
practices) to a Hub provided by WinStar and for which the
necessary Required Rights have been obtained by, or provided to,
WinStar.
(y) "Required Rights" means leases or licenses for access to, and use
of, building roof areas and other antenna staging locations and
interior space and conduit rights as necessary to provide
Wireless Fiber Connectivity to a building.
(z) "Sector" means an area of coverage emanating off a
point-to-multipoint radio on a Hub.
(aa) "Sector Capacity" of any given Hub means, as of the date in
question, the transport capacity of the relevant Sector of that
Hub.
(bb) "Start Date" means, with respect to any Williams T-1, the first
day on which such service is provided.
(cc) "T-1" means a circuit (wire, fiber or spectrum) with a capacity
of 1.544 Mbps.
3
<PAGE>
(dd) "Term" has the meaning set forth in Section 2.2.
(ee) "Williams" has the meaning set forth in the preamble to this
Agreement.
(ff) "Williams Connectivity" has the meaning given in Exhibit A-6.
(gg) "Williams IRU" has the meaning given in Section 3.1(a).
(hh) "Williams T-1" has the meaning given in Section 3.1(a). Each such
circuit shall traverse __________________________________________
_________________________________________________________________
_____________________________ and shall be deemed provided when
approved by Williams in accordance with Section 3.5(e).
(ii) "WinStar" has the meaning set forth in the preamble to this
Agreement.
(jj) "WinStar Equipment" means the telecommunications equipment used
by WinStar to implement the Wireless Fiber Connectivity.
(kk) "WinStar Target Market" means a city listed in Exhibit A-2 where
WinStar has at least one Hub to provide the Wireless Fiber
Connectivity, which list may be amended by WinStar from time to
time with notice to Williams (in accordance with Exhibit A-2).
(ll) "Wireless Fiber Connectivity" means the Wireless Fibersm
connectivity, which WinStar is authorized to provide at certain
licensed radio frequency bandwidths.
1.2. Other Terms.
Other terms used in this Agreement are defined in the context in which
they are used and have the meanings there indicated.
2. SCOPE AND STRUCTURE
2.1. General.
(a) This Agreement sets forth the general terms and conditions under
which WinStar grants Williams specific rights to certain capacity
within the deployed Wireless Fiber Connectivity.
(b) The Parties acknowledge that this Agreement does not grant to
WinStar an exclusive privilege to sell or otherwise provide to
Williams any or all of the transport and services of the type
described in this Agreement. Williams may contract with other
suppliers for the procurement of comparable transport or
services. Subject to the Williams IRU granted by WinStar under
this Agreement, WinStar is not restricted from selling to other
entities any types of transport or services including the types
of transport or services that are provided to Williams hereunder.
4
<PAGE>
2.2. Term.
The term of this Agreement (the "Term"), with respect to each of the
initial two hundred and seventy (270) Hubs implemented by WinStar,
shall begin on the corresponding Acceptance Date and continue in
effect for twenty-five (25) years from that time.
2.3. Strategic Relationship.
(a) Resale of WinStar Product. Pursuant to terms to be agreed upon by
the Parties after the Effective Date, WinStar will grant Williams
the right to market and promote certain WinStar voice and data
products (e.g., wireless capacity, professional services and
Internet connectivity) through its sales channel.
(b) Williams-Provided Roof Rights and Building Access. If requested
by WinStar, Williams shall grant to WinStar, at no cost,
appropriate roof, riser, conduit rights and interior space (in
each case, in quantities to be mutually agreed upon on a
case-by-case basis) rights to buildings in the United States for
which Williams owns, leases or occupies, in whole or in part,
that Williams can obtain (at reasonable cost) or has such rights.
In addition, Williams shall assist WinStar in obtaining such
rights with respect to other buildings in the United States
leased or occupied, in whole or in part, by Williams or its
Affiliates, including by actively conveying to those Affiliates
the strategic and important nature of the relationship with
WinStar. Williams shall provide (and periodically update as
reasonably requested by WinStar) WinStar with a written list of
the addresses of all such real estate.
(c) Mutual Marketing Support. WinStar will provide Williams
reasonable marketing support in connection with Williams' sale of
the Williams T-1s and other WinStar voice and data products.
(d) Provisioning and Billing OSS. The Parties will work together in
order to interface their then-current provisioning and billing
operational support system information (e.g., network events and
statistics). The reasonable costs associated with these
activities shall be mutually shared between the Parties. If,
after consultation with Williams, WinStar is required to provide
provisioning and billing information unique to Williams'
wholesale activities, the reasonable costs of providing such
information shall be borne by Williams.
(e) Regulatory Assistance. If either Party affirmatively takes a
position in the domestic regulatory environment, it will be in
favor of a level playing field and in support of competition, as
such Party determines in its sole discretion. The Parties shall
periodically (but at least semi-annually) meet to discuss their
plans and objectives with respect to the regulatory environment.
3. GRANTS, RIGHTS AND RESPONSIBILITIES
3.1. WinStar Grant, Rights and Responsibilities.
(a) Effective as of the Acceptance Date, WinStar hereby grants to
Williams an exclusive Indefeasible Right of Use (the "Williams
IRU"), for the purposes described herein, in the Williams
<PAGE>
5
Connectivity as expressed in T-1 increments over time, as
provided in Exhibit A-6 (the "Williams T-1s"), subject to the
additional limitations set forth in Subsection (c) below. Such
grant does not convey any legal title to any real or personal
property, including the spectrum, physical equipment and
connections used to effect the Domestic Hub Capacity.
(b) Subject to the terms of this Agreement, Williams shall have
exclusive use of the Williams T-1s for any lawful purpose during
the Term.
(c) In addition to the Williams Connectivity limitation set forth in
Section 3.1(a), the Williams T-1s shall be subject to the
following limitations:
(i) Williams T-1s from any Lit Building that is connected to the
WinStar Hub through a point-to-point radio link may go up to
but shall not exceed _______ percent (__%) of the bandwidth
capacity provided to that building notwithstanding WinStar's
usage of any or all of such capacity in that building.
(ii) Williams T-1s that are to be implemented using
point-to-multipoint links between Lit Buildings in a Sector
and a WinStar Hub may go up to but shall not exceed _______
percent (__%) of the relevant Sector Capacity of that Hub
notwithstanding WinStar's usage of any or all of such Sector
Capacity in the Sector.
(iii)For Qualified Buildings lit at Williams' expense pursuant
to Section 3.4(b)(ii), the limitation set forth in
Subsection (c)(i), if applicable, shall be increased to
_____ percent (__%) for buildings lit point-to-point. In
addition, only ____________ percent (__%) of the Williams
T-1s in such buildings will count towards the Williams
Connectivity limitation set forth in Subsection (a) above.
(iv) In accordance with Section 3.6, each Williams T-1 shall
count against the limitations set forth above for ___ (_)
____, regardless of whether or not the duration of its
connectivity lasts less than ___ (_) ____. After its _____
____ of connectivity, each Williams T-1 shall count against
such limitations until disconnected.
(v) Williams may order Williams Connectivity only in multiples
of T-1 line speeds. Orders for line speeds higher than T-1
will count proportionately toward the limitations set forth
in this Subsection (c). For example, a DS-3 will count as
____________ (__) T-1s. Apart from the applicability of the
limitations, the line speeds of the circuits constituting
the Williams Connectivity shall have no effect on the
respective rights and obligations of the Parties.
3.2. WinStar Acceptance and Testing.
(a) As of the Effective Date, Williams hereby agrees that Acceptance
of the initial fifty-seven (57) Hubs (the "Initial Hubs")
deployed by WinStar is deemed to have occurred. WinStar
represents and warrants that the Initial Hubs have met the
Acceptance Standards as of the Effective Date.
6
<PAGE>
(b) Prior to the use of each Hub deployed by WinStar following the
Effective Date, WinStar will have performed testing procedures in
accordance with Exhibit A-4, which are sufficient to verify
compliance with Acceptance Standards. Acceptance of each such Hub
shall occur as set forth in Exhibit A-4.
3.3. Control of Facilities.
Notwithstanding any other provision of this Agreement, WinStar has and
shall at all times continue to retain control over all FCC licenses,
equipment and facilities subject to this Agreement and shall have, at
all times, required access to all of the equipment and facilities
installed by it pursuant to this Agreement. In exercising this
control, WinStar will not disturb or interfere with the Williams T-1s
without good cause, such as a request from the FCC to shut down
interfering transmissions, emergency service restoration or correction
of other technical problems. WinStar shall provide Williams with as
much prior notice as is reasonably practicable in the case of
emergency disruptions of the Wireless Fiber Connectivity. WinStar
shall, with the reasonable cooperation and assistance of Williams, (i)
operate its business in all material respects in accordance with the
terms of the Governmental Authorizations and (ii) maintain the
validity of the Governmental Authorizations. WinStar agrees to provide
Williams with notice in the event matters come to WinStar's attention
that could materially prevent it from meeting its obligations under
this Agreement. In this regard, WinStar and Williams further agree as
follows:
(a) Williams shall not represent itself as the holder of any FCC
licenses issued to WinStar.
(b) Any communications by either Party with the FCC regarding the
subject matter of this Agreement shall require the other's prior
written approval.
(c) Neither WinStar nor Williams shall represent itself as the legal
representative of the other before the FCC or any state
regulatory body. Except as otherwise required by law, all filings
made before regulatory bodies with respect to WinStar's license
or the services provided hereunder shall be made by and in the
name of WinStar. WinStar and Williams will cooperate with each
other with respect to regulatory matters concerning WinStar's
licenses and the services provided pursuant to this Agreement;
provided, however, this will not relieve WinStar from complying
with the Governmental Authorizations.
(d) Nothing in this Agreement is intended to diminish or restrict
WinStar's obligations as an FCC licensee and both Parties desire
that this Agreement be in full compliance with the rules and
regulations of the FCC and any state or local jurisdiction. If
the FCC or any state regulatory body of competent jurisdiction
determines that any provision of this Agreement violates any
applicable rules, policies or regulations, both Parties shall
bear their respective Pro Rata Share of costs to immediately
bring this Agreement into compliance, consistent with the intent
of this Agreement.
