<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 1
TO
FORM 8-K
ON FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 21, 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 6
<PAGE>
ITEM 5. OTHER EVENTS
General
On October 21, 1998, WinStar Communications, Inc. (the "Company") and
Lucent Technologies, Inc. ("Lucent"), entered into an expanded long-term
strategic relationship to further the build out of the Company's broadband
telecommunications network (the "Network") in and between major domestic and
international markets. The Company will purchase the components of the Network
from Lucent and, to a lesser extent, third-party vendors on a "best-of-breed"
basis pursuant to the terms of a Supply Agreement between the Company and
Lucent ("Supply Agreement"). Lucent will also provide the Company with certain
design, engineering and other services related to such build out. The Company,
WinStar Network Expansion LLC ("WinStar Network Expansion"), a limited
liability company owned by the Company and formed to facilitate the financing
of purchases under the Supply Agreement, Lucent, as administrative agent and
lender, and State Street Bank and Trust Company, as collateral agent ("State
Street Bank"), also entered into a Credit Agreement ("Credit Agreement") which
sets forth the terms and conditions under which Lucent (or its assignee
lenders) will provide purchase money financing (the "Credit Commitments") in an
aggregate amount of up to $2.0 billion in connection with the implementation of
the Supply Agreement and the build out of the Network.
While the Company's plan of providing switched services in 40 major
metropolitan areas by the end of 1999 was already funded, the expanded
relationship with Lucent will allow the Company greater flexibility and provide
it with enhanced resources in connection with the build out of its Network. The
relationship also enhances the Company's ability to expand internationally as
well as into additional U.S. markets and, if it chooses, to do so on an
accelerated basis.
Network Build Out and Relationship of the Parties
Lucent and the Company will work together in the continuing build out
of the Network during the five-year term of the Supply Agreement. The Supply
Agreement provides the basis under which Lucent will, under the direction and
supervision of the Company, design, engineer and install the Company's growing
Network. Under the Supply Agreement, Lucent will be the Company's preferred
supplier for Network components to the extent best-of- breed network components
are manufactured or sold by Lucent. If it is determined that certain components
manufactured by Lucent are not best-of-breed (i.e., not the best and most
cost-effective with regard to the particular requirements of the Network) or
that such components are not available from Lucent, the Company may purchase
such components from third-party vendors. Such third party purchases may be
made directly from the vendor or through Lucent and, subject to certain
limitations, may be financed under the Credit Commitments described below.
Network components and services will be delivered and installed by Lucent in
response to purchase orders given by the Company to Lucent from time to time.
Lucent will designate certain key employees to implement or supervise Lucent's
activities under the Supply Agreement. The Company will retain control and
operation of the Network and has final design authority and control over the
build out of the Network.
Under the Supply Agreement the parties will undertake certain other
strategic initiatives. Lucent will provide the Company with testing and lab
facilities, various demonstration products for the Company's evaluation and
other forms of assistance. At the Company's request, Lucent will provide
building access rights (including roof, interior space and conduit rights) in
buildings for which Lucent has or can obtain such rights pursuant to industry
standard terms, and will assist the Company in obtaining similar rights in any
other buildings leased or occupied by Lucent. Lucent and the Company will
provide marketing support to each other in a variety of areas relating to
telecommunications services and equipment and other associated business
opportunities, including mutual assistance obtaining Federal government
business.
2
<PAGE>
Credit Commitment
Under the Credit Agreement, Lucent has established a Credit Commitment
which may be drawn by the WinStar Network Expansion (the "Borrower") as and
when needed during the build out of the Network. The Credit Agreement allows
for aggregate borrowings of up to $2.0 billion; provided, however, that Lucent
is not required to have outstanding at any one time aggregate loans and
commitments in excess of $500 million. Additional amounts of the Credit
Commitment will become available on a dollar-for-dollar basis as the loans
and/or unfunded commitments are syndicated to other lenders. The Borrower may
draw against the available Credit Commitments until they have been fully drawn
or, if earlier, the fifth anniversary of the Credit Agreement (the "Commitment
Termination Date"). The Credit Agreement provides that borrowings will fall
into one of five annual tranches ("Tranches"). The Tranche under which a loan
is drawn will determine when such loan is to be repaid. Borrowings made during
the first year, second year, third year, fourth year and fifth year of the
Credit Agreement would be considered Tranche 1, Tranche 2, Tranche 3, Tranche 4
and Tranche 5 borrowings, respectively.
Interest on each loan made under the Credit Commitments will accrue at
a floating rate equal to either a base rate (determined in relation to the then
current prime rate) or an adjusted Eurodollar rate ("LIBOR"), in each case plus
a margin which may vary over the life of the facility. Interest will be payable
quarterly in arrears for base rate advances and at the end of each interest
period (which can be one, three or six months in length, at the Borrower's
election) for LIBOR advances; provided, however, that interest on loans
accruing during the first year of the Tranche of which such loan is a part may,
at the Borrower's election, be deferred and the deferred interest shall accrue
interest at the same rates as the principal of the loans.
The Credit Agreement provides that the principal of loans made under
any Tranche as well as any deferred interest thereon will be repaid in sixteen
equal installments, payable on the last day of each calendar quarter,
commencing on the last day of the first quarter following the fourth
anniversary of the date the applicable Tranche first becomes available (each, a
"Tranche Payment Date").
Loans made under the Credit Agreement are also subject to mandatory
prepayment in certain events, including (i) receipt by the Company and its
Restricted Subsidiaries (as defined in the Credit Agreement) of proceeds of
certain asset sales or casualty events which are not reinvested in the
Company's business and (ii) the generation of Excess Cash Flow (as defined in
the Credit Agreement), if any, by the Company. The Borrower will also be
entitled to prepay the loans at its option at any time.
Pursuant to a security agreement between Lucent, State Street Bank,
the Borrower and the Company, loans made under the Credit Agreement will be
secured by a purchase money security interest in the equipment comprising the
Network, to the extent the purchase of such equipment is financed under the
Credit Agreement. Additionally, the Borrower's obligations under the Credit
Agreement are guaranteed by the Company and certain of the Company's Restricted
Subsidiaries (as defined in the Credit Agreement), under a Guarantee and
Subordination Agreement among the Company, such Restricted Subsidiaries and
Lucent, as administrative agent.
The Credit Agreement contains significant covenants of the Borrower,
the Company and the Company's Restricted Subsidiaries, including, but not
limited to: (a) affirmative covenants with respect to compliance with laws,
inspection rights, performance of other obligations, delivery of financial
statements and other information, interest rate cap arrangements, and
maintenance of licenses and certain other assets, (b) negative covenants
restricting their ability to incur or create (with certain exceptions) liens,
debt and capitalized lease obligations, and otherwise restricting (with
customary exceptions) mergers or consolidations, disposal of assets,
investments, payments of dividends and distributions, modification of
tax-sharing or management or servicing fee agreements, changes in the nature of
the business conducted, prepayment or redemption of debt, creation of
partnerships and new subsidiaries and transactions with affiliates; and (c)
financial covenants (including, among others, minimum revenue requirements, and
ratios of secured debt to total capitalization, total debt to total
capitalization, and total debt to total EBITDA.
3
<PAGE>
In connection with the arranging and making of the Credit Commitment,
the Borrower is required to pay various arrangement, commitment and other fees
to Lucent and/or its assignees in amounts customary for facilities of this
type.
This report contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect to
the financial condition, results of operations and business of the Company.
These forward-looking statements involve certain risks and uncertainties. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions. No
assurance can be given that any of such expectations will be realized.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS:
10.1 Credit Agreement, dated as of October 21, 1998,
among WinStar Network Expansion, LLC, WinStar
Communications, Inc., the Lenders, State Street Bank
and Trust Company, and Lucent Technologies Inc.
10.2 Security Agreement, dated as of October 21, 1998,
between WinStar Network Expansion, LLC and State
Street Bank and Trust Company.
10.3 Guarantee and Subordination Agreement, dated as of
October 21, 1998, among WinStar Network Expansion,
LLC, WinStar Communications, Inc., each of the
subsidiaries of the Parent listed on Schedule I
thereto and Lucent Technologies Inc.
10.4 Supply Agreement dated as of October 21, 1998
between WinStar Communications, Inc. and Lucent
Technologies, Inc.
4
<PAGE>
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: February 1, 1999
WINSTAR COMMUNICATIONS, INC.
By: /s/ Timothy R. Graham
----------------------------------
Executive Vice President
5
<PAGE>
EXHIBIT INDEX
The following exhibit is filed herewith:
Exhibit Document Page
10.1 Credit Agreement, dated as of October 21, 1998, among WinStar
Network Expansion, LLC, WinStar Communications, Inc., the
Lenders, State Street Bank and Trust Company, and Lucent
Technologies Inc.
10.2 Security Agreement, dated as of October 21, 1998, between
WinStar Network Expansion, LLC and State Street Bank and Trust
Company.
10.3 Guarantee and Subordination Agreement, dated as of October 21,
1998, among WinStar Network Expansion, LLC, WinStar
Communications, Inc., each of the subsidiaries of the Parent
listed on Schedule I thereto and Lucent Technologies Inc.
10.4 Supply Agreement
6
<PAGE>
==============================================================================
CREDIT AGREEMENT
dated as of
October 21, 1998
among
WINSTAR NETWORK EXPANSION, LLC,
WINSTAR COMMUNICATIONS, INC.,
The Lenders Party Hereto,
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent,
and
LUCENT TECHNOLOGIES INC.,
as Administrative Agent
==============================================================================
[Reference No. 7725-042]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
Definitions
<S> <C> <C>
SECTION 1.01. Defined Terms......................................................... 1
SECTION 1.02. Classification of Loans and
Borrowings.......................................................... 33
SECTION 1.03. Terms Generally....................................................... 33
SECTION 1.04. Accounting Terms; GAAP................................................ 34
ARTICLE II
The Loans
SECTION 2.01. Commitments........................................................... 35
SECTION 2.02. Loans and Borrowings.................................................. 35
SECTION 2.03. Requests for Borrowings............................................... 35
SECTION 2.04. Funding of Borrowings................................................. 37
SECTION 2.05. Interest Elections.................................................... 38
SECTION 2.06. Termination and Reduction of
Commitments......................................................... 40
SECTION 2.07. Repayment of Loans; Evidence of Debt.................................. 40
SECTION 2.08. Amortization of Loans................................................. 41
SECTION 2.09. Prepayment of Loans................................................... 46
SECTION 2.10. Fees.................................................................. 49
SECTION 2.11. Interest.............................................................. 50
SECTION 2.12. Alternate Rate of Interest............................................ 51
SECTION 2.13. Increased Costs....................................................... 52
SECTION 2.14. Break Funding Payments; Prepayment
Fees................................................................ 53
SECTION 2.15. Taxes................................................................. 54
SECTION 2.16. Payments Generally; Pro Rata Treatment;
Sharing of Set-Offs................................................. 55
SECTION 2.17. Mitigation Obligations; Replacement of
Lenders............................................................. 57
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers.................................................. 58
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 3.02. Authorization; Enforceability......................................... 58
SECTION 3.03. Governmental Approvals; No Conflicts.................................. 59
SECTION 3.04. Financial Condition; No Material
Adverse Change...................................................... 59
SECTION 3.05. Properties and Licenses............................................... 60
SECTION 3.06. Litigation and Environmental Matters.................................. 60
SECTION 3.07. Compliance with Laws and Agreements................................... 61
SECTION 3.08. Investment and Holding Company Status................................. 61
SECTION 3.09. Taxes................................................................. 61
SECTION 3.10. ERISA................................................................. 61
SECTION 3.11. Disclosure............................................................ 62
SECTION 3.12. Subsidiaries.......................................................... 62
SECTION 3.13. Insurance............................................................. 62
SECTION 3.14. Labor Matters......................................................... 62
SECTION 3.15. Supply Agreement...................................................... 63
SECTION 3.16. Security Agreement.................................................... 63
SECTION 3.17. Year 2000 Compliance.................................................. 63
ARTICLE IV
Conditions
SECTION 4.01. Effective Date........................................................ 63
SECTION 4.02. Each Borrowing........................................................ 66
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other
Information......................................................... 67
SECTION 5.02. Notices of Material Events............................................ 69
SECTION 5.03. Information Regarding Collateral...................................... 70
SECTION 5.04. Existence; Conduct of Business........................................ 71
SECTION 5.05. Payment of Obligations................................................ 71
SECTION 5.06. Maintenance of Properties............................................. 71
SECTION 5.07. Insurance............................................................. 71
SECTION 5.08. Books and Records; Inspection Rights.................................. 73
SECTION 5.09. Compliance with Laws and Agreements................................... 73
SECTION 5.10. Use of Proceeds....................................................... 73
SECTION 5.11. Further Assurances.................................................... 73
SECTION 5.12. Casualty and Condemnation............................................. 73
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 5.13. Interest Rate Protection.............................................. 74
SECTION 5.14. Additional Subsidiary Guarantors...................................... 74
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness.......................................................... 75
SECTION 6.02. Liens................................................................. 77
SECTION 6.03. Fundamental Changes................................................... 78
SECTION 6.04. Investments, Loans, Advances,
Guarantees and Acquisitions; Asset
Sales............................................................... 80
SECTION 6.05. Hedging Agreements.................................................... 82
SECTION 6.06. Restricted Payments................................................... 82
SECTION 6.07. Transactions with Affiliates.......................................... 83
SECTION 6.08. Restrictive Agreements................................................ 83
SECTION 6.09. Repayment of Indebtedness............................................. 83
SECTION 6.10. Limitation on Sale-Leaseback
Transactions........................................................ 83
SECTION 6.11. Secured Indebtedness to Total
Capitalization...................................................... 84
SECTION 6.12. Consolidated Indebtedness to Total
Capitalization...................................................... 84
SECTION 6.13. Consolidated Indebtedness to
Consolidated EBITDA................................................. 84
SECTION 6.14. Consolidated EBITDA to Consolidated
Debt Service........................................................ 84
SECTION 6.15. Consolidated EBITDA to Consolidated
Interest Expense.................................................... 85
SECTION 6.16. Minimum Revenues...................................................... 85
SECTION 6.17. Use of Collateral..................................................... 85
ARTICLE VII
Events of Default
Events of Default.......................................................................................86
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE VIII
The Agents
The Agents..............................................................................................90
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices............................................................... 92
SECTION 9.02. Waivers; Amendments................................................... 93
SECTION 9.03. Expenses; Indemnity; Damage Waiver.................................... 94
SECTION 9.04. Successors and Assigns................................................ 96
SECTION 9.05. Survival.............................................................. 99
SECTION 9.06. Counterparts; Integration;
Effectiveness....................................................... 99
SECTION 9.07. Severability.......................................................... 100
SECTION 9.08. Right of Setoff....................................................... 100
SECTION 9.09. Governing Law; Jurisdiction; Consent
to Service of Process............................................... 101
SECTION 9.10. WAIVER OF JURY TRIAL.................................................. 101
SECTION 9.11. Headings.............................................................. 102
SECTION 9.12. Confidentiality....................................................... 102
SECTION 9.13. Interest Rate Limitation.............................................. 103
</TABLE>
SCHEDULES:
Schedule 2.01 -- Commitments
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Subsidiaries
Schedule 3.13 -- Insurance
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Permitted Liens
Schedule 6.04A -- Pending Acquisitions
Schedule 6.04B -- Existing Investments
Schedule 6.04C -- Permitted Asset Sales
Schedule 6.08 -- Existing Restrictions
Schedule 6.17 -- Customer Equipment
<PAGE>
Page
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Guarantee Agreement
Exhibit C -- Form of Indemnity and Contribution Agreement
Exhibit D -- Form of Perfection Certificate
Exhibit E -- Form of Security Agreement
Exhibit F -- Form of Equipment User Agreement
<PAGE>
CREDIT AGREEMENT dated as of October 21, 1998, among
WINSTAR NETWORK EXPANSION, LLC, a Delaware limited liability
company, WINSTAR COMMUNICATIONS, INC., a Delaware
corporation, the LENDERS party hereto, STATE STREET BANK AND
TRUST COMPANY, as Collateral Agent, and LUCENT TECHNOLOGIES
INC., as Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the Alternate Base Rate.
"Acquisition Basket Amount" means, at any time, an amount
equal to the sum of (a) $350,000,000, plus (b) 100% of the aggregate Net
Proceeds received by the Parent after the Effective Date and prior to such time
from the issuance of additional shares of capital stock (other than
Disqualified Stock) of the Parent (including options, warrants and other rights
to purchase shares of such capital stock) (excluding the amount of any (A)
Restricted Payments made pursuant to clause (b) of Section 6.06 and (B) Net
Proceeds used to pay the consideration for any investment made by the Parent or
a Restricted Subsidiary pursuant to clause (x) of Section 6.04(a)), plus (c)
40% of the aggregate Net Proceeds received by the Parent after the Effective
Date and prior to such time from the issuance of Subordinated Indebtedness or
Disqualified Stock, in each case satisfying the criteria set forth in clause
(viii) of Section 6.01(a), excluding any such Net Proceeds to the extent
applied to refinance other Indebtedness.
"Acquisition Indebtedness" means any Indebtedness (a) issued
as consideration in connection with any Permitted Acquisition or (b) incurred
or assumed in connection with or otherwise resulting from any Permitted
Acquisition.
<PAGE>
2
"Additional Assets" means any capital assets used or useful
in the business of the Parent and the Restricted Subsidiaries.
"Adjusted LIBO Rate" means, with respect to any LIBOR
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means Lucent, in its capacity
as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an
Administrative Questionnaire in a form supplied by the
Administrative Agent.
"Affiliate" means, with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
"Affiliated Equipment User" means any Equipment User that is
an Affiliate of the Parent (including any Restricted Subsidiary) or with which
the Parent or a Restricted Subsidiary has entered into an agreement to provide
management or operating services.
"Agents" means the Administrative Agent and the
Collateral Agent.
"Alternate Base Rate" means, for any day, a rate per annum
equal to the greater of (a) the Prime Rate in effect on such day and (b) the
Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change
in the Alternate Base Rate due to a change in the Prime Rate or the Federal
Funds Effective Rate shall be effective from and including the effective date
of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"Applicable Rate" means, for any day, with respect to any
Loan, the applicable rate per annum set forth below under the caption "ABR
Spread" or "Eurodollar Spread", as the
<PAGE>
3
case may be, based on the Leverage Ratio as of the most recent
determination date:
<TABLE>
<CAPTION>
Eurodollar
Leverage Ratio ABR Spread Spread
-------------- ---------- ------
<S> <C> <C> <C>
Category 1 <4.0 to 1.0 1.25% 2.25%
Category 2 >= 4.0 to 1.0 1.50% 2.50%
< 5.0 to 1.0
Category 3 >= 5.0 to 1.0 1.75% 2.75%
< 6.0 to 1.0
Category 4 >= 6.0 to 1.0 2.00% 3.00%
< 7.0 to 1.0
Category 5 >= 7.0 to 1.0 2.25% 3.25%
< 7.5 to 1.0
Category 6 >= 7.5 to 1.0 2.50% 3.50%
For purposes of the foregoing, (i) the Leverage Ratio shall be determined as of
the end of each fiscal quarter of the Parent's fiscal year based upon the
Parent's consolidated financial statements delivered pursuant to Section
5.01(a) or (b), except that, prior to delivery of the first such financial
statements after the Effective Date, such determination shall be based upon the
financial statements for the fiscal quarter ended June 30, 1998, referred to in
Section 3.04, and (ii) each change in the Applicable Rate resulting from a
change in the Leverage Ratio shall be effective during the period commencing on
and including the date of delivery to the Administrative Agent of such
consolidated financial statements indicating such change and ending on the date
immediately preceding the effective date of the next such change; provided that
the Leverage Ratio shall be deemed to be in Category 6 (A) at any time that an
Event of Default has occurred and is continuing or (B) if the Parent fails to
deliver the consolidated financial statements required to be delivered by it
pursuant to Section 5.01(a) or (b) within 15 days after the end of the period
specified therein for delivery thereof, during the period from the expiration
of such 15-day period until such consolidated financial statements are
delivered; provided further that if the Parent fails to deliver the
consolidated financial statements required to be delivered by it pursuant to
Section 5.01(a) or (b) within the period specified therein for
<PAGE>
4
delivery thereof and, when such financial statements are delivered, the
Applicable Rate resulting from the Leverage Ratio based upon such financial
statements is greater than the Applicable Rate in effect immediately prior to
the end of the period during which such financial statements were required to
be delivered, then (x) the Applicable Rate shall be retroactively increased
(for the period from the expiration of the period specified in Section 5.01(a)
or (b) for delivery of such consolidated financial statements until the earlier
of the date such consolidated financial statements are delivered or the date of
the expiration of the 15-day period referred to in clause (B) of the foregoing
proviso) and (y) if any payments of interest have been made with respect to
such period, the Borrower shall promptly make a supplemental payment of
interest to correct the underpayment.
"Asset Acquisition" means (i) an investment by the Parent or
any of the Restricted Subsidiaries in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Parent or shall be merged
into or consolidated with the Parent or any of the Restricted Subsidiaries or
(ii) an acquisition by the Parent or any of the Restricted Subsidiaries of the
property and assets of any Person other than the Parent or any of the
Restricted Subsidiaries that constitute substantially all of a division or line
of business of such Person.
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transactions) in
one transaction or a series of related transactions by the Parent or any of the
Restricted Subsidiaries to any Person other than the Parent or any of the
Restricted Subsidiaries of (i) all or any of the capital stock of any
Restricted Subsidiary, (ii) all or substantially all of the property and assets
of an operating unit or business of the Parent or any of the Restricted
Subsidiaries or (iii) any other property or assets of the Parent or any of the
Restricted Subsidiaries outside the ordinary course of business of the Parent
or such Restricted Subsidiary; provided, that the following shall not be
included within the meaning of "Asset Sale": (A) sales or other dispositions of
inventory, receivables and other current assets; (B) sales or other
dispositions of equipment that has become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of the Parent or
the Restricted Subsidiaries and (C) a substantially simultaneous exchange of,
or a sale or disposition (other than 85% or more for cash or
<PAGE>
5
cash equivalents) by the Parent or any of the Restricted Subsidiaries of,
licenses issued by the FCC or applications or bids therefor; provided, however,
that the consideration received by the Parent or any such Restricted Subsidiary
in connection with such exchange, sale or disposition shall be equal to the
fair market value of licenses so exchanged, sold or disposed of, as determined
by the Board of Directors of the Parent.
"Assignment and Acceptance" means an assignment and
acceptance entered into by a Lender and an assignee (with the consent of the
Borrower and Administrative Agent if required by Section 9.04), and accepted by
the Administrative Agent, in the form of Exhibit A or any other form approved
by the Administrative Agent.
"Availability Period" means the Tranche 1 Availability Period,
Tranche 2 Availability Period, Tranche 3 Availability Period, Tranche 4
Availability Period or Tranche 5 Availability Period.
"Available Commitment" means, with respect to each Lender,
its Commitment; provided that the aggregate "Available Commitments" of the
Lucent Lenders shall not at any time exceed the excess, if any, of $500,000,000
over the aggregate principal amount of outstanding Loans and Deferred Interest
that are held by the Lucent Lenders at such time. At any time that there is
more than one Lucent Lender with a Commitment and the "Available Commitments"
of the Lucent Lenders are limited as a result of the foregoing proviso, the
aggregate "Available Commitments" of the Lucent Lenders may be allocated
between the Lucent Lenders as agreed between such Lucent Lenders.
"Board" means the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrower" means WinStar Network Expansion, LLC, a Delaware
limited liability company.
"Borrowing" means a Loan or group of Loans of the same Class
and Type, made, converted or continued on the same date and, in the case of
LIBOR Loans, as to which a single Interest Period is in effect.
"Borrowing Request" means a request by the Borrower
for a Borrowing in accordance with Section 2.03.
<PAGE>
6
"Business Day" means any day that is not a Saturday, Sunday
or other day on which commercial banks in New York City are authorized or
required by law to remain closed; provided that, when used in connection with a
LIBOR Loan, the term "Business Day" shall also exclude any day on which banks
are not open for dealings in dollar deposits in the London interbank market.
"Business Plan" means, for any fiscal year, the business plan
of the Parent and the Restricted Subsidiaries for such fiscal year.
"Capital Expenditures" means, for any period, (a) the
additions to property, plant and equipment and other capital expenditures of
the Parent and the Restricted Subsidiaries that are (or would be) set forth in
a consolidated statement of cash flows of the Parent for such period prepared
in accordance with GAAP and (b) Capital Lease Obligations incurred by the
Parent and the Restricted Subsidiaries during such period.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of beneficial
ownership, directly or indirectly, by any Person or group (within the meaning
of the Securities Exchange Act of 1934 and the rules of the Securities and
Exchange Commission thereunder as in effect on the date hereof), other than Mr.
William J. Rouhana, Jr., of shares representing more than 35% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock
of the Parent; (b) occupation of a majority of the seats (other than vacant
seats) on the Board of Directors of the Parent by Persons who were neither (i)
nominated by the Board of Directors of the Parent nor (ii) appointed by
directors so nominated; or (c) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person other than the Parent or a
wholly-owned Restricted Subsidiary of any membership interest or other
ownership or equity interest in the Borrower.
<PAGE>
7
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.13(b), by any lending office of such Lender or by
such Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
Tranche 1 Loans, Tranche 2 Loans, Tranche 3 Loans, Tranche 4 Loans or Tranche 5
Loans.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means any and all "Collateral", as
defined in the Security Agreement.
"Collateral Agent" means State Street Bank and Trust Company
in its capacity as collateral agent for the Secured Parties (as defined in the
Security Agreement) under the Security Agreement.
"Collateral Cost" means, with respect to any property or
asset, the portion of the Purchase Price attributable to such property or
asset, determined by reference to Lucent's invoice therefor, disregarding
amounts attributable to installation and related services, other intangibles
and sales taxes.
"Collateral Prepayment Amount" means, with respect to any
Collateral Trigger Event an amount equal to the product of (a) the sum of the
aggregate principal amount of the Loans outstanding at the time plus all
Deferred Interest thereon, multiplied by (b) a fraction, the numerator of which
shall be the total Collateral Cost of the properties or assets that are the
subject of the applicable Collateral Trigger Event, and the denominator of
which shall be the total Collateral Cost of all properties and assets
constituting Collateral immediately prior to such Collateral Trigger Event;
provided that if a Collateral Trigger Event described in clause (b) of the
definition of "Collateral Trigger Event" occurs and if the Borrower has
replaced the affected property or asset as
<PAGE>
8
contemplated by the proviso to the definition of "Collateral Trigger Event",
but the replacement property or assets do not have a value equivalent to or
greater than the property or asset that was the subject of such Collateral
Trigger Event (determined immediately prior to giving effect to the applicable
event), then the "Collateral Prepayment Amount" in respect of such Collateral
Trigger Event shall be reduced by an amount equal to the Collateral Cost of the
replacement property or assets.
"Collateral Trigger Event" means:
(a) any direct or indirect sale, transfer or other
disposition (including pursuant to a sale and leaseback transaction)
of any property or asset constituting Collateral; or
(b) any casualty or other damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of,
any property or asset constituting Collateral;
and the aggregate Collateral Cost of all properties and assets affected by any
such events described in clause (a) or (b) above (other than those events as to
which a prepayment has been made pursuant to Section 2.09(c) or, in the case of
events described in clause (b) above, as to which the affected properties or
assets have been repaired, restored or replaced in accordance with the
requirements set forth below) exceeds the Collateral Trigger Threshhold at the
time; provided that an event referred to in clause (b) above shall not
constitute a "Collateral Trigger Event" if (i) the Borrower elects, by notice
to the Administrative Agent, to repair, restore or replace the affected
property or asset, as promptly as practicable, but in any event within 180 days
(or, if it is not reasonably practicable to do so within 180 days, then 360
days), after the Collateral Trigger Threshhold is reached in accordance with
the requirements of this proviso, (ii) all Net Proceeds from such event are
deposited with the Collateral Agent to be held as cash collateral pursuant to
the Security Agreement, subject to release to pay the costs of such repair,
restoration, replacement or purchase as and when due, (iii) the Borrower
promptly commences and diligently pursues such repair, restoration or
replacement and (iv) in the case of a replacement, each property or asset
acquired pursuant to such replacement (A) is acquired by the Borrower pursuant
to the Supply Agreement (if the Supply Agreement is in effect at
<PAGE>
9
the time and the property or asset that was the subject of the applicable event
was Lucent Product), (B) has a value equivalent to or greater than the property
or asset that was the subject of the applicable event (determined immediately
prior to giving effect to the applicable event), (C) becomes Collateral
effective upon such replacement, free and clear of all Liens (other than the
Lien of the Security Agreement), and (D) is not financed with any Borrowings
hereunder (except to the extent the purchase price thereof exceeds the greater
of (i) the Collateral Cost of the property or asset subject to such event and
(ii) the Net Proceeds of such event); provided further that, if at the
expiration of the 180-day (or, if applicable, 360-day) period commencing on any
date that the Collateral Trigger Threshhold is reached the Borrower has not
substantially completed the repair, restoration or replacement of the affected
property or asset in accordance with all the requirements of the foregoing
proviso, then a "Collateral Trigger Event" shall be deemed to have occurred at
the expiration of such 180-day (or, if applicable 360-day) period.
"Collateral Trigger Threshhold" means, at any time, an amount
equal to the greater of $5,000,000 or 2.50% of the total Collateral Cost of all
properties and assets constituting Collateral at the time.
"Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Loans hereunder during any
Availability Period, expressed as an amount representing the maximum principal
amount of the Loans to be made by such Lender hereunder, as such commitment may
be (a) reduced from time to time pursuant to Section 2.06 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender's Commitment is set
forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which
such Lender shall have assumed its Commitment, as applicable. The initial
aggregate amount of the Lenders' Commitments is $2,000,000,000.
"Consolidated Debt Service" means, for any period,
Consolidated Interest Expense for such period plus any scheduled payments of
principal of Indebtedness of the Parent and the Restricted Subsidiaries during
such period.
"Consolidated EBITDA" means, for any period, Consolidated Net
Income for such period (adjusted to exclude all extraordinary items and
Non-Recurring Items), plus,
<PAGE>
10
without duplication and to the extent deducted from revenues in determining
Consolidated Net Income, the sum of (a) the aggregate amount of Consolidated
Interest Expense for such period, (b) the aggregate amount of income tax
expense for such period, (c) all amounts attributable to depreciation and
amortization for such period and (d) preferred stock dividends in respect of
any Disqualified Stock for such period, all as determined on a consolidated
basis with respect to the Parent and the Restricted Subsidiaries in accordance
with GAAP.
"Consolidated Indebtedness" means, as of any date of
determination, the aggregate principal amount of Indebtedness (including
Disqualified Stock) of the Parent and the Restricted Subsidiaries outstanding
as of such date determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the
sum of (a) the interest expense, both expensed and capitalized (including the
interest component in respect of Capital Lease Obligations, but excluding any
such interest expense of any Person for any period that the income (or loss) of
such Person is excluded from the calculation of Consolidated Net Income by
reason of clause (c) of the definition of "Consolidated Net Income"), accrued
by the Parent and the Restricted Subsidiaries during such period plus (b)
preferred stock dividends in respect of Disqualified Stock for such period, in
each case determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, net income
or loss of the Parent and the Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP; provided that there
shall be excluded (a) the income of any Person in which any other Person (other
than the Parent or any Restricted Subsidiary or any director holding qualifying
shares in compliance with applicable law) has a joint interest, except to the
extent of the amount of dividends or other distributions (including
distributions made as a return of capital or repayment of principal of
advances) actually paid to the Parent or any Restricted Subsidiary by such
Person, (b) the income of any Unrestricted Subsidiary, except to the extent of
the amount of dividends or other distributions (including distributions made as
a return of capital or repayment of principal of advances) actually paid to the
Parent or any Restricted Subsidiary by such Unrestricted Subsidiary during such
period, and (c) the income (or loss) of any Person accrued prior to the date it
becomes
<PAGE>
11
a Restricted Subsidiary or is merged into or consolidated with the Parent or
any Restricted Subsidiary or the date such Person's assets are acquired by the
Parent or any Restricted Subsidiary.
"Control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless
cured or waived, become an Event of Default.
"Deferred Interest" means any interest on any Loan, or any
interest on any Deferred Interest on such Loan, that is deferred rather than
paid when due as provided in clause (iv) of Section 2.11(d). Deferred Interest
on any Loan shall continue to constitute interest on (and not principal of)
such Loan for all purposes hereof.
"Designated Loan" means any Loan held by any Lender (other
than a Lucent Lender) that has been designated by Lucent as a "Designated Loan"
pursuant to the separate letter agreement among Lucent, the Borrower and the
Parent dated the date of this Agreement.
"Disclosed Matters" means the actions, suits and proceedings
and the environmental matters disclosed in Schedule 3.06.
"Disqualified Stock" means any capital stock of the Parent or
any Restricted Subsidiary which by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable or exercisable) or
upon the happening of any event (i) matures or is mandatorily redeemable
pursuant to a sinking fund obligation or otherwise, (ii) is convertible or
exchangeable for Indebtedness or Disqualified Stock, (iii) requires the payment
of dividends other than dividends payable solely in additional shares of
capital stock of the Parent (other than Disqualified Stock) or (iv) is
redeemable or subject to required repurchase at the option of the holder
thereof, in whole or in part.
<PAGE>
12
"dollars" or "$" refers to lawful money of the United States
of America.
"Effective Date" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
9.02).
"Environmental Laws" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Parent or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials
into the environment or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.
"Equipment User" has the meaning assigned to such term in
Section 6.17.
"Equipment User Agreement" means an agreement among the
Borrower, the Administrative Agent, the Collateral Agent and one or more
Equipment Users, substantially in the form of Exhibit F.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Parent, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
<PAGE>
13
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Parent or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Parent or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Parent or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Parent or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Parent or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
"Event of Default" has the meaning assigned to such term in
Article VII.
"Excess Cash Flow" means, for any fiscal year of the Parent,
the sum (without duplication) of the following (provided that Excess Cash Flow
shall be zero for any fiscal year that the sum of the following would otherwise
be less than zero):
(a) the Consolidated Net Income of the Parent and the
Restricted Subsidiaries for such fiscal year, adjusted to exclude any
gains or losses attributable to Prepayment Events or Collateral
Trigger Events; plus
(b) depreciation, amortization and other non-cash charges or
losses deducted in determining such Consolidated Net Income for such
fiscal year (including Deferred Interest and any other interest
expense accrued for such fiscal year that is not payable currently in
cash); plus
<PAGE>
14
(c) the sum of (i) the amount, if any, by which Net Working
Capital decreased during such fiscal year plus (ii) the amount, if
any, by which the consolidated deferred revenues of the Parent and the
Restricted Subsidiaries increased during such fiscal year plus (iii)
the aggregate principal amount of Capital Lease Obligations and other
Indebtedness incurred by the Parent or any of the Restricted
Subsidiaries during such fiscal year to finance Capital Expenditures,
to the extent that principal payments in respect of such Indebtedness
would not be excluded from clause (f) below when made; minus
(d) the sum of (i) any non-cash gains included in determining
such Consolidated Net Income for such fiscal year plus (ii) the
amount, if any, by which Net Working Capital increased during such
fiscal year plus (iii) the amount, if any, by which the consolidated
deferred revenues of the Parent and its Restricted Subsidiaries
decreased during such fiscal year; minus
(e) Capital Expenditures for such fiscal year; minus
(f) the aggregate principal amount of Indebtedness, and the
aggregate amount of Deferred Interest, repaid or prepaid by the Parent
and the Restricted Subsidiaries during such fiscal year, excluding (i)
Loans and Deferred Interest prepaid pursuant to Section 2.09(b), (c)
or (d), (ii) repayments or prepayments of Indebtedness financed by
incurring other Indebtedness, to the extent that mandatory principal
payments in respect of such other Indebtedness would not be excluded
from this clause (f) when made and (iii) Indebtedness referred to in
clause (ii), (vii), (ix), (x) or (xi) of Section 6.01.
"Excluded Taxes" means, with respect to either Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which
its principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant
<PAGE>
15
to a request by the Borrower under Section 2.17(b)), any withholding tax that
is imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office)
or is attributable to such Foreign Lender's failure to comply with Section
2.15(e), except to the extent that such Foreign Lender (or its assignor, if
any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.15(a).
"FCC" means the United States Federal Communications
Commission (and any successor thereto).
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Financial Officer" means, with respect to any Person, the
chief financial officer, principal accounting officer, treasurer or controller
of such Person.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than the United States of America, any State
thereof or the District of Columbia.
"Foreign Telecommunications Subsidiary" has the meaning
assigned to such term in the definition of "Unrestricted Subsidiary".
"Four Quarter Period" has the meaning assigned to such term
in the definition of "Unrestricted Subsidiary".
"GAAP" means, subject to Section 1.04(b), generally accepted
accounting principles in the United States of America.
<PAGE>
16
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having
the economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Guarantee Agreement" means the Guarantee and Subordination
Agreement among the Parent, the Guarantor Subsidiaries and the Administrative
Agent, substantially in the form of Exhibit B.
"Guarantor Subsidiaries" means all Restricted Subsidiaries
other than the Borrower, Special Purpose Equipment Subsidiaries, Special Purpose
License Subsidiaries, Special Purpose Financing Subsidiaries and Non-Material
Subsidiaries.
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
<PAGE>
17
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price
hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid,
(d) all obligations of such Person under conditional sale or other title
retention agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of
property or services (excluding accounts payable incurred in the ordinary
course of business that are not overdue by more than 60 days), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty, (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances and
(k) all Disqualified Stock of such Person. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor. The amount
outstanding at any time of any Indebtedness issued with original issue discount
is the face amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at such time as determined
in conformity with GAAP.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
<PAGE>
18
"Indemnity and Contribution Agreement" means the Indemnity,
Subrogation and Contribution Agreement among the Loan Parties and the
Administrative Agent, substantially in the form of Exhibit C.
"Interest Election Request" means a request by the Borrower
to convert or continue a Borrowing in accordance with Section 2.05.
"Interest Payment Date" means (a) with respect to any ABR
Loan (or Deferred Interest thereon), the last day of each March, June,
September and December and (b) with respect to any LIBOR Loan (or Deferred
Interest thereon), the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a LIBOR Borrowing
with an Interest Period of more than three months' duration, each day prior to
the last day of such Interest Period that occurs at intervals of three months'
duration after the first day of such Interest Period.
"Interest Period" means, with respect to any LIBOR Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower may elect; provided, that (a) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (b) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Lenders" means the Persons listed on Schedule 2.01 and any
other Person that shall have become a party hereto pursuant to an Assignment
and Acceptance, other than any such Person that ceases to be a party hereto
pursuant to an Assignment and Acceptance.
<PAGE>
19
"Leverage Ratio" means, on any date, the ratio of (a)
Consolidated Indebtedness as of such date to (b) 400% of Consolidated EBITDA
for the fiscal quarter of the Parent ended on such date or, if such date is not
the last day of a fiscal quarter, ended on the last day of the fiscal quarter
of the Parent most recently ended prior to such date.
"LIBOR", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the Adjusted LIBO Rate.
"LIBO Rate" means, with respect to any LIBOR Borrowing for
any Interest Period, the rate appearing on Page 3750 of the Dow Jones Markets
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the "LIBO Rate"
with respect to such LIBOR Borrowing for such Interest Period shall be the rate
at which dollar deposits of $5,000,000 and for a maturity comparable to such
Interest Period are offered by the principal London office of the Administrative
Agent (or, if the Administrative Agent at the time is not a commercial bank, any
commercial bank based in New York City selected by the Administrative Agent for
the purpose of quoting such rate, provided that such commercial bank has a
combined capital and surplus and undivided profits of not less than
$500,000,000) in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor
under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic effect
as any of the foregoing) relating to such asset and (c) in the case of
securities, any purchase option,
<PAGE>
20
call or similar right of a third party with respect to such securities.
"Loan Documents" means this Agreement, the Guarantee
Agreement, the Security Agreement and the Indemnity and Contribution Agreement.
"Loan Parties" means the Parent, the Borrower and the
Guarantor Subsidiaries.
"Loans" means the loans made or deemed made to the Borrower
pursuant to this Agreement.
"Lucent" means Lucent Technologies Inc.
"Lucent Lender" means any Lender that is Lucent or an
Affiliate of Lucent.
"Lucent Product" has the meaning assigned to such term in the
Supply Agreement.
"Material Adverse Effect" means a material adverse effect on
(a) the business, condition (financial or otherwise), operations, performance
or properties of the Parent and the Restricted Subsidiaries taken as a whole,
(b) the ability of the Parent or the Borrower to perform any of its material
obligations under any Loan Document or (c) the rights of or benefits available
to the Lenders under any Loan Document.
"Material Indebtedness" means Indebtedness (other than the
Loans), or obligations in respect of one or more Hedging Agreements, of any one
or more of the Loan Parties in an aggregate principal amount exceeding
$10,000,000. For purposes of determining Material Indebtedness, the "principal
amount" of the obligations of a Loan Party in respect of any Hedging Agreement
at any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that such Loan Party would be required to pay if such Hedging
Agreement were terminated at such time.
"Maturity Date" means (a) in respect of the Tranche 1 Loans,
the Tranche 1 Maturity Date, (b) in respect of the Tranche 2 Loans, the Tranche
2 Maturity Date, (c) in respect of the Tranche 3 Loans, the Tranche 3 Maturity
Date, (d) in respect of the Tranche 4 Loans, the Tranche 4 Maturity
<PAGE>
21
Date and (e) in respect of the Tranche 5 Loans, the Tranche 5 Maturity Date.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any event (a) the cash
proceeds received in respect of such event including (i) any cash received in
respect of any non-cash proceeds, but only as and when received, (ii) in the
case of a casualty, insurance proceeds, and (iii) in the case of a condemnation
or similar event, condemnation awards and similar payments, net of (b) the sum
of (i) all reasonable fees and out-of-pocket expenses paid by the Parent and
the Restricted Subsidiaries to third parties (other than Affiliates) in
connection with such event, (ii) in the case of a sale or other disposition of
an asset (including pursuant to a casualty or condemnation), the amount of all
payments required to be made by the Parent and the Restricted Subsidiaries as a
result of such event to repay Indebtedness (other than Loans) secured by such
asset or otherwise subject to mandatory prepayment as a result of such event,
and (iii) the amount of all taxes paid (or reasonably estimated to be payable)
by the Parent and the Restricted Subsidiaries, and the amount of any reserves
established by the Parent and the Restricted Subsidiaries to fund contingent
liabilities reasonably estimated to be payable, in each case that are directly
attributable to such event (as determined reasonably and in good faith by the
chief financial officer of the Parent).
"Net Working Capital" means, at any date, (a) the consolidated
current assets of the Parent and the Restricted Subsidiaries as of such date
(excluding cash and Permitted Investments) minus (b) the consolidated current
liabilities of the Parent and the Restricted Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness), determined on a
consolidated basis in accordance with GAAP. Net Working Capital at any date may
be a positive or negative number. Net Working Capital increases when it becomes
more positive or less negative and decreases when it becomes less positive or
more negative.
"Non-Material Subsidiaries" means, at any time, any Restricted
Subsidiary that has been designated by the Parent as identified on Schedule 3.12
or by written notice to the
<PAGE>
22
Administrative Agent as a "Non-Material Subsidiary" and as to which such
designation has not been withdrawn by the Parent by written notice thereof to
the Administrative Agent; provided that (a) the total combined assets of all
Non-Material Subsidiaries and their Restricted Subsidiaries (determined on a
consolidated basis in accordance with GAAP) shall not at any time exceed 5% of
the total assets of the Parent and the Restricted Subsidiaries, (b) the total
combined revenues of all Non-Material Subsidiaries (determined on a
consolidated basis in accordance with GAAP) shall not, for any fiscal quarter,
exceed 5% of the total revenues of the Parent and the Restricted Subsidiaries
for such fiscal quarter and (c) a Non- Material Subsidiary shall not Guarantee
any Indebtedness or other obligations of any other Person. If any of the
criteria set forth in the foregoing proviso are not satisfied, the Parent shall
immediately withdraw its designation with respect to such Non-Material
Subsidiaries as shall be necessary in order for such criteria to be satisfied.
"Non-Recurring Items" means, for any period, (a) all
non-recurring items that do not involve any payment of cash by the Parent or
any Restricted Subsidiary during such period or any future period and (b)
non-recurring items set forth on the Parent's consolidated statement of
operations for such period below the operating income line in respect of (i)
gains or losses on sales or dispositions of assets outside the ordinary course
of business, (ii) discontinued operations, (iii) the effects of changes in
accounting principles or methods, (iv) write-downs on any investments of the
Parent or any Restricted Subsidiary in any Person (other than the Parent or a
Restricted Subsidiary) and (v) any restructuring charges, including the amount
of any such restructuring charge to cover cash payouts to laid-off employees of
the Parent or a Restricted Subsidiary.
"Obligations" has the meaning assigned to such term
in the Security Agreement.
"Other Service Licenses" means Service Licenses
other than Special Service Licenses.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
<PAGE>
23
"Parent" means WinStar Communications, Inc., a
Delaware corporation.
"PBGC" means the Pension Benefit Guaranty Corporation
referred to and defined in ERISA and any successor entity performing similar
functions.
"Perfection Certificate" means a certificate in the form of
Exhibit D or any other form approved by the Collateral Agent.
"Permitted Acquisition" means any acquisition (other than an
acquisition described on Schedule 6.04A) of a Special Service License or all or
substantially all the assets of, or a majority of the shares or other equity
interests in, a Person or a division or line of business of a Person if,
immediately after giving effect thereto, (a) no Default has occurred and is
continuing or would result therefrom, (b) all transactions related thereto have
been consummated in all material respects in accordance with applicable laws,
(c) in the case of an acquisition of shares or other equity interests in a
Person, such acquisition results in such Person being merged with and into a
Restricted Subsidiary or becoming a Restricted Subsidiary of the Parent and (i)
in the case of an acquisition of shares or other equity interests in a Person
that is organized under the laws of any jurisdiction in the United States of
America or a substantial portion of the assets of which are located in the
United States of America, at least 80% of all shares or other equity interests
in all Restricted Subsidiaries resulting from such acquisition are owned,
directly or indirectly, by the Parent, or (ii) in the case of any other such
acquisition, at least a majority of all shares or other equity interests in all
Restricted Subsidiaries resulting from such acquisition are owned, directly or
indirectly, by the Parent, (d) the Parent and the Restricted Subsidiaries are
in compliance, on a pro forma basis after giving effect to such acquisition,
with the covenants contained in Sections 6.11, 6.12, 6.13, 6.14, 6.15 and 6.16
recomputed as of the last day of the most recently ended fiscal quarter of the
Parent for which financial statements are available as if such acquisition had
occurred on the first day of each relevant period for testing such compliance,
(e) the consideration for such acquisition shall have consisted solely of
common stock or Permitted Preferred Stock of the Parent (including options,
warrants or other rights to purchase shares of such common stock or Permitted
Preferred Stock), cash, Indebtedness of the Parent or a
<PAGE>
24
Restricted Subsidiary, or a combination of the foregoing, (f) after giving
effect to such acquisition, the aggregate amount of cash consideration paid in
connection with all acquisitions constituting "Permitted Acquisitions"
(disregarding amounts paid or received pursuant to customary purchase price
adjustments and indemnification provisions, and net of all Net Proceeds
previously received from sales of assets acquired pursuant to Permitted
Acquisitions in accordance with clause (viii) of Section 6.04(b)), plus the
aggregate principal amount of all Acquisition Indebtedness issued as
consideration in connection with or incurred or assumed in connection with or
otherwise resulting from such acquisitions (on a cumulative basis, including
Acquisition Indebtedness previously repaid or prepaid), shall not exceed the
Acquisition Basket Amount at the time (provided that the aggregate principal
amount of all such Acquisition Indebtedness shall not exceed 33 1/3% of the
Acquisition Basket Amount), and (g) the Parent has delivered to the
Administrative Agent, not less than five Business Days prior to such
acquisition, an officer's certificate to the effect set forth in clauses (a)
through (f) above, together with all relevant financial information for the
business or entity being acquired.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes, assessments, governmental
charges or similar claims that are not yet due or are being contested
in compliance with Section 5.05;
(b) statutory or common law Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other
similar Liens, arising in the ordinary course of business and securing
obligations that are not yet delinquent or are being contested in
compliance with Section 5.05;
(c) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security;
(d) Liens incurred or deposits made to secure the performance
of tenders, bids, leases, statutory or regulatory obligations, surety
and appeal bonds, government contracts, performance and
return-of-money
<PAGE>
25
bonds and other obligations of a like nature, in each case in the
ordinary course of business, and a bank's unexercised right of set-off
with respect to deposits made in the ordinary course;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII;
(f) easements, municipal and zoning ordinances, rights-of-way
and similar encumbrances on or defects or other irregularities of
title to real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of the Parent or any
Restricted Subsidiary;
(g) interests of lessees under leases or subleases granted by
the Parent or a Restricted Subsidiary as lessor that do not materially
interfere with the ordinary course of business of the Parent and the
Restricted Subsidiaries, taken as a whole;
(h) Liens encumbering property or assets under construction
arising from progress or partial payments made by a customer of the
Parent or a Restricted Subsidiary relating to such property or assets;
(i) any interest or title of a lessor in any property subject
to any lease otherwise permitted by the Loan Documents; and
(j) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of
and interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such
obligations are backed
<PAGE>
26
by the full faith and credit of the United States of America), in each
case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date
of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the United
States of America or any State thereof which has a combined capital
and surplus and undivided profits of not less than $500,000,000; and
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above and
entered into with a financial institution satisfying the criteria
described in clause (c) above.
"Permitted Preferred Stock" means capital stock of the Parent
(other than Disqualified Stock) of any class or classes (however designated)
that is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of the
Parent, over shares of capital stock of any other class of the Parent.
"Permitted Receivables Financing" means an arrangement for
financing accounts receivable of one or more Restricted Subsidiaries pursuant
to which such accounts receivable are sold, without recourse (except as
customary in accounts receivable financing arrangements), to a Special Purpose
Financing Subsidiary or to banks or other financial institutions pursuant to a
"true sale" transaction and, in the case of a sale to a Special Purpose
Financing Subsidiary, such Subsidiary either resells such accounts receivable
to banks or other financial institutions or borrows under a credit facility
provided to it by banks or other financial institutions and secured by such
accounts receivable.
<PAGE>
27
"Permitted Receivables Indebtedness" means Indebtedness of
one or more Restricted Subsidiaries for borrowed money under one or more
revolving credit facilities; provided that (a) such Indebtedness is for working
capital purposes and is secured by accounts receivable of one or more
Restricted Subsidiaries and (b) the aggregate principal amount of all such
Indebtedness outstanding at any time does not exceed 80% of such accounts
receivable net of reserves and allowances for doubtful accounts, determined in
accordance with GAAP.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower
or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Prepayment Event" means:
(a) any direct or indirect sale, transfer or other
disposition after the Effective Date (including pursuant to a sale and
leaseback transaction) of any property or asset (other than
Collateral) of the Parent or any Restricted Subsidiary (other than
dispositions described in clauses (i), (ii), (iii), (v), (vi), (viii),
(x), (xii) and (to the extent such sales are made in the ordinary
course of business) (ix) of Section 6.04(b)); or
(b) any casualty or other insured damage to, or any taking
under power of eminent domain or by condemnation or similar proceeding
of, any property or asset (other than Collateral) of the Parent or any
Restricted Subsidiary after the Effective Date;
provided that (i) such events shall not constitute "Prepayment Events" to the
extent that the aggregate Net Proceeds from all such events are less than
$15,000,000 (or on and after January 1, 2002, $30,000,000) during any fiscal
year of the Parent, (ii) any such event referred to in clause (a) above shall
not constitute a "Prepayment Event" if the Parent elects (by notice to the
Administrative Agent within five Business
<PAGE>
28
Days after receipt of the Net Proceeds of such event) to reinvest the Net
Proceeds of such event in Additional Assets as promptly as practicable, but in
any event within 180 days, after the receipt of the Net Proceeds of such event
and (iii) any such event referred to in clause (b) above shall not constitute a
"Prepayment Event" if the Parent elects (by notice to the Administrative Agent
within five Business Days after receipt of the Net Proceeds of such event) to
apply the Net Proceeds of such event to repair, restore or replace the affected
property or asset or to reinvest such Net Proceeds in Additional Assets as
promptly as practicable, but in any event within 180 days, after the receipt of
the Net Proceeds of such event; provided further that, if at the expiration of
the 180-day period referred to in clause (ii) or (iii) above less than all the
Net Proceeds of such event have been reinvested or applied as provided therein,
then a "Prepayment Event" shall be deemed to have occurred at the expiration of
such 180-day period with Net Proceeds equal to the Net Proceeds that have not
been so reinvested or applied. Notwithstanding the foregoing, any Asset Sale or
similar event that would not otherwise constitute a Prepayment Event hereunder
but, under the terms of any indenture or other agreement governing any Material
Indebtedness, would require any prepayment or redemption of, or offer to prepay
or redeem, any such Indebtedness to the extent that the Net Proceeds therefrom
are not reinvested within a specified period of time, shall constitute a
Prepayment Event to the extent that the Net Proceeds therefrom are not
reinvested in accordance with clause (ii) above.
"Prime Rate" means the rate of interest per annum published
from time to time in the "Money Rates" column (or any successor column) of The
Wall Street Journal as the prime rate or, if such rate shall cease to be so
published or is not available for any reason, the rate of interest publicly
announced from time to time by any commercial bank based in New York City
selected by the Administrative Agent for the purpose of quoting such rate,
provided such commercial bank has a combined capital and surplus and undivided
profits of not less than $500,000,000. Each change in the Prime Rate shall be
effective from and including the date such change is published.
"Purchase Money Debt Limit" means (a) during the period prior
to January 1, 2003, $500,000,000 and (b) during the period on and after
January 1, 2003, and prior to January 1, 2004, $1,000,000,000; provided that
the Purchase Money Debt Limit
<PAGE>
29
in effect at any time shall be increased upon any termination or reduction of
the Commitments pursuant to Section 2.06(d) by an amount equal to the
Commitments so terminated or the amount by which the Commitments are so
reduced, as the case may be.
"Purchase Price" means amounts paid or payable for Products
(as defined in the Supply Agreement) pursuant to invoices delivered pursuant to
the Supply Agreement.
"Register" has the meaning set forth in Section 9.04.
"Related Parties" means, with respect to any specified
Person, such Person's Affiliates and the respective directors, officers,
employees, agents and advisors of such Person and such Person's Affiliates.
"Repayment" means, in respect of any Indebtedness, the direct
or indirect repayment, prepayment, redemption, purchase, acquisition,
defeasance, retirement or other satisfaction of the principal of such
Indebtedness, in whole or in part, whether optional or mandatory. "Repay" has a
meaning correlative thereto.
"Required Lenders" means, at any time, Lenders having
outstanding Loans, Deferred Interest and Commitments representing more than 50%
of the sum of the total outstanding Loans, Deferred Interest and Commitments at
such time; provided that at any time (on or after the first date on which
Lenders (other than Lucent Lenders) hold Commitments, Loans and Deferred
Interest aggregating $100,000,000 or more) that Lucent Lenders have outstanding
Loans, Deferred Interest and Commitments representing more than 50% of the sum
of all outstanding Loans, Deferred Interest and Commitments at such time,
"Required Lenders" means each of (i) the Lucent Lenders at such time and (ii)
other Lenders holding more than 50% of the outstanding Loans, Deferred Interest
and Commitments (excluding those held by Lucent Lenders) at such time.
"Restricted Payment" means (a) any dividend or other
distribution (whether in cash, securities or other property) with respect to
any shares of any class of capital stock of the Parent or any Restricted
Subsidiary, (b) any Repayment of any Subordinated Indebtedness or (c) any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancelation or
<PAGE>
30
termination of any shares of any class of capital stock of the Parent or any
Restricted Subsidiary or any option, warrant or other right to acquire any such
shares of capital stock of the Parent or any Restricted Subsidiary.
"Restricted Subsidiary" means any Subsidiary that is
not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's.
"Secured Indebtedness" means any Indebtedness of the Parent
or any Restricted Subsidiary that is secured by a Lien on any asset of the
Parent or any Subsidiary.
"Security Agreement" means the Security Agreement between the
Borrower and the Collateral Agent, substantially in the form of Exhibit E.
"Service Licenses" means licenses, permits, certifications
and other authorizations issued or granted by the FCC or state or other
regulatory authorities permitting or authorizing utilization of radio waves,
air waves or portions of the air wave or radio wave spectrum for purposes of
transmitting sound, data, video or other forms of communication, including
authorizations to provide personal communications service, cellular service or
local multipoint distribution service or to be a common carrier or to provide
local, intralata or interlata communications service.
"Special Purpose Equipment Subsidiary" means any Restricted
Subsidiary that is established to own equipment (other than assets constituting
Collateral or other assets the removal or loss of which would adversely affect
the value of assets constituting Collateral) and to finance the acquisition of
such equipment by incurring Indebtedness prior to or within 90 days after the
acquisition of such equipment; provided that (a) the only Indebtedness of such
Restricted Subsidiary is Indebtedness incurred to finance the acquisition of
such equipment and such Indebtedness is otherwise permitted by this Agreement,
(b) such Indebtedness does not exceed the cost of such equipment (plus the
amount of any cash proceeds of such Indebtedness held by such Restricted
Subsidiary pending purchase of equipment to be purchased with such proceeds)
and finances not less than 80% of the cost thereof, (c) such Restricted
Subsidiary does not own any assets other than the equipment so financed, other
immaterial assets incidental to the ownership of such equipment, cash proceeds
of such
<PAGE>
31
Indebtedness (and Permitted Investments made with such proceeds) pending the
purchase of such equipment with such proceeds and rights as lessor under any
leases of such equipment and (d) such Restricted Subsidiary does not engage in
any other activity (other than activities incidental to the ownership,
financing, sale and leasing of such equipment); provided further that any such
Restricted Subsidiary shall cease to constitute a "Special Purpose Equipment
Subsidiary" when all such Indebtedness of such Restricted Subsidiary has been
repaid. Each of WEC and WEC II shall constitute a Special Purpose Equipment
Subsidiary so long as it shall satisfy the foregoing criteria.
"Special Purpose Financing Subsidiary" means any Restricted
Subsidiary that is established in connection with a Permitted Receivables
Financing; provided that (a) the activities of such Restricted Subsidiary are
limited to the purchase of accounts receivable without recourse to the Parent
or any other Restricted Subsidiary, the resale or financing thereof pursuant to
such Permitted Receivables Financing and activities incidental thereto and (b)
such Restricted Subsidiary does not have any Indebtedness other than
Indebtedness incurred to finance accounts receivable purchased by it.
"Special Purpose License Subsidiary" means any Restricted
Subsidiary that is established to own or hold one or more Service Licenses for
the telecommunications business conducted by one or more other Restricted
Subsidiaries; provided that such Restricted Subsidiary (a) does not own any
other assets (other than immaterial assets incidental to the ownership of such
Service Licenses), (b) does not engage in any other activity (other than
activities incidental to the ownership of such Service Licenses) and (c) does
not have any Indebtedness.
"Special Service Licenses" means Service Licenses that are
limited in number for a specified area, territory or market, including Service
Licenses for personal communications service, cellular service or other mobile
wireless service. Special Service Licenses do not include Service Licenses for
the 38GHz radio spectrum, fixed local multipoint distribution service or for
other fixed wireless services.
"Statutory Reserve Rate" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate
<PAGE>
32
of the maximum reserve percentages (including any marginal, special, emergency
or supplemental reserves) expressed as a decimal established by the Board to
which any commercial banks subject to regulation by the Board are subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D. LIBOR
Loans shall be deemed to constitute eurocurrency funding and to be subject to
such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"Subordinated Indebtedness" means any Indebtedness of the
Parent or any Restricted Subsidiary (other than Indebtedness owing to the
Parent or a Restricted Subsidiary) that is, by its terms, subordinated in right
of payment to the payment of any of the Obligations.
"subsidiary" means, with respect to any Person (the "parent")
at any date, any corporation, limited liability company, partnership,
association or other entity of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary
voting power or, in the case of a partnership, more than 50% of the general
partnership interests are, as of such date, owned, controlled or held by the
parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Parent.
"Supply Agreement" means the Supply Agreement dated as of
October 21, 1998 between Lucent and the Parent.
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
"Telecommunications Assets" means any (i) entity or business
substantially all the revenues of which are derived from (a) providing
transmission of sound, data or video; (b) the sale or provision of phone cards,
"800" services, voice mail, switching, enhanced telecommunications services,
<PAGE>
33
telephone directory or telephone number information services or
telecommunications network intelligence; or (c) any business ancillary or
directly related to the businesses referred to in clause (a) or (b) above and
(ii) any assets used primarily to effect such transmission or provide the
products or services referred to in clause (a) or (b) above and any directly
related or ancillary assets, including licenses and applications, bids and
agreements to acquire licenses, or other authority to provide transmission
services previously granted, or to be granted, by the FCC or state or other
regulatory authorities.
"Telecommunications Subsidiary" means (i) WinStar Gateway
Network, Inc., WinStar Wireless, Inc., WinStar Milliwave, Inc., WinStar Locate,
Inc., and WinStar Wireless Fiber Corp. and, in each case, its successors and
(ii) any other Restricted Subsidiary that holds more than a de minimis
amount of Telecommunications Assets.
"Total Capitalization" means, as of any date of
determination, the sum of (a) Consolidated Indebtedness as of such date plus
(b) the amount of paid in capital of the Parent on such date determined on a
consolidated basis in accordance with GAAP plus (c), if positive, the retained
earnings of the Parent on such date determined on a consolidated basis in
accordance with GAAP.
"Tranche 1 Availability Period" means the period from and
including the Effective Date to but excluding the earlier of the Tranche 1
Availability Termination Date and the date of termination of the Commitments.
"Tranche 1 Availability Termination Date" means the earlier
of (i) the first anniversary of the Effective Date and (ii) the date the
Commitments are fully drawn.
"Tranche 1 Loans" means Loans made or deemed made pursuant to
this Agreement during the Tranche 1 Availability Period.
"Tranche 1 Maturity Date" means the date that is the
sixteenth scheduled Tranche 1 Payment Date.
"Tranche 1 Payment Date" means each March 31, June 30,
September 30 and December 31, commencing on and including the first such date
that occurs after the fourth
<PAGE>
34
anniversary of the Effective Date, and ending on and including
the Tranche 1 Maturity Date.
"Tranche 2 Availability Period" means the period from and
including the Tranche 1 Availability Termination Date to but excluding the
earlier of the Tranche 2 Availability Termination Date and the date of
termination of the Commitments.
"Tranche 2 Availability Termination Date" means the earlier
of (i) the second anniversary of the Effective Date and (ii) the date the
Commitments are fully drawn.
"Tranche 2 Loans" means Loans made or deemed made pursuant to
this Agreement during the Tranche 2 Availability Period.
"Tranche 2 Maturity Date" means the date that is the
sixteenth scheduled Tranche 2 Payment Date.
"Tranche 2 Payment Date" means each March 31, June 30,
September 30 and December 31, commencing on and including the first such date
that occurs after the fourth anniversary of the first day of the Tranche 2
Availability Period, and ending on and including the Tranche 2 Maturity Date.
"Tranche 3 Availability Period" means the period from and
including the Tranche 2 Availability Termination Date to but excluding the
earlier of the Tranche 3 Availability Termination Date and the date of
termination of the Commitments.
"Tranche 3 Availability Termination Date" means the earlier
of (i) the third anniversary of the Effective Date and (ii) the date the
Commitments are fully drawn.
"Tranche 3 Loans" means Loans made or deemed made pursuant to
this Agreement during the Tranche 3 Availability Period.
"Tranche 3 Maturity Date" means the date that is the
sixteenth scheduled Tranche 3 Payment Date.
"Tranche 3 Payment Date" means each March 31, June 30,
September 30 and December 31, commencing on and including the first such date
that occurs after the fourth
<PAGE>
35
anniversary of the first day of the Tranche 3 Availability Period, and ending
on and including the Tranche 3 Maturity Date.
"Tranche 4 Availability Period" means the period from and
including the Tranche 3 Availability Termination Date to but excluding the
earlier of the Tranche 4 Availability Termination Date and the date of
termination of the Commitments.
"Tranche 4 Availability Termination Date" means the earlier
of (i) the fourth anniversary of the Effective Date and (ii) the date the
Commitments are fully drawn.
"Tranche 4 Loans" means Loans made or deemed made pursuant to
this Agreement during the Tranche 4 Availability Period.
"Tranche 4 Maturity Date" means the date that is the
sixteenth scheduled Tranche 4 Payment Date.
"Tranche 4 Payment Date" means each March 31, June 30,
September 30 and December 31, commencing on and including the first such date
that occurs after the fourth anniversary of the first day of the Tranche 4
Availability Period, and ending on and including the Tranche 4 Maturity Date.
"Tranche 5 Availability Period" means the period from and
including the Tranche 4 Availability Termination Date to but excluding the
earlier of the Tranche 5 Availability Termination Date and the date of
termination of the Commitments.
"Tranche 5 Availability Termination Date" means the earlier
of (i) the fifth anniversary of the Effective Date and (ii) the date the
Commitments are fully drawn.
"Tranche 5 Loans" means Loans made or deemed made pursuant to
this Agreement during the Tranche 5 Availability Period.
"Tranche 5 Maturity Date" means the date that is the
sixteenth scheduled Tranche 5 Payment Date.
"Tranche 5 Payment Date" means each March 31, June 30,
September 30 and December 31, commencing on and
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36
including the first such date that occurs after the fourth anniversary of the
first day of the Tranche 5 Availability Period, and ending on and including the
Tranche 5 Maturity Date.
"Transactions" means the execution, delivery and performance
by each Loan Party of the Loan Documents to which it is to be a party, the
borrowing of Loans and the use of the proceeds thereof.
"Type", when used in reference to any Loan or Borrowing,
refers to whether the rate of interest on such Loan, or on the Loans comprising
such Borrowing, is determined by reference to the Adjusted LIBO Rate or the
Alternate Base Rate.
"Unrestricted Subsidiary" means (i) any Subsidiary that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors of the Parent in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Parent
may designate any Restricted Subsidiary (including any newly acquired or newly
formed Subsidiary), other than the Borrower, a Guarantor Subsidiary, a Special
Purpose Equipment Subsidiary or a Special Purpose License Subsidiary, to be an
Unrestricted Subsidiary unless such Subsidiary owns any capital stock of, or
owns or holds any Lien on any property of, the Parent or any Restricted
Subsidiary; provided, that neither the Parent nor the Restricted Subsidiaries
has any Guarantee of any Indebtedness of such Subsidiary outstanding at the
time of such designation and either (A) the Subsidiary to be so designated has
total assets of $1,000 or less or (B) if such Subsidiary has assets greater
than $1,000, that such designation would be permitted under the provisions of
Section 6.04. Notwithstanding the foregoing, WinStar New Media Company, Inc.,
WinStar Credit Corp., WinStar Multichannel Corp., WinStar LHC2, LLC and WinStar
Global Products, Inc. and their direct and indirect subsidiaries are
Unrestricted Subsidiaries. The Board of Directors of the Parent may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, that
immediately after giving effect to such designation (x) except with respect to
such designation of a Foreign Telecommunications Subsidiary, the Leverage Ratio
is greater than zero and less than 5.0 to 1.0 and (y) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors of
the Parent shall be evidenced to the Administrative Agent by filing with the
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37
Administrative Agent a certified copy of the resolution of the Board of
Directors of the Parent giving effect to such designation and a certificate of
a Financial Officer of the Parent certifying that such designation complied
with the foregoing conditions. Anything to the contrary contained in this
Agreement notwithstanding, no Telecommunications Subsidiary may be designated
an Unrestricted Subsidiary unless (a) such Telecommunications Subsidiary is
organized in a jurisdiction outside the United States of America and
substantially all of its assets and operations are located and conducted
outside the United States of America or (b) such Telecommunications Subsidiary
is a holding company and substantially all its assets consist of investments in
Telecommunications Subsidiaries described in clause (a) above (each such
Subsidiary described in clause (a) and (b) above, a "Foreign Telecommunication
Subsidiary"). For purposes of this definition, the Leverage Ratio shall be
computed at the end of the most recent fiscal quarter for which financial
statements were furnished to the Administrative Agent pursuant to Section
5.01(a) or (b). For purposes of this definition, in calculating the Leverage
Ratio (x) pro forma effect shall be given to any Indebtedness incurred from the
beginning of the period of four consecutive quarters of the Parent ended on the
date of such computation, or if such date is not the last day of a fiscal
quarter, ended on the last day of the fiscal quarter of the Parent most
recently ended prior to such date (any such four full fiscal quarter period
being referred to herein as a "Four Quarter Period") through the date of such
designation (including any Indebtedness incurred on the date of such
designation), to the extent outstanding on the date of such designation, (y) if
during the period commencing on the first day of such Four Quarter Period
through the date of such designation (the "Reference Period"), the Parent or
any of the Restricted Subsidiaries shall have engaged in any Asset Sale,
Consolidated EBITDA for such period shall be reduced by an amount equal to
Consolidated EBITDA (if positive), or increased by an amount equal to
Consolidated EBITDA (if negative), directly attributable to the assets which
are the subject of such Asset Sale and any related retirement of Indebtedness
as if such Asset Sale and related retirement of Indebtedness has occurred on
the first day of such Reference Period or (z) if during such Reference Period,
the Parent or any of the Restricted Subsidiaries shall have made any such Asset
Acquisition, Consolidated EBITDA shall be calculated on a pro forma basis as if
such Asset Acquisition and any incurrence of Indebtedness to finance such Asset
Acquisition had taken place on the first day of such Reference Period.
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"WEC" means WinStar Equipment Corp., a Delaware
corporation.
"WEC II" means WinStar Equipment II Corp., a
Delaware corporation.
"Withdrawal Liability" means liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred to by Class
(e.g., a "Tranche 1 Loan") or by Type (e.g., a "LIBOR Loan") or by Class and
Type (e.g., a "Tranche 1 LIBOR Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Tranche 1 Borrowing") or by Type (e.g., a "LIBOR
Borrowing") or by Class and Type (e.g., a "Tranche 1 LIBOR Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any reference herein to any Person shall
be construed to include such Person's successors and assigns, (c) the words
"herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) the words "asset" and "property" shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts, contract rights, licenses and intellectual property.
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39
SECTION 1.04. Accounting Terms; GAAP. (a) Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Parent notifies the Administrative Agent that the Parent requests
an amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the Parent
that the Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
(b) Each reference herein to any financial term, definition
or computation that is to be calculated for or with respect to the Parent and
the Restricted Subsidiaries on a consolidated basis in accordance with GAAP
shall be calculated excluding and without giving effect to any consolidated
subsidiary of the Parent that is not a Restricted Subsidiary (including
Unrestricted Subsidiaries) or any investment therein or earnings thereon,
except to the extent otherwise expressly provided herein.
ARTICLE II
The Loans
SECTION 2.01. Commitments. Subject to the terms and
conditions set forth herein, each Lender with an Available Commitment agrees to
make Loans to the Borrower at any time and from time to time during each
Availability Period in an aggregate principal amount not exceeding its
remaining Available Commitment at the time. Amounts repaid in respect of Loans
may not be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan
shall be made as part of a Borrowing consisting of Loans of
the same Class and Type made by the Lenders ratably in
accordance with their respective Available Commitments. The
failure of any Lender to make any Loan required to be made by
it shall not relieve any other Lender of its obligations
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40
hereunder; provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender's failure to make Loans as
required.
(b) Subject to Section 2.12, each Borrowing shall be
comprised entirely of LIBOR Loans or ABR Loans as the Borrower may request in
accordance herewith. Each Lender at its option may make any LIBOR Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this
Agreement.
(c) At the commencement of each Interest Period for any LIBOR
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $5,000,000. Borrowings of more than one
Type and Class may be outstanding at the same time; provided that there shall
not be more than 12 LIBOR Borrowings of the same Class outstanding at the same
time.
(d) Notwithstanding any other provision of this Agreement,
the Borrower shall not be entitled to request, or to elect to convert or
continue, any Borrowing as a LIBOR Borrowing if the Interest Period requested
with respect thereto would end after the Maturity Date for the Loans included
in such Borrowing.
SECTION 2.03. Requests for Borrowings. To request a
Borrowing, the Borrower shall notify the Administrative Agent of such request
by telephone (a) in the case of a LIBOR Borrowing, not later than 11:00 a.m.,
New York City time, three Business Days before the date of the proposed
Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m.,
New York City time, one Business Day before the date of the proposed Borrowing;
provided that (i) the Borrower may make only one request for a Borrowing in any
single calendar month (it being understood that all Borrowings made by the
Borrower on the same date shall be treated as a single request for a Borrowing
for purposes of this limitation) and (ii) if any Lucent Lender has an Available
Commitment at the time of such Borrowing and any portion of the proceeds of
such Borrowing to be funded by such Lucent Lender would be required to be
funded by such Lucent Lender other than as a credit against amounts owing to
Lucent or an Affiliate of Lucent as provided in Section 2.04, then the
applicable Borrowing Request shall be made not later than five Business Days
before
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41
the date of the proposed Borrowing (in the case of a LIBOR Borrowing) or three
Business Days before the date of the proposed Borrowing (in the case of an ABR
Borrowing). Each such telephonic Borrowing Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Borrowing Request in a form approved by the Administrative
Agent and signed by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section
2.02:
(i) the aggregate amount of such Borrowing and a reasonably
detailed description of the use of the proceeds therefrom (and each
written Borrowing Request shall attach copies of all invoices to be
paid with such proceeds) and indicating the portion, if any, of such
Borrowing that is financing the Purchase Price of any Third Party
Products (as defined in the Supply Agreement);
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be a LIBOR Borrowing or an
ABR Borrowing;
(iv) in the case of a LIBOR Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated
by the definition of the term "Interest Period"; and
(v) the location and number of the account or accounts to
which funds (if any) are to be disbursed, which shall comply with the
requirements of Section 2.04.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested LIBOR Borrowing, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender with an Available Commitment of
the details thereof and of the amount of such Lender's Loan to be made as part
of the requested Borrowing.
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42
SECTION 2.04. Funding of Borrowings. (a) Each Lender with an
Available Commitment shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds by 12:00
noon, New York City time, to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders. The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an account of the Borrower
maintained with the Administrative Agent in New York City and designated by the
Borrower in the applicable Borrowing Request. Notwithstanding the foregoing, if
the proceeds of any Borrowing are to be used to make any payment to or for the
account of Lucent or any Affiliate thereof (i) if any Lucent Lender has an
Available Commitment, then such Lucent Lender may make its Loan by crediting
the amount thereof against the payment obligations to Lucent or any such
Affiliate and shall be deemed to have made a Loan in the amount of such credit
and (ii) the Administrative Agent will make the Loans of the other Lenders
available to the Borrower by promptly crediting the amounts so received from
such other Lenders, in immediately available funds, to an account of Lucent
maintained with the Administrative Agent for such purpose, to the extent of the
proceeds of such Loans designated to be used to make payments to Lucent or any
of its Affiliates (after giving effect to any credits pursuant to clause (i)
above) and the balance, if any, of such proceeds shall be made available to the
Borrower as provided in the preceding sentence.
(b) Unless the Administrative Agent shall have received
notice from a Lender prior to the proposed date of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender's share
of such Borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this
Section and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with
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43
banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans of the same Class. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.
SECTION 2.05. Interest Elections. (a) Each Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a LIBOR Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. Thereafter, the Borrower may elect to
convert such Borrowing to a different Type or to continue such Borrowing and,
in the case of a LIBOR Borrowing, may elect Interest Periods therefor, all as
provided in this Section. The Borrower may elect different options with respect
to different portions of the affected Borrowing, in which case each such
portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.
(b) To make an election pursuant to this Section, the
Borrower shall notify the Administrative Agent of such election by telephone by
the time that a Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Borrowing of the Type resulting from such election
to be made on the effective date of such election. Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or telecopy to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by
the Borrower.
(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02 and
paragraph (f) of this Section:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be
specified pursuant to clauses (iii) and (iv) below shall be specified
for each resulting Borrowing);
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(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be a LIBOR
Borrowing or an ABR Borrowing; and
(iv) if the resulting Borrowing is a LIBOR Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of
the term "Interest Period".
If any such Interest Election Request requests a LIBOR Borrowing but does not
specify an Interest Period, then the Borrower shall be deemed to have selected
an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest
Election Request with respect to a LIBOR Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing, then, so long as an
Event of Default is continuing (i) no outstanding Borrowing may be converted to
or continued as a LIBOR Borrowing and (ii) unless repaid, each LIBOR Borrowing
shall be converted to an ABR Borrowing at the end of the Interest Period
applicable thereto.
(f) A Borrowing of any Class may not be converted to or
continued as a LIBOR Borrowing if after giving effect thereto (i) the Interest
Period therefor would commence before and end after a date on which any
principal of the Loans of such Class is scheduled to be repaid and (ii) the sum
of the aggregate principal amount of outstanding LIBOR Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date plus
the aggregate principal amount of outstanding ABR Borrowings of such Class
would be less than the aggregate principal amount of Loans of such Class
required to be repaid on such scheduled repayment date.
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45
SECTION 2.06. Termination and Reduction of
Commitments. (a) Unless previously terminated, the
Commitments shall terminate on the Tranche 5 Availability
Termination Date.
(b) On the date of each Loan made by any Lender such Lender's
Commitment shall be reduced by an amount equal to such Loan. On each date that
interest on a Loan of any Lender is deferred pursuant to clause (iv) of Section
2.11(d), such Lender's Commitment shall be reduced by the amount of such
Deferred Interest.
(c) In the event that a prepayment would be required pursuant
to paragraph (b), (c), (d) or (e) of Section 2.09, all Commitments then in
effect shall be reduced ratably by an aggregate amount equal to the excess, if
any, of the amount of the required prepayment over the aggregate principal
amount of Loans and Deferred Interest outstanding immediately prior to giving
effect to such prepayment.
(d) The Borrower may at any time terminate, or from time to
time reduce, the Commitments; provided that each reduction of the Commitments
pursuant to this paragraph (d) shall be in an amount that is an integral
multiple of $1,000,000 and not less than $5,000,000.
(e) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (d) of this
Section at least one Business Day prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any such notice, the Administrative
Agent shall advise the Lenders of the contents thereof. Each notice delivered
by the Borrower pursuant to this Section shall be irrevocable. Any termination
or reduction of the Commitments shall be permanent. Each reduction of the
Commitments pursuant to paragraph (d) of this Section shall be made ratably
among the Lenders in accordance with their respective Commitments; provided
that the Borrower may, in its discretion, reduce the Commitments of Lucent
Lenders in excess of their Available Commitments pursuant to such paragraph (d)
without reducing the Commitments of other Lenders.
SECTION 2.07. Repayment of Loans; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to
the Administrative Agent for the account of each Lender the
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46
then unpaid principal amount of each Loan of such Lender and any Deferred
Interest thereon as provided in Section 2.08.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest (including Deferred Interest) payable and paid to
such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest (including Deferred Interest) due and payable or to
become due and payable from the Borrower to each Lender hereunder and (iii) the
amount of any sum received by the Administrative Agent hereunder for the
account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it
be evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender such a promissory note payable to the order
of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest thereon
(including Deferred Interest) shall at all times (including after assignment
pursuant to Section 9.04) be represented by one or more promissory notes in
such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered
assigns).
SECTION 2.08. Amortization of Loans. (a) Subject
to adjustment pursuant to paragraph (g) of this Section, the
Borrower shall repay Tranche 1 Borrowings and Deferred
Interest thereon on each Tranche 1 Payment Date in an
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aggregate amount equal to 6.250% of the sum of all Tranche 1 Loans made or
deemed made hereunder and all Deferred Interest thereon (including amounts
previously repaid or prepaid).
(b) Subject to adjustment pursuant to paragraph (g) of this
Section, the Borrower shall repay Tranche 2 Borrowings and Deferred Interest
thereon on each Tranche 2 Payment Date in an aggregate amount equal to 6.250%
of the sum of all Tranche 2 Loans made or deemed made hereunder and all
Deferred Interest thereon (including amounts previously repaid or prepaid).
(c) Subject to adjustment pursuant to paragraph (g) of this
Section, the Borrower shall repay Tranche 3 Borrowings and Deferred Interest
thereon on each Tranche 3 Payment Date in an aggregate amount equal to 6.250%
of the sum of all Tranche 3 Loans made or deemed made hereunder and all
Deferred Interest thereon (including amounts previously repaid or prepaid)
(d) Subject to adjustment pursuant to paragraph (g) of this
Section, the Borrower shall repay Tranche 4 Borrowings and Deferred Interest
thereon on each Tranche 4 Payment Date in an aggregate amount equal to 6.250%
of the sum of all Tranche 4 Loans made or deemed made hereunder and all
Deferred Interest thereon (including amounts previously repaid or prepaid).
(e) Subject to adjustment pursuant to paragraph (g) of this
Section, the Borrower shall repay Tranche 5 Borrowings and Deferred Interest
thereon on each Tranche 5 Payment Date in an aggregate amount equal to 6.250%
of the sum of all Tranche 5 Loans made or deemed made hereunder and all
Deferred Interest thereon (including amounts previously repaid or prepaid).
(f) To the extent not previously paid, all Loans of each
Class and Deferred Interest thereon shall be due and payable on the Maturity
Date with respect to Loans of such Class.
(g) Any prepayment of a Borrowing (and Deferred Interest
thereon, if applicable) of any Class shall be applied to reduce ratably the
subsequent scheduled repayments of the Borrowings and Deferred Interest thereon
of such Class to be made pursuant to this Section; provided that any prepayment
of a Borrowing and Deferred Interest thereon of any Class that is
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48
made pursuant to Section 2.09(a) shall be applied to reduce the subsequent
scheduled repayments of the Borrowings of such Class to be made pursuant to
this Section in reverse chronological order.
(h) Prior to any repayment of any Borrowings of any Class
hereunder, the Borrower shall select the Borrowing or Borrowings of the
applicable Class to be repaid and shall notify the Administrative Agent by
telephone (confirmed by telecopy) of such selection not later than 11:00 a.m.,
New York City time, three Business Days before the scheduled date of such
repayment; provided that each repayment of Borrowings of any Class shall be
applied to repay any outstanding ABR Borrowings of such Class before any other
Borrowings of such Class. If the Borrower fails to make a timely selection of
the Borrowing or Borrowings to be repaid, such repayment shall be applied,
first, to repay any outstanding ABR Borrowings of the applicable Class and,
second, to other Borrowings of the applicable Class in the order of the
remaining duration of their respective Interest Periods (the Borrowing with the
shortest remaining Interest Period to be repaid first). Each repayment of a
Borrowing or Deferred Interest thereon shall be applied, first, ratably to
Deferred Interest on the Loans included in the repaid Borrowing and, second,
ratably to the Loans included in the repaid Borrowing. Repayments of Borrowings
or Deferred Interest thereon shall be accompanied by the payment of accrued
interest (other than Deferred Interest) on the amount thereof.
SECTION 2.09. Prepayment of Loans. (a) The
Borrower shall have the right at any time and from time to
time to prepay any Borrowing or Deferred Interest thereon in
whole or in part subject to the requirements of this Section.
(b) In the event and on each occasion that any Net Proceeds
are received by or on behalf of the Parent or any Restricted Subsidiary in
respect of any Prepayment Event, the Borrower shall, within six Business Days
after such Net Proceeds are received, prepay Borrowings and Deferred Interest
in an aggregate amount equal to such Net Proceeds.
(c) In the event and on each occasion that any Collateral
Trigger Event occurs, the Borrower shall, within three Business Days after the
date that such Collateral Trigger Event occurs, prepay Borrowings and Deferred
Interest in an aggregate amount equal to the Collateral Prepayment Amount with
respect to such Collateral Trigger Event.
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(d) Following the end of each fiscal year of the Parent,
commencing with the first fiscal year ending after the date of this Agreement
for which there is any Excess Cash Flow, the Borrower shall prepay Borrowings
and Deferred Interest in an aggregate amount equal to 50% of Excess Cash Flow
for such fiscal year. Each prepayment pursuant to this paragraph shall be made
on or before the date on which financial statements are delivered pursuant to
Section 5.01 with respect to the fiscal year for which Excess Cash Flow is
being calculated (and in any event within 90 days after the end of such fiscal
year).
(e) In the event and on each occasion that the Parent or any
Restricted Subsidiary Repays any Indebtedness of the Parent or any Restricted
Subsidiary or Indebtedness for borrowed money which the Parent or any
Restricted Subsidiary has Guaranteed, then the Borrower shall, within three
Business Days after the date of such Repayment, prepay Borrowings and Deferred
Interest in an aggregate amount equal to the product of (x) the sum of the
aggregate principal amount of the Loans outstanding at the time plus Deferred
Interest thereon, multiplied by (y) a fraction, the numerator of which is the
aggregate principal amount of such Repayment, and the denominator of which is
the amount of Consolidated Indebtedness immediately prior to such Repayment
(excluding Indebtedness in respect of the Loans and Deferred Interest and
Indebtedness outstanding under revolving credit facilities); provided that
prepayments of Borrowings and Deferred Interest shall not be required pursuant
to this paragraph in respect of (i) any Repayment of the Loans, (ii) any
scheduled repayment or mandatory prepayment of Indebtedness, (iii) any
Repayment of Indebtedness to the extent such Repayment is refinanced by
incurring other Indebtedness that (A) has a scheduled maturity date that is on
or after the scheduled maturity date of the Indebtedness being refinanced, (B)
has a weighted average life to maturity that is equal to or longer than the
remaining weighted average life to maturity of the Indebtedness being
refinanced, determined immediately prior to giving effect to such Repayment,
(C) does not include any provisions that may require mandatory Repayment
thereof prior to scheduled maturity, other than scheduled repayments taken into
consideration in determining compliance with clause (B) above and other
provisions that are not materially more burdensome than any such provisions
included in the Indebtedness being refinanced, (D) is issued or incurred by the
same Person that issued or incurred the Indebtedness being refinanced and is
not Guaranteed or secured by any Lien unless the Indebtedness
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50
being refinanced was Guaranteed or secured (in which case such Indebtedness
shall not be Guaranteed by any Person that did not Guarantee the Indebtedness
being refinanced and shall not be secured by a Lien on any asset that did not
secure the Indebtedness being refinanced) and (E) is subordinated to the
Obligations on terms no less favorable than the terms on which the Indebtedness
being refinanced was so subordinated, if such refinanced Indebtedness is
Subordinated Indebtedness, (iv) any Repayment of Indebtedness outstanding under
a revolving credit facility to the extent that (A) the commitments of the
lenders to make loans thereunder remain in effect after giving effect to such
Repayment and (B) the borrower thereunder does not voluntarily reduce the
principal amount available under such revolving credit facility within six
months of any such prepayment, or (v) any Repayment of any Permitted
Receivables Financing or Permitted Receivables Indebtedness.
(f) Prior to any optional or mandatory prepayment of
Borrowings or Deferred Interest hereunder, the Borrower shall select the
Borrowing or Borrowings (and Deferred Interest thereon) to be prepaid and shall
specify such selection in the notice of such prepayment pursuant to paragraph
(g) of this Section; provided that each prepayment of Borrowings of any Class
shall be applied to prepay ABR Borrowings of such Class before any other
Borrowings of such Class. In the event of any optional or mandatory prepayment
of Borrowings made at a time when Borrowings or Deferred Interest of more than
one Class are outstanding, the Borrower shall select Borrowings to be prepaid
so that the aggregate amount of such prepayment is allocated among the Classes
pro rata based on the aggregate principal amount of outstanding Borrowings
(plus the aggregate amount of Deferred Interest thereon at the time) of each
such Class.
(g) The Borrower shall notify the Administrative Agent by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case
of prepayment of a LIBOR Borrowing, not later than 1:00 p.m., New York City
time, three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date, the principal amount of each
Borrowing (and Deferred Interest thereon) or portion thereof to be prepaid and,
in the case of a mandatory prepayment, a reasonably detailed calculation of the
amount of such prepayment. Promptly following receipt of any such notice,
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51
the Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing (and Deferred Interest thereon) shall be in
an amount that is an integral multiple of $100,000 and not less than
$5,000,000, except as necessary to apply fully the required amount of a
mandatory prepayment. Each prepayment of a Borrowing or Deferred Interest shall
be applied, first, ratably to Deferred Interest on the Loans included in the
prepaid Borrowing and, second, ratably to the Loans included in the prepaid
Borrowing. Prepayments of Borrowings or Deferred Interest thereon shall be
accompanied by the payment of accrued interest(other than Deferred Interest) on
the amount prepaid.
(h) Notwithstanding the foregoing, any Lender who holds a
Designated Loan may, by notice to the Administrative Agent by telephone
(confirmed by telecopy) at least one Business Day prior to the applicable
prepayment date, decline all or any portion of any prepayment of such
Designated Loan pursuant to this Section (other than an optional prepayment
pursuant to paragraph (a) of this Section, which may not be declined), in which
case the aggregate amount of the prepayment that would have been applied to
prepay such Designated Loan but was so declined shall be applied to prepay
other Loans (other than Designated Loans) in accordance with paragraph (f) of
this Section. Any Lender holding a Designated Loan who is entitled to, but does
not, decline any such prepayment shall not be entitled to receive any
prepayment fee pursuant to paragraph (b) of Section 2.14 with respect to such
prepayment.
SECTION 2.10. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue (at the rate per annum separately agreed) on the average daily
amount of the Available Commitment of such Lender during the period from and
including the Effective Date to but excluding the date on which the Commitments
terminate. Accrued commitment fees shall be payable in arrears on the last day
of March, June, September and December of each year and on the date on which
the Commitments terminate, commencing on the first such date to occur after the
Effective Date. All commitment fees shall be computed on the basis of a year of
360 days and shall be payable for the actual number of days elapsed (including
the first day but excluding the last day).
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52
(b) The Borrower agrees to pay to Lucent, for its own
account, fees in the amounts and at the times separately agreed.
(c) The Borrower agrees to pay to the Administrative Agent
(if other than Lucent) and the Collateral Agent, for its own account, fees in
the amounts and at the times separately agreed.
(d) All fees payable hereunder shall be paid on the dates
due, in immediately available funds, (i) to the applicable Agent, (ii) to
Lucent, in the case of fees payable to it, or (iii) to the Administrative
Agent, in the case of commitment fees, for distribution to the Lenders entitled
thereto. Fees paid shall not be refundable under any circumstances.
SECTION 2.11. Interest. (a) The Loans comprising
each ABR Borrowing (and Deferred Interest thereon) shall bear
interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each LIBOR Borrowing (and Deferred
Interest thereon) shall bear interest at the Adjusted LIBO Rate for the
Interest Period in effect for such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration
or otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to 2% plus the rate applicable to ABR Loans
as provided in paragraph (a) of this Section.
(d) All accrued interest (other than Deferred Interest) on
each Loan and all accrued interest on the Deferred Interest on such Loan (other
than Deferred Interest) shall be payable in arrears on each Interest Payment
Date for such Loan; provided that (i) interest accrued pursuant to paragraph
(c) of this Section shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (or Deferred Interest thereon), accrued
interest on the principal amount of such Loan (or on such Deferred Interest, as
the case may be) repaid or prepaid shall be payable on the date of such
repayment or prepayment, (iii) in the event of any conversion of any Loan prior
to the end of the current Interest Period therefor, accrued interest on such
Loan (including accrued
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53
interest on any Deferred Interest thereon) shall be payable on the effective
date of such conversion and (iv) the Borrower may, at its option, elect to
defer payment of any interest payable on any Loan (including interest payable
on Deferred Interest thereon, but excluding Deferred Interest that becomes due
pursuant to the terms of this Agreement) of any Class until the earlier of (A)
the date on which such Loan and Deferred Interest thereon are repaid or prepaid
and (B) the end of the Availability Period for Loans of such Class; provided
further that (1) any Deferred Interest on any Loan (including Deferred Interest
on Deferred Interest) shall accrue interest from and including the date on
which such Deferred Interest was initially due at the same rate as the
principal amount of such Loan, (2) to the extent that the amount of any
interest to be deferred with respect to any Loan of any Lender pursuant to
clause (iv) above would, when aggregated with any Loan to be made by such
Lender on the applicable Interest Payment Date, exceed the amount of such
Lender's Available Commitment on such Interest Payment Date, such interest
shall not be deferred on such date and shall be payable as provided herein, and
(3) interest shall not be deferred (and shall be payable as provided herein)
with respect to the portion of the outstanding Loans of any Class incurred to
finance the Purchase Price of any Third Party Products (as defined in the
Supply Agreement).
(e) All interest hereunder shall be computed on the basis of
a year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate or Adjusted LIBO Rate shall be determined in accordance with this
Agreement by the Administrative Agent, and such determination shall be
conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior
to the commencement of any Interest Period for a LIBOR
Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the Adjusted LIBO Rate
for such Interest Period; or
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54
(b) the Administrative Agent is advised by a majority in
interest of the Lenders participating in such Borrowing that the
Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining their
Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a LIBOR Borrowing shall be ineffective and
(ii) if any Borrowing Request requests a LIBOR Borrowing, such Borrowing shall
be made as an ABR Borrowing.
SECTION 2.13. Increased Costs. (a) If any Change
in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or LIBOR Loans made by such
Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBOR Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.
(b) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Agreement or the Loans made by such
Lender to a level below that which such Lender or such Lender's holding company
could have achieved but for such Change in Law
<PAGE>
55
(taking into consideration such Lender's policies and the policies of such
Lender's holding company with respect to capital adequacy), then from time to
time the Borrower will pay to such Lender such additional amount or amounts as
will compensate such Lender or such Lender's holding company for any such
reduction suffered.
(c) A certificate of a Lender setting forth the amount or
amounts necessary to compensate such Lender or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section and the basis
therefor shall be delivered to the Borrower by the applicable Lender (with a
copy to the Administrative Agent) and shall be conclusive absent manifest
error. The Borrower shall pay such Lender the amount shown as due on any such
certificate within 30 days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; provided that the Borrower shall
not be required to compensate a Lender pursuant to this Section for any
increased costs or reductions incurred more than 270 days prior to the date
that such Lender notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 270-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
SECTION 2.14. Break Funding Payments; Prepayment Fees. (a) In
the event of (i) the payment of any principal of any LIBOR Loan other than on
the last day of an Interest Period applicable thereto (including as a result of
an Event of Default), (ii) the conversion of any LIBOR Loan other than on the
last day of the Interest Period applicable thereto, (iii) the failure to
borrow, convert, continue or prepay any Loan on the date specified in any
notice delivered pursuant hereto, or (iv) the assignment of any LIBOR Loan
other than on the last day of the Interest Period applicable thereto as a
result of a request by the Borrower pursuant to Section 2.17, then, in any such
event, the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a LIBOR Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount
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56
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable
to such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of
a comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this paragraph shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days
after receipt thereof.
(b) Subject to Section 2.09(h), in the event of the payment
of any principal of any Designated Loan of any Class of any Lender (other than
in the amounts and on the dates scheduled to be paid in accordance with Section
2.08), the Borrower shall pay to the Administrative Agent, for the account of
such Lender, at the time of such payment (in addition to any other amounts
payable hereunder, including any amounts payable under paragraph (a) of this
Section) a prepayment fee in the amount separately agreed.
SECTION 2.15. Taxes. (a) Any and all payments by or on
account of any obligation of the Borrower hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section) the Administrative Agent or Lender receives an
amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
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57
(b) In addition, the Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and
each Lender, within 10 days after written demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or
such Lender on or with respect to any payment by or on account of any
obligation of the Borrower hereunder or under any other Loan Document
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment delivered to the Borrower by a Lender, or by the Administrative
Agent on its own behalf or on behalf of a Lender, shall be conclusive absent
manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Each Foreign Lender shall deliver to the Borrower (with a
copy to the Administrative Agent) two copies of either United States Internal
Revenue Service Form 1001 or Form 4224, or, in the case of a Foreign Lender
claiming exemption from U.S. Federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest", a Form
W-8, or any subsequent versions thereof or successors thereto (and, if such
Foreign Lender delivers a Form W-8, a certificate representing that such
Foreign Lender is not a bank for purposes of Section 881(c) of the Code, is not
a 10-percent shareholder of the Borrower (within the meaning of Section
871(h)(3)(B) of the Code) and is not a controlled foreign corporation related
to the Borrower (within the meaning of Section 864(d)(4) of the Code)),
properly completed and duly executed by such Foreign Lender claiming complete
exemption from, or reduced rate of, U.S. Federal withholding tax on payments by
the
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58
Borrower under this Agreement or any other Loan Document. Such forms shall be
delivered by each Foreign Lender on or before the date it becomes a party to
this Agreement or designates a new lending office. In addition, each Foreign
Lender shall deliver such forms promptly upon the obsolescence, expiration or
invalidity of any form previously delivered by such Foreign Lender.
Notwithstanding any other provision of this Section 2.15, a Foreign Lender
shall not be required to deliver any form pursuant to this Section 2.15 that
such Foreign Lender is not legally able to deliver.
(f) If the Administrative Agent or a Lender determines, in
its sole discretion, that it has received a refund of any Taxes as to which it
has been indemnified by the Borrower pursuant to this Section 2.15, it shall
pay over such refund to the Borrower (but only to the extent of indemnity
payments made by the Borrower under this Section 2.15 with respect to the Taxes
giving rise to such refund), net of all reasonable out-of-pocket expenses of
the Administrative Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided, however, that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. Nothing contained in this Section 2.15
shall require the Administrative Agent or any Lender to make available its tax
returns (or any other information relating to its Taxes which it deems
confidential) to the Borrower or any other Person.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing
of Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest or
fees, or of amounts payable under Section 2.13, 2.14 or 2.15, or otherwise)
prior to 12:00 noon, New York City time, on the date when due, in immediately
available funds, without set-off or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon. All such payments shall be made to the
Administrative Agent at The Chase Manhattan Bank, New York, New York, ABA no.
021000021, account no. 9101449099, phone no. (212) 552-2222 (or such
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59
other account as the Administrative Agent shall from time to time specify by
notice), except that payments pursuant to Sections 2.10(b), 2.10(c), 2.13,
2.14, 2.15 and 9.03 shall be made directly to the Persons entitled thereto and
payments pursuant to other Loan Documents shall be made to the Persons
specified therein. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment under any Loan Document
shall be due on a day that is not a Business Day, the date for payment shall be
extended to the next succeeding Business Day, and, in the case of any payment
accruing interest, interest thereon shall be payable for the period of such
extension. All payments under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied (i) first,
towards payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, towards payment of principal then
due hereunder, ratably among the parties entitled thereto in accordance with
the amounts of principal then due to such parties.
(c) If any Lender shall, by exercising any right of set-off
or counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans of other Lenders to the extent necessary so that
the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment
made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans
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to any assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
(d) Unless the Administrative Agent shall have received
notice from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders hereunder that the Borrower
will not make such payment, the Administrative Agent may assume that the
Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders the amount due. In
such event, if the Borrower has not in fact made such payment, then each of the
Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of
the Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation.
(e) Without limiting the generality of paragraph (a) above,
the Borrower's obligations to make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest,
fees or otherwise) shall be absolute and unconditional and shall not be subject
to any delay, reduction, set-off, counterclaim, defense or recoupment for any
reason, including any failure of any equipment or other assets acquired
pursuant to the Supply Agreement or any part thereof, or any dispute with,
breach of representation or warranty by or claim against any supplier,
manufacturer, installer, vendor or distributer, including Lucent. The
provisions of this paragraph shall not be construed as a waiver by the Parent
or the Borrower of any rights they may have under the Supply Agreement.
SECTION 2.17. Mitigation Obligations; Replacement
of Lenders. (a) If any Lender requests compensation under
Section 2.13, or if the Borrower is required to pay any
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61
additional amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 2.15, then, if requested by the Borrower,
such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the reasonable judgment of such Lender, such designation or assignment (i)
would eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as
the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment
made at the Borrower's request.
(b) If any Lender requests compensation under Section 2.13,
or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section
2.15, then the Borrower may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all its interests, rights and obligations under
this Agreement to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (i) the Borrower shall have received the prior written consent of the
Administrative Agent, which consent shall not unreasonably be withheld, (ii)
such Lender shall have received payment of an amount equal to the outstanding
principal of its Loans, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts) and (iii) such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
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ARTICLE III
Representations and Warranties
Each of the Parent and the Borrower represents and warrants
to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Parent and
the Restricted Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite company or corporate, as the case may be, power and authority to
carry on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
SECTION 3.02. Authorization; Enforceability. The
Transactions to be entered into by each Loan Party are within
such Loan Party's corporate or company, as the case may be,
powers and have been duly authorized by all necessary
corporate or company, as the case may be, and, if required,
stockholder or member, as the case may be, action. This
Agreement has been duly executed and delivered by each of the
Parent and the Borrower and constitutes, and each other Loan
Document to which any Loan Party is to be a party, when
executed and delivered by such Loan Party, will constitute, a
legal, valid and binding obligation of the Parent, the
Borrower or such Loan Party (as the case may be), enforceable
in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered
in a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect and except filings
necessary to perfect Liens created under the Security Agreement, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of any Loan Party or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
agreement or other instrument evidencing or
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governing any Material Indebtedness or any other material indenture, agreement
or other instrument binding upon any Loan Party or its assets, or give rise to
a right thereunder to require any payment to be made by any Loan Party, and (d)
will not result in the creation or imposition of any Lien on any asset of any
Loan Party, except Liens created under the Security Agreement.
SECTION 3.04. Financial Condition; No Material Adverse
Change. (a) The Parent has heretofore furnished to the Lenders its consolidated
balance sheet and statements of income, stockholders equity and cash flows (i)
as of and for the fiscal year ended December 31, 1997, reported on by Grant
Thornton LLP, independent public accountants, and (ii) as of and for the fiscal
quarter and the portion of the fiscal year ended June 30, 1998, certified by
its chief financial officer. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash
flows of the Parent and its consolidated subsidiaries as of such dates and for
such periods in accordance with GAAP, subject to year-end audit adjustments in
the case of the statements referred to in clause (ii) above.
(b) Since June 30, 1998, there has been no material adverse
change in the business, condition (financial or otherwise), operations,
performance or properties of the Parent and the Restricted Subsidiaries, taken
as a whole.
SECTION 3.05. Properties and Licenses. (a) Each of the Loan
Parties has good title to, or valid leasehold interests in, all the real and
personal property material to its business, except for minor defects in title
that do not interfere with its ability to conduct its business as currently
conducted or to utilize such properties for their intended purposes.
(b) Each of the Loan Parties owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Loan Parties does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
(c) The Parent and the Restricted Subsidiaries have all
licenses and permits that are material to the business of the Parent and the
Restricted Subsidiaries. Each license or
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permit that is material to the business of the Parent and the Restricted
Subsidiaries, is valid and in full force and effect, and the Parent and the
Restricted Subsidiaries are in compliance in all material respects with the
terms and conditions thereof.
SECTION 3.06. Litigation and Environmental Matters. (a) There
are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Parent or
the Borrower, threatened against or affecting the Parent or any of its
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve any of the Loan Documents or
the Transactions.
(b) Except for the Disclosed Matters and except with respect
to any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, none of the
Parent or any of its Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) has become subject to
any Environmental Liability, (iii) has received notice of any claim with
respect to any Environmental Liability or (iv) knows of any basis for any
Environmental Liability.
(c) Since the date of this Agreement, there has been no
change in the status of the Disclosed Matters that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of
the Parent and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
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SECTION 3.08. Investment and Holding Company Status. None of
the Loan Parties is (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding company"
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.
SECTION 3.09. Taxes. Each of the Loan Parties has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the applicable Loan Party has set aside on its books
adequate reserves or (b) the filing of local Tax returns and reports to the
extent that the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such
ERISA Events for which liability is reasonably expected to occur, could
reasonably be expected to result in a Material Adverse Effect. The present
value of all accumulated benefit obligations under each such Plan (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $5,000,000 the fair market value
of the assets of such Plan, and the present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for
purposes of Statement of Financial Accounting Standards No.87) did not, as of
the date of the most recent financial statements reflecting such amounts,
exceed by more than $5,000,000 the fair market value of the assets of all such
underfunded Plans.
SECTION 3.11. Disclosure. The Parent and the Borrower have
disclosed to the Lenders all agreements, instruments and corporate or other
restrictions to which any of the Loan Parties is subject that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect. None of the reports, financial statements, certificates or other
information furnished by or on behalf of any Loan Party to the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or thereunder (as modified or
supplemented by other information so
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66
furnished, including the Parent's publicly available filings with the
Securities and Exchange Commission) contains any material misstatement of fact
or omits to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected financial information, the Parent and
the Borrower represent only that such information was prepared in good faith
based upon assumptions believed to be reasonable at the time.
SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth as of
the date of this Agreement the name of, and the ownership interest of the
Parent in, each Subsidiary of the Parent and identifies each such Subsidiary
(other than the Borrower) as either an Unrestricted Subsidiary, a Special
Purpose Equipment Subsidiary, a Special Purpose License Subsidiary, a Special
Purpose Financing Subsidiary, a Non- Material Subsidiary or a Guarantor
Subsidiary.
SECTION 3.13. Insurance. Schedule 3.13 sets forth a
description of all insurance maintained by or on behalf of the Parent and its
Restricted Subsidiaries as of the date of this Agreement. As of the date of
this Agreement, all premiums in respect of such insurance have been paid.
SECTION 3.14. Labor Matters. As of the date hereof, there are
no strikes, lockouts or slowdowns against any Loan Party pending or, to the
knowledge of the Parent or the Borrower, threatened. The hours worked by and
payments made to employees of the Loan Parties have not been in violation of
the Fair Labor Standards Act or any other applicable Federal, state, local or
foreign law dealing with such matters. All payments due from any Loan Party, or
for which any claim may be made against any Loan Party, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the applicable Loan Party. The
consummation of the Transactions will not give rise to any right of termination
or right of renegotiation on the part of any union under any collective
bargaining agreement to which any Loan Party is bound.
SECTION 3.15. Supply Agreement. The Supply
Agreement is in full force and effect. The Borrower (i) is in
compliance in all material respects with the terms and
conditions of the Supply Agreement and (ii) has not
terminated, nor taken any action which could result in the
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termination of, the Supply Agreement (except during the Disengagement Period,
as defined in the Supply Agreement).
SECTION 3.16. Security Agreement. The
representations and warranties in the Security Agreement are
true and correct.
SECTION 3.17. Year 2000 Compliance. Any reprogramming
required to permit the proper functioning, in and following the year 2000, of
(a) the computer systems of the Parent and the Subsidiaries and (b) equipment
containing embedded microchips and the testing of all such systems and
equipment, as so reprogrammed, will be completed by November 30, 1999, except
to the extent that failure to do so would not have a Material Adverse Effect.
The cost to the Parent and the Subsidiaries of such reprogramming and testing
and of the reasonably foreseeable consequences of year 2000 to the Parent and
the Subsidiaries (including reprogramming errors and the failure of others'
systems or equipment) could not reasonably be expected to have a Material
Adverse Effect.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders
to make the initial Loans hereunder shall not become effective until the date
on which each of the following conditions is satisfied (or waived in accordance
with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this
Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such
party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Agents and the Lenders, dated the
Effective Date and addressing such matters relating to the Loan
Parties, the Loan Documents and the Transactions as the Administrative
Agent shall reasonably request, in each case in form and substance
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reasonably satisfactory to the Administrative Agent) of each of (i)
Graubard Mollen & Miller, counsel for the Parent and the Borrower,
(ii) Willkie Farr & Gallagher, special FCC counsel for Parent and the
Borrower, and (iii) Cravath, Swaine & Moore, counsel for Lucent. The
Parent and the Borrower hereby request their counsel referred to in
clauses (i) and (ii) of this paragraph to deliver such opinions.
(c) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel
may reasonably request relating to the organization, existence and
good standing of the Loan Parties, the authorization of the
Transactions and any other legal matters relating to the Loan Parties,
the Loan Documents or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by the President, a
Vice President or a Financial Officer of each of the Parent and the
Borrower, confirming compliance with the conditions set forth in
paragraphs (a), (b) and (c) of Section 4.02.
(e) The Agents and Lucent shall be satisfied that all fees
and other amounts due and payable to them hereunder on or prior to the
Effective Date, including, to the extent invoiced, reimbursement or
payment of all expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Loan Document, have been paid or
will be paid from the proceeds of a Borrowing to be made on the
Effective Date.
(f) The Lenders shall be reasonably satisfied with the
corporate and legal structure and capitalization of the Parent and the
Restricted Subsidiaries, including the charter and by-laws of the
Parent and each Restricted Subsidiary and each agreement or instrument
evidencing Indebtedness.
(g) The Administrative Agent shall have received (i)
counterparts of the Guarantee Agreement signed on behalf of the Parent
and each Guarantor Subsidiary and (ii) counterparts of the Indemnity
and Contribution Agreement signed on behalf of each Loan Party.
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(h) The Collateral Agent shall have received (i) counterparts
of the Security Agreement signed on behalf of the Borrower, (ii)
counterparts of an Equipment User Agreement or other document
contemplated by Section 6.17, in either case signed on behalf of the
initial Equipment User or Users and (iii) evidence satisfactory to it
that all documents and instruments, including Uniform Commercial Code
financing statements, required by law or reasonably requested by the
Collateral Agent to be filed, registered or recorded to create or
perfect the Liens intended to be created under the Security Agreement,
and to protect the Borrower's ownership interest in (and the Lien of
the Security Agreement on) all Collateral that will be leased to or
otherwise possessed by any initial Affiliated Equipment User, have
been so filed, registered or recorded.
(i) The Collateral Agent shall have received a completed
Perfection Certificate dated the Effective Date and signed by a
Financial Officer of the Borrower, together with all attachments
contemplated thereby, including (i) the results of a search of the
Uniform Commercial Code (or equivalent) filings made with respect to
the Borrower in the jurisdictions contemplated by the Perfection
Certificate and (ii) copies of the financing statements (or similar
documents) disclosed by such search and evidence reasonably
satisfactory to the Collateral Agent that the Liens indicated by such
financing statements (or similar documents) are permitted by Section
6.02 or have been released.
(j) The Administrative Agent shall have received evidence
satisfactory to it that the insurance required by Section 5.07 is in
effect and that the Collateral Agent has been named as an additional
insured and loss payee under all insurance policies to be maintained
with respect to the properties of the Borrower constituting the
Collateral.
(k) The Lenders shall have received the most recent Business
Plan, including financial projections, and there shall have been no
material adverse changes in the Business Plan compared to the
information disclosed to Lucent prior to the date of execution of this
Agreement.
(l) The Lenders (i) shall have been given access to
the management, records, books of account, contracts and
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properties of the Loan Parties and shall have received such financial,
business and other information regarding the Loan Parties as the
Lenders shall have reasonably requested and (ii) shall have completed
their due diligence review of the Loan Parties and shall be reasonably
satisfied with the results of such review.
(m) The Administrative Agent shall have received evidence
reasonably satisfactory to it that the Restricted Subsidiaries hold
all material Service Licenses and material governmental approvals, and
have entered into all interconnection agreements with the incumbent
local exchange providers, reasonably necessary to conduct business as
a local exchange provider in each of their local markets in which they
are providing local exchange service.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New
York City time, on December 31, 1998 (and, in the event such conditions are not
so satisfied or waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Borrowing. The obligation of
each Lender to make a Loan on the occasion of any Borrowing is
subject to the satisfaction of the following conditions:
(a) At the time of and immediately after giving effect to
such Borrowing, the representations and warranties of the Loan Parties
set forth in the Loan Documents shall be true and correct (or, in the
case of any representation or warranty that is not qualified as to
materiality, true and correct in all material respects) on and as of
the date of such Borrowing (or, in the case of any representation and
warranty that expressly relates to an earlier date, on and as of such
earlier date).
(b) At the time of and immediately after giving effect to
such Borrowing no Default shall have occurred and be continuing.
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(c) At the time of and immediately after giving effect to
such Borrowing, the Supply Agreement shall be in full force and effect
and the Borrower shall be in compliance therewith in all material
respects.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a),
(b) and (c) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall
have been paid in full, each of the Parent and the Borrower covenants and
agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other
Information. The Parent and the Borrower will furnish to the
Administrative Agent:
(a) within 90 days after the end of each fiscal year of the
Parent, the audited consolidated balance sheet of the Parent and
related statements of operations, stockholders' equity and cash flows
as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
reported on by Grant Thornton LLP or other independent public
accountants of recognized national standing (without a "going concern"
or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such
consolidated financial statements present fairly in all material
respects the financial condition and results of operations of the
Parent and its consolidated subsidiaries on a consolidated basis in
accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Parent, the consolidated
balance sheet of the Parent and related statements of operations and
cash flows as of the end of and for such fiscal quarter and the then
elapsed
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portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal
year, all certified by one of its Financial Officers as presenting
fairly in all material respects the financial condition and results of
operations of the Parent and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of
footnotes;
(c) concurrently with any delivery of the Parent's financial
statements under clause (a) or (b) above, a certificate of a Financial
Officer of each of the Parent and the Borrower (i) certifying as to
whether a Default has occurred and, if a Default has occurred,
specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth the Leverage Ratio as
of the end of the period covered by such financial statements, (iii)
setting forth reasonably detailed calculations demonstrating
compliance with Sections 6.11, 6.12, 6.13, 6.14, 6.15 and 6.16, (iv)
stating whether any change in GAAP or in the application thereof that
materially affects the Parent's financial statements accompanying such
certificate (it being understood that any change that would affect
compliance with any covenant set forth herein or the Applicable Rate
shall be considered material) has occurred since the date of the
Parent's audited financial statements referred to in Section 3.04 and,
if any such change has occurred, specifying the effect of such change
on the financial statements accompanying such certificate, and (v) if
the financial statements accompanying such certificate include
consolidated financial information for any Unrestricted Subsidiary,
setting forth on a schedule attached to such certificate a reasonably
detailed calculation of all adjustments to such financial statements
necessary in order to reflect the financial condition and results of
operations of the Parent and the Restricted Subsidiaries on a
consolidated basis in accordance with GAAP;
(d) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial
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statements of any Default (which certificate may be
limited to the extent required by accounting rules or
guidelines);
(e) promptly after the same become available but in any event
within 105 days after the end of each fiscal year of the Parent, the
Business Plan for the current fiscal year and updated financial
projections through the earlier of (i) the eighth fiscal year
thereafter and (ii) the fiscal year during which the latest Maturity
Date occurs;
(f) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other
materials filed by the Parent or any Subsidiary with the Securities
and Exchange Commission, or any Governmental Authority succeeding to
any or all of the functions of said Commission, or with any national
securities exchange, or distributed by the Parent to its shareholders
generally, as the case may be; and
(g) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Parent or any Subsidiary, or compliance with the
terms of any Loan Document, as either Agent or any Lender may
reasonably request (including, if requested by any Lender, unaudited
balance sheets and statements of operations for the Borrower).
SECTION 5.02. Notices of Material Events. (a) The
Parent or the Borrower will furnish to the Administrative
Agent, the Collateral Agent and each Lender written notice of
the following promptly upon obtaining knowledge thereof:
(i) the occurrence of any Default;
(ii) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting the Parent or any Affiliate thereof that, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect; and
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(iii) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
(b) The Parent or the Borrower will furnish to the
Administrative Agent and the Collateral Agent written notice of the occurrence
of any Collateral Trigger Event or Prepayment Event promptly after the
occurrence of such event.
(c) Each notice delivered under this Section shall be
accompanied by a statement of a Financial Officer or other executive officer of
the Parent or the Borrower setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
SECTION 5.03. Information Regarding Collateral. (a) The
Borrower will furnish to the Collateral Agent prompt written notice of any
change (i) in the Borrower's or any Affiliated Equipment User's corporate name
or in any trade name used to identify it in the conduct of its business or in
the ownership of its properties, (ii) in the location of the Borrower's or any
Affiliated Equipment User's chief executive office, its principal place of
business or any asset constituting Collateral (other than the installation of
any asset constituting Collateral in a jurisdiction in which all Uniform
Commercial Code financing statements (including fixture filings, if applicable)
and other appropriate filings, recordings or registrations, containing a
description of the Collateral have been filed of record in each governmental,
municipal or other appropriate office in such jurisdiction to the extent
necessary to perfect the security interests under the Security Agreement
(including, if applicable, the Borrower's ownership interest in any Collateral
leased to or otherwise possessed by any Affiliated Equipment User), (iii) in
the Borrower's or any Affiliated Equipment User's identity or corporate
structure or (iv) in the Borrower's or any Affiliated Equipment User's Federal
Taxpayer Identification Number. The Borrower agrees not to effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
the Collateral Agent to continue at all times following such change to have a
valid, legal and perfected security interest in all the Collateral.
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(b) Each year, at the time of delivery of annual financial
statements for the Parent with respect to the preceding fiscal year pursuant to
clause (a) of Section 5.01, the Borrower shall deliver to the Collateral Agent
a certificate of a Financial Officer of the Parent or the Borrower (i) setting
forth the information required pursuant to Sections 1 and 2 of the Perfection
Certificate or confirming that there has been no change in such information
since the date of the Perfection Certificate delivered on the Effective Date or
the date of the most recent certificate delivered pursuant to this Section and
(ii) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (i) above to the extent necessary to
protect and perfect the security interests under the Security Agreement
(including the Borrower's ownership interest in any Collateral leased to or
otherwise possessed by any Affiliated Equipment User) for a period of not less
than 18 months after the date of such certificate (except as noted therein with
respect to any continuation statements to be filed within such period).
SECTION 5.04. Existence; Conduct of Business. The Parent
will, and will cause each of the Restricted Subsidiaries to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges and franchises
material to the conduct of the business of the Parent and the Restricted
Subsidiaries, taken as a whole; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section
6.03.
SECTION 5.05. Payment of Obligations. The Parent will, and
will cause each of the Restricted Subsidiaries to, pay its Indebtedness and
other obligations, including Tax liabilities, before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Parent or
such Restricted Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP, (c) such contest effectively suspends
collection of the contested obligation and the enforcement of any Lien
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securing such obligation and (d) the failure to make payment pending the
resolution of such contest could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 5.06. Maintenance of Properties. The Parent will, and
will cause each of the Restricted Subsidiaries to, keep and maintain all
Collateral, and all other property material to the conduct of the business of
the Parent and the Restricted Subsidiaries, taken as a whole, in good working
order and condition, ordinary wear and tear excepted.
SECTION 5.07. Insurance. (a) The Parent will, and will cause
each of the Restricted Subsidiaries to, maintain, with financially sound and
reputable insurance companies with AM Best's rating of A minus (A-) or better,
All-Risk property insurance for the full replacement value of all property and
other insurance, including public liability insurance against claims for
personal injury, death or property damage occurring upon, about or in
connection with the use of any properties owned, occupied or controlled by it
as well as such other insurance as may be required by law.
(b) All policies of All-Risk property insurance maintained by
or for the benefit of the Borrower with respect to the Collateral shall be (i)
maintained in an amount not less than the full replacement value of all
property thereof, with deductibles or self insured retention not exceeding
$100,000, and (ii) endorsed or otherwise amended to include a "standard" or
"New York" lender's loss payable endorsement, in favor of and satisfactory to
the Collateral Agent, which endorsement shall provide that the insurance
carrier shall pay all proceeds otherwise payable to any Loan Party under such
policies directly to the Collateral Agent. All such policies also shall provide
that none of the Borrower, the Administrative Agent, the Collateral Agent nor
any other party shall be a coinsurer thereunder and shall contain a
"Replacement Cost Endorsement", without any deduction for depreciation,
"mortgagee's interest"/"breach of warranty coverage" and such other provisions
as the Administrative Agent or the Collateral Agent may reasonably require from
time to time to protect the interests of the Lenders. Each such policy also
shall provide that it shall not be canceled (i) by reason of nonpayment of
premium except upon not less than 10 days' prior written notice thereof by the
insurer to the Administrative Agent and the Collateral Agent (giving the
Administrative Agent and the Collateral Agent the right to
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cure defaults in the payment of premiums) or (ii) for any other reason except
upon not less than 30 days' prior written notice thereof by the insurer to the
Administrative Agent and the Collateral Agent. The Borrower shall deliver to
the Administrative Agent and the Collateral Agent, upon not less than 30 days'
prior written notice to the cancelation, modification or nonrenewal of any such
policy of insurance, a copy of a renewal or replacement policy (or other
evidence of renewal of a policy previously delivered to the Administrative
Agent and the Collateral Agent) together with evidence satisfactory to the
Administrative Agent and the Collateral Agent of payment of the premium
therefor.
(c) The Borrower shall notify the Administrative Agent and
the Collateral Agent immediately whenever any separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this Section is taken out by any Loan Party, and shall promptly deliver
to the Administrative Agent and the Collateral Agent a duplicate original copy
of such policy or policies.
SECTION 5.08. Books and Records; Inspection Rights. The
Parent will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made of all
material dealings and transactions in relation to its business and activities.
The Parent will, and will cause each of its Subsidiaries to, permit any
representatives designated by either Agent or any Lender, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times and as
often as reasonably requested.
SECTION 5.09. Compliance with Laws and Agreements. The Parent
will, and will cause each of its Subsidiaries to, comply with all laws, rules,
regulations and orders of any Governmental Authority (including ERISA and all
Environmental Laws) applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.10. Use of Proceeds. The proceeds of the
Loans will be used solely to make payments of the Purchase
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Price and to pay fees and expenses incurred in connection with the
Transactions.
SECTION 5.11. Further Assurances. The Parent and the Borrower
will, and the Parent will cause each other Loan Party to, execute any and all
further documents, financing statements, agreements and instruments, and take
all such further actions (including the filing and recording of financing
statements, fixture filings and other documents), which may be required under
any applicable law, or which either Agent or the Required Lenders may
reasonably request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect the Liens created or
intended to be created by the Security Agreement or the validity or priority of
any such Lien, all at the expense of the Borrower. The Borrower also agrees to
provide to either Agent, upon request, evidence reasonably satisfactory to such
Agent as to the perfection and priority of the Liens created or intended to be
created by the Security Agreement.
SECTION 5.12. Casualty and Condemnation. (a) The Borrower
will furnish to the Agents and the Lenders prompt written notice of any
casualty or other damage to any material portion of any Collateral or the
commencement of any action or proceeding for the taking of any Collateral or
any part thereof or interest therein under power of eminent domain or by
condemnation or similar proceeding.
(b) If any event described in paragraph (a) of this Section
results in Net Proceeds (whether in the form of insurance proceeds,
condemnation award or otherwise), the Collateral Agent is authorized to collect
such Net Proceeds and, if received by the Parent, the Borrower or any other
Subsidiary, such Net Proceeds shall be paid over to the Collateral Agent. All
such Net Proceeds retained by or paid over to the Collateral Agent shall be
held by the Collateral Agent and released from time to time to pay the costs of
repairing, restoring or replacing the affected property in accordance with the
terms of this Agreement and the applicable provisions of the Security
Agreement, subject to the provisions of the Security Agreement regarding
application of such Net Proceeds during a Default.
(c) If any Net Proceeds retained by or paid over to the
Collateral Agent as provided above continue to be held by the Collateral Agent
on the date that any prepayment is due pursuant to Section 2.09(c) in respect
of the event resulting
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in such Net Proceeds, then such Net Proceeds shall be applied to prepay
Borrowings as provided in Section 2.09(c).
SECTION 5.13. Interest Rate Protection. The Parent will from
time to time enter into and maintain in effect one or more Hedging Agreements
reasonably satisfactory to the Required Lenders, the effect of which shall be
to fix or limit the interest cost to the Parent and the Restricted Subsidiaries
with respect to such portion of the Loans and Deferred Interest as shall be
necessary in order that, at all times, at least 50% of Consolidated
Indebtedness shall be comprised of a combination of (a) Indebtedness bearing
interest at a fixed rate and (b) the portion of the Loans and Deferred Interest
covered by such Hedging Agreements.
SECTION 5.14. Additional Subsidiary Guarantors. If any
additional Guarantor Subsidiary is formed or acquired (or results from a
Subsidiary that was not previously a Guarantor Subsidiary becoming a Guarantor
Subsidiary) after the Effective Date, the Parent will notify the Administrative
Agent and the Lenders thereof and will cause such Subsidiary to become a party
to the Guarantee Agreement and the Indemnity and Contribution Agreement
promptly, and in any event within five Business Days, thereafter.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full, each of the Parent and the Borrower covenants and agrees with the
Lenders that:
SECTION 6.01. Indebtedness. (a) The Parent will not, nor
will it permit any Restricted Subsidiary to, create, incur, assume or permit
to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) subject to Section 6.04, Indebtedness of the Parent to
any Restricted Subsidiary and of any Restricted Subsidiary to the Parent or any
other Restricted Subsidiary;
(iii) subject to Section 6.04, Guarantees by the Parent of
Indebtedness of any Restricted Subsidiary and
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Guarantees by any Guarantor Subsidiary of Indebtedness of any Special Purpose
Equipment Subsidiary;
(iv) Indebtedness of the Parent or any Restricted Subsidiary
incurred after the date of this Agreement to finance the acquisition of any
equipment or inventory, or the acquisition, improvement or construction of any
real property, by the Parent or such Restricted Subsidiary (other than assets
constituting Collateral or other assets the removal or loss of which would
adversely affect the value of any assets constituting Collateral), including
Capital Lease Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets prior to
the acquisition thereof; provided that (A) such Indebtedness is incurred prior
to or within 90 days after such acquisition or the completion of such
improvement or construction, as the case may be, and (B) any such Indebtedness
incurred in connection with any particular acquisition, improvement or
construction shall not exceed the cost of such acquisition, improvement or
construction; provided further that the aggregate principal amount of all
outstanding Indebtedness incurred in reliance upon this clause (iv) (including
Indebtedness incurred pursuant to clause (vi) below to refinance Indebtedness
originally incurred pursuant to this clause (iv), and successive refinancings
thereof) shall not at any time prior to January 1, 2004, exceed the Purchase
Money Debt Limit at such time;
(v) Indebtedness outstanding on the Effective Date and set
forth on Schedule 6.01;
(vi) Indebtedness of the Parent incurred to refinance any
Indebtedness referred to in clause (iv) or (v) above and Indebtedness of any
Restricted Subsidiary incurred to refinance any Indebtedness of such Restricted
Subsidiary referred to in clause (iv) or (v) above; provided that (A) the
principal amount of any such Indebtedness does not exceed the principal amount
of, plus accrued interest and any prepayment premiums applicable to, the
Indebtedness refinanced thereby, (B) any such Indebtedness has a scheduled
maturity date that is on or after the scheduled maturity date of the
Indebtedness refinanced thereby, (C) any such Indebtedness has a weighted
average life to maturity that is equal to or longer than the remaining weighted
average life to maturity of the Indebtedness refinanced thereby (determined
immediately prior to giving effect to such refinancing), (D) any such
Indebtedness does not include any provisions that may require
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mandatory Repayment thereof prior to scheduled maturity, other than scheduled
repayments taken into account in determining compliance with clause (C) above
and other provisions that are not materially more burdensome than any such
provisions included in the Indebtedness refinanced thereby, (E) any such
Indebtedness shall not be secured by any Lien other than Liens on assets
securing the Indebtedness being refinanced thereby and shall not be Guaranteed
by any Restricted Subsidiary other than any Restricted Subsidiary that
Guaranteed the Indebtedness being refinanced thereby and (F) if the
Indebtedness being refinanced is Subordinated Indebtedness, then any
Indebtedness incurred to refinance such Subordinated Indebtedness shall be
subordinated to the Obligations on terms no less favorable to the Lenders than
the terms of the Subordinated Indebtedness being refinanced;
(vii) Permitted Receivables Indebtedness and Permitted
Receivables Financings;
(viii) Subordinated Indebtedness and Disqualified Stock, in
each case issued by the Parent after the date of this Agreement; provided that
(A) such Subordinated Indebtedness is subordinated to the Obligations of the
Parent under the Guarantee Agreement on terms no less favorable to the Lenders
than the terms of subordination of the Subordinated Indebtedness of the Parent
outstanding on the date of this Agreement, (B) such Subordinated Indebtedness
is unsecured and is not Guaranteed by any Restricted Subsidiary or any other
Affiliate of the Parent, (C) such Indebtedness matures on or after, and does
not require any scheduled payments of principal prior to, the date that is ten
years after the date of issuance of such Indebtedness and (D) in the case of
any such Disqualified Stock (x) any obligations in respect thereof would not
rank any greater than those in respect of Subordinated Indebtedness issued in
compliance with this clause, (y) any obligations in respect thereof are
unsecured and are not Guaranteed by any Restricted Subsidiary or any other
Affiliate of the Parent and (z) there is not any obligation to make any
mandatory payment (other than payments contingent upon an "asset sale" or
"change of control" comparable to those applicable to the Parent's existing
Disqualified Stock) in respect thereof (or right to convert or exchange such
Disqualified Stock into or for any security other than Subordinated
Indebtedness that would qualify for issuance under this clause (viii) or common
stock or Permitted Preferred Stock of the Parent) prior to the date that is ten
years after the date of issuance thereof;
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(ix) Indebtedness of the Parent as an account party in
respect of letters of credit or surety bonds issued to support obligations
incurred in the ordinary course of business; provided that (A) any Indebtedness
resulting from a drawing under any such letter of credit or payment under any
such surety bond shall be repaid within three Business Days and (B) the sum of
the aggregate face amount of all such letters of credit and the aggregate
amount payable under all surety bonds outstanding at any time, plus any
unreimbursed drawings or payments thereunder, shall not exceed $25,000,000 at
any time prior to the end of the fiscal year ended December 31, 1999, or, in
the case of any fiscal year ending thereafter, the maximum amount permitted
hereunder during the immediately preceding fiscal year plus $5,000,000;
(x) Acquisition Indebtedness, subject to the limitations set
forth in the definition of "Permitted Acquisitions"; and
(xi) other unsecured Indebtedness of the Parent in an
aggregate principal amount not exceeding $25,000,000 (or, on and after January
1, 2003, $50,000,000) at any time outstanding.
(b) The Borrower will not create, incur, assume or permit to
exist any Indebtedness other than the Loans, regardless of whether such
Indebtedness would be permitted under paragraph (a) of this Section.
SECTION 6.02. Liens. (a) The Parent will not, nor will it
permit any Restricted Subsidiary to, create, incur, assume or permit to exist
any Lien on any property or asset now owned or hereafter acquired by it, or
assign or sell any income or revenues (including accounts receivable) or rights
in respect of any thereof, except:
(i) Liens created under the Security Agreement;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the Parent or any
Restricted Subsidiary existing on the date hereof and set forth in
Schedule 6.02; provided that (A) such Lien shall not apply to any
other property or asset of the Parent or any Restricted Subsidiary and
(B) such Lien shall secure only those obligations which it secures on
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the date hereof and refinancings thereof that satisfy the criteria set
forth in clause (vi) of Section 6.01(a);
(iv) any Lien existing on any property or asset prior to the
date that such property or asset was first acquired by the Parent or
any Subsidiary or any Affiliate thereof or existing on any property or
asset of any Person that becomes a Subsidiary after the date hereof
prior to the time such Person becomes a Subsidiary; provided that (A)
such Lien is not created in contemplation of or in connection with
such acquisition or such Person becoming a Subsidiary, (B) such Lien
shall not apply to any other property or assets of the Parent or any
Subsidiary and (C) such Lien shall secure only those obligations which
it secures on the date of such acquisition or the date such Person
becomes a Subsidiary, as the case may be, and refinancings thereof
that satisfy the criteria set forth in clause (vi) of Section 6.01(a);
(v) Liens on equipment, inventory or real property (other
than assets constituting Collateral or other assets that become
accessions to assets constituting Collateral or the removal or loss of
which would adversely affect the value of any assets constituting
Collateral) acquired, constructed or improved by the Parent or a
Restricted Subsidiary; provided that (A) such Liens secure only
Indebtedness permitted by clause (iv) of Section 6.01(a) or a
refinancing thereof permitted by clause (vi) of Section 6.01(a), (B)
such Liens and the Indebtedness secured thereby are incurred prior to
or within 90 days after such acquisition, construction or improvement
of such equipment, inventory or real property, (C) the Indebtedness
secured thereby does not exceed 100% of the cost of acquiring such
equipment or inventory or acquiring, constructing or improving such
real property and (D) such Liens shall not apply to any other property
or assets of the Parent or any Restricted Subsidiary;
(vi) sales of accounts receivable pursuant to Permitted
Receivables Financings and Liens on accounts receivable securing
Permitted Receivables Indebtedness; and
(vii) Liens securing reimbursement obligations in respect of
letters of credit; provided that such Liens
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apply only to documents and other property relating to such letters of
credit and products and proceeds thereof.
(b) Notwithstanding the foregoing, the Borrower will not
create, incur, assume or permit to exist any Lien on any Collateral except (i)
Liens created under the Security Agreement, (ii) Liens described in clause (a)
or (b) of the definition of "Permitted Encumbrances" and (iii) rights of
Equipment Users under leases or similar arrangements, subject to Equipment User
Agreements.
SECTION 6.03. Fundamental Changes. (a) The Parent will not,
nor will it permit any Restricted Subsidiary to, merge into or consolidate with
any other Person, or permit any other Person to merge into or consolidate with
it, or sell, transfer, lease or otherwise dispose of (in one transaction or in
a series of transactions) all or substantially all of its assets, or all or
substantially all of the stock of any of its Restricted Subsidiaries (in each
case, whether now owned or hereafter acquired), or liquidate or dissolve,
except that, if at the time thereof and immediately after giving effect thereto
no Default shall have occurred and be continuing (i) any Person may merge with
or into a Restricted Subsidiary (other than the Borrower, a Special Purpose
Equipment Subsidiary, a Special Purpose Financing Subsidiary or a Special
Purpose License Subsidiary) pursuant to a transaction that constitutes a
Permitted Acquisition, provided that the survivor of such merger is a
Restricted Subsidiary, (ii) any Restricted Subsidiary (other than the Borrower,
a Special Purpose Equipment Subsidiary or a Special Purpose Financing
Subsidiary) may merge with or into any other Restricted Subsidiary (other than
the Borrower, a Special Purpose Equipment Subsidiary or a Special Purpose
Financing Subsidiary) in a transaction in which (A) the surviving entity is a
Restricted Subsidiary and (B) if either such Restricted Subsidiary is a
Guarantor Subsidiary, the surviving entity is a Guarantor Subsidiary, (iii) any
Restricted Subsidiary (other than the Borrower, a Special Purpose Equipment
Subsidiary or a Special Purpose Financing Subsidiary) may merge into the Parent
in a transaction in which the Parent is the surviving entity, (iv) any Special
Purpose Equipment Subsidiary may merge with or into any Guarantor Subsidiary if
the survivor is a Guarantor Subsidiary, (v) any Restricted Subsidiary may sell,
transfer, lease or otherwise dispose of its assets to the Parent or to another
Restricted Subsidiary (other than the Borrower, a Special Purpose Equipment
Subsidiary, a Special
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Purpose Financing Subsidiary or a Special Purpose License Subsidiary) or (vi)
any Restricted Subsidiary (other than the Borrower) may liquidate or dissolve
if the Parent determines in good faith that such liquidation or dissolution is
in its best interests and is not disadvantageous to the Lenders; provided that
any such merger involving the Person that is not a wholly owned Restricted
Subsidiary immediately prior to such merger shall not be permitted unless also
permitted by Section 6.04.
(b) The Parent will not, nor will it permit any of its
Restricted Subsidiaries to, engage to any material extent in any business other
than communications, data transport and networking businesses (including
Internet related businesses), production and distribution of content and
information services, any businesses in which Parent or its Subsidiaries are
currently engaged and any businesses incidental, related or ancillary to, or
which are entered into as a means of facilitating or enhancing, any of the
foregoing.