(e) It is expressly understood by WinStar and Williams that nothing
in this Agreement is intended to give to Williams any right that
would be deemed to constitute a transfer of control (as "control"
is defined in the Communications Act of 1934, as amended, or any
applicable FCC rules or case law) of one or more of WinStar's
licenses from WinStar to Williams.
7
<PAGE>
3.4. Provisioning of Williams T-1s.
Except as otherwise provided in this Section 3.4, WinStar, at its own
expense, shall be solely responsible for obtaining and maintaining all
rights and privileges (including Required Rights, space and power)
that are necessary for WinStar to provide the Williams T-1s to the
WinStar common space.
(a) Subject to the limitations set forth in Section 3.1, Williams may
order T-1s to be connected to any Qualified Building (or a
building that would be a Qualified Building but for the obtaining
of Required Rights). If Williams orders Williams T-1s that are to
be connected to a Lit Building, WinStar will provision, on a
non-discriminatory basis, those T-1s to the common space at no
additional cost with an objective of completing that provisioning
within ______ (__) days from the date of Williams' order.
(b) If Williams orders Williams T-1s that are to be connected to a
Qualified Building (or a building that would be a Qualified
Building but for the obtaining of Required Rights) that is not a
Lit Building:
(i) WinStar shall determine within ______ (__) days of receipt
of notice from Williams whether, in its sole discretion, it
will light such building at its own expense. If WinStar so
elects, that notice shall set forth a target delivery date
and WinStar shall light that building and provision, on a
non-discriminatory basis, the T-1s to the common space with
the objective of completing such activities by the target
delivery date.
(ii) If WinStar elects not to light such building at its own
expense, WinStar will light the building upon Williams'
request, in accordance with a target delivery date
established by WinStar. Williams shall pay for such lighting
at WinStar's Cost of performance. Additionally, in such
event, Williams shall be responsible, with WinStar's
assistance, for obtaining and maintaining, at Williams'
expense, all necessary rights and privileges (including
Required Rights, space and power). Lighting, pursuant to
this Subsection 3.4(b)(ii), of more than ____ (_) buildings
connected to a single Hub, whether singly or in combination
over any period of time, shall be subject to WinStar's
approval which shall not be unreasonably withheld.
(c) When WinStar lights a building for provisioning a Williams T-1,
Williams will either:
(i) Perform inside wiring for its customers in such building
subject both to obtaining any necessary consents and to
WinStar's then-current installation guidelines and
specifications; or
(ii) Have WinStar perform such wiring at WinStar's Cost.
8
<PAGE>
3.5. Service Orders for Williams T-1s.
(a) The implementation of a Williams T-1 to a Lit Building shall be
requested on WinStar's Service Order forms in effect from time to
time ("Service Orders"). Each Service Order shall reference this
Agreement. WinStar reserves the right not to accept a Service
Order that does not conform with the terms and conditions of this
Agreement and such non-conforming Service Order shall have no
force or effect hereunder.
(b) Each Service Order will indicate a requested Start Date (the
"Requested Start Date") for the implementation of the Williams
T-1s to a Lit Building, the desired term of the Williams T-1s,
and any other parameters required. WinStar shall acknowledge
receipt of the Service Order, on average, within forty-eight (48)
hours (an "Acknowledgement").
(c) Once a Service Order is placed, Williams may cancel it only by
notice of cancellation not less then ___ (__) days prior to
delivery of the corresponding Williams T-1, and payment of any
specified cancellation fee. Williams agrees that the actual
damages in the event of such cancellation would be difficult or
impossible to ascertain, and that the cancellation charge
including those set forth herein is consequently intended to
establish liquidated damages and not a penalty.
(d) Any conflicting, different or additional terms and conditions
contained in Williams' acknowledgment or Service Order or
elsewhere are deemed objected to by WinStar and shall not
constitute part of this Agreement. No action by WinStar
(including fulfillment of such Service Order) shall be construed
as binding or estopping WinStar with respect to such conflicting,
different or additional term or condition, unless the Service
Order containing said term or condition has been signed by an
authorized representative of WinStar.
(e) WinStar shall make reasonable efforts to provide the Williams
T-1s within the service implementation interval set forth in
Section 3.5(b) or by Williams' Requested Start Date. Williams
T-1s shall begin on the date WinStar issues notice that service
is available (the "Start of Service Notice" or "SOSN"),
indicating the Williams T-1 has been tested by WinStar in
accordance with WinStar's standard specifications and that the
service meets or exceeds those specifications.
(f) Williams may reasonably request one or more delays in the
Requested Start Date of a Service Order, a move, or rearrangement
if WinStar receives the delay request at least _______ (__) days
prior to the Requested Start Date and the requested delay does
not extend the Requested Start Date more than _______ (__) days
from the original date thereof. If Williams delays the Requested
Start Date (or as gauged by the SOSN, if issued for a date after
the Requested Start Date) by more than ______ (__) days, the
Williams T-1s will count against the Minimum Williams T-1
Inventory and the Williams Connectivity for a period of one (1)
year. This count against the Minimum Williams T-1 Inventory and
Williams Connectivity will be effective ______ (__) days after
the Requested Start Date.
9
<PAGE>
3.6. Changes in Service Parameters.
Following the relevant Start Date for any Williams T-1, Williams may
disconnect or reconfigure that service upon sixty (60) days' prior
written notice. If that action relates to a Williams T-1 that has not
been in place for at least one (1) year from its Start Date, (i) such
Williams T-1 will continue to count against the Minimum Williams T-1
Inventory and Williams Connectivity for the remainder of the one (1)
year period; and (ii) Williams shall also pay WinStar the additional
charges incurred by WinStar that are associated with that
disconnection or reconfiguration. Subsection (ii) shall also apply
with respect to a cancellation as provided in Section 3.5(c).
3.7. Delivery of Minimum Williams T-1 Inventory.
(a) Availability Date. The "Availability Date" shall mean (i) the
Effective Date with respect to the Minimum Williams T-1 Inventory
identified in Exhibit A-6 to be provided to Williams as of the
Effective Date, and (ii) December 31st of each calendar year
following 1998 through the end of the Term with respect to each
annual number of Minimum Williams T-1 Inventory identified in
Exhibit A-6 for such calendar year. The "Deadline Date" shall be
sixty (60) days after the later of (i) such planned Availability
Date or (ii) the planned Availability Date as extended due to
unforeseen events not in the reasonable control of WinStar (other
than as due to WinStar's negligence), Force Majeure events or as
expressly permitted by this Agreement. WinStar shall make
available each of its annual Minimum Williams T-1 Inventories by
the applicable Deadline Date. WinStar shall give Williams as much
prior notice as reasonably possible if, to the best of WinStar's
knowledge, there is a foreseeable risk that it may miss a
Deadline Date for its Minimum Williams T-1 Inventory.
(b) Failure to Meet Deadline Date. If WinStar fails to make available
the Minimum Williams T-1 Inventory by its applicable Deadline
Date, and the Parties are unable, in good faith, to agree to an
alternative Deadline Date, Williams' sole and exclusive monetary
remedy for such failure shall be to obtain Cover (as hereinafter
defined) beginning on the Deadline Date for the number of T-1s
not made available. "Cover" shall be satisfied by obtaining, at
WinStar's expense, the number of T-1s that would have been
available had WinStar made available the entire applicable
Minimum Williams T-1 Inventory. Once WinStar makes such T-1s
available, the Parties will work together to migrate the T-1s to
WinStar at WinStar's sole cost and expense.
4. OTHER PERFORMANCE AND SERVICES
4.1. Interconnection.
(a) With respect to each of the WinStar Target Markets, the Parties
shall mutually determine the most efficient manner of providing
the required connectivity ("Interconnection") between the WinStar
and Williams points of presence, whether through then-existing
installed capacity, implementation of new capacity or third party
arrangements. In addition, the Parties shall set and periodically
review the schedule (timing and priority) of implementation of
those Interconnection facilities and shall adhere to that
schedule in implementing such facilities.
10
<PAGE>
(b) The Parties shall allocate the costs of each Interconnection
facility as follows:
(i) The Parties shall mutually agree upon a forecast of each
Party's usage of that Interconnection facility during the
first year after implementation (the "Forecast"). The
non-recurring costs associated with the implementation of
that facility and the recurring cost thereof in the first
month of operation (in aggregate, the "Start-up Costs") will
be allocated pro rata between the Parties based upon the
Forecast. One year thereafter the Parties shall re-calculate
the allocation of the Start-up Costs by substituting actual
usage during the preceding year in place of the Forecast.
Based upon that recalculation, Williams shall pay or receive
a refund, in either case equal to the difference between the
initial allocation of the Start-up Costs and the
recalculated amount, plus interest at the Prime Rate for the
applicable period.
(ii) On a quarterly basis, the Parties shall allocate the
periodic recurring costs of that Interconnection facility
pro rata between the Parties based upon actual usage during
the preceding quarter.
(iii)Following the Effective Date, the Parties will mutually
develop appropriate procedures to implement the foregoing.
4.2. Collocation.
Exhibit A-3 sets forth the collocation services, terms and conditions.
4.3. Maintenance.
WinStar shall be responsible for providing maintenance, repair and
testing on all WinStar Equipment used to provide the Williams T-1s, in
accordance with its then-current standard policies and procedures, a
portion of which is attached hereto as Exhibit A-4. Williams is
prohibited from providing any maintenance, repair or testing with
regard to WinStar Equipment.
4.4. Routine Maintenance.
During the Term, WinStar shall perform all required Routine
Maintenance Services at the charges set forth in Schedule C. "Routine
Maintenance Services" means the work specifically identified as
Routine Maintenance Services in Article 5 of Schedule A, provided that
Routine Maintenance Services excludes work for which Williams is
obligated to reimburse WinStar for all or a portion of the Costs
incurred pursuant to other provisions of this Agreement.
4.5. Non-Routine Maintenance.
Williams shall pay its Pro Rata Share of WinStar's direct Costs for
maintenance in respect of the Williams Connectivity other than Routine
Maintenance Services, if the Cost of such work relating to any single
event or multiple related events is greater than Five Thousand Dollars
($5,000.00).