(c) The Borrower will not engage in any business or activity
other than the acquisition of assets comprising Collateral, the financing
thereof pursuant to this Agreement, the leasing and disposition thereof to
Equipment Users as contemplated hereby and activities incidental to the
foregoing.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions; Asset Sales. (a) The Parent will not, nor will it permit any of
its Restricted Subsidiaries to, purchase, hold or acquire (including pursuant
to any merger with any Person that was not a wholly owned Restricted Subsidiary
prior to such merger) any capital stock, evidences of indebtedness or other
securities (including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, Guarantee any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) any Special Service License or any assets of any other
Person constituting a business unit, except:
(i) Permitted Investments;
(ii) investments by the Parent and its Restricted
Subsidiaries in the capital stock of their respective Restricted
Subsidiaries; provided that the sum of the
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aggregate amount of outstanding investments made by the Parent and its
Restricted Subsidiaries that are Loan Parties in, and loans and
advances made by the Parent and its Restricted Subsidiaries that are
Loan Parties to, Restricted Subsidiaries that are not Loan Parties,
plus the aggregate amount of obligations of Restricted Subsidiaries
that are not Loan Parties that is Guaranteed by the Parent, shall not
at any time exceed $10,000,000; provided further that (A) investments
described in clause (xi) below and (B) Guarantees by Loan Parties of
Indebtedness of Special Purpose Equipment Subsidiaries and payment by
the Parent of principal of and interest on such Indebtedness and
related expenses shall be permitted without regard to the limitation
set forth in the foregoing proviso;
(iii) loans or advances made by the Parent to any Restricted
Subsidiary and made by any Restricted Subsidiary to the Parent or any
other Restricted Subsidiary; provided that the aggregate amount of
such loans and advances made by the Parent and its Restricted
Subsidiaries that are Loan Parties to Restricted Subsidiaries that are
not Loan Parties shall be subject to the limitation set forth in the
proviso to clause (ii) above;
(iv) Guarantees by the Parent of obligations of the
Restricted Subsidiaries, Guarantees by Guarantor Subsidiaries of
Indebtedness of any Special Purpose Equipment Subsidiary and
Guarantees by WinStar Wireless, Inc. of obligations (other than
Indebtedness) of any other Guarantor Subsidiary; provided that the
aggregate amount of outstanding obligations Guaranteed by the Parent
of Restricted Subsidiaries that are not Loan Parties shall be subject
to the limitation set forth in the proviso to clause (ii) above;
(v) Permitted Acquisitions and the acquisitions described in
Schedule 6.04A that are made substantially on the terms described on
such Schedule;
(vi) promissory notes received by the Parent or any
Restricted Subsidiary in connection with sales of assets (other than
assets constituting Collateral) permitted by paragraph (b) below;
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(vii) investments received in connection with the bankruptcy
or reorganization of, or settlement of delinquent accounts and
disputes with, customers and suppliers, in each case in the ordinary
course of business;
(viii) (A) promissory notes of directors, officers or
employees of the Parent or any Restricted Subsidiary issued to the
Parent in exchange for common stock of the Parent, (B) payroll, travel
and similar advances made in the ordinary course of business that are
expected at the time such advances are made ultimately to be treated
as expenses in accordance with GAAP and (C) other loans and advances
by the Parent or any Restricted Subsidiary to their respective
directors, officers or employees in an aggregate principal amount not
exceeding $1,000,000 at any one time outstanding;
(ix) investments existing on the Effective Date and set forth
on Schedule 6.04B;
(x) to the extent that the consideration therefor consists
solely of common stock or Permitted Preferred Stock of the Parent or
is paid for in cash out of the Net Proceeds of a substantially
concurrent issuance of common stock or Permitted Preferred Stock of
the Parent (or options, warrants and other rights to purchase shares
of such common stock or Permitted Preferred Stock) (other than common
stock or Permitted Preferred Stock of the Parent (or options, warrants
and other rights to purchase shares of such commen stock or Permitted
Preferred Stock) issued to and paid for by a Subsidiary), investments
in Unrestricted Subsidiaries, joint ventures and minority interests in
Persons engaged in any business or activity in which the Parent and
the Restricted Subsidiaries are permitted to engage;
(xi) investments by the Parent in Subsidiaries resulting from
the allocation by the Parent of corporate overhead expenses paid by
the Parent among the Subsidiaries pursuant to book entries made in
accordance with past practices;
(xii) investments owned by a Person at the time such Person
is acquired pursuant to an acquisition permitted by clause (v) above;
provided that such investment is not
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made in connection with, or in contemplation of, such acquisition;
(xiii) the acquisition of the shares or other equity
interests in a Person that becomes a Restricted Subsidiary upon
consummation of such acquisition; provided that (A) substantially all
of the assets of such Person consist of Other Service Licenses, (B)
such Person has no outstanding Indebtedness (other than Indebtedness
that is repaid upon consummation of such acquisition) and (C)(x) in
the case of an acquisition of shares or other equity interests in a
Person that is organized under the laws of any jurisdiction in the
United States of America or a substantial portion of the Other Service
Licenses of which relate to markets in the United States of America,
at least 80% of all shares or other equity interests in all Restricted
Subsidiaries resulting from such acquisition are owned, directly or
indirectly, by the Parent, or (y) in the case of any other such
acquisition, at least a majority of all shares or other equity
interests in all Restricted Subsidiaries resulting from such
acquisition are owned, directly or indirectly, by the Parent; and
(xiv) other investments, loans, advances and Guarantees by
the Parent or any of the Restricted Subsidiaries (including (x)
investments in Unrestricted Subsidiaries and (y) investments in any
Restricted Subsidiary existing at the time such Subsidiary is
designated as an Unrestricted Subsidiary) in an aggregate amount not
exceeding $30,000,000 (or, on and after January 1, 2004, $60,000,000).
(b) The Parent will not, nor will it permit any of its
Restricted Subsidiaries to, sell, transfer, lease or otherwise dispose of any
asset, including any capital stock of or ownership interest in any other Person
owned by it, nor will the Parent permit any Restricted Subsidiary to issue
(other than to the Parent or a wholly owned Restricted Subsidiary) any
additional shares of its capital stock or other ownership interest in such
Restricted Subsidiary, except:
(i) sales of (A) inventory, (B) obsolete, uneconomic or
surplus assets not exceeding, in the aggregate, $5,000,000 during any
fiscal year of the Parent and
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(C) Permitted Investments, in each case in the ordinary
course of business;
(ii) transfers constituting investments permitted by
paragraph (a) of this Section or Restricted Payments permitted by
Section 6.06;
(iii) sales, transfers and dispositions to the Parent or a
Restricted Subsidiary;
(iv) other sales, transfers and dispositions of
obsolete, uneconomic or surplus assets made when no
Default has occurred and is continuing;
(v) sales of assets described on Schedule 6.04C; provided
that at least 85% of the consideration received for each such sale
consists of cash;
(vi) sales of securities held for investment purposes (which
shall not be construed to include capital stock of or other
investments in Restricted Subsidiaries);
(vii) sales of investments in Unrestricted
Subsidiaries;
(viii) sales of non-core assets acquired pursuant to a
Permitted Acquisition; provided that (A) such sales are made within 18
months after the date of consummation of such Permitted Acquisition
and (B) the sales price of the assets so sold do not exceed 25% of the
total purchase price of the assets acquired (including any Acquisition
Indebtedness) pursuant to such Permitted Acquisition;
(ix) sales of Other Service Licenses in respect of markets
other than those in any of the 50 most populated Metropolitan
Statistical Areas (determined based upon the most recent Rand-McNally
publication containing such information);
(x) bulk capacity arrangements for the use of transmission
capacity on the telecommunications network of the Restricted
Subsidiaries in accordance with practices customary in the
telecommunications industry;
(xi) during any fiscal year of the Parent, sales of other
assets not exceeding, in the aggregate during any such fiscal year,
$50,000,000 (or, in the case of any
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fiscal year ending on or after December 31, 2000, the maximum amount
permitted under this clause (xi) for the immediately preceding fiscal
year plus $10,000,000); provided at least 85% of the consideration
received for each such sale consists of cash;
(xii) sales of accounts receivable pursuant to Permitted
Receivables Financings;
(xiii) leases by the Borrower of assets constituting
Collateral in accordance with Section 6.17; and
(xiv) leases entered into by a Restricted Subsidiary
(other than the Borrower), as lessor, in the ordinary
course of business;
provided that all sales, transfers, leases and other dispositions permitted
hereby (other than pursuant to clause (iii) or (xiii) above) shall be made for
fair value and, if such asset constitutes Collateral, solely for cash
consideration.
SECTION 6.05. Hedging Agreements. The Parent will not, nor
will it permit any of its Restricted Subsidiaries to, enter into any Hedging
Agreement, other than Hedging Agreements required by Section 5.13 and other
Hedging Agreements entered into in the ordinary course of business to hedge or
mitigate risks to which the Parent or any Restricted Subsidiary is exposed in
the conduct of its business or the management of its liabilities.
SECTION 6.06. Restricted Payments. The Parent will not, nor
will it permit any Restricted Subsidiary to, declare or make, or agree to pay
or make, directly or indirectly, any Restricted Payment, except (a) the Parent
may make Restricted Payments payable solely in additional shares of its common
stock or Permitted Preferred Stock (including options, warrants and other
rights to purchase shares of such common stock or Permitted Preferred Stock),
(b) the Parent may make Restricted Payments in cash out of the Net Proceeds of
a substantially concurrent issuance of its common stock or Permitted Preferred
Stock (or options, warrants and other rights to purchase shares of such common
stock or Permitted Preferred Stock) (other than common stock or Permitted
Preferred Stock (or options, warrants and other rights to purchase shares of
such common stock or Permitted Preferred Stock) issued to and paid for by a
Subsidiary), (c) Restricted
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Subsidiaries may declare and pay dividends and distributions ratably with
respect to their common stock, (d) the Parent and the Restricted Subsidiaries
may make regularly scheduled payments of principal of and interest on
Subordinated Indebtedness as and when due, subject to the subordination
provisions thereof, and may refinance Subordinated Indebtedness in accordance
with clause (vi) of Section 6.01(a), (e) payments made in respect of
dissenters' rights in respect of shares of capital stock of a Person acquired
pursuant to a Permitted Acquisition, provided that such payments are treated as
cash consideration for such Permitted Acquisition, and (f) payments made in
lieu of issuance of fractional shares of common stock of the Parent upon the
conversion of any Indebtedness or Permitted Preferred Stock into shares of
common stock of the Parent, in any such case in accordance with the terms of
such Indebtedness or Permitted Preferred Stock.
SECTION 6.07. Transactions with Affiliates. The Parent will
not, nor will it permit any Restricted Subsidiary to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Unrestricted Subsidiaries or other Affiliates, except (a) transactions
that are at prices and on terms and conditions not less favorable to the Parent
or such Restricted Subsidiary than could be obtained on an arm's-length basis
from unrelated third parties, (b) transactions between or among the Loan Parties
not involving any other Affiliate and (c) transactions between any Loan Party
and any Restricted Subsidiary that is not a Loan Party that are at prices and on
terms and conditions not less favorable to such Loan Party than could be
obtained on an arm's length basis from unrelated third parties.
SECTION 6.08. Restrictive Agreements. The Parent will not,
and will not permit any Restricted Subsidiary to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon the ability of any
Restricted Subsidiary to pay dividends or other distributions with respect to
any shares of its capital stock or to make or repay loans or advances to the
Parent or to Guarantee Indebtedness of the Borrower; provided that (a) the
foregoing shall not apply to restrictions and conditions imposed by law or by
any Loan Document and (b) the foregoing shall not apply to restrictions and
conditions existing on the date hereof
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identified on Schedule 6.08 (but shall apply to any extension or renewal of, or
any amendment or modification expanding the scope of, any such restriction or
condition).
SECTION 6.09. Repayment of Indebtedness. The Parent will not,
nor will it permit any Restricted Subsidiary to, make any Repayment in respect
of, or make any payment in violation of any subordination terms of, any
Indebtedness of the Parent or any Restricted Subsidiary except (a) any
Repayment of Indebtedness resulting in a prepayment of Loans and Deferred
Interest pursuant to Section 2.09(e) and (b) Repayments described in any of the
clauses of the proviso to Section 2.09(e).
SECTION 6.10. Limitation on Sale-Leaseback Transactions. The
Parent will not, nor will it permit any Restricted Subsidiary to, enter into
any arrangement, directly or indirectly, whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned
or hereafter acquired, and thereafter rent or lease such property or other
property that it intends to use for substantially the same purpose or purposes
as the property sold or transferred, except for any such sale of any fixed or
capital asset that is made for cash consideration in an amount not less than
the cost of such fixed or capital asset and is consummated within 90 days after
the Parent or such Restricted Subsidiary acquires or completes the construction
of such fixed or capital asset.
SECTION 6.11. Secured Indebtedness to Total Capitalization.
The Parent will not permit the ratio of Secured Indebtedness to Total
Capitalization at any time during any period set forth below to be greater than
the ratio set forth below opposite such period:
Period Ratio
------ -----
On or after the Effective Date, 0.23 to 1.0
but prior to April 1, 1999
On or after April 1, 1999, 0.27 to 1.0
but prior to July 1, 1999
On or after July 1, 1999, 0.29 to 1.0
but prior to October 1, 1999
On or after October 1, 1999, 0.34 to 1.0
but prior to January 1, 2000
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On or after January 1, 2000, 0.38 to 1.0
but prior to April 1, 2000
On or after April 1, 2000, 0.41 to 1.0
but prior to July 1, 2000
On or after July 1, 2000, 0.43 to 1.0
but prior to October 1, 2000
On or after October 1, 2000, 0.46 to 1.0
but prior to January 1, 2001
On or after January 1, 2001, 0.48 to 1.0
but prior to April 1, 2001
On or after April 1, 2001, 0.51 to 1.0
but prior to July 1, 2001
On or after July 1, 2001, 0.53 to 1.0
but prior to October 1, 2001
On or after October 1, 2001, 0.54 to 1.0
but prior to January 1, 2002
On or after January 1, 2002, 0.56 to 1.0
but prior to April 1, 2002
On or after April 1, 2002, 0.58 to 1.0
but prior to July 1, 2002
On or after July 1, 2002, 0.60 to 1.0
but prior to October 1, 2002
On or after October 1, 2002, 0.61 to 1.0
but prior to January 1, 2003
On or after January 1, 2003, 0.55 to 1.0
but prior to April 1, 2004
On or after April 1, 2004, 0.52 to 1.0
but prior to July 1, 2004
On or after July 1, 2004, 0.49 to 1.0
but prior to October 1, 2004
On or after October 1, 2004, 0.46 to 1.0
but prior to January 1, 2005
On or after January 1, 2005, 0.43 to 1.0
but prior to April 1, 2005
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On or after April 1, 2005, 0.40 to 1.0
but prior to July 1, 2005
On or after July 1, 2005, 0.38 to 1.0
but prior to January 1, 2006
On or after January 1, 2006, 0.35 to 1.0
but prior to April 1, 2006
On or after April 1, 2006, 0.31 to 1.0
but prior to July 1, 2006
On or after July 1, 2006, 0.28 to 1.0
but prior to October 1, 2006
On or after October 1, 2006 0.25 to 1.0
SECTION 6.12. Consolidated Indebtedness to Total
Capitalization. The Parent will not permit the ratio of Consolidated
Indebtedness to Total Capitalization at any time during any period set forth
below to be greater than the ratio set forth below opposite such period:
Period Ratio
------ -----
On or after January 1, 1999, 0.90 to 1.0
but prior to October 1, 1999
On or after October 1, 1999, 0.91 to 1.0
but prior to April 1, 2000
On or after April 1, 2000, 0.92 to 1.0
but prior to January 1, 2001
On or after January 1, 2001, 0.93 to 1.0
but prior to January 1, 2002
On or after January 1, 2002, 0.94 to 1.0
but prior to January 1, 2004
On or after January 1, 2004, 0.90 to 1.0
but prior to April 1, 2004
On or after April 1, 2004, 0.85 to 1.0
but prior to July 1, 2004
On or after July 1, 2004, 0.82 to 1.0
but prior to October 1, 2004
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On or after October 1, 2004, 0.78 to 1.0
but prior to January 1, 2005
On or after January 1, 2005, 0.74 to 1.0
but prior to April 1, 2005
On or after April 1, 2005, 0.70 to 1.0
but prior to July 1, 2005
On or after July 1, 2005, 0.67 to 1.0
but prior to October 1, 2005
On or after October 1, 2005, 0.65 to 1.0
but prior to January 1, 2006
On or after January 1, 2006, 0.56 to 1.0
but prior to April 1, 2006
On or after April 1, 2006, 0.53 to 1.0
but prior to July 1, 2006
On or after July 1, 2006, 0.49 to 1.0
but prior to October 1, 2006
On or after October 1, 2006 0.46 to 1.0
SECTION 6.13. Consolidated Indebtedness to Consolidated
EBITDA. The Parent will not permit the ratio of (a) Consolidated Indebtedness
as of any day during any period set forth below to (b) 400% of Consolidated
EBITDA for the fiscal quarter of the Parent ending on such day (or, if such day
is not the last day of a fiscal quarter, ending on the last day of the most
recently ended fiscal quarter) to be greater than the ratio set forth below
opposite such period:
Period Ratio
------ -----
On or after January 1, 2002, 9.6 to 1.0
but prior to January 1, 2003
On or after January 1, 2003, 4.9 to 1.0
but prior to January 1, 2004
On or after January 1, 2004, 3.4 to 1.0
but prior to January 1, 2005
On or after January 1, 2005, 2.5 to 1.0
but prior to January 1, 2006
On or after January 1, 2006 2.0 to 1.0
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96
SECTION 6.14. Consolidated EBITDA to Consolidated Debt
Service. The Parent will not permit the ratio of (a) 400% of Consolidated
EBITDA for any fiscal quarter of the Parent ending on any date on or after July
1, 2002, to (b) Consolidated Debt Service for the period of four consecutive
fiscal quarters of the Parent ending on such date to be less than 1.0 to 1.0.
SECTION 6.15. Consolidated EBITDA to Consolidated Interest
Expense. The Parent will not permit the ratio of (a) Consolidated EBITDA for
any fiscal quarter of the Parent ending on any date during any period set forth
below to (b) Consolidated Interest Expense for such period to be less than the
ratio set forth below opposite such period:
Period Ratio
------ -----
On or after January 1, 2002, 1.0 to 1.0
but prior to January 1, 2004
On or after January 1, 2004 1.5 to 1.0
SECTION 6.16. Minimum Revenues. The Parent will not permit
the consolidated revenue of the Parent and the Restricted Subsidiaries for any
fiscal year ending on any date set forth below to be less than the amount
listed opposite such fiscal year:
Fiscal Year Ending Amount
------------------ ------
December 31, 1999 $ 437,000,000
December 31, 2000 $1,117,000,000
December 31, 2001 $1,975,000,000
December 31, 2002 $3,083,000,000
December 31, 2003 $3,840,000,000
December 31, 2004 $4,323,000,000
December 31, 2005 $4,865,000,000
After December 31, 2005 $5,475,000,000
SECTION 6.17. Use of Collateral. The Parent and the Borrower
will not permit any asset constituting Collateral to be outside the Borrower's
possession or located on any
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97
property not owned by the Borrower, except that the Borrower may lease any such
assets to, or otherwise allow any such assets to be in the possession of, any
other Restricted Subsidiary or any Affiliate of the Parent (or other Person
with which the Parent or a Restricted Subsidiary has entered into an agreement
to provide management and operating services) that is in the business of
operating assets of the type leased to or possessed by it or any customer of
any such Restricted Subsidiary or Affiliate (any such Restricted Subsidiary,
Affiliate (or other Person) or customer, an "Equipment User") if (a) in the
case of any such Affiliated Equipment User (i) such Affiliated Equipment User
has entered into an Equipment User Agreement and (ii) all documents and
instruments, including Uniform Commercial Code financing statements, required
by law or reasonably requested by either Agent to be filed, registered or
recorded to perfect (or maintain the perfection of) the Liens created under the
Security Agreement with respect to such assets, and to protect the Borrower's
ownership interests therein, shall be so filed, registered or recorded or (b)
in the case of any such customer (i) such customer has entered into a written
lease agreement for (or other written agreement granting such customer the
right to possess or use) such assets and such lease (or other agreement) shall
have a term not exceeding three years (subject to renewal rights requiring the
consent of the lessor) and otherwise be on terms and conditions no less
favorable to the lessor than those customary for leases of similar assets
between unaffiliated parties, (ii) the assets leased to (or otherwise possessed
or used by) such customer shall be of the type described on Schedule 6.17 and
(iii) such customer shall have entered into an Equipment User Agreement or the
lease agreement (or other agreement) with such customer shall include
provisions substantially the same as those that would be included in an
Equipment User Agreement; provided that any lease or transfer of possession of
any Collateral contemplated hereby shall not relieve the Parent or the Borrower
of any of their respective obligations under any Loan Document. The foregoing
shall not be construed to prohibit (A) the return of any asset constituting
Collateral to the vendor thereof for repairs, services, modifications or other
similar purposes or (B) the storage of any asset constituting Collateral in any
warehouse or similar facility; provided that in the case of any such warehouse
or similar facility that is not owned by the Borrower or the applicable
Equipment User, the owner and operator of such warehouse or similar facility
shall have entered into a written agreement waiving any Liens on such assets.
It is understood that the Parent and the
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98
Borrower intend that a portion of the Collateral will be located and used
outside the United States of America; provided that neither the Parent nor the
Borrower will permit any asset constituting Collateral to be located outside
the United States of America (or to be transferred between jurisdictions
outside the United States of America) unless (a) the Parent or the Borrower
shall have notified the Lenders thereof reasonably in advance of any such
assets being transferred outside the United States of America (or between such
jurisdictions) and (b) the Required Lenders shall be reasonably satisfied that
(i) the laws of the jurisdiction in which such assets are to be located
adequately protect the interests of the Lenders in such Collateral, (ii) the
security interests in such Collateral granted under the Security Agreement will
continue to be adequately protected and perfected, (iii) there are not any
material risks relating to the political or economic stability of the
jurisdiction in which such Collateral is to be located or the Person that will
possess such Collateral in such jurisdiction, (iv) the portion of the
Collateral located in such jurisdiction, and in all jurisdictions outside the
United States of America, is within acceptable limits, and (v) the location of
such Collateral in such jurisdiction is not otherwise materially
disadvantageous to the Lenders. The Borrower shall deliver to the Lenders, with
a copy to the Agents, such legal opinions and other documentation as either
Agent or the Required Lenders shall reasonably request in connection with their
consideration or approval of any proposed transfer of Collateral outside the
United States of America or between jurisdictions outside the United States of
America.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall
occur:
(a) the Borrower shall fail to pay any principal of or
Deferred Interest on any Loan when and as the same shall become due
and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest (other than
Deferred Interest) on any Loan or any fee or
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99
any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement, when and as the same shall
become due and payable, and such failure shall continue unremedied for
a period of five days (in the case of interest or fees) or five days
after notice thereof from the Administrative Agent or any Lender (in
the case of any such other amount);
(c) any representation or warranty made or deemed made by or
on behalf of any Loan Party in or in connection with any Loan Document
or any amendment or modification thereof or waiver thereunder, or in
any report, certificate, financial statement or other document
furnished pursuant to or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to
have been incorrect in any respect (or, in the case of any
representation or warranty that is not qualified as to materiality, in
any material respect) when made or deemed made;
(d) the Parent or the Borrower shall fail to observe or
perform any covenant, condition or agreement contained in Section
5.02, 5.04 (with respect to the existence of the Parent or the
Borrower) or 5.10 or in Article VI;
(e) any Loan Party shall fail to observe or perform any
covenant, condition or agreement contained in any Loan Document (other
than those specified in clause (a), (b) or (d) of this Article), and
such failure shall continue unremedied for a period of 30 days after
notice thereof from the Administrative Agent to the Borrower (which
notice will be given at the request of any Lender);
(f) any Loan Party shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and
payable (after giving effect to any period of grace expressly
applicable thereto);
(g) any event or condition occurs that results in any
Material Indebtedness becoming due prior to its scheduled maturity or
that enables or permits (with or without the giving of notice, the
lapse of time or both) the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause
any
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Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Parent or any
Restricted Subsidiary or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Parent or any Restricted
Subsidiary or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing
shall be entered;
(i) the Parent or any Restricted Subsidiary shall (i)
voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state
or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Parent or any Restricted
Subsidiary or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against
it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
(j) the Parent or any Restricted Subsidiary shall become
unable, admit in writing its inability or fail generally to pay its
debts as they become due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $10,000,000 shall be rendered against
the Parent or any Restricted Subsidiary
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101
or any combination thereof and the same shall remain undischarged for
a period of 30 consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the Parent or any
Restricted Subsidiary to enforce any such judgment;
(l) any Lien on any material portion of the Collateral
purported to be created under the Security Agreement shall cease to
be, or shall be asserted by the Borrower not to be, a valid and
perfected Lien on any Collateral, with the priority required by the
Security Agreement, except as a result of the sale or other
disposition of the applicable Collateral in a transaction permitted
under the Loan Documents;
(m) a Change in Control shall occur;
(n) the loss, revocation, suspension or material impairment
of any license or agreement (or combination of licenses and
agreements) of the Parent and the Restricted Subsidiaries shall occur
that, in the opinion of the Required Lenders, results in or could
reasonably be expected to result in a Material Adverse Effect; or
(o) an ERISA Event shall have occurred that, in the opinion
of the Required Lenders, when taken together with all other ERISA
Events that have occurred, could reasonably be expected to result in a
Material Adverse Effect;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either
or both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
(including Deferred Interest) thereon and all fees and other obligations of the
Borrower accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or
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102
other notice of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in clause (h) or
(i) of this Article, the Commitments shall automatically terminate and the
principal of the Loans then outstanding, together with accrued interest
(including Deferred Interest) thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
ARTICLE VIII
The Agents
Each of the Lenders hereby irrevocably appoints each Agent as
its agent and authorizes each Agent to take such actions on its behalf and to
exercise such powers as are delegated to such Agent by the terms of the Loan
Documents, together with such actions and powers as are reasonably incidental
thereto.
Any Person serving as an Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not an Agent, and such Person and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Parent or any Subsidiary or other Affiliate thereof
as if it were not an Agent hereunder.
Neither Agent shall have any duties or obligations except
those expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) neither Agent shall be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) neither Agent shall have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Loan Documents that such Agent
is required to exercise in writing by the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02), and (c) except as expressly set
forth in the Loan Documents, neither Agent shall have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to
the Parent or any of its Subsidiaries that is communicated to or obtained by
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103
the Person serving as Agent or any of its Affiliates in any capacity. Neither
Agent shall be liable for any action taken or not taken by it with the consent
or at the request of the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 9.02) or in the absence of its own gross negligence or wilful
misconduct. Each Agent shall be deemed not to have knowledge of any Default
unless and until written notice thereof is given to such Agent by a Loan Party
or a Lender, and neither Agent shall be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered thereunder or in connection therewith, (iii)
the performance or observance of any of the covenants, agreements or other
terms or conditions set forth in any Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of any Loan Document or any other
agreement, instrument or document, or (v) the satisfaction of any condition set
forth in Article IV or elsewhere in any Loan Document, other than to confirm
receipt of items expressly required to be delivered to such Agent.
Each Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. Each Agent also
may rely upon any statement made to it orally or by telephone and believed by
it to be made by the proper Person, and shall not incur any liability for
relying thereon. Each Agent may consult with legal counsel (who may be counsel
for the Parent or the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
Each Agent may perform any and all its duties and exercise
its rights and powers by or through any one or more sub-agents appointed by
such Agent. Each Agent and any such sub-agent may perform any and all its
duties and exercise its rights and powers through their respective Related
Parties. The exculpatory provisions of the preceding paragraphs shall apply to
any such sub-agent and to the Related Parties of each Agent and any such
sub-agent, and shall apply to their respective activities in connection with
the syndication of
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104
the credit facilities provided for herein as well as activities as Agent.
Subject to the appointment and acceptance of a successor
Agent as provided in this paragraph, an Agent may resign at any time by
notifying the Lenders and the Borrower. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor with the approval of the
Borrower (which approval shall not be unreasonably withheld or delayed and, if
an Event of Default has occurred and is continuing, shall not be required). If
no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a bank with an office in New
York, New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After an Agent's resignation
hereunder, the provisions of this Article and Section 9.03 shall continue in
effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Agent.
Each Lender acknowledges that it has, independently and
without reliance upon either Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon either Agent
or any other Lender and based on such documents and informa tion as it shall
from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Loan
Document or related agreement or any document furnished hereunder or
thereunder.
ARTICLE IX
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105
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and
other communications expressly permitted to be given by telephone, all notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower or the Parent, to it at 230 Park
Avenue, Suite 2700, New York, New York 10169, Attention of Vice
President, Treasurer (Telecopy No. (212) 584-4073) (with a copy, in
the case of notices or other communications relating to Defaults, to
such address, Attention of Executive Vice President, General Counsel
(Telecopy No. (212) 922-1637));
(b) if to the Collateral Agent, to it at Two International
Place, Boston, Massachusetts 02110, Attention of Corporate Trust
Division (Telecopy No. (617) 664-5371;
(c) if to the Administrative Agent, to it at 283 King George
Road, Warren, New Jersey 07059, Attention of Assistant
Treasurer-Project Finance (Telecopy No. (908) 559-1711);
(d) if to Lucent, to it at 283 King George Road, Warren, New
Jersey 07059, Attention of Assistant Treasurer-Project Finance
(Telecopy No. (908) 559-1711); and
(e) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay
by either Agent or any Lender in exercising any right or power hereunder or
under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial
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106
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Agents and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of any Loan Document or consent to
any departure by any Loan Party therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) of this Section, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. Without limiting the generality of the foregoing,
the making of a Loan shall not be construed as a waiver of any Default,
regardless of whether an Agent or any Lender may have had notice or knowledge
of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor
any provision hereof or thereof may be waived, amended or modified except, in
the case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Parent, the Borrower and the Required Lenders or, in the
case of any other Loan Document, pursuant to an agreement or agreements in
writing entered into by the applicable Agent and the Loan Party or Loan Parties
that are parties thereto with the consent of the Required Lenders; provided
that no such agreement shall (i) increase the Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of any
Loan or the amount of Deferred Interest thereon or reduce the rate of interest
on such Loan or Deferred Interest, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the
scheduled date of payment of the principal amount of any Loan or any interest
(including Deferred Interest) thereon, or any fees payable hereunder, or reduce
the amount of, waive or excuse any such payment, or postpone the scheduled date
of expiration of any Commitment, without the written consent of each Lender
affected thereby, (iv) change Section 2.16(b) or (c) in a manner that would
alter the pro rata sharing of payments required thereby, without the written
consent of each Lender, (v) change any of the provisions of this Section or the
definition of "Required Lenders" or any other provision of any Loan Document
specifying the number or percentage of Lenders required to waive, amend or
modify any rights thereunder or make any determination or grant any consent
thereunder, without the written consent of each Lender, (vi) release all or any
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substantial part of the Collateral from the Lien of the Security Agreement
(except as expressly provided in the Security Agreement), without the written
consent of each Lender, (vii) release the Parent or any Guarantor Subsidiary
from its Guarantee under the Guarantee Agreement (except as expressly provided
in the Guarantee Agreement) or limit or condition its obligations thereunder,
without the written consent of each Lender, or (viii) change any provisions of
any Loan Document in a manner that by its terms adversely affects the rights in
respect of payments due to Lenders holding Loans of any Class differently than
those holding Loans of any other Class, without the written consent of Lenders
holding a majority in interest of the outstanding Loans and Deferred Interest
thereon of each affected Class and, in the case of a Class with respect to
which the Availability Period has not ended, a majority in interest of the
Commitments (in addition to any other consents required by this sentence);
provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of either Agent without the prior written consent of such
Agent.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The
Borrower shall pay (i) all costs and expenses incurred by Lucent and each
Agent, including the fees, charges and disbursements of counsel for Lucent or
the Agents, in connection with the negotiation, preparation, execution and
delivery of the Loan Documents (including, in the case of Lucent, expenses
incurred in connection with its due diligence activities) and (ii) all costs
and expenses incurred by either Agent or any Lender, including the fees,
charges and disbursements of any counsel for either Agent or any Lender, in
connection with (A) the enforcement or protection of its rights in connection
with the Loan Documents, including its rights under this Section, or in
connection with the Loans made hereunder, including all such costs and expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans, and (B) in the case of Lucent and the Agents, the administration of, and
any amendments, modifications, waivers or supplements of or to the provisions
of, any of the Loan Documents.
(b) The Borrower shall indemnify each Agent and each Lender,
and each Related Party of any of the foregoing Persons (each such Person being
called an "Indemnitee") against, and hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
the fees, charges and disbursements of any counsel
<PAGE>
108
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of any
Loan Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective
obligations thereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Parent or any of its
Subsidiaries or at which any Collateral is located, or any Environmental
Liability related in any way to the Parent or any of its Subsidiaries, or (iv)
any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to either Agent under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to such Agent such Lender's pro
rata share (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against such Agent in
its capacity as such. For purposes hereof, a Lender's "pro rata share" shall be
determined based upon its share of the sum of the total outstanding Loans,
Deferred Interest and Commitments at the time.
(d) To the extent permitted by applicable law, neither the
Parent nor the Borrower shall assert, and each of them hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or the
use of the proceeds thereof.
(e) All amounts due under this Section shall be payable not
later than 30 days after written demand therefor.
<PAGE>
109
SECTION 9.04. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except that
the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Agents and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.
(b) Any Lender may, without the consent of the Borrower
(except as expressly provided below), assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans and Deferred Interest at the time owing
to it); provided that (i) except in the case of an assignment to Lucent or a
Lender or to an Affiliate of Lucent or a Lender, the Administrative Agent must
give its prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed and, while an Event of Default has occurred
and is continuing, shall not be required), (ii) in the case of an assignment by
a Lucent Lender (other than to Lucent or an Affiliate of Lucent) or an
assignment to a competitor of the Parent and its Restricted Subsidiaries or to
any Affiliate of any such competitor, the Borrower must give its prior written
consent to such assignment (which consent shall not be unreasonably withheld or
delayed), (iii) except in the case of an assignment to Lucent, a Lender or an
Affiliate of Lucent or a Lender or an assignment of the entire remaining amount
of the assigning Lender's Commitment or entire remaining Loans and Deferred
Interest of any Class, the amount of the Commitment and Loans and Deferred
Interest of such Class of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$10,000,000 unless the Borrower otherwise consents, (iv) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, except that
this clause (iv) shall not be construed to prohibit the assignment of a
<PAGE>
110
proportionate part of all of the assigning Lender's rights and obligations in
respect of (A) one or more Classes of Loans and Deferred Interest, (B) one or
more Classes of Loans and Deferred Interest separately from (or without
assigning) Commitments or (C) Commitments separately from (or without
assigning) Loans or Deferred Interest, (v) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing fee of $3,500, and (vi) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Subject to acceptance and recording thereof pursuant to
paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply
with this paragraph shall be treated for purposes of this Agreement as a sale
by such Lender of a participation in such rights and obligations in accordance
with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal
amount of the Loans and amount of Deferred Interest owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Agents and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.
<PAGE>
111
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder) and the processing fee referred to in clause (v) of paragraph
(b) of this Section, subject to the Administrative Agent's right to consent to
such assignment to the extent provided in paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or
the Administrative Agent, sell participations to one or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of its Commitments
and the Loans and Deferred Interest owing to it); provided that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Agents and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any provision
of the Loan Documents; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.16(c) as though it were a
Lender.
(f) A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of
<PAGE>
112
Section 2.15 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 2.15(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any Loans,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that either Agent or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any fee or
any other amount payable under this Agreement is outstanding and unpaid and so
long as the Commitments have not expired or terminated. The provisions of
Sections 2.13, 2.14, 2.15 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Commitments or the termination of this Agreement or any provision
hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and any separate letter agreements with respect to the
agreement of the Parent and the Borrower to cooperate with Lucent with respect
to marketing,
<PAGE>
113
selling or syndicating Loans and Commitments or with respect to fees payable to
Lucent or either Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
obligations at any time owing by such Lender or Affiliate to or for the credit
or the account of the Borrower against any of and all the obligations of the
Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured. The rights of
each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service
of Process. (a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York.
<PAGE>
114
(b) Each of the Parent and the Borrower hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement or any other Loan Document
shall affect any right that either Agent or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or any other Loan
Document against the Parent, the Borrower or their properties in the courts of
any jurisdiction.
(c) Each of the Parent and the Borrower hereby irrevocably
and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or any other Loan Document in any court referred to in paragraph
(b) of this Section. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement or any other Loan Document will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES
<PAGE>
115
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Agents and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of
any remedies hereunder or any suit, action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, (g) with the consent of the Parent or the Borrower or (h)
to the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to either Agent or
any Lender on a nonconfidential basis from a source other than the Parent or
the Borrower. For the purposes of this Section, "Information" means all
information received from the Parent or the Borrower relating to the Parent,
the Borrower or their businesses, other than any such information that is
publicly available or available to either Agent or any Lender on a
nonconfidential basis prior to disclosure by the Parent or the Borrower,
provided that such information is identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section
<PAGE>
116
shall be considered to have complied with its obligation to do so if such
Person has exercised the same degree of care to maintain the confidentiality of
such Information as such Person would accord to its own confidential
information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated
as interest on such Loan under applicable law (collectively the "Charges"),
shall exceed the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received or reserved by the Lender holding such
Loan in accordance with applicable law, the rate of interest payable in respect
of such Loan hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest
and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.
<PAGE>
117
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
WINSTAR NETWORK EXPANSION, LLC,
by /s/ Frederic E. Rubin
-------------------------------------
Name: Frederic E. Rubin
Title: Vice President, Treasurer
WINSTAR COMMUNICATIONS, INC.,
by /s/ Charles T. Dickson
-------------------------------------
Name: Charles T. Dickson
Title: Executive Vice President,
Chief Financial Officer
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent,
by /s/ Patrick E. Thebado
-------------------------------------
Name: Patrick E. Thebado
Title: Assistant Vice Presiden
LUCENT TECHNOLOGIES INC.,
individually and as Administrative Agent,
by /s/ Leslie L. Rogers
-------------------------------------
Name: Leslie L. Rogers
Title: Managing Director
<PAGE>
Schedule 2.01
Commitments
Commitment
Lender Amount
- ------ ------
Lucent Technologies Inc. $2,000,000,000
<PAGE>
SCHEDULE 3.06
Disclosed Matters
Litigation filed in Delaware in respect of the Parent's Shareholder's Rights
Plan (Hoffman v. WinStar Communications, Inc.).
<PAGE>
SCHEDULE 3.12
US = Unrestricted Subsidiary
SPLS = Special Purpose License Subsidiary
SPES = Special Purpose Equipment Subsidiary
GS = Guarantor Subsidiary
WinStar = WinStar Communications, Inc.
</TABLE>
<TABLE>
<CAPTION>
Subsidiary Ownership Interest Designation
- ---------- ------------------ -----------
<S> <C> <C>
WinStar Wireless, Inc. 100% by WinStar GS
WinStar Federal Services, LLC 100% by WinStar Wireless, Inc. GS
WinStar LANSystems Acquisition, LLC 100% by WinStar Wireless, Inc. GS
WinStar Midcom Acquisition Corp. 100% by WinStar Wireless, Inc. GS
WinStar Media Connection, Inc. 100% by WinStar Wireless, Inc. GS
The Internet Connection, Inc. 100% by WinStar Wireless, Inc. GS
Macro Computer Solutions, Inc. 100% by WinStar Wireless, Inc. GS
Commercial Order and Information Express 100% by WinStar Wireless, Inc. GS
WinStar Gateway Network, Inc. 100% by WinStar GS
WinStar Communications of Canada, Inc. 100% by WinStar US
WinStar Milliwave, Inc. 100% by WinStar GS
WinStar Wireless Fiber Corp. 100% by WinStar GS
WinStar LMDS, LLC 100% by WinStar Wireless Fiber Corp. GS
WinPinn Corp. 100% by WinStar Wireless Fiber Corp. GS
Pinnacle Nine Communications LLC 100% by WinPinn Corp. GS
Pinnacle Seven Communications, Inc. 100% by WinPinn Corp. GS
WinStar Locate Inc. 100% by WinStar Wireless Fiber Corp. GS
State Regulated Wireless Fiber Subs-- See Attachment 3.12 100% by WinStar Wireless Fiber Corp. SPLS
WinStar Wireless Fiber Acquisition Corp. 100% by WinStar Wireless Fiber Corp. GS
WinStar Global Products, Inc. 100% by WinStar US
Inne Dispensables, Inc. 100% by WinStar Global Products, Inc. US
WinStar Equipment Corp. 100% by WinStar SPES
WinStar Equipment II Corp. 100% by WinStar SPES
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Subsidiary Ownership Interest Designation
- ---------- ------------------ -----------
<S> <C> <C>
WinStar New Media Company, Inc. 90% by WinStar US
WinStar Interactive Media Sales Inc. 100% by WinStar New Media Company, Inc. US
Non Fiction Films Inc. 100% by WinStar New Media Company, Inc. US
GFL Communications, Inc. 100% by Non-Fiction Films Inc. US
Fox/Lorber Associates, Inc. 100% by Non-Fiction Films Inc. US
WinStar for Business Inc. 100% by WinStar New Media Company, Inc. US
Office.com, Inc. 100% by WinStar for Business Inc. US
WinStar Telebase Inc. 100% by WinStar New Media Company, Inc. US
The Winning Line, Inc. 100% by WinStar New Media Company, Inc. US
Global Media The Sales and Marketing Company, Inc. 100% by WinStar New Media Company, Inc. US
WinStar Broadcasting Corp. 100% by WinStar New Media Company, Inc. US
WinStar Interactive Ventures I, Inc. 100% by WinStar New Media Company, Inc. US
Wellspring Media, Inc. 100% by WinStar New Media Company, Inc. US
WinStar International, Inc. 100% by WinStar US
WinStar Communications SA (Belgium) 100% by WinStar International, Inc. US
WinStar Holding BV (Netherlands) 100% by WinStar International, Inc. US
WinStar Communications BV (Netherlands) 100% by WinStar International, Inc. US
WinStar Communications SA (France) 100% by WinStar International, Inc. US
WinStar Communications GmbH (Germany) 100% by WinStar International, Inc. US
WinStar Communications Ltd (United Kingdom) 100% by WinStar International, Inc. US
WinStar Multichannel Corp. 100% by WinStar US
WinStar Credit Corp. 100% by WinStar US
WinStar Switch Acquisition Corp. 100% by WinStar GS
WinStar LHC1, LLC 100% by WinStar GS
WinStar LHC2, LLC 100% by WinStar US
WinStar Goodnet, Inc. 100% by WinStar GS
</TABLE>
<PAGE>
Attachment 3.12
Page 1 of 2
IHQ
Corporate Services Inc 10/21/98
Winstar Wireless of [State], Inc.*
List by State
Winstar Wireless of Arizona, Inc.
Winstar Wireless of California, Inc.
Winstar Wireless of Colorado, Inc.
Winstar Wireless of Florida, Inc.
Winstar Wireless of Georgia, Inc.
Winstar Wireless of Illinois, Inc.
Winstar Wireless of Kansas, Inc.
Winstar Wireless of Maryland, Inc.
Winstar Wireless of Massachusetts, Inc.
Winstar Wireless of Michigan, Inc.
Winstar Wireless of Missouri, Inc.
Winstar Wireless of New York, Inc.
Winstar Wireless of Ohio, Inc.
Winstar Wireless of Pennsylvania, Inc.
Winstar Wireless of Texas, Inc.
Winstar Wireless of Washington, Inc.
Winstar Wireless of Wisconsin, Inc.
Winstar Wireless of New Jersey, Inc.
Winstar Wireless of Indiana, Inc.
Winstar Wireless of Louisiana, Inc.
Winstar Wireless of Minnesota, Inc.
Winstar Wireless of Nebraska, Inc.
Winstar Wireless of North Carolina, Inc.
Winstar Wireless of Oklahoma, Inc.
Winstar Wireless of Oregon, Inc.
Winstar Wireless of Tennessee, Inc.
Winstar Wireless of Virginia, Inc.
Winstar Wireless of Connecticut, Inc.
Winstar Wireless of Hawaii, Inc.
Winstar Wireless of New Mexico, Inc.
Winstar Wireless of Utah, Inc.
Winstar Wireless of Idaho, Inc.
Winstar Wireless of Iowa, Inc.
<PAGE>
Attachment 3.12
Page 2 of 2
IHQ
Corporate Services Inc
Winstar Wireless of [State], Inc.
Page 2
Winstar Wireless of Kentucky, Inc.
Winstar Wireless of Mississippi, Inc.
Winstar Wireless of Arkansas, Inc.
Winstar Wireless of South Carolina, Inc.
Winstar Wireless of Virginia, Inc. (a Virginia Corporation)
Winstar Wireless of the District of Columbia, Inc.
Winstar Wireless of New Hampshire, Inc.
Winstar Wireless of Montana, Inc.
Winstar Wireless of Alabama, Inc.
Winstar Wireless of Alaska, Inc.
Winstar Wireless of Nevada, Inc.
Winstar Wireless of Delaware, Inc.
Winstar Wireless of Maine, Inc.
* all Delaware Corporations unless otherwise noted
<PAGE>
SCHEDULE 3.13
Insurance
See Attachment 3.13.
<PAGE>
Attachment 3.13
Page 1 of 6
[LOGO] Aon Risk Services RECORD OF INSURANCE
WinStar Communications, Inc.
230 Park Avenue
Aon Risk Services, Inc. of Connecticut New York, NY 10169
55 Railroad Avenue, P.O. Box 5050
Greenwich, Connecticut 06830-5050
Telephone: 203/863-6600
Facsimile: 203/629-6556
<TABLE>
<CAPTION>
Policy Annual
Coverage Limits Location Term Carrier Policy Number Premium
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
General Liability/Auto Package USA, its territories 8/1/98-99 Fireman's DXC80368081 $39,066
& possessions, Fund
Canada & Puerto Rico
Commercial General Liability
General Aggregate Limit $2,000,000
Products/Completed Operations $2,000,000
Personal & Advertising Injury $1,000,000
Per Occurrence $1,000,000
Fire/Explosion/Water Damage Limit $1,000,000
Medical Expense incl. dental $ 10,000
Employee Benefits Liab.-ea employee $1,000,000
Employee Benefits Ded-ea employee $ 1,000
Business Auto Liab/Phys. Dam.
Liability--Per Accident $1,000,000
Medical Payments--Per Person $ 5,000
Uninsured Motorists $1,000,000
Underinsured Motorists $1,000,000
Personal Injury Protection Statutory
Comprehensive $500 Ded.
Collision $500 Ded.
- ------------------------------------------------------------------------------------------------------------------------------------
Business Automobile Massachusetts 8/1/98-99 National DXA07180700 $ 3,123.
- ------------------- Surety Corp
Liability--Each Accident $1,000,000
Medical Payments--Per Person $ 500
Uninsured Motorists $1M/$1M
Comprehensive $500 Ded.
Collision $500 Ded.
</TABLE>
The purpose of this exhibit is to provide an Prepared by: Maureen McShane
overall view of your insurance coverage and limits. Date: 10/22/98
It only represents coverage placed by our office.
Nothing contained herein in any way modifies or Page 1 of 4
changes actual policy conditions.
<PAGE>
Attachment 3.13
Page 2 of 6
[LOGO] Aon Risk Services RECORD OF INSURANCE
WinStar Communications, Inc.
230 Park Avenue
Aon Risk Services, Inc. of Connecticut New York, NY 10169
55 Railroad Avenue, P.O. Box 5050
Greenwich, Connecticut 06830-5050
Telephone: 203/863-6600
Facsimile: 203/629-6556
<TABLE>
<CAPTION>
Policy Annual
Coverage Limits Location Term Carrier Policy Number Premium
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Umbrella Worldwide 8/1/98-99 Fireman's XYZ-000-6808-3526 $ 27,750
General Aggregate $50,000,000 Fund
Each Occurrence $50,000,000
Retained Limit $ 10,000
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Workers' Compensation $ Statutory Various States 8/1/98-99 Fireman's DWP80779994 $352,237
Employer's Liability Fund Assessments:
$ 8,893
Bodily Injury Each
Accident $ 1,000,000
Bodily Injury by
Disease Policy Limit $ 1,000,000
Bodily Injury by
Disease Ea. Employee $ 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
Commercial Property
- -------------------
Perils: External Risks $ 5,000,000 USA, its territories 8/1/98-99 Security CCOPG10790 $ 92,000
of Direct Physical each and possessions, Insurance
Loss Including Flood occurrence. Canada and Puerto Company of
and Earthquake $5,000,000 Rico. Hartford
Coverage: Property, aggregate as
Business Income respects flood
including Extra & quake.
Expense and
Contingent Business
Income on all Real
& Personal Property.
Deductible: $5,000
combined property
damage and time
element except:
- - 24 hrs for off
premises power.
- - $25,000 per
occurrence for flood.
- - $25,000 or 5% TIV,
whichever is greater
for California
earthquake.
</TABLE>
The purpose of this exhibit is to provide Prepared by: Maureen McShane
an overall view of your insurance coverage and Date: 10/22/98
limits. It only represents coverage placed by
our office. Nothing contained herein in any way Page 2 of 4
modifies or changes actual policy conditions.
<PAGE>
Attachment 3.13
Page 3 of 6
[LOGO] Aon Risk Services RECORD OF INSURANCE
WinStar Communications, Inc.
230 Park Avenue
Aon Risk Services, Inc. of Connecticut New York, NY 10169
55 Railroad Avenue, P.O. Box 5050
Greenwich, Connecticut 06830-5050
Telephone: 203/863-6600
Facsimile: 203/629-6556
<TABLE>
<CAPTION>
Policy Annual
Coverage Limits Location Term Carrier Policy Number Premium
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Excess Property and $35,000,000 As per schedule on 8/1/98- Hartford Fire 31XLSQG3023 $28,000.
Primary Boiler & excess of file with company 8/1/99 Insurance Co.
Machinery $5,000,000
Perils: "All Risk" for All Risk
including Boiler on all
and Machinery, coverages
Flood and Earthquake except:
(excluding $20,000,000
California excess of
Earthquake). $5,000,000
Coverage: Property, from flood.
Business Income, $20,000,000
including Extra excess of
Expense and $5,000,000
Contingent Business from
Income on all earthquake
Real & Personal (excluding CA
Property. earthquake)
Boiler & Machinery $40,000,000
Deductibles and excess of 12 Gardner Road,
Sublimits: deductibles Fairfield, NJ.
$5,000 Ded. For for Boiler &
combined PD/BI. Machinery at
24 hour waiting one location
period for off
premises power.
Sublimit: $100,000
for water damage,
ammonia contamination,
expediting expense.
Sublimit: $25,000
for hazardous
substance and
pollution
</TABLE>
The purpose of this exhibit is to provide an overall view of your insurance
coverage and limits. It only represents coverage placed by our office. Nothing
contained herein in any way modifies or changes actual policy conditions.
Prepared by: Maureen McShane Page 3 of 4
Date: 10/22/98
<PAGE>
Attachment 3.13
Page 4 of 6
[LOGO] Aon Risk Services RECORD OF INSURANCE
WinStar Communications, Inc.
230 Park Avenue
Aon Risk Services, Inc. of Connecticut New York, NY 10169
55 Railroad Avenue, P.O. Box 5050
Greenwich, Connecticut 06830-5050
Telephone: 203/863-6600
Facsimile: 203/629-6556
<TABLE>
<CAPTION>
Policy Annual
Coverage Limits Location Term Carrier Policy Number Premium
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial Crime $5,000,000 7/31/98 - National 861-81-27 $14,540
Retention: $25,000 7/31/99 Union Fire
Ins. Co.
Fiduciary Liability $1,000,000 8/1/98 - National 008566199 $5,000
Employee Benefit Plan 8/1/99 Union Fire
Retention: $10,000 Ins. Co.
The purpose of this exhibit is to provide an Prepared by: Maureen McShane
overall view of your insurance coverage and
limits. It only represents coverage placed by Date: 10/22/98
our office. Nothing contained herein in any way
modifies or changes actual policy conditions. Page 4 of 4
</TABLE>
<PAGE>
ATTACHMENT 3.13 PAGE 5 OF 6
- --------------------------------------------------------------------------------
ACCORD (TRADEMARK) CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YY)
10/19/98
- --------------------------------------------------------------------------------
PRODUCER
AON RISK SERVICES, INC., OF CT.
55 RAILROAD AVENUE
P.O. BOX 5050
GREENWICH, CT 06836-5050
INSURED
WINSTAR COMMUNICATIONS, INC., AND ITS
SUBSIDIARIES
230 PARK AVENUE, SUITE 2700
NEW YORK, NY 10169
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION
ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE
HOLDER. THIS CERTIFICATE DOES NOT MEND, EXTEND OR
ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.
COMPANIES AFFORDING COVERAGE
COMPANY
A FIREMAN'S FUND INSURANCE COMPANY
COMPANY
B SECURITY INSURANCE COMPANY OF HARTFORD
COMPANY
C
COMPANY
D
- --------------------------------------------------------------------------------
COVERAGES
- --------------------------------------------------------------------------------
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED
TO THE INSURED TO THE INSURED NAME ABOVE FOR THE POLICY PERIOD INDICATED,
NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER
DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN,
THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE
TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES, LIMITS SHOWN MAY HAVE BEEN
REDUCED BY PAID CLAIMS.
<TABLE>
CO POLICY EFFECTIVE POLICY EXPIRATION
LTR TYPE OF INSURANCE POLICY NUMBER DATE (MM/DD/YY) DATE (MM/DD/YY) LIMITS
- --- ----------------- ------------- ---------------- ----------------- ------
<S> <C> <C> <C> <C> <C>
A GENERAL LIABILITY DXC80368081 08/01/98 08/01/99 GENERAL AGGREGATE $ 2,000,000
/X/ COMMERCIAL GENERAL
LIABILITY PRODUCTS-COMP/OP AGG $ 2,000,000
/ / / / CLAIMS MADE
/X/ OCCUR PERSONAL & ADV INJURY $ 1,000,000
/ / OWNER'S &
CONTRACTOR'S PROT EACH OCCURENCE $ 1,000,000
/X/ GENERAL AGG APPLIES FIRE DAMAGE (Any one fire) $ 1,000,000
/ / TO EACH LOCATION MED EXP (Any one person) $ 10,000
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY COMBINED
/ / ANY AUTO SINGLE LIMIT $
/ / ALL OWNED AUTOS BODILY INJURY
/ / SCHEDULED AUTOS (Per person) $
/ / HIRED AUTOS BODILY INJURY
/ / NON-OWNED AUTOS (Per accident) $
/ /
/ / PROPERTY DAMAGE $
- ------------------------------------------------------------------------------------------------------------------------------------
GARAGE LIABILITY AUTO ONLY - EA ACCIDENT
/ / ANY AUTO OTHER THAN AUTO ONLY: $
/ / EACH ACCIDENT $
/ / AGGREGATE $
- ------------------------------------------------------------------------------------------------------------------------------------
A EXCESS LIABILITY XYZ-000-6808-3526 08/01/98 08/01/99 EACH OCCURRENCE $10,000,000
/X/ UMBRELLA FORM AGGREGATE $10,000,000
/ / OTHER THAN IN EXCESS OF $1,000,000
UMBRELLA FORM PRIMARY $
- ------------------------------------------------------------------------------------------------------------------------------------
WORKER'S COMPENSATION /X/ WC STATU- / / OTHER
AND EMPLOYERS' LIABILITY TORY LIMITS
EL EACH ACCIDENT $
THE PROPRIETOR/ / /INCL EL DISEASE - POLICY LIMIT $
PARTNERS/ / /EXCL EL DISEASE - EA EMPLOYEE $
EXECUTIVE
OFFICERS ARE:
- ------------------------------------------------------------------------------------------------------------------------------------
B OTHER
COMMERCIAL PROPERTY C-COP-G10790 08/01/98 08/01/99 LIMIT: $5,000,000 EACH
OCCURRENCE.
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS
CERTIFICATE HOLDER IS NAMED AS ADDITIONAL INSURED AND LOSS PAYEE. THIRTY DAYS NOTICE OF CANCELLATION, MODIFICATION AND NON RENEWAL
EXCEPT 10 DAYS NOTICE FOR NON PAYMENT IS AFFORDED.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
CERTIFICATE HOLDER CANCELLATION
LUCENT TECHNOLOGIES, INC. SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
ONE OAK WAY EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL MAIL 30 DAYS
BERKELEY HEIGHTS, NJ 07922 WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT.
-----------------------------------------------------------------------
AUTHORIZED REPRESENTATIVE
/s/ Steven Danielson
- ------------------------------------------------------------------------------------------------------------------------------------
ACCORD 25-S (1/95) (c) ACCORD CORPORATION 1988
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ATTACHMENT 3.13 PAGE 6 OF 6
- --------------------------------------------------------------------------------
ACCORD (TRADEMARK) CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YY)
10/19/98
- --------------------------------------------------------------------------------
PRODUCER
AON RISK SERVICES, INC., OF CT.
55 RAILROAD AVENUE
P.O. BOX 5050
GREENWICH, CT 06836-5050
INSURED
WINSTAR COMMUNICATIONS, INC., AND ITS
SUBSIDIARIES
230 PARK AVENUE, SUITE 2700
NEW YORK, NY 10169
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION
ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE
HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR
ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.
COMPANIES AFFORDING COVERAGE
COMPANY
A FIREMAN'S FUND INSURANCE COMPANY
COMPANY
B SECURITY INSURANCE COMPANY OF HARTFORD
COMPANY
C
COMPANY D
- --------------------------------------------------------------------------------
COVERAGES
- --------------------------------------------------------------------------------
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED
TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY
REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO
WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY
THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND
CONDITIONS OF SUCH POLICIES, LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
<TABLE>
<CAPTION>
CO POLICY EFFECTIVE POLICY EXPIRATION
LTR TYPE OF INSURANCE POLICY NUMBER DATE (MM/DD/YY) DATE (MM/DD/YY) LIMITS
- --- ----------------- ------------- ---------------- ----------------- ------
<S> <C> <C> <C> <C> <C> <C>
A GENERAL LIABILITY DXC80368081 08/01/98 08/01/99 GENERAL AGGREGATION $ 2,000,000
/X/ COMMERCIAL GENERAL
LIABILITY PRODUCTS-COMP/OP AGG $ 2,000,000
/ / / / CLAIMS MADE
/X/ OCCUR PERSONAL & ADV INJURY $ 1,000,000
/ / OWNER'S &
CONTRACTOR'S PROT EACH OCCURENCE $ 1,000,000
/X/ GENERAL AGG APPLIES FIRE DAMAGE (Any one fire) $ 1,000,000
/ / TO EACH LOCATION MED EXP (Any one person) $ 10,000
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY COMBINED
/ / ANY AUTO SINGLE LIMIT $
/ / ALL OWNED AUTOS BODILY INJURY
/ / SCHEDULED AUTOS (Per person) $
/ / HIRED AUTOS BODILY INJURY
/ / NON-OWNED AUTOS (Per accident) $
/ /
/ / PROPERTY DAMAGE $
- ------------------------------------------------------------------------------------------------------------------------------------
GARAGE LIABILITY AUTO ONLY - EA ACCIDENT
/ / ANY AUTO OTHER THAN AUTO ONLY: $
/ / EACH ACCIDENT $
/ / AGGREGATE $
- ------------------------------------------------------------------------------------------------------------------------------------
A EXCESS LIABILITY XYZ-000-6808-3526 08/01/98 08/01/99 EACH OCCURRENCE $10,000,000
/X/ UMBRELLA FORM AGGREGATE $10,000,000
/ / OTHER THAN IN EXCESS OF $1,000,000
UMBRELLA FORM PRIMARY $
- ------------------------------------------------------------------------------------------------------------------------------------
WORKER'S COMPENSATION /X/ WC STATU- / / OTHER
AND EMPLOYERS' LIABILITY TORY LIMITS
EL EACH ACCIDENT $
THE PROPRIETOR/ / /INCL EL DISEASE - POLICY LIMIT $
PARTNERS/ / /EXCL EL DISEASE - EA EMPLOYEE $
EXECUTIVE
OFFICERS ARE:
- ------------------------------------------------------------------------------------------------------------------------------------
B OTHER
COMMERCIAL PROPERTY C-COP-G10790 08/01/98 08/01/99 LIMIT: $5,000,000 EACH
OCCURRENCE.
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS
CERTIFICATE HOLDER IS NAMED AS ADDITIONAL INSURED AND LOSS PAYEE. THIRTY DAYS NOTICE OF CANCELLATION, MODIFICATION AND NON RENEWAL
EXCEPT 10 DAYS FOR NON PAYMENT IS AFFORDED.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
CERTIFICATE HOLDER CANCELLATION
STATE STREET BANK SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
225 FRANKLIN STREET EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL MAIL 30 DAYS
BOSTON, MA 02110 WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT.
-----------------------------------------------------------------------
AUTHORIZED REPRESENTATIVE
/s/ Steven Danielson
- ------------------------------------------------------------------------------------------------------------------------------------
ACCORD 25-S (1/95) (c) ACCORD CORPORATION 1988
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 6.01
Outstanding Indebtedness
(Dollar Amounts are as of 9/30/98; $000's omitted)
<TABLE>
<CAPTION>
Description Amount Outstanding
- ----------- ------------------
<S> <C>
10% Senior Subordinated Notes due 2008 200,000
11% Senior Subordinated Deferred Interest Notes dues 2008 264,653
14% Convertible Senior Subordinated Discount Notes due 2005 111,605
14% Senior Discount Notes due 2005 223,210
14 1/2% Senior Deferred Interest Notes due 2005 124,000
12 1/2% Guaranteed Senior Secured Notes due 2004 200,000
12 1/2% Guaranteed Senior Secured Notes due 2004 50,000
15% Senior Subordinated Deferred Interest Notes due 2007 113,950
Series C 14 1/4% Senior Cumulative Exchangeable Preferred Stock due 2007 194,739
Series D 7% Convertible Preferred Stock due 2010 200,000
Master Equipment Lease Agreement between BNY Capital Resources Corporation 40,164
and WinStar Wireless, Inc.
Master Equipment Lease with Transamerica Business Credit Corp. 8,961
Equipment Lease with Finova Technology Finance, Inc. 3,421
Equipment Lease arrangement between Heller Financial, Inc. and WinStar Wireless, Inc. 3,314
Equipment Lease with Mellon US Leasing 2,507
Master Loan and Security Agreement with Telecom Finance Corporation 2,207
Equipment Lease with Centigram Communications Corp. 1,498
Equipment Lease with WASCO Funding Corp. 1,273
Equipment Lease with LINC Management 1,123
</TABLE>
<PAGE>
SCHEDULE 6.02
Liens on property or assets of the Parent or any Restricted Subsidiary
There are liens securing indebtedness for the following:
1. 12 1/2% Guaranteed Senior Secured Notes due 2004
2. 12 1/2% Guaranteed Senior Secured Notes due 2004
3. Master Equipment Lease Agreement between BNY Capital Resources Corporation
and WinStar Wireless, Inc.
4. Master Equipment Lease with Transamerica Business Credit Corp.
5. Equipment Lease with Finova Technology Finance, Inc.
6. Equipment Lease arrangement between Heller Financial, Inc. and WinStar
Wireless, Inc.
7. Equipment Lease with Mellon US Leasing
8. Master Loan and Security Agreement with Telecom Finance Corporation
9. Equipment Lease with Centigram Communications Corp.
10. Equipment Lease with WASCO Funding Corp.
11. Equipment Lease with LINC Management
Other immaterial liens not exceeding $5,000,000.
<PAGE>
SCHEDULE 6.04A
Pending Acquisitions
None
<PAGE>
SCHEDULE 6.04B
Existing Investments
(Dollar Amounts are as of 9/30/98)
Investments in Unrestricted Subsidiaries: $84,368
o WinStar New Media and its Subsidiaries
o WinStar MultiChannel Corp.
o WinStar Credit Corp.
o WinStar International Inc. and its Subsidiaries
Investment in ARTT $13,910
Loans and Commitments to CellularVision $3,538
outstanding
plus up to
$9,000 for
contingent
commitments
Investment in WinStar LHC2, LLC $1,116
Other investments not to exceed $5,000 as of the above-referenced date.
<PAGE>
SCHEDULE 6.04C
Permitted Asset Sales
Sale of shares of Dal Telecom, Inc., a Russian cellular telecom provider
acquired in the Midcom Acquisition
Sale of substantially all the assets or the capital stock of WinStar Switch
Acquisition Corp. and miscellaneous U.S. One acquired assets
Sale of substantially all the assets or the capital stock of WinStar Gateway
Network, Inc.
Midcom Long Distance and miscellaneous Midcom assets
Sales of ISP Dial up customers
Provided that at the time of such asset or stock sale the assets of such entity
consist of no more than the assets of such entity on the date hereof, subject to
non-material changes in the ordinary course of business.
<PAGE>
SCHEDULE 6.08
Existing Restrictions
None
<PAGE>
SCHEDULE 6.17
Customer Equipment
See Schedule C1 of the Supply Agreement.
<PAGE>
EXHIBIT A
[Form of]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of October 21, 1998
(as amended and in effect on the date hereof, the "Credit Agreement"), among
WinStar Network Expansion, LLC, WinStar Communications, Inc., the lenders listed
on Schedule 2.01 thereto (the "Lenders"), State Street Bank and Trust Company,
as collateral agent and Lucent Technologies Inc., as administrative agent for
the Lenders (in such capacity, the "Administrative Agent"). Terms defined in the
Credit Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Assignment Date set forth below, the interests
set forth below (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement and the other Loan Documents, including,
without limitation, the amounts set forth below of (i) the Commitments of the
Assignor on the Assignment Date and (ii) the Loans (and any Deferred Interest
thereon) owing to the Assignor which are outstanding on the Assignment Date. The
Assignee hereby acknowledges receipt of a copy of the Credit Agreement. From and
after the Assignment Date (i) the Assignee shall be a party to and be bound by
the provisions of the Credit Agreement and, to the extent of the interests
assigned by this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to
the extent of the interests assigned by this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is a Foreign Lender, any
forms of the type described in Section 2.15(e) of the Credit Agreement, duly
completed and executed by such Assignee, (ii) if the Assignee is not already a
Lender under the Credit Agreement, an Administrative Questionnaire and (iii) a
processing and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and construed
in accordance with the laws of the State of New York.
<PAGE>
2
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date"):
Principal Amount
of outstanding
Loans and
Deferred Interest Amount of Commitment
Facility/Commitment Assigned Assigned
Tranche 1 $ $
Tranche 2 $ $
Tranche 3 $ $
Tranche 4 $ $
Tranche 5 $ $
<PAGE>
3
The terms set forth above are
hereby agreed to: Accepted */
______________, as Assignor
LUCENT TECHNOLOGIES INC.,
as Administrative Agent
by:______________________ by:______________________
Name: Name:
Title: Title:
_____________, as Assignee WINSTAR NETWORK
EXPANSION, LLC,
by:______________________ by:______________________
Name: Name:
Title: Title:
- -------------------
*/ To be completed to the extent consents are required under
Section 9.04(b) of the Credit Agreement.
<PAGE>
EXHIBIT B
GUARANTEE AND SUBORDINATION AGREEMENT dated
as of October [ ], 1998, among WINSTAR NETWORK
EXPANSION, LLC, a Delaware limited liability company
(the "Borrower"), WINSTAR COMMUNICATIONS, INC., a
Delaware corporation (the "Parent"), each of the
subsidiaries of the Parent listed on Schedule I
hereto (each such subsidiary individually, a
"Subsidiary Guarantor" and collectively, the
"Subsidiary Guarantors"; the Subsidiary Guarantors
and the Parent being referred to individually as a
"Guarantor" and collectively as the "Guarantors"),
and LUCENT TECHNOLOGIES INC. ("Lucent"), as
administrative agent (the "Administrative Agent") for
the Lenders (as defined below).
Reference is made to the Credit Agreement dated as of October
21, 1998 (as amended or modified from time to time, the "Credit Agreement"),
among the Parent, the Borrower, the lenders from time to time party thereto (the
"Lenders"), State Street Bank and Trust Company, as collateral agent (the
"Collateral Agent") and the Administrative Agent. Capitalized terms used herein
and not defined herein shall have the meanings assigned to such terms in the
Credit Agreement
The Lenders have agreed to make Loans to the Borrower pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. The Parent has elected that the Guarantors guarantee the Obligations
(as defined below) by entering into this Agreement. The Borrower is a
wholly-owned subsidiary of the Parent and each of the Subsidiary Guarantors is a
Subsidiary of the Parent. Each of the Guarantors acknowledges that it will
derive substantial benefit from the making of the Loans by the Lenders. The
obligations of the Lenders to make Loans are conditioned on, among other things,
the execution and delivery by the Borrower and the Guarantors of a Guarantee and
Subordination Agreement in the form hereof. As consideration therefor and in
order to induce the Lenders to make Loans, the Borrower and the Guarantors are
willing to execute this Agreement.
<PAGE>
2
Accordingly, the parties hereto agree as follows:
ARTICLE I
Guarantee
SECTION 1.01. Guarantee. Each Guarantor unconditionally
guarantees, jointly with the other Guarantors and severally, as a primary
obligor and not merely as a surety, (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise and (ii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency, receiver
ship or other similar proceeding, regardless of whether allowed or allowable in
such proceeding), of the Borrower under the Credit Agreement and the other Loan
Documents and (b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Borrower under or pursuant to the Credit
Agreement and the other Loan Documents (all the monetary and other obligations
referred to in the preceding clauses (a) and (b) being collectively called the
"Obligations"). Each Guarantor further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice to or further assent
from it, and that it will remain bound upon its guarantee notwithstanding any
extension or renewal of any Obligation.
SECTION 1.02. Obligations Not Waived. To the fullest extent
permitted by applicable law, each Guarantor waives presentment to, demand of
payment from and protest to the Borrower or any other Loan Party of any of the
Obligations, and also waives notice of acceptance of its guarantee and notice of
protest for nonpayment. To the fullest extent permitted by applicable law, the
obligations of each Guarantor hereunder shall not be affected by (a) the failure
of the Administrative Agent, the Collateral Agent or any Lender to assert any
claim or demand or to enforce or exercise any right or remedy against the
Borrower or any other Guarantor under the provisions of the Credit Agreement,
any other Loan Document or otherwise, (b) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of this
<PAGE>
3
Agreement, any other Loan Document, any Guarantee or any other agreement,
including with respect to any other Guarantor under this Agreement or (c) the
failure to perfect any security interest in, or the release of, any of the
security held by or on behalf of the Collateral Agent or any Lender.
SECTION 1.03. Security. Each of the Guarantors authorizes the
Collateral Agent and each of the Lenders to (a) take and hold security given for
the payment of this Guarantee and the Obligations and exchange, enforce, waive
and release any such security, (b) apply such security and direct the order or
manner of sale thereof as they in their sole discretion may determine and (c)
release or substitute any one or more endorsees, other Guarantors of other
obligors.
SECTION 1.04. Guarantee of Payment. Each Guarantor further
agrees that its guarantee constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Administrative Agent or any Lender to any of the security held for payment of
the Obligations or to any balance of any deposit account or credit on the books
of the Administrative Agent or any Lender in favor of the Borrower, any other
Loan Party or any other Person.
SECTION 1.05. No Discharge or Diminishment of Guarantee. The
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Administrative Agent, the Collateral Agent or any Lender to assert any claim or
demand or to enforce any remedy under the Credit Agreement, any other Loan
Document or any other agreement, by any waiver or modification of any provision
of any thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the Obligations, or by any other act or omission that may or
might in any manner or to any extent vary the risk of any Guarantor or that
would otherwise operate as a discharge of each Guarantor as a matter of law
<PAGE>
4
or equity (other than the indefeasible payment in full in cash of all the
Obligations).
SECTION 1.06. Defenses of Borrower Waived. To the fullest
extent permitted by applicable law, each of the Guarantors waives any defense
based on or arising out of the defense of the Borrower or any other Loan Party
or the unenforceability of the Obligations or any part thereof from any cause,
or the cessation from any cause of the liability of the Borrower or any other
Loan Party, other than the final and indefeasible payment in full in cash of the
Obligations. The Collateral Agent and the Lenders may, at their election,
foreclose on any security held by one or more of them by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with the Borrower or any other Loan Party or guarantor or exercise
any other right or remedy available to them against the Borrower or any other
Loan Party or guarantor, without affecting or impairing in any way the liability
of any Guarantor hereunder except to the extent the Obligations have been fully,
finally and indefeasibly paid in cash. To the fullest extent permitted by
applicable law, each of the Guarantors waives any defense arising out of any
such election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Guarantor against the Borrower or any other Guarantor or
guarantor, as the case may be, or any security.
ARTICLE II
Subordination
SECTION 2.01. Subordination. Each Subordinated Creditor hereby
agrees that all the Subordinated Obligations of each Loan Party owed to such
Subordinated Creditor are hereby expressly subordinated, to the extent and in
the manner set forth in this Article II, to the prior payment in full in cash of
all Senior Obligations of such Loan Party in accordance with the terms thereof.
As used herein:
"Senior Creditors" means each of the Lenders, the
Administration Agent, the Collateral Agent and their respective successors and
assigns.
<PAGE>
5
"Senior Obligations" of any Loan Party means (a) in the case
of the Borrower, the Obligations, and (b) in the case of to any other Loan
Party, all monetary obligations of such Loan Party under the Loan Documents to
which it is a party, including pursuant to this Agreement.
"Subordinated Creditors" means any Guarantor in its capacity
as a creditor of the Borrower or any Subsidiary Guarantor.
"Subordinated Obligations" of any Loan Party means all
monetary obligations and other liabilities of such Loan Party at any time owing
to any Subordinated Creditor of such Loan Party (including any such obligations
or other liabilities owning to any other Person for the direct or indirect
benefit of any Subordinated Creditor of such Loan Party), including all rights
of such Subordinated Creditors against such Loan Party arising by way of right
of subrogation, contribution, reimbursement, indemnity or otherwise; provided
that the Subordinated Obligations of the Borrower or a Subsidiary Guarantor
shall not include any Indebtedness owed to the Parent to the extent any such
Indebtedness may only be incurred in compliance with any indenture of the Parent
evidencing public Indebtedness of the Parent if such Indebtedness is evidenced
by an unsubordinated promissory note.
SECTION 2.02. Dissolution or Insolvency. Each Subordinated
Creditor agrees that upon any distribution of the assets of any Loan Party or
upon any dissolution, winding up, liquidation or reorganization of any Loan
Party, whether in bankruptcy, insolvency, reorganization, arrangement or
receivership proceedings or otherwise, or upon any assignment for the benefit of
creditors or any other marshaling of the assets and liabilities of any Loan
Party:
(a) the Senior Creditors of such Loan Party shall first be
entitled to receive payment in full in cash of the Senior Obligations of such
Loan Party in accordance with the terms of such Senior Obligations before any
Subordinated Creditor shall be entitled to receive any payment on account of the
Subordinated Obligations of such Loan Party, whether as principal, interest or
otherwise; and
(b) any payment by, or distribution of the assets of, such
Loan Party of any kind or character, whether in cash, property or securities,
received by or on behalf of any Subordinated Creditor shall be held in trust for
the benefit of, and shall be paid over to, the Senior Creditors of any Loan
Party to the extent necessary to make payment in
<PAGE>
6
full in cash of all Senior Obligations of such Loan Party remaining unpaid,
after giving effect to any concurrent payment or distribution to the Senior
Creditors in respect of the Senior Obligations.
SECTION 2.03. Other Creditors. Nothing contained in this
Agreement is intended to or shall impair, as between and among the Loan Parties,
their creditors (other than their Senior Creditors) and the Subordinated
Creditors, the obligations of each Loan Party to pay to the applicable
Subordinated Creditors of such Borrower Company the Subor dinated Obligations of
such Loan Party as and when the same shall become due and payable in accordance
with the terms thereof, or affect the relative rights of the Subordinated
Creditors and the other creditors of such Loan Party (other than their Senior
Creditors).
SECTION 2.04. Proofs of Claims. In the event of any
dissolution, winding up, liquidation or reorganization of any Loan Party,
whether in bankruptcy, insolvency, reorganization, arrangement or receivership
proceedings or otherwise, or any assignment for the benefit of creditors or any
other marshaling of the assets and liabilities of any Loan Party, each
Subordinated Creditor agrees to file proofs of claim for the Subordinated
Obligations owed to it upon demand of the Administrative Agent, in default of
which the Administrative Agent or other authorized representative of the Senior
Creditors is hereby irrevocably authorized so to file in order to effectuate the
provisions hereof. This Section shall not be construed to permit any
Subordinated Creditor to retain any payment received by it in respect of a
Subordinated Obligation that such Subordinated Creditor is not entitled to
retain under any other provision of this Agreement.
SECTION 2.05. No Waiver. No right of any Senior Creditor to
enforce this Agreement shall at any time or in any way be prejudiced or impaired
by any act or failure to act on the part of any of the Administrative Agent, the
other Senior Creditors, or any Loan Party, or by any noncompliance by any
Subordinated Creditor or Loan Party with the terms, provisions and covenants
contained herein, and the Senior Creditors are hereby expressly authorized to
extend, renew, increase, decrease, modify or amend the terms of the Senior
Obligations or any security therefor, and to release, sell or exchange any such
security and otherwise deal freely with the Loan Parties, all without notice to
or consent of any Subordinated Creditor and without affecting the liabilities
and obligations of the parties hereto.
<PAGE>
7
SECTION 2.06. Transfer of Subordinated Obligations. Each
Subordinated Creditor agrees that it will not sell, assign, transfer or
otherwise dispose of all or any part of the Subordinated Obligations owed to it
unless the Person to whom such sale, assignment, transfer or disposition is made
(i) is a Subordinated Creditor hereunder or (ii) shall acknowledge in writing
(delivered to the Agent) that it shall be bound by the terms of this Agreement,
including the terms of this Section 2.06, as though named herein as a
Subordinated Creditor.
SECTION 2.07. Obligations Hereunder Not Affected.
(a) All rights and interests of the Senior Creditors
hereunder, and all agreements and obligations of the Subordinated Creditors
hereunder, shall remain in full force and effect irrespective of:
(i) any lack of validity or enforceability of the
Credit Agreement or any other Loan Document;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Senior Obligations, or any
other amendment or waiver of or consent to departure from the Credit
Agreement or any other Loan Document (other than this Agreement);
(iii) any exchange, release or nonperfection of any security
interest in any collateral, or any release or amendment or waiver of or
consent to departure from any guarantee, in respect of all or any of
the Senior Obligations; or
(iv) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Borrower Company in
respect of its Senior Obligations or of any Subordinated Creditor in
respect of this Agreement.
(b) Each Subordinated Creditor hereby authorizes the Senior
Creditors, without notice or demand and without affecting or impairing any of
the obligations of such Subordinated Creditor hereunder, from time to time to
(i) renew, compromise, extend, increase, accelerate or otherwise change the time
for payment of, or otherwise change the terms of, the Senior Obligations or any
part thereof and (ii) exercise or refrain from exercising any rights against any
Subordinated Creditor, any Loan Party or any other Person.
<PAGE>
8
ARTICLE III
Miscellaneous
SECTION 3.01. Representations and Warranties. Each of the
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Credit Agreement are true and
correct.
SECTION 3.02. Information. Each of the Guarantors assumes all
responsibility for being and keeping itself informed of the Borrower's and each
other Loan Party's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Obligations and the
nature, scope and extent of the risks that such Guarantor assumes and incurs
hereunder, and agrees that none of the Administrative Agent or the Lenders will
have any duty to advise any of the Guarantors of information known to it or any
of them regarding such circumstances or risks.
SECTION 3.03. Termination of this Agreement and the
Guarantees. This Agreement and the Guarantees made hereunder shall terminate
when all the Obligations have been indefeasibly paid in full and the Lenders
have no further commitment to lend under the Credit Agreement and shall continue
to be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any Obligation is rescinded or must otherwise be restored
by the Administrative Agent or any Lender upon the bankruptcy or reorganization
of the Borrower, any Guarantor or otherwise.
SECTION 3.04. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of each party hereto
that are contained in this Agreement shall bind and inure to the benefit of each
party hereto and their respective successors and assigns. This Agreement shall
become effective as to the Borrower or any Guarantor when a counterpart hereof
executed on behalf of such Party shall have been delivered to the Administrative
Agent, and a counterpart hereof shall have been executed on behalf of the
Administrative Agent, and thereafter shall be binding upon such Party and the
Administrative Agent and their respective successors and assigns, and shall
inure to the benefit of such Party, the Administrative Agent and the Lenders,
and their respective successors and assigns, except that neither the Borrower
nor the Guarantor shall have the right to assign its rights or obligations
hereunder or any interest
<PAGE>
9
herein (and any such attempted assignment shall be void). If all of the capital
stock of a Subsidiary Guarantor is sold, transferred or otherwise disposed of
(other than to a Subsidiary of the Parent) pursuant to a transaction permitted
by the Loan Documents, such Subsidiary Guarantor shall be released from its
obligations under this Agreement without further action. This Agreement shall be
construed as a separate agreement with respect to each Guarantor and may be
amended, modified, supplemented, waived or released with respect to any
Guarantor without the approval of any other Guarantor and without affecting the
obligations of any other Guarantor hereunder.
SECTION 3.05. Waivers; Amendment. (a) No failure or delay of
the Administrative Agent in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent hereunder and of the Collateral Agent and the Lenders under
the other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by the Borrower or any Guarantor therefrom
shall in any event be effective unless the same shall be permitted by paragraph
(b) below, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on
the Borrower or any Guarantor in any case shall entitle the Borrower or any such
Guarantor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the party hereto with respect to which such waiver, amendment or
modification relates and the Administrative Agent, with the prior written
consent of the Required Lenders as required under the Credit Agreement.
SECTION 3.06. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 3.07. Notices. All communications and notices
hereunder shall be in writing and given as provided in Section 9.01 of the
Credit Agreement. All communications
<PAGE>
10
and notices hereunder to each Subsidiary Guarantor shall be given to it in care
of the Parent.
SECTION 3.08. Survival of Agreement; Severability. (a) All
covenants, agreements, representations and warranties made by the Borrower and
the Guarantors herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the Administrative
Agent and the Lenders and shall survive the making by the Lenders of the Loans
regardless of any investigation made by any Lender or on any Lender's behalf,
and shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any other fee or amount payable under this
Agreement or any other Loan Document is outstanding and unpaid and as long as
the Commitments have not been terminated.
(b) In the event any one or more of the provisions contained
in this Agreement or in any other Loan Document should be held invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 3.09. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective as
provided in Section 4.04. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart of this Agreement.
SECTION 3.10. Rules of Interpretation. The rules of
interpretation specified in Section 1.03 of the Credit Agreement shall be
applicable to this Agreement.
SECTION 3.11. Jurisdiction; Consent to Service of Process. (a)
The Borrower and each Guarantor hereby irrevocably and unconditionally submit,
for itself and its property, to the nonexclusive jurisdiction of any New York
<PAGE>
11
State court or Federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Administrative Agent, the Collateral Agent or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against the Borrower, any Guarantor or its properties
in the courts of any jurisdiction.
(b) The Borrower and each Guarantor hereby irrevocably and
unconditionally waive, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 3.07. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 3.12. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 3.12.
<PAGE>
12
SECTION 3.13. Additional Subsidiary Guarantors. Pursuant to
the Credit Agreement, any additional Guarantor Subsidiary that is formed or
acquired (or results from a Subsidiary that was not previously a Subsidiary
becoming a Guarantor Subsidiary) after the date hereof is required to enter into
this Agreement as a Subsidiary Guarantor upon becoming a Guarantor Subsidiary.
Upon execution and delivery after the date hereof by the Administrative Agent
and such a Guarantor Subsidiary of an instrument in the form of Annex 1, such
Guarantor Subsidiary shall become a Subsidiary Guarantor hereunder with the same
force and effect as if originally named as a Subsidiary Guarantor herein. The
execution and delivery of any instrument adding an additional Subsidiary
Guarantor as a party to this Agreement shall not require the consent of any
other Guarantor or Subordinated Creditor hereunder. The rights and obligations
of each Guarantor and Subordinated Creditor hereunder shall remain in full force
and effect notwithstanding the addition of any new Subsidiary Guarantor as a
party to this Agreement.
SECTION 3.14. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other Indebtedness at any time owing by such Lender
to or for the credit or the account of any Guarantor against any or all the
obligations of such Guarantor now or hereafter existing under this Agreement and
the other Loan Documents held by such Lender, irrespective of whether or not
such Lender shall have made any demand under this Agreement or any other Loan
Document and although such obligations may be unmatured. The rights of each
Lender under this Section 3.14 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
WINSTAR NETWORK EXPANSION,
LLC,
by
--------------------------
Name:
Title:
<PAGE>
13
WINSTAR COMMUNICATIONS, INC.,
by
--------------------------
Name:
Title:
EACH OF THE SUBSIDIARY
GUARANTORS LISTED ON
SCHEDULE I HERETO,
by
---------------------------
Name:
Title:
LUCENT TECHNOLOGIES INC., as
Administrative Agent,
by
---------------------------
Name:
Title:
<PAGE>
SCHEDULE I
to the Guarantee Agreement
SUBSIDIARIES
WinStar Wireless, Inc.
WinStar Federal Services, LLC
WinStar LANSystems Acquisition, LLC
WinStar Midcom Acquisition Corp.
WinStar Media Connection, Inc.
The Internet Connection, Inc.
Macro Computer Solutions, Inc.
Commercial Information and Order Express (CIOE) Corporation, Inc.
WinStar Gateway Network, Inc.
WinStar Milliwave, Inc.
WinStar Wireless Fiber Corp.
WinStar LMDS, LLC
WinPinn Corp.
Pinnacle Nine Communications LLC
Pinnacle Seven Communications, Inc.
WinStar Locate, Inc.
WinStar Wireless Fiber Acquisition Corp.
WinStar Switch Acquisition Corp.
WinStar LHC1, LLC
WinStar GoodNet, Inc.
<PAGE>
ANNEX 1 TO THE
GUARANTEE AGREEMENT
SUPPLEMENT NO. dated as of
, to the Guarantee and Subordination Agreement
dated as of October [ ],1998 (as amended or modified
from time to time, the "Guarantee Agreement"), among
WINSTAR NETWORK EXPANSION, LLC, a Delaware limited
liability company (the "Borrower"), WINSTAR
COMMUNICATIONS, INC., a Delaware corporation (the
"Parent"), each of the subsidiaries of the Parent
listed on Schedule I thereto (each such subsidiary
individually, a "Subsidiary Guarantor" and
collectively, the "Subsidiary Guarantors" and,
together with the Parent, the "Guarantors"), and
LUCENT TECHNOLOGIES INC. ("Lucent"), as
administrative agent (the "Administrative Agent") for
the Lenders (as defined in the Guarantee Agreement).
A. Reference is made to (a) the Credit Agreement dated as of
October 21, 1998 (as amended or modified from time to time, the "Credit
Agreement"), among the Parent, the Borrower, the lenders from time to time party
thereto (the "Lenders"), State Street Bank and Trust Company, as Collateral
Agent and the Administrative Agent and (b) the Guarantee Agreement. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Guarantee Agreement.
B. The Guarantors have entered into the Guarantee Agreement in
order to induce the Lenders to make Loans. Pursuant to the Credit Agreement, any
additional Guarantor Subsidiary that is formed or acquired (or results from a
Subsidiary that was not previously a Guarantor Subsidiary becoming a Guarantor
Subsidiary) after the date of the Guarantee Agreement is required to enter into
the Guarantee Agreement as a Subsidiary Guarantor upon becoming a Guarantor
Subsidiary. Section 3.13 of the Guarantee Agreement provides that additional
Guarantor Subsidiaries may become Subsidiary Guarantors under the Guarantee
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Guarantor Subsidiary (the "New Subsidiary
Guarantor") is executing this Supplement in accordance with the requirements of
the Credit Agreement to become a Subsidiary Guarantor under the Guarantee
Agreement in order to induce the Lenders to make additional Loans and as
consideration for Loans previously made.
<PAGE>
2
Accordingly, the Administrative Agent and the New Subsidiary
Guarantor agree as follows:
SECTION 1. In accordance with Section 3.13 of the Guarantee
Agreement, the New Subsidiary Guarantor by its signature below becomes a
Subsidiary Guarantor and a Guarantor under the Guarantee Agreement with the same
force and effect as if originally named therein as a Subsidiary Guarantor and
the New Subsidiary Guarantor hereby (a) agrees to all the terms and provisions
of the Guarantee Agreement applicable to it as a Subsidiary Guarantor thereunder
and (b) represents and warrants that the representations and warranties made by
it as a Subsidiary Guarantor thereunder are true and correct on and as of the
date hereof. Each reference to a "Subsidiary Guarantor" or "Guarantor" in the
Guarantee Agreement shall be deemed to include the New Subsidiary Guarantor. The
Guarantee Agreement is hereby incorporated herein by reference.
SECTION 2. The New Subsidiary Guarantor represents and
warrants to the Administrative Agent and the Lenders that this Supplement has
been duly authorized, executed and delivered by it and constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms.
SECTION 3. This Supplement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Supplement shall become effective when
the Administrative Agent shall have received counterparts of this Supplement
that, when taken together, bear the signatures of the New Subsidiary Guarantor
and the Administrative Agent. Delivery of an executed signature page to this
Supplement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the
Guarantee Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and in the Guarantee Agreement
<PAGE>
3
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision hereof in a particular jurisdiction
shall not in and of itself affect the validity of such provision in any other
jurisdiction). The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be
in writing and given as provided in Section 3.07 of the Guarantee Agreement. All
communications and notices hereunder to the New Subsidiary Guarantor shall be
given to it at the address set forth under its signature below, with a copy to
the Borrower.
SECTION 8. The New Subsidiary Guarantor agrees to reimburse
the Administrative Agent for its out-of-pocket expenses in connection with this
Supplement, including the fees, disbursements and other charges of counsel for
the Administrative Agent.
IN WITNESS WHEREOF, the New Subsidiary Guarantor and the
Administrative Agent have duly executed this Supplement to the Guarantee
Agreement as of the day and year first above written.
[Name Of New Subsidiary
Guarantor],
by
--------------------------
Name:
Title:
Address:
------------------
------------------
[ ],
as Administrative Agent,
by
--------------------------
Name:
Title:
<PAGE>
EXHIBIT C
INDEMNITY, SUBROGATION and CONTRIBUTION
AGREEMENT dated as of October [ ], 1998, among
WINSTAR COMMUNICATIONS, INC., a Delaware corporation
(the "Parent"), WINSTAR NETWORK EXPANSION, LLC, a
Delaware limited liability company (the "Borrower"),
each Subsidiary of the Parent listed on Schedule I
hereto (the "Subsidiary Guarantors" and, together
with the Parent, the "Guarantors") and LUCENT
TECHNOLOGIES INC. ("Lucent"), as Administrative Agent
(in such capacity, the "Administrative Agent") for
the Lenders (as defined below).
Reference is made to (a) the Credit Agreement dated as of
October 21, 1998 (as amended or modified from time to time, the "Credit
Agreement"), among the Parent, the Borrower, the lenders from time to time party
thereto (the "Lenders"), State Street Bank and Trust Company, as Collateral
Agent for the Lenders and the Administrative Agent and (b) the Guarantee
Agreement referred to in the Credit Agreement. Capitalized terms used herein and
not defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrower pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. The Guarantors have guaranteed such Loans and the other Obligations
(such term when used herein to have the meaning assigned thereto in the
Guarantee Agreement) pursuant to the Guarantee Agreement. The obligations of the
Lenders to make Loans are conditioned on, among other things, the execution and
delivery by the Borrower and the Guarantors of an agreement in the form hereof.
Accordingly, the Borrower, each Guarantor and the
Administrative Agent agree as follows:
SECTION 1. Indemnity and Subrogation. In addi tion to all such
rights of indemnity and subrogation as the Subsidiary Guarantors may have under
applicable law (but subject to Section 3), the Parent and the Borrower agree
that in the event a payment in respect of any Obligation of the Borrower shall
be made by any Subsidiary Guarantor under the Guarantee Agreement, the Parent
and the Borrower shall indemnify such Subsidiary Guarantor for the full amount
of such payment and such Subsidiary Guarantor shall be subrogated to the rights
of the Person to whom such payment shall have been made to the extent of such
payment.
<PAGE>
2
SECTION 2. Contribution and Subrogation. Each Subsidiary
Guarantor (a "Contributing Guarantor") agrees (subject to Section 3) that, in
the event a payment shall be made by any other Subsidiary Guarantor under the
Guarantee Agreement and such other Subsidiary Guarantor (the "Claiming
Guarantor") shall not have been fully indemnified by the Parent and the
Borrower, the Contributing Guarantor shall indemnify the Claiming Guarantor in
an amount equal to the amount of such payment multiplied by a fraction the
numerator of which shall be the net worth of the Contributing Guarantor on the
date hereof and the denominator of which shall be the aggregate net worth of all
the Subsidiary Guarantors on the date hereof (or, in the case of any Subsidiary
Guarantor becoming a party hereto after the date hereof, the date such
Subsidiary Guarantor so becomes a party hereto). Any Contributing Guarantor
making any payment to a Claiming Guarantor pursuant to this Section 2 shall be
subrogated to the rights of such Claiming Guarantor under Section 1 to the
extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of
this Agreement to the contrary, all rights of the Subsidiary Guarantors under
Sections 1 and 2 and all other rights of indemnity, contribution or subrogation
under applicable law or otherwise shall be fully subordinated, to the extent and
on the terms set forth in the Guarantee Agreement, to the indefeasible payment
in full in cash of the Obligations. No failure on the part of the Borrower or
any Guarantor to make the payments required by Sections 1 and 2 (or any other
payments required under applicable law or otherwise) shall in any respect limit
the obligations and liabilities of any Guarantor with respect to its obligations
hereunder, and each Guarantor shall remain liable for the full amount of the
obligations of such Guarantor hereunder.
SECTION 4. Termination. This Agreement shall survive and be in
full force and effect so long as any Obligation is outstanding and has not been
indefeasibly paid in full in cash, and so long as any of the Commitments under
the Credit Agreement remain in effect, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by any Lender or any
Guarantor upon the bankruptcy or reorganization of the Bor rower, any Guarantor
or otherwise.
SECTION 5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
3
SECTION 6. No Waiver; Amendment. (a) No failure on the part of
the Administrative Agent or any Guarantor to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy by the Administrative Agent or any Guarantor preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law. None of the Administrative Agent and the Guarantors
shall be deemed to have waived any rights hereunder unless such waiver shall be
in writing and signed by such parties.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Borrower, the Guarantors and the Administrative Agent, with the
prior written consent of the Required Lenders, except as otherwise provided in
the Credit Agreement.
SECTION 7. Notices. All communications and notices hereunder
shall be in writing and given as provided in the Guarantee Agreement and
addressed as specified therein.
SECTION 8. Binding Agreement; Assignments. When ever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the parties that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. Neither the Bor rower nor any Guarantor may assign or
transfer any of its rights or obligations hereunder (and any such attempted
assignment or transfer shall be void) without the prior written consent of the
Required Lenders. Notwithstanding the foregoing, at the time any Guarantor is
released from its obligations under the Guarantee Agreement in accordance with
such Guarantee Agreement and the Credit Agreement, such Guarantor will cease to
have any rights or obligations under this Agreement.
SECTION 9. Survival of Agreement; Severability. (a) All
covenants and agreements made by the Borrower and each Guarantor herein and in
the certificates or other instruments prepared or delivered in connection with
this Agreement or the other Loan Agreements shall be considered to have been
relied upon by the Administrative Agent, the Lenders and each Guarantor and
shall survive the making by the Lenders of the Loans and shall continue in full
force
<PAGE>
4
and effect as long as the principal of or any accrued interest on any Loans or
any other fee or amount payable under the Credit Agreement or this Agreement or
under any of the other Loan Documents is outstanding and unpaid and as long as
the Commitments have not been terminated.
(b) In case any one or more of the provisions contained in
this Agreement should be held invalid, illegal or unenforceable in any respect,
no party hereto shall be required to comply with such provision for so long as
such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remain ing provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 10. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement shall be effective with
respect to any Guarantor when a counterpart bearing the signature of such
Guarantor shall have been delivered to the Administrative Agent.
SECTION 11. Rules of Interpretation. The rules of
interpretation specified in Section 1.03 of the Credit Agreement shall be
applicable to this Agreement.
SECTION 12. Additional Guarantors. Pursuant to the Credit
Agreement, any additional Guarantor Subsidiary that is formed or acquired (or
results from a Subsidiary that was not previously a Guarantor Subsidiary
becoming a Guarantor Subsidiary) after the date hereof is required to enter into
this Agreement as a Subsidiary Guarantor upon becoming a Guarantor Subsidiary.
Upon execution and delivery, after the date hereof, by the Administrative Agent
and such a Guarantor Subsidiary of an instrument in the form of Annex 1 hereto,
such Guarantor Subsidiary shall become a Subsidiary Guarantor hereunder with the
same force and effect as if originally named as a Subsidiary Guarantor
hereunder. The execution and delivery of any instrument adding an additional
Subsidiary Guarantor as a party to this Agreement shall not require the consent
of any Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Guarantor as a party to this Agreement.
<PAGE>
5
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of the date first
appearing above.
WINSTAR NETWORK EXPANSION, LLC,
by ---------------------------
Name:
Title:
WINSTAR COMMUNICATIONS, INC.,
by ---------------------------
Name:
Title:
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I HERETO,
by ---------------------------
Name:
Title:
LUCENT TECHNOLOGIES INC.,
as Administrative Agent,
by ---------------------------
Name:
Title:
<PAGE>
SCHEDULE I
to the Indemnity Subrogation
and Contribution Agreement
SUBSIDIARIES
WinStar Wireless, Inc.
WinStar Federal Services, LLC
WinStar LANSystems Acquisition, LLC
WinStar Midcom Acquisition Corp.
WinStar Media Connection, Inc.
The Internet Connection, Inc.
Macro Computer Solutions, Inc.
Commercial Information and Order Express (CIOE) Corporation, Inc.
WinStar Gateway Network, Inc.
WinStar Milliwave, Inc.
WinStar Wireless Fiber Corp.
WinStar LMDS, LLC
WinPinn Corp.
Pinnacle Nine Communications LLC
Pinnacle Seven Communications, Inc.
WinStar Locate, Inc.
WinStar Wireless Fiber Acquisition Corp.
WinStar Switch Acquisition Corp.
WinStar LHC1, LLC
WinStar GoodNet, Inc.
<PAGE>
ANNEX 1 TO
THE INDEMNITY, SUBROGATION AND
CONTRIBUTION AGREEMENT
SUPPLEMENT NO. dated as of ,
to the Indemnity, Subrogation and Contribution
Agreement dated as of October [ ], 1998 (as the same
may be amended or modified from time to time, the
"Indemnity, Subrogation and Contribution Agreement"),
among WINSTAR NETWORK EXPANSION, LLC, a Delaware
limited liability company (the "Borrower"), WINSTAR
COMMUNICATIONS, INC., a Delaware corporation (the
"Parent"), certain subsidiaries of the Parent (the
"Subsidiary Guarantors" and, together with the
Parent, the "Guarantors"), and LUCENT TECHNOLOGIES
INC. ("Lucent"), as Administrative Agent (the
"Administrative Agent") for the Lenders (as defined
below).
A. Reference is made to (a) the Credit Agreement dated as of
October 21, 1998 (as amended or modified from time to time, the "Credit
Agreement"), among the Parent, the Borrower, the lenders from time to time party
thereto (the "Lenders"), State Street Bank and Trust Company, as Collateral
Agent for the Lenders and the Administrative Agent, and (b) the Indemnity,
Subrogation and Contribution Agreement.
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Indemnity,
Subrogation and Contribution Agreement and the Credit Agreement.
C. The Borrower and the Guarantors have entered into the
Indemnity, Subrogation and Contribution Agreement in order to induce the Lenders
to make Loans. Pursuant to the Credit Agreement, any additional Guarantor
Subsidiary that is formed or acquired (or results from a Subsidiary that was not
previously a Guarantor Subsidiary becoming a Guarantor Subsidiary) after the
date of the Indemnity, Subrogation and Contribution Agreement is required to
enter into the Indemnity, Subrogation and Contribution Agreement as a Subsidiary
Guarantor upon becoming a Guarantor Subsidiary. Section 12 of the Indemnity,
Subrogation and Contribution Agreement provides that additional Guarantor
Subsidiaries may become Subsidiary Guarantors under the Indemnity, Subrogation
and Contribution Agreement by execution and delivery of an instrument in the
form of this Supplement. The undersigned Guarantor Subsidiary (the "New
Guarantor") is executing this Supplement in accordance with the requirements of
the Credit Agreement to become a Subsidiary Guarantor under the Indemnity,
Subrogation and Contribution Agreement in order to
<PAGE>
2
induce the Lenders to make additional Loans and as consideration for Loans
previously made.
Accordingly, the Administrative Agent and the New Guarantor
agree as follows:
SECTION 1. In accordance with Section 12 of the Indemnity,
Subrogation and Contribution Agreement, the New Guarantor by its signature below
becomes a Subsidiary Guarantor under the Indemnity, Subrogation and Contribution
Agreement with the same force and effect as if originally named therein as a
Subsidiary Guarantor and the New Guarantor hereby agrees to all the terms and
provisions of the Indemnity, Subrogation and Contribution Agreement applicable
to it as a Subsidiary Guarantor thereunder. Each reference to a "Subsidiary
Guarantor" in the Indemnity, Subrogation and Contribution Agreement shall be
deemed to include the New Guarantor. The Indemnity, Subrogation and Contribution
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the
Administrative Agent and the Lenders that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Administrative
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Guarantor and the Administrative Agent.
SECTION 4. Except as expressly supplemented hereby, the
Indemnity, Subrogation and Contribution Agreement shall remain in full force and
effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provi sions
contained in this Supplement should be held invalid, illegal or unenforceable in
any respect, neither party hereto shall be required to comply with such
provision for so long as such provision is held to be invalid, illegal or
unenforce able, but the validity, legality and enforceability of the remaining
provisions contained herein and in the Indemnity, Subrogation and Contribution
Agreement shall not in any way be
<PAGE>
3
affected or impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be
in writing and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it at the address set forth under its signature.
SECTION 8. The New Guarantor agrees to reimburse the
Administrative Agent for its reasonable out-of-pocket expenses in connection
with this Supplement, including the reasonable fees, other charges and
disbursements of counsel for the Administrative Agent.
IN WITNESS WHEREOF, the New Guarantor and the Administrative
Agent have duly executed this Supplement to the Indemnity, Subrogation and
Contribution Agreement as of the day and year first above written.
[Name Of New Guarantor],
by ----------------------
Name:
Title:
Address:
LUCENT TECHNOLOGIES INC.,
as Administrative Agent,
by ----------------------
Name:
Title:
<PAGE>
EXHIBIT D
PERFECTION CERTIFICATE
Reference is made to (a) the Credit Agreement dated as of
October 21, 1998 (as amended or modified from time to time, the "Credit
Agreement"), among WinStar Network Expansion, LLC, a Delaware limited liability
company (the "Borrower"), WinStar Communications, Inc., a Delaware corporation
(the "Parent"), the lenders party thereto (the "Lenders"), State Street Bank and
Trust Company, as collateral agent (in such capacity, the "Collateral Agent"),
and Lucent Technologies Inc., as administrative agent (in such capacity, the
"Administrative Agent"), and (b) the Security Agreement dated as of [ ], 1998
(as amended or modified from time to time, the "Security Agreement") between the
Borrower and the Collateral Agent. Capitalized terms used herein without
definition have the meanings assigned to them in the Credit Agreement and the
Security Agreement.
The undersigned, a Financial Officer of the [Borrower]
[Parent], hereby certifies to the Administrative Agent, the Collateral Agent and
each Lender as follows:
1. Names. (a) The exact company name of the Borrower, as
such name appears in its certificate of formation, is WinStar Network Expansion,
LLC.
(b) Set forth below is each other company name the Borrower
has had since its formation, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, the Borrower has
not changed its identity or company structure in any way within the past five
years. Changes in identity or company structure would include mergers,
consolidations and acquisitions, as well as any change in the form, nature or
jurisdiction of Company organization. If any such change has occurred, include
in Schedule 1 the information required by Sections 1 and 2 of this certificate
as to each acquiree or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including
trade names or similar appellations) used by the Borrower or any of its
divisions or other business units in connection with the conduct of its business
or the ownership of its properties at any time during the past five years:
<PAGE>
2
(e) The Federal Taxpayer Identification Number of the
Borrower is [ ].
2. Current Locations. (a) The chief executive office of the
Borrower is located at the following address:
Mailing Address County State
--------------- ------ -----
(b) The following are all the places of business of the
Borrower not identified above:
Mailing Address County State
--------------- ------ -----
(c) The following are the names and addresses of all Persons
other than the Borrower which have possession of any of the Collateral:
Name Mailing Address County State
- ---- --------------- ------ -----
(d) The following are all the locations where the
Borrower maintains any Collateral not identified above:
Name Mailing Address County State
- ---- --------------- ------ -----
3. File Search Reports. Attached hereto as Schedule 3(A) are true copies of file
search reports from the Uniform Commercial Code filing offices where filings
described in Schedule 5 are to be made. Attached hereto as Schedule 3(B) is a
true copy of each financing statement or other filings identified in such file
search reports.
<PAGE>
3
4. UCC Filings. Duly signed financing statements on Form UCC-1
in substantially the form of Schedule 4 hereto have been duly filed or delivered
to the Collateral Agent for filing in the Uniform Commercial Code filing offices
in each jurisdiction where the Borrower has Collateral as identified in Section
2 hereof.
5. Schedule of Filings. Attached hereto as Schedule 5 is a
schedule setting forth, with respect to the filings described in Section 4
above, each filing and the filing office in which such filing is to be made.
6. Filing Fees. All filing fees and taxes payable in
connection with the filings described in Section 4 above have been paid or
provided for.
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate this [ ] day of [ ], [ ].
----------------------------
[Financial Officer]
<PAGE>
EXHIBIT E
SECURITY AGREEMENT dated as of October [ ],
1998, between WINSTAR NETWORK EXPANSION, LLC, a
Delaware limited liability company (the "Borrower"),
and STATE STREET BANK AND TRUST COMPANY, as
collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties, as defined herein.
Reference is made to the Credit Agreement dated as of October
21, 1998 (as amended or modified from time to time, the "Credit Agreement"),
among the Borrower, WinStar Communications, Inc., the lenders party thereto (the
"Lenders"), the Collateral Agent and Lucent Technologies Inc., as Administrative
Agent (in such capacity, the "Administrative Agent"). The Lenders have agreed to
extend credit to the Borrower pursuant to, and subject to the terms and
conditions specified in, the Credit Agreement. The obligations of the Lenders to
extend credit under the Credit Agreement are conditioned upon, among other
things, the execution and delivery by the Borrower of a security agreement in
the form hereof to secure (a) the due and punctual payment by the Borrower of
(i) the principal of and interest on the Loans (including Deferred Interest and
accrued interest thereon), when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, and (ii)
all other monetary obligations of the Borrower to the Secured Parties under the
Credit Agreement and the other Loan Documents, and (b) the due and punctual
performance of all other obligations of the Borrower to the Secured Parties
under the Credit Agreement and the other Loan Documents (all the foregoing
obligations being collectively called the "Obligations").
Accordingly, the Borrower and the Collateral Agent hereby
agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Terms Defined in the Credit Agreement. Terms
used herein and not otherwise defined herein shall have the meanings set forth
in the Credit Agreement.
<PAGE>
2
SECTION 1.02. Definition of Certain Terms Used Herein. As
used herein, the following terms shall have the following meanings:
"Collateral" shall mean (i) the Network and (ii) all Proceeds.
"Credit Agreement" shall have the meaning assigned to such
term in the preliminary statement of this Agreement.
"Equipment" shall mean the following, to the extent that all
or any part of the purchase price thereof is financed by Loans under the Credit
Agreement: (i) all equipment, furniture and furnishings, (ii) all tangible
personal property similar to any of the foregoing, including tools, parts and
supplies of every kind and description, (iii) all improvements, accessions or
appurtenances thereto. The term Equipment shall include Fixtures, and (iv) all
Products (as defined in the Supply Agreement).
"Fixtures" shall mean all items of Equipment, whether now
owned or hereafter acquired, of the Borrower that become so related to
particular real estate that an interest in them arises under any real estate law
applicable thereto.
"General Intangibles" shall mean the following, to the extent
acquired by the Borrower pursuant to the Supply Agreement in connection with the
purchase of Equipment: (i) all choses in action and causes of action and (ii)
all other assignable intangible personal property of the Borrower of every kind
and nature now owned or hereafter acquired by the Borrower, including the
Borrower's rights under the Supply Agreement and all intellectual property
acquired by or granted to the Borrower pursuant to the Supply Agreement.
"Network" shall mean any and all Equipment and General
Intangibles, but excluding General Intangibles to the extent that an assignment
thereof would violate a restriction on assignment contained therein.
"Obligations" shall have the meaning assigned to such term in
the preliminary statement of this Agreement.
"Proceeds" shall mean any consideration received from the
sale, exchange, license, lease or other disposition
<PAGE>
3
of any asset which constitutes Collateral, including any payment received from
any insurer or other Person as a result of the destruction, loss, theft, damage
or other involuntary conversion of whatever nature of any asset which
constitutes Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the
Administrative Agent and the Collateral Agent, in their capacities as such under
each Loan Document and (c) the successors and assigns of the foregoing.
"Security Interest" shall have the meaning assigned to such
term in Section 2.01.
"Supply Agreement" shall mean the Supply Agreement dated
October 21, 1998 between Lucent Technologies Inc. and the Parent.
SECTION 1.03. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment
or performance, as the case may be, in full of the Obligations, the Borrower
hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, its successors and assigns,
for the benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the benefit of the Secured Parties, a
security interest in, all of the Borrower's right, title and interest in, to and
under the Collateral (the "Security Interest"). Without limiting the foregoing,
the Collateral Agent is hereby authorized to file one or more financing
statements (including fixture filings), continuation statements or other
documents for the purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest granted by the Borrower without the signature
of the Borrower, and naming the Borrower as debtor and the Collateral Agent as
secured party.
<PAGE>
4
SECTION 2.02. No Assumption of Liability. The Security
Interest is granted as security only and shall not subject the Collateral Agent
or any other Secured Party to, or in any way alter or modify, any obligation or
liability of the Borrower with respect to or arising out of any of the
Collateral.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Collateral Agent
and the Secured Parties that:
SECTION 3.01. Title and Authority. The Borrower has good and
valid rights in and title to the Collateral and has full power and authority to
grant to the Collateral Agent the Security Interest in the Collateral pursuant
hereto and to execute, deliver and perform its obligations in accordance with
the terms of this Agreement, without the consent or approval of any other Person
other than any consent or approval which has been obtained.
SECTION 3.02. Filings. The Perfection Certificate has been
duly prepared, completed and executed and the information set forth therein is
correct and com plete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been filed of record in each governmental, municipal or other office
specified in Schedule 5 to the Perfection Certificate, which are all the
filings, recordings and registrations that are necessary to publish notice of
and protect the validity of and to establish a legal, valid and perfected
security interest in favor of the Collateral Agent (for the benefit of the
Secured Parties) in respect of all Collateral in which the Security Interest may
be perfected by filing, recording or registration in the United States (or any
political subdivision thereof) and its territories and possessions, and no
further or subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements.
<PAGE>
5
SECTION 3.03. Validity of Security Interest. The Security
Interest constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations and (b) a
perfected security interest in all Collateral in which a security interest may
be perfected by filing, recording or registering a financing statement or
analogous document in the United States (or any political subdivision thereof)
and its territories and possessions pursuant to the Uniform Commercial Code or
other applicable law in such jurisdictions. The Security Interest is and shall
be prior to any other Lien on any of the Collateral, except for Liens expressly
permitted by the Credit Agreement that are prior to the Security Interest as a
matter of law.
SECTION 3.04. Absence of Other Liens. The Collateral is owned
by the Borrower free and clear of any Lien, except for Permitted Encumbrances
described in clauses (a) and (b) of the definition of "Permitted Encumbrances"
and the Security Interest. The Borrower has not filed or consented to the filing
of any financing statement or analogous document under the Uniform Commercial
Code or any other applicable laws covering any Collateral.
ARTICLE IV
Covenants
SECTION 4.01. Collateral Schedules. (a) Promptly following the
delivery of each Borrowing Request under the Credit Agreement, the Borrower will
deliver to the Collateral Agent (i) copies of all invoices paid or financed, in
whole or in part, with the Loans resulting from such Borrowing Request, together
with such other information as shall be necessary to identify each item of
Collateral financed thereby and (ii) a schedule indicating the Equipment User or
Users that will lease such Collateral and the location or locations of such
Collateral.
(b) From time to time (but not less frequently than
quarterly), the Borrower will deliver to the Collateral Agent (i) supplements to
and corrections of the schedules and other information theretofore delivered to
the Collateral Agent sufficient to enable the Collateral Agent to identify each
item of Collateral, the jurisdiction in which it is located and the Equipment
User that is leasing
<PAGE>
6
such Collateral and (ii) copies of all Equipment User Agreements and leases and
subleases under which any Collateral is leased (to the extent not previously
delivered to the Collateral Agent).
SECTION 4.02. Protection of Security. The Borrower shall, at
its own cost and expense, take any and all actions necessary to defend title to
the Collateral against all Persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien.
SECTION 4.03. Further Assurances. The Borrower agrees, at
its own expense, to execute, acknowledge, deliver and cause to be duly filed all
such further instruments and documents and take all such actions as the
Collateral Agent or any of the Lenders may from time to time reasonably request
to better assure, preserve, protect and perfect the Security Interest and the
rights and remedies created hereby, including the payment of any fees and taxes
required in connection with the execution and delivery of this Agree ment, the
granting of the Security Interest and the filing of any financing statements
(including fixture filings) or other documents in connection herewith or
therewith.
SECTION 4.04. Inspection and Verification. The Collateral
Agent and such Persons as the Collateral Agent may reasonably designate shall
have the right, on reasonable advance notice at the Borrower's own cost and
expense, to inspect the Collateral, all records related thereto (and to make
extracts and copies from such records) and the premises upon which any of the
Collateral is located, to discuss the Borrower's affairs with the officers of
the Borrower and its independent accountants and to verify under reasonable
procedures the validity, amount, quality, quantity, value, condition and status
of, or any other matter relating to, the Collateral, including, in the case of
Collateral in the possession of any third Person, by contacting the third Person
possessing such Collateral for the purpose of making such a verification.
Subject to the provisions of Section 9.12 of the Credit Agreement, the
Collateral Agent shall have the absolute right to share any information it gains
from such inspection or verification with any Secured Party and their agents and
representatives.
SECTION 4.05. Taxes; Encumbrances. At its option, the
Collateral Agent may discharge past due taxes,
<PAGE>
7
assessments, charges, fees, liens, security interests or other encumbrances at
any time levied or placed on the Collateral and not permitted under the Loan
Documents and may pay for the maintenance and preservation of the Collat eral to
the extent the Borrower fails to do so as required by the Credit Agreement or
this Agreement, and the Borrower agrees to reimburse the Collateral Agent on
demand for any payment made or any expense incurred by the Collateral Agent
pursuant to the foregoing authorization; provided, however, that nothing in this
Section 4.05 shall be interpreted as excusing the Borrower from the performance
of, or imposing any obligation on the Collateral Agent or any Secured Party to
cure or perform, any covenants or other promises of the Borrower with respect to
taxes, assessments, charges, fees, liens, security interests or other
encumbrances and maintenance as set forth herein or in the Credit Agreement.
SECTION 4.06. Continuing Obligations of the Borrower. The
Borrower shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement or
instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and the Borrower agrees to indemnify and hold harmless the
Collateral Agent and the Secured Parties from and against any and all liability
for such performance.
SECTION 4.07. Use and Disposition of Collateral. The Borrower
shall not make or permit to be made an assign ment, pledge or hypothecation of
the Collateral or grant any other Lien in respect of the Collateral. The
Borrower shall not make or permit to be made any transfer of the Collateral and
shall remain at all times in possession of the Collateral, except that unless
and until the Collateral Agent shall notify the Borrower that an Event of
Default shall have occurred and be continuing and that during the continuance
thereof the Borrower shall not sell, convey, lease, assign, transfer or
otherwise dispose of any Collateral (which notice may be given by telephone if
promptly confirmed in writing), the Borrower may use and dispose of the
Collateral in any lawful manner not inconsistent with the provisions of this
Agreement or the Credit Agreement.
SECTION 4.08. Insurance and Related Matters. (a) The
Borrower, at its own expense, shall maintain or cause to be maintained insurance
covering physical loss or damage to
<PAGE>
8
the Collateral in accordance with the provisions of the Credit Agreement.
(b) The Borrower irrevocably makes, constitutes and appoints
the Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as the Borrower's true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of the Borrower on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
the Borrower at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of the Borrower hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Collateral Agent
deems advisable. All sums disbursed by the Collateral Agent in connection with
this Section 4.08, including reasonable attorneys' fees, court costs, expenses
and other charges relating thereto, shall be payable, upon demand, by the
Borrower to the Collateral Agent.
(c) In the event of any casualty or other damage to, or any
taking under power of eminent domain or by condemnation or similar proceedings
of, any property or asset constituting Collateral, then any and all Net Proceeds
from such event shall be deposited with the Collateral Agent. Subject to the
provisions of the Credit Agreement requiring that such Net Proceeds be applied
to prepay Loans in the event of a Collateral Trigger Event, the Collateral Agent
will hold such Net Proceeds and, provided that the Borrower elects to repair,
restore or replace the affected property or asset in accordance with the
definition of the term "Collateral Trigger Event" set forth in the Credit
Agreement, the Collateral Agent will release such Net Proceeds from time to time
to pay the costs of such repair, restoration or replacement; provided that (i)
such repair, restoration or replacement shall comply with the requirements set
forth in such definition of "Collateral Trigger Event" and (ii) as a condition
of any release of funds, the Collateral Agent may require delivery of evidence
<PAGE>
9
reasonably satisfactory to it of compliance with such requirements. The
Collateral Agent shall invest any portion of the funds held by it from time to
time pursuant to this paragraph as directed in writing from time to time by the
Borrower. Any such investment shall be made only in Permitted Investments, shall
be at the Borrower's risk and the earnings thereon shall be credited to the
funds then held by the Collateral Agent hereunder for the Borrower's account.
The Collateral Agent shall not be liable for any interest on uninvested funds.
If any Event of Default occurs and is continuing, the Collateral Agent may, in
its discretion, apply any funds then held by it hereunder as provided in Section
6.02.
(d) In the event that the Collateral Agent, as loss payee,
receives the Net Proceeds of any casualty or other damage to any property or
asset of the Borrower not constituting Collateral, the Collateral Agent shall
deliver such Net Proceeds to the Borrower.
ARTICLE V
Power of Attorney
SECTION 5.01. Power of Attorney. The Collateral Agent shall
have the right, as the true and lawful agent and attorney-in-fact of the
Borrower, with power of substitution for the Borrower and in the Borrower's name
or otherwise, for the use and benefit of the Collateral Agent and the Secured
Parties, upon the occurrence and during the continuance of an Event of Default
(a) to receive, endorse, assign and/or deliver any and all notes, acceptances,
checks, drafts, money orders or other evidences of payment relating to the
Collateral or any part thereof; (b) to demand, collect, receive payment of, give
receipt for and give discharges and releases of all or any of the Collateral;
(c) to commence and prosecute any and all suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect or otherwise
realize on all or any of the Collateral or to enforce any rights in respect of
any Collateral; (d) to settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to all or any of the Collateral; and (e)
to use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to
<PAGE>
10
carry out the purposes of this Agreement, as fully and completely as though the
Collateral Agent were the absolute owner of the Collateral for all purposes;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent or any Secured Party to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment received
by the Collateral Agent or any Secured Party, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken or omitted to be taken by the Collateral Agent or
any Secured Party with respect to the Collateral or any part thereof shall give
rise to any defense, counterclaim or offset in favor of the Borrower or to any
claim or action against the Collateral Agent or any Secured Party. It is
understood and agreed that the appointment of the Collateral Agent as the agent
and attorney-in-fact of the Borrower for the purposes set forth above is coupled
with an interest and is irrevocable. The provisions of this Section shall in no
event relieve the Borrower of any of its obligations hereunder or under the
Credit Agreement with respect to the Collateral or any part thereof or impose
any obligation on the Collateral Agent or any Secured Party to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Collateral Agent or any Secured Party of any other
or further right which it may have on the date of this Agreement or hereafter,
whether hereunder, under any other Loan Document, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default, the Borrower agrees to deliver
each item of Collateral to the Collateral Agent on demand, and it is agreed that
the Collateral Agent shall have the right with or without legal process and with
or without previous notice or demand for performance, to take possession of the
Col lateral or any part thereof (at the same or different times) and without
liability for trespass to enter any premises where the Collateral or any part
thereof may be located for the purpose of taking possession of or removing the
<PAGE>
11
Collateral and, generally, to exercise any and all rights afforded to a secured
party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, the Borrower agrees that the
Collateral Agent shall have the right, subject to the manda tory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale for cash, upon credit or for future
delivery as the Collateral Agent shall deem appropriate. Upon consum mation of
any such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of the Borrower, and the Borrower hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which the Borrower now has or may at any time in the future have under any rule
of law or statute now exist ing or hereafter enacted.
The Collateral Agent shall give the Borrower 10 days' written
notice (which the Borrower agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale. Any such public sale shall
be held at such time or times within ordinary business hours and at such place
or places as the Collateral Agent may fix and state in the notice of such public
sale. At any such sale, the Collateral, or portion thereof, to be sold may be
sold in one lot as an entirety or in separate parcels, as the Collateral Agent
may (in its sole and absolute discretion) determine. The Collateral Agent shall
not be obligated to make any sale of any Collateral if it shall determine not to
do so, regardless of the fact that notice of sale of such Collateral shall have
been given. The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
<PAGE>
12
thereof, but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by law, private) sale made
pursuant to this Section, any Secured Party may bid for or purchase, free (to
the extent permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of the Borrower (all said rights being also hereby waived
and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any Obligation
then due and payable to such Secured Party from the Borrower as a credit against
the purchase price and such Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to the Borrower therefor. For purposes hereof, a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and the Borrower shall be entitled to the return of the Collateral or any
portion thereof subject thereto, notwith standing the fact that after the
Collateral Agent shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Collateral Agent may
proceed by a suit or suits at law or in equity to foreclose this Agreement and
to sell the Collateral or any portion thereof pursuant to a judgment or decree
of a court or courts having competent jurisdiction or pursuant to a proceeding
by a court-appointed receiver.
SECTION 6.02. Application of Proceeds. The Collateral Agent
shall apply the proceeds of any collection or sale of the Collateral, as well as
any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent or the Collateral Agent (in its capacity as
such hereunder or under any other Loan Document) in connection with
such collection or sale or otherwise in connection with this Agreement
or any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent or the Administrative Agent hereunder
<PAGE>
13
or under any other Loan Document on behalf of the Borrower and any
other costs or expenses incurred in connection with the exercise of any
right or remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Borrower, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices
hereunder shall (except as otherwise expressly permitted herein) be in writing
and given as provided in Section 9.01 of the Credit Agreement.
SECTION 7.02. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the Security Interest and all obligations of the
Borrower hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
<PAGE>
14
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement or any other Loan Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower in respect of the
Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Borrower herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Secured Parties and shall survive the making by the
Lenders of the Loans, regardless of any investigation made by the Secured
Parties or on their behalf, and shall continue in full force and effect until
this Agreement shall terminate.
SECTION 7.04. Binding Effect. This Agreement shall become
effective when a counterpart hereof executed on behalf of the Borrower shall
have been delivered to the Collateral Agent and a counterpart hereof shall have
been executed on behalf of the Collateral Agent, and thereafter shall be binding
upon the Borrower and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of the Borrower, the Collateral Agent
and the other Secured Parties and their respective successors and assigns,
except that the Borrower shall not have the right to assign or transfer its
rights or obligations hereunder or any interest herein or in the Collateral (and
any such assignment or transfer shall be void) except as expressly contemplated
by this Agreement or the Credit Agreement.
SECTION 7.05. Successors and Assigns. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower or the Collateral Agent
that are contained in this Agreement shall bind and inure to the benefit of
their respective successors and assigns.
<PAGE>
15
SECTION 7.06. Collateral Agent Appointed Attorney-in-Fact. The
Borrower hereby appoints the Collateral Agent the attorney-in-fact of the
Borrower for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument which the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest.
SECTION 7.07. Collateral Agent's Fees and Expenses;
Indemnification. (a) The Borrower agrees to pay upon demand to the Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts or agents, which the
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from
or other realization upon any of the Collateral, (iii) the exercise, enforcement
or protection of any of the rights of the Collateral Agent hereunder or (iv) the
failure of the Borrower to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations
under the other Loan Documents, the Borrower agrees to indemnify the Collateral
Agent and the other Indemnitees against, and hold each of them harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees and expenses incurred by or asserted against any of them
arising out of, in any way connected with, or as a result of, the execution,
delivery or performance of this Agreement or any claim, litigation,
investigation or proceeding relating hereto or to the Collateral, whether or not
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) The provisions of this Section 7.07 shall remain operative
and in full force and effect regardless of the termination of this Agreement or
any other Loan Document, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans or Deferred Interest, the invalidity
or unenforceability of any term or provision of this Agreement or any other Loan
Document, or
<PAGE>
16
any investigation made by or on behalf of the Collateral Agent or any Secured
Party. All amounts due under this Section 7.07 shall be payable on written
demand therefor.
SECTION 7.08. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.09. Waivers; Amendment. (a) No failure or delay of
the Collateral Agent in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent, the Administrative Agent and the Secured Parties
under the other Loan Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provisions
of this Agreement or any other Loan Document or consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except in accordance with Section 9.02 of the Credit
Agreement.
SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY,
<PAGE>
17
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10.
SECTION 7.11. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7.12 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective as provided in Section 7.04.
SECTION 7.13 Headings. Article and Section headings used
herein are for convenience of reference only, are not part of this Agreement and
are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 7.14. Jurisdiction; Consent to Service of Process. (a)
The Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent or any Secured Party may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan
<PAGE>
18
Documents against the Borrower or its properties in the courts of any
jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State court or Federal court sitting in New York
City. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 7.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 7.15. Termination. This Agreement and the Security
Interest shall terminate when all the Obligations have been indefeasibly paid in
full and the Lenders have no further commitment to lend under the Credit
Agreement, at which time the Collateral Agent shall execute and deliver to the
Borrower, at the Borrower's expense, all Uniform Commercial Code termination
statements and similar documents which the Borrower shall reasonably request to
evidence such termination and release of the Security
<PAGE>
19
Interest. Any execution and delivery of termination statements or documents
pursuant to this Section 7.15 shall be without recourse to or warranty by the
Collateral Agent.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
WINSTAR NETWORK
EXPANSION, LLC,
by ------------------------
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY, as
Collateral Agent,
by -------------------------
Name:
Title:
<PAGE>
EXHIBIT F
EQUIPMENT USER AGREEMENT dated as of [ ],
among WINSTAR NETWORK EXPANSION, LLC, a Delaware
limited liability company (the "Equipment Owner"), [
] (the "Equipment User"), LUCENT TECHNOLOGIES INC.,
as administrative agent (the "Administrative Agent")
for the Lenders (as defined below), and STATE STREET
BANK AND TRUST COMPANY, as collateral agent (the
"Collateral Agent") for the Lenders.
Reference is made to (a) the Credit Agreement dated as of
October 21, 1998 (as amended or modified from time to time, the "Credit
Agreement") among WinStar Communications, Inc., the Equipment Owner, the lenders
from time to time party thereto (the "Lenders"), the Collateral Agent and the
Administrative Agent and (b) the Security Agreement dated as of [ ], 1998 (as
amended or modified from time to time, the "Security Agreement") between the
Equipment Owner and the Collateral Agent.
The Equipment User has entered into, and may from time to time
in the future enter into, one or more leases, sub-leases or other arrangements
(collectively, the "Leases") with [the Equipment Owner] [ ] granting to the
Equipment User the right to possess or use certain equipment and other assets.
All or a portion of such equipment and other assets (the "Equipment") is owned
by the Equipment Owner and has been financed pursuant to the Credit Agreement
and is subject to a security interest (the "Security Interest") in favor of the
Collateral Agent under the Security Agreement. It is a condition of the
availability of the Equipment to the Equipment User that the Equipment User
enter into an agreement in the form hereof to acknowledge the ownership of the
Equipment by the Equipment Owner, and the Security Interest therein pursuant to
the Security Agreement, and to confirm certain rights and remedies in respect of
the Equipment as set forth herein.
<PAGE>
2
Accordingly, the parties hereto agree as follows:
ARTICLE I
Rights in Equipment
SECTION 1.01. Acknowledgment of Interest. The Equipment User
acknowledges and agrees that (a) the Equipment Owner is the owner of the
Equipment, (b) the Equipment is subject to the Security Interest granted under
the Security Agreement and (c) the Leases do not grant to the Equipment User any
ownership rights in the Equipment.
SECTION 1.02. Subject and Subordinate. The Equipment User
acknowledges and agrees that its rights and interests in and to the Equipment
are subject and subordinate in all respects to the Security Interest and the
rights and interests of the Collateral Agent under the Security Agreement.
SECTION 1.03. Use and Disposition of Equipment. The Equipment
User shall not make or permit to be made an assignment, pledge or hypothecation
of the Equipment or grant any other lien or encumbrance in respect of the
Equipment. The Equipment User shall not make or permit to be made any transfer
of the Equipment and shall remain at all times in possession of the Equipment,
except (a) to return the Equipment to the Equipment Owner [and (b) the Equipment
User may sub-lease the Equipment to the extent permitted by and in accordance
with Section 6.17 of the Credit Agreement (and the Equipment User acknowledges
receipt of a copy of the Credit Agreement)]1.
SECTION 1.04. No Right of Set-off, Counterclaim, Etc. The
Equipment User acknowledges and agrees that it does not have and in no event
will assert, as against the Administrative Agent, the Collateral Agent or any
Lender, any lien, right of distraint or levy, right of set-off, claim,
deduction, counterclaim, security or other interest in any of the Equipment or
in the proceeds thereof, including any of the foregoing which might arise or
- --------
1 Clause (b) of Section 1.03, Section 1.05 and paragraph (b) of Section 1.06
are to be included only for agreements with Affiliated Equipment Users.
<PAGE>
3
exist in the Equipment User's favor pursuant to any agreement, common law,
statute or otherwise.
[SECTION 1.05. Uniform Commercial Code Filings. The Equipment
User agrees to execute and deliver such Uniform Commercial Code financing
statements or other appropriate filings, recordings or registrations, including
all refilings, rerecordings and reregistrations, containing a description of the
Equipment as the Collateral Agent or the Administrative Agent may request from
time to time in order to protect the ownership interest of the Equipment Owner
in the Equipment or the perfection of the Security Interest.]1
SECTION 1.06. Information Regarding Equipment. (a) The
Equipment User agrees to maintain records of the location of each item of
Equipment and to provide copies of such records to the Collateral Agent or the
Administrative Agent promptly following any request therefor.
[(b) The Equipment User will furnish to the Collateral Agent
prompt written notice of any change (i) in the Equipment User's corporate name
or in any trade name used to identify it in the conduct of its business or in
the ownership of its properties, (ii) in the location of the Equipment User's
chief executive office or its principal place of business, (iii) the
jurisdiction in which any Equipment is located to any other jurisdiction (other
than a jurisdiction in which filings have been made as contemplated by Section
1.05 above), (iv) in the Equipment User's identity or corporate structure or (v)
in the Equipment User's Federal Taxpayer Identification Number. The Equipment
User agrees not to effect or permit any change referred to in the preceding
sentence until notice thereof has been given and all filings requested pursuant
to Section 1.05 above have been made. The Equipment User also agrees promptly to
notify the Collateral Agent if any material portion of the Equipment is damaged
or destroyed.]1
SECTION 1.07. Inspection and Verification. Each of the
Collateral Agent and the Administrative Agent and such persons as the Collateral
Agent or the Administrative Agent may reasonably designate shall have the right
to inspect the Equipment, all records related thereto (and to make extracts and
copies from such records) and the premises upon which any of the Equipment is
located. Each of the Collateral Agent and the Administrative Agent shall have
the
<PAGE>
4
absolute right to share any information it gains from any such inspection or
verification with any Lender and their agents and representatives.
SECTION 1.08. Maintenance of Equipment. The Equipment User
will keep and maintain all Equipment in good working order and condition,
ordinary wear and tear excepted.
SECTION 1.09. Remedies. The Equipment User acknowledges and
agrees that the Collateral Agent may terminate the Equipment User's rights and
interests in and to the Equipment upon the occurrence and during the continuance
of an Event of Default (as defined in the Credit Agreement). Upon the occurrence
and during the continuance of an Event of Default, the Equipment User agrees to
deliver each item of the Equipment to the Collateral Agent on demand, and it is
agreed that the Collateral Agent shall have the right with or without legal
process and with or without previous notice, to take possession of the Equipment
or any part thereof (at the same or different times) and without liability for
trespass to enter any premises where the Equipment or any part thereof may be
located for the purpose of taking possession of or removing the Equipment and,
generally, to exercise any and all rights afforded to a secured party under the
Uniform Commercial Code or other applicable law. Without limiting the generality
of the foregoing, the Equipment User agrees that the Collateral Agent shall have
the right to sell or otherwise dispose of all or any part of the Equipment, at
public or private sale for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. Upon consummation of any such sale the
Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Equipment so sold. Each such purchaser at
any such sale shall hold the property sold absolutely, free from any claim or
right on the part of the Equipment User, and the Equipment User hereby waives
all rights with respect to the Equipment which the Equipment User now has or may
at any time in the future have under any rule of law or statute now existing or
hereafter enacted.
<PAGE>
5
ARTICLE II
Miscellaneous
SECTION 2.01. Notices. All notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:
(a) if to the Equipment Owner, to it at 230 Park Avenue, Suite
2700, New York, New York 10169, Attention of [ ] (Telecopy No.
(212) [ ], ;
(b) if to the Collateral Agent, to it at Two
International Place, Boston, Massachusetts 02110,
Attention of Corporate Trust Division (Telecopy No.
(617) 664-5371;
(c) if to the Administrative Agent, to it at 283
King George Road, Warren, New Jersey 07059, Attention
of Assistant Treasurer-Project Finance (Telecopy No.
(908) 559-1711); and
(d) if to the Equipment User, to it at [ ]
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 2.02. Assignments. The Equipment User shall not have
the right to assign or transfer its rights or obligations hereunder or any
interest herein or in the Equipment (and any such assignment or transfer shall
be void).
SECTION 2.03. Successors and Assigns. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the parties hereto that are
<PAGE>
6
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
SECTION 2.04. GOVERNING LAW. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.
SECTION 2.05. Waivers; Amendment. (a) No failure or delay of
the Collateral Agent in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
are cumulative and are not exclusive of any rights or remedies that it would
otherwise have. No waiver of any provisions of this Agreement or consent to any
departure by the Equipment User therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on the Equipment User in any case shall
entitle the Equipment User to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
among the parties hereto.
SECTION 2.06. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 2.06.
SECTION 2.07. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining
<PAGE>
7
provisions contained herein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 2.08 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract.
SECTION 2.09 Headings. Article and Section headings used
herein are for convenience of reference only, are not part of this Agreement and
are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 2.10. Jurisdiction; Consent to Service of Process. (a)
Each of the Equipment Owner and the Equipment User hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(b) Each of the Equipment Owner and the Equipment User hereby
irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement in any New York State court or Federal court sitting in New York
City. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
<PAGE>
8
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 2.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
WINSTAR NETWORK EXPANSION,
LLC,
by
----------------------
Name:
Title:
[EQUIPMENT USER],
by
----------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Collateral Agent,
by
----------------------
Name:
Title:
LUCENT TECHNOLOGIES INC., as
Administrative Agent,
by
----------------------
Name:
Title:
<PAGE>
SECURITY AGREEMENT dated as of December 4,
1998, between WINSTAR NETWORK EXPANSION, LLC, a
Delaware limited liability company (the "Borrower"),
and STATE STREET BANK AND TRUST COMPANY, as
collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties, as defined herein.
Reference is made to the Credit Agreement dated as of October
21, 1998 (as amended or modified from time to time, the "Credit Agreement"),
among the Borrower, WinStar Communications, Inc., the lenders party thereto
(the "Lenders"), the Collateral Agent and Lucent Technologies Inc., as
Administrative Agent (in such capacity, the "Administrative Agent"). The
Lenders have agreed to extend credit to the Borrower pursuant to, and subject
to the terms and conditions specified in, the Credit Agreement. The obligations
of the Lenders to extend credit under the Credit Agreement are conditioned
upon, among other things, the execution and delivery by the Borrower of a
security agreement in the form hereof to secure (a) the due and punctual
payment by the Borrower of (i) the principal of and interest on the Loans
(including Deferred Interest and accrued interest thereon), when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, and (ii) all other monetary obligations of the Borrower to the
Secured Parties under the Credit Agreement and the other Loan Documents, and
(b) the due and punctual performance of all other obligations of the Borrower
to the Secured Parties under the Credit Agreement and the other Loan Documents
(all the foregoing obligations being collectively called the "Obligations").
Accordingly, the Borrower and the Collateral Agent hereby
agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Terms Defined in the Credit Agreement. Terms
used herein and not otherwise defined herein shall have the meanings set forth
in the Credit Agreement.
<PAGE>
2
SECTION 1.02. Definition of Certain Terms Used Herein. As
used herein, the following terms shall have the following meanings:
"Collateral" shall mean (i) the Network and (ii) all Proceeds.
"Credit Agreement" shall have the meaning assigned to such
term in the preliminary statement of this Agreement.
"Equipment" shall mean the following, to the extent that all
or any part of the purchase price thereof is financed by Loans under the Credit
Agreement: (i) all equipment, furniture and furnishings, (ii) all tangible
personal property similar to any of the foregoing, including tools, parts and
supplies of every kind and description, (iii) all improvements, accessions or
appurtenances thereto. The term Equipment shall include Fixtures, and (iv) all
Products (as defined in the Supply Agreement).
"Fixtures" shall mean all items of Equipment, whether now
owned or hereafter acquired, of the Borrower that become so related to
particular real estate that an interest in them arises under any real estate
law applicable thereto.
"General Intangibles" shall mean the following, to the extent
acquired by the Borrower pursuant to the Supply Agreement in connection with
the purchase of Equipment: (i) all choses in action and causes of action and
(ii) all other assignable intangible personal property of the Borrower of every
kind and nature now owned or hereafter acquired by the Borrower, including the
Borrower's rights under the Supply Agreement and all intellectual property
acquired by or granted to the Borrower pursuant to the Supply Agreement.
"Network" shall mean any and all Equipment and General
Intangibles, but excluding General Intangibles to the extent that an assignment
thereof would violate a
restriction on assignment contained therein.
"Obligations" shall have the meaning assigned to such term in
the preliminary statement of this Agreement.
"Proceeds" shall mean any consideration received from the
sale, exchange, license, lease or other disposition
<PAGE>
3
of any asset which constitutes Collateral, including any payment received from
any insurer or other Person as a result of the destruction, loss, theft, damage
or other involuntary conversion of whatever nature of any asset which
constitutes Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the
Administrative Agent and the Collateral Agent, in their capacities as such
under each Loan Document and (c) the successors and assigns of the foregoing.
"Security Interest" shall have the meaning
assigned to such term in Section 2.01.
"Supply Agreement" shall mean the Supply Agreement
dated October 21, 1998 between Lucent Technologies Inc. and
the Parent.
SECTION 1.03. Rules of Interpretation. The rules
of interpretation specified in Section 1.02 of the Credit
Agreement shall be applicable to this Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment
or performance, as the case may be, in full of the Obligations, the Borrower
hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, its successors and assigns,
for the benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the benefit of the Secured Parties, a
security interest in, all of the Borrower's right, title and interest in, to
and under the Collateral (the "Security Interest"). Without limiting the
foregoing, the Collateral Agent is hereby authorized to file one or more
financing statements (including fixture filings), continuation statements or
other documents for the purpose of perfecting, confirming, continuing,
enforcing or protecting the Security Interest granted by the Borrower without
the signature of the Borrower, and naming the Borrower as debtor and the
Collateral Agent as secured party.