11
<PAGE>
4.6. Subcontractors.
WinStar may subcontract provisioning, testing, maintenance, repair,
restoration, relocation or other operational and technical services it
is obligated to provide hereunder or may have the underlying facility
owner or its contractor perform such obligations. Such subcontracting
shall not relieve WinStar of any obligations under this Agreement.
4.7. Williams Equipment.
WinStar's maintenance and repair obligations under this Agreement
shall not include maintenance, repair or replacement of Williams'
equipment.
4.8. Performance Standards.
Except as otherwise set forth in Schedule B, for the purpose of this
Agreement the normal standards of performance within the
telecommunications industry in the relevant market shall be the
measure of whether a Party's performance is reasonable and timely.
4.9. Disengagement Assistance.
Upon termination or expiration of this Agreement, WinStar shall
provide Williams and its designated third party providers all
reasonable assistance as necessary to effect a smooth transition to a
new supplier.
4.10. Relocation.
(a) If WinStar determines for bona fide operational reasons, or is
required by a third party acting pursuant to condemnation or
similar authority or by a governmental entity, to relocate all or
any portion of a Hub or any of the facilities used or required in
providing Williams with the Williams IRU, WinStar shall, to the
extent practicable, provide Williams sixty (60) days' prior
notice and shall proceed with such relocation. WinStar shall have
the right to direct such relocation, including the right to
determine the extent of, the timing of, and methods to be used
for such relocation, provided that any such relocation:
(i) Shall be constructed and tested in accordance with the
specifications and requirements set forth in this Agreement
and applicable Exhibits;
(ii) Shall not result in a materially adverse change to the
operations or performance of the Hub, and
(iii) Shall not unreasonably interrupt service on the Hub.
For purposes of this Section 4.10, a WinStar relocation shall be
for bona fide operational reasons if it is undertaken in good
faith (i) to settle or avoid a bona fide threatened or filed
condemnation action or order by a governmental authority to
relocate, (ii) to reduce the likelihood of physical damage, (iii)
as the result of a Force Majeure Event, or (iv) for other
operational reasons to which Williams has consented, provided
that Williams shall not unreasonably withhold such consent.
WinStar shall use reasonable efforts to contest any exercise of
condemnation authority that would require a relocation pursuant
to this Section 4.10.
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(b) Unless such relocation is necessitated by a breach of WinStar's
obligations under this Agreement, Williams shall reimburse
WinStar for the Costs incurred in the same manner and to the same
extent as set forth for reimbursement for Costs of maintenance
other than for Routine Maintenance Services in Section 4.5.
4.11. Ancillary Services.
WinStar may also provide other services to Williams for reasons
including: (a) Williams' request to expedite Williams T-1 availability
to a date earlier than WinStar's published installation interval or a
previously accepted Start Date; (b) Williams T-1 redesign or other
activity occasioned by receipt of inaccurate information from
Williams; (c) Williams' request for use of facilities other than those
selected by WinStar for provision of the Wireless Fiber Connectivity
("facilities" for this purpose shall not include buildings that became
Lit Buildings pursuant to Section 3.4(b)(i)); and (d) other
circumstances in which extraordinary costs and expenses are generated
at the written request of Williams and incurred by WinStar
(collectively, "Ancillary Services").
5. CONTRACT ADMINISTRATION
5.1. Reports and Meetings.
(a) Within thirty (30) days of the Effective Date, the Parties shall
mutually agree upon a set of monthly reports to be issued by
WinStar to Williams. WinStar will provide Williams with suggested
formats for such reports for Williams' review and approval. As
one such report, WinStar will provide a monthly performance
report that describes WinStar's deployment of the Hubs,
availability of the applicable Minimum Williams T-1 Inventory and
a forecast of upcoming WinStar Target Market implementations
(including Hubs, buildings and addresses).
(b) Within thirty (30) days of the Effective Date, the Parties shall
mutually agree upon a set of regular management meetings. WinStar
will prepare and circulate an agenda sufficiently in advance of
each such meeting to give participants an opportunity to prepare
for the meeting and will incorporate into such agenda any items
that Williams desires to discuss. At Williams' request, WinStar
will prepare and circulate minutes promptly after a meeting.
5.2. Confidentiality.
(a) Confidential Information. Williams and WinStar each acknowledge
that they may be furnished with, receive or otherwise have access
to information of or concerning the other Party that such Party
considers to be confidential, proprietary, a trade secret or
otherwise restricted. As used in this Agreement and subject to
Section (c), "Confidential Information" means all information, in
any form, furnished or made available directly or indirectly by
one Party (the "Disclosing Party") to the other (the "Receiving
Party") that (i) concerns the operations, facilities, plans,
affairs and businesses of the Disclosing Party, the financial
affairs of the Disclosing Party, and the relations of the
Disclosing Party with its customers, employees and service
providers, or (ii) is marked confidential, restricted,
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proprietary, or with a similar designation. The terms and
conditions of this Agreement shall be deemed Confidential
Information, but may be disclosed pursuant to this Section 5.2 or
Section 12.15.
(b) Obligations.
(i) Each Party's Confidential Information shall remain the
property of that Party except as expressly provided
otherwise by the other provisions of this Agreement. Each
Party shall each use at least the same degree of care, but
in any event no less than a reasonable degree of care, to
prevent unauthorized disclosure of Confidential Information
as it employs to avoid unauthorized disclosure of its own
information of a similar nature. Except as otherwise
permitted hereunder, the Parties may disclose such
information (A) to their respective directors, officers,
managers, employees, agents, contractors and consultants
(collectively, "Representatives"), (B) to entities
performing services required hereunder only where: (1) use
of such entity is authorized under this Agreement, (2) such
disclosure is necessary or otherwise naturally occurs in
that entity's scope of responsibility, (3) the entity agrees
in writing to assume the obligations described in this
Subsection (b). Any disclosure to such entity shall be under
substantially the same confidentiality terms and conditions
set forth herein.
(ii) Each Party shall take reasonable steps to ensure that its
(and its Affiliates') Representatives comply with this
Subsection (b). In the event of any disclosure or loss of,
or inability to account for, any Confidential Information of
the Disclosing Party, the Receiving Party shall promptly, at
its own expense: (A) notify the Disclosing Party in writing;
and (B) take such actions as may be necessary and cooperate
in all reasonable respects with the Disclosing Party to
minimize the violation and any damage resulting therefrom.
(iii)Either Party may disclose the terms and conditions of this
Agreement to any third party that (A) has expressed a bona
fide interest in consummating a significant financing,
merger or acquisition or other corporate transaction between
such third party and such Party, (B) has a reasonable
ability (financial and otherwise) to consummate such
transaction, and (C) has executed a nondisclosure agreement
that includes within its scope the terms and conditions of
this Agreement and also includes a procedure to limit the
extent of copying and distribution thereof. Each Party shall
endeavor to delay the disclosure of the terms and conditions
of this Agreement until the status of discussions concerning
such transaction warrants such disclosure. In addition,
either party (or either party's Affiliates) may disclose the
terms and conditions of this Agreement as such party deems
appropriate to prepare for IPOs or major corporate
transactions. Any disclosure to such entity shall be
substantially under the same confidentiality terms and
conditions as provided herein.
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(c) Exclusions. "Confidential Information" shall exclude any
particular information that the Receiving Party can demonstrate:
(i) At the time of disclosure, was in the public domain or in
the rightful possession of the Receiving Party;
(ii) After disclosure, is published or otherwise becomes part of
the public domain through no fault of the Receiving Party;
(iii)Was received after disclosure from a third party who had a
lawful right to disclose such information to the Receiving
Party without any obligation to restrict its further use or
disclosure;
(iv) Was independently developed by the Receiving Party without
reference to Confidential Information of the Disclosing
Party; or
(v) Was required to be disclosed to satisfy a legal requirement
of a competent government body; provided that, immediately
upon receiving such request and to the extent that it may
legally do so, the Receiving Party advises the Disclosing
Party promptly and prior to making such disclosure in order
that the Disclosing Party may interpose an objection to such
disclosure, take action to assure confidential handling of
the Confidential Information, or take such other action as
it deems appropriate to protect the Confidential
Information.
(d) No Implied Rights. Nothing contained in this Section shall be
construed as obligating a Party to disclose its Confidential
Information to the other Party, or as granting to or conferring
on a Party, expressly or impliedly, any rights or license to the
Confidential Information of the other Party.
6. CHARGES
6.1. General.
The charging mechanisms and pricing methodologies for Wireless Fiber
Connectivity and maintenance and collocation services are set forth in
Schedule C.
6.2. Taxes.
The Parties' respective responsibilities for taxes arising under or in
connection with this Agreement shall be as follows:
(a) Each Party shall be responsible for personal property taxes on
property it owns or leases, for franchise and privilege taxes on
its business, and for taxes based on its net income or gross
receipts; provided, however, that Williams shall be responsible
for its proportionate share (based upon the proportion of the Hub
or building capacity used for Williams T-1) of any property taxes
(or similar levies) assessed as a result of the implementation of
any Williams T-1.
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(b) Williams shall timely report and pay any and all sales, use,
income, gross receipts, excise, transfer, ad valorem or other
taxes, and any and all franchise fees or similar fees assessed
against it due to the Williams IRU or its use of the Williams
T-1s.
(c) If a sales, use, excise, value-added, services, consumption, or
other tax is assessed on the provision of the Wireless Fiber
Connectivity, Maintenance or any other services, the Parties
shall work together to segregate the payments under this
Agreement into three (3) payment streams:
(i) Payments for taxable items;
(ii) Payments where Williams functions merely as a payment agent
for WinStar; and
(iii) Payments for other nontaxable items.
(d) The Parties agree to cooperate with each other to enable each to
determine more accurately its own tax liability and to minimize
such liability to the extent legally permissible. Each invoice
shall separately state the amounts of any taxes collected. Each
Party shall provide and make available to the other any resale
certificates and other exemption certificates or information
reasonably requested by either Party that is applicable to the
subject matter of this Agreement.