<PAGE>
4
SECTION 2.02. No Assumption of Liability. The Security
Interest is granted as security only and shall not subject the Collateral Agent
or any other Secured Party to, or in any way alter or modify, any obligation or
liability of the Borrower with respect to or arising out of any of the
Collateral.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Collateral Agent
and the Secured Parties that:
SECTION 3.01. Title and Authority. The Borrower has good and
valid rights in and title to the Collateral and has full power and authority to
grant to the Collateral Agent the Security Interest in the Collateral pursuant
hereto and to execute, deliver and perform its obligations in accordance with
the terms of this Agreement, without the consent or approval of any other
Person other than any consent or approval which has been obtained.
SECTION 3.02. Filings. The Perfection Certificate has been
duly prepared, completed and executed and the information set forth therein is
correct and com plete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been filed of record in each governmental, municipal or other office
specified in Schedule 5 to the Perfection Certificate, which are all the
filings, recordings and registrations that are necessary to publish notice of
and protect the validity of and to establish a legal, valid and perfected
security interest in favor of the Collateral Agent (for the benefit of the
Secured Parties) in respect of all Collateral in which the Security Interest
may be perfected by filing, recording or registration in the United States (or
any political subdivision thereof) and its territories and possessions, and no
further or subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements.
<PAGE>
5
SECTION 3.03. Validity of Security Interest. The Security
Interest constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations and (b) a
perfected security interest in all Collateral in which a security interest may
be perfected by filing, recording or registering a financing statement or
analogous document in the United States (or any political subdivision thereof)
and its territories and possessions pursuant to the Uniform Commercial Code or
other applicable law in such jurisdictions. The Security Interest is and shall
be prior to any other Lien on any of the Collateral, except for Liens expressly
permitted by the Credit Agreement that are prior to the Security Interest as a
matter of law.
SECTION 3.04. Absence of Other Liens. The Collateral is owned
by the Borrower free and clear of any Lien, except for Permitted Encumbrances
described in clauses (a) and (b) of the definition of "Permitted Encumbrances"
and the Security Interest. The Borrower has not filed or consented to the
filing of any financing statement or analogous document under the Uniform
Commercial Code or any other applicable laws covering any Collateral.
ARTICLE IV
Covenants
SECTION 4.01. Collateral Schedules. (a) Promptly following
the delivery of each Borrowing Request under the Credit Agreement, the Borrower
will deliver to the Collateral Agent (i) copies of all invoices paid or
financed, in whole or in part, with the Loans resulting from such Borrowing
Request, together with such other information as shall be necessary to identify
each item of Collateral financed thereby and (ii) a schedule indicating the
Equipment User or Users that will lease such Collateral and the location or
locations of such Collateral.
(b) From time to time (but not less frequently than
quarterly), the Borrower will deliver to the Collateral Agent (i) supplements
to and corrections of the schedules and other information theretofore delivered
to the Collateral Agent sufficient to enable the Collateral Agent to identify
each item of Collateral, the jurisdiction in which it is located and the
Equipment User that is leasing
<PAGE>
6
such Collateral and (ii) copies of all Equipment User Agreements and leases and
subleases under which any Collateral is leased (to the extent not previously
delivered to the Collateral Agent).
SECTION 4.02. Protection of Security. The Borrower shall, at
its own cost and expense, take any and all actions necessary to defend title to
the Collateral against all Persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien.
SECTION 4.03. Further Assurances. The Borrower agrees, at
its own expense, to execute, acknowledge, deliver and cause to be duly filed all
such further instruments and documents and take all such actions as the
Collateral Agent or any of the Lenders may from time to time reasonably
request to better assure, preserve, protect and perfect the Security Interest
and the rights and remedies created hereby, including the payment of any fees
and taxes required in connection with the execution and delivery of this Agree
ment, the granting of the Security Interest and the filing of any financing
statements (including fixture filings) or other documents in connection herewith
or therewith.
SECTION 4.04. Inspection and Verification. The Collateral
Agent and such Persons as the Collateral Agent may reasonably designate shall
have the right, on reasonable advance notice at the Borrower's own cost and
expense, to inspect the Collateral, all records related thereto (and to make
extracts and copies from such records) and the premises upon which any of the
Collateral is located, to discuss the Borrower's affairs with the officers of
the Borrower and its independent accountants and to verify under reasonable
procedures the validity, amount, quality, quantity, value, condition and status
of, or any other matter relating to, the Collateral, including, in the case of
Collateral in the possession of any third Person, by contacting the third Person
possessing such Collateral for the purpose of making such a verification.
Subject to the provisions of Section 9.12 of the Credit Agreement, the
Collateral Agent shall have the absolute right to share any information it gains
from such inspection or verification with any Secured Party and their agents and
representatives.
SECTION 4.05. Taxes; Encumbrances. At its option, the
Collateral Agent may discharge past due taxes,
<PAGE>
7
assessments, charges, fees, liens, security interests or other encumbrances at
any time levied or placed on the Collateral and not permitted under the Loan
Documents and may pay for the maintenance and preservation of the Collat eral to
the extent the Borrower fails to do so as required by the Credit Agreement or
this Agreement, and the Borrower agrees to reimburse the Collateral Agent on
demand for any payment made or any expense incurred by the Collateral Agent
pursuant to the foregoing authorization; provided, however, that nothing in this
Section 4.05 shall be interpreted as excusing the Borrower from the performance
of, or imposing any obligation on the Collateral Agent or any Secured Party to
cure or perform, any covenants or other promises of the Borrower with respect to
taxes, assessments, charges, fees, liens, security interests or other
encumbrances and maintenance as set forth herein or in the Credit Agreement.
SECTION 4.06. Continuing Obligations of the Borrower. The
Borrower shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement or
instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and the Borrower agrees to indemnify and hold harmless the
Collateral Agent and the Secured Parties from and against any and all liability
for such performance.
SECTION 4.07. Use and Disposition of Collateral. The Borrower
shall not make or permit to be made an assign ment, pledge or hypothecation of
the Collateral or grant any other Lien in respect of the Collateral. The
Borrower shall not make or permit to be made any transfer of the Collateral and
shall remain at all times in possession of the Collateral, except that unless
and until the Collateral Agent shall notify the Borrower that an Event of
Default shall have occurred and be continuing and that during the continuance
thereof the Borrower shall not sell, convey, lease, assign, transfer or
otherwise dispose of any Collateral (which notice may be given by telephone if
promptly confirmed in writing), the Borrower may use and dispose of the
Collateral in any lawful manner not inconsistent with the provisions of this
Agreement or the Credit Agreement.
SECTION 4.08. Insurance and Related Matters. (a) The
Borrower, at its own expense, shall maintain or cause to be maintained insurance
covering physical loss or damage to
<PAGE>
8
the Collateral in accordance with the provisions of the Credit Agreement.
(b) The Borrower irrevocably makes, constitutes and appoints
the Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as the Borrower's true and lawful agent (and
attorney-in-fact) for the purpose, during the continuance of an Event of
Default, of making, settling and adjusting claims in respect of Collateral
under policies of insurance, endorsing the name of the Borrower on any check,
draft, instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect thereto.
In the event that the Borrower at any time or times shall fail to obtain or
maintain any of the policies of insurance required hereby or to pay any premium
in whole or part relating thereto, the Collateral Agent may, without waiving or
releasing any obligation or liability of the Borrower hereunder or any Event of
Default, in its sole discretion, obtain and maintain such policies of insurance
and pay such premium and take any other actions with respect thereto as the
Collateral Agent deems advisable. All sums disbursed by the Collateral Agent in
connection with this Section 4.08, including reasonable attorneys' fees, court
costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the Borrower to the Collateral Agent.
(c) In the event of any casualty or other damage to, or any
taking under power of eminent domain or by condemnation or similar proceedings
of, any property or asset constituting Collateral, then any and all Net
Proceeds from such event shall be deposited with the Collateral Agent. Subject
to the provisions of the Credit Agreement requiring that such Net Proceeds be
applied to prepay Loans in the event of a Collateral Trigger Event, the
Collateral Agent will hold such Net Proceeds and, provided that the Borrower
elects to repair, restore or replace the affected property or asset in
accordance with the definition of the term "Collateral Trigger Event" set forth
in the Credit Agreement, the Collateral Agent will release such Net Proceeds
from time to time to pay the costs of such repair, restoration or replacement;
provided that (i) such repair, restoration or replacement shall comply with the
requirements set forth in such definition of "Collateral Trigger Event" and
(ii) as a condition of any release of funds, the Collateral Agent may require
delivery of evidence
<PAGE>
9
reasonably satisfactory to it of compliance with such requirements. The
Collateral Agent shall invest any portion of the funds held by it from time to
time pursuant to this paragraph as directed in writing from time to time by the
Borrower. Any such investment shall be made only in Permitted Investments, shall
be at the Borrower's risk and the earnings thereon shall be credited to the
funds then held by the Collateral Agent hereunder for the Borrower's account.
The Collateral Agent shall not be liable for any interest on uninvested funds.
If any Event of Default occurs and is continuing, the Collateral Agent may, in
its discretion, apply any funds then held by it hereunder as provided in Section
6.02.
(d) In the event that the Collateral Agent, as loss payee,
receives the Net Proceeds of any casualty or other damage to any property or
asset of the Borrower not constituting Collateral, the Collateral Agent shall
deliver such Net Proceeds to the Borrower.
ARTICLE V
Power of Attorney
SECTION 5.01. Power of Attorney. The Collateral Agent
shall have the right, as the true and lawful agent and attorney-in-fact of the
Borrower, with power of substitution for the Borrower and in the Borrower's name
or otherwise, for the use and benefit of the Collateral Agent and the Secured
Parties, upon the occurrence and during the continuance of an Event of Default
(a) to receive, endorse, assign and/or deliver any and all notes, acceptances,
checks, drafts, money orders or other evidences of payment relating to the
Collateral or any part thereof; (b) to demand, collect, receive payment of, give
receipt for and give discharges and releases of all or any of the Collateral;
(c) to commence and prosecute any and all suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect or otherwise
realize on all or any of the Collateral or to enforce any rights in respect of
any Collateral; (d) to settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to all or any of the Collateral; and (e)
to use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to
<PAGE>
10
carry out the purposes of this Agreement, as fully and completely as though the
Collateral Agent were the absolute owner of the Collateral for all purposes;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent or any Secured Party to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment received
by the Collateral Agent or any Secured Party, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken or omitted to be taken by the Collateral Agent or
any Secured Party with respect to the Collateral or any part thereof shall give
rise to any defense, counterclaim or offset in favor of the Borrower or to any
claim or action against the Collateral Agent or any Secured Party. It is
understood and agreed that the appointment of the Collateral Agent as the agent
and attorney-in-fact of the Borrower for the purposes set forth above is coupled
with an interest and is irrevocable. The provisions of this Section shall in no
event relieve the Borrower of any of its obligations hereunder or under the
Credit Agreement with respect to the Collateral or any part thereof or impose
any obligation on the Collateral Agent or any Secured Party to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Collateral Agent or any Secured Party of any other
or further right which it may have on the date of this Agreement or hereafter,
whether hereunder, under any other Loan Document, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default, the Borrower agrees to deliver
each item of Collateral to the Collateral Agent on demand, and it is agreed
that the Collateral Agent shall have the right with or without legal process
and with or without previous notice or demand for performance, to take
possession of the Col lateral or any part thereof (at the same or different
times) and without liability for trespass to enter any premises where the
Collateral or any part thereof may be located for the purpose of taking
possession of or removing the
<PAGE>
11
Collateral and, generally, to exercise any and all rights afforded to a secured
party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, the Borrower agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale for cash, upon credit or for future
delivery as the Collateral Agent shall deem appropriate. Upon consum mation of
any such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of the Borrower, and the Borrower hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which the Borrower now has or may at any time in the future have under any rule
of law or statute now exist ing or hereafter enacted.
The Collateral Agent shall give the Borrower 10 days' written
notice (which the Borrower agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of
New York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale. Any such public sale shall
be held at such time or times within ordinary business hours and at such place
or places as the Collateral Agent may fix and state in the notice of such
public sale. At any such sale, the Collateral, or portion thereof, to be sold
may be sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may (in its sole and absolute discretion) determine. The Collateral Agent
shall not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Collateral Agent until the sale price is paid by the
purchaser or purchasers
<PAGE>
12
thereof, but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by law, private) sale made
pursuant to this Section, any Secured Party may bid for or purchase, free (to
the extent permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of the Borrower (all said rights being also hereby waived
and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any Obligation
then due and payable to such Secured Party from the Borrower as a credit against
the purchase price and such Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to the Borrower therefor. For purposes hereof, a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and the Borrower shall be entitled to the return of the Collateral or any
portion thereof subject thereto, notwith standing the fact that after the
Collateral Agent shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Collateral Agent may
proceed by a suit or suits at law or in equity to foreclose this Agreement and
to sell the Collateral or any portion thereof pursuant to a judgment or decree
of a court or courts having competent jurisdiction or pursuant to a proceeding
by a court-appointed receiver.
SECTION 6.02. Application of Proceeds. The Collateral
Agent shall apply the proceeds of any collection or sale of the Collateral, as
well as any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent or the Collateral Agent (in its capacity as
such hereunder or under any other Loan Document) in connection with
such collection or sale or otherwise in connection with this Agreement
or any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent or the Administrative Agent hereunder
<PAGE>
13
or under any other Loan Document on behalf of the Borrower and any
other costs or expenses incurred in connection with the exercise of any
right or remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the
amounts so applied to be distributed among the Secured Parties pro
rata in accordance with the amounts of the Obligations owed to them on
the date of any such distribution); and
THIRD, to the Borrower, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be
a sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices
hereunder shall (except as otherwise expressly permitted herein) be in writing
and given as provided in Section 9.01 of the Credit Agreement.
SECTION 7.02. Security Interest Absolute. All rights of
the Collateral Agent hereunder, the Security Interest and all obligations of the
Borrower hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
<PAGE>
14
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement or any other Loan Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower in respect of the
Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Borrower herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Secured Parties and shall survive the making by
the Lenders of the Loans, regardless of any investigation made by the Secured
Parties or on their behalf, and shall continue in full force and effect until
this Agreement shall terminate.
SECTION 7.04. Binding Effect. This Agreement shall become
effective when a counterpart hereof executed on behalf of the Borrower shall
have been delivered to the Collateral Agent and a counterpart hereof shall have
been executed on behalf of the Collateral Agent, and thereafter shall be
binding upon the Borrower and the Collateral Agent and their respective
successors and assigns, and shall inure to the benefit of the Borrower, the
Collateral Agent and the other Secured Parties and their respective successors
and assigns, except that the Borrower shall not have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement.
SECTION 7.05. Successors and Assigns. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower or the Collateral Agent
that are contained in this Agreement shall bind and inure to the benefit of
their respective successors and assigns.
<PAGE>
15
SECTION 7.06. Collateral Agent Appointed Attorney-in-Fact.
The Borrower hereby appoints the Collateral Agent the attorney-in-fact of the
Borrower for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument which the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest.
SECTION 7.07. Collateral Agent's Fees and Expenses;
Indemnification. (a) The Borrower agrees to pay upon demand to the Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts or agents, which the
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from
or other realization upon any of the Collateral, (iii) the exercise,
enforcement or protection of any of the rights of the Collateral Agent
hereunder or (iv) the failure of the Borrower to perform or observe any of the
provisions hereof.
(b) Without limitation of its indemnification obligations
under the other Loan Documents, the Borrower agrees to indemnify the Collateral
Agent and the other Indemnitees against, and hold each of them harmless from,
any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees and expenses incurred by or asserted against
any of them arising out of, in any way connected with, or as a result of, the
execution, delivery or performance of this Agreement or any claim, litigation,
investigation or proceeding relating hereto or to the Collateral, whether or
not any Indemnitee is a party thereto; provided that such indemnity shall not,
as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee.
(c) The provisions of this Section 7.07 shall remain
operative and in full force and effect regardless of the termination of this
Agreement or any other Loan Document, the consummation of the transactions
contemplated hereby, the repayment of any of the Loans or Deferred Interest,
the invalidity or unenforceability of any term or provision of this Agreement
or any other Loan Document, or
<PAGE>
16
any investigation made by or on behalf of the Collateral Agent or any Secured
Party. All amounts due under this Section 7.07 shall be payable on written
demand therefor.
SECTION 7.08. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.09. Waivers; Amendment. (a) No failure or delay of
the Collateral Agent in exercising any power or right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent, the Administrative Agent and the Secured Parties
under the other Loan Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provisions
of this Agreement or any other Loan Document or consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except in accordance with Section 9.02 of the
Credit Agreement.
SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY,
<PAGE>
17
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10.
SECTION 7.11. Severability. In the event any one or more
of the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7.12 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective as provided in Section 7.04.
SECTION 7.13 Headings. Article and Section headings used
herein are for convenience of reference only, are not part of this Agreement
and are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 7.14. Jurisdiction; Consent to Service of Process.
(a) The Borrower hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that
the Collateral Agent or any Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan
<PAGE>
18
Documents against the Borrower or its properties in the courts of any
jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or the
other Loan Documents in any New York State court or Federal court sitting in
New York City. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 7.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 7.15. Termination. This Agreement and the Security
Interest shall terminate when all the Obligations have been indefeasibly paid
in full and the Lenders have no further commitment to lend under the Credit
Agreement, at which time the Collateral Agent shall execute and deliver to the
Borrower, at the Borrower's expense, all Uniform Commercial Code termination
statements and similar documents which the Borrower shall reasonably request to
evidence such termination and release of the Security
<PAGE>
19
Interest. Any execution and delivery of termination statements or documents
pursuant to this Section 7.15 shall be without recourse to or warranty by the
Collateral Agent.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
WINSTAR NETWORK
EXPANSION, LLC,
by /s/ Timothy R. Graham
------------------------------
Name: Timothy R. Graham
Title: President
STATE STREET BANK AND
TRUST COMPANY, as
Collateral Agent,
by /s/ Patrick E. Thebado
-------------------------------
Name: Patrick E. Thebado
Title: Assistant Vice President
<PAGE>
GUARANTEE AND SUBORDINATION AGREEMENT dated
as of December 4, 1998, among WINSTAR NETWORK
EXPANSION, LLC, a Delaware limited liability company
(the "Borrower"), WINSTAR COMMUNICATIONS, INC., a
Delaware corporation (the "Parent"), each of the
subsidiaries of the Parent listed on Schedule I
hereto (each such subsidiary individually, a
"Subsidiary Guarantor" and collectively, the
"Subsidiary Guarantors"; the Subsidiary Guarantors
and the Parent being referred to individually as a
"Guarantor" and collectively as the "Guarantors"),
and LUCENT TECHNOLOGIES INC. ("Lucent"), as
administrative agent (the "Administrative Agent")
for the Lenders (as defined below).
Reference is made to the Credit Agreement dated as of October
21, 1998 (as amended or modified from time to time, the "Credit Agreement"),
among the Parent, the Borrower, the lenders from time to time party thereto
(the "Lenders"), State Street Bank and Trust Company, as collateral agent (the
"Collateral Agent") and the Administrative Agent. Capitalized terms used herein
and not defined herein shall have the meanings assigned to such terms in the
Credit Agreement
The Lenders have agreed to make Loans to the Borrower
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Parent has elected that the Guarantors guarantee the
Obligations (as defined below) by entering into this Agreement. The Borrower is
a wholly-owned subsidiary of the Parent and each of the Subsidiary Guarantors
is a Subsidiary of the Parent. Each of the Guarantors acknowledges that it will
derive substantial benefit from the making of the Loans by the Lenders. The
obligations of the Lenders to make Loans are conditioned on, among other
things, the execution and delivery by the Borrower and the Guarantors of a
Guarantee and Subordination Agreement in the form hereof. As consideration
therefor and in order to induce the Lenders to make Loans, the Borrower and the
Guarantors are willing to execute this Agreement.
<PAGE>
2
Accordingly, the parties hereto agree as follows:
ARTICLE I
Guarantee
SECTION 1.01. Guarantee. Each Guarantor unconditionally
guarantees, jointly with the other Guarantors and severally, as a primary
obligor and not merely as a surety, (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise and (ii)
all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receiver ship or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Borrower under the Credit
Agreement and the other Loan Documents and (b) the due and punctual performance
of all covenants, agreements, obligations and liabilities of the Borrower under
or pursuant to the Credit Agreement and the other Loan Documents (all the
monetary and other obligations referred to in the preceding clauses (a) and (b)
being collectively called the "Obligations"). Each Guarantor further agrees
that the Obligations may be extended or renewed, in whole or in part, without
notice to or further assent from it, and that it will remain bound upon its
guarantee notwithstanding any extension or renewal of any Obligation.
SECTION 1.02. Obligations Not Waived. To the fullest extent
permitted by applicable law, each Guarantor waives presentment to, demand of
payment from and protest to the Borrower or any other Loan Party of any of the
Obligations, and also waives notice of acceptance of its guarantee and notice
of protest for nonpayment. To the fullest extent permitted by applicable law,
the obligations of each Guarantor hereunder shall not be affected by (a) the
failure of the Administrative Agent, the Collateral Agent or any Lender to
assert any claim or demand or to enforce or exercise any right or remedy
against the Borrower or any other Guarantor under the provisions of the Credit
Agreement, any other Loan Document or otherwise, (b) any rescission, waiver,
amendment or modification of, or any release from any of the terms or
provisions of this
<PAGE>
3
Agreement, any other Loan Document, any Guarantee or any other agreement,
including with respect to any other Guarantor under this Agreement or (c) the
failure to perfect any security interest in, or the release of, any of the
security held by or on behalf of the Collateral Agent or any Lender.
SECTION 1.03. Security. Each of the Guarantors authorizes the
Collateral Agent and each of the Lenders to (a) take and hold security given
for the payment of this Guarantee and the Obligations and exchange, enforce,
waive and release any such security, (b) apply such security and direct the
order or manner of sale thereof as they in their sole discretion may determine
and (c) release or substitute any one or more endorsees, other Guarantors of
other obligors.
SECTION 1.04. Guarantee of Payment. Each Guarantor further
agrees that its guarantee constitutes a guarantee of payment when due and not
of collection, and waives any right to require that any resort be had by the
Administrative Agent or any Lender to any of the security held for payment of
the Obligations or to any balance of any deposit account or credit on the books
of the Administrative Agent or any Lender in favor of the Borrower, any other
Loan Party or any other Person.
SECTION 1.05. No Discharge or Diminishment of Guarantee. The
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim
of waiver, release, surrender, alteration or compromise of any of the
Obligations, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Administrative Agent, the Collateral Agent or any Lender to assert any claim or
demand or to enforce any remedy under the Credit Agreement, any other Loan
Document or any other agreement, by any waiver or modification of any provision
of any thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the Obligations, or by any other act or omission that may or
might in any manner or to any extent vary the risk of any Guarantor or that
would otherwise operate as a discharge of each Guarantor as a matter of law
<PAGE>
4
or equity (other than the indefeasible payment in full in cash of all the
Obligations).
SECTION 1.06. Defenses of Borrower Waived. To the fullest
extent permitted by applicable law, each of the Guarantors waives any defense
based on or arising out of the defense of the Borrower or any other Loan Party
or the unenforceability of the Obligations or any part thereof from any cause,
or the cessation from any cause of the liability of the Borrower or any other
Loan Party, other than the final and indefeasible payment in full in cash of the
Obligations. The Collateral Agent and the Lenders may, at their election,
foreclose on any security held by one or more of them by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with the Borrower or any other Loan Party or guarantor or exercise
any other right or remedy available to them against the Borrower or any other
Loan Party or guarantor, without affecting or impairing in any way the liability
of any Guarantor hereunder except to the extent the Obligations have been fully,
finally and indefeasibly paid in cash. To the fullest extent permitted by
applicable law, each of the Guarantors waives any defense arising out of any
such election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Guarantor against the Borrower or any other Guarantor or
guarantor, as the case may be, or any security.
ARTICLE II
Subordination
SECTION 2.01. Subordination. Each Subordinated Creditor
hereby agrees that all the Subordinated Obligations of each Loan Party owed to
such Subordinated Creditor are hereby expressly subordinated, to the extent and
in the manner set forth in this Article II, to the prior payment in full in
cash of all Senior Obligations of such Loan Party in accordance with the terms
thereof.
As used herein:
"Senior Creditors" means each of the Lenders, the
Administration Agent, the Collateral Agent and their respective successors and
assigns.
<PAGE>
5
"Senior Obligations" of any Loan Party means (a) in the case
of the Borrower, the Obligations, and (b) in the case of to any other Loan
Party, all monetary obligations of such Loan Party under the Loan Documents to
which it is a party, including pursuant to this Agreement.
"Subordinated Creditors" means any Guarantor in
its capacity as a creditor of the Borrower or any Subsidiary
Guarantor.
"Subordinated Obligations" of any Loan Party means all
monetary obligations and other liabilities of such Loan Party at any time owing
to any Subordinated Creditor of such Loan Party (including any such obligations
or other liabilities owning to any other Person for the direct or indirect
benefit of any Subordinated Creditor of such Loan Party), including all rights
of such Subordinated Creditors against such Loan Party arising by way of right
of subrogation, contribution, reimbursement, indemnity or otherwise; provided
that the Subordinated Obligations of the Borrower or a Subsidiary Guarantor
shall not include any Indebtedness owed to the Parent to the extent any such
Indebtedness may only be incurred in compliance with any indenture of the
Parent evidencing public Indebtedness of the Parent if such Indebtedness is
evidenced by an unsubordinated promissory note.
SECTION 2.02. Dissolution or Insolvency. Each Subordinated
Creditor agrees that upon any distribution of the assets of any Loan Party or
upon any dissolution, winding up, liquidation or reorganization of any Loan
Party, whether in bankruptcy, insolvency, reorganization, arrangement or
receivership proceedings or otherwise, or upon any assignment for the benefit
of creditors or any other marshaling of the assets and liabilities of any Loan
Party:
(a) the Senior Creditors of such Loan Party shall first be
entitled to receive payment in full in cash of the Senior Obligations of such
Loan Party in accordance with the terms of such Senior Obligations before any
Subordinated Creditor shall be entitled to receive any payment on account of
the Subordinated Obligations of such Loan Party, whether as principal, interest
or otherwise; and
(b) any payment by, or distribution of the assets of, such
Loan Party of any kind or character, whether in cash, property or securities,
received by or on behalf of any Subordinated Creditor shall be held in trust
for the benefit of, and shall be paid over to, the Senior Creditors of any Loan
Party to the extent necessary to make payment in
<PAGE>
6
full in cash of all Senior Obligations of such Loan Party remaining unpaid,
after giving effect to any concurrent payment or distribution to the Senior
Creditors in respect of the Senior Obligations.
SECTION 2.03. Other Creditors. Nothing contained in this
Agreement is intended to or shall impair, as between and among the Loan
Parties, their creditors (other than their Senior Creditors) and the
Subordinated Creditors, the obligations of each Loan Party to pay to the
applicable Subordinated Creditors of such Borrower Company the Subor dinated
Obligations of such Loan Party as and when the same shall become due and
payable in accordance with the terms thereof, or affect the relative rights of
the Subordinated Creditors and the other creditors of such Loan Party (other
than their Senior Creditors).
SECTION 2.04. Proofs of Claims. In the event of any
dissolution, winding up, liquidation or reorganization of any Loan Party,
whether in bankruptcy, insolvency, reorganization, arrangement or receivership
proceedings or otherwise, or any assignment for the benefit of creditors or any
other marshaling of the assets and liabilities of any Loan Party, each
Subordinated Creditor agrees to file proofs of claim for the Subordinated
Obligations owed to it upon demand of the Administrative Agent, in default of
which the Administrative Agent or other authorized representative of the Senior
Creditors is hereby irrevocably authorized so to file in order to effectuate
the provisions hereof. This Section shall not be construed to permit any
Subordinated Creditor to retain any payment received by it in respect of a
Subordinated Obligation that such Subordinated Creditor is not entitled to
retain under any other provision of this Agreement.
SECTION 2.05. No Waiver. No right of any Senior Creditor to
enforce this Agreement shall at any time or in any way be prejudiced or
impaired by any act or failure to act on the part of any of the Administrative
Agent, the other Senior Creditors, or any Loan Party, or by any noncompliance
by any Subordinated Creditor or Loan Party with the terms, provisions and
covenants contained herein, and the Senior Creditors are hereby expressly
authorized to extend, renew, increase, decrease, modify or amend the terms of
the Senior Obligations or any security therefor, and to release, sell or
exchange any such security and otherwise deal freely with the Loan Parties, all
without notice to or consent of any Subordinated Creditor and without affecting
the liabilities and obligations of the parties hereto.
<PAGE>
7
SECTION 2.06. Transfer of Subordinated Obligations. Each
Subordinated Creditor agrees that it will not sell, assign, transfer or
otherwise dispose of all or any part of the Subordinated Obligations owed to it
unless the Person to whom such sale, assignment, transfer or disposition is
made (i) is a Subordinated Creditor hereunder or (ii) shall acknowledge in
writing (delivered to the Agent) that it shall be bound by the terms of this
Agreement, including the terms of this Section 2.06, as though named herein as
a Subordinated Creditor.
SECTION 2.07. Obligations Hereunder Not Affected. (a) All
rights and interests of the Senior Creditors hereunder, and all agreements and
obligations of the Subordinated Creditors hereunder, shall remain in full force
and effect irrespective of:
(i) any lack of validity or enforceability of the credit
Agreement or any other Loan Document;
(ii) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Senior Obligations, or any
other amendment or waiver of or consent to departure from the Credit
Agreement or any other Loan Document (other than this Agreement);
(iii) any exchange, release or nonperfection of any security
interest in any collateral, or any release or amendment or waiver of
or consent to departure from any guarantee, in respect of all or any
of the Senior Obligations; or
(iv) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Borrower Company in
respect of its Senior Obligations or of any Subordinated Creditor in
respect of this Agreement.
(b) Each Subordinated Creditor hereby authorizes the Senior
Creditors, without notice or demand and without affecting or impairing any of
the obligations of such Subordinated Creditor hereunder, from time to time to
(i) renew, compromise, extend, increase, accelerate or otherwise change the
time for payment of, or otherwise change the terms of, the Senior Obligations
or any part thereof and (ii) exercise or refrain from exercising any rights
against any Subordinated Creditor, any Loan Party or any other Person.
<PAGE>
8
ARTICLE III
Miscellaneous
SECTION 3.01. Representations and Warranties. Each of the
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Credit Agreement are true and
correct.
SECTION 3.02. Information. Each of the Guarantors assumes all
responsibility for being and keeping itself informed of the Borrower's and each
other Loan Party's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Obligations and the
nature, scope and extent of the risks that such Guarantor assumes and incurs
hereunder, and agrees that none of the Administrative Agent or the Lenders will
have any duty to advise any of the Guarantors of information known to it or any
of them regarding such circumstances or risks.
SECTION 3.03. Termination of this Agreement and the
Guarantees. This Agreement and the Guarantees made hereunder shall terminate
when all the Obligations have been indefeasibly paid in full and the Lenders
have no further commitment to lend under the Credit Agreement and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by the Administrative Agent or any Lender upon the bankruptcy or
reorganization of the Borrower, any Guarantor or otherwise.
SECTION 3.04. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of each party hereto
that are contained in this Agreement shall bind and inure to the benefit of
each party hereto and their respective successors and assigns. This Agreement
shall become effective as to the Borrower or any Guarantor when a counterpart
hereof executed on behalf of such Party shall have been delivered to the
Administrative Agent, and a counterpart hereof shall have been executed on
behalf of the Administrative Agent, and thereafter shall be binding upon such
Party and the Administrative Agent and their respective successors and assigns,
and shall inure to the benefit of such Party, the Administrative Agent and the
Lenders, and their respective successors and assigns, except that neither the
Borrower nor the Guarantor shall have the right to assign its rights or
obligations hereunder or any interest
<PAGE>
9
herein (and any such attempted assignment shall be void). If all of the capital
stock of a Subsidiary Guarantor is sold, transferred or otherwise disposed of
(other than to a Subsidiary of the Parent) pursuant to a transaction permitted
by the Loan Documents, such Subsidiary Guarantor shall be released from its
obligations under this Agreement without further action. This Agreement shall
be construed as a separate agreement with respect to each Guarantor and may be
amended, modified, supplemented, waived or released with respect to any
Guarantor without the approval of any other Guarantor and without affecting the
obligations of any other Guarantor hereunder.
SECTION 3.05. Waivers; Amendment. (a) No failure or delay of
the Administrative Agent in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent hereunder and of the Collateral Agent and the Lenders
under the other Loan Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision
of this Agreement or consent to any departure by the Borrower or any Guarantor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice or demand
on the Borrower or any Guarantor in any case shall entitle the Borrower or any
such Guarantor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the party hereto with respect to which such waiver, amendment or
modification relates and the Administrative Agent, with the prior written
consent of the Required Lenders as required under the Credit Agreement.
SECTION 3.06. Governing Law. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.
SECTION 3.07. Notices. All communications and notices
hereunder shall be in writing and given as provided in Section 9.01 of the
Credit Agreement. All communications
<PAGE>
10
and notices hereunder to each Subsidiary Guarantor shall be given to it in
care of the Parent.
SECTION 3.08. Survival of Agreement; Severability. (a) All
covenants, agreements, representations and warranties made by the Borrower and
the Guarantors herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the Administrative
Agent and the Lenders and shall survive the making by the Lenders of the Loans
regardless of any investigation made by any Lender or on any Lender's behalf,
and shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any other fee or amount payable under this
Agreement or any other Loan Document is outstanding and unpaid and as long as
the Commitments have not been terminated.
(b) In the event any one or more of the provisions contained
in this Agreement or in any other Loan Document should be held invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 3.09. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective
as provided in Section 4.04. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart of this Agreement.
SECTION 3.10. Rules of Interpretation. The rules of
interpretation specified in Section 1.03 of the Credit Agreement shall be
applicable to this Agreement.
SECTION 3.11. Jurisdiction; Consent to Service of Process.
(a) The Borrower and each Guarantor hereby irrevocably and unconditionally
submit, for itself and its property, to the nonexclusive jurisdiction of any
New York
<PAGE>
11
State court or Federal court of the United States of America sitting in New
York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Administrative Agent, the Collateral
Agent or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against the Borrower,
any Guarantor or its properties in the courts of any jurisdiction.
(b) The Borrower and each Guarantor hereby irrevocably and
unconditionally waive, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 3.07. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 3.12. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 3.12.
<PAGE>
12
SECTION 3.13. Additional Subsidiary Guarantors. Pursuant to
the Credit Agreement, any additional Guarantor Subsidiary that is formed or
acquired (or results from a Subsidiary that was not previously a Subsidiary
becoming a Guarantor Subsidiary) after the date hereof is required to enter
into this Agreement as a Subsidiary Guarantor upon becoming a Guarantor
Subsidiary. Upon execution and delivery after the date hereof by the
Administrative Agent and such a Guarantor Subsidiary of an instrument in the
form of Annex 1, such Guarantor Subsidiary shall become a Subsidiary Guarantor
hereunder with the same force and effect as if originally named as a Subsidiary
Guarantor herein. The execution and delivery of any instrument adding an
additional Subsidiary Guarantor as a party to this Agreement shall not require
the consent of any other Guarantor or Subordinated Creditor hereunder. The
rights and obligations of each Guarantor and Subordinated Creditor hereunder
shall remain in full force and effect notwithstanding the addition of any new
Subsidiary Guarantor as a party to this Agreement.
SECTION 3.14. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other Indebtedness at any time owing by such Lender
to or for the credit or the account of any Guarantor against any or all the
obligations of such Guarantor now or hereafter existing under this Agreement
and the other Loan Documents held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement or any other
Loan Document and although such obligations may be unmatured. The rights of
each Lender under this Section 3.14 are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
WINSTAR NETWORK EXPANSION,
LLC,
by /s/ Timothy R. Graham
------------------------
Name: Timothy R. Graham
Title: President
<PAGE>
13
WINSTAR COMMUNICATIONS, INC.,
by /s/ Timothy R. Graham
-------------------------
Name: Timothy R. Graham
Title: President
EACH OF THE SUBSIDIARY
GUARANTORS LISTED ON
SCHEDULE I HERETO,
by /s/ Kenneth J. Zinghini
--------------------------
Name: Kenneth J. Zinghini
Title: Vice President
LUCENT TECHNOLOGIES INC., as
Administrative Agent,
by /s/ Leslie L. Rogers
--------------------------
Name: Leslie L. Rogers
Title: Managing Director
<PAGE>
SUPPLY AGREEMENT
BY AND BETWEEN
WINSTAR COMMUNICATIONS, INC.
AND
LUCENT TECHNOLOGIES INC.
Effective as of October 21, 1998
<PAGE>
TABLE OF CONTENTS
DEFINITIONS
1.1. Certain Definitions..............................................1
1.2. Other Terms......................................................6
SCOPE AND STRUCTURE
2.1. General..........................................................6
2.2. Other Entities...................................................6
2.3. Strategic Relationship...........................................7
2.4. Existing Agreements..............................................9
2.5. International Aspects............................................9
TERM
3.1. Initial Term and Extension......................................10
3.2. Interim Extension...............................................10
PURCHASING AND ORDERING
4.1. Purchase Orders.................................................10
4.2. Administrative Changes..........................................12
4.3. Timing of Delivery..............................................12
4.4. Cancellation and Rescheduling of Purchase Orders................13
4.5. Termination of Purchase Orders..................................15
SHIPPING AND DELIVERY
5.1. Incorrect Delivery..............................................15
5.2. Purchase Order Tracking.........................................15
5.3. Packing.........................................................16
5.4. Labeling........................................................16
5.5. Calibration and Testing.........................................16
5.6. Shipping........................................................16
5.7. Title and Risk of Loss..........................................17
DELIVERY OF SERVICES
6.1. Transition/Ramp-up of Lucent Service Capabilities...............17
6.2. Use of Third Parties............................................17
6.3. Key Lucent Positions............................................18
6.4. Required Consents...............................................19
6.5. Implementation Plans, Milestones and Milestone Dates............19
ACCEPTANCE TESTING AND FINAL ACCEPTANCE
7.1. Acceptance Testing and Cure.....................................19
7.2. Acceptance......................................................19
PERFORMANCE STANDARDS
8.1. General.........................................................20
8.2. Failure to Perform..............................................20
8.3. Periodic Reviews................................................20
8.4. Measurement and Monitoring Tools................................21
SOFTWARE LICENSES AND PROPRIETARY RIGHTS
9.1. Licenses........................................................21
9.2. Proprietary Rights..............................................22
9.3. Source Code Availability........................................23
WINSTAR RESPONSIBILITIES
10.1. Facilities and Resources........................................24
10.2. Savings Clause..................................................24
- i -
<PAGE>
CHARGES
11.1. General.........................................................24
11.2. Taxes...........................................................25
11.3. Financing.......................................................26
11.4. Incidental Expenses.............................................27
INVOICING AND PAYMENT
12.1. Invoicing.......................................................28
12.2. Payment Due.....................................................29
12.3. Accountability..................................................29
12.4. Proration.......................................................29
12.5. Set Off.........................................................29
12.6. Disputed Charges................................................29
12.7. Encumbrances....................................................29
CONFIDENTIALITY
13.1. Confidential Information........................................30
13.2. Obligations.....................................................30
13.3. Exclusions......................................................30
13.4. No Implied Rights...............................................31
REPRESENTATIONS, WARRANTIES AND COVENANTS
14.1. Pass-Through Warranties.........................................31
14.2. Non-Infringement................................................32
14.3. Ownership or Use................................................32
14.4. Authorization...................................................32
14.5. Inducements.....................................................32
14.6. Work Standards..................................................32
14.7. Product Warranties..............................................33
14.8. Discontinued Lucent Products....................................35
14.9. Compliance......................................................35
14.10. Documentation.................................................35
14.11. Viruses.......................................................35
14.12. Disabling Code................................................35
14.13. Integration Test..............................................36
14.14. Year 2000.....................................................36
14.15. Disclaimer....................................................37
TERMINATION
15.1. Termination for Cause...........................................37
15.2. Termination by Lucent...........................................37
15.3. Termination Option for Lucent's Failure to Provide Financing....38
15.4. Disengagement Assistance........................................38
LIABILITY
16.1. General Intent..................................................38
16.2. Liability Restrictions..........................................38
16.3. Force Majeure...................................................39
INDEMNIFICATION
17.1. Indemnities by Lucent...........................................40
17.2. Indemnities by WinStar..........................................40
17.3. Infringement....................................................41
17.4. Indemnification Procedures......................................41
DISPUTE RESOLUTION
18.1. Informal Dispute Resolution.....................................42
- ii -
<PAGE>
18.2. Litigation......................................................43
18.3. Continued Performance...........................................43
18.4. Governing Law...................................................44
INSURANCE REQUIREMENTS
GENERAL
20.1. Binding Nature and Assignment...................................44
20.2. Entire Agreement................................................45
20.3. Notices.........................................................45
20.4. Counterparts....................................................46
20.5. Relationship of Parties.........................................46
20.6. Severability....................................................46
20.7. Consents and Approval...........................................46
20.8. Waiver of Default...............................................46
20.9. Cumulative Remedies.............................................47
20.10. Survival......................................................47
20.11. Public Disclosures............................................47
20.12. Service Marks.................................................47
20.13. Third Party Beneficiaries.....................................48
20.14. Amendment.....................................................48
20.15. Interpretation................................................48
20.16. Incorporation by Reference and Order of Precedence............49
LIST OF SCHEDULES AND EXHIBITS
Schedule A Statement of Work
Exhibit A-1 Lucent Responsibility Matrix by Technology
Exhibit A-2 International
Exhibit A-3 WinStar/Lucent Market Deployment Responsibility Matrix
Exhibit A-4 Transition Plan
Exhibit A-5 Product Spec Principles
Exhibit A-6
Exhibit A-7 Future Network Diagrams
Schedule B Performance Standards
Schedule C Pricing
Exhibit C-1 Lucent Product Price List
Exhibit C-2 WinStar Product Discounts
Exhibit C-3 Reference Pricing
Exhibit C-4 Switch Pricing
Exhibit C-5 Pricing for Lucent Services
Exhibit C-6 Pricing for Interoperability Testing Lab
Exhibit C-7 Pricing for Optical Networking Technologies
Exhibit C-8 Pricing for International Services
Schedule D Documentation and Specifications
Schedule E Testing and Acceptance
Schedule F Credit Agreement
Schedule G International Consideration
Schedule H Best of Breed
Schedule I Warranty Periods
Schedule J Key Lucent Positions
Schedule K Lucent Indicia Use Guidelines
- iii -
<PAGE>
SUPPLY AGREEMENT
BY AND BETWEEN
WINSTAR COMMUNICATIONS, INC.
AND
LUCENT TECHNOLOGIES INC.
This Supply Agreement (the "Agreement"), effective as of October 21,
1998 (the "Effective Date"), is entered into by and between WINSTAR
COMMUNICATIONS, INC., a Delaware corporation with offices located at 230 Park
Avenue, New York, New York 10169 ("WinStar"), and LUCENT TECHNOLOGIES INC., a
Delaware corporation with offices located at 600 Mountain Avenue, Murray Hill,
New Jersey 07974 ("Lucent"). As used in this Agreement, "Party" means either
WinStar or Lucent, as appropriate, and "Parties" means WinStar and Lucent. The
Parties agree that the following terms and conditions shall apply to the
products and services to be provided by Lucent under this Agreement in
consideration of certain payments to be made by WinStar.
1. DEFINITIONS
1.1. Certain Definitions.
As used in this Agreement:
(a) "Acceptance" has the meaning set forth in Section
1.1.
(b) "Acceptance Criteria" mean the criteria used to
determine whether a Deliverable is ready for
Acceptance, as set forth more fully in Schedule E.
The Acceptance Criteria require, unless otherwise
mutually agreed in writing, that the Deliverable:
(i) Meets or exceeds the Specifications
applicable to such Deliverable, as
well as all applicable warranties;
(ii) Integrates in accordance with the approved
Network design, architecture and
technology;
(iii) Complies with applicable Documentation;
(iv) Complies with Applicable Standards; and
(v) Complies with all additional mutually
agreed-upon testing criteria and plans as
may be developed and agreed upon by the
Parties in accordance with the terms of
this Agreement.
(c) "Acceptance Test Period" for a Deliverable shall
mean the applicable period
Supply Agreement Confidential-WinStar/Lucent
- - 1 -
<PAGE>
specified in Schedule E. In the event an Acceptance
Test Period for a particular Deliverable is not
specified in Schedule E and is not otherwise
mutually agreed upon, the Acceptance Test Period
shall be thirty (30) days from either Lucent
Certification, if installed or implemented by
Lucent, or delivery of the Deliverable, if not
installed or implemented by Lucent.
(d) "Affiliate" means, with respect to any entity, any
other entity Influencing, Influenced by or under
common Influence with such entity.
(e) "Agreement" has the meaning set forth in the
preamble to this Agreement.
(f) "Applicable Standards" means (i) all industry
standards (whether domestic or international)
applicable to the Deliverable, including NEBS (1, 2
and 3), Underwriters Laboratory, EIA/TIA, Bellcore,
ANSI, IEEE, ATM-Forum, NESC, ITU-T and NEC, all as
may be amended from time to time, and (ii) all
domestic and international federal, state and local
laws, regulations, ordinances, codes and
requirements applicable to the Deliverable, all as
may be amended from time to time.
(g) "Best of Breed" shall have the meaning set forth in
Schedule H. Best of Breed analyses shall be used for
all Products and Services to be provided or
implemented as part of the Network design and
architecture.
(h) "City-Specific Plan" means a plan that addresses the
timing (including Milestones), network, cost/budget,
functionality and scope of implementation (addition
or augmentation) for a particular network design.
(i) "Contract Year" shall have the meaning set forth in
Section 11.3(b).
(j) "Credit Agreement" shall refer to that certain
Credit Agreement, dated as of October 21, 1998 among
WinStar Network Expansion LLC, WinStar
Communications, Inc., the Lenders party thereto,
State Street Bank and Trust Company as collateral
agent, and Lucent Technologies Inc. as
administrative agent. A copy of the Credit Agreement
is attached hereto as Schedule F.
(k) "Custom Product" shall mean a Product that requires
engineering to WinStar's specific and unique
requirements.
(l) "Customer Colocation" means the existence of WinStar
customer equipment and associated software and
peripherals interconnected with a WinStar network
and located in WinStar's premises (whether owned,
leased or licensed by WinStar).
(m) "Customer Virtual Colocation" means the existence of
WinStar customer equipment and associated software
and peripherals interconnected with a WinStar
network and not located in WinStar's premises
(whether owned, leased or licensed by WinStar).
Supply Agreement Confidential-WinStar/Lucent
- - 2 -
<PAGE>
(n) "Deliverable" means a Product or an end product of a
Service delivered by Lucent pursuant to this
Agreement and the applicable Schedules.
(o) "Developed Deliverable" has the meaning set forth in
Section 9.2.
(p) "Documentation" has the meaning set forth in Section
9.1(f).
(q) "Effective Date" has the meaning set forth in the
preamble to this Agreement.
(r) "Equipment" means the equipment, hardware, firmware,
cabling and embedded Software components that may be
purchased, or with respect to embedded Software,
licensed by WinStar from or through Lucent under
this Agreement. As of the Effective Date, the
categories of Equipment include the categories
identified as such in Schedule C.
(s) "Extended Warranty Period" has the meaning set
forth in Section (ss).
(t) "Influence" and its derivatives means (i) legal,
beneficial, or equitable ownership, directly or
indirectly, of more than an Interest of outstanding
capital stock (or other ownership interest, if not a
corporation) of an entity ordinarily having voting
rights or (ii) with respect to entities incorporated
or principally operating in the United States,
management or operational control over such entity.
(u) "Interest" means thirty-three and one third percent
(337%) with respect to entities incorporated or
principally operating in the United States, and five
percent (5%) with respect to all other entities.
(v) "Lucent" has the meaning set forth in the preamble
to this Agreement. With respect to the obligation to
fulfill Purchase Orders, "Lucent" shall also include
Lucent's distributors; provided, however, Lucent
shall remain fully responsible for the
performance of such distributors.
(w) "Lucent Certification" shall mean Lucent's written
certification to WinStar that (i) it has fully and
successfully tested the Deliverable in accordance
with the developed test plan (individually and as
integrated into the Network), (ii) the Deliverable
has met the Acceptance Criteria to Lucent's
satisfaction and (iii) the Deliverable is available
for WinStar's testing in accordance with the
applicable test plan.
(x) "Lucent Product" means any product created, sold
through, distributed or branded by Lucent or its
distributors, and shall include those products
identified in this Agreement and otherwise made
commercially available by Lucent or its
distributors.
(y) "Milestone" has the meaning set forth in Section
6.5(a).
Supply Agreement Confidential-WinStar/Lucent
- - 3 -
<PAGE>
(z) "Milestone Date" has the meaning set forth in Section
6.5(a).
(aa) "Network" means the physical, transport and
application network layers of the communication
infrastructure used by WinStar to connect to its
domestic and foreign customers and central offices
in a variety of combinations. The demarcation points
of the Network shall be coincident with the WinStar
customer demarcation points. It is anticipated that
the Network will include domestic intra-city
networks, inter-city networks, international
networks and international intra-city networks.
(bb) "Network Architecture" means the overall design and
architecture specification for the Network,
including sizing and engineering requirements, from
which the Network Technology is developed.
(cc) "Network Element" means any product or transport
service necessary for the proper operation of the
Network, which will be set forth in the Network
Technology.
(dd) "Network Technology" means the Deliverable developed
from the Network Architecture by Lucent for review
and approval by WinStar, all as set forth in
Schedule A, that identifies the Product and
transport specifications for implementation as part
of the City-Specific Plans.
(ee) "Nonconformity" has the meaning set forth in
Schedule E.
(ff) "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.
(gg) "Party" and "Parties" has the meaning set forth in
the preamble to this Agreement.
(hh) "Product" means Lucent Products and Third Party
Products.
(ii) "Purchase Order" has the meaning specified in
Section 4.1(a).
(jj) "Required Consents" means such third party consents
with regard to Third Party Products or other items
as may be required for Lucent's provision of
Services and Deliverables.
(kk) "Service" means the services provided by Lucent
pursuant to this Agreement and (i) described in any
Purchase Order, or (ii) not specifically described
in a Purchase Order, but implied by or required for
the proper performance and provision of services
included in a Purchase Order. As of the Effective
Date, the
Supply Agreement Confidential-WinStar/Lucent
- - 4 -
<PAGE>
Services that WinStar may purchase from Lucent
include those services identified as such in
Schedule A subject to the Transition Plan specified
therein, as well as those services described in
Schedule G.
(ll) "Software" means software, including applicable
documentation, that may be licensed by WinStar from
Lucent under this Agreement or that is developed by
Lucent as a Deliverable pursuant to this Agreement.
(mm) "Source Code" means both machine-readable and
human-readable copies of Software consisting of
instructions to be executed upon a computer in the
language used by its programmers (i.e., prior to
compilation or assembly) in a form in which the
program logic of the Software is deducible by a human
being, fully commented, and including all related
flow diagrams and all other documentation and manuals
which would allow WinStar to properly effect
modifications and support for Software Deliverables
provided under this Agreement.
(nn) "Specifications" means published engineering
specifications, including Network design standards
and Lucent's or the relevant Product manufacturers'
specifications for particular Products furnished
hereunder.
(oo) "Stock Product" shall mean a Product that is not a
Custom Product.
(pp) "Third Party Product" means any product that is not
a Lucent Product.
(qq) "Transition Plan" means the plan specified in
Schedule A regarding Lucent's time periods to begin
providing certain of the Services as specified in
the plan.
(rr) "Virus" means: (i) program code, programming
instruction or set of instructions intentionally
constructed with the ability to damage, interfere
with or otherwise adversely affect computer
programs, data files or operations; or (ii) other
code typically designated to be a virus.
(ss) "Warranty Period" means, for each Deliverable, the
applicable period set forth in Schedule I measured
from the earlier of Acceptance or thirty (30) days
following the date of Lucent Certification. Lucent
shall advise WinStar of the price, if any,
determined pursuant to the charging methodology and
process set forth in Schedule C and applicable to
WinStar's extension of the Warranty Period. WinStar
may extend the Warranty Period one or
Supply Agreement Confidential-WinStar/Lucent
- - 5 -
<PAGE>
more times in its sole discretion upon payment of
such price, which shall in no event exceed Lucent's
published standard rates applicable to commercial
accounts similar to WinStar's less the applicable
discount percentage set forth in Exhibit C-2 (the
aggregate of such extensions being referred to as
the "Extended Warranty Period").
(tt) "WinStar" has the meaning set forth in the preamble
to this Agreement.
(uu) "Year 2000 Compliant" means the ability of a
Deliverable provided or developed by Lucent pursuant
to this Agreement to (i) correctly process, provide,
interpret, manipulate and receive date data within
and between the twentieth and twenty-first centuries,
without causing logical or mathematical
inconsistencies, processing errors, loss of
functionality or performance, or other failures, and
(ii) interoperate with other technical systems
(including but not limited to hardware and software)
having the characteristics described in (i) and with
date data of the twentieth and twenty-first
centuries. With respect to any data that is
generated or provided in conjunction with the
Deliverables, such data shall contain such
information or be so formatted as to permit hardware
or software with the characteristics described in (i)
of the foregoing sentence to correctly process,
provide, interpret, manipulate and receive such data
within and between the twentieth and twenty-first
centuries, without causing logical or mathematical
inconsistencies, processing errors, loss of
functionality or performance, or other failures with
respect to such Deliverables.
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 may purchase and
receive Deliverables and Services from Lucent and
financing the Network-related Third Party Products
and services purchased directly by WinStar.
(b) This Agreement is being made and entered into with
reference to the following:
Supply Agreement Confidential-WinStar/Lucent
- - 6 -
<PAGE>
(i) It is WinStar's objective to engage Lucent
to design and implement a Best of Breed
nationwide and global communications
Network;
(ii) By entering into this Agreement, WinStar
and Lucent desire to leverage Lucent's core
competencies in both products and services
in designing and implementing the Best of
Breed Network; and
(iii) Lucent desires to provide such products and
services and provide the requisite
financing to enable WinStar and Lucent to
achieve this mutual objective.
(c) The Parties acknowledge that this Agreement does not
grant to Lucent an exclusive privilege to sell or
otherwise provide to WinStar any or all of the
Deliverables or Services of the type described in
this Agreement. WinStar may contract with other
manufacturers and suppliers for the procurement of
comparable equipment, software, systems, deliverables
or services. Lucent is not restricted from selling
the types of products or services that may be
purchased and ordered by WinStar hereunder to other
parties, except as provided in Section 9.2.
2.2. Other Entities.
(a) As of the Effective Date, Lucent shall provide
Deliverables and Services to WinStar and any WinStar
Affiliates designated by WinStar from time to time in
its sole discretion. For the purposes of this
Agreement, Deliverables and Services provided to
WinStar's Affiliates shall be deemed to be
Deliverables and Services provided to WinStar, and
WinStar's Affiliates shall be entitled to the rights
of WinStar hereunder with respect to Deliverables and
Services purchased by such Affiliates. Payment for
Deliverables and Services to Affiliates either will
be guaranteed by WinStar or may be conditioned upon
the Affiliates' ability to pay.
(b) Except as may be otherwise provided by the terms and
conditions of the Credit Agreement, WinStar shall
have the right to assign, transfer, sell, alienate,
lease or sublicense Lucent Products to third parties
in conjunction with (i) the disposal of such
Products, (ii) Customer Colocations involving such
Products, or (iii) Customer Virtual Colocations
involving such Products, and pass through to such
third parties the rights (and the applicable warranty
exclusions) granted to WinStar under this Agreement
that are applicable to such Lucent Products, subject
to the following:
(i) Each third party shall agree in writing
that its license for any Software to which
Lucent maintains title under this Agreement
is revocable by Lucent in the event such
third party materially breaches the
licensing restrictions imposed upon WinStar
under this Agreement pursuant to Section
9.1;
(ii) Each such third party shall agree in
writing to confidentiality terms
Supply Agreement Confidential-WinStar/Lucent
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<PAGE>
and conditions substantially similar to
those set forth in Article 13; and
(iii) With respect to rights granted to WinStar
under Article 14and passed through to such
third parties, the Parties will agree upon
a reasonable means of administering
Lucent's fulfillment of its obligations
with respect to such rights.
Where WinStar substantially complies with the
obligations set forth above, WinStar shall have no
liability to Lucent for any action or omission of
such third parties except for providing Lucent
reasonable assistance in bringing claims as against
the third party for reasonable claims.
(c) The Parties will proactively pursue entering into
mutual value-added reseller or similar relationships
as business needs dictate. Such relationships may
also include co-marketing activities where Lucent
would also sell WinStar products in conjunction with
Lucent products.
2.3. Strategic Relationship.
(a) Best of Breed Commitment and Preferred Supplier
Status. The Parties agree that a critical component
of the Parties success in working together under this
Agreement is sharing in the following objectives and
commitments: (i) the Network and associated services
will be Best of Breed; and (ii) subject to the
Parties following the Best of Breed selection process
set forth in Schedule H, Lucent will be WinStar's
preferred supplier to the extent Best of Breed
Network Elements exist from Lucent. Consistent with
this mutual objective and commitment, Lucent
understands that as part of the Best of Breed
analysis and subsequent recommendation, some of the
recommended Network Elements and services may consist
of Third Party Products and services, even where
Lucent has a competing product and service.
(b) Preferred Customer Status. In consideration of
WinStar's agreement to treat Lucent as a preferred
supplier, Lucent agrees to treat WinStar as a
preferred customer. This preferred customer status
shall include providing WinStar with any preferential
treatment that Lucent may provide to its other
significant customers, including, expediting orders,
providing access to new technologies, competitive
pricing and discounts, invitations to Lucent-run
conferences, customer events and educational
activities (including finance-related educational
events Lucent may provide), and potential business
referrals. Nothing herein will require Lucent to
violate any of its existing agreements.
(c) Lucent-provided Roof Rights and Building Access. If
requested by WinStar, Lucent shall grant to WinStar,
at no cost, roof and interior space and conduit
rights to buildings for which Lucent can obtain or
has such rights pursuant to industry standard terms.
In addition, Lucent shall assist WinStar in
obtaining such rights with respect to any other
buildings leased or occupied by Lucent. Nothing
herein shall obligate Lucent to violate any of its
existing real property lease agreements. Within
ninety (90) days of the Effective Date and
Supply Agreement Confidential-WinStar/Lucent
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<PAGE>
semi-annually thereafter, Lucent shall provide
WinStar with a written list of all addresses of
current real estate properties owned, leased or
otherwise occupied by Lucent.
(d) Mutual Marketing Support. The Parties will provide
reasonable marketing support to the each other in
connection with the Network and associated business
opportunities of each Party. This shall include
WinStar's ability to use, subject to Section 20.12
and Schedule K, the Lucent name, logos and service
marks (including use of the "Bell Labs" and "Bell
Laboratories" names, logos and service marks in the
same manner that Lucent uses such names, logos and
service marks) in WinStar advertising and marketing
materials. Lucent will credit to an account of
WinStar on an annual basis one quarter of one percent
of the total purchase price for Lucent Products and
Services during the previous Contract Year. Said
credit will be accrued by Lucent and utilized for
co-branding and co-marketing activities related to
promoting WinStar in the marketplace.
(e) Technology Summit. Semiannually after the Effective
Date and during the Term, the Parties shall meet to
discuss their plans and objectives with respect to
the development and deployment of new
network-related solutions. As part of such
discussion (i) WinStar shall share with Lucent its
plans for potential future service offerings,
potential market demand and anticipated product
needs and (ii) Lucent shall share with WinStar its
plans regarding product enhancements and evaluations
as well as new products under development.
(f) Lucent Lab/Testing Facilities. Lucent shall provide
the testing and lab facilities as provided in
Schedule A and Exhibit C-6.
(g) Demonstration Products. From time to time and at
WinStar's reasonable request, Lucent shall, at no
charge, provide WinStar with limited quantities of
Lucent Products not previously introduced to the
market generally by Lucent for the purpose of
WinStar's evaluation (or demonstration) for a trial
period.
(h) Regulatory Assistance. If Lucent affirmatively
takes a position in the United States regulatory
environment, it will be in favor of a level playing
field and in support of competition. Lucent agrees
to meet and consult with WinStar regarding United
States regulatory issues, including with regard to
WinStar's licensed spectrum and Equal Access II
concerns. Outside of the United States, Lucent shall
assist and support all of WinStar's regulatory-
related efforts in connection with obtaining
required licenses, approvals or otherwise in
connection with WinStar's implementation of its
network.
(i) Government Business. Lucent and WinStar will develop
and implement a cooperation strategy to assist both
companies in obtaining Federal government business
(e.g., to respond to future GSA MAA proposals). In
particular, this shall include the following: (1)
provided it is legally capable of doing so, Lucent
will agree to be a subcontractor team member, at
WinStar's election, to WinStar Federal Services, LLC
on the GSA WITS2001 project and will assist
Supply Agreement Confidential-WinStar/Lucent
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<PAGE>
in the preparation and review of the proposal; and
(2) provided it is legally capable of doing so,
Lucent and WinStar will mutually investigate making
WinStar Federal Services, LLC a subcontractor on the
Lucent ViViD contract for the U.S. Navy.
2.4. Existing Agreements
As of the Effective Date, the Parties have entered into a
General Agreement (Contract No. LNS960531CRWIN) (the "GA"),
the Product Purchase Addendum to the General Agreement
(Contract No. LNS960609CRWIN) (the "PPA"), the Professional
Services Agreement (Contract No. LNS960819MTWIN) (the "PSA"),
and related Exhibits, Attachments and Lists to the foregoing,
all of which have been executed between the Parties (the GA,
PPA, PSA, Exhibits and Attachments collectively hereinafter
referred to as the "Existing Agreements"). Notwithstanding
the Existing Agreements, (a) all services and products
ordered by WinStar after the Effective Date (or after October
15, 1998 in the case of certain 5ESS purchase orders that may
be issued by WinStar to Lucent) shall be governed by the
terms of this Agreement, and (b) any unused portions of any
credits to which WinStar is entitled under the Existing
Agreements or any such other agreements between Lucent and
WinStar or its Affiliates shall be carried over to this
Agreement and apply to reduce amounts payable by WinStar
under this Agreement. The Parties shall also carry forward
and make available to WinStar any additional benefits that
were to be provided by Lucent under the Existing Agreements
and the Parties shall identify such benefits in Product
addenda hereto.
2.5. International Aspects.
The Parties agree that as of the Effective Date the terms of
this Agreement shall apply with respect to Lucent's provision
of products and services outside of the United States to
WinStar and WinStar's Affiliates, and such products and
services shall be deemed Products and Services, as
applicable. The Parties agree that they shall amend this
Agreement (in a writing signed by both parties and in a
manner consistent with the terms of this Agreement) to the
extent necessary to account for local law and practice issues
unique to such Products and Services and to the country in
which they are to be provided.
3. TERM
3.1. Initial Term and Extension
The term of this Agreement shall begin upon the Effective
Date and shall continue for a period of five years, unless
terminated earlier or extended in accordance with this
Agreement (the "Term"). Upon giving written notice to Lucent
no less than thirty (30) days prior to the then-existing
expiration date of this Agreement, WinStar shall have the
right to extend the Term of this Agreement for additional one
(1) year periods on the terms and conditions then in effect;
provided, however, that Lucent reserves the right to
renegotiate the pricing set forth in Schedule C of this
Agreement subject to Section 3.2.
Supply Agreement Confidential-WinStar/Lucent
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<PAGE>
3.2. Interim Extension
In the event that WinStar provides notice to Lucent pursuant
to Section 3.1 of its desire to extend the Term, and Lucent
exercises its right to renegotiate pricing as described in
Section 3.1, the Term of this Agreement shall be deemed
extended upon the terms and conditions then in effect
(including with respect to the pricing set forth in Schedule
C) for any period of time during which the Parties are
renegotiating such pricing. In the event that such
renegotiation terminates in an agreement between the Parties
with respect to Schedule C pricing, the Term shall be
extended pursuant to Section 3.1, and such agreement between
the Parties will apply retroactively beginning upon the
immediately prior expiration of the Term. In the event that
such renegotiation terminates without an agreement between
the Parties with respect to Schedule C pricing, this
Agreement shall expire upon such termination of
renegotiations.
4. PURCHASING AND ORDERING
4.1. Purchase Orders.
(a) All purchases of Deliverables or Services shall be
made by means of orders (each, a "Purchase Order")
issued by WinStar to Lucent from time to time
pursuant to this Section, unless otherwise expressly
agreed by the Parties in writing. WinStar will not
be liable to Lucent for any charges, additional or
otherwise, for Deliverables or Services provided by
Lucent unless set forth in a Purchase Order, or
otherwise mutually agreed upon by the Parties in
writing.
(b) Lucent agrees to provide and deliver, and WinStar
agrees to purchase:
(i) Any Deliverable or Service listed in a
Schedule hereto that is specified by
WinStar in a Purchase Order that conforms
to Subsection (e) of this Section; and
(ii) Any other Deliverable or Service specified
by WinStar in a Purchase Order that
conforms to Subsection (e) of this Section
and is accepted by Lucent.
(c) With respect to any Purchase Order that is either
consistent with (i) the requirements of a
City-Specific Plan, or (ii) Lucent's ordering
intervals set forth in Schedule C for the Products
identified therein or Lucent's standard ordering
intervals for any other Products, then Lucent shall
be deemed to have accepted a Purchase Order
immediately upon receipt of such Purchase Order.
Otherwise, Lucent shall be deemed to have accepted a
Purchase Order on the tenth (10th) business day
following receipt of such Purchase Order pursuant to
Section 20.3 if Lucent has not notified WinStar in
writing of its rejection of the Purchase Order
pursuant to Section 20.3 prior to such time. In the
event of a disaster declared by WinStar, Lucent will
use commercially reasonable efforts to expedite the
acceptance of any Purchase Orders that are submitted
by WinStar as a means of mitigating the adverse
effects to WinStar of such
Supply Agreement Confidential-WinStar/Lucent
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<PAGE>
disaster; provided, however, that the terms and
conditions of Section 4.3(c) shall not apply to such
Purchase Order.
(d) Estimates or forecasts furnished by WinStar to
Lucent shall not constitute Purchase Orders or
commitments for purchases.
(e) Purchase Orders placed under this Agreement may be
made by means of mail or fax pursuant to Section
20.3, or upon mutual agreement of the Parties,
electronic data interchange. No Purchase Order or
other ordering document which would otherwise modify
or supplement this Agreement or any Schedule shall
add to or vary the terms of this Agreement. All such
proposed variations or additions (whether submitted
by either Party) are objected to and deemed
material. Each Purchase Order shall contain, at a
minimum, the following information:
(i) The date of the Purchase Order;
(ii) A written reference to this Agreement;
(iii) Any applicable discounts as set forth in
Schedule C;
(iv) With regard to Products:
(1) The quantity and a brief written
description of each Product
ordered, including any applicable
part, accessory or product number;
(2) The unit price of each Product
ordered, calculated pursuant to
this Agreement, as well as
subtotals and Purchase Order totals
for Products; and
(3) The required delivery date and
place;
(v) With regard to other Deliverables or
Services:
(1) The quantity and a brief written
description of each Service ordered;
(2) The price of each Service ordered
(e.g., applicable rates or fixed
fees), calculated pursuant to this
Agreement, as well as subtotals and
Purchase Order totals for Services;
(3) In the case of a Deliverable, the
required delivery date, and in the
case of a Service, the required
performance date or dates; and
(4) In the case of a Deliverable, the
required place of delivery, and in
the case of a Service, the required
place of performance.
Supply Agreement Confidential-WinStar/Lucent
- - 12 -
<PAGE>
(f) With respect Third Party Products provided by Lucent
pursuant to this Agreement, Lucent shall:
(i) Use commercially reasonable efforts to
effect a formal original-equipment
manufacturer ("OEM") or similar
relationship with the third-party sellers,
manufacturers, lessors or licensors of such
Third Party Products that is consistent
with Lucent's then-current OEM policies and
standards; and
(ii) To the extent Lucent does not have an OEM
or similar relationship with the third party
sellers, manufactures, lessors or licensors
of such Third Party Product: (1) pass
through to WinStar the benefits of any
rights and remedies it has with respect to
such Third Party Products to the extent that
Lucent is able pursuant to any agreements
between Lucent and the third-party sellers,
manufacturers, lessors or licensors of such
Third Party Products, and enforce such
warranties and indemnities on behalf of
WinStar as directed by WinStar; and (2) use
commercially reasonable efforts to obtain
terms and conditions that are favorable to
WinStar.
4.2. Administrative Changes.
Lucent will notify WinStar at least thirty (30) calendar days
in advance of any administrative changes with respect to any
Product set forth in Schedule A or previously provided by
Lucent to WinStar, such as changes in product part numbers or
descriptions, as well as newly compatible products or
components.
4.3. Timing of Delivery.
(a) Delivery dates for Deliverables and Services shall
be firm. Lucent will deliver Deliverables and
Services strictly in accordance with the terms and
conditions of this Agreement.