(e) Each Party shall promptly notify the other of, and coordinate the
response to and settlement of, any claim for taxes asserted by
applicable taxing authorities for which the other Party is
responsible hereunder. With respect to any claim arising out of a
form or return signed by a Party to this Agreement, such Party
shall have the right to elect to control the response to and
settlement of the claim, but the other Party shall have all
rights to participate in the responses and settlements that are
appropriate to its potential responsibilities or liabilities.
6.3. Pass-Through Expenses.
For each Pass-Through Expense, if any, WinStar shall review the
invoiced charges and determine whether such charges are proper and
valid. Unless the Parties mutually agree otherwise, Pass-Through
Expenses will be paid directly by Williams.
6.4. Most Favored Customer Status.
(a) Williams T-1s. With regard to the Williams Connectivity, Williams
shall have most favored customer protection as follows:
(i) ____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
(ii) ____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
(b) Excess Connectivity. With regard to Wireless Fiber Connectivity
in excess of the Williams Connectivity or Williams T-1 Ceiling,
as appropriate ("Excess Connectivity"), Williams shall have most
favored customer protection as follows:
(i) ____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
(ii) ____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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6.5. Benchmarking.
(a) Wireless Fiber Connectivity offered by WinStar in excess of the
Williams Connectivity, if any, shall be of equivalent or better
quality, availability and price when compared to similar
offerings in the marketplace. However, nothing in this Section
6.5 shall be deemed to require WinStar to sell more Wireless
Fiber Connectivity than the Williams Connectivity.
(b) Within 180 days after the Effective Date, the Parties will
jointly establish a benchmarking measurement and comparison
process (the "Benchmarking Process") designed to objectively
evaluate whether the Wireless Fiber Connectivity purchased by
Williams in excess of the Williams Connectivity is of equivalent
or better quality, availability and price as compared to similar
services generally available in the market for similar size and
scope requirements ("Market Level Charges"). The Benchmarking
Process will take into consideration relevant factors such as
quality and delivery terms.
7. INVOICING AND PAYMENT
7.1. Invoicing.
WinStar shall invoice Williams for all amounts due under this
Agreement prior to the payment dates set forth in Schedule C and on a
monthly basis in arrears for all other charges. Each invoice shall
show such details as reasonably requested by Williams, separately
state the amounts of any taxes collected and include the calculations
utilized to establish the charges.
7.2. Payment Due.
(a) Subject to the other provisions of this Article 7, invoices
provided for under Section 7.1 and properly submitted to Williams
pursuant to this Agreement shall be due and payable by Williams
within thirty (30) days after receipt thereof. Any amount due
under this Agreement for which a time for payment is not
otherwise specified shall be due and payable within thirty (30)
days after receipt of a proper invoice for such amount.
(b) To the extent a credit may be due Williams pursuant to this
Agreement, WinStar shall provide Williams with an appropriate
credit against amounts then due and owing; if no further payments
are due to WinStar, WinStar shall pay such amounts to Williams
within thirty (30) days.
(c) Williams shall make payments provided for under this Article 7 or
Schedule C by wire transfer of immediately available funds to the
account or accounts designated by WinStar. All other payments to
be made pursuant to this Agreement may be made by check or draft
of immediately available funds delivered to the address
designated in writing by the other Party (e.g., in a statement or
invoice) or, failing such designation, to the address for notice
to such other Party provided pursuant to Section 12.8.
(d) The first invoice provided under this Agreement shall be due and
payable within sixty (60) days of the Effective Date.
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7.3. Disputed Charges.
Williams shall pay undisputed charges when such payments are due under
this Agreement. Williams may withhold payment of particular charges
that Williams disputes in good faith and for which it promptly gives
written notice to WinStar, stating the details of such dispute. The
Parties shall promptly refer such matter to dispute resolution in
accordance with Section 11.2. If Williams withholds any disputed
charges and such charges are ultimately determined to be proper and
payable to WinStar, Williams shall pay such charges to WinStar plus
interest at the Prime Rate from the date such charges were originally
due until the date such charges are paid. WinStar agrees that no
payment dispute shall be grounds for WinStar to withhold or diminish
the quality or quantity of any of the connectivity and services
provided hereunder.
7.4. Late Interest.
If either Williams or WinStar fails to make any payment under this
Agreement when due, such amounts shall accrue interest, from the date
such payment is due until paid, including accrued interest, at the
Prime Rate.
8. COVENANTS, REPRESENTATIONS AND WARRANTIES
8.1. Non-Infringement.
Each Party represents, warrants and covenants to the other that it
shall perform its responsibilities under this Agreement in a manner
that does not infringe, or constitute an infringement or
misappropriation of, any Intellectual Property Rights of any third
party.
8.2. Authorization.
Each Party represents and warrants to the other that:
(a) It has the requisite corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated by
this Agreement;
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement
have been duly authorized by the requisite corporate action on
the part of such Party;
(c) This Agreement constitutes a legal, valid and binding obligation
enforceable against such party in accordance with its terms;
(d) Its execution of and performance under this Agreement shall not
violate any applicable existing regulations, rules, statutes, or
court orders of any local, state, or federal government agency,
court, or body;
(e) It is not subject to any contractual or other obligation that
would prevent it from entering into this relationship; and
(f) It has not offered or provided any inducements in violation of
law or the other Party's policies of which it has been given
notice, in connection with this Agreement.
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8.3. Wireless Fiber Connectivity.
Excluding services provided by third parties other than WinStar's
subcontractors, WinStar covenants that the Williams T-1s shall be
designed, engineered, installed, constructed and operated in
accordance with the specifications set forth in the applicable
services schedule. WinStar further covenants that it will use its
commercially reasonable efforts under the circumstances to remedy any
delays, interruptions, omissions, mistakes, accidents or errors in the
Williams T-1s provided hereunder and to restore such Williams T-1s to
compliance with the terms hereof.
8.4. Disclaimer.
EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE PARTIES MAKE
NO WARRANTY TO EACH OTHER OR ANY OTHER ENTITY, WHETHER EXPRESS,
IMPLIED OR STATUTORY, AS TO THE MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OF ANY WIRELESS FIBER CONNECTIVITY, WILLIAMS T-1s,
HUBS, ANCILLARY SERVICES OR ANY OTHER SERVICES PROVIDED HEREUNDER OR
DESCRIBED HEREIN, OR AS TO ANY OTHER MATTER, ALL OF WHICH WARRANTIES
ARE HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED.
9. INDEMNIFICATION
9.1. Indemnities by Williams.
Williams agrees to indemnify, defend and hold harmless WinStar and its
Affiliates and their respective officers, directors, employees,
agents, successors, and assigns, from any and all Losses and
threatened Losses arising from, in connection with, or based on
allegations of, any of the following:
(a) Williams' failure to observe or perform its duties or obligations
to third parties (e.g., duties or obligations to subcontractors);
(b) Williams' infringement or misappropriation of any Intellectual
Property Rights of any third party;
(c) Williams' unexcused failure to abide by the terms and conditions
of the business relationship as mutually agreed to by the Parties
in writing;
(d) The death or bodily injury of any agent, employee, customer,
business invitee or any other person to the extent caused by the
tortious conduct of Williams;
(e) The damage, loss or destruction of any real or tangible personal
property to the extent caused by the tortious conduct of
Williams;
(f) Fines, penalties or other amounts payable due to Williams'
violation of applicable laws or regulations; and
(g) Any claim, demand, charge, action, cause of action, or other
proceeding asserted against WinStar but resulting from an act or
omission of Williams in its capacity as an employer of a person.
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9.2. Indemnities by WinStar.
WinStar agrees to indemnify, defend and hold harmless Williams and its
Affiliates and their respective officers, directors, employees,
agents, successors, and assigns, from any and all Losses and
threatened Losses arising from, in connection with, or based on
allegations of, any of the following:
(a) WinStar's failure to observe or perform its duties or obligations
to third parties (e.g., duties or obligations to its customers);
(b) WinStar's infringement or misappropriation of Intellectual
Property Rights of any third party;
(c) WinStar's unexcused failure to abide by the terms and conditions
of the business relationship as mutually agreed to by the Parties
in writing;
(d) The death or bodily injury of any agent, employee, customer,
business invitee or any other person to the extent caused by the
tortious conduct of WinStar;
(e) The damage, loss or destruction of any real or tangible personal
property to the extent caused by the tortious conduct of WinStar;
(f) Fines, penalties or other amounts payable due to WinStar's
violation of applicable laws or regulation; and
(g) Any claim, demand, charge, action, cause of action, or other
proceeding asserted against Williams but resulting from an act or
omission of WinStar in its capacity as an employer of a person.
9.3. Indemnification Procedures.
With respect to third-party claims, the following procedures shall
apply:
(a) Promptly after receipt of notice of the commencement or
threatened commencement of any civil, criminal, administrative,
or investigative action or proceeding involving a claim in
respect of which the indemnitee will seek indemnification
pursuant to this Article 9, the indemnitee will notify the
indemnitor of such claim in writing. No failure to so notify the
indemnitor will relieve the indemnitor of its obligations under
this Agreement except to the extent that it can demonstrate
damages attributable to such failure. Within fifteen (15)
calendar days following receipt of written notice from the
indemnitee relating to any claim, but no later than ten (10)
calendar days before the date on which any response to a
complaint or summons is due, the indemnitor will notify the
indemnitee in writing if the indemnitor elects to assume control
of the defense and settlement of that claim (a "Notice of
Election").
(b) If the indemnitor delivers a Notice of Election relating to any
claim within the required notice period, the indemnitor shall be
entitled to have sole control over the defense and settlement of
such claim; provided that (i) the indemnitee shall be entitled to
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participate in the defense of such claim and to employ counsel at
its own expense to assist in the handling of such claim, and (ii)
the indemnitor shall obtain the prior written approval, not to be
unreasonably withheld or delayed, of the indemnitee before
entering into any settlement of such claim or ceasing to defend
against such claim. After the indemnitor has delivered a Notice
of Election relating to any claim in accordance with the
preceding paragraph, the indemnitor shall not be liable to the
indemnitee for any legal expenses incurred by the indemnitee in
connection with the defense of that claim. In addition, the
indemnitor shall not be required to indemnify the indemnitee for
any amount paid or payable by the indemnitee in the settlement of
any claim for which the indemnitor has delivered a timely Notice
of Election if such amount was agreed to without the written
consent of the indemnitor.