(b) If Lucent discovers any potential delay that
threatens the timely delivery or the full delivery
of Deliverables or Services with respect to a
Purchase Order, Lucent shall immediately notify
WinStar of such delay. If requested by WinStar,
Lucent shall provide a written plan for correction
of such delay.
(c) Subject to Sections 4.1(c), 10.2 and 16.3, if
Lucent fails to deliver such Deliverable or Services
in accordance with the scheduled delivery or
performance date set forth in the corresponding
Purchase Order, then after five (5) business days
following the scheduled delivery or performance date,
WinStar shall be entitled to deduct from the price of
such Deliverable or Service an amount equal to one
percent (1%) of the price of such Deliverable or
Service for each seven (7) calendar days of delay
after such grace period until actual delivery of such
Deliverable or performance of such Service, up to a
maximum deduction of one hundred percent (100%) of
the price for such
Supply Agreement Confidential-WinStar/Lucent
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<PAGE>
Deliverable or Service (the "Delivery Pricing
Adjustment"). Notwithstanding the preceding
sentence, Lucent shall not be liable for a Delivery
Pricing Adjustment to the extent that Lucent can
demonstrate that its failure to deliver a
Deliverable or Service in accordance with the
scheduled delivery or performance date set forth in
the corresponding Purchase Order is reasonably
caused by the wrongful actions of WinStar or a
change, revision, modification, or special
requirement with respect to such Deliverable or
Service, or the delivery or performance date for
such Deliverable or Service, that is requested by
WinStar and approved by Lucent after Lucent has
accepted the Purchase Order corresponding to such
Deliverable or Service. In the event WinStar has not
otherwise terminated the Purchase Order as provided
in Subsection 4.5 below and WinStar elects to take
the Delivery Pricing Adjustment as provided above,
such adjustment shall be WinStar's sole and
exclusive monetary remedy with respect to the delay
attributable to the failure to complete the Purchase
Order; provided, however, in the event Lucent has
persistent delays over multiple Purchase Orders,
such Delivery Pricing Adjustment shall be in
addition to any other rights or remedies WinStar may
have under this Agreement or at law or in equity.
Lucent agrees not to make an economic determination
not to deliver a Deliverable or Service under a
particular Purchase Order due to the Delivery
Pricing Adjustment.
(d) If Lucent fails to make any delivery of a
Deliverable or performance of a Service within the
lesser of
(i) forty-five (45) calendar days after the
scheduled delivery or performance date set
forth in the corresponding Purchase Order,
and
(ii) such other time period as mutually agreed
by the Parties,
Then WinStar shall be entitled to terminate the
corresponding Purchase Order in accordance with
Section 4.5.
4.4. Cancellation and Rescheduling of Purchase Orders
(a) WinStar can cancel Purchase Orders for Stock
Products in whole or in part at no cost or liability
anytime prior to thirty (30) days prior to the
scheduled delivery date set forth in the Purchase
Order. Should WinStar cancel any Purchase Order for
Stock Products, in whole or in part, other than for
cause during the thirty (30) day period prior to the
scheduled delivery date, WinStar agrees to pay to
Lucent cancellation and reconfiguration charges equal
to the lesser of (i) Lucent's actual and reasonable
Out-of-Pocket Expenses associated with reconfiguring
and restocking the Stock Products canceled and (ii)
ten percent (10%) of the Purchase Order price for the
canceled Stock Products.
(b) WinStar can cancel Purchase Orders for Custom
Products in whole or in part at no cost or liability
anytime prior to sixty (60) days prior to the
scheduled delivery date set forth in the Purchase
Order. Should WinStar cancel any Purchase Order for
Custom Products, in whole or in part, other than for
cause
Supply Agreement Confidential-WinStar/Lucent
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<PAGE>
during the sixty (60) day period prior to the
scheduled delivery date, WinStar agrees to pay to
Lucent cancellation and reconfiguration charges
equal to the lesser of (i) Lucent's Out-of-Pocket
Expenses associated with reconfiguring and
restocking the Custom Products canceled and (ii) the
following percentage of the Purchase Order price for
the particular canceled Custom Products based on the
number of calendar days of prior notice provided by
WinStar: (1) fifty percent (50%) if the notice is
within nine (9) days prior to or on the scheduled
delivery date set forth in the Purchase Order, (2)
twenty percent (20%) if the notice is less than
fifty-five (55) days but more than nine (9) days
prior to the scheduled delivery date set forth in
the Purchase Order, and (3) ten percent (10%) if the
notice is less than sixty (60) days but more than
fifty-five (55) days prior to the scheduled delivery
date set forth in the Purchase Order.
(c) WinStar may change the "ship to" destination of any
Purchase Order by submitting notice to Lucent in
writing at least ten (10) calendar days prior to
shipment. If such change is requested by WinStar
with less than forty-eight hours of notice prior to
shipment, Lucent will use all reasonable efforts to
implement such change. WinStar will be responsible
for unavoidable Out-of-Pocket Expenses that Lucent
reasonably incurs as a direct result of such change.
Lucent will provide WinStar with an estimate of such
Out-of-Pocket Expenses as soon as possible following
WinStar's notice.
(d) Purchase Orders shall not be subject to cancellation
after shipment except as expressly provided in this
Agreement.
(e) WinStar may reschedule any Purchase Order for Stock
Products at anytime prior to actual shipment.
WinStar can reschedule any Purchase Order with
respect to Stock Products at no cost or liability up
to ninety (90) days from the original scheduled
shipment date specified in the applicable Purchase
Order.
(f) WinStar may reschedule any Purchase Order for
Custom Products at no cost or liability at anytime
prior to the actual shipment; provided, however, if
the reschedule request is within thirty (30) days of
the scheduled delivery date set forth in the Purchase
Order, the rescheduled delivery date requested by
WinStar will be subject to Lucent's reasonable
approval, but in no event shall the rescheduled
delivery date be more than ten (10) days later than
WinStar's requested rescheduled delivery date. If
the new shipment date is within thirty (30) days of
the scheduled shipment date, then Lucent shall
arrange and pay for all additional transportation and
storage costs for the Purchase Order. If the new
shipment date is more than thirty (30) days after the
scheduled shipment date but less than ninety (90)
days after the scheduled shipment date, then such
reasonable additional storage Out-of-Pocket Expenses
incurred by Lucent shall be payable by WinStar.
Except as provided in the preceding sentence, WinStar
can reschedule any Purchase Order at no cost or
liability up to ninety (90) days from the original
scheduled shipment date specified in the applicable
Purchase Order.
(g) All references in this Section to the scheduled
delivery date specified in the
Supply Agreement Confidential-WinStar/Lucent
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<PAGE>
Purchase Order shall be extended day-for-day by the
number of days Lucent is delayed in meeting the
scheduled delivery date.
4.5. Termination of Purchase Orders.
In the event that Lucent:
(a) Fails to correct the failure of a Deliverable to
comply with a representation, warranty or covenant
as set forth in this Agreement;
(b) Fails to achieve Acceptance with respect to a Lucent
Product as set forth in Section 7.2; or
(c) Fails to make delivery in a timely fashion as set
forth in Section 4.3(d) or 1.1(b);
Then WinStar may, by giving written notice to Lucent,
terminate the corresponding Purchase Order, in whole or in
part, for cause as of a date specified in the notice of
termination. In such event, WinStar may return any associated
Deliverables (if delivered) to Lucent, in which case Lucent
shall promptly refund (in the form of a credit for future
purchases) to WinStar all charges paid by WinStar to Lucent
for such Deliverables, and WinStar shall have no further
payment obligations to Lucent with respect to such
Deliverables.
5. SHIPPING AND DELIVERY
5.1. Incorrect Delivery.
(a) Early deliveries of Products may be refused due to
space or security considerations and returned or
stored at Lucent's expense and risk of loss.
(b) WinStar assumes no liability for Products produced,
processed, rendered or shipped in excess of the
amounts specified in any Purchase Order submitted
pursuant to this Agreement.
(c) If Lucent makes a proper shipment in a timely manner
and the WinStar facility is not prepared to receive
the shipment, WinStar will be responsible for
unavoidable Out-of-Pocket Expenses that Lucent
reasonably incurs as a direct result of WinStar's
failure to prepare. Lucent will provide WinStar with
an estimate of such Out-of-Pocket Expenses as soon
as possible following WinStar's notice.
5.2. Purchase Order Tracking.
Lucent shall be responsible for tracking the delivery of all
Products from receipt of the corresponding Purchase Order
until delivery of such Products to the WinStar- designated
place of delivery. Lucent will provide WinStar with current
status reports
Supply Agreement Confidential-WinStar/Lucent
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<PAGE>
and information on Purchase Orders and such other information
and reports as reasonably requested by WinStar regarding
Purchase Orders.
5.3. Packing.
All Products delivered to WinStar pursuant to this Agreement
shall be preserved, packaged and packed by Lucent to ensure
safe delivery to their destinations without damages due to
shipment.
5.4. Labeling.
(a) Lucent will label each component of any Product no
later than at the time of installation of such
component. Lucent will use reasonable and good faith
efforts to label each component of any Product, each
container and each set of packing documentation with
any WinStar-provided asset identification
information prior to the installation of such
component.
(b) Lucent will mark each shipping carton with (i) a
brief description of the contents and quantities of
the Products shipped within such shipping carton,
and (ii) the address of the delivery destination
specified on the applicable Purchase Order.
5.5. Calibration and Testing.
Lucent will calibrate and test Products shipped to ensure
that such Products meet the applicable Specifications.
5.6. Shipping
(a) Lucent will notify WinStar of Lucent's intent to
ship Products within a reasonable time prior to the
scheduled delivery date as specified in the Order at
the delivery destination address specified in a
Purchase Order, so as to permit WinStar to make
necessary arrangements for receipt of the shipment.
The foregoing notwithstanding, Lucent shall deliver
such Products consistent with the agreed upon
City-Specific Plan.
(b) Lucent will ship all Products to the delivery
destination specified by WinStar in the
corresponding Purchase Order. All shipments to
WinStar's premises shall be consistent with
WinStar's shipping and delivery processes and
procedures provided or identified to Lucent. Lucent
will (i) ship all deliveries complete, and (ii) not
ship any substitute item in place of a Product
specified in a Purchase Order that differs in form,
fit or function, unless otherwise agreed by WinStar
in writing.
(c) Unless otherwise instructed by WinStar, Lucent will:
(i) Enclose a packing memorandum with each
shipment and, when more
Supply Agreement Confidential-WinStar/Lucent
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<PAGE>
than one package is shipped, identify the
one which contains the memorandum;
(ii) Verify that bills of lading match
corresponding shipping invoices; and
(iii) Forward applicable bills of lading and
shipping notices with items shipped.
(d) All shipments will be F.O.B. destination, unless
otherwise agreed in writing by WinStar. WinStar will
reimburse Lucent for actual, reasonable freight and
insurance costs on an Out-of-Pocket expenses basis;
provided, however that upon reasonable request by
WinStar, Lucent substantiates such costs by
providing WinStar with freight bills or other
written documentation that adequately verifies such
charges. Lucent will ship all items by means of a
common carrier or carriers designated by WinStar.
5.7. Title and Risk of Loss.
Risk of loss and title to any item shipped to WinStar will
pass to WinStar upon delivery into the interior of the
WinStar destination facility or as otherwise specified in
writing by WinStar. WinStar will notify Lucent as soon as
reasonably practicable of any claim with respect to loss
which occurs while Lucent has the risk of loss and shall
provide reasonable cooperation to facilitate the settlement
of any claim.
6. DELIVERY OF SERVICES
6.1. Transition/Ramp-up of Lucent Service Capabilities.
(a) Subject to the Transition Plan, Lucent shall perform
the Services ordered by WinStar hereunder.
(b) If Lucent fails to achieve the transition on or
before the completion date as set forth in the
Transition Plan for reasons other than the wrongful
actions of WinStar, then Lucent shall pay WinStar
for additional Out-of-Pocket Expenses incurred by
WinStar as a result of such failure.
6.2. Use of Third Parties.
(a) Lucent shall not subcontract any of its obligations
under this Agreement, without WinStar's prior written
consent, which shall not be unreasonably withheld.
WinStar shall have the right to revoke its prior
approval of a subcontractor and direct Lucent to
replace such subcontractor if (i) the subcontractor's
performance is deficient, (ii) there have been
misrepresentations by or concerning the
subcontractor, or (iii) good faith doubts exist
concerning the subcontractor's ability to render
future performance because of changes to the
subcontractor's ownership, personnel, management,
financial condition, or otherwise.
Supply Agreement Confidential-WinStar/Lucent
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<PAGE>
(b) Lucent will remain responsible for obligations
performed by its subcontractors to the same extent as
if such obligations were performed by Lucent
employees. Lucent shall be WinStar's sole point of
contact regarding Deliverables and Services provided
by such subcontractors, including with respect to
payment. Lucent will not disclose Confidential
Information of WinStar to a subcontractor unless and
until such subcontractor has agreed in writing to
protect the confidentiality of such information in a
manner substantially equivalent to that required of
Lucent under this Agreement, and in all respects,
only on a "need-to-know" basis.
(c) Upon WinStar's request, Lucent shall provide
program management with respect to WinStar's
personnel and third party service providers
contracted directly by WinStar to perform services
related to the Deliverables and Services. In the
event Lucent intends to subcontract a particular
component of the Services to a third party, Lucent
shall notify WinStar and WinStar shall have the
option, in its sole discretion, to perform such
services itself or through its own subcontractor.
Such WinStar personnel and third parties shall not be
considered Lucent subcontractors for the purposes of
this Agreement.
6.3. Key Lucent Positions.
(a) "Key Lucent Positions" shall be the positions set
forth as such in Schedule J, as Schedule J is
amended from time to time by the mutual written
agreement of the Parties.
(b) Lucent shall fill such Key Lucent Positions and
shall cause each of the personnel filling the Key
Lucent Positions to devote substantially his or her
full time and effort to the provision of the
Services on-site at WinStar's facilities. WinStar
will provide reasonable facilities for the use of
the personnel in Key Lucent Positions.
(c) WinStar, with Lucent's written approval, which
approval shall not be unreasonably withheld, may
from time to time change the positions designated as
Key Lucent Positions under this Agreement provided
that the number of Key Lucent Positions shall not
exceed the number set forth in Schedule J as of the
Effective Date.
(d) Before assigning an individual to a Key Lucent
Position, whether as an initial assignment or a
subsequent assignment, Lucent shall notify WinStar of
the proposed assignment and shall provide WinStar
with a resume and other information about the
individual reasonably requested by WinStar. If
WinStar in good faith objects to the proposed
assignment, the Parties shall attempt to resolve
WinStar's concerns on a mutually agreeable basis. If
the Parties have not been able to resolve WinStar's
concerns within five (5) days, Lucent shall not
assign the individual to that position and shall
propose to WinStar the assignment of another
individual of suitable ability and qualifications.
(e) Personnel filling Key Lucent Positions may not be
transferred or re-assigned
Supply Agreement Confidential-WinStar/Lucent
- - 19 -
<PAGE>
until a suitable replacement has been reasonably
approved by WinStar and the functions and
responsibilities of the individual being transferred
or reassigned have been properly transitioned to the
replacement.
6.4. Required Consents
(a) Lucent, with the cooperation of WinStar, but at
Lucent's expense, shall obtain any Required
Consents. In the event that such expense is not
commercially reasonable and Lucent cannot provide a
reasonable monetary or non-monetary alternative to
the third party, the Parties shall work together to
achieve an appropriate resolution.
(b) If a Required Consent is not obtained, then, unless
and until such Required Consent is obtained, Lucent
shall determine and adopt, subject to WinStar's
prior approval, such alternative approaches as are
necessary and sufficient to provide the Deliverables
and Services without such Required Consents.
6.5. Implementation Plans, Milestones and Milestone Dates.
For all Services that result in the creation of a
Deliverable:
(a) Lucent shall prepare for WinStar's review, comment
and approval, a detailed, task-level implementation
plan delineating milestones (each, a "Milestone"),
Milestone completion dates (each, a "Milestone
Date"), together with each Party's respective
responsibilities associated with the installation or
implementation work.
(b) If Lucent fails to achieve a Milestone on or before
the corresponding Milestone Date, (i) Lucent's
President of Global Commercial Markets (or in the
event such position no longer exists, an executive
with a similar level of responsibility) will meet
with WinStar in person at WinStar's facilities,
explain to WinStar the root cause for the delay, and
present to WinStar a plan to remedy such failure, and
(ii) Lucent will take appropriate preventive measures
so that the failure does not recur, and reasonably
demonstrate to WinStar that such measures have been
performed.
7. ACCEPTANCE TESTING AND FINAL ACCEPTANCE
7.1. Acceptance Testing and Cure.
As described more fully in Schedule E, each Deliverable shall
be subject to acceptance testing by WinStar. If a Deliverable
meets its Acceptance Criteria (including all applicable
Specifications), WinStar will notify Lucent that such
Deliverable has received Acceptance pursuant to Section 7.2.
If a Deliverable does not meet its Acceptance Criteria,
WinStar may notify Lucent of the failures of the Deliverable
to meet its Acceptance Criteria, and of WinStar's Acceptance
of such Deliverable pursuant to Section 7.2 upon the
condition that such failures will be corrected by
Supply Agreement Confidential-WinStar/Lucent
- - 20 -
<PAGE>
Lucent within a period of time specified by WinStar (such
acceptance a "Conditional Acceptance").
7.2. Acceptance.
A Deliverable shall be deemed to be accepted (the
"Acceptance") only upon the earliest of: (a) receipt by
Lucent of written notice by WinStar certifying that the
Deliverable conforms to its Acceptance Criteria; (b)
satisfaction of all conditions underlying a Conditional
Acceptance as described in Section 7.1, or (c) the expiration
of the Acceptance Testing Period for such Deliverable without
notice of non-acceptance or of the terms of a Conditional
Acceptance by WinStar. Notwithstanding anything to the
contrary herein, Acceptance of a Deliverable shall only occur
in accordance with the terms of this Agreement.
8. PERFORMANCE STANDARDS
8.1. General.
All Deliverables and Services provided by Lucent shall at all
times meet or exceed the quantitative and qualitative
performance standards identified in Schedule B (the
"Performance Standards"), including those Performance
Standards that are critical to WinStar's business functions
(the "Critical Performance Standards"). In addition, all
Services provided by Lucent shall at all times be consistent
with (i) WinStar's methods, operations and procedures as of
the Effective Date and in any event (ii) standards satisfied
by well-managed operations performing services similar to the
Services.
8.2. Failure to Perform.
(a) Lucent recognizes that its failure to meet Critical
Performance Standards may have a materially adverse
impact on the business and operations of WinStar.
Accordingly, in the event that Lucent fails to meet a
Critical Performance Standard for reasons other than
the wrongful actions of WinStar or circumstances that
constitute force majeure under this Agreement,
WinStar may elect in lieu of pursuing other monetary
remedies to recover as liquidated damages the amounts
calculated pursuant to Schedule B (the "Performance
Standard Credits").
(b) If Lucent fails to meet any Performance Standard,
Lucent shall (i) investigate and report on the root
causes of the problem; (ii) advise WinStar, as and
to the extent requested by WinStar, of the status of
remedial efforts being undertaken with respect to
such problems; (iii) correct the problem and begin
meeting the Performance Standards; and (iv) take
appropriate preventive measures so that the problem
does not recur.
Supply Agreement Confidential-WinStar/Lucent
- - 21 -
<PAGE>
8.3. Periodic Reviews.
Within three (3) months after the expiration of the first
year following the Effective Date and at least annually
thereafter, WinStar and Lucent shall review the Performance
Standards and shall make adjustments to them as appropriate
to reflect improved performance capabilities associated with
advances in the technology and methods used to provide the
Deliverables and perform the Services. The Parties expect and
understand that the Performance Standards will become more
stringent over time.
8.4. Measurement and Monitoring Tools.
Lucent shall use the measurement and monitoring tools and
procedures required to measure and report Lucent's
performance of the Services against the applicable
Performance Standards. Such measurement and monitoring will
permit reporting at a level of detail sufficient to verify
compliance with the Performance Standards and will be subject
to audit by WinStar. Lucent shall provide WinStar with
information and access to such tools and procedures upon
request, for purposes of verification.
9. SOFTWARE LICENSES AND PROPRIETARY RIGHTS
9.1. Licenses.
(a) Commencing upon delivery of Software pursuant to this
Agreement, Lucent grants WinStar and its Affiliates a
perpetual, transferable (as provided herein),
nonexclusive, fully-paid, royalty-free, irrevocable
(except as provided by Subsection (b) of this
Section) and world-wide right and license (or
sublicense in the case of Software owned by a third
party) to use, copy (as provided herein), access,
display, operate and process the Software provided to
WinStar pursuant to a Purchase Order (collectively,
the "Licenses"). These rights may be exercised
through officers, employees and agents for the sole
purpose of providing services to WinStar and its
Affiliates. WinStar may copy the Software for
back-up purposes and for uses that are in accordance
with this Agreement. Any such reproduction will
include any copyright or similar proprietary notice
contained in the Software being reproduced. WinStar
may not decompile, disassemble or reverse engineer
the Software.
(b) Lucent may revoke a particular License if and only
if WinStar fails to pay undisputed licensing fees
associated with such License, and such nonpayment is
not cured within thirty (30) calendar days after
written notice of such nonpayment provided by Lucent
to WinStar.
(c) If Lucent is unable to secure the rights specified
in Section 9.1 with respect to Software associated
with Third Party Products, it shall be excused from
that obligation, provided that it gives WinStar
prior written notice of such inability sufficiently
in advance so that WinStar may seek alternate means
of obtaining such rights.
Supply Agreement Confidential - WinStar/Lucent
22 -
<PAGE>
(d) WinStar may, at no charge, relocate any Software to
another location for reuse with Equipment with which
it was originally delivered when such Equipment is
itself to be relocated consistent with this
Agreement. Such relocation or reuse shall not alter
the Licenses.
(e) WinStar shall have the right to transfer any of the
Licenses in the event WinStar sells the Equipment
with which such Software is utilized or any component
thereof, or in the event of an assignment or change
in control in accordance with Section 20.1. Such
transfers shall be subject to (i) the transferee
undertaking the restrictions and covenants of the
license, (ii) reasonable creditworthiness of the
transferee, and (iii) a limitation that the
transferee is not a direct competitor of Lucent in
the area of telecommunications equipment manufacture.
(f) Lucent agrees to furnish and convey, at no additional
charge to WinStar, such documentation, training
materials, manuals, appropriate designs, appropriate
drawings, and other media and material pertaining to
the use and operation of Deliverables as is necessary
to permit WinStar to use and maintain such items in
accordance with this Agreement (the
"Documentation"). Lucent will provide the
Documentation in both hard- and soft-copy formats.
WinStar may make a reasonable number of copies of the
Documentation; provided, however, that all such
copies shall contain the copyright legends placed on
the original versions by Lucent.
(g) In the event that a WinStar employee violates the
License restrictions set forth in this Section (a),
WinStar shall, at its own expense take such
reasonable actions as may be necessary to remedy
such violation and cooperate in all reasonable
respects to minimize the violation and any damage
resulting therefrom.
(h) WinStar acknowledges that, in the event it attempts
to decompile, disassemble or reverse engineer
Software other than any Developed Deliverable, Lucent
may proceed directly to court. If a court of
competent jurisdiction should find that WinStar has
attempted to decompile, disassemble or reverse
engineer such Software, WinStar agrees that without
any additional findings of irreparable injury or
other conditions to injunctive relief, it shall not
oppose the entry of an appropriate order restraining
it from any further attempt to decompile, disassemble
or reverse engineer such Software.
9.2. Proprietary Rights.
(a) Title to the Software shall remain in Lucent or its
suppliers except as otherwise provided herein.
(b) The Parties do not expect that Lucent will develop
custom Software in the course of performance under
this Agreement.
(c) Notwithstanding the foregoing, title to any Software
or Deliverables created by
Supply Agreement Confidential - WinStar/Lucent
23 -
<PAGE>
WinStar or created by Lucent for WinStar pursuant to
mutually agreed-upon terms, conditions and fees set
forth in a Purchase Order shall vest in WinStar
(such Software and Deliverables the "Developed
Deliverables"). Developed Deliverables shall be
considered "works made for hire" for WinStar. To the
extent any Developed Deliverable is not deemed a
"work for hire" by operation of law, Lucent hereby
irrevocably assigns, transfers and conveys to
WinStar without further consideration all of its
right, title and interest in such Developed
Deliverable, including all rights of patent,
copyright, trade secret or other proprietary rights
in such materials. Lucent acknowledges that WinStar
and the assigns of WinStar shall have the right to
obtain and hold in their own name any intellectual
property rights in and to Developed Deliverables.
Lucent agrees to execute any documents or take any
other actions as may reasonably be necessary, or as
WinStar may reasonably request, to perfect WinStar's
ownership of any Developed Deliverables.
Concurrently with the delivery of Developed
Deliverables, Lucent will provide to WinStar the
Source Code for Software included within the scope
of the Developed Deliverables as well as all
documentation and other information necessary for
WinStar to exercise its rights granted by this
Agreement with respect to such Source Code. To the
extent that Lucent adds to or modifies such Source
Code as part of the Services, Lucent shall provide
such additions or modifications to the Source Code
and any associated documentation to WinStar
concurrently with the performance of such Services.
(d) WinStar grants to Lucent a worldwide, fully paid-up,
nonexclusive license during the Term to use, copy,
maintain, modify, enhance and create derivative works
of the Developed Deliverables (including the Source
Code applicable to such Developed Deliverables) for
the sole purpose of providing the Services pursuant
to this Agreement. For any items provided by WinStar
for Lucent's use hereunder, Lucent shall maintain the
confidentiality of such items in accordance with the
terms hereof. Lucent will not use Developed
Deliverables or any other items provided by WinStar
for the benefit of any entities other than WinStar
without the prior written consent of WinStar, which
may be withheld at WinStar's sole discretion. Except
as otherwise requested or approved by WinStar, upon
expiration or termination of this Agreement, Lucent
will cease all use of Developed Deliverables and
other items provided by WinStar and promptly return
all such items to WinStar.
9.3. Source Code Availability
10. WINSTAR RESPONSIBILITIES
10.1. Facilities and Resources
WinStar's responsibility for providing facilities, personnel
and other resources as necessary to permit Lucent to deliver
the Deliverables and Services shall be as set forth in this
Agreement. Lucent shall be responsible for providing all
other necessary
Supply Agreement Confidential - WinStar/Lucent
24 -
<PAGE>
facilities, personnel and other resources.
10.2. Savings Clause
WinStar's failure to perform any of its responsibilities set
forth in this Agreement (other than WinStar obligations to
pay undisputed amounts under Article 11.3) shall not
constitute a material breach of the Agreement or otherwise be
deemed to be grounds for extra compensation to, or
termination by, Lucent. However, Lucent's nonperformance of
its obligations under this Agreement shall be excused if and
to the extent: (a) such nonperformance is a direct result of
WinStar's failure to perform its responsibilities, (b) Lucent
provides WinStar with reasonable notice of such
nonperformance, and (c) Lucent uses commercially reasonable
efforts to perform notwithstanding WinStar's failure to
perform.
11. CHARGES
11.1. General.
The charging mechanisms and pricing methodologies for
Products, other Deliverables and Services are set forth in
Schedule C. The Parties agree to supplement Schedule C in a
manner consistent with the other pricing terms of this
Agreement as necessary if and when WinStar purchases
Deliverables and Services for which pricing is not set forth
in Schedule C. WinStar will not be liable to Lucent for any
charges, additional or otherwise, for Deliverables or
Services provided by Lucent unless such charges are expressly
set forth in a Purchase Order, this Agreement (including its
Schedules) or as otherwise may be mutually agreed by the
Parties in writing.
11.2. 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.
(b) Lucent shall be responsible for sales, use, excise,
value-added, services, consumption, and other taxes
and duties payable by Lucent on any goods or
services that are used or consumed by Lucent in
providing the Deliverables and Services.
(c) WinStar shall be responsible for sales, use, excise,
value-added, services, consumption, and other taxes
existing as of the Effective Date that are assessed
on any particular Deliverable or Service received by
WinStar from Lucent. If and to the extent any such
tax is reduced or eliminated during the Term, Lucent
shall reduce or eliminate any charges for such
taxes, as appropriate.
Supply Agreement Confidential - WinStar/Lucent
25 -
<PAGE>
(d) In the event that a sales, use, excise, value added,
services, consumption, or other tax is assessed on
the provision of any of Deliverable or Services, the
Parties shall work together to segregate the
payments under this Agreement into three (3) payment
streams:
(i) Payments for taxable Deliverables and
Services;
(ii) Payments where Lucent functions merely as a
payment agent for WinStar in receiving
goods, supplies, or services (including
leasing and licensing arrangements); and
(iii) Payments for other nontaxable Deliverables
and Services.
(e) The Parties agree to cooperate with each other to
enable each to more accurately determine its own tax
liability and to minimize such liability to the
extent legally permissible. Lucent shall use
commercially reasonable efforts to minimize WinStar's
taxes payable hereunder. Lucent's invoices shall
separately state the amounts of any taxes Lucent is
collecting from WinStar. Each Party shall provide and
make available to the other any resale certificates,
information regarding out-of-state or out-of-country
sales or use of equipment, materials or services, and
other exemption certificates or information
reasonably requested by either Party.
(f) Lucent shall promptly notify WinStar of, and
coordinate with WinStar the response to and
settlement of, any claim for taxes asserted by
applicable taxing authorities for which WinStar 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. If WinStar requests Lucent to challenge
the imposition of any tax, WinStar shall reimburse
Lucent for the reasonable legal fees and expenses it
incurs. WinStar shall be entitled to any tax refunds
or rebates granted to the extent such refunds or
rebates are of taxes that were paid by WinStar.
11.3. Financing.
(a) Lucent shall provide WinStar financing in accordance
with the Credit Agreement and otherwise in
accordance with the terms of this Agreement..
(b) Lucent agrees to provide financing (subject to the
terms and conditions set forth in the Credit
Agreement) for all Lucent Products and Services
purchased by WinStar under this Agreement plus up to
$2,600,000 per Contract Year for amounts drawn down
for WinStar provided RF engineering (with any excess
and any other WinStar provided products and services
to be treated as Other Products and Services as
defined below) (collectively, the "Lucent Content").
Lucent also agrees to provide financing for
non-Lucent Products and services associated with the
Network ("Other Products and Services"),
Supply Agreement Confidential - WinStar/Lucent
26 -
<PAGE>
subject to the following annual total financing
percentage limitations set forth below. For purposes
of this Subsection (b) the following definitions
shall apply: (1) "Contract Year" shall refer to each
year of the Term of this Agreement, with the initial
Contract Year commencing on the Effective Date, (2)
"Total Contract Year Draw Down" shall refer to the
total dollar amount drawn down by WinStar under the
Credit Agreement during a Contract Year, and (3)
"Total Surcharge Amount" for each Contract Year
shall equal a total of U.S. $3,000,000.
(i) WinStar may use up to thirty-five percent
(35%) of the Total Contract Year Draw
Down during the first Contract Year for
Other Products and Services. During each of
the second, third, fourth and fifth
Contract Years (each, a "Subsequent
Contract Year"), WinStar may use up to
thirty percent (30%) of the Total
Contract Year Draw Down for Other Products
and Services.
(ii) At the end of each Contract Year, Lucent
shall provide for WinStar's review, and
subject to WinStar's confirmation, a
reconciliation statement that specifies the
percentage of the Total Contract Year Draw
Down that was used for Lucent Content and
for Other Products and Services and the
amount of the Total Surcharge Amount that
is due Lucent, if any, based upon the
following:
(1) If the actual percentage for Other
Products and Services is less or
equal to thirty percent (30%) for
the First Contract Year and less
than or equal to twenty-five
percent (25%) during any
Subsequent Contract Year, as the
case may be, there will be no
portion of the Total Surcharge
Amount due and payable by WinStar;
(2) Where the actual percentage for Other
Products and Services exceeds
thirty percent (30%) in the
First Contract Year or exceeds
twenty-five percent (25%) in a
Subsequent Contract Year, as the
case may be, the portion of the
Total Surcharge Amount due and
payable by WinStar shall be an
amount equal to six thousand dollars
(U.S. $6,000) per each one
hundredth of a percentage (1/100%)
in excess of thirty percent (30%)
for the First Contract Year and
twenty-five percent (25%) in a
Subsequent Contract Year, but in
each case no greater than the Total
Surcharge Amount.
(c) Subject to the terms set forth in Subsection (b)
above, this Agreement and the Credit Agreement,
Lucent shall provide financing and act as the paying
agent for any such other invoices for non-Lucent
Products and services (e.g., Third Party Products and
third party and WinStar provided services) delivered
to Lucent by WinStar. Lucent shall pay all such
delivered invoices in accordance with the payment
terms set forth on such invoice or as otherwise
directed by WinStar.
Supply Agreement Confidential - WinStar/Lucent
27 -
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(d) Lucent shall continue to provide WinStar with
financing for Deliverables and Services during the
Disengagement Period as described in Section 15.4(a)
subject to the terms set forth in Subsection (b)
above.
(e) Should WinStar acquire any significant interest in
any company to which Lucent is currently providing
financing pursuant to an independent contractual
agreement, Lucent hereby consents and agrees, at no
cost to WinStar for such consent, to continue to
honor such contractual agreement if all the terms
and conditions of such agreement other than change
in ownership are met under WinStar's acquisition of
such significant interest.
11.4. Incidental Expenses.
(a) Lucent acknowledges that, except as provided in
Subsection (b) of this Section, expenses that Lucent
expects to incur in performing under this Agreement
(including document reproduction and long-distance
telephone) are included in Lucent's charges under in
this Agreement. Accordingly, such Lucent expenses
are not separately reimbursable by WinStar unless,
on a case-by-case basis for unusual expenses,
WinStar has agreed in advance and in writing to
reimburse Lucent for the expense.
(b) WinStar will reimburse Lucent for the verifiable
travel and travel-related Out- of-Pocket Expenses
incurred by Lucent that are necessary to provide the
Services to the extent that such Out-of-Pocket
Expenses are consistent with WinStar's expense
policies, provided that Lucent obtains WinStar's
consent in advance of incurring any such expenses.
11.5. Most Favored Customer.
12. INVOICING AND PAYMENT
12.1. Invoicing.
(a) Products. Upon shipment of Products pursuant to a
Purchase Order, Lucent will invoice WinStar for
amounts due pursuant to this Agreement for such
Products. Such invoice shall include: invoice date,
shipment number, Product part numbers and
descriptions, quantities, unit prices and total
amount due. That invoice shall also indicate the
corresponding Purchase Order for each invoiced
Product.
(b) Other Deliverables and Services. With respect to
Product-related engineering and installation
Services, Lucent will invoice WinStar upon
completion of the performance of such Services. With
respect to other Deliverables and Services, Lucent
shall render a single consolidated invoice for
charges due under this Agreement on a monthly basis
in arrears. Such invoice shall include invoice date,
quantities, unit prices and total amount due. Each
Supply Agreement Confidential - WinStar/Lucent
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<PAGE>
invoice shall also indicate the corresponding
Purchase Order for each line item and the
corresponding milestone for each Service that will
produce a Deliverable.
(c) On each invoice, Lucent shall include the
calculations utilized to establish any charges, and
each invoice shall show details and information as to
charges as may be reasonably specified by WinStar,
including as necessary to satisfy WinStar's internal
accounting; provided, however, that to the extent
that a firm pricing quotation previously delivered to
WinStar by from Lucent expressly provides such
calculations, details and information, Lucent may
cross-reference such quotation in the applicable
invoice in lieu of including such calculations,
details or information, as applicable, in such
invoice. Each invoice shall also (i) separately
state the amounts of any taxes Lucent is collecting
from WinStar and (ii) identify that the invoice is a
Lucent issued invoice.
(d) To the extent a credit may be due WinStar pursuant
to this Agreement, Lucent shall provide WinStar with
an appropriate credit against amounts then due and
owing; if no further payments are due to Lucent,
Lucent shall pay such amounts to WinStar within
thirty (30) calendar days.
12.2. Payment Due.
(a) Subject to the other provisions of this Article 12,
charges shall be due and payable by WinStar within
thirty (30) calendar days after receipt of a proper
invoice for such amount.
(b) All amounts due and payable to Lucent under this
Article 12 shall be paid, at WinStar's option, (i)
by check payable to the order of Lucent, (ii)
through draw-down of Lucent-provided financing under
the Credit Agreement, or (iii) by electronic funds
transfer to Lucent from account(s) designated by
WinStar.
12.3. Accountability.
Lucent shall maintain complete and accurate records of and
supporting documentation for the amounts billable to and
payments made by WinStar hereunder, in accordance with
generally accepted accounting principles applied on a
consistent basis. Lucent agrees to provide WinStar with
documentation and other information with respect to each
invoice as may be reasonably requested by WinStar to verify
accuracy and compliance with the provisions of this
Agreement. Upon WinStar's reasonable request, WinStar and its
authorized agents and representatives shall have access to
such records for purposes of audit during normal business
hours during the Term and during the period for which Lucent
is required to maintain such records.
12.4. Proration.
Periodic charges under this Agreement are to be computed on a
calendar month basis,
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and shall be prorated for any partial month.
12.5. Set Off.
With respect to any amount to be paid by WinStar hereunder,
WinStar may set off against such amount any amount that
Lucent is obligated to pay WinStar hereunder.
12.6. Disputed Charges.
Subject to Section 12.5, WinStar shall pay undisputed charges
when such payments are due under this Article 12. WinStar may
withhold payment of particular charges that WinStar disputes
in good faith.
12.7. Encumbrances.
Except to the extent granted in the Credit Agreement or
otherwise expressly set forth in this Agreement, Lucent shall
not perfect a security interest, lien or other encumbrance
upon any Deliverable, Deliverable component or Service
provided pursuant to this Agreement.
13. CONFIDENTIALITY
13.1. Confidential Information.
Lucent 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 13.3, "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, 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.
13.2. Obligations.
The following obligations with respect to Confidential
Information shall survive the expiration or termination of
this Agreement for a period of seven (7) years or such longer
period as required by regulation, law or court order.
(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
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disclosure of its own information of a similar
nature. Except as otherwise permitted hereunder, the
Parties may disclose such information to entities
performing services required hereunder 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 13.2. Any disclosure to such entity shall be
under the terms and conditions as provided herein.
(b) Each Party shall take reasonable steps to ensure
that its employees comply with this Section 13.2. 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.
13.3. Exclusions.
(a) "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 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.
(b) Either Party may disclose the terms and conditions
of this Agreement to third parties that (1) have
expressed a bona fide interest in consummating a
significant financing, merger or acquisition
transaction between such third
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parties and such Party, (2) have a reasonable
ability (financial and otherwise) to consummate such
transaction, and (3) have 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 of this Agreement. 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.
13.4. 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.
14. REPRESENTATIONS, WARRANTIES AND COVENANTS
14.1. Pass-Through Warranties.
Without limiting any other representation, warranty or
covenant contained in this Article 14, Lucent may from time
to time provide certain Products and other items for which
Lucent is entitled to warranties and indemnities from the
manufacturers, lessors or licensors of such items. Lucent
shall pass through to WinStar the benefits of such warranties
and indemnities to the extent that Lucent is able pursuant to
any agreements between Lucent and such manufacturers, lessors
or licensors, and enforce such warranties and indemnities as
directed by WinStar.
14.2. Non-Infringement.
Lucent represents, warrants and covenants that it shall
perform its responsibilities under this Agreement in a manner
that does not infringe, or constitute an infringement or
misappropriation of, any patent, copyright, trademark, trade
secret or other proprietary rights of any third party.
14.3. Ownership or Use.
(a) Lucent represents, warrants and covenants that it is
either the owner of, or authorized to distribute,
sublicense and use, the Deliverables provided by
Lucent pursuant to this Agreement.
(b) Lucent represents, warrants and covenants that
WinStar shall receive marketable title to all
Products and Developed Deliverables provided
pursuant to this Agreement and shall be entitled to
the rights of possession and quiet enjoyment
thereto, free of any liens or encumbrances, except
as provided in the Credit Agreement.
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14.4. Authorization.
(a) Each Party represents and warrants to the other that:
(i) It has the requisite corporate power and
authority to enter into this Agreement and
to carry out the transactions contemplated
by this Agreement; and
(ii) 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.
(b) Lucent represents, warrants and covenants that it is
not subject to any contractual or other obligation
that would prevent it from entering into this
relationship.
14.5. Inducements.
Each Party represents, warrants and covenants that 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.
14.6. Work Standards.
(a) Lucent represents, warrants and covenants that the
Services shall be rendered with promptness and
diligence and shall be executed in a workmanlike
manner, in accordance with the practices and high
professional standards used in well-managed
operations performing services similar to the
Services. Lucent represents and warrants that it
shall use adequate numbers of qualified individuals
with suitable training, education, experience, and
skill to perform the Services.
(b) If the Services prove not to be performed as
warranted within a nine (9) month period commencing
on the date of completion of the applicable Services,
Lucent shall correct the defect or non-conforming
Services at no additional cost or expense to
WinStar. In the event the Services cannot be
corrected within the applicable time periods
specifically identified in this Agreement or thirty
(30) days of WinStar's notice, whichever period is
shorter (or such additional period of time as may be
mutually agree upon), Lucent shall at WinStar's
option render a full refund or credit based on the
original charges for the Services.
14.7. Product Warranties.
(a) During the Warranty Period and any Extended Warranty
Periods for each Lucent Product, Lucent shall
perform the specific warranty and extended warranty
Services as may be set forth in Schedule A.
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(b) During the Warranty Period and any Extended Warranty
Periods, Lucent represents, warrants and covenants
that Deliverables (other than Third Party Products)
provided under this Agreement shall be free from
defects in design, material and workmanship, and
shall operate in accordance with applicable
Acceptance Criteria, industry standards and intended
purposes during the Warranty Period and any Extended
Warranty Periods.
(c) Lucent represents, warrants and covenants that all
Lucent Product components (except for spare parts
provided in the course of repair or replacement,
which may be refurbished or re-manufactured)
provided hereunder shall be new, not refurbished or
re-manufactured.
(d) With respect to the Software associated with Lucent
Products, Lucent represents, warrants and covenants
that it shall provide to WinStar, at no additional
charge, error-fixes, corrections and revisions to the
Software that are necessary to maintain those
Deliverables in compliance with the Acceptance
Criteria or as otherwise generally provided to any
other customer of Lucent. Lucent will provide on-site
assistance (including installation and problem
resolution Services) necessary to correct
Nonconformities with such Software at no additional
charge to WinStar. Lucent shall also replace such
Software if the media is destroyed or damaged and as
a result such Software is unusable or fails to
operate in accordance with the applicable Acceptance
Criteria. The foregoing representations, warranties
and covenants shall also apply with respect to new
versions, upgrades and enhancements provided by
Lucent to the Software; provided that, if such new
versions, upgrades and enhancements are chargeable to
Lucent's other customers, WinStar must also pay a fee
pursuant to the applicable prices and pricing
methodologies contained in Schedule C.
(e) Lucent represents, warrants and covenants that it
shall provide updated Documentation reflecting any
changes to Deliverables (other than Third Party
Products).
(f) During the Warranty Period and any Extended Warranty
Periods, Lucent represents, warrants and covenants
that it shall provide telephone support to WinStar
in order to assist WinStar to locate and correct
functional or operational problems with Deliverables
(other than Third Party Products). Such support
shall be provided on a 24-hour, 7-days-per-week
basis. Lucent shall provide a toll-free number for
WinStar's calls to Lucent.
(g) Lucent represents, warrants and covenants that it
shall stock spare Equipment parts for Deliverables
other than Third Party Products and provide 24-hour
availability of such parts, unless Lucent's standard
published policies provide otherwise and specified
in a Product addendum herein.
(h) Lucent represents, warrants and covenants that it
will provide all upgrades to Deliverables components
(other than Third Party Products) during the
Warranty Period and Extended Warranty Periods (as
applicable) and that such upgrades shall be backward
compatible to within two (2) immediately
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preceding revision levels for the Deliverables in
use by WinStar.
(i) During the Warranty Period and any Extended Warranty
Periods, Lucent represents, warrants and covenants
that it shall provide access to technical resources
to resolve any problem with Deliverables (other than
Third Party Products) that WinStar cannot resolve
through lower level support, including help desk
support and on-site service support for problems that
cannot be remotely diagnosed and cured. If on-site
support reveals that the problem originated with
WinStar or a third-party, Lucent may charge WinStar
reasonable time and material rates for the on-site
support.
(j) Subject to Section 20.9 of the Agreement, in the
event that any Deliverable fails to comply with the
representations, warranties or covenants contained in
this Section 14.7, WinStar will notify Lucent,
specifying the nature of the failure in reasonable
detail. Lucent shall correct the failure at no
additional charge to WinStar so that the Deliverable
complies with such representations, warranties and
covenants, in accordance with the Performance
Standards set forth in Schedule B. Lucent shall make
available to WinStar on-site personnel as necessary
to repair, replace or correct such Deliverable at no
additional charge to WinStar. The repair and replace
time intervals are set forth in Schedule A.
Notwithstanding the foregoing, if, after a reasonable
number of repeated efforts (but not more than three
(3) attempts or more than a total of three (3)
business days after WinStar's initial notification to
Lucent of noncompliance with a representation,
warranty or covenant), Lucent is unable to correct
the failure, then, at WinStar's option, Lucent shall
provide WinStar with a refund, pro-rated according to
the useful life, of amounts paid for any affected
Deliverable.
14.8. Discontinued Lucent Products
(a) Lucent shall notify WinStar at least one (1) year
before Lucent discontinues accepting Purchase Orders
from WinStar for a Lucent Product. Where Lucent
generally offers an equivalent Lucent Product (based
upon form, fit and function) this notification
period may vary but shall in no event be less than
six (6) months.
(b) Lucent shall, in addition to its obligations under
this Agreement (including with respect to the
Product warranties set forth in this Agreement),
make available ongoing Warranty Period and Extended
Warranty Period support during Extended Warranty
Periods upon the terms and conditions of this
Agreement for a period of five (5) years after such
Product's discontinued availability effective date.
14.9. Compliance.
Lucent represents, warrants and covenants that all
Deliverables delivered hereunder operate in conformance with
all applicable domestic and international laws and
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regulations, including, FCC requirements and specifications
as well as safety and environmental laws and regulations.
Upon WinStar's request, Lucent will issue to WinStar written
statements of compliance that Deliverables provided to
WinStar comply with the foregoing representation, warranty
and covenant.
14.10. Documentation.
Lucent represents, warrants and covenants that all
Documentation provided by Lucent will (a) accurately reflect
the operations and capabilities of any corresponding
Deliverables, (b) be accurate, complete and written in a
manner understood by WinStar, and (c) be updated from time to
time to reflect the changes to the Deliverables.
14.11. Viruses.
Lucent represents, warrants and covenants that it will
exercise reasonable care in recommending Third Party Products
that are free of Viruses and that there are no Viruses coded
or introduced into (a) any Lucent Product or (b) other
Deliverable that is not a Third Party Product. Lucent agrees
that, in the event a Virus is found to have been introduced
into any such Lucent Product or other Deliverable that is not
a Third Party Product, Lucent shall use its best efforts, at
no additional charge, to assist WinStar in reducing the
effects of the Virus and, if the Virus causes a loss of
operational efficiency or loss of data, to assist WinStar to
the same extent to mitigate and restore such losses.
14.12. Disabling Code.
Lucent represents, warrants and covenants that, without the
prior written consent of WinStar, Lucent shall not insert
into any Deliverable any code which would have the effect of
disabling or otherwise shutting down all or any portion of a
Deliverable ("Disabling Code"). Lucent further represents,
warrants and covenants that, with respect to any Disabling
Code that may be part of any Deliverable, Lucent shall not
invoke such Disabling Code at any time, including upon
expiration or termination of this Agreement (in whole or in
part) for any reason, without WinStar's prior written
consent.
14.13. Integration Test.
Lucent represents, warrants and covenants that
(a) It is familiar with the intended use by WinStar of
the Network as described in this Agreement and that
the Network and its associated Deliverables are
suitable for and will satisfy such use and the terms
of this Agreement in all respects, including the
Network Architecture and design and Product
recommendations.
(b) The Network, if implemented in accordance with the
Network Architecture, is
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designed to and will interface and interoperate in
accordance with the Network Architecture, Applicable
Standards and other corresponding Specifications in
this Agreement as a fully integrated system. If the
Network fails to so interface and interoperate
during the Term of this Agreement, Lucent shall
initiate corrective actions after receipt of notice
of the defect or failure and shall promptly cure
such defect at Lucent's sole cost and expense. This
warranty shall not apply to the extent that (i) the
Network is installed by a party other than Lucent
not in accordance with the Network Architecture or
(ii) such failure to operate directly results from a
failure or defect in Lucent or Third-Party Products
to operate in accordance with their specifications.
This warranty shall not be deemed to extend or limit
any warranty for any individual Product provided by
Lucent.
14.14. Year 2000.
Lucent represents, warrants and covenants:
(a) that it will exercise reasonable care in
recommending Third Party Products that are Year 2000
Compliant;
(b) that, during the longer of (i) the Warranty Periods
and Extended Warranty Periods and (ii) December 31,
2001, Lucent Products, and other Deliverables other
than Third Party Products, shall be Year 2000
Compliant; and
(c) to the extent that Lucent provides testing and
validation Services with respect to a Network (which
Services may be performed in Lucent's sole
discretion) and certifies that such Network is Year
2000 Compliant, that such Network is Year 2000
Compliant.
At WinStar's reasonable request, Lucent agrees to cooperate
and assist WinStar and its designated third party contractors
in connection with WinStar's other Year 2000 compliance
efforts.
14.15. Disclaimer
(a) The foregoing warranties will not extend to
defective conditions or non- conformities to the
extent resulting from the following, if not
consistent with the applicable Specifications and
Documentation: WinStar modification, misuse,
neglect, accident, abuse, improper wiring,
repairing, splicing, alteration, installation,
storage or maintenance.
(b) THE FOREGOING WARRANTIES ARE EXCLUSIVE AND IN LIEU
OF ALL OTHER EXPRESS AND IMPLIED WARRANTIES,
INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE. WINSTAR'S SOLE AND
EXCLUSIVE REMEDY FOR A BREACH OF THE PRODUCT
WARRANTY SET FORTH IN SECTION 14.8 HEREUNDER SHALL
BE LUCENT'S OBLIGATION TO
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REPAIR, REPLACE, CREDIT OR REFUND AS PROVIDED HEREIN.
15. TERMINATION
15.1. Termination for Cause.
In the event that Lucent:
(a) Commits a material breach of this Agreement, which
breach is not cured within thirty (30) calendar days
after notice of breach from WinStar to Lucent,
(b) Commits a material breach of this Agreement which is
not capable of being cured within thirty (30)
calendar days and fails to (i) proceed promptly and
diligently to correct the breach, (ii) develop
within thirty (30) calendar days following written
notice of breach from WinStar a complete plan for
curing the breach, and (iii) cure the breach within
sixty (60) calendar days of notice thereof, or
(c) Commits numerous breaches of its duties or
obligations which collectively constitute a material
breach of this Agreement,
Then WinStar may, by giving written notice to Lucent,
terminate this Agreement or any affected Purchase Orders, in
whole or in part, for cause as of a date specified in the
notice of termination.
15.2. Termination by Lucent.
In the event that WinStar fails to pay Lucent when due
undisputed charges under a Purchase Order within thirty (30)
calendar days of notice from Lucent of the failure to make
such payment within the payment period described in Section
12.2, Lucent may, by giving written notice to WinStar,
terminate such Purchase Order as of a date specified in such
notice of termination.
15.3. Termination Option for Lucent's Failure to Provide Financing.
In the event Lucent fails to continue to provide financing
under the Credit Agreement at terms and conditions
satisfactory to WinStar, WinStar may upon notice to Lucent
elect to terminate this Agreement in whole or in part. Any
such termination shall be at no cost or liability to WinStar.
15.4. Disengagement Assistance.
(a) Upon termination or expiration of this Agreement,
WinStar may extend all or any portion of the
Agreement beyond the effective date of termination
one or more times as it elects, at its sole
discretion, provided that the total of all such
extensions shall not exceed twelve months (unless a
longer time period is mutually agreed upon)
following the original effective date of termination
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(such period the "Disengagement Period").
(b) Upon termination or expiration of this Agreement,
Lucent agrees to provide WinStar and its designated
third party providers all reasonable assistance as
necessary to effect a smooth transition to a new
supplier. In the event this Agreement is terminated
by WinStar for cause pursuant to this Agreement,
Lucent shall bear WinStar's reasonable and
verifiable Out-of-Pocket Expenses incurred with
respect to transitioning to a new supplier.
16. 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.
(b) Subject to Subsections (c) and (d) of this Section,
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 an amount equal to one hundred
fifty million U.S. Dollars (U.S. $150,000,000).
(c) The limitation set forth in Subsection (b) of this
Section shall not apply with respect to: (i) damages
occasioned by willful misconduct or gross negligence;
(ii) claims of breach of confidentiality, (iii)
claims subject to indemnification pursuant to the
Agreement, (iv) financing charges, fees or costs that
are assessed on any unused financing amounts
(including to the extent owed or paid by WinStar and
included as part of any damages to which WinStar is
or becomes entitled pursuant to law), (v) failure to
comply with applicable laws and regulations, (vi)
damages occasioned by the improper or wrongful
termination or abandonment of work by Lucent; and
(vii) any amounts paid by WinStar that are refundable
(either by credit or payment) by Lucent pursuant to
this Agreement..
(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.
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16.3. 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, with respect to Lucent,
its sole suppliers or its subcontractors, 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 to the
extent 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. In addition, in such
event, Lucent shall give priority status to WinStar
vis-a-vis other customers to recommence performance
or observance of its obligations. Any Party so
delayed in its performance shall immediately notify
the Party to whom performance is due 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.
(c) If any event under Subsection (a) of this Section
above substantially prevents, hinders, or delays
Lucent's performance for more than thirty (30)
consecutive calendar days, then at WinStar's option:
(i) WinStar may terminate for convenience at no
charge to WinStar or modify any affected portion of
any Purchase Order, or terminate for convenience at
no charge to WinStar any affected portion of this
Agreement, and the charges payable hereunder shall be
equitably adjusted to reflect such termination; or
(ii) WinStar may terminate this Agreement without
liability to WinStar or Lucent as of a date specified
by WinStar in a written notice of termination to
Lucent. Lucent shall not have the right to any
additional payments from WinStar for costs or
expenses incurred by Lucent as a result of any force
majeure occurrence.
17. INDEMNIFICATION
17.1. Indemnities by Lucent.
Lucent 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:
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(a) Lucent's failure to observe or perform any duties or
obligations to third parties (e.g., duties or
obligations to subcontractors);
(b) Any claims of infringement of any patent, trade
secret, copyright or other proprietary rights,
alleged to have occurred based upon the provision of
Deliverables or performance of Services by Lucent,
except to the extent that such claims arise from (i)
modification of a Deliverable or any component
thereof by WinStar that is not recommended or
otherwise approved by Lucent, (ii) maintenance of a
Deliverable by WinStar other than in accordance with
the Specifications and the provisions set forth in
this Agreement that is not recommended or otherwise
approved by Lucent, or (iii) use of a Deliverable by
WinStar in combination with deliverables furnished by
third parties that is not recommended or otherwise
approved by Lucent;
(c) The death or bodily injury of any agent, employee,
customer, business invitee or any other person caused
by the tortious conduct of Lucent;
(d) The damage, loss or destruction of any real or
tangible personal property caused by the tortious
conduct of Lucent; or
(e) Any claim, demand, charge, action, cause of action,
or other proceeding asserted against WinStar but
resulting from an act or omission of Lucent in its
capacity as an employer of a person.
17.2. Indemnities by WinStar.
WinStar agrees to indemnify, defend and hold harmless Lucent
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 any duties or
obligations to third parties (e.g., duties or
obligations to subcontractors);
(b) Any claims of infringement of any patent, trade
secret, copyright or other proprietary rights,
alleged to have occurred based upon misuse of
Deliverables by WinStar, including (i) modification
of a Deliverable or any component thereof by WinStar
that is not recommended or otherwise approved by
Lucent, (ii) maintenance of a Deliverable performed
by WinStar other than in accordance with the
Specifications and the provisions set forth in this
Agreement that is not recommended or otherwise
approved by Lucent, or (iii) use of a Deliverable by
WinStar in combination with deliverables furnished by
third parties that is not recommended or otherwise
approved by Lucent;
(c) The death or bodily injury of any agent, employee,
customer, business invitee or any other person caused
by the tortious conduct of WinStar;
(d) The damage, loss or destruction of any real or
tangible personal property
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caused by the tortious conduct of WinStar; or
(e) Any claim, demand, charge, action, cause of action,
or other proceeding asserted against Lucent but
resulting from an act or omission of WinStar in its
capacity as an employer of a person.
17.3. Infringement.
If any Deliverable or other item used by Lucent to provide the
Services becomes, or in Lucent's reasonable opinion is likely
to become, the subject of an infringement or misappropriation
claim or proceeding, in addition to indemnifying WinStar as
provided in Section 17.1 and to the other rights WinStar may
have under this Agreement, Lucent shall, promptly at Lucent's
expense:
(a) Secure the right to continue using the Deliverable or
item, or
(b) If the action described in Subsection (a) cannot be
accomplished by Lucent, replace or modify the
Deliverable or item to make it non-infringing,
provided that any such replacement or modification
will not degrade the fit, form or function of the
affected Deliverables or Services, or
(c) If the action described in Subsection (b) of this
Section cannot be accomplished by Lucent, and only in
such event, provide WinStar with a full refund for
the affected Deliverables and Services.
17.4. 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
Indemnitee will seek indemnification pursuant to
this Article 17, Indemnitee will notify Indemnitor
of such claim in writing. No failure to so notify
Indemnitor will relieve 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 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, Indemnitor will
notify Indemnitee in writing if Indemnitor elects to
assume control of the defense and settlement of that
claim (a "Notice of Election").
(b) If Indemnitor delivers a Notice of Election relating
to any claim within the required notice period,
Indemnitor shall be entitled to have sole control
over the defense and settlement of such claim;
provided that (i) Indemnitee shall be entitled to
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) Indemnitor shall
obtain the prior written approval of Indemnitee
before entering into any
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<PAGE>
settlement of such claim or ceasing to defend against
such claim. After Indemnitor has delivered a Notice
of Election relating to any claim in accordance with
the preceding paragraph, Indemnitor shall not be
liable to Indemnitee for any legal expenses incurred
by Indemnitee in connection with the defense of that
claim. In addition, Indemnitor shall not be required
to indemnify 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 Indemnitor does not deliver a Notice of Election
relating to any claim within the required notice
period, Indemnitee shall have the right to defend the
claim in such manner as it may deem appropriate, at
the cost and expense of Indemnitor. Indemnitor shall
promptly reimburse Indemnitee for all such costs and
expenses.
18. 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
Lucent or WinStar, shall be resolved as provided in this Article 18;
provided, however, that any dispute arising out of the Best of Breed
process described in Schedule H shall not be subject to Sections 18.1
and 18.2, but rather shall be subject to the dispute resolution process
described in Schedule H.
18.1. Informal Dispute Resolution.
(a) Prior to the initiation of formal dispute resolution
procedures, the Parties shall first attempt to
resolve their dispute informally pursuant to this
Section. Upon the written request of a Party, each
Party shall appoint a designated representative who
does not devote substantially all of his or her time
to performance under this Agreement, whose task it
will be to meet for the purpose of endeavoring to
resolve such dispute.
(i) 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 which 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.
(ii) During the course of discussion, all
reasonable requests made by one Party to
another for non-privileged information,
reasonably related to this Agreement, shall
be honored in order that each of the Parties
may be fully advised of the other's
position.
(iii) The specific format for the discussions
shall be left to the discretion of
Supply Agreement Confidential - WinStar/Lucent
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<PAGE>
the designated representatives.
(b) The Parties agree that disputes, controversies or
claims between them shall not be subject to the
provisions of this Section where:
(i) A Party makes a good faith determination
that a breach of the terms of this Agreement
by the other Party is such that a temporary
restraining order or other injunctive relief
is the only appropriate and adequate remedy;
or
(ii) Institution of formal proceedings earlier
than as set forth in Section 18.2(a) is
necessary to avoid the expiration of any
applicable limitations period or to preserve
a superior position with respect to other
creditors.
(c) If a Party files a pleading with a court seeking
immediate injunctive relief and this pleading is
challenged by the other Party and the injunctive
relief sought is not awarded in substantial part, the
Party filing the pleading seeking immediate
injunctive relief shall pay all of the costs and
attorneys' fees of the Party successfully challenging
the pleading.
18.2. Litigation.
(a) Formal proceedings for the resolution of a dispute
may be commenced after the earlier of:
(i) The designated representatives described in
Section 18.1 conclude in good faith that
amicable resolution through continued
negotiation of the matter does not appear
likely; or
(ii) Thirty (30) calendar days after the initial
written request to appoint a designated
representative pursuant to Subsection
18.1(a) above (this period shall be deemed
to run notwithstanding any claim that the
process described in this Section 18.1 was
not followed or completed).
(b) 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.
18.3. 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
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<PAGE>
performance (dispute over payment shall not be deemed to
preclude performance).
18.4. 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.
19. INSURANCE REQUIREMENTS
During the Term, Lucent shall have and maintain in force the following
insurance coverages:
(a) Worker's Compensation and Employer's Liability.
Lucent is required to comply with applicable federal
and state workers' compensation and occupational
disease statutes. If occupational diseases are not
compensable under those statutes, they shall be
covered under the employer's liability section of
Lucent's insurance policy. Employer's liability
coverage of at least $1,000,000 shall be required,
except in States with exclusive or monopolistic funds
that do not permit workers' compensation to be
written by private carriers.
(b) General Liability. Lucent shall carry general
liability insurance coverage for product liability of
at least $1,000,000 per occurrence; bodily injury
written on the comprehensive form or policy of at
least $1,000,000 per occurrence per person; property
damage of at least $1,000,000 per occurrence.
(c) Automobile Liability. Lucent shall carry automobile
liability insurance written on the comprehensive 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. Policies covering
automobiles operated in the United States shall
provide coverage of at least $1,000,000 per
occurrence for bodily injury and $300,000per
occurrence for property damage. The amount of
liability coverage on other policies shall be
commensurate with any legal requirements of the
locality and sufficient to meet normal and customary
claims.
The foregoing insurance coverages shall be primary and
non-contributing with respect to any other insurance or self
insurance that may be maintained by WinStar. Lucent shall
cause its insurers to issue certificates of insurance
evidencing that the coverages and policy endorsements
required under this Agreement are maintained in force and
that not less than thirty (30) calendar days written notice
shall be given to WinStar prior to any modification,
cancellation or non-renewal of the policies. The minimum
limits of coverage specified herein are not intended, and
shall not be construed, to limit any liability or indemnity
of Lucent under this Agreement.
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<PAGE>
20. GENERAL
20.1. 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.
(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 that WinStar may assign its rights and
obligations under this Agreement without the approval
of Lucent to
(i) an entity which acquires all or
substantially all of the assets of WinStar,
(ii) to any Affiliate, or
(iii) to a successor in a merger or acquisition of
WinStar;
provided, however, that in the event that the
financing provided by Lucent under the Credit
Agreement is terminated as a result of such
assignment, then Lucent's consent to such assignment
shall be required if the entity has credit worthiness
less than that of WinStar.
20.2. 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.
20.3. 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 reliable system
for tracking delivery, (iii) when sent by confirmed facsimile
with a copy delivered by another means specified in this
Section, or (iv) four (4) business days after the day of
mailing, when mailed by United States mail, registered or
certified mail, return receipt requested, postage prepaid,
and addressed as follows:
Supply Agreement Confidential - WinStar/Lucent
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<PAGE>
If to WinStar: If to Lucent:
WinStar Communications, Inc. Lucent Technologies Inc.
7799 Leesburg Pike 5 Wood Hollow Rd
Falls Church, Virginia 22043 Parsippany, New Jersey 07054
Attn: Senior VP, Network Operations Attn: President, Global
Commercial Markets
Facsimile: (703) 761-0309 Facsimile: (973) 581-4106
With a copy to: With a copy to:
WinStar Communications, Inc. Lucent Technologies Inc.
230 Park Avenue 283 King George Rd.
New York, New York 10169 Warren, New Jersey 07059
Attn: General Counsel Attn: Vice President of Law
Facsimile: (212) 922-1637 Facsimile: (908) 559-3042
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.
20.4. Counterparts.
This Agreement may be executed in several counterparts, all of
which taken together shall constitute one single agreement
between the Parties hereto.
20.5. Relationship of Parties.
Lucent, in furnishing Deliverables and Services hereunder, is
acting as an independent contractor, and Lucent personnel
(including its subcontractors) shall not be considered or
represented as employees or agents of WinStar. Lucent is not
otherwise an agent of WinStar and has no authority to
represent WinStar as to any matters, except as expressly
authorized in this Agreement. Lucent is solely responsible
for: (a) performing its responsibilities under this
Agreement, (b) management and control of its personnel; (c)
the payment of all compensation owed to its personnel,
including payment of employment-related taxes, benefits, and
worker's compensation insurance; (d) the filing of all
required employment returns and reports; and (e) the
withholding and payment of all applicable federal, state, and
local taxes and other wage or employment assessments,
including but not limited to income tax, social security tax,
and unemployment insurance premiums for its personnel.
20.6. Severability.
In the event that 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>
20.7. Consents and Approval.
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.
20.8. 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
waive of any succeeding breach thereof or of any other
covenant herein contained.
20.9. 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.
20.10. Survival.
Any provision of this Agreement which contemplates performance
or observance subsequent to any termination or expiration of
this Agreement (in whole or in part) shall survive any
termination or expiration of this Agreement (in whole or in
part, as applicable) and continue in full force and effect.
Without limiting the generality of the foregoing, WinStar
shall have the right to extend any Warranty Period pursuant to
Section 1.1(ss) and order spare parts and Products following
terminatio of this Agreement, and each Party's obligations
with respect to such Services and Products (including those
set forth in Sections 9.3 and 14.8) shall survive expiration
or termination of this Agreement (in whole or in part, as
applicable) and continue in full force and effect.
20.11. 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 beyond the reasonable
control of the disclosing Party, shall be coordinated with and
shall be subject to approval by WinStar prior to release.
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<PAGE>
20.12. Service Marks.
(a) Lucent agrees that it shall not, without WinStar's
prior written consent, use the name, service marks or
trademarks of WinStar or its Affiliates.
(b) WinStar may use the names, tradenames, trademarks,
service marks, trade devices, logos, codes, brand
names or other symbols of Lucent or its Affiliates
(collectively, the "Lucent Indicia") subject to the
following terms and conditions:
(i) WinStar shall not use Lucent Indicia unless
and until approval is rendered pursuant to
Subsection (ii) of this Subsection (b).
(ii) WinStar shall submit all proposed usage of
Lucent Indicia for approval by Lucent on
such written or electronic forms as may be
developed by Lucent and provided to WinStar
from time to time. Lucent shall either
accept or reject WinStar's proposed usage of
Lucent Indicia in writing within three (3)
business days of receipt of WinStar's
request. If Lucent fails to provide such
written acceptance or rejection within such
three-day period, WinStar's proposed usage
shall be deemed approved by Lucent.
(iii) WinStar shall be entitled to use the Lucent
Indicia as proposed by WinStar to the extent
approved by Lucent pursuant to Subsection
(ii) of this Subsection (b); provided,
however, that such use conforms to the
guidelines set forth in Schedule K (the
"Lucent Indicia Co-Marketing Program
Guidelines"), except that for the purposes
of Schedule K, WinStar shall be deemed
enrolled in the Co-Marketing Program.
Without limiting the Lucent Indicia Use
Guidelines, the following shall also apply:
(1) WinStar may not conduct business as
Lucent under Lucent's name or logo;
(2) WinStar may not use any Lucent
Indicia or variations thereof to
identify WinStar or WinStar's
products or services except as
specifically permitted by the
Lucent Indicia Use Guidelines; and
(3) WinStar may not use any of the
Lucent Indicia in a manner that is
likely to confuse the public
concerning the relationship of the
Parties.
(iv) Except as otherwise required by, and without
limiting the terms of, this Agreement,
WinStar acknowledges that it has no
ownership or other interest in the Lucent
Indicia and shall make no claim with respect
to the ownership or other interest in such
Indicia. WinStar's rights to use the Lucent
Indicia shall not be exclusive; Lucent
expressly reserves the
Supply Agreement Confidential - WinStar/Lucent
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<PAGE>
right to contract with others to use the
Lucent Indicia.
20.13. 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.
20.14. Amendment.
This Agreement shall not be modified, amended or in any way
altered except by an instrument in writing signed by both
Parties.
20.15. 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. Terms defined in the Credit Agreement
shall not be superceded by the same terms defined in
this Agreement.
(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.
(e) All dollar amounts set forth herein are in United
States dollars.
20.16. Incorporation by Reference and Order of Precedence.
(a) All Schedules attached hereto are hereby incorporated
by reference into this Agreement. Subject to Section
20.14, any amendments to this Agreement (including
with respect to Schedules), and any additional
Schedules that are agreed upon by the Parties
subsequent to the Effective Date, shall likewise be
incorporated by reference into this Agreement.