(c) If the indemnitor does not deliver a Notice of Election relating
to any claim within the required notice period, or ceases to
defend against the claim, the indemnitee shall have the right to
defend the claim in such manner as it may deem appropriate, at
the cost and expense of the indemnitor. The indemnitor shall
promptly reimburse the indemnitee for all such costs and
expenses.
10. LIABILITY, RISK OF LOSS AND INSURANCE
10.1. General Intent.
Subject to the specific provisions of this Article 10, it is the
intent of the Parties that each Party shall be liable to the other
Party for any actual damages incurred by the non-breaching Party as a
result of the breaching Party's failure to perform its obligations in
the manner required by this Agreement.
10.2. Liability Restrictions.
(a) IN NO EVENT, WHETHER IN CONTRACT OR IN TORT (INCLUDING BREACH OF
WARRANTY, NEGLIGENCE AND STRICT LIABILITY IN TORT), SHALL A PARTY
BE LIABLE FOR INDIRECT OR CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR
SPECIAL DAMAGES EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
(b) Subject to Subsection (c), below, each Party's total liability to
the other, whether in contract or in tort (including breach of
warranty, negligence and strict liability in tort) shall be
limited to two hundred million dollars ($200,000,000).
(c) The limitation set forth in Subsections (b), above, shall not
apply with respect to: (i) third-party claims subject to
indemnification pursuant to the Agreement; (ii) fees due and
owing under this Agreement at the time of the claim; and (iii)
amounts subject of Cover as provided in Section 3.7(b).
(d) For the purposes of this Section 10.2, all amounts payable or
paid to third parties in connection with claims that are eligible
for indemnification pursuant to this Agreement shall be deemed
direct damages.
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10.3. Insurance Requirements.
(a) During the Term, WinStar shall have and maintain in force the
following insurance coverages:
(i) Worker's Compensation and Employer's Liability. Worker's
Compensation Insurance in amounts required by applicable law
and Employers Liability Insurance with limits not less than
$1,000,000 each accident. If work is to be performed in
Nevada, North Dakota, Ohio, Washington, Wyoming or West
Virginia, the party shall participate in the appropriate
state fund(s) to cover all eligible employees and provide a
stop gap endorsement for these monopolistic states in
WinStar's Worker's Compensation Insurance Program.
(ii) Commercial General Liability. WinStar shall carry broadform
general liability insurance coverage for property damage,
bodily injury, personal injury, contractual liability and
accidental pollution legal liability with coverage of at
least $10,000,000 per occurrence and in the aggregate. Total
limits can be attained by the inclusion of an
Umbrella/Excess Liability policy.
(iii)Automobile Liability. WinStar shall carry automobile
liability insurance written on the occurrence form of
policy. The policy shall provide for bodily injury and
property damage liability covering the operation of all
automobiles used in connection with performing under the
Agreement and shall provide coverage of at least $2,000,000
per occurrence.
(b) WinStar shall cause its insurers to issue certificates of
insurance evidencing that the coverages required under this
Agreement are maintained in force. The minimum limits of coverage
specified herein are not intended, and shall not be construed, to
limit any liability or indemnity of WinStar under this Agreement.
(c) Nothing in this Agreement shall be construed to prevent WinStar
from satisfying its insurance obligations pursuant to this
Agreement under a blanket policy or policies of insurance that
meet or exceed the requirements of this Article.
10.4. Risk of Loss.
(a) Each Party shall promptly notify the other of any matters
pertaining to any damage or impending damage to or loss of
Wireless Fiber Connectivity known to it that could reasonably be
expected to adversely affect the Wireless Fiber Connectivity.
(b) Each Party shall take all reasonable precautions against, and
shall assume liability for, subject to the terms of this
Agreement, any damage caused by it to the property of the other
Party.
(c) Neither Party shall use, or allow others to use, equipment,
technologies, or methods of operation that interfere in any way
with or adversely affect the Williams Connectivity or the
permitted use thereof by Williams, WinStar or authorized third
parties.
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(d) Williams shall not cause or permit any part of the Williams T-1s
to become subject to any mechanic's lien, materialman's lien,
vendor's lien or any similar lien or encumbrance whether by
operation of law or otherwise.
10.5. Force Majeure.
(a) No Party shall be liable for any default or delay in the
performance of its obligations under this Agreement if and to the
extent such default or delay is caused, directly or indirectly,
by fire, flood, lightning, earthquake, elements of nature or acts
of God, riots, civil disorders, rebellions or revolutions in any
country or any other cause beyond the reasonable control of such
Party; provided, however, that (i) the non-performing Party is
without fault in causing such default or delay, and (ii) such
default or delay could not have been prevented by reasonable
precautions and cannot reasonably be circumvented by the
non-performing Party through the use of alternate sources,
workaround plans or other means, including means contemplated by
applicable disaster recovery processes or procedures).
(b) In such event the non-performing Party shall be excused from
further performance or observance of the obligation(s) so
affected for as long as such circumstances prevail and such Party
continues to use commercially reasonable efforts to recommence
performance or observance whenever and to whatever extent
possible without delay. Any Party so delayed in its performance
shall immediately notify the other Party by telephone (to be
confirmed in writing within two (2) business days of the
inception of such delay) and describe at a reasonable level of
detail the circumstances causing such delay. The non-performing
party will provide the other party prompt written notice of the
cessation or termination of the force majeure event.
11. REMEDIES AND DISPUTE RESOLUTION
Any dispute between the Parties arising out of or relating to this
Agreement, including with respect to the interpretation of any provision of
this Agreement and with respect to the performance by Williams or WinStar,
shall be resolved as provided in this Article 11.
11.1. Cumulative Nature.
Except as otherwise expressly provided herein, all remedies provided
for in this Agreement shall be cumulative and in addition to and not
in lieu of any other remedies available to either Party at law, in
equity or otherwise.
11.2. Informal Dispute Resolution.
(a) Prior to the initiation of formal dispute resolution procedures
(i.e., arbitration), the Parties shall first attempt to resolve
their dispute at the senior manager level. If that level of
dispute resolution is not successful, the Parties shall proceed
informally, as follows:
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(i) Upon the written request of either Party, each Party shall
appoint a designated representative who does not otherwise
devote substantially full time to performance under this
Agreement, whose task it will be to meet for the purpose of
endeavoring to resolve such dispute.
(ii) The designated representatives shall meet as often as the
Parties reasonably deem necessary in order to gather and
furnish to the other all information with respect to the
matter in issue that the Parties believe to be appropriate
and germane in connection with its resolution. The
representatives shall discuss the problem and attempt to
resolve the dispute without the necessity of any formal
proceeding.
(iii)During the course of discussion, all reasonable requests
made by one Party to another for non-privileged
non-confidential information reasonably related to this
Agreement shall be honored so that each of the Parties may
be fully advised of the other's position.
(iv) The specific format for the discussions shall be left to the
discretion of the designated representatives.
(b) Prior to instituting formal proceedings, the Parties will first
have their chief executive officers meet to discuss the dispute.
This requirement shall not delay the institution of formal
proceedings past any statute of limitations expiration or for
more than fifteen (15) days.
(c) Subject to Subsection (b), formal proceedings for the resolution
of a dispute may not be commenced until the earlier of:
(i) The designated representatives concluding in good faith that
amicable resolution through continued negotiation of the
matter does not appear likely; or
(ii) Thirty (30) days after the initial written request to
appoint a designated representative pursuant to Subsection
(a), above, (this period shall be deemed to run
notwithstanding any claim that the process described in this
Section 11.2 was not followed or completed).
(d) This Section 11.2 shall not be construed to prevent a Party from
instituting, and a Party is authorized to institute, formal
proceedings earlier to avoid the expiration of any applicable
limitations period, or to preserve a superior position with
respect to other creditors or as provided in Section 11.6(a).
11.3. Arbitration.
If the Parties are unable to resolve a dispute as contemplated by
Section 11.2, and that dispute is not subject to 11.6(a) of this
Agreement, then such dispute shall be submitted to mandatory and
binding arbitration at the election of either Party (the "Disputing
Party") pursuant to the following conditions:
(a) Selection of Arbitrator. The Disputing Party shall notify the
American Arbitration Association ("AAA") and the other Party,
describing in reasonable detail the nature of the dispute, (the
25
<PAGE>
"Dispute Notice") and shall request that the AAA furnish a list
of five (5) possible arbitrators who have substantial experience
in the telecommunications industry. Each Party shall have fifteen
(15) days to reject two (2) of the proposed arbitrators. If only
one individual has not been so rejected, that person shall serve
as arbitrator; if two (2) or more individuals have not been so
rejected, the AAA shall select the arbitrator from those
individuals.
(b) Conduct of Arbitration. The arbitrator shall allow reasonable
discovery in the forms permitted by the Federal Rules of Civil
Procedure, to the extent consistent with the purpose of the
arbitration. The arbitrator shall have no power or authority to
amend or disregard any provision of this Section 11.3 or any
other provision of this Agreement. In particular, the arbitrator
shall not have the authority to exclude the right of a Party to
terminate this Agreement when a Party would otherwise have such
right. The arbitration hearing shall be commenced promptly and
conducted expeditiously.
(c) Replacement of Arbitrator. Should the arbitrator refuse or be
unable to proceed with arbitration proceedings as called for by
this Section, such arbitrator shall be replaced and a rehearing
shall take place in accordance with the provisions of this
Section. In such case, the replacement for the arbitrator shall
be either selected by the AAA from the original group of
potential arbitrators that were not rejected by the Parties or,
if there are no such arbitrators available, selected by repeating
the process of selection described in Subsection (a), above.
(d) Findings and Conclusions. The arbitrator rendering judgment upon
disputes between Parties as provided in this Section shall, after
reaching judgment and award, prepare and distribute to the
Parties a writing describing the findings of fact and conclusions
of law relevant to such judgment and award. The award of the
arbitrator shall be final and binding on the Parties, and
judgment thereon may be entered in a court of competent
jurisdiction.
(e) Place of Arbitration Hearings. Arbitration hearings hereunder
shall be held in Chicago, Illinois. If the Parties mutually
agree, arbitration hearings may be held in another location.
(f) Time of the Essence. The arbitrator is instructed that time is of
the essence in the arbitration proceeding, and that the
arbitrator shall have the right and authority to issue monetary
sanctions against either of the Parties if, upon a showing of
good cause, that Party is unreasonably delaying the proceeding.
Recognizing the express desire of the Parties for an expeditious
means of dispute resolution, the arbitrator shall limit or allow
the Parties to expand the scope of discovery as may be reasonable
under the circumstances.
11.4. Termination.
A Party shall not be in material breach of this Agreement unless and
until the other Party provides it written notice of default and the
non-performing party has failed to cure within thirty (30) days after
receipt of such notice. Any event of default may be waived in writing
at the non-defaulting Party's option. Upon the failure of a Party to
timely cure its material breach hereunder within the applicable cure
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period, the non-defaulting Party shall have the right to (i) terminate
this Agreement or (ii) subject to the terms of this Article 11, pursue
any legal remedies it may have under applicable law or principles of
equity relating to such breach.
11.5. Suspension of Service.
If Williams does not make any undisputed payment of at least One
Hundred Thousand Dollars ($100,000) within thirty days of the payment
due date, WinStar may suspend service to all Williams T-1s upon five
(5) days' prior written notice if Williams does not cure within such
period. If such non-payment continues for more than thirty (30) days
after receipt of such notice, WinStar shall have the right to
terminate this Agreement.
11.6. Litigation.
(a) Immediate Injunctive Relief. The only circumstance in which
disputes between the Parties shall not be subject to the
provisions of Sections 11.2 and 11.3 is where a Party, in good
faith, determines that a temporary restraining order or other
injunctive relief is its only appropriate and adequate remedy. If
a Party seeks immediate injunctive relief and does not prevail in
substantial part, that Party shall pay the other Party's costs
and attorneys' fees to the extent incurred in responding to or
challenging the request for immediate injunctive relief.
(b) Jurisdiction. The Parties consent to the jurisdiction of the
courts of the State of New York and to jurisdiction and venue in
the United States District Court for the Southern District of New
York for all litigation that may be brought with respect to the
terms of, and the transactions and relationships contemplated by,
this Agreement. The Parties further consent to the jurisdiction
of any state court located within a district that encompasses
assets of a Party against which a judgment has been rendered for
the enforcement of such judgment or award against the assets of
such Party.
(c) Governing Law. This Agreement and performance under it shall be
governed by and construed in accordance with the laws of the
State of New York without regard to its choice of law principles.
11.7. Continued Performance.
Each Party agrees to continue performing its obligations under this
Agreement while any dispute is being resolved except to the extent the
issue in dispute precludes performance (dispute over payment shall not
be deemed to preclude performance except as provided in Section 11.5).
12. GENERAL
12.1. Binding Nature and Assignment.
(a) This Agreement shall accrue to the benefit of and be binding upon
the Parties hereto and any purchaser or any successor entity into
which either Party has been merged or consolidated or to which
either Party has sold or transferred all or substantially all of
its assets.
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(b) Neither Party may, or shall have the power to, assign this
Agreement or delegate such Party's obligations hereunder without
the prior written consent of the other, except to:
(i) An entity that acquires all or substantially all of the
assets of such Party,
(ii) Any Affiliate,
(iii) A successor in a merger or acquisition of either Party, or
(iv) In connection with any financing.
12.2. Entire Agreement.
This Agreement, including any attached Schedules, constitutes the
entire agreement between the Parties with respect to the subject
matter in this Agreement, and supersedes all prior agreements, whether
written or oral, with respect to the subject matter contained in this
Agreement.
12.3. Tariff.
WinStar acknowledges that this is a private non-common carrier
agreement and that any incorporation of WinStar tariff provisions is
done for the convenience of the Parties.
12.4. Consents.
As between the parties, Williams shall be responsible for all
arrangements with copyright holders, music licensing organizations,
performers' representatives or other parties for necessary
authorizations, clearances or consents with respect to transmission
contents.
12.5. Restriction of Transmissions.
Williams will not transmit content that violates applicable law or
carries an unreasonable risk of leading to criminal, civil or
administrative proceedings or investigations against Williams or
WinStar.
12.6. Use and Ownership.
Neither Party shall have any right, title or interest to the equipment
installed by the other Party.
12.7. Non-Solicitation.
Neither Party shall directly or indirectly solicit the other's
employees or contractors without the other Party's written consent,
which shall not be unreasonably withheld.
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12.8. Notices.
All notices, requests, demands, and determinations under this
Agreement (other than routine operational communications), shall be in
writing and shall be deemed duly given (i) when delivered by hand,
(ii) one (1) business day after being given to an express, overnight
courier with a system for tracking delivery, (iii) when sent by
confirmed facsimile with a copy delivered thereafter by another means
specified in this Section, or (iv) four (4) business days after the
day of mailing, when mailed by United States registered or certified
mail, return receipt requested, postage prepaid, and addressed as
follows:
If to WinStar: If to Williams:
WinStar Wireless, Inc. Williams Communications, Inc.
230 Park Avenue One Williams Center, Suite 26-5
New York, NY 10169 Tulsa, Oklahoma 74172
Attn: EVP, General Counsel Attn: Contract Administration
Facsimile: 212/922-1637 Facsimile: 918/573-6578
With a copy to: With a copy to:
WinStar Wireless, Inc. Williams Communications, Inc.
7799 Leesburg Pike One Williams Center, Suite 4100
Falls Church, Virginia 22043 Tulsa, Oklahoma 74172
Attn: VP, Commercial and Attn: General Counsel
Legal Operations
Facsimile: 703/288-6647 Facsimile: 918/573-3005
A Party may from time to time change its address or designee for
notification purposes by giving the other prior written notice of the
new address or designee and the date upon which it will become
effective.
12.9. Counterparts.
This Agreement may be executed in several counterparts, all of which
taken together shall constitute one single agreement between the
Parties hereto.
12.10. Relationship of Parties.
Each Party, in performing hereunder, is acting as an independent
contractor, and such Party's personnel (including its subcontractors)
shall not be considered or represented as employees or agents of the
other Party. Neither Party is an agent of the other and has no
authority to represent that Party as to any matters, except as
expressly authorized in this Agreement.
12.11. Severability.
If any provision of this Agreement conflicts with the law under which
this Agreement is to be construed or if any such provision is held
invalid by an arbitrator or a court with jurisdiction over the
Parties, such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in
accordance with applicable law. The remainder of this Agreement shall
remain in full force and effect.
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<PAGE>
12.12. Reasonableness, Consents and Approval.
(a) Where this Agreement requires a Party to assist or
cooperate, such requirement shall not be interpreted to
require materially more than a commercially reasonable level
of effort (i.e. the standard applicable will not be "best
efforts" or "exhausting all available means").
(b) Except where expressly provided as being in the sole
discretion of a Party, where agreement, approval,
acceptance, consent, or similar action by either Party is
required under this Agreement, such action shall not be
unreasonably delayed or withheld. An approval or consent
given by a Party under this Agreement shall not relieve the
other Party from responsibility for complying with the
requirements of this Agreement, nor shall it be construed as
a waiver of any rights under this Agreement, except as and
to the extent otherwise expressly provided in such approval
or consent.
12.13. Waiver of Default.
No waiver or discharge hereof shall be valid unless in writing and
signed by an authorized representative of the Party against which such
amendment, waiver, or discharge is sought to be enforced. A delay or
omission by either Party hereto to exercise any right or power under
this Agreement shall not be construed to be a waiver thereof. A waiver
by either of the Parties hereto of any of the covenants to be
performed by the other or any breach thereof shall not be construed to
be a waiver of any succeeding breach thereof or of any other covenant
herein contained.
12.14. Survival.
No termination of this Agreement shall affect the rights or
obligations of any Party with respect to any other provisions of this
Agreement that contemplate performance or observance subsequent to any
termination or expiration of this Agreement.
12.15. Public Disclosures.
All media releases, public announcements, and public disclosures
relating to this Agreement or the subject matter of this Agreement,
including promotional or marketing material, but not including
announcements intended solely for internal distribution or disclosures
to the extent required to meet legal or regulatory requirements, shall
be coordinated with and shall be subject to approval by both Parties
prior to release.
12.16. Third Party Beneficiaries.
Except as otherwise provided in this Agreement, this Agreement shall
not be deemed to create any rights in third parties, including
suppliers and customers of a Party, or to create any obligations of a
Party to any such third parties.
12.17. Amendment.
(a) This Agreement shall not be modified, amended or in any way
altered except by an instrument in writing signed by both
Parties.
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(b) Unless otherwise expressly permitted in this Agreement, WinStar
shall not make any changes to the Exhibits or Schedules attached
hereto that may have a material adverse impact on the performance
or usability of Williams Connectivity without Williams' prior
written consent.
12.18. Order of Precedence.
In the event of a conflict, this Agreement shall take precedence over
the Schedules attached hereto, and the Schedules shall take precedence
over their attached Exhibits.
This order of precedence may be modified in a subsequently-added
Schedule or Exhibit if this modification is explicitly noted in the
corresponding amendment instrument.
12.19. Interpretation.
(a) Terms other than those defined in this Agreement shall be given
their plain English meaning, and those terms, acronyms and
phrases known in the telecommunications and information
technology services industries shall be interpreted in accordance
with their generally known meanings. Unless the context otherwise
requires, words importing the singular include the plural and
vice-versa.
(b) References to "Article," "Section," "Subsection" and "Schedule"
mean references to an article, section, subsection or schedule of
this Agreement, as appropriate, unless otherwise specifically
stated.
(c) The article and section headings in this Agreement are intended
to be for reference purposes only and shall in no way be
construed to modify or restrict any of the terms or provisions of
this Agreement.
(d) The words "include," "includes" and "including," when following a
general statement or term, are not to be construed as limiting
the general statement or term to any specific item or matter set
forth or to similar items or matters, but rather as permitting
the general statement or term to refer also to all other items or
matters that could reasonably fall within its broadest scope.