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<PAGE>
(b) Any conflict among or between the documents making up
this Agreement will be resolved in accordance with
the following order of precedence (in descending
order of precedence):
(i) This Agreement;
(ii) The Schedules;
(iii) The Exhibits to the Schedules; and
(iv) Purchase Orders.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
undersigned officers, thereunto, duly authorized, as of the date first written
above.
WINSTAR COMMUNICATIONS, INC. LUCENT TECHNOLOGIES INC.
By: /s/ Nate Kantor By: /s/ Nina Aversano
----------------------- ---------------------
Name: Nate Kantor Name: Nina Aversano
----------------------- --------------------
Title: President and COO Title: President -- GSM
----------------------- --------------------
Date: October 21, 1998 Date: October 21, 1996
----------------------- --------------------
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<PAGE>
Schedule A
Statement of Work
1. General.
1.1. General.
This Statement of Work describes certain services, functions and
responsibilities of Lucent, including the design, architecture,
planning, program management and implementation of the Network.
The Services described in this Statement of Work are intended to
be comprehensive as to the categories of services to be performed
by Lucent, but may not necessarily be all inclusive in describing
the particular activities, resources or other details necessary
for the performance of those Services. Appropriate additional
implementation details and procedures for the Services described
herein will be included in documents subsequently developed under
this Agreement.
As more fully described herein, Lucent will have full
responsibility to:
(i) Develop the end-to-end design and architecture of the
Network;
(ii) Develop and design the end-to-end Network Technology,
including Network Elements specifications pursuant to
Best of Breed;
(iii) Plan and execute the implementation of the Network;
(iv) Consistent with the terms of this Agreement, acquire
(on WinStar's behalf) the requisite Network Elements
for the implementation of the Network;
(v) Install, integrate and test the Network Elements with
each other and with the appropriate OSS and BSS; and
(vi) Provide continued engineering support for the Network
as it may evolve and expand to include additional
WinStar business units and WinStar customers.
1.2. Current WinStar Topology, Network Building Blocks And Elements.
(a) Network Building Blocks. The current Network consists of
independent voice and data networks. The voice network is
entirely TDM based while the data network is a combination of
TDM and packet technologies. The network elements of the
voice and data networks are being physically colocated to
afford all of WinStar's customers the opportunity to access
all products and services in a seamless manner. The WinStar
network is comprised of the following major building blocks:
- --------------------------------------------------------------------------------
Schedule A to the Confidential - Winstar/Lucent
Supply Agreement - A-1 - Execution Version
<PAGE>
(i) Central Offices. The Central Office is the service
node for all voice and data services. It houses a
voice switch, an ATM switch, frame relay switch,
microwave radios, transmission gear, host loop
carrier equipment, distribution frames and all
necessary power, network management devices, data
service gateways, HVAC and environmental controls.
Many Central Offices also serve as Hubs, as defined
below.
(ii) Hubs. An access node, primarily utilizing wireless
technology, consisting of microwave radios, host loop
carrier equipment, transmission gear, distribution
frames, network management devices and all necessary
power, HVAC and environmental controls. A Hub in many
cases is also a B-Site in that it serves WinStar
customers that reside in the Hub building.
(iii) B-Sites. A customer building, also known as a WinStar
Building that houses microwave radios, remote loop
carrier equipment, intra-building connectivity
facilities and/or gear to reach WinStar's customer
demarcation point and all necessary power. A B-Site
can also serve as a Hub in a reduced configuration.
(iv) Colos. WinStar can physically or virtually colocate a
subscriber loop or transmission/mux gear with LECs,
IXCs and CAPs. WinStar uses LECs and CAPs to access
unbundled loops and/or T1/T3 facilities for the
provisioning of service to WinStar customers.
(v) Data-Only Points. In other markets, there may be
WinStar services deployed that are not built around a
5ESS anchor. These other markets may also require a
Central Office environment with engineered access,
power, transmission and switching. Lucent will extend
EF&I services to these markets in a similar program
managed environment as is being provided in core
cities.
(b) Topology. The network topology currently consists of a
centralized switching platform that provides all
of the features, services and switching functionality for all
customers in a particular Network Serving Area. Each switch
delivers services to and from WinStar customers through
interconnect facilities to and from the LEC, IXCs and
Internet Peering Points to which WinStar has connections.
Today, Switches connect to Hubs in a hub-and-spoke topology.
Also, Hubs connect to B-Sites in a hub-and-spoke topology.
Exhibit A-6 sets forth the current Network topology.
(c) Switching. The voice network today consists of the Lucent
5ESS, typically deployed one per city and operated as the
centralized switching platform for the entire market. All
Switches provide local service through interconnect
arrangements with the incumbent LEC. All WinStar switches
provide long distance service to WinStar local customers and
most switches provide long distance services to WinStar
switched access long distance customers. The data
- --------------------------------------------------------------------------------
Schedule A to the Confidential - Winstar/Lucent
Supply Agreement - A-2 - Execution Version
<PAGE>
network consists of a Newbridge 36170 ATM switch and a
Cascade 9000 frame relay switch in the Central Office.
(d) Interconnect. The Interconnect facilities are the physical
connections from WinStar's Switch to other carrier networks
for the provisioning of services to WinStar customers. These
facilities connect to the LECs, IXCs, Internet Peering
Points, Carrier Hotels (locations with a large concentration
of carrier POPs) and CAPs. The capacity of the interconnect
facilities varies from T-1 to multiple OC-12 and OC-48. The
interconnect network can consist of:
(i) Leased telco facilities on copper and/or fiber;
(ii) Point-to-point microwave radio facilities operating on
the 18, 23, 28 and 38 GHz bands; or
(iii) Fiber that has been procured through long-term IRUs
and uses optronics owned and operated by WinStar.
(e) Transmission. The transmission network provides connections
from the Switch to the Hubs, Colos and Switches in other
WinStar Network Serving Areas. The capacity of the
transmission facilities varies from T-1 to multiple OC-12 and
OC-48. The transmission network can consist of:
(i) Leased telco facilities on copper and/or fiber;
(ii) Point-to-point microwave radio facilities operating
on the 18, 23, 28, 38 GHz bands; or
(iii) Fiber that has been procured through long-term IRUs
and uses optronics owned and operated by WinStar.
(f) Access. The access network provides connections from B-Sites
to Hubs and Switches. While the preferred and most widely
used access medium is WinStar's Wireless FiberSM, the access
network can consist of any of the following:
(i) Dedicated, TDM-based, point-to-point microwave radio
facilities operated on primarily the 28 and 38 GHz
bands where WinStar owns licenses. WinStar does use
other radio bands if and when they are available or
appropriate. The geographical coverage areas, as
defined and authorized by the FCC where WinStar owns
38 GHz licenses, are called Licensed Serving
Areas("LSAs"). The geographical coverage areas
authorized by the FCC and where WinStar owns 28 GHz
licenses are called Basic Trading Areas("BTAs");
(ii) Dedicated, leased telco facilities on copper or fiber;
(iii) Colocation with LECs, ISCs or CAPs utilizing unbundled
loops; or
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Schedule A to the Confidential - Winstar/Lucent
Supply Agreement - A-3 - Execution Version
<PAGE>
(iv) Fiber that has been procured through long-term IRUs
and uses optronics owned and operated by WinStar.
The capacity of the access network is primarily 8xT1 or DS-3
in the case of microwave radio facilities. In the case of
leased facilities or WinStar fiber, the capacity varies from
T1 to OC-12 and OC-48.
(g) CTE/CPE. The CTE/CPE employed today consists of channel
banks, digital loop carrier equipment, DSUs, routers, bridges
and hubs. Most B-Sites have loop carrier equipment deployed
as a matter of course to provision voice services. Other
devices are selected and deployed at the time of customer
order based on the services to be offered to the customer.
1.3. WinStar Network Services
WinStar offers a wide range of communications services to its
customers, including: Local Voice, LD Voice, Network Transport,
Internet Services, LAN/WAN Integration, and other Professional
Services. This functionality may include
(a) Domestic Voice Functionality. Voice service products may or
may not be tariffed. Tariffed services must interoperate and
interwork with other like tariffed services, if offered, from
incumbent carriers in a service area. On a service-by-service
basis, non-tariffed enhanced services may or may not
interwork or interoperate with other non-tariffed like
offerings in a service area.
(i) Basic and Enhanced Voice,
(ii) CLASS,
(iii) Operator services,
(iv) Directory services,
(v) 911 services,
(vi) Local switching (Class 5), AIN,
(vii) LD switching (Class 4) and IN,
(viii) Least Cost Routing,
(ix) DXC Access integration,
(x) 800/888 services,
(xi) Information/900 services,
(xii) Centrex,
(xiii) ISDN,
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(xiv) Call center outsourcing services,
(xv) Network-based voicemail,
(xvi) Voice conference services,
(xvii) Voice network design,
(xviii) Outsourcing services,
(xix) CPE, and
(xx) PBX CTI.
(b) Domestic Data Functionality. Data service products may or may
not be tariffed. Tariffed services must interoperate and
interwork with other like tariffed services, if offered, from
incumbent carriers in a service area. On a service by service
basis, non-tariffed enhanced services may or may not
interwork or interoperate with other non-tariffed like
offerings in a service area.
(i) Point to Point Connectivity,
(ii) Internet Access,
(iii) UseNet groups,
(iv) Web hosting, e-commerce,
(v) VPN connectivity,
(vi) Email, Network Notes services,
(vii) IP telephony/fax,
(viii) Multimedia and video,
(ix) IP multimedia conferencing services,
(x) CPE,
(xi) WAN professional services,
(xii) LAN professional services,
(xiii) Security services,
(xiv) E Commerce,
(xv) Web/Intranet systems integration,
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(xvi) Private Peering,
(xvii) Customer Network Management,
(xviii) TCP/IP,
(xix) Frame Relay, and
(xx) X.25 / SNA integration.
1.4. Planned WinStar Network Evolution.
WinStar anticipates certain changes in the topology of the Network
as new technologies and Network Elements evolve. WinStar will work
closely with Lucent to plan and implement this evolution under the
principles of SNAP-D and Best of Breed so that the Network
continues to be efficient from a cost, products, services,
features, reliability and maintainability standpoint. Exhibit A-7
sets forth a view of the planned Network topology. While this
section and Exhibit A-7 set forth the anticipated network
evolution, the final architecture will depend on future
requirements, cost and availability of access and transmission
bandwidth, technologies and services.
It is the intent of the Parties to merge voice and data services
into common local infrastructure where these service share common
"Next Generation" Network Elements. In addition, a common
inter-city transport network is required to support combined voice
and data functionality. This integrated metropolitan and national
network will employ Best of Breed technology.
(a) Switching. The Network today consists of a centralized
switching topology connected to access nodes via transmission
facilities. This topology is expected to gradually evolve to
a more distributed switching architecture whereby many former
access nodes become service nodes.
(i) The building blocks formerly referred to as Switches,
and perhaps several of the Hubs, will become
Integrated Core Service Nodes ("ICSNs"). The ICSN may
contain many of the Network Elements as it did
before, however it will now be configured and
integrated in a manner that the provisioning of
service and utilization of transmission and access
facilities will become more efficient and seamless
relative to the voice, data and video services
provided. Also, it is anticipated that there will be
more than a single ICSN in a particular market, which
will offer additional efficiencies via more
localized, multiple interconnect facilities to other
carrier networks.
(ii) Hubs that do not qualify as ICSNs because of traffic
density or operating costs will become Integrated
Edge Service Nodes ("IESNs"). The IESN will be much
like the ICSN, but it will not have direct
interconnect facilities to other carrier networks and
the switching functionality will be less
sophisticated.
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(b) Interconnect. The interconnect facilities defined in the
previous section are expected to evolve in three major ways:
(i) Facilities will migrate from hard partitioning for
voice and data services to clear pipes over which
voice and data traffic will be transported via packet
technologies;
(ii) With the addition of new, distributed service nodes,
there will be multiple interconnection points to
other carrier networks from the numerous ICSNs as
opposed to a single interconnect point with the
centralized switching architecture; and
(iii) The Interconnect facilities will continue to use the
mediums as previously described but the use of
WinStar fiber procured through long-term IRUs and
using optronics owned and operated by WinStar is
expected to increase. Also, it is anticipated that
long-term trends in bandwidth requirements and
increased WinStar market share will drive the
capacity of these facilities much higher than today.
(c) Transmission. Fundamental to advanced services is the
deployment of Lucent Optical Networking solutions in the
Network (locally and nationally), switching and restoration
capabilities for multiple optical rings, and the appropriate
terminating equipment required to deliver services to WinStar
customers. Network bandwidth requirements are expected to
increase to multiple OC-192s in the coming years in order to
support rapidly expanding Internet Protocol (IP) traffic. IP
traffic is expected to be pervasive in the local loop, over
radio facilities and in the long haul network. The
Transmission network is expected to evolve in the following
ways:
(i) The topology will migrate from a hub-and-spoke
topology to a ring and/or mesh topology where it is
determined to be the most cost-effective and
efficient solution.
(ii) The transmission facilities will be configured in
such a way as to allow dynamic allocation of
bandwidth. Transmission facilities that are currently
partitioned for voice and data will gradually evolve
into simply "pipes" over which voice and data
services are transported seamlessly via packet
technologies.
(iii) The physical provisioning that is required today will
be greatly reduced and gradually replaced by logical
and virtual connections.
(iv) The transmission facilities will continue to use the
mediums as previously described but the use of
WinStar fiber procured through long-term IRUs and
using optronics owned and operated by WinStar is
expected to increase dramatically. Also, it is
anticipated that long-term trends in bandwidth
requirements and increased WinStar market share will
drive the capacity of these facilities much higher
than today.
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(d) Access. The Access network will evolve in the following ways:
(i) The access network medium will become increasingly
more dependent on wireless vs. leased telco
facilities as the number of B-Site and Hub leases
increases which in turn will greatly increase the
number of constructed wireless access points;
(ii) The wireless access medium will allow dynamic
allocation of bandwidth over the air interfaces via
packet technologies;
(iii) Increased bandwidth requirements and new technologies
for advanced services will cause the average wireless
bandwidth per building to increase from 8xT1 and DS-3
bandwidth to OC-3 speeds and higher;
(iv) New point-to-multipoint radio technologies will become
commercially available and offer "sharing" or
"trunking" of WinStar's wireless spectrum to multiple
B-Sites simultaneously with an air interface that has
evolved from TDM to packet technologies. The Access
network will become a hybrid wireless network
consisting of a combination of dedicated
high-capacity point-to-point radio and
point-to-multipoint radio technologies; and
(v) WinStar will continue to acquire spectrum in
different portions of the wireless spectrum, which
will create opportunities for new Access topologies
and schemas.
(e) CTE/CPE. The CTE/CPE employed today is expected to change
dramatically to integrated edge devices and customer premises
equipment, which will provide flow-through logical and
virtual provisioning as a much more graceful solution to the
current challenges of physical provisioning of broadband
integrated voice, data and video services. These edge
devices, unlike today's solutions, will be deployed as a
matter of course based on the expectation that cost-effective
solutions will be developed to justify doing so.
2. Network Architecture and Technology.
2.1. General.
Lucent's Network design will consist of two primary components
(Network Architecture and Network Technology), which will be
detailed and analyzed at two levels: overall and city-specific.
The city-specific level will be divided into four application
areas: domestic intra-city, domestic inter-city, international
intra-city and international inter-city. Following development of
the Network design, Lucent will develop city-specific project
plans that define the timing, cost, functionality and scope of the
implementation for each city.
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2.2. WinStar Engineering Requirements.
(a) WinStar will be responsible for identifying the short- and
long-term engineering requirements and business constraints
of the Network (overall and at a city-specific level),
including products supported, functionality, performance
standards and volume, based upon WinStar's engineering
product plans. Lucent will analyze and comment on these
requirements, including using commercially reasonable efforts
to identify any omitted services that are required or
related. After consideration of Lucent's review and comment,
WinStar will specify its final engineering requirements.
These requirements will include year one by quarter, year two
by half-year, and a target year three estimation.
(b) WinStar will provide information regarding WinStar-managed or
-controlled elements of the implementation along with
associated timing, cost and functionality requirements.
(c) The Network Architecture and Network Technology developed by
Lucent shall be capable of handling a margin of deviation
above or below the network capacity defined by market
projections and sales forecast volumes provided by WinStar.
Changes to the Network, Network Architecture or Network
Technology to accommodate volumes beyond this acceptable
margin of deviation shall be handled as a special project in
accordance with Section 5.4 of this Schedule A. In
particular, the acceptable margin of deviation shall be as
follows:
<TABLE>
<CAPTION>
Timeframe Acceptable Deviation (+/-)
---------------------------- ------------------------------------------
<S> <C>
First quarter of year one Ten percent (10%)
Second quarter of year one Twelve and one-half percent (12 1/2%)
Third quarter of year one Fifteen percent (15%)
Fourth quarter of year one Seventeen and one-half percent (17 1/2%)
First half of year two Twenty percent (20%)
Second half of year two Twenty-five percent (25%)
Year three Thirty percent (30%)
</TABLE>
2.3. Baseline Analysis.
Within forty-five (45) days after the Effective Date, Lucent
will complete a baseline analysis of the existing state of the
Network. Initially, this analysis will include a documentation
of the architecture of the Network as of the Effective Date,
including current services supported, objective and actual
network performance, and operations criteria. Part of the
analysis will be a gap analysis, which is an assessment of
problems and issues with that architecture in light of
WinStar's short and longer-term target services, network
performance, and operating criteria. The remainder of the
analysis will be a set of multiple network architecture views
(generic, local and inter-city to support a broad product set
including voice, data and video), services offered, end-to-end
performance criteria, operations criteria (e.g. flow-through),
and service product features, functionality and estimated cost
points. WinStar agrees to provide timely internal information,
expertise and participation in order to meet the schedule.
Lucent
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will assign a chief architect (with a properly staffed
supporting team) to initiate the baseline analysis within one
week of the Effective Date.
2.4. Overall Network Architecture.
Within ninety (90) days after the Effective Date, Lucent will
develop and submit a Network Architecture, based upon WinStar's
final engineering requirements and in compliance with Applicable
Standards, to WinStar for review and potential approval. This
document will be the master specification for the Network and will
describe the final architecture anticipated for implementation
under the Agreement. Where appropriate, the Network Technology
specifications described below will be incorporated by reference.
The Network Architecture will include recommended technical
performance standards with regard to system and Network Element
performance (e.g., MTBF, reliability, recoverability, availability
and throughput) and will describe how all Network Elements
interface with each other, as well as all protocol conversions and
encapsulations. The specification will fully describe the Network
and endpoint and NOC access thereto, alternate access technologies
and co-location strategies. The Network Architecture will support
views of year one by quarter, year two by half-year, and a target
year three view. This document will be updated quarterly to
reflect changes in WinStar's business plan, Lucent and Third Party
Products, new technologies and evolving standards.
2.5. Overall Network Technology.
Lucent will develop a Network Technology plan that specifies the
Network Elements composing the Network, as designed in the
WinStar-approved Network Architecture. The Network Technology will
include:
(a) Public Network Specifications. For each public network
interface included in the Network Technology, Lucent will
submit a set of interface specifications as part of the
Network Technology. Each interface specification will
describe the interface standards and options to be
implemented for a specific public network, including network
management and data interfaces.
(b) Product Specifications. For each item of Equipment and
Software included in the Network design, Lucent will submit a
specification as part of the Network Technology. Lucent's
development of these specifications shall include the
following:
(i) Lucent will perform technical evaluations of required
Products, based on feature content,
cost-effectiveness (including impact of SNAP-D),
operational efficiency and availability, the Product
Spec Principles set forth in Exhibit A-5 and Schedule
B and migration considerations.
(ii) Lucent will perform validation, operations and
interoperability testing, as set forth below in
Section 4, and Lucent Certification of required
Products.
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(iii) Lucent will review and present to WinStar a
sufficient number of system options prior to deciding
on a technical cost-effective solution. The options
will cover popular industry solutions and suppliers.
2.6. City-Specific Network Architecture and Technology.
Lucent will develop Network Architecture and Network Technology
plans at a city-specific level, divided into four application
areas: domestic intra-city, domestic inter-city, international
intra-city and international inter-city. The city-specific Network
design and architecture developed by Lucent will include actual
sizing and deployment of specific Network Elements as determined
by WinStar's city-specific engineering requirements, as well as
preconditioning for growth and a SNAP-D plan, as appropriate. The
Parties agree to employ, where feasible and practical, pre-defined
equipment models in developing City-Specific Plans. Lucent will
perform validation, operations and interoperability testing and
acceptance of the city-specific plans, as set forth below. After
appropriate testing, the city specific Network Architecture and
Network Technology plans will be submitted to WinStar for review
and potential approval.
2.7. Systems Architecture and Design.
(a) To achieve an integrated end-to-end network solution for
WinStar, it will be necessary to integrate all Network
Elements with WinStar's Operations Support Systems and
Business Support Systems (OSS/BSS). These systems are used in
the day-to-day management and administration of WinStar's
business and support the following broad business functions:
(i) Network configuration management;
(ii) Network fault management;
(iii) Network performance management;
(iv) Network security management;
(v) WinStar customer provisioning;
(vi) WinStar customer billing; and
(vii) Management information reporting.
(b) Lucent will work collaboratively with WinStar to facilitate
the integration of Network Elements into WinStar's BSS/OSS
environment. Lucent will define network event data generated
by all Network Elements and will provide the data and
interface specifications to WinStar. All Network Elements
will be compliant with applicable industry standard network
management interfaces, including but not limited to SNMP and
TMN Q3.
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2.8. Engineering and Consulting Services.
(a) Review and Re-Optimizing. WinStar will assess the Network
design in terms of its internal five-year business model and
the "City Success Model." This assessment may lead to an
iterative process to resolve discrepancies and omissions. In
addition, Lucent (with WinStar's input, review and potential
approval) will continually review and re-optimize the Network
design (Architecture and Technology) per a mutually
agreed-upon schedule as new users are added, WinStar develops
new products, volumes change and technology evolves.
(b) Engineering Services. On an on-going basis, but consistent
with the transition plan described in Section 3.3 of this
Schedule A, Lucent's shall be responsible for engineering,
which shall include the following services, as applicable and
necessary for functions set forth in the Responsibility
Matrices at Exhibits A-1 and A-3:
(i) Network architecture, planning and engineering;
(ii) Providing technical expertise in network management
and transport technologies;
(iii) Performing ongoing technology assessment, developing
technology feasibility studies, and coordinating and
determining budgetary costs regarding the Network;
(iv) Evaluating, recommending, and analyzing design
aspects of Equipment, Software, network and circuit
changes and enhancements; (v) Switch and services
engineering;
(vi) Capacity planning and management;
(vii) Transmission and facilities engineering;
(viii) Wireless engineering;
(ix) Local access facilities and equipment engineering;
(x) In-building equipment and facilities engineering;
(xi) End user product/services engineering;
(xii) Inter-city network engineering;
(xiii) International network engineering;
(xiv) Mechanical/electrical site engineering;
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(xv) Managing documentation requirements of the Network;
and
(xvi) Providing overall technical consulting as requested by
WinStar.
(c) Documentation. Lucent's performance of engineering services
shall be supported through its use of the following
documentation and specifications. The structure and specific
content of the documentation shall be mutually agreed upon by
the Parties. However, it is expressly agreed that the
documentation shall include, at a minimum, the current
WinStar information content for these documents.
(i) EOS Generation. The Engineering Order Specification
defines WinStar functional and capacity requirements
used to order Network Elements. An EOS is required
prior to ordering Network Elements.
(ii) Installation Methods and Procedures. The
installation-related Methods and Procedures outline
the steps necessary to install a Network Element in
the Network.
(iii) Capacity Reports Generation. Capacity reports show
network and equipment utilization, including traffic
characteristics and utilization of ports, memory, CPU
and other system resources.
(iv) Network Trunking Design. The network trunking design
depicts how a WinStar switch is connected to other
networks for a given market.
(v) Circuit Service Orders. Circuit Service Orders
specify new or augmentation quantities of circuits
needed. Circuit Service Orders are also used to
communicate translations requirements associated with
new circuits.
(vi) Equipment Growth Orders. Equipment Growth Orders
specify hardware growth requirements.
(vii) Switch Services Engineering Plans. Switch Services
Engineering Plans, define new or existing city switch
engineering requirements. Typical SSE Plans include
central office configuration diagrams, central office
connectivity design, CLLI codes, points of contact
for ILEC and other service providers, Product
engineering requirements and a new technology
architectural description.
(viii) Office Data Administration and Translations
Requirements. The ODA specifies new switch
translations requirements. Translations Requirements
specify translations for existing systems.
(ix) Test Plans. Test Plans define actions needed to test
a new feature or system, as described more fully
below.
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(x) End User Product/Services Engineering Plans.
End-to-end Network Element functionality and
interoperability required to support WinStar-defined
end user products and services, including WinStar
customer provisioning guidelines for new services;
(xi) Network Administration and Network Optimization
Orders. Network Administration and Network
Optimization orders define actions needed to improve
network efficiency. Examples of network
administration and network optimization orders might
include an order to groom two customers with small
counts of DS0s into a single switch facility or to
move a trunk group from one switch SM to another in
order to balance switch traffic.
3. Planning Services and Program Management.
3.1. Program Management.
Lucent will be responsible for overall program management of the
functions performed by Lucent and WinStar, including functions
performed in designing, engineering and building the Network, but
not including on-going Network operations (e.g., NOC operations,
product maintenance and support). Lucent will manage the overall
master schedule for functions performed by Lucent, Lucent
subcontractors, WinStar and WinStar's third-party contractors in
accordance with Exhibits A-1 and A-3 (and Exhibit A-2
(International) as mutually agreed). As functions transition from
WinStar to Lucent in accordance with the transition plan, the
project plan will be modified to reflect the transition of
responsibility and accountability. Also in accordance with the
transition plan, Lucent will assume EF&I program management
responsibility for network components (e.g., B-sites, Hubs,
Central Office and transmission sites including customer
collocation). Lucent's performance of the overall program
management function does not imply responsibility for budget, cost
or performance of work functions not directly controlled by Lucent
or its subcontractors. The Lucent program management role, as the
single point of contact for the overall design, engineer, and
build function, will include:
(a) Typical activities such as program/project schedule
development and maintenance, roles and responsibility matrix
development and maintenance, action register administration,
high-level document control, change control, critical
item/jeopardy escalation process management and program
progress reporting;
(b) Managing and communicating with the various responsible
parties (i.e., Lucent and its subcontractors, WinStar and
WinStar-directed third party resources) as appropriate so
that the Implementation meets established objectives of time,
cost, functionality and service quality, as defined in the
relevant City-Specific Plan. WinStar will provide a single
point of contact to monitor status, resolve issues and make
commitments to Lucent with regard to each WinStar-performed
function or required input; and
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(c) Attending regularly scheduled progress reviews with
appropriate WinStar personnel to communicate project status
and resolve issues in cooperation with WinStar.
3.2. City Implementation Planning.
(a) WinStar will develop and provide to Lucent a roll-out
schedule that, among other things, indicates cities in which
WinStar will commence offering services, the scope of those
services, budget, scope, target markets (buildings to be
targeted) and timeframes.
(b) Lucent will develop and submit City-Specific Project Plans
for WinStar's review and potential approval. Each such
City-Specific Project Plan will be based upon the
corresponding city-specific Network Architecture and Network
Technology plans and will include specific disaster, recovery
and back-out procedures. The City-Specific Plans will
schedule and detail each of the responsibilities set forth in
the matrix in Exhibit A-3, as applicable to the particular
city (i.e., for augmentation of existing cities, only a
subset will be applicable). Lucent will also take into
account WinStar input regarding WinStar functions (e.g., site
acquisition, regulatory compliance, numbering/dial plans,
ILEC facilities negotiation and build-out of common space at
the customer building). The City-Specific Project Plans will
be updated as responsibilities are completed and Network
Elements are implemented so as to incorporate developing best
practices, Best of Breed solutions and issue resolution.
3.3. Transition Planning.
(a) Except as otherwise specified in Exhibit A-4, within
forty-five (45) days after the Effective Date, Lucent will
develop a transition plan with WinStar's input, review and
potential approval, consistent with the matrices set forth in
Exhibits A-1 and A-3; provided, however, Lucent will develop
a transition plan with WinStar's input, review and potential
approval for Network Engineering/Traffic Engineering within
fifteen (15) days of the Effective Date. This plan will
address transfer of responsibility for: network architecture
and technology, planning services, program management,
testing and implementation. The transition plan will identify
and schedule Lucent assumption of responsibility based upon
the following prerequisites:
(i) Lucent core competency and Best of Breed decisions
(e.g., Lucent RF engineering and radio and data
products respectively);
(ii) Understanding (detail) of WinStar expectations;
(iii) Lucent's evolving core competencies ; and
(iv) A joint (Lucent and WinStar) development of
appropriate business processes to transition those
responsibilities, which will include a process for
positive acknowledgement of responsibility transfer.
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(b) The Parties intend that certain functions, such as those
that, as of the Effective Date, are performed by WinStar's
Engineering and Network Construction & Deployment
departments, although not currently within Lucent's core
competence, will be assumed by Lucent during the Term.
(c) Certain functions, although necessary to the implementation
of the Network, will remain WinStar's responsibility. This
includes site acquisition, regulatory compliance,
numbering/dial plans, ILEC facilities negotiation, build-out
of common space at the customer building and management of
business relationships with WinStar customers.
(d) WinStar and Lucent agree to providing the required subject
matter expertise, time and resources required to complete the
transition plan on schedule.
4. Testing.
4.1. Test Beds.
(a) Test Facilities. Lucent will develop and maintain test
facilities to support the test and acceptance process
necessary to drive the technical evaluation and selection set
forth in this Section ("Test Facilities").
(i) The Test Facilities will include a functional replica
of the Network environment, including each Network
Element to be implemented per the Network design. At
no additional cost to WinStar, Lucent will provide
WinStar with at least one of each Lucent Product
purchased by WinStar for implementation into the Test
Facilities. Title in all such Test Facilities Network
Elements shall vest in WinStar, and WinStar shall be
entitled to continue to use such Elements in its Test
Facilities following termination or expiration of the
Agreement. The Test Facilities must be adequate to
support the following types of network testing:
(1) End-to-end integration testing;
(2) Network topology changes;
(3) Integration testing of new/individual Network
Elements within the existing Network (including
Lucent Products and Third-Party Products) and
with the OSS/BSS;
(4) Integration testing of WinStar customer CPE and
network applications within the then-current
Network;
(5) Performance, load, and stress testing;
(6) Trouble/fault isolation;
(7) Year 2000 compliance testing; and
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(8) Verify support of, and compliance with,
Applicable Standards.
(ii) The Test Facilities will be capable of supporting
concurrent testing on current and future
configurations/systems and will support testing by
WinStar and WinStar's customers and third-party
vendors (subject to such third-party vendors signing
a confidentiality agreement protecting Lucent's
intellectual property). The Test Facilities will also
be used for certifying new WinStar hardware/software
configurations as well as simulating Network trouble
conditions if necessary for real-time
trouble-shooting or maintenance support.
(iii) Lucent will install in the test beds a reasonable
number of new product evaluation units for the
purpose of testing such new products and technology.
(iv) Support connection for integration testing of the
WinStar Operations Support Systems ("OSS") and
Business Support Systems ("BSS") as individual and
integrated Network Elements and technology. Act as a
WinStar customer demonstration center where WinStar
customers can, on a pre-negotiated basis, observe
interoperability of their equipment and network
applications with WinStar Network Elements, OSS and
BSS.
(b) Test Bed Scheduling. Lucent will be responsible for
scheduling and coordinating the Test Facilities as required
to support the testing requirements of Lucent, WinStar
(including OSS, BSS and Year 2000 compliance), WinStar's
customers and third-party vendors.
(i) The Lucent test bed will be dedicated to WinStar.
(ii) WinStar will advise Lucent, on a monthly basis, of the
anticipated testing requirements. Lucent will take
these testing requirements into account in developing
the testing schedule for the next ninety (90) days.
(iii) WinStar will be responsible for supporting testing,
as reasonably required, when conducted by Lucent or
WinStar or in support of WinStar customers and
third-party vendors.
4.2. Test Plans.
Lucent will develop test plans and scripts for a structured,
hierarchical test program that will verify the functionality of
individual Network Elements and the ability of the Network
Elements to inter-operate with each other in the Network as
described in the WinStar-approved design specifications. The test
plans will include test conditions and the anticipated acceptable
outcome thresholds (e.g. with regard to interoperability,
manageability, engineering guidelines, product specs, Y2K, IEEE,
and NEBs compliance).
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4.3. Conduct of Lab Testing.
Lucent will perform lab testing according to the WinStar-approved
test plans, and will provide the results to WinStar as input to
the review and approval process. Lab testing will be performed to
validate the Network Architecture and Network Technology, to
validate additions and changes thereto, and for standards
compliance and interoperability with other Network Elements,
WinStar OSS and BSS, and WinStar customer CPE. This testing will
include:
(a) Product testing, performed through factory acceptance tests,
which demonstrate the ability of individual Network Elements
to provide the functionality described in the associated
design specifications. These tests should verify all
interface and standards compliance for the Network Elements,
employing simulation or stimulation devices.
(b) Network Element integration and validation testing, to verify
the ability of the Network Elements to interface with other
Network Elements in the Network, as appropriate. These tests
may include use of load generators to create synthesized data
streams.
(c) Inter-operability Testing, to verify the ability of all
components of the Network to interact and perform as a
system, ensuring interoperability and network integrity and
reliability. This testing may include stress loading devices
to generate sufficient levels of traffic to drive the Network
Elements towards operation at capacity to verify the ability
of the system to function under stress conditions.
(d) Integration and acceptance testing of all changes to the
Network.
(e) Load and recovery testing and support for WinStar in pilot
trials prior to deployment to the production environment.
(f) WinStar will provide reasonable access to OSS/BSS development
test or production environments, as appropriate, to
facilitate network and systems integration testing.
5. Implementation.
5.1. Procurement/Acquisition.
To the extent necessary to implement the Network Architecture and
Network Technology, Lucent will provision Lucent Products as
indicated in the attached Exhibit C-1 (or any successor thereto).
This responsibility shall include:
5.2. Installation.
Lucent will be responsible for the installation of Network
Elements in accordance with the City-Specific Plan, Network design
and the Product Standards. This includes:
- --------------------------------------------------------------------------------
Schedule A to the Confidential - Winstar/Lucent
Supply Agreement - A-18 - Execution Version
<PAGE>
(a) Decomissioning of existing equipment and equipment disposal
per WinStar instructions.
(b) Overseeing proper performance of installation functions on
all Network Elements, including installing Lucent Products
and selecting the installation contractor (except where such
selection would interfere with Product warranty requirements)
and program managing the installation;
(c) Connecting customer building access equipment, cross-connects
and central office connections;
(d) Performing logical assignments in WinStar network facilities
provisioning databases (e.g., ASAP);
(e) Physical inventory and loading of inventory data into
appropriate WinStar databases and systems;
(f) Other installation services as may be mutually agreed to by
the Parties from time to time; and
(g) Performing required acceptance testing.
5.3. Support.
Lucent will be responsible for supporting the Lucent Products as
set forth in this Section and Section 14.7 of the Agreement during
the Warranty and Extended Warranty Periods. This responsibility
will include:
(a) Tendering complete documentation (including inventory
information) in association with replacement of Product
components.
(b) Providing advanced/accelerated replacement service (i.e.,
delivering a replacement Product, part or component on an
overnight basis) based upon an understanding that WinStar
will return the defective Product, part or component as soon
as practicable, unless Lucent's standard published policies
provide otherwise and are specified in a Product addendum to
the Agreement.
(c) Providing standard replacement service (as elected by
WinStar) that will provide replacement Products, parts or
components with a turn-around intervals of less than
twenty-four (24) calendar days. Lucent shall be responsible
for the costs of shipping to and from Lucent in connection
with the standard replacement service.
(d) Delivering a quarterly report that tracks root causes of
failures for all replacements of Products, parts or
components, with tallies of incidents that are similar in
nature or cause.
(e) Lucent will be responsible for recommending (and delivering
per WinStar's order) an adequate field supply and inventory
of spare parts for every Lucent
- --------------------------------------------------------------------------------
Schedule A to the Confidential - Winstar/Lucent
Supply Agreement - A-19 - Execution Version
<PAGE>
Product under Warranty or Extended Warranty. The quantity and
positioning of the spares will be sufficient for Lucent to
meet applicable Service Levels. This shall also include:
(i) Lucent will be responsible for replenishing the spare
parts inventory with quality spare parts. These parts
shall either be new parts or have been certified by
Lucent's quality control as suitable for use in a
production environment.
(ii) Lucent will develop spare parts stocking plans based
on equipment concentrations, locations, and failure
rates. The parts stocking plan will establish
Recommended Spare Parts Lists for engineer-carried,
local, regional, and central stocked quantities of
all parts.
(f) Within thirty (30) days of the Lucent issuance of a new
upgrade or release for any Lucent Product, Lucent will notify
WinStar of the release and its functional content. Lucent
will also propose a test and implementation schedule. WinStar
may, at its option, defer or bypass the implementation.
Lucent and WinStar will work together to assure that WinStar
does not fall two (2) release levels behind the current
release, unless test results indicate instability or
diminished capacity as a result of the new release. In no
case should WinStar be permitted to operate on an unsupported
software release.
5.4. Disaster and Recovery.
Lucent's responsibility for disaster and recovery for the Network
shall be as follows:
(a) Provide WinStar with a comprehensive disaster recovery plan
for all Network Elements and connectivity; and
(b) Perform specific disaster recovery services as may be
mutually agreed upon by the Parties.
5.5. Training.
Lucent will provide, at no additional cost to WinStar, reasonable
numbers of WinStar-designated individuals with reasonable levels
of appropriate training in the installation, operation,
configuration, maintenance and repair of Lucent Products so that
WinStar may, at its option, use, operate, configure and maintain
those Products without Lucent's assistance. In addition, Lucent
shall provide similar training, at no additional cost to WinStar
(other than Out-of-Pocket Expenses incurred by Lucent and paid to
the third party vendor providing training, if applicable), for
those Third Party Products to be implemented into the Network that
Lucent is authorized or otherwise certified to provide training.
If Lucent utilizes a third party vendor to provide the training
identified in the preceding sentence, WinStar will reimburse
Lucent for its cost for such third party vendor on an
Out-of-Pocket Expenses basis.
- --------------------------------------------------------------------------------
Schedule A to the Confidential - Winstar/Lucent
Supply Agreement - A-20 - Execution Version
<PAGE>
6. Special Projects
Lucent will support WinStar's need for ad hoc performance of large,
one-time projects that are related to the Network and individual case basis
requirements not otherwise included in the Services (each, a "Special
Project"). With regard to such Special Projects, the following Services
shall apply:
6.1. Program Management.
Lucent will assign a program manager and sufficient resources
within the program management office to assess and assemble the
Lucent team that will address the Special Project. Lucent will use
best reasonable efforts to support the deadlines specified by
WinStar with regard to Special Projects. Within one week of
notification of the Special Project, Lucent will either provide a
schedule that allows for those deadlines or suggest another
deadline and associated schedule or alternative method to meet the
requirement.
6.2. Products.
Lucent will provide Lucent Products required to meet the schedule
on an accelerated basis and propose an engineering plan that will
meet WinStar's business objectives as defined in the Special
Project request.
6.3. Services.
Lucent will perform services to support the Special Project as
defined in this Agreement and, as mutually agreed upon after
pricing, provide other services as required to meet the objectives
of the Special Project. Other services may include:
(a) Engineering Assessment. Provide a professional assessment of
a network to be purchased as to the interoperability with the
Network and the costs and interval for such interoperability
to be accomplished.
(b) Proposal Support. Provide technical support for large
proposals and evaluations of technology requested and the
applicability and suitability of Lucent Products and services
to meet the requirements set forth by an RFP-type document or
other such bid as may be received by WinStar.
(c) Engineering Design Services. Provide engineering analysis and
offer a design that meets the initiative in a cost-effective
manner.
(d) Other Support. Price and provide other support such as
implementation, testing or inside connectivity.
6.4. Personnel.
It is anticipated that Lucent will need to use personnel other
than those assigned to the Network project in order to meet
Special Project-related demands. If Lucent wishes to use the same
personnel from the Network project to meet the requirements for
Special
- --------------------------------------------------------------------------------
Schedule A to the Confidential - Winstar/Lucent
Supply Agreement - A-21 - Execution Version
<PAGE>
Projects, the roll out of the Network and associated activities
must stay on the agreed-upon schedule unless otherwise agreed to
by WinStar.
6.5. Pricing.
Lucent shall provide preliminary pricing for Special Projects
within five (5) business days and final pricing within ten (10)
business days of notification of the Special Project.
- --------------------------------------------------------------------------------
Schedule A to the Confidential - Winstar/Lucent
Supply Agreement - A-22 - Execution Version
<PAGE>
Exhibit A-1
Lucent Responsibility Matrix by Technology
<TABLE>
<CAPTION>
Technologies By Functional Services - Transition Planning
Functions/services
Ckt Premise
(Apply to initial deployment and growth/evolution) Switch Trans Access PWR Radio Data MDF Cable Rack wiring OSS CPE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Network architecture Y Y Y Y Y Y Y Y Y Y TBD
Technology selection/network design, testing Y Y Y Y Y Y Y Y Y Y TBD
City plan - Network Techn. & Tech Planning Y Y Y Y TBD TBD Y Y Y Y TBD
Equipment Engineering Y Y Y Y TBD TBD Y Y Y Y TBD
Delivery Y Y Y Y TBD TBD Y Y Y Y TBD
Staging Y Y Y Y TBD TBD Y Y Y Y TBD
Installation/Turnover Y Y Y Y TBD TBD Y Y Y Y TBD
Equipment/Site Integration Y Y Y Y TBD TBD Y Y Y Y TBD
Drawings Y Y Y Y TBD TBD Y Y Y Y TBD
Records Y Y Y Y TBD TBD Y Y Y Y TBD
Product Warranty Support Y Y Y Y TBD TBD Y Y Y Y TBD
Logical Assignments Provisioning TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD
Traffic Eng/Capacity Planning TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD
</TABLE>
LEGEND:
Y - Lucent Competency Targeted for Transition.
TBD - Transition Planning Process will analyze and determine
timeframe for implementation.
Exhibit A-1 to the Confidential - Winstar/Lucent
Supply Agreement - A-1-1 - Execution Version
<PAGE>
Confidential --WinStar / Lucent
- --------------------------------------------------------------------------------
Exhibit A-2
International Responsibility Matrix
The following is a listing of some of the international related services Lucent
shall provide. The Parties will develop a responsibility matrix for these
services and such other mutually agreed upon services as soon as practicable
following the Effective Date. The Parties intend to complete the responsibility
matrix as part of developing the associated international related pricing that
is to be developed within thirty (30) days following the Effective Date.
- --------------------------------------------------------------------------------
Schedule A-2 to Confidential - Winstar/Lucent
Supply Agreement - A-2-1 - Execution Version
<PAGE>
Confidential --WinStar / Lucent
- --------------------------------------------------------------------------------
Pre-Implementation Consultancy Including: business planning;
network planning, architecture
design, and engineering; RF
engineering; operations planning
(build MOPs); interoperability
testing; and disaster recovery
planning
Services Including: licenses and permits;
site surveys; site acquisition; and
civil engineering and construction
Implementation Services Including: logistics (warehousing,
delivery and inventory); staging;
installation; testing; network
testing; interworking testing (an
ORT plan will be developed); program
management; and functional
end-to-end testing
Operations Services Including: training; maintenance
(dispatch, repair and replace);
field support; remote management
(Netcare, including IP Gateway);
operations (monitor, provision,
remote management, customer care,
global WinStar NOC monitoring,
Netcare services); staffing; and
civil construction
- --------------------------------------------------------------------------------
Schedule A-2 to Confidential - Winstar/Lucent
Supply Agreement - A-2-2 - Execution Version
<PAGE>
Exhibit A-3
Responsibility Matrix
<TABLE>
<CAPTION>
ID Process Owner Inputs Outputs
- ----- -------------------------------- ------------------ ------------------------------------ -------------------------------------
<S> <C> <C> <C> <C>
1 Market Definition WinStar License Information Rate/Wire Center Priorities
Building Universe Product Descriptions
D&B (ABI) Tenant Data Demand Forecasts (2 years)
o Volume
o Number of Lines
2 Regulatory Approval WinStar Rate/Wire Center Priorities CLEC Authority
3* Dial Plan Lucent Rate/Wire Center Priorities Switch Dial Plan
Calling Plan
4 Preliminary City Plan Lucent Rate/Wire Center Priorities Claritas Data
Demand Forecasts (2 years) o Cluster Maps
Building Priorities o Building Data
Tandem Locations
Connectivity Analysis
Refined Rate Centers
Additional NXX Requirements
5 Interconnect Agreements WinStar Rate/Wire Center Priorities Interconnect Agreements
Interconnect Guidelines/Restrictions
6 Switch Analysis Lucent Connectivity Analysis Preliminary Switch Requirements
Demand Forecasts (2 years) Switch Building Requirements
7 Preliminary Field Survey WinStar/Lucent Building Clusters and Maps Hub Candidates (WinStar)
Tandem Locations o On-net coverage
Switch Building Requirements o Constructability
Broker Switch Site Candidates o Owner Interest
Switch Site Candidates (Lucent)
o Usable square footage
</TABLE>
- --------------------------------------------------------------------------------
Exhibit A-3 to the Confidential - Winstar/Lucent
Supply Agreement - A-3-1 - Execution Version
<PAGE>
<TABLE>
<CAPTION>
ID Process Owner Inputs Outputs
- ----- -------------------------------- ------------------ ------------------------------------ -------------------------------------
<S> <C> <C> <C> <C>
o Distance to Tandem
Connectivity Options (Lucent)
8 Switch Site Selection WinStar Rate/Wire Center Priorities Target Switch Sites (2 or 3 per area)
Site Candidates (RR and Broker)
Switch Building Requirements
Tandem Locations
Connectivity Options
9 Switch Site LOI WinStar Target Switch Sites Switch Site LOI (1 per area)
10 Switch Site Lease WinStar Switch Site LOI Switch Site Lease
CLLI/SS7 Point Code WinStar Switch Site Lease CLLI Codes
Application / Administration SS7 Point Codes
11* Dial Plan Administration Lucent Rate/Wire Center Priorities Calling Plans
Products Descriptions Dialing Plans
Demand Forecasts NPA/NXX's
12 Dialing/Calling Plan Review WinStar Switch Dialing Plans Dialing Plan Approval
Calling Plan (with Call Type)
13 NXX Application WinStar CLLI Code WinStar NXX Codes
Rate/Wire Center Priorities
14 Network Capacity Planning Lucent Demand Forecasts Network Trunking Forecast
Network Capacity Reports
15 Preliminary Connectivity Plan Lucent Switch Site LOI Preliminary Connectivity Plan
Switch Site Lease
Network Trunking Forecast
Tandem Locations
16 ILEC Planning WinStar/Lucent Interconnect Agreements POI (Lucent)
Switch Site LOI Trunking Plans (Lucent)
ASR's (from ILEC) (WinStar)
17 City Network Design Lucent City Serving Plan Network Topology
Demand Forecast Connectivity Plan (Switch to ILEC)
Trunking Forecast Facility Inventory
</TABLE>
- --------------------------------------------------------------------------------
Exhibit A-3 to the Confidential - Winstar/Lucent
Supply Agreement - A-3-2 - Execution Version
<PAGE>
<TABLE>
<CAPTION>
ID Process Owner Inputs Outputs
- ----- -------------------------------- ------------------ ------------------------------------ -------------------------------------
<S> <C> <C> <C> <C>
Switch Site LOI Equipment Inventory
Trunking Plan Budget
Local & Access Tandems
Capacity Requirements
Interconnection Guidelines/
Restrictions
18 Switch Site Survey WinStar/Lucent
19 Room Plans Lucent Site Visit Floor Plan
Cable Rack & Lighting Plan
20 Switch EOS Lucent Demand Forecast Switch EOS
Site Visit
Preliminary Switch Requirements
21 CO Site Construction WinStar/Lucent Site Visit (WinStar - Civil Construction/HVAC)
22 Switch Design/Manufacture Lucent Switch EOS Delivered Switch
Interconnection Agreements
23 ODA Questionnnaire Lucent NPA/NXX Calling Plans ODA Questionnaire
Switch Dialing Plan Translation Requirements
Transmission Facility Orders Integration Test Plan
ODA "Models
24 Transmission Area Lucent Demand Forecast Transmission Equipment Layout
Floor Plan Transmission EOS
Cable Rack & Lighting Plan
25 Central Office Plan Review WinStar Transmission Plan/EOS Central Office Plan Approval
Switch Plan/EOS
Connectivity Plan
26 Facilities and Trunk WinStar Interconnect Facility Orders ASR's to LEC
Provisioning Transmission Facility Orders FOC/CLR
ASR's from ILEC
FOC/DLR from ILEC
Trunking Plans
</TABLE>
- --------------------------------------------------------------------------------
Exhibit A-3 to the Confidential - Winstar/Lucent
Supply Agreement - A-3-3 - Execution Version
<PAGE>
<TABLE>
<CAPTION>
ID Process Owner Inputs Outputs
- ----- -------------------------------- ------------------ ------------------------------------ -------------------------------------
<S> <C> <C> <C> <C>
27 Ongoing Translations WinStar ODA Questionnnaire ODA Updates
LERG Update
28 CO Installation (Switch and Lucent Delivered Switch Completed Central Office
Transmission Room) Room Layout Installed Switch
Connectivity Plan
CO Plan Approval (WinStar - Civil Construction/HVAC)
Translation Requirements
Switch EOS
Switch Lease
29 Integration Testing Lucent Integration Test Plan Switch Integration Test Results
30 Hub Site Selection WinStar/Lucent Hub Candidates Target Hub List (2 or 3 hubs per
On-net coverage (WinStar) cluster to pursue)
Constructability (WinStar)
Owner Interest (WinStar)
Connectivity Options (Lucent)
31 Hub Site Leasing WinStar Target Hub List One Hub Lease per Cluster
32 Hub A&E Review WinStar/Lucent Hub Target List Hub Selection/Approval
Connectivity Plan
33 Backhaul Design Lucent Hub Lease Hub Connectivity Document
Switch Site LOI Hub Engineering Plans
Demand Forecast
Connectivity Plan
IRVs (if any)
34 Hub Engineering Package Lucent Hub Lease Hub Engineering Package
Backhaul Design
35 Hub Equipment Order WinStar Purchase Order FOC
Due Date
36 Hub Construction WinStar/Lucent Hub Lease Constructed Hub
Backhaul EPAC (WinStar - Civil Construction/HVAC)
</TABLE>
- --------------------------------------------------------------------------------
Exhibit A-3 to the Confidential - Winstar/Lucent
Supply Agreement - A-3-4 - Execution Version
<PAGE>
<TABLE>
<CAPTION>
ID Process Owner Inputs Outputs
- ----- -------------------------------- -------------------- ------------------------------------ ----------------------------------
<S> <C> <C> <C> <C>
37 Hub Acceptance Testing WinStar Constructed Hub OPS Acceptance
Backhaul EPAC
38 B-Site Selection WinStar Hub Candidates B-Site Target List
Building Data
39 B-Site Leasing WinStar B-Site Target List B-Site Leases
40 Connectivity Design WinStar (transition Hub Site Lease Connectivity EPAC
(B-Site to Hub) to Lucent) B-Site Target List
41 B-Site Construction WinStar/Lucent B-Site Lease Constructed B-Site
Connectivity EPAC (WinStar - Civil Construction/HVAC)
42 B-Site Ops Acceptance Testing WinStar Constructed B-Site B-Site OPS Acceptance
Connectivity EPAC
43 ORT Test Planning WinStar/Lucent Translation Requirements ORT Test Plan
Translation Updates
Dialing Plans
Product Descriptions
Switch Integration Test Results
44 ORT Testing WinStar ORT Test Plan ORT Results
- Defect Log (owners assigned)
- Resolution Estimates
45 Switch Ops Acceptance Test WinStar Integration Test Results Switch OPS Acceptance
46 General Availability WinStar Switch OPS Acceptance General Availability
Hub OPS Acceptance
B-Site OPS Acceptance
ORT Results
</TABLE>
* Regarding items 3 and 11 above, Lucent intends to begin performing these
Services within six (6) months of the Effective Date of the Agreement.
In the event Lucent cannot perform these Services within such timeframe,
Lucent agrees to hire WinStar (or its designee) as a subcontractor to perform
these Services as part of a city-specific plan.
- --------------------------------------------------------------------------------
Exhibit A-3 to the Confidential - Winstar/Lucent
Supply Agreement - A-3-5 - Execution Version
<PAGE>
Exhibit A-4
Initial Transition Plan
1. General
All contracted services for engineering, furnishing and installation (E,
F&I) and Services for program management shall migrate to Lucent within six
(6) months of the Effective Date.
An initial ramp-up time period is specified for Lucent to fully provide
specific Services. During this period, WinStar personnel will assist Lucent
personnel in familiarization with currently employed practices and
procedures where they exist. This period varies by Service and specifically
includes the items listed below.
1.1. Checklist for Transition
For each of the Services set forth below, WinStar and Lucent will
develop a checklist for items to be transitioned from WinStar to
Lucent. As each service or network element is transitioned, there
will be a document developed by WinStar and Lucent which will be
signed by the appropriate WinStar Network Services VP and the
Lucent Program Management office indicating that the service has
been transitioned and Lucent has accepted responsibility for the
service.
1.2. Specific Transition Timeframes
An initial ramp-up time period is specified for Lucent to fully
provide specific Services. During this period, WinStar personnel
will assist Lucent personnel in familiarization with currently
employed practices and procedures where they exist. The transition
timeframes set forth below apply to all Network technologies with
the exception of radio, packet switching (data) and CPE.
Transition timeframes for these technologies will be mutually
agreed during the transition plan process defined in Section 3.3
of Schedule A.
(a) Engineering of Network Elements, including:
(i) WinStar fiber optic systems will be migrated within
thirty (30) days of the Effective Date. Fiber optic
systems include optronics deployed in metropolitan
areas and systems deployed for long haul
transmission. Fiber optic system engineering includes
evaluation of existing and future dark fiber routes
for loss budget, amplifier and repeater spacing
requirements, protection switching and capacity
growth.
(ii) WinStar Collocation at ILEC central office sites will
be migrated within sixty (60) days of the Effective
Date. Collocation at ILEC central offices includes
subscriber loop carrier equipment and digital loop
carrier equipment
(iii) WinStar Broadband Services only sites will be
migrated within ninety (90) days of the Effective
Date. Broadband Services sites may include
Exhibit A-4 to the Confidential - Winstar/Lucent
Supply Agreement - A-4-1 - Execution Version
<PAGE>
packet switching or packet concentrating equipment,
multiplex or cross connect equipment, auto answer
modems, and UPS equipment and optronics.
(iv) WinStar B sites will be migrated within one hundred
and twenty (120) days of the Effective Date. B sites
may include rack mounted and roof mounted radio
equipment, multiplex equipment, subscriber loop
carrier equipment, digital loop carrier equipment,
packet switching, routing, or concentrating equipment
and UPS equipment.
(v) WinStar Hub sites will be migrated within one hundred
and twenty (120) days of the Effective Date. Hub
sites may include rack mounted and roof mounted radio
equipment, multiplex equipment or cross connect
equipment, subscriber loop carrier equipment, digital
loop carrier equipment, packet switching, routing, or
concentrating equipment, fiber optic equipment, UPS
equipment, battery plant and associated power and
stand-by power generating equipment.
(vi) WinStar Central Office and Transmission sites
including Customer Collocation will be migrated
within one hundred and twenty (120) days of the
Effective Date. Central Office sites may include
rack-mounted and roof-mounted radio equipment, voice
switching equipment, multiplex equipment or
cross-connect equipment, subscriber loop carrier
equipment, digital loop carrier equipment, packet
switching, routing or concentrating equipment, fiber
optic equipment, UPS equipment, battery plant and
associated power and stand-by power generating
equipment
(vii) WinStar Customer Termination Equipment Engineering
will be migrated within thirty (30) days of the
Effective Date. Customer Termination Equipment may
include multiplex equipment, subscriber loop carrier
equipment, digital loop carrier equipment, and packet
routing or concentrating equipment.
(viii) WinStar Customer Premise Equipment and Inside
Connectivity will be migrated within one hundred and
twenty (120) days of the Effective Date. Customer
Premises Equipment may include PBXs, telephone sets,
LANs, bridges, video conferencing equipment etc.
Inside connectivity is the method for connecting from
a B building common space demarcation point to a
demarcation point on the customer premise.
(b) Network Engineering/Traffic Engineering will be migrated as
set forth below. This shall include sizing of trunks for
interconnection to the LEC, 911 services, operator services,
SS7 and AIN and interconnection of hub-to-hub and
hub-to-switch inter-city connectivity, data services, etc.
For new cities (i.e., cities planned for implementation in
1999), Lucent will assume the responsibility within thirty
(30) days of the Effective Date. For existing cities, Lucent
will develop and present a schedule within sixty (60) days of
the Effective Date, with assumption of these Services in the
first city within seventy-five (75) days of the
Exhibit A-4 to the Confidential - Winstar/Lucent
Supply Agreement - A-4-2 - Execution Version
<PAGE>
Effective Date. If Lucent cannot meet this responsibility
within the timeframes specified, it shall subcontract the
responsibility to WinStar. In such case, the payment to
WinStar for this responsibility shall be the amount set forth
in Exhibit C-5, prorated monthly (i.e., WinStar will pay
Lucent that amount for the Service and Lucent will pay
WinStar that same amount as a subcontractor).
(c) Documentation and entry of data into WinStar Systems to
support tracking and provisioning of Network Elements will
commence concurrently with the Lucent Engineering of each
Network Element. The initial ramp up time period for Lucent
provided documentation and entry into WinStar Systems will
exist concurrently with the ramp up time period specified for
Lucent provided Engineering for each Network Element. In
cases where documentation and entry of data into WinStar
Systems is provided for Network Elements for which Lucent is
not providing Engineering Services, the Lucent ramp up period
will be defined per the Transition Plan as specified in
Section 3.3 of Schedule A.
1.3. Other.
The Agreement and its Schedules anticipate that the Network will
evolve into a different and new structure with Network Elements
that have not been explicitly defined herein. If, during the
transition period, these new Network Elements are deployed in the
Network, Lucent agrees to support them at the time of transition
unless otherwise mutually agreed by the Parties. Engineering
Services for these elements will also be provided by Lucent at
that time.
Exhibit A-4 to the Confidential - Winstar/Lucent
Supply Agreement - A-4-3 - Execution Version
<PAGE>
Exhibit A-5
Product Performance Specifications
1. 5ESS Switches
Switches will be deployed in phases. Phases are based on modular
capacity models.
1.1. Initial Deployment
The initial deployment will be based on two Switch Modules
("SMs") based on Lucent's pre-designed Model 2A. This phase
will be equipped to support the following capacity per SM:
(a) TR008 analog lines: 800
(b) TR303 lines: 2,400
(c) ISDN PRI DS0s: 3,048
(d) Digital DS0s for PBX customers: 1,032
(e) Software. The switch will include but will not be limited
to software for the following services:
(i) Local Services;
(ii) CENTREX;
(iii) CLASS Features;
(iv) Long Distance; and
(v) LNP.
1.2. First Growth Job
When additional capacity is needed the first two SMs will be
grown to the following size before additional SMs are
deployed:
(a) TR008 analog lines: 800
(b) TR303 lines: 7,500 @ 2.66 : 1 concentration
(c) Digital DS0s for PBX and ISDN: 5,000
(d) Interconnection DSOs: 2,000
(e) Spare DS0s: 500
- --------------------------------------------------------------------------------
Schedule A-5 to Confidential - Winstar/Lucent
Supply Agreement - A-5-1 - Execution Version
<PAGE>
1.3. Additional Growth
The switch will grow to support at a minimum the customers
below before a new switch is deployed:
(a) Total SMs: 10
(b) TR008 Analog Lines: 8,000
(c) TR303 Analog Lines: 105,000 @ 2.66 : 1 concentration
(d) Total Customer Digital Trunks: 37,000
(e) Interconnection Trunks: 20,000
(f) Unassigned ports: 15,000 DS0s
Total Ports (Lines or Trunks) used by WinStar
revenue-generating customers: 150,000
Assuming:
Lines used at 6 CCS
Trunks used at 28 CCS
- --------------------------------------------------------------------------------
Exhibit A-5 to the Confidential - Winstar/Lucent
Supply Agreement - A-5-2 - Execution Version
<PAGE>
Exhibit A-6
to
Schedule A
Combined Transmission Network
This Exhibit consists of a map of the continental United States showing
present locations of transmission equipment and locations where additional
equipment is required. It also contains diagrams of the architecture of the
transmission network, including the High Speed National Core, Stage 1 Remote
City Connections, State 2 Remote City Connections, Stage 3 City Data Hub
Expansion, the National Core Transport Network, the National Core Transmission
Network, Network Peering and Regional/City Core Access and Current Topology.
Exhibit A-7
to
Schedule A
Potential Future WinStar Network
This Exhibit consists of diagrams of the Transport Network (Packet
Technology) and the ATM Edge to Core (National Backbone ATM Fiber/TDM Core
Regional Networks).
<PAGE>
Schedule B
Performance
1. General
1.1. Introduction.
This Schedule B sets out Performance Standards for Lucent's
performance of engineering and design Services.
1.2. Future Direction.
The Parties agree to work together to develop an affirmative
approach to incent Lucent to adopt a WinStar customer
satisfaction-focused approach to delivering the Services. The
Parties anticipate that this approach may involve gainsharing,
incentives or changes to WinStar's commitment to spending volume
and Lucent content.
2. Engineering Services.
Consistent with the transition plan, Lucent is required to provide
Engineering Services for the WinStar Network. The Services to be provided
include but are not limited to Base General Architecture, City Plans, Site
Plans, Switch EOS, ODA Development, Backhaul Design, Engineering Plan for
Hubs, Connectivity Design for Hubs, Network Capacity Plan, Future
Architecture, Baseline Evaluation of existing network and others that may
be required for implementation and ongoing serviceability of the WinStar
Network. A number of these Services are still under evaluation by both
Parties and a decision as to whether Lucent will provide those Services
will be made as part of the development of the transition plan.
2.1. Service Delivery.
Except as otherwise mutually agreed to by the Parties, Lucent will
deliver the Services within the following intervals:
(a) Architecture Services:
(i) RF Engineering (Individual Path) - one (1) working
day;
(ii) City-Specific Plans - forty (40) working days after
request and delivery of forecast;
(iii) Network Architecture - forty-five (45) days after the
Effective Date;
(iv) Gap assessment of Existing Network - two (2) months
after the Effective Date; and
(v) Network Technology - three (3) months after the
Effective Date.
(b) Other Engineering Services:
- --------------------------------------------------------------------------------
Schedule B to the Confidential - Winstar/Lucent
Supply Agreement - B-1 - Execution Version
<PAGE>
(i) Site Plans including Hub and Central Office -
two (2) weeks after request;
(ii) Switch EOS - two (2) weeks after request;
(iii) ODA Development - three (3) weeks after request;
(iv) Backhaul Design - three (3) weeks after request;
(v) Engineering Plan for Hubs - two (2) weeks after
delivery of base building drawings;
(vi) Connectivity Design for Hubs - two (2) weeks after
Hub selection;
(vii) Network Capacity Plan - one (1) week after need for
augment, network elements or connectivity is
determined; and
(viii) Documentation for Network Elements (with respect to
placement and connectivity within the Network) -
within three (3) business days of installation of the
Network Element.
2.2. Change Requests.
In the event that WinStar desires a change to generic individual
Engineering Packages for Network Elements, Lucent will provide
change documentation within thirty (30) days of request unless
otherwise mutually agreed.
3. Availability and Reliability
Network Elements made up of Lucent Products and Deliverables must perform
up to the manufacturer's specification. The end-to-end network availability
is an objective, not a specification, until WinStar approves the final
design produced by Lucent. An availability calculation will then be
performed by Lucent. Based upon the outcome of the calculations, Lucent
will recommend that the design be adjusted or that the outcome of the
calculation be accepted as the specification for the Network. This
recommendation will be submitted to WinStar for review and potential
approval.
3.1. Reliability Standards.
Reliability standards are defined for the following four major
network segments as shown in Figure 1. These standards encompass:
(a) Distribution: Distribution consists of the Network segment
starting at the customer demarcation point in the customer
space and ending at the Central Office. When CPE is provided
by Lucent, distribution objectives include the CPE.
(b) Switch: The Network's central office switches.
- --------------------------------------------------------------------------------
Schedule B to the Confidential - Winstar/Lucent
Supply Agreement - B-2 - Execution Version
<PAGE>
(c) Facility Entrance: The facility entrance network segment
includes Equipment such as analog-to-digital converters
(channel banks, loop carrier equipment), multiplexers,
Digital Cross Connects, etc.
(d) Interoffice: The interoffice transmission facility segment is
used to transmit calls from one central office switch to the
other.
[GRAPHIC OMITTED]
3.2. End-to-End Network Reliability Objective (Figure 1)
Since it is important from the customer's view that there be a
high probability of obtaining a path through the network, a high
level of end-to-end (customer to customer) network availability is
desirable. The end-to-end availability requirement in accordance
with Bellcore Standards is ninety-nine and ninety-three hundredths
percent (99.93%) from the customer viewpoint. This is
approximately three hundred and sixty-five (365) minutes per year
or one (1) minute per day of unavailability. The availability must
be met regardless of equipment failures or network congestion.
3.3. Distribution Network Segment (Figure 2).
The distribution network segment includes both the feeder and the
loop from the switch to the customer's home/office demarcation
point, including customer terminal equipment (e.g., DLC) and
inside wiring, excluding customer premise equipment (e.g., PBX or
key sets). The objective on the distribution segment availability
is ninety-nine and ninety-nine hundredths percent (99.99%). This
would give a maximum downtime objective of approximately
fifty-three (53) minutes per year per customer line.
- --------------------------------------------------------------------------------
Schedule B to the Confidential - Winstar/Lucent
Supply Agreement - B-3 - Execution Version
<PAGE>
[GRAPHIC OMITTED]
3.4. Circuit Switch Segment (Figure 3).
(a) The total switch down time objective is three (3) minutes per
year. In addition the total downtime for individual lines is
twenty-eight (28) minutes per year, and the total downtime
for individual trunks is also twenty-eight (28) minutes per
year.
(b) For a transmission through-path traversing the switch from a
line to a trunk, the maximum unavailability objective is the
sum of the line and trunk unavailability minus three (3)
minutes per year, since the total outage objective is
included in both the line and trunk objectives and need only
be considered once on a through-path. This results in a
through-path downtime objective (line to trunk, or customer
to interconnection trunk) of fifty-three (53) minutes per
year or one hundred of a percent (0.01%).
[GRAPHIC OMITTED]
3.5. Facility-Entrance Network Segment (Figure 4).
The facility-entrance network segment is allocated five
ten-thousandths of a percent (0.0005%) unavailability at each end
or a total of one-hundredth of a percent (0.01%) for both. This
results in about five (5) minutes per year unavailability.
- --------------------------------------------------------------------------------
Schedule B to the Confidential - Winstar/Lucent
Supply Agreement - B-4 - Execution Version
<PAGE>
[GRAPHIC OMITTED]
3.6. Interoffice Network Segment.
The interoffice transmission minimum availability objective is
ninety-nine and ninety-eight hundredths percent (99.98%). This
equates to ninety-nine and ninety-eight hundredths percent
(99.98%) availability at two hundred and fifty (250) miles.
3.7. Common Channel Signaling SS7 Network (Figure 5).
The common channel signaling SS7 network downtime objectives are
shown in Figure 5.
Each SS7 user (e.g. 5ESS) interface segment should be down (an
average of) no more than three (3) minutes per year.
Each network access segment should be down (an average of) no more
than two (2) minutes per year, and
The backbone network segment should be down a negligible amount of
time (that is, close to zero (0) minutes downtime per year). Note
that downtime for this segment includes failures that prevent use
of the backbone segment but do not by themselves disable any other
segment(s).
The above allocation assumes an ANSI-based reference architecture
with two-way diversity for the A-link sets and three- way
diversity for the B-/D-link sets. If three-way diversity is not
achievable in the backbone segment, the downtime of that segment
may no longer be negligible. Hence, the ten (10) minute end-to-end
objective may no longer be achievable.
- --------------------------------------------------------------------------------
Schedule B to the Confidential - Winstar/Lucent
Supply Agreement - B-5 - Execution Version
<PAGE>
[GRAPHIC OMITTED]
4. Other Services
It is recognized that evolution and development of the WinStar Network is
ongoing. As the Network grows and changes, Lucent will develop and WinStar
will approve new or revised Engineering Services and Design functions to
support it.
5. Standards and Remedies
Lucent recognizes that in providing services and network elements that such
tasks are to be performed within industry standards and products must be
Best of Breed. The reliability and availability of the Network and the
delivery of engineering Services are critical to WinStar's business.