12.20. Covenant of Good Faith.
Each Party agrees that, in its respective dealings with the other
Party under or in connection with this Agreement, it will act in good
faith.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
undersigned officers, thereunto duly authorized, as of the date first written
above.
<TABLE>
<S> <C>
WINSTAR WIRELESS, INC. WILLIAMS COMMUNICATIONS, INC.
/s/ Timothy R. Graham /s/ Frank Semple
By: -------------------------------------------- By: ----------------------------------------
Timothy R. Graham Frank Semple
Name: -------------------------------------------- Name: ----------------------------------------
Vice President President, Williams Network
Title -------------------------------------------- Title: ----------------------------------------
December 17, 1998 December 17, 1998
Date: -------------------------------------------- Date: ----------------------------------------
</TABLE>
AGREEMENT TO PURCHASE LMDS LICENSE
AGREEMENT TO PURCHASE LMDS LICENSE, dated as of July 10, 1998 (this
"Agreement") by and between WinStar Communications, Inc., a Delaware corporation
the "Purchaser"), CellularVision USA, Inc., a Delaware corporation ("CVUSA") and
CellularVision of New York, L.P., a Delaware limited partnership ("Seller"),
WHEREAS, Seller holds the LMDS A Block License (the "License") from the
Federal Communications Commission (the "FCC") for the New York Primary
Metropolitan Statistical Area (i.e., the five boroughs comprising the City of
New York, and the contiguous New York State counties of Westchester, Rockland
and Putnam), free and clear of all liens, claims, rights of usage by third
parties and other encumbrances (collectively, "Liens"),
WHEREAS, Seller and CVUSA have retained Wasserstein Perella & Co., Inc.
to advise them on the marketing and sale of the 850 MHz License and Wasserstein
Perella & Co., Inc. has managed the sale process, which included, among other
things, contacting a large number of potential purchasers as well as active
negotiations with certain potential purchasers, all of which resulted in the
offer of the Purchase Price and the Loans (as hereinafter defined) all on the
terms and conditions set forth herein, which CVUSA deems to be the best offer
currently available for the 850 MHz License;
WHEREAS, Seller intends to disaggregate 850 MHz of the spectrum covered
by the License, comprised of the frequencies between 27.5 and 28.35 GHz and to
be conveyed to Purchaser pursuant to a license granted by the FCC thereto (the
"850 MHz License") and Purchaser wishes to purchase the 850 MHz License, upon
the terms and subject to the conditions set forth herein, free and clear of all
Liens.
WHEREAS, holders of a majority of the outstanding shares of common
stock of CVUSA wish to irrevocably consent to this Agreement and the
transactions contemplated hereby;
<PAGE>
NOW, THEREFORE, in consideration of the premises, and the mutual
conditions and obligations set forth herein, the parties hereto hereby agree as
follows:
1. Purchase Price; Loan. (a) The purchase price for the 850 MHz License
shall be $32,500,000, of which a portion will be payable by offset of the total
outstanding principal amount and accrued interest on the Loan (as defined below)
and the remainder of which will be payable by wire transfer of immediately
available funds to Seller at the Closing (defined in Section 3).
(b) As promptly as practicable following the execution and delivery of
this Agreement by the parties hereto (including the voting agreement of certain
holders owning not less than 39% of the outstanding shares of common stock of
CVUSA), Purchaser will make an initial loan to Seller (the "Initial Loan") in
the amount of $3,500,000, and, when Seller shall have made the FCC filings
contemplated by Section 2(a) and CVUSA shall have obtained the stockholder
approval contemplated by Section 13, Purchaser will make an additional loan in
the amount of $2,000,000 (such loan, together with the Initial Loan and the
loans that Purchaser may, in its sole discretion, make pursuant to Section 6,
the "Loans") at 7.5% per annum, with interest and principal payable in full at
the Closing by way of offset against the purchase price then due, as provided
above, or on such earlier date as this Agreement may be terminated in accordance
with its terms, provided that in the event of such a termination, such interest
rate will be 18% per annum. The Loans will be secured by a first priority
perfected security interest on all of the assets of Seller as to which a
security interest may be granted, including, without limitation, the proceeds
from such assets as well as from the sale or other transfer of FCC licenses, it
being understood and agreed that (i) a vendor's security interest in certain
equipment has been assigned to NewStart Factors, Inc. and (ii) the FCC licenses
may not be subject to security interests as a matter of law. Purchaser's
security interest will extend to after-acquired property and to proceeds,
provided that Borrower will retain the right to enter into vendor financing and
equivalent secured financing arrangements with respect to equipment acquired
after the date hereof. CVUSA will guarantee the repayment in full of the Loans
in accordance with its terms, and will secure its guarantee with a pledge of all
of the outstanding shares of stock of CellularVision Capital Corp., the sole
general partner of Seller, and all of the outstanding limited partnership
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<PAGE>
interests in Seller, all of which are owned by CVUSA. The parties agree to
prepare, review and negotiate in good faith and execute as promptly as
practicable (and in any event prior to the funding of the Loans) mutually
acceptable definitive documentation ((the "Loan Documents") in customary form
for these financing transactions, including, without limitation, a Loan
Agreement (including guaranty provisions), a Note, a Security Agreement
(including pledge provisions), and UCC-1 forms. To the extent there is an
inconsistency between the Loan Documents and this Agreement with respect to the
Loans and related security arrangements, the Loan Documents shall control.
2. Government Approvals; Transition. (a) As promptly as practicable
following the execution and delivery of this Agreement, Seller and Purchaser
will (i) file appropriate applications for the disaggregation of the License and
assignment of the 850 MHz License to Purchaser and (ii) make such filings under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and
regulations (collectively, the "HSR Act") as may be legally required in order to
consummate the transactions contemplated herein, with the filing fee related to
any such filing to be shared by Purchaser and CVNY on a 50%/50% basis. Following
the making of such applications and filings, both parties will diligently
attempt to obtain successful results with respect thereto in a manner that
permits the consummation of the transactions contemplated herein as soon as
practicable.
(b) Prior to the Closing, and in accordance with all
applicable legal and regulatory requirements, Seller will clear its operations
from the spectrum covered by the 850 MHz License, such transition to be
completed in any event within 90 days of the date of FCC Approval (as herein
defined).
3. Closing. The closing of the transactions contemplated herein (the
"Closing") shall occur on the first business day (the "Closing Date") following
the first date upon which all of the following conditions are satisfied: (i) the
FCC shall have granted its consent to the assignment of the 850 MHz License to
Purchaser and, unless waived by Purchaser, such consent shall have become a
final, nonappealable order no longer subject to review or reconsideration ("FCC
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Approval"); (ii) CVUSA shall have obtained the approval of its stockholders with
respect to the transactions contemplated hereby; and (iii) any applicable
waiting period under the HSR Act shall have expired without action taken to
prevent the consummation of the transactions contemplated herein. At the
closing, Seller shall assign the 850 MHz License to Purchaser free and clear of
all Liens against payment of the Purchase Price as contemplated by Section 1.
4. Representations and Warranties. (a) Each party (the "Representer")
hereby represents and warrants to the other that (i) the Representer has all
requisite power and authority to execute this Agreement and the Loan Documents
and perform its obligations hereunder and thereunder, (ii) all corporate and
partnership action necessary for the authorization, execution and performance by
the Representer of its obligations hereunder and thereunder have been taken,
except that, in the case of CVUSA, stockholder approval may be required, and
(iii) subject to obtaining the consent and approvals referred to in paragraph 3
above, the execution, delivery and performance of this Agreement and the Loan
Documents does not and will not require the consent of any other person or
entity, contravene the certificate of incorporation or by-laws or certificate of
limited partnership or partnership agreement of the Representer or conflict with
or result in a breach or violation by the Representer of any law, court or
administrative order or contract to which the Representer is a party or by which
the Representer is bound.
(b) Seller and CVUSA hereby represent and warrant that Seller is the
sole legal and beneficial owner and holder of the License, has the right under
applicable law and FCC regulations to effect the disaggregation of spectrum
contemplated hereby and that the License is, and the 850 MHz License will be,
held by Seller free and clear of all Liens. Without limiting the foregoing,
Seller hereby represents and warrants that no person or entity other than Seller
has or will have the right to use all or any portion of the License or the 850
MHz License. Seller hereby further represents and warrants that (i) it is in
compliance in all material respects with the Communications Act of 1934, as
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<PAGE>
amended, and the rules, regulations and policies of the FCC, (ii) Seller has
satisfied all build-out, renewal, construction and other material regulatory
requirements, and (iii) there are no pending complaints, challenges, petitions,
appeals or other regulatory encumbrances pending or, to the best of the
knowledge of Seller or CVUSA, threatened, against Seller or the License.
(c) Each party will use all commercially reasonable efforts to cause
all of its representations and warranties in this Agreement to remain true and
correct at all times through the Closing Date and to cause all conditions to
Closing to be satisfied.
5. Closing Conditions. (a) Each Party's obligation to close shall be
subject to the following conditions (i) the other party's representations and
warranties hereunder and under the Loan Documents shall be true and correct on
and as of the Closing Date as if made again on that date, (ii) the other party
shall have performed all covenants to have been performed hereunder and
thereunder and (iii) the other party shall have delivered a certificate of a
senior officer as to the matters in clauses (i) and (ii) above dated as of the
Closing Date.
(b) Purchaser's obligation to close shall be subject to the conditions
that (i) the conditions referred to in Sections 2(b) and 3 shall have been
satisfied, (ii) there shall be no injunction or order of any court or government
agency restraining or invalidating any of the transactions contemplated hereby,
and (iii) Purchaser shall have received opinions of Seller's counsel dated as of
the date hereof and as of the Closing date in form and substance reasonably
satisfactory to Purchaser and covering such portion of the matters covered by
Seller's and CVUSA's representations contained herein as are customarily covered
in legal opinions and subject to customary qualifications, including an opinion
of FCC counsel substantially in the form attached.
6. Termination. Either party which is not then in material breach of
its obligations hereunder may terminate this Agreement without liability by
written notice to the other party if the Closing Date shall not have occurred on
or before January 31, 1999, provided, however, that upon Purchaser's notice
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<PAGE>
given at least 10 days prior to the date that termination would otherwise be
permitted, such date shall be extended to June 30, 1999 and, thereafter, to
December 31, 1999 if (i) Purchaser is not in material breach of its obligations
hereunder and (ii) on each such occasion Purchaser makes an additional Loan of
$3.5 million in principal amount to the Seller on substantially the same terms
as the Loans. Purchaser may terminate this Agreement at any time if CVUSA has
not obtained stockholder approval of this transaction by October 10, 1998.
7. Transaction Expenses. Except as otherwise provided in Section 2(a)
and Section 13, each of the parties hereto will be responsible for its own
expenses (including fees and expenses of legal counsel) incurred in connection
with the transactions contemplated hereby, provided that as of the Closing Date
(or earlier termination of this Agreement in accordance with its terms in a case
in which the expense reimbursement provision of Section 13 do not apply) Seller
and CVUSA will reimburse Purchaser's reasonable fees and expenses of counsel
incurred in connection with the negotiation and preparation of the documents
relating to the transactions contemplated hereby, including the Loans, and the
prosecution of the FCC applications contemplated hereby, provided that the
amount of such fees and expenses related to the documentation of the
transactions through the funding of the Initial Loan and prosecution of the FCC
applications contemplated hereby shall not exceed $50,000. Each party represents
to the other that it has not incurred any liability for a broker's or finder's
fee in connection with the transactions contemplated hereby, except that Seller
is liable to Wasserstein Perella & Co., Inc. for fees in connection with such
transactions.
8. Publicity; Disclosure. Without the prior approval of the other
party, neither of the parties hereto shall disclose to the public or to any
third party any information concerning the transactions contemplated hereby,
other than disclosures to their financial, legal and other advisors and to
governmental authorities or the public as may, in the opinion of counsel, be
required by law. Notwithstanding the foregoing, CVUSA shall be permitted to
include in the proxy statement described in Section 13 hereof, such details of
the transactions contemplated hereby as may be required by law; provided that
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<PAGE>
Purchaser shall have the right to review and comment thereon prior to the proxy
statement being filed with the SEC or distributed. The parties will cooperate in
the preparation of a joint press release or coordinated but separate press
releases announcing the effectiveness of this Agreement as soon as it occurs
pursuant to Section 12.
9. Access. Until the Closing, CVUSA and Seller will give Purchaser and
its representatives all access during ordinary business hours to the premises
and personnel of Seller and CVUSA and to all accounting, financial and other
records applicable to Seller as Purchaser may reasonably request for the purpose
of confirming compliance with this Agreement and CVUSA and shall furnish all
information with respect to the business and affairs of Seller as Purchaser may
reasonably request for such purpose. CVUSA and Seller will cause their
executives, employees, attorneys and accountants to make themselves available to
provide reasonable cooperation to Purchaser in connection therewith.
10. Exclusivity. Neither CVUSA nor Seller shall (nor shall either of
them permit their representatives or stockholders to) discuss a possible sale,
lease or other disposition of or by Seller or CVUSA (whether by sale of stock or
assets or otherwise) that is not consistent with the sale to Purchaser of the
850 MHz License contemplated hereby or provide any information in connection
therewith to any other party or enter into any agreements or commitments to do
the same.
11. Assignment. This Agreement is intended to be a binding agreement
between Purchaser, CVUSA and Seller and shall bind and inure to the benefit of
the successors and assigns of such parties; provided that CVUSA and Seller may
not assign their rights or delegate their obligations hereunder without
Purchaser's prior written consent, which will not be unreasonably withheld. The
Purchaser may assign its rights hereunder to any of its wholly-owned or majority
controlled subsidiaries, provided that no such assignment of its rights shall
relieve Purchaser of any of its obligations hereunder.
7
<PAGE>
12. Effectiveness. Simultaneously with the execution and delivery of
this Agreement the following are expected to occur, upon the occurrence of which
this Agreement will come into full force and effect:
(a) Holders of not less than 39% of the issued and outstanding
shares of Common Stock of CVUSA shall have agreed to vote their shares as
provided below;
(b) Seller shall have executed and delivered to Purchaser the
Loan Documentation, including arrangements with existing creditors as Purchaser
shall deem appropriate;
(c) Purchaser shall have received such opinions of Seller's
counsel as it shall reasonably require in connection with FCC and corporate
matters with respect to the Loan Documents, the License and the transactions
contemplated hereby, including, if Purchaser so requires, a favorable opinion
from Purchaser's FCC counsel to the effect that there is no reason to expect (i)
that the transactions contemplated hereby will materially adversely affect the
regulatory status of any of the FCC wireless licenses currently held by
Purchaser or any of its subsidiaries or (ii) that there is any reason to believe
that the disaggregation of spectrum is not permissible under applicable law.
13. Shareholder Approval; Break-up fee; Events of Bankruptcy.
(a) CVUSA has obtained the approval of a majority of its board
of directors to the transactions contemplated hereby, and its board has
recommended and will continue to recommend, so long as such recommendation is
consistent with their fiduciary duties under applicable law, that its
stockholders vote to approve the transactions contemplated hereby. CVUSA will
call a special meeting of its stockholders as promptly as practicable for the
purpose of obtaining such approval, will file a preliminary proxy statement with
respect thereto with the Securities and Exchange Commission within five (5)
business days of the execution of this Agreement and will distribute a
definitive proxy statement to stockholders in accordance with applicable law,
and use its best efforts to hold such meeting and obtain such approval as
quickly as possible.
8
<PAGE>
(b) In the event a petition for relief under 11 U.S.C. ss.101
et seq. (the "Bankruptcy Code") or similar State insolvency statute, is filed by
or against Seller or CVUSA, each Seller and CVUSA agree to (i) consent to entry
of an order for relief under Chapter 11 of the Bankruptcy Code; (ii) continue to
comply with the terms of this Agreement; and (iii) to the extent necessary for
Seller or CVUSA to continue to comply with the terms of this Agreement, seek
Bankruptcy Court approval of the sale contemplated by this Agreement or take
such other action as may be necessary or advisable to allow Seller and CVUSA to
continue to comply with the terms of this Agreement.
(c) in the event at any time on or prior to the Closing Date
(i) this Agreement is terminated by Seller or CVUSA (other than as a result of a
material breach by Purchaser) and a court determines that specific enforcement
in accordance with the provisions of Section 14(b) is not available to
Purchaser, or (ii) Purchaser terminates this Agreement because CVUSA stockholder
approval has not been obtained by October 10, 1998, then Purchaser shall be
entitled to the following as liquidated damages, and not as a penalty:
(i) Expense Reimbursement: Seller and CVUSA jointly and
severally shall reimburse Purchaser for its actual and reasonable out-of-pocket
expenses, not to exceed $325,000 (exclusive of the amounts payable pursuant to
Section 7) incurred in furtherance of this Agreement and the transactions
contemplated herein, including without limitation, attorneys' fees and expenses
incurred by Purchaser for services of outside counsel in negotiating this
Agreement, the Loan Documents and all related agreements, performance of due
diligence, or otherwise (the "Expense Reimbursement"). Purchaser shall submit to
Seller and CVUSA an itemized statement reflecting such actual reasonable
expenses. Within five (5) days thereafter, Seller and CVUSA shall make an
Expense Reimbursement. This obligation shall survive any termination of this
Agreement, and shall be secured by the collateral under the security agreement
being executed in relation to the Loans.
9
<PAGE>
(ii) Termination Fee. Seller and CVUSA jointly and severally
shall, within five (5) days of such termination, pay $1,625,000 to the Purchaser
as a termination fee ("Termination Fee"). This obligation shall survive any
termination of this Agreement, and shall be secured by the collateral under the
security agreement being executed in relation to the Loans.
14. Specific Performance; Miscellaneous; Conflict Waiver. (a) This
Agreement shall be construed and enforced in accordance with the internal laws
of the State of New York. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but which together shall
constitute one instrument.
(b) Notwithstanding the provisions of Section 13(c)(i) and
(ii), it is understood and agreed that money damages would not be an adequate
remedy for a breach of the Agreement by Seller or CVUSA and that Purchaser shall
be entitled to specific performance and injunctive or other equitable relief as
a remedy for any such breach. Seller and CVUSA agree to waive any requirement
for the securing or posting of any bond in connection with such remedy. Such
remedy shall not be deemed to be the exclusive remedy for any such breach, but
shall be in addition to all other remedies available to Purchaser at law or in
equity.
(c) Each of the parties hereto acknowledges that Willkie Farr
& Gallagher regularly acts as counsel for each of them, and consents to the fact
that the New York office of such firm will provide corporate (but not FCC)
advice to CVUSA and Seller (which will receive FCC advice from other counsel),
its Washington office will provide FCC (but not corporate) advice to Purchaser,
which is also represented by other counsel in this matter.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
WINSTAR COMMUNICATIONS, INC.
By:/s/ Timothy R. Graham
--------------------------
Timothy R. Graham
Title:
Accepted and agreed as of July 10, 1998
CELLULARVISION USA, INC.
By:_/s/ Shant Hovnanian
- - -------------------------
Printed name: Shant Hownanian
Title:
CELLULARVISION OF NEW YORK, L.P.
By: CELLULARVISION CAPITAL CORP.,
its General Partner
By:___/s/ Shant Hovnanian
--------------------------
Title:
11
<PAGE>
Voting Agreement by Stockholders
In consideration of the Purchaser executing the Agreement, the
undersigned, being the holders of not less than 39% outstanding shares of the
voting capital stock of CellularVision USA, Inc. which is entitled to vote a the
approval of the transactions described herein, hereby expressly and irrevocably
agree to vote all such shares in favor of approval of the transactions
contemplated hereby at any special meeting of stockholders to be called for such
purpose and do hereby agree to take such actions as Purchaser may reasonably
request in order to further evidence such approval and consent.
/s/ Shant Hovnanian
---------------------
Shant Hovnanian
/s/ Vahak Hovnanian
--------------------
Vahak Hovnanian