5.1. Architecture Services.
With regard to Engineering Services for Base Generic Architecture,
Future Architecture, City Plans and baseline architecture of
existing networks as referred to in Section 2.1(a) of this
Schedule B, the following standards and remedies shall apply:
(a) Standard. Lucent shall deliver all Deliverables of such
Services within the timeframes specified.
(b) Remedy. If, for any reason, Lucent anticipates a delay in the
delivery of the service, it shall notify WinStar as soon as
possible. In addition:
(i) If Lucent's delivery of the Service is, or is
expected to be, delayed more than five (5) business
days, then the Lucent Vice-President of Network
Solutions shall notify the WinStar Senior
Vice-President of Engineering of the delay and of the
plan to cure such delay within (10) business days of
the original due date. The president of Lucent Global
Commercial markets will also be notified at this
time.
- --------------------------------------------------------------------------------
Schedule B to the Confidential - Winstar/Lucent
Supply Agreement - B-6 - Execution Version
<PAGE>
(ii) If Lucent cannot deliver the affected Service within
ten (10) days of the original due date, the Lucent
President of Global Commercial Markets will
personally visit the WinStar Chief Operating Officer
to explain the reason for the delay in service and to
confirm a new plan to deliver the service within
twenty (20) business days from the original due date.
WinStar and Lucent may mutually agree to extend the
timeframes for such Services. If WinStar and Lucent
cannot mutually agree to extend delivery dates for
the affected Service, WinStar shall be given the
option to terminate the affected service in its sole
discretion.
5.2. Other Engineering Services.
With regard to Engineering Services for site plans, switch EOS,
ODA development, backhaul design, engineering plan for Hubs,
Network capacity plan, connectivity designs for Hubs, RF
engineering, and documentation, as referred to in Sections 2.1(b)
of this Schedule B, the following standards and remedies shall
apply.
(a) Standard. Lucent shall deliver all Deliverables of
such Services within the timeframes specified. In particular,
Lucent shall achieve on-time delivery of ninety-five percent
(95%) of all services ordered in a given Service.
(b) Remedies. If, for any reason, Lucent anticipates a delay in
the delivery of the service, it shall notify WinStar as soon
as possible.
(i) If Lucent's on-time delivery falls below the
ninety-five percent (95%) threshold in any given
service category, the Lucent Vice-President of Network
solutions shall notify the WinStar Senior
Vice-President of Engineering of the delay and
deliver a plan to cure the affected Service within
five (5) Business days. The president of Lucent
Global Commercial Markets will also be notified at
this time.
(ii) If Lucent cannot cure the affected Service in the
five (5) day cure period then the Lucent President of
Global Commercial Markets will personally visit the
WinStar Chief Operating Officers to explain the delay
in Service. WinStar and Lucent may mutually agree to
extend the timeframes for the affected Services. If
WinStar and Lucent cannot Mutually agree to extend
delivery dates for the affected service, then WinStar
shall be given the option to terminate the affected
Service in its sole discretion.
5.3. Reliability and Availability
For failure to meet the switch reliability standards set forth in
Section 3.4 of this Schedule B or the end-to-end Network
reliability specification as calculated in Section 3.2 of this
Schedule B after the new Network Architecture and Technology plans
are provided by Lucent, the following standards and remedies shall
apply:
- --------------------------------------------------------------------------------
Schedule B to the Confidential - Winstar/Lucent
Supply Agreement - B-7 - Execution Version
<PAGE>
(a) Standards. Lucent shall meet or exceed the performance
metrics for the switch and end-to-end Network as set forth in
Sections 3.4 and 3.2 of this Schedule B, as measured on a
monthly basis.
(b) Remedies. If Lucent fails to meet a stated objective in any
given month then Lucent will notify WinStar and present a
plan to cure the affected Service in the following
measurement period.
(i) If Lucent's performance objective is not achieved for
two months of any given six month period, then Lucent
will place into escrow an amount equal to one percent
(1%) of the charges for all Products and Services
provided pursuant to this Agreement over the
preceding twelve (12) months. The president of Lucent
Global Commercial Markets will also be notified at
this time.
(ii) If Lucent does not achieve a performance metric in
any three (3) months in any given six (6) month
period, then the Lucent President of Global
Commercial Markets will personally visit the WinStar
Chief Operating Officer and provide a plan to improve
performance of the Network. Lucent will also forfeit
the escrow deposit described above to WinStar.
(iii) If Lucent cures the underlying problem so that the
Network achieves the affected performance metric for
six (6) consecutive months, the escrow deposit will
be released and returned to Lucent.
5.4. Limitations.
The following limitations shall apply to the remedies set forth in
this Schedule B:
(a) Credits to WinStar pursuant to this Section will be capped at
Two Million Dollars ($2,000,000) for any given calendar year.
(b) The remedies apply only to Lucent Products and Deliverables.
(c) The remedies will not apply in situations of third party
Equipment not performing to Specifications or third party
catastrophic outages (other than those that should have been
reasonably foreseen and accounted for by Lucent's design) or
where WinStar has failed to meet its responsibilities as
required for Lucent to perform the Service.
- --------------------------------------------------------------------------------
Schedule B to the Confidential - Winstar/Lucent
Supply Agreement - B-8 - Execution Version
<PAGE>
Schedule C
Charges
1. General
1.1. General
This Schedule C describes the charging methodologies and processes
for both Products and Services. For Products, Lucent's list
prices, WinStar's discounts, the Best of Breed process and SNAP-D
interact to produce prices for individual Products. For Services,
charges will be determined on a fixed price schedule, either
annually or per Network segment.
1.2. Definitions
(a) "Ramp-up Period" means:
(i) For addition of new cities to the Network, a time
period of twenty-four (24) months for switches and
fifteen (15) months for all other Network Elements,
both as measured beginning with cutover to production
traffic; or
(ii) For augmentation of cities already included in the
Network, the twelve-month period of time following
acceptance of the corresponding new capacity.
(b) "Target Volume" means the volume of projected traffic
forecast by the City Success Model (or other WinStar
forecast) during the Ramp-up Period.
(c) "SNAP-D Term" means a Ramp-up Period for a specific city or
Product, as applicable, but shall terminate before the
expiration of the Ramp-up Period if the corresponding Target
Volume is achieved earlier.
2. Pricing Process for Products
The pricing process implements five operations on the price offered by
Lucent for each Lucent Product. These include comparison to the market,
comparison to list prices with discounts, comparison to reference scales,
Best of Breed protection and SNAP-D.
2.1. Market-Competitive Pricing.
Lucent is committed to competitive market pricing on all Lucent
Products (price and extended warranty fees) deployed in the
Network.
- --------------------------------------------------------------------------------
Schedule C to Confidential - Winstar/Lucent
Supply Agreement - C-1 - Execution Version
<PAGE>
2.2. Price Lists and Discounts
(a) Price Lists. Exhibit C-1 sets forth a "Price List" for the
initial set of Lucent Products that may be purchased under
this Agreement and represents the price at which such
Products are offered to other customers. Future products may
be added to the Price List as they are brought out to market.
For such additions, WinStar may participate, at its election,
in early product trials or first office applications and will
be given a priority position to obtain Products once they
achieve general availability. Products will be retired from
the Price List as Lucent discontinues availability, provided
that replacement products with comparable functionality are
substituted on the Price List.
(b) Discounts. Exhibit C-2 sets forth the discounts applicable
throughout the Term to the initial set of Lucent Products.
Each "Initial Start-up Discount" designated on Exhibit C-2
will apply to WinStar's purchase of the corresponding
Product. The "Incremental Growth Discount" will apply to
WinStar's purchase of parts and components to augment the
capacity of the corresponding Product. As Products are added
to the Price List, corresponding discounts shall be provided
by Lucent that are at least as favorable as those set forth
on Exhibit C-2.
(c) Calculation. For each Lucent Product, the "Discount Price"
shall be the product of the applicable discount and the
corresponding price from the Price List.
2.3. Reference Scaling
(a) FOT, Access And Cross Connect.
(i) Exhibit C-3 sets forth the "Reference Price" for
three pricing categories: fiber optics technologies,
access and cross connect. The Reference Prices are
intended to be indicative of specific configurations
required for each product category.
(ii) For each Lucent Product that falls into one of these
pricing categories, the Reference Scale Price shall
be the lower of the Discount Price and the
corresponding Reference Price, assuming an
appropriately scaled product configuration.
Appropriately scaled product configuration means that
the Reference Price will be adjusted as agreed to by
the Parties to account for differences between the
configuration of the Reference Price model and the
Product actually purchased by WinStar.
(b) Switching. For each Lucent Product in the switching category,
Exhibit C-4 sets forth the applicable Start-up Price and
Incremental Price. Those prices will be adjusted as agreed to
by the Parties to account for differences between the
configuration of the Reference Price model in Exhibit C-4 and
the Product actually purchased by WinStar. For such products,
Sections (c), 2.5(a)(i) and 2.5(a)(ii) shall not apply.
(c) Other. For all other Products, the Reference Price shall be
the Discount Price.
- --------------------------------------------------------------------------------
Schedule C to Confidential - Winstar/Lucent
Supply Agreement - C-2 - Execution Version
<PAGE>
2.4. Best of Breed Pricing (BoB)
In accordance with the BoB process set forth in Schedule H, an
appropriate cost will be determined for the Best of Breed
solution. For each Lucent Product other than those in the
switching category, the BoB Price will be the lesser of that cost
or the Reference Scale Price.
2.5. SNAP-D Charging.
(a) For each Network Element that is a Lucent Product, Lucent
will identify two budget elements in the City-Specific Plan:
a "Start-up Price" and an "Incremental Price."
(i) The Start-up Price for each Lucent Product shall be
the corresponding BoB Price for that Product, less a
minimum of five percent (5%) for Lucent-branded
Products or a minimum of ten percent (10%) for
Lucent-created Products.
(ii) The Incremental Price for each Lucent Product shall
be the difference between the Start-up Price and the
BoB Price, divided by a standard measure of volume
that reflects the growth in traffic volume with
respect to that Product over the Ramp-Up Period
(e.g., port-months or voice minutes).
(b) The charges for each Lucent Product that is implemented as a
Network Element of a City-Specific Plan shall be invoiced to
WinStar as follows:
(i) Upon Product shipment, Lucent shall charge WinStar
the Start-up Price.
(ii) Each month during the corresponding Ramp-up Period,
assuming the Target Volume has not yet been achieved,
Lucent shall charge WinStar an amount equal to the
Incremental Price multiplied by the amount of
corresponding volume units actually attributable to
that month. If the Target Volume is achieved during
the course of a month, the charge for that month
shall be equal to the Incremental Price multiplied by
the difference between the volume at the close of the
preceding month and the Target Volume.
(iii) If, at the expiration of that Ramp-up Period, the
Target Volume has not been achieved, Lucent shall
charge WinStar an amount equal to the Incremental
Price multiplied by the difference between the Target
Volume and the actual volume.
(iv) Following the Ramp-up Period, the Parties shall
consider each such Product to have been fully
paid-for.
- --------------------------------------------------------------------------------
Schedule C to Confidential - Winstar/Lucent
Supply Agreement - C-3 - Execution Version
<PAGE>
Exhibit C-1
Lucent Equipment Price List
Complete list of Lucent Products to be provided by Lucent within ten
days of the Effective Date.
- --------------------------------------------------------------------------------
Exhibit C-1 to the Confidential - Winstar/Lucent
Supply Agreement - C-1-1 - Execution Version
<PAGE>
Exhibit C-2
WinStar Equipment Discounts
<TABLE>
<CAPTION>
- ------------------------------------ ----------------------------------- -----------------------------------
Initial Startup Discount % Growth Window Discount %
Switching
- ------------------------------------ ----------------------------------- -----------------------------------
<S> <C> <C>
5ESS-2000 85% 85%
- ------------------------------------ ----------------------------------- -----------------------------------
VCDX 85% 85%
- ------------------------------------ ----------------------------------- -----------------------------------
Remote SM 78% 78%
- ------------------------------------ ----------------------------------- -----------------------------------
</TABLE>
Note: Other 5ESS Equipment and software (such as adjunct processors, etc.)
carry various discount levels that are quoted separately from the 5ESS switch.
WinStar will have one (1) six-month growth window as described in Schedule C
5ESS SNAP-D pricing that will provide for eighty-five percent (85%) discount.
<TABLE>
<CAPTION>
- ------------------------------------ ----------------------------------- --------------------------------------
Initial Start-Up Discount % Incremental Growth Discount %
SONET/OPTICAL NETWORKING/DWDM
- ------------------------------------ ----------------------------------- --------------------------------------
<S> <C> <C>
DDM-2000 OC-3 45% 45%
- ------------------------------------ ----------------------------------- --------------------------------------
DDM-2000 OC-12 45% 45%
- ------------------------------------ ----------------------------------- --------------------------------------
FT-2000 40% 40%
- ------------------------------------ ----------------------------------- --------------------------------------
WaveStar OLS 40G 30% 30%
- ------------------------------------ ----------------------------------- --------------------------------------
WaveStar OLS 400G 30% 30%
- ------------------------------------ ----------------------------------- --------------------------------------
WaveStar 2.5 G 30% 30%
- ------------------------------------ ----------------------------------- --------------------------------------
WaveStar 10G 30% 30%
- ------------------------------------ ----------------------------------- --------------------------------------
WaveStar Bandwidth Mgr. 30% 30%
- ------------------------------------ ----------------------------------- --------------------------------------
Access
- ------------------------------------ ----------------------------------- --------------------------------------
SLC Series 5 35% 35%
- ------------------------------------ ----------------------------------- --------------------------------------
SLC 2000 40% 40%
- ------------------------------------ ----------------------------------- --------------------------------------
SLC Connect Reach 30% 30%
- ------------------------------------ ----------------------------------- --------------------------------------
SLC Line Reach 35% 35%
- ------------------------------------ ----------------------------------- --------------------------------------
SLC-2000 MSDT 35% 35%
- ------------------------------------ ----------------------------------- --------------------------------------
SLC-Fiber Reach 40% 40%
- ------------------------------------ ----------------------------------- --------------------------------------
Anymedia FAST 25% 25%
- ------------------------------------ ----------------------------------- --------------------------------------
Digital Cross-connect
- ------------------------------------ ----------------------------------- --------------------------------------
DACS II 40% 40%
- ------------------------------------ ----------------------------------- --------------------------------------
DACS IV-2000 45% 45%
- ------------------------------------ ----------------------------------- --------------------------------------
Data
- ------------------------------------ ----------------------------------- --------------------------------------
Port Master (Remote Access) 50% 55%
- ------------------------------------ ----------------------------------- --------------------------------------
AC (Access Concentrator) 40% 45%
- ------------------------------------ ----------------------------------- --------------------------------------
MX1000 (ATM Edge) 40% 45%
- ------------------------------------ ----------------------------------- --------------------------------------
PC ACS (ATM Core Switch) 35% 40%
- ------------------------------------ ----------------------------------- --------------------------------------
PS 6400 (IP Core) 35% 40%
- ------------------------------------ ----------------------------------- --------------------------------------
PS ITS (IP Telephony) 40% 50%
- ------------------------------------ ----------------------------------- --------------------------------------
PS AS (Packet End Office) 40% 50%
- ------------------------------------ ----------------------------------- --------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Exhibit C-2 to the Confidential - Winstar/Lucent
Supply Agreement - C-2-1 - Execution Version
<PAGE>
Exhibit C-3
Reference Pricing
1. DACS II, DACS IV-2000
1.1. DACS II.
The DACS II Digital Access and Cross-Connect System is configured
with eight (8) DS3 interfaces and two hundred and twenty-five
(225) DS1 interfaces. As configured, including software RTU, the
system price will be the lesser of the discounted price as
specified in the discount schedule (Exhibit C-1) or three hundred
and fifty thousand dollars ($350,000). This price is furnish only.
Growth will be discounted from list price per the contractual
discount schedule.
The standard ordering interval for DACS II is six (6) weeks from
receipt of purchase order.
1.2. DACS IV-2000.
The DACS IV-2000 Digital Access Cross-Connect System operates with
a VT1.5 non-blocking switch fabric. Configured with two hundred
and twenty-five (225) DS1, sixty-five (65) DS3, sixteen (16)
STS-1, one (1) OC-3 and one (1) OC-12 interfaces, including
software RTUs. The system price will be the lesser of the
discounted price as specified in the discount schedule (Exhibit
C-1) or four hundred and eighty thousand dollars ($480,000). This
price is furnish only. Growth will be discounted from list price
per the contractual discount schedule.
The standard ordering interval for DACS IV-2000 is four (4) weeks
from receipt of purchase order.
2. Access Network Solution
Lucent Technologies proposes four (4) different access solutions for
the Network:
1.3. SLC 2000 Connect Reach Models (Voice and Voice / Data).
Fully loaded SLC-2000 in the hub with SLC Connect Reach in the end
user node for voice (see Diagram 1, below) or for data and voice
(see Diagram 2, below) optimized to support small business
customers.
(i) SLC 2000 equipped to support 48 DSI distribution
trunks for a maximum of 48 single SLC Connect Reach
elements or 96 sub-tended elements or a subset of the
two.
(ii) SLC-2000 equipped with 12 DSI network trunks.
(iii) SLC-2000 price is $54,500.
- --------------------------------------------------------------------------------
Exhibit C-3 to the Confidential - Winstar/Lucent
Supply Agreement - C-3-1 - Execution Version
<PAGE>
(iv) SLC Connect Reach single element price is $3,300 for
24 POTS lines only; $2,700 for 16 POTS lines only;
$2,100 for 8 POTS lines only; $4,800 for 24 POTS lines
and data; $4,200 for 16 POTS lines and data; $3,600
for 8 POTS lines and data.
(v) Additional price per sub-tending SLC Connect Reach
element is $1,179; sub-tending SLC Connect Reach
elements must run in PBX mode.
(vi) A data equipped SLC Connect Reach supports Internet
access, IP, VPN and Frame Relay.
(vii) SLC Connect Reach provides an integrated router.
2.2. AnyMedia FAST / IRX Router Model.
AnyMedia FAST for voice with data access via IRX routers (see
Diagram 3, below):
(a) AnyMedia FAST equipped with 96 lines, wired for 192 lines,
expandable to 512 lines.
(b) Cost effective TR303 based telephony platform.
(c) AnyMedia FAST price; $14,500 with ringing included.
(d) Low cost data overlay option.
(e) IRX router configuration supports one V.35 customer and
one DS1 network interface at $1,400 per router.
2.3. AnyMedia FAST / ATM Access Model.
AnyMedia FAST for voice with data access via AC 10s (ATM
Access device) (see Diagram 4, below):
(a) AnyMedia FAST equipped with 96 lines, wired for 192 lines,
expandable to 512 lines
(b) Cost effective TR303 based telephony platform.
(c) AC10 ATM access device provides four Ethernet customer
interfaces and two DS1 ATM network interfaces.
(d) AC 10 cost $6,500.
(e) AC 120 ATM Access Concentrator at Hub site engineered to
support 60 DS1s.
(f) AC 120 concentrates data traffic at Hub site to reduce
back haul costs.
- --------------------------------------------------------------------------------
Exhibit C-3 to the Confidential - Winstar/Lucent
Supply Agreement - C-3-2 - Execution Version
<PAGE>
(g) AC 120 price: $75,000.
3. Optical Networking
3.1. Bandwidth Guarantee
For the New York City-to-Washington, DC route and for other
routes deployed before the availability of Lucent's OC-192
product, Lucent will:
(a) Provide up to four OC-48 systems to accommodate the
equivalent bandwidth of an OC-192 system for the route.
(b) Provide this solution at a price point equal to WinStar's
competitive alternatives for OC-192 systems
(c) At the time Lucent's OC-192 system becomes available, which
shall not be later than 3Q1999, Lucent will provide and
install said system (i.e., migrate the Network to the new
system) at no cost to WinStar. The OC-192 system will be
sufficiently similar to the existing service interfaces so
that WinStar and WinStar's customers are not required to
change interfaces, applications or systems in order to
connect to and use the new system.
(d) Lucent will either sell the existing OC-48 system(s) to
WinStar for other routes where applicable or take them back.
3.2. Fiber Optics Technology.
Lucent has configured the New York to Washington, DC route using
state of the art optical networking technology per WinStar's
network specifications. The attached Exhibit C-7 (spreadsheet,
system descriptions and network diagram) illustrate the major
components and associated prices for TDM equipment, optical
add/drop sites and optical amplifier sites. The total price for
the attached network proposal based on WinStar's technical
specifications is Six Million, Two Hundred and Ninety Thousand
Dollars ($6,290,000). Applying Lucent's Optical Network Bandwidth
Guarantee to these specifications yields a discounted price of
Five Million, Five Hundred Thousand Dollars ($5,500,000), which
will vary if WinStar's specifications change. This network
provides a DWDM backbone that supports capacity of up to foty (40)
OC-192 channels. This system supports a mix of OC-48 and OC-192,
as required by WinStar customer demand. In addition, Lucent
believes that there is a significant reduction in equipment (i.e.,
optical amplifiers and regeneration sites) possible as actual
fiber loss characteristics are determined.
- --------------------------------------------------------------------------------
Exhibit C-3 to the Confidential - Winstar/Lucent
Supply Agreement - C-3-3 - Execution Version
<PAGE>
Diagram 1: SLC Connect Reach Voice Model
SLC Connect Reach Voice Model
[DIAGRAM]
Lucent Technologies Proprietary
- --------------------------------------------------------------------------------
Exhibit C-3 to the Confidential - Winstar/Lucent
Supply Agreement - C-3-4 - Execution Version
<PAGE>
Diagram 2: SLC Connect Reach Voice & Data Model
SLC Connect Reach Voice & Data Model
[DIAGRAM]
Lucent Technologies Proprietary
- --------------------------------------------------------------------------------
Exhibit C-3 to the Confidential - Winstar/Lucent
Supply Agreement - C-3-5 - Execution Version
<PAGE>
Diagram 3: AnyMedia FAST / IRX Router Model
AnyMedia FAST / IRX Router Model
[DIAGRAM]
Lucent Technologies Proprietary
- --------------------------------------------------------------------------------
Exhibit C-3 to the Confidential - Winstar/Lucent
Supply Agreement - C-3-6 - Execution Version
<PAGE>
Diagram 4: AnyMedia FAST / ATM Access Model
AnyMedia FAST / ATM Access Model
[DIAGRAM]
Lucent Technologies Proprietary
- --------------------------------------------------------------------------------
Exhibit C-3 to the Confidential - Winstar/Lucent
Supply Agreement - C-3-7 - Execution Version
<PAGE>
Exhibit C-4
Switch Pricing
1. General
This SNAP-D quote for the 5ESS is predicated on Lucent Quick-Start
Model 2A agreed upon with WinStar Engineering on October 10, 1998. The
corresponding configuration is:
(a) Lines / Customer provisionable total lines = 6,144
(b) Trunks / Customer provisionable total trunks = 8,400
1.2. Configuration Parameters:
(a) The initial model switch configuration consists of one 3B21
Administrative Module at 5E13 Base Generic, or the then
available Generic, one CM2 Communications Module (two pairs),
and two SM-2000 Switching Modules containing the following:
(b) SM001 - This switching module contains all of the
miscellaneous functions as well as POTS line interfaces via
IDCU TR008, a mix of analog and ISDN lines via DNU-S TR303
and digital trunk interfaces via DNU-S STSX-1(8) and DLTU2.
(c) SM002 - This switching module provides a mix of analog and
ISDN lines via DNU-S TR303 and digital trunk interfaces via
DNUS-S STSX-1(8).
(d) ODA to meet WinStar's network requirement.
1.3. WinStar Benefits:
(a) Minimized up front investment;
(b) Includes an IDCU allowing WinStar the ability to transition
from TR008 to TR303;
(c) Full compliment of current WinStar software features
including Long Distance; and
(d) System is pre-conditioned to allow for quick growth of the
next SM-2000.
- --------------------------------------------------------------------------------
Exhibit C-4 to the Confidential - Winstar/Lucent
Supply Agreement - C-4-1 - Execution Version
<PAGE>
2. Terms
2.1. Pricing.
Prices for the 5ESS shall be as follows:
(a) Start-up Price shall be Nine Hundred and Sixty-Five Thousand
Dollars ($965,000), which includes the first forty (40) DS1s
to meet Winstar's requirement for the initial activation.
(b) There is no Incremental Price attributable to the first forty
(40) DS1s activated for each 5ESS. The Incremental Price
corresponding to each DS1 thereafter shall be Four Thousand
One Hundred and Fifty Dollars ($4,150).
2.2. Terms and Conditions:
(a) There will be a monthly true-up to determine numbers of DS1s
that have been activated
(b) At the end of twenty-four (24) months, if any remaining DS1s
have not been activated, WinStar will pay the balance of DS1
activation charges.
(c) WinStar must pay for the full value of the Switch (which is
the remaining non-activated DS1s from the initial four
hundred and forty-eight (448) DS1s) before any additional
STSX packs or additional SM2000 is added to the Switch.
(d) Model pricing is subject to change consistent with any
changes in the model configurations.
(e) Lucent shall provide one eighty-five percent (85%) discount
window per year per switch site for hardware and software
orders received over a six (6) month period designated by
WinStar. This provision applies for the duration of the
Agreement.
(f) The 5ESS implementation interval will be eighteen (18) weeks
from receipt of a WinStar Purchase Order to Turnover (i.e.,
not including the period between Turnover and Cutover, which
is approximately three (3) weeks).
(g) Spare 5ESS switch circuit packs, one (1) per pack code are
included in this proposal. Also included is a complement of
spare fuses and blank DAT tape cartridges.
(h) Previous Professional Services credit of One Hundred and
Twenty Thousand Dollars ($120,000) per new switch does not
apply to purchases of 5ESS pursuant to this Exhibit C-2.
- --------------------------------------------------------------------------------
Exhibit C-4 to the Confidential - Winstar/Lucent
Supply Agreement - C-4-2 - Execution Version
<PAGE>
2.3. Power and E&I
Additional amounts not included in the Start-up Price and
Incremental Price set forth above are as follows (with approximate
regional averages quoted therefor):
(a) Engineering and Installation $238,349
(b) Power (switch only) $162,256
(c) Framework $ 27,117
- --------------------------------------------------------------------------------
Exhibit C-4 to the Confidential - Winstar/Lucent
Supply Agreement - C-4-3- Execution Version
<PAGE>
Exhibit C-5
Pricing for Lucent Network-Related Services
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Line Item DESCRIPTION Price Price Price Price Price
Year 1 Year 2 Year 3 Year 4 Year 5
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
001 Network
Architecture (Baseline) $ 680,000
- ------------------------------------------------------------------------------------------------------------------------------------
002 Overall Network Architecture $ 800,000 $ 680,000 $ 680,000 $ 680,000 $ 680,000
- ------------------------------------------------------------------------------------------------------------------------------------
003 Overall Network
Technology/Network Design $ 5,000,000 $ 3,250,000 $ 3,250,000 $ 3,250,000 $ 3,250,000
- ------------------------------------------------------------------------------------------------------------------------------------
004 Network Solution Development $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
005 Interoperability Lab / Technology
Selection $ 4,500,000 $ 8,000,000 $ 5,200,000 $ 5,200,000 $ 5,200,000
- ------------------------------------------------------------------------------------------------------------------------------------
006** City Plan (per New City) $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000
- ------------------------------------------------------------------------------------------------------------------------------------
007** Existing City Traffic
Engineering/Capacity
Planning (per City per year) $ 75,000 $ 75,000 $ 75,000 $ 75,000 $ 75,000
- ------------------------------------------------------------------------------------------------------------------------------------
008 Equipment Engineering Included in Lucent Firm Price Quote
- ------------------------------------------------------------------------------------------------------------------------------------
009 Delivery Included in Lucent Firm Price Quote
- ------------------------------------------------------------------------------------------------------------------------------------
010 Staging Included in Lucent Firm Price Quote
- ------------------------------------------------------------------------------------------------------------------------------------
011 Installation/Turnover Included in Lucent Firm Price Quote
- ------------------------------------------------------------------------------------------------------------------------------------
012 Drawings Included in Lucent Firm Price Quote
- ------------------------------------------------------------------------------------------------------------------------------------
013 Records Included in Lucent Firm Price Quote
- ------------------------------------------------------------------------------------------------------------------------------------
015 Logical Assignments
Provisioning Included in Lucent Firm Price Quote
- ------------------------------------------------------------------------------------------------------------------------------------
014 Product Warranty Standard Warranty included in price of the product
- ------------------------------------------------------------------------------------------------------------------------------------
017 Program Management ($$
based on Business
Case Quantities)
- ------------------------------------------------------------------------------------------------------------------------------------
017a Program Management Office $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
017b New City CO (per site) $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000
- ------------------------------------------------------------------------------------------------------------------------------------
017c Hub Site (per site) $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
- ------------------------------------------------------------------------------------------------------------------------------------
017d B-Site (per site - less
than 1000) $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
- ------------------------------------------------------------------------------------------------------------------------------------
017e B-Site (per site -
greater than 1000) $ 500 $ 500 $ 500 $ 500 $ 500
- ------------------------------------------------------------------------------------------------------------------------------------
017i Connectivity Included In PM line items above
- ------------------------------------------------------------------------------------------------------------------------------------
017j Growth (Augments) Included In PM line items above
- ------------------------------------------------------------------------------------------------------------------------------------
017k PM of WinStar Responsible
Functions Included In PM line items above
- ------------------------------------------------------------------------------------------------------------------------------------
020 Special Projects Pricing TBD (SOW based)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The elements priced above are based on Schedule A Statement of Work. Not all
content of the Statement of Work is priced herein.
** This Price does not include RF engineering based on that
functionality residing with WinStar.
NOTE: 1 Price structure above to be extended to the international as
applicable.
- --------------------------------------------------------------------------------
Exhibit C-5 to the Confidential - Winstar/Lucent
Supply Agreement - C-5-1- Execution Version
<PAGE>
Exhibit C-6
Pricing for Interoperability Test Lab
1. Introduction
This Exhibit sets forth the functionality, scope, composition, staffing
and pricing for the Test Facilities to be provided by Lucent under this
Agreement. Further description of the use of the Test Facilities is set
forth in Section 4 of Schedule A.
2. Functionality
2.1. Functionality.
The Testing Facilities provided by Lucent pursuant to Section
4 of Schedule A shall encompass the following functionality:
(a) Architecture and Design Support. Functionality and
interoperability testing of Network Elements,
technical evaluation and selection of network
elements, WinStar customer tours, direct technical
interface with suppliers of Network Elements in
resolving all technical performance and
interoperability issues. Deliverables are engineering
standards, recommended standard installation
configurations and provisioning requirements. The
Test Lab will also serve as a testbed for Level 4
support in replicating problems found in the Network
for purposes of problem diagnosis and resolution.
(b) Network Operations Support. Development of High Level
Process Requirements and Functional Interface
Requirements between Network Management and Element
Management systems and the appropriate Network
Elements. Deliverables are requirements documents for
WinStar OSS/BSS systems, fault management rules to be
used to manage the network, and changes to Network
Elements as appropriate and necessary to support
WinStar OSS/BSS functionality.
(c) Network Verification Testing. Development of Network
Verification Tests to verify that a chosen set of
Network Elements that constitute a network
Architecture support products and services offered by
WinStar (customer products). Deliverable is a set of
Network Verification Tests that have been
successfully executed in the Interoperablility
Laboratory environment and criteria for successfully
executing such tests in a field environment.
(d) SME Access. Lucent will provide access to at least
twenty (20) virtual Subject Matter Experts (SMEs) in
other Lucent laboratory environments as required to
support technical efforts related to the activities
of the Interoperablity Laboratory.
(e) Technical Training. The testing facility staff will
provide access to the laboratory, including
configuration of Network Elements to support
WinStar's efforts to provide training in engineering,
construction, provisioning and maintenance. Testing
facility staff will participate in and support
training as required. Training classes will not
exceed a reasonable percentage of the normal work
week so as not to deter the prime purpose of the
laboratory.
- --------------------------------------------------------------------------------
Exhibit C-6 to the Confidential - Winstar/Lucent
Supply Agreement - C-6-1 - Execution Version
<PAGE>
2.2. Scope and Composition.
(a) The Testing Facilities will test Lucent Products and
Third-Party Products that are or may be used as
Network Elements in the Network, to include
interoperability of CPE as required to support
WinStar-provided products and services. Scheduling of
such testing is directly linked to the staffing level
and equipment availability of the testing facility.
(b) WinStar will specify and provide a site at which the
Testing Facility will be located. WinStar will be
responsible for all facility costs such as rent,
utilities, telephone service and comminications
WinStar will provide any required access to the
Network and the BSS/OSS data communications network
(DCN).
(c) WinStar will be responsible for supply of those
Third-Party Products deployed as Network Elements
that are not purchased through Lucent. Lucent will
coordinate the installation and maintenance of those
Elements in the testing facility. Lucent will supply
and maintain all other Equipment, Software and other
Services (including but not limited to a 5ESS switch,
racks, DC power equipment, cabling, test and analysis
equipment necessary to implement the Test Facilities.
Lucent will also make shared-use Equipment owned by
Lucent available whether on site or through remote
connectivity as required by the Test Facility.
2.3. Staffing.
(a) Initial Levels. Table 1 contains the Parties'
expectation for the staffing of the Test Facilities
over the Term, in numbers of on-site Lucent personnel
dedicated to the WinStar Test Facilities. It also
indicates an approximate breakdown of staff per area,
corresponding to the work activities described in
Section 2.1 of this Exhibit.
(b) Efficiencies. Lucent will advise WinStar of any
opportunities for efficiencies or adjustments in
staffing for the Testing Facilities that would permit
savings without sacrificing functionality. The
Parties will work together to adjust the staffing
levels as appropriate to support the design and
implementation of the Network over the Term, with
corresponding adustments in the billing to WinStar.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Table 1: Initial Staffing Levels (FTEs)
--------------------------------------------------------------------------------------------------
Year 1 Year 2 Year 3 Year 4 Year 5
------------------------------------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Design Support 14 24 15 15 15
--------------------------------------------------------------------------------------------------
Network Operations Support 2 7 5 5 5
--------------------------------------------------------------------------------------------------
Network Verification Testing 2 1 1 1 1
--------------------------------------------------------------------------------------------------
Total 18 32 21 21 21
--------------------------------------------------------------------------------------------------
</TABLE>
3. Pricing
3.1. Test Facilities Staff Pricing.
Table 2 sets forth the pricing levels attributable to the
staffing indicated in Table 1. These pricing levels represent
annual caps that correspond to staffing levels set forth in
Section 2.3 of this Exhibit. Notwithstanding the foregoing,
the Parties may mutually agree to adjust these levels pursuant
to Section 3.2 of this Exhibit.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Table 2: Pricing for Initial Staffing Levels ($K)
--------------------------------------------------------------------------------------------------
Year 1 Year 2 Year 3 Year 4 Year 5
------------------------- ----------------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Totals 4,500,000 8,000,000 5,200,000 5,200,000 5,200,000
--------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Exhibit C-6 to the Confidential - Winstar/Lucent
Supply Agreement - C-6-2 - Execution Version
<PAGE>
3.2. Adjustments.
(a) Within sixty (60) days of the Effective Date, Lucent
will develop a set of blended rates applicable to the
staff of the Testing Facilities, divided into three
personnel categories (e.g., junior, mid-level and
senior technical personnel).
(b) In the event that WinStar requests a reduction in
staffing of the Testing Facilities (whether in
response to a Lucent notice of an efficiency
opportunity pursuant to Section 2.3(b) or otherwise),
Lucent will work with WinStar to accommodate that
request without loss of functionality. In cases where
Lucent believes that a reduction in Scope of Work or
functionality will result from the request, the
impact will be provided to WinStar within fifteen
(15) days of the request. When such a reduction in
staffing becomes effective, the charges set forth in
Section 3.1 shall be reduced by the blended rates
attributable to such person(nel).
- --------------------------------------------------------------------------------
Exhibit C-6 to the Confidential - Winstar/Lucent
Supply Agreement - C-6-3 - Execution Version
<PAGE>
Exhibit C-7
Pricing for Optical Networking Technology
1. Definitions
1.1. Lucent's DWDM Solutions:
The OLS 400G DWDM system utilizes a global platform approach to
provide complete optical networking solutions for WinStar. The DWDM
system supports up to 40 wavelengths of OC-192, 80 wavelengths of
OC-48, or a mix up to 400 Gb/sec per fiber. There are four components
to the solution as follows:
(a) OLS 400G DWDM End Terminal. This DWDM terminal terminates the four
fibers (two transmit and two receive) to support WinStar's initial
application as well as future growth to 400 Gb/sec. It provides
the multiplexing and demultiplexing of wavelengths from the high
speed DWDM line rate (400 Gb/sec) fibers to the individual SONET
TDM terminals. The SONET TDM terminals interface to the OLS 400G
DWDM End Terminal and each input is assigned an individual
wavelength (color) for multiplexing into the OLS 400G DWDM system.
A signal from a Lucent SONET terminal (FT-2000 OC-48 or WaveStar
10G OC-192 system) can directly feed the OLS 400G DWDM End
Terminal. The OLS 400G system also supports an open interface to
other vendors SONET TDM equipment via Lucent's Optical Translator
Unit or OTU.
In the WinStar specific network design, the OLS 400G DWDM End
Terminal is equipped with OC-48 OTUs for the through NYC to
Washing D.C. express wavelengths. The three Lucent FT-2000 OC-48
SONET terminals are equipped with Lucent Compatible Optics so that
OTUs are not required.
(b) OLS 400G DWDM Optical Add/Drop Terminal. The optical add/drop
sites contain the OLS 400G Optical Add/Drop Terminal, which allows
wavelengths to be dropped to or added from SONET OC-48 or OC-192
TDM terminals. All other wavelengths are expressed through the
Optical Add/Drop Terminal. This function in the DWDM network is
analogous to the Linear Add/Drop function in the SONET
environment.
(c) OLS 400G Optical Amplification Terminal. These sites contain the
stand-alone Optical Amplifiers where optical amplification is
required. These Erbium-doped amplifiers have the wide band
amplification pass bands required to support the fully equipped
OLS 400G system (same amp for all 80/40 wavelengths of OC48/OC192;
no additional amplifiers are required throughout the system
growth). These OLS 400G DWDM terminals can be upgraded in-service
to an OLS 400 G Optical Add/Drop Terminal if required.
(d) OLS 400G Regeneration Terminal. This terminal is used once in the
NYC/DC design. The purpose of this system is to fully regenerate
the DWDM signals once the limit of concatenated amplified spans
has been reached This is necessary to eliminate the build up of
signal degradation and second order effects in the amplification
process.
- --------------------------------------------------------------------------------
Exhibit C-7 to the Confidential - Winstar/Lucent
Supply Agreement - C-7-1 - Execution Version
<PAGE>
1.2. Lucent's SONET TDM Solutions:
(a) FT-2000 OC-48 SONET TDM Terminal. These are OC-48 SONET terminals,
which multiplex lower speed signals up to the OC-48 rate. They
contain optics that output the correct wavelength for direct input
into the OLS 400G DWDM Terminals.
(b) WaveStar 10G (OC-192) SONET TDM Terminal. These are OC-192 SONET
TDM terminals, which multiplex lower speed signals (DS3, EC1,
OC-3, Oc-12, Oc-48) up to the Oc-192 rate. These terminals are
quipped with OLS 400G DWDM System Compatible Optics that output
the correct wavelengths for input to the OLS 400G DWDM terminals.
2. Optronics Network Solution
2.1. Description.
The attached Diagrams 1, 3 and 4 represent the Lucent solution to
supporting WinStar's identified traffic requirements, as indicated in
Diagram 2. As described in Exhibit C-3, the solution relies upon OC-48
(see Diagram 3, the "OC-48 Solution") until Lucent is able to offer
the OC-192 solution (see Diagram 4, the "OC-192 Solution"). The detail
behind the diagrams is as follows:
(a) Diagram 1 sets forth the Span Engineering for the Lucent solution.
It is based upon the following:
(i) Assumptions.
(1) TrueWave Plus fiber to be used throughout this portion of
the Network;
(2) There are four (4) fibers between Jersey City and
Washington DC;
(3) 0.30 dB/km;
(4) 1.6 km/mile;
(5) 2 dB into/out of wavelength add/drop;
(6) 1.5 dB into/out of end terminal; and
(7) 1 dB loss per OA.
(ii) Engineering Rules. WaveStar OLS 400G OC-192 on TrueWave +
Release 1.0
- --------------------------------------------------------------------------------
Exhibit C-7 to the Confidential - Winstar/Lucent
Supply Agreement - C-7-2 - Execution Version
<PAGE>
[GRAPHIC OMITTED]
Diagram 1: Optronics Solution Span Engineering
(b) Diagram 2 represents WinStar's indication of its traffic support
requirements. The Lucent solution set forth in Diagram 1 was
developed by Lucent to be capable of accommodating this traffic
support.
[GRAPHIC OMITTED]
Diagram 2: WinStar Traffic Support Requirements
- --------------------------------------------------------------------------------
Exhibit C-7 to the Confidential - Winstar/Lucent
Supply Agreement - C-7-3 - Execution Version
<PAGE>
(c) Diagram 3 depicts the OC-48 Solution.
[GRAPHIC OMITTED]
Diagram 3: OC -48 Solution
(d) Diagram 4 depicts the OC-192 Solution.
[GRAPHIC OMITTED]
Diagram 4: OC -192 Solution
2.2. Component Pricing.
(a) Table 3 indicates the component-level list prices for Lucent
Products used in the optronics Network solution. These prices
will be adjusted as set forth in Schedule C (i.e., discounts,
reference scaling, BoB and SNAP-D) before being charged to
WinStar.
- --------------------------------------------------------------------------------
Exhibit C-7 to the Confidential - Winstar/Lucent
Supply Agreement - C-7-4 - Execution Version
<PAGE>
(b) Tables 4 and 5 indicate component level pricing for other Lucent
Products used in the optronics Network solution. This pricing is
the Discount Price and will be adjusted as set forth in Schedule
C (i.e., reference scaling, BoB and SNAP-D) before being charged
to WinStar.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Table 1: OC-48 Solution
Site Description # Systems Unit Price Total Price
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York City OLS 400G DWDM End Terminal 1 485,256 485,256
-------------------------------------------------------------------------------------------------------
FT-2000 OC-48 e/w no lowspeed (for future service) 1 91,000 91,000
-------------------------------------------------------------------------------------------------------
FT-2000 OC-48 e/w (2) 1+1 prot OC-3s 1 104,000 104,000
-------------------------------------------------------------------------------------------------------
FT-2000 OC-48 e/w (4) 1+1 prot OC-3s & 24 prot DS3s 1 135,000 135,000
- ----------------------------------------------------------------------------------------------------------------------------
Jersey City OLS 400G DWDM Optical Add/Drop Terminal 1 567,212 567,212
-------------------------------------------------------------------------------------------------------
FT-2000 OC-48 e/w (4) 1+1 prot OC-3s & 24 prot DS3s 1 135,000 135,000
- ----------------------------------------------------------------------------------------------------------------------------
Newark Jct OLS 400G DWDM Optical Add/Drop Terminal 1 567,212 567,212
-------------------------------------------------------------------------------------------------------
FT-2000 OC-48 e/w (4) 1+1 prot OC-3s & 24 prot DS3s 1 135,000 135,000
- ----------------------------------------------------------------------------------------------------------------------------
Hopewell OLS 400G DWDM Optical Amplification Terminal 1 294,799 294,799
- ----------------------------------------------------------------------------------------------------------------------------
Philadelphia Jct OLS 400G DWDM Optical Regeneration Terminal 1 1,031,555 1,031,555
-------------------------------------------------------------------------------------------------------
FT-2000 OC-48 e/w (2) 1+1 prot OC-3s 1 104,000 104,000
-------------------------------------------------------------------------------------------------------
FT-2000 OC-48 e/w (4) 1+1 prot OC-3s & 24 prot DS3s 1 135,000 135,000
- ----------------------------------------------------------------------------------------------------------------------------
Wilmington Jct OLS 400G DWDM Optical Amplification Terminal 1 294,799 294,799
- ----------------------------------------------------------------------------------------------------------------------------
Elkton OLS 400G DWDM Optical Amplification Terminal 1 294,799 294,799
- ----------------------------------------------------------------------------------------------------------------------------
New Site A+A7 OLS 400G DWDM Optical Amplification Terminal 1 294,799 294,799
- ----------------------------------------------------------------------------------------------------------------------------
Baltimore Jct OLS 400G DWDM Optical Add/Drop Terminal 1 567,212 567,212
-------------------------------------------------------------------------------------------------------
FT-2000 OC-48 e/w (2) 1+1 prot OC-3s 1 104,000 104,000
-------------------------------------------------------------------------------------------------------
FT-2000 OC-48 e/w (4) 1+1 prot OC-3s & 24 prot DS3s 1 135,000 135,000
- ----------------------------------------------------------------------------------------------------------------------------
Washington DC OLS 400G DWDM End Terminal 1 485,256 485,256
-------------------------------------------------------------------------------------------------------
FT-2000 OC-48 e/w no lowspeed (for future service) 1 91,000 91,000
-------------------------------------------------------------------------------------------------------
FT-2000 OC-48 e/w (2) 1+1 prot OC-3s 1 104,000 104,000
-------------------------------------------------------------------------------------------------------
FT-2000 OC-48 e/w (4) 1+1 prot OC-3s & 24 prot DS3s 1 135,000 135,000
- ----------------------------------------------------------------------------------------------------------------------------
-------------------
$6,290,899
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Exhibit C-7 to the Confidential - Winstar/Lucent
Supply Agreement - C-7-5 - Execution Version
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Table 2: OC-192 Solution
Site Description # Unit Price Total Price
systems
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York City OLS 400G DWDM End Terminal 1 485,256 485,256
------------------------------------------------------------------------------------------------
WaveStar 10G (OC-192) e/w 1 OC-48, 8 OC3, 24 DS3, one 1 402,000 402,000
additional oc48 rail unused
--------------------------------------------------------------------------------------------------------------
Jersey City OLS 400G DWDM Optical Add/Drop Terminal 1 506,169 506,169
------------------------------------------------------------------------------------------------
WaveStar 10G (OC0192) e/w 4 1+1 protected OC3 three 1 360,000 360,000
additional oc48 rail unused
--------------------------------------------------------------------------------------------------------------
Newark Jct OLS 400G DWDM Optical Add/Drop Terminal 1 506,169 506,169
------------------------------------------------------------------------------------------------
WaveStar 10G (OC-192) e/w 4 1+1 protected OC3 three 1 360,000 360,000
additional oc48 rail unused
--------------------------------------------------------------------------------------------------------------
Hopewell OLS 400G DWDM Optical Amplification Terminal 1 294,799 294,799
--------------------------------------------------------------------------------------------------------------
Philadelphia OLS 400G Regeneration Terminal 1 970,512 970,512
Jct
------------------------------------------------------------------------------------------------
WaveStar 10G (OC-192) e/w 8 1+1 protected OC-3; 24 DS3 two 1 398,000 398,000
additional oc48 rail unused
--------------------------------------------------------------------------------------------------------------
Wilmington OLS 400G DWDM Optical Amplification Terminal 1 294,799 294,799
Jct
--------------------------------------------------------------------------------------------------------------
Elkton OLS 400G DWDM Optical Amplification Terminal 1 294,799 294,799
--------------------------------------------------------------------------------------------------------------
(New Site A) OLS 400G DWDM Optical Amplification Terminal 1 294,799 294,799
--------------------------------------------------------------------------------------------------------------
Baltimore OLS 400G DWDM Optical Add/Drop Terminal 1 506,169 506,169
Jct
------------------------------------------------------------------------------------------------
WaveStar 10G (OC-192) e/w 8 1+1 protected OC-3; 24 DS3 two 1 398,000 398,000
additional oc48 rail unused
--------------------------------------------------------------------------------------------------------------
Washington DC OLS 400G DWDM End Terminal 1 485,256 485,256
------------------------------------------------------------------------------------------------
WaveStar 10G (OC-192) e/w 1 OC-48, 8 OC3, 24 DS3 one 1 402,000 402,000
additional oc48 rail unused
--------------------------------------------------------------------------------------------------------------
-------------
$6,958,727
--------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Exhibit C-7 to the Confidential - Winstar/Lucent
Supply Agreement - C-7-6 - Execution Version
<PAGE>
--------------------------------------------------------------
Table 3: Linearized 10G (OC-192)
TDM SONET Terminal Pricing Models
--------------------------------------------------------------
Model List Price
--------------------------------------------------------------
10G 2F
--------------------------------------------------------------
Startup (1.3u high speed) $278,312
--------------------------------------------------------------
per 1xN DS3/EC1 (8 port) $1,615
--------------------------------------------------------------
per 1+1 OC3 (4 port SR) $6,357
--------------------------------------------------------------
per 1+1 OC3 (4 port LR) $9,200
--------------------------------------------------------------
per 1+1 OC12 (2 port SR) $15,454
--------------------------------------------------------------
per 1+1 OC12 (2 port LR) $25,000
--------------------------------------------------------------
per OC48 BLSR (1.3u) $38,788
--------------------------------------------------------------
10G 4F
--------------------------------------------------------------
Startup (1.3u high speed) $533,338
--------------------------------------------------------------
per 1xN DS3/EC1 (8 port) $1,615
--------------------------------------------------------------
per 1+1 OC3 (4 port SR) $6,357
--------------------------------------------------------------
per 1+1 OC3 (4 port LR) $9,200
--------------------------------------------------------------
per 1+1 OC12 (2 port SR) $15,454
--------------------------------------------------------------
per 1+1 OC12 (2 port LR) $25,000
--------------------------------------------------------------
per OC48 BLSR (1.3u) $38,788
--------------------------------------------------------------
Interface Packs
--------------------------------------------------------------
DS3 Prot. Switch Relay $2,400
--------------------------------------------------------------
OC48 1.3u $19,394
--------------------------------------------------------------
OC48 1.5u $24,546
--------------------------------------------------------------
OC48 OLS Compatible $40,000
--------------------------------------------------------------
OC3 1.3 4 port Long Reach $18,400
--------------------------------------------------------------
OC3 1.3 4 port Short Reach $12,714
--------------------------------------------------------------
OC12 1.3 2 port Long Reach $25,000
--------------------------------------------------------------
OC12 1.3 2 port Short Reach $15,454
--------------------------------------------------------------
DS3/EC1 8 port pack $10,000
--------------------------------------------------------------
DS3 Terminal Block $3,000
--------------------------------------------------------------
--------------------------------------------------------------
OC192 2 Fiber HS Shelf Common
Item Count List
OC192 Shelf/BP/Fan 1 $14,000
CTL/SYS50DM 1 $9,334
DCC/EIU 1 $5,600
PPROC/STS192 4 $32,000
Switch/STS576 2 $10,600
TMG 2 $4,000
OC192 1.5 2 $140,000
OC192 Software 1 $20,000
Basic cables 1 $462
Total HS $235,996
OC192 2 Fiber LS Shelf Common
OC48 Shelf/BP/Fan 1 $10,000
CTL/SYS50DM 1 $9,334
DCC/EIU 1 $5,600
SWITCH/STS576 2 $10,600
TMG 2 $4,000
Intershelf cables 1 $2,320
Basic Cables 1 $462
Total LS $42,316
- --------------------------------------------------------------------------------
Exhibit C-7 to the Confidential - Winstar/Lucent
Supply Agreement - C-7-7 - Execution Version
<PAGE>
- ------------------------------------------------------------------------------
Table 4: Linearized FT-2000 (OC-48)
TDM SONET Terminal Pricing Models
- ------------------------------------------------------------------------------
Model WinStar Price
- ------------------------------------------------------------------------------
FT-2000 OC-48 System
- ------------------------------------------------------------------------------
Startup 24,500
- ------------------------------------------------------------------------------
Optics
- ------------------------------------------------------------------------------
OLS compatible optics (T&R,1+1 protected) 67,000
- ------------------------------------------------------------------------------
Standard 1.3 optics (T&R, 1+1 protected) 39,200
- ------------------------------------------------------------------------------
Lowspeed packs
- ------------------------------------------------------------------------------
per 1XN DS3 ( 3 ports per card, includes allocated 868
protection pack cost &misc associated equip)
- ------------------------------------------------------------------------------
per 1XN EC1 (3 ports per card, includes allocated 911
protection pack cost & misc associated equip)
- ------------------------------------------------------------------------------
per 1+1 OC3 (includes allocated cost of Trib Overhead 5,095
Controller -TOHCTL)
- ------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit C-7 to the Confidential - Winstar/Lucent
Supply Agreement - C-7-8 - Execution Version
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Table 5: Equipment List: FT-2000 OC-48 Bay (up to 2 systems per bay)
- --------------------------------------------------------------------------------------------------
Part No. Price
- --------------------------------------------------------------------------------------------------
OC-48 System #1
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ED8C902-30 G-1 2 Fiber Add/Drop Ring Term includes the following: 14,697
E/W
J68974E1 L-7 2 F A/D Ring Term
J68974E1 L-36 Low Speed Protn Sw LAA12B
J68974E1 L-41 TG3 (DS1) Cp LAA18
J68974E1 L-70 Overhead Controller LAA21
J68974E1 L-46 System Controller LAA23B
J68974E1 L-50 System Memory 4 Mbyte LAA25
J68974E1 L-66 Line Controller (4Mg) A/D & ring LAA28
- --------------------------------------------------------------------------------------------------
OC-48 System #2
- --------------------------------------------------------------------------------------------------
ED8C902-30 G-1 2 Fiber Add/Drop Ring Term includes the following: 14,697
E/W
J68974E1 L-7 2 F A/D Ring Term
J68974E1 L-41 TG3 (DS1) Cp LAA18
J68974E1 L-70 Overhead Controller LAA21
J68974E1 L-46 System Controller LAA23B
J68974E1 L-50 System Memory 4 Mbyte LAA25
J68974E1 L-66 Line Controller (4Mg) A/D & ring LAA28
- --------------------------------------------------------------------------------------------------
Standard High Speed (OC48) Optics
- --------------------------------------------------------------------------------------------------
J68974E1 L-78 OC-48 RCVR (A/D STS-1) 839B5 7,000
J68974E1 L-83 1.3 Transmitter Standard Power 24dB 739B5 12,600
J68974E1 L-84 1.3 Transmitter High Power 27dB 739C5 18,900
J68974E1 L-104 1550 Transmitter 23dB 739J5 35,910
OLS Compatible High Speed (OC48) Optics
- --------------------------------------------------------------------------------------------------
J68974E1 L-79 1.5 OLS compatible Receiver 839E5 9,500
J68974E1 L-251- 1.5 OLS compatible Transmitter 739E5 24,000
266
Lowspeed Cards
- --------------------------------------------------------------------------------------------------
J68974E1 L-21 OC-3 Long Reach Interface - one port per card (LAA10) 2,310
J68974E1 L-23 IS3 Circuit pack - one port per card (LAA5) 1,575
J68974E1 L-33 OC-12 Optical Extension (T939A) 9,240
J68974E1 L-25 DS3 Interface - three ports per card (LAA2) 2,100
J68974E1 L-30 EC-1 Low Speed Interface - three ports per card (LAA4) 2,205
J68974E1 L-39 Tributary Overhead Controller (LAA26) 2,772
- --------------------------------------------------------------------------------------------------
</TABLE>
(continues)
- --------------------------------------------------------------------------------
Exhibit C-7 to the Confidential - Winstar/Lucent
Supply Agreement - C-7-9 - Execution Version
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Table 5: Equipment List: FT-2000 OC-48 Bay (continued)
- --------------------------------------------------------------------------------------------------
Part No. Price
- --------------------------------------------------------------------------------------------------
Software
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
J68974ES-2 L-1 R7.2 Disk -
J68974ES-2 L-M1R R.7.2 App RTU 2,310
- --------------------------------------------------------------------------------------------------
J68974ES-2 L-P1R R 7.2 OS RTU 6,930
J68974ES-2 L-A R7.2 User/Service Manual -
- --------------------------------------------------------------------------------------------------
Miscellaneous
- --------------------------------------------------------------------------------------------------
Required FT-2000 bay, Shelf, Cable, and Miscellaneous Items
- --------------------------------------------------------------------------------------------------
J68974E1 L-109 9824AG Line Buildout (1 per DS3 circuit) 25
J68974E1 L-107 -48V DC pwr input Ca overhead 33
J68974E1 L-116 lightguide buildout set ST's (choose 2 per optics) 23
J68974E1 L-126 lightguide buildout set FC's (choose 2 per optics) 33
J68974E1 L-136 lightguide buildout set SC's (choose 2 per optics) 33
J68974E1 L-117 lightguide buildout set STs for OC-3 (1.3 STD) 18
J68974E1 L-118 lightguide buildout set ST's for IS3 & OC12 33
ED8C900-20 G-102 DS3 to DSX3/4 gr.A,B,& C 100ft. (one per DS3/STS1) e/w 141
ED8C900-20 G-6BA (6) Straight BNC Connectors, near end factory install 88
ED8C900-20 G-6LA (6) Straight BNC Connectors, far end loose 29
ED8C805-50 G-1 Anchor Bolt 7' Fr. Zone 1&2 37
ED8C805-50 G-2 Anchor Bolt 7' Fr. Zone 3&4 43
ED8C805-50 G-6 FLOOR MOLDING 10' Lg 30
- --------------------------------------------------------------------------------------------------
Optional Cables and Miscellaneous Items
- --------------------------------------------------------------------------------------------------
ED7G001-22 G-53 TMG IN OR OUT 150 ft. 73
ED7G001-22 G-251 SER TLM (TBOS) intfc 150 ft. 75
ED7G001-22 G-351 ALMs & PAR TLM intfc 150 ft. 90
ED7G001-22 G-451 SONET Overhead Chs. 150ft. 98
ED7G001-22 G-652 X.25 Cable 150 ft 100
ED7G001-22 G-752 DTE Link (CIT) 150 ft. 100
ED8C120-50 G-89 Ft. of 1/4 in spiral wrap -
901011320 WRIST STRAP > 6 1/2 in. Circumference 24
845264118 Terminal ESD grounding 157
- --------------------------------------------------------------------------------------------------
Documentation
- --------------------------------------------------------------------------------------------------
107373094 FT-2000 OC-48 Installation Manual 113
- --------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Exhibit C-7 to the Confidential - Winstar/Lucent
Supply Agreement - C-7-10- Execution Version
<PAGE>
Exhibit C-8
Pricing for International Services
The Parties have deferred agreement upon pricing for international
Services until thirty (30) days following the Effective Date. The
Parties agree that the pricing shall be developed consistent with the
pricing and pricing methodologies and processes (including most favored
customer, BOB and SNAP-D) set forth in this Agreement for the United
States based pricing.
- --------------------------------------------------------------------------------
Exhibit C-8 to the Confidential - Winstar/Lucent
Supply Agreement - C-8-1 - Execution Version
<PAGE>
Schedule D
Documentation and Specifications
Incorporated by reference
[This Schedule D incorporates current technical Documentation and Specifications
relating to cetain Lucent Products and Services, as well as Third Party Products
and Services, as in effect from time to time, that WinStar may elect to obtain
from Lucent and is comprised substantially of drawings, blueprints and similar
technical information. Because the specific Products and Services that WinStar
may elect to obtain from or through Lucent are not conclusive or exhaustive as
of the Effective Date, the Documentation and Specifications referred to in this
Schedule D will be modified from time to time as applicable.]
- --------------------------------------------------------------------------------
Schedule D to Confidential - Winstar/Lucent
Supply Agreement - D-1 - Execution Version
<PAGE>
Schedule E
Acceptance Testing
1. Acceptance Testing and Final Acceptance.
Lucent will develop and WinStar will approve standards for acceptance
procedures, testing and final acceptance. Until these procedures are
developed, it is agreed that the attachments in Schedule E will govern
acceptance criteria and will be the methodology employed for acceptance
unless or until new procedures are proposed by Lucent and accepted by
WinStar. "Nonconformity" shall mean failure to comply with the
Acceptance Criteria and such other criteria as are set forth in this
Agreement.
1.1. Acceptance Testing and Cure.
Lucent will perform joint testing as described in Schedule E
for each Hub, B site and Central Office it provides to WinStar
under this contract. Full documentation countersigned by each
party or their representatives will be provided to WinStar.
Lucent will maintain a copy of each site accepted for a period
of five (5) years.
1.2. Failure to Meet Acceptance Criteria.
In the event that a site or link does not pass the agreed upon
testing and acceptance, Lucent will begin immediately upon
notification to correct the cause for non-acceptance in the
following manner:
(a) B Sites. Unless otherwise agreed to by WinStar,
Lucent will identify and correct the defect within
two (2) working days. In the event that Lucent can
not resolve the defect within the specified time
frame, WinStar may, at its option, extend the time
for acceptance conformity or take action to resolve
the defect itself. If WinStar chooses to resolve the
defect, actual out of pocket costs to do so will be
deducted from the price Lucent bills WinStar for that
site.
(b) Hub Site. Lucent shall have five (5) working days to
resolve any defects or non conformity to acceptance
criteria as defined in Schedule E. Remedies for
failure to resolve shall be as described in (a) above
(including time extension).
(c) Central Office. Lucent shall have ten (10) working
days to resolve any defects or non-conformity to
acceptance criteria as defined in Schedule E.
Acceptance testing and final acceptance of the
Central Office will include all Network Elements in
the CO, i.e., Switch, DXC, etc. Remedies for failures
to resolve shall be as defined in Section (a) above
(including time extension).
1.3. WinStar's Responsibilities.
WinStar will bear responsibility to promptly perform test and
acceptance for Network Elements (NE's) which Lucent notifies
WinStar are ready for service. Failure to meet deadlines for
acceptance will be deemed as Acceptance.
- --------------------------------------------------------------------------------
Schedule E to Confidential - Winstar/Lucent
Supply Agreement - E-1 - Execution Version
<PAGE>
(a) B-Sites. Acceptance tests and walk through will be
performed within two (2) working days of
notification.
(b) Hub Sites. Acceptance tests and walk through will be
performed within five (5) working days of
notification.
(c) Central Office. Acceptance tests and ORT will be
performed within thirty (30) calendar days of
notification.
(d) WinStar Systems. Lucent will also be responsible to
update WinStar Systems with as built circuit and
Equipment placement as it relates to floor plans and
WinStar Provisioning Systems prior to acceptance.
1.4. Other Test and Acceptance.
As the WinStar Network grows and evolves, it is anticipated
that new technologies and Network Elements (NE's) will be
placed into the network. Prior to any purchase order being
placed for such Network Elements (NE's) and Services, Lucent
will propose and WinStar will approve a test and acceptance
procedure which will become an addendum to this contract.
1.5. Change Methodology.
If Lucent develops a new test procedure that enhances or
automates test and acceptance, it will submit a proposal to
WinStar who will provide approval or disapproval of the new
procedure. In no instance will any new acceptance criteria be
introduced that does not meet standard industry practices and
methods of evaluation for fitness for service or the
manufacturer's specification whichever is more stringent. No
new acceptance procedures will be instituted without prior
WinStar approval.
- --------------------------------------------------------------------------------
Schedule E to Confidential - Winstar/Lucent
Supply Agreement - E-2 - Execution Version
<PAGE>
Schedule F
Financing
Refer to the Credit Agreement
- --------------------------------------------------------------------------------
Schedule F to Confidential - Winstar/Lucent
Supply Agreement - F-1 - Execution Version
<PAGE>
Schedule G
International Considerations
1. General.
1.1. General.
(a) Purchase of Products and Services from Lucent by WinStar
International will be pursuant to this Agreement
(including BOB and SNAP-D), and all of the rights and
responsibilities will attach thereto, including but not
limited to financing and qualification of those purchases
for purposes of WinStar's minimum volume purchase
commitments, if any.
(b) Services and products delivered by Lucent to WinStar
International shall be considered "Services" and
"Products," respectively, for all purposes within the
scope of this Agreement.
(c) Internationally, Lucent will perform the Services of
Network Architecture and Technology, Planning and Program
Management, Testing, Implementation and Special Projects
as described in Schedule A, with appropriate modifications
to account for differences in the regulatory and technical
environments. In addition, Lucent's scope of
responsibility internationally will include:
(i) Planning and execution of the build-out of the
Network including site selection (including line of
site surveys), site acquisition, RF Engineering,
obtaining SS7 links and other interconnection
arrangements;
(ii) Provisioning of IP Gateways; and
(iii) Maintaining the network and providing monitoring and
the use of Lucent's Netcare facilities.
1.2. Operations.
(a) Start Up Phase. WinStar International is in the initial
stages of building portions of the Network in
international markets and has not yet begun an operational
phase. The first build is in Amsterdam, where a data
switch node and hub sites are under construction.
(b) Data-Only Strategy. Unlike WinStar's domestic operations,
WinStar International will not initially have a voice
product, but will focus on selling data products to medium
and large business customers. Therefore, the international
components of the Network will be packet-based instead of
circuit-based. There may be a voice product introduced in
the future, but the Parties expect such a product to be
packet-based (e.g., voice over IP or ATM).
- --------------------------------------------------------------------------------
Schedule G to the Confidential - Winstar/Lucent
Supply Agreement - G-1 -
<PAGE>
1.3. Service Offerings for Remote or International Cities
This section describes the set of WinStar's international
service offerings, as applicable to the scope of
responsibility assumed by Lucent internationally.
With an architecture that support a range of deployed
infrastructure, WinStar can offer a subset of its full
services suite globally with customization suited to local
conditions. In such cities functionality can include the
following:
(a) Point to Point Connectivity,
(b) Internet Access,
(c) Web hosting, e-commerce,
(d) VPN connectivity,
(e) Email, Network Notes services,
(f) IP telephony/fax,
(g) IP multimedia conferencing services,
(h) CPE,
(i) WAN professional services,
(j) LAN professional services,
(k) Security services,
(l) E Commerce,
(m) Web/Intranet systems integration,
(n) Customer Network Management,
(o) TCP/IP,
(p) ATM, and
(q) Frame Relay.
- --------------------------------------------------------------------------------
Schedule G to the Confidential - Winstar/Lucent
Supply Agreement - G-1 -
<PAGE>
Schedule H
Best of Breed (BOB)
1. General Principles
(a) Lucent believes that its telecommunications Products
and Services are superior and are second to no other
vendor.
(b) WinStar agrees to use Lucent as its preferred
supplier and to use Lucent Products and Services
provided that they are Best of Breed.
2. Definitions
(a) "Best of Breed" or "BOB" means Products and/or
Services that are commercially available and that
have the best functionality for the lowest price as
set forth in more detail in Section 4.
(b) The "BOB Highest Authority" or "BHA" means, in the
case of Lucent, the President - Global Commercial
Markets, and in the case of WinStar, the Chief
Operating Officer. The BHA for each company can be
changed by written notice to the other party by
Lucent or WinStar, as appropriate.
(c) The "BOB Intermediate Team" or "BIT" means Lucent's
Vice President of Network Solutions and WinStar's
Senior Vice President of Engineering. The BOB
Intermediate Team Member can be changed by written
notice to the other party by Lucent or WinStar, as
appropriate.
(d) The "BOB Review Team" or "BRT" has the meaning set
forth below (See Section 3.1 of this Schedule H). The
"TPM" are The Primary Members of the BRT.
3. How BOB works
3.1. The BOB Review Team
(a) Immediately upon execution of this Agreement,
Lucent's BHA will appoint two Lucent personnel (one
primary and one back up) to serve on the BOB Review
Team on behalf of Lucent, and WinStar's BHA will
appoint two WinStar personnel (one primary and one
back up) to serve on the BOB Review Team on behalf of
WinStar. If a vacancy occurs on the BOB Review Team,
a replacement will immediately be appointed by the
appropriate BOB Highest Authority. The two primary
members (TPM) of the BOB Review Team shall make all
determinations, except that if one or both of the
TPMs are unavailable for any reason, the back up
member for the absent TPM will have the authority to
make the determination required by BOB.
- --------------------------------------------------------------------------------
Schedule H to Confidential - Winstar/Lucent
Supply Agreement - H-1 -
<PAGE>
(b) Contemporaneously with any quote that is provided to
WinStar by Lucent, there will be a presentation made
to the BOB Review Team by the person or persons who
are submitting the quote; provided, however, that if
there already has been a BOB Review completed on the
Product(s) or Service(s) in question, no additional
BOB review will be required. The BOB Presentation
should address the criteria set forth in Section 4 of
this Schedule H. Within five business days of the BOB
Presentation, the BOB Review Team must make a
determination as to whether the Product(s) and/or
Service(s) are BOB. If they are BOB, then WinStar
shall approve the Purchase Order for the Product(s)
and/or Service(s) in question.
(c) If, on the other hand, one or more of the Product(s)
and/or Service(s) are found by the BOB Review Team to
fail the BOB test, then the person(s) who submitted
the quote must either:
(i) Try to adjust one or more of the criteria to
satisfy the BOB test (by, for example,
adjusting the purchase price downward) or
(ii) Decide to recommend a non-Lucent product.
(d) If, however, the BOB Review Team fails to act within
the five business day period or fails to reach a
consensus, then the matter must promptly be escalated
to the BOB Intermediate Team.
3.2. The BOB Intermediate Team (BIT)
BIT must make a BOB determination within five business days
from the day that the matter is referred to them by the BOB
Review Team. Within the five business day time period, the BIT
must have asked for materials and/or presentations from their
respective organizations to familiarize themselves with the
basis for the BOB dispute.
(a) If the BIT determines that the BOB test has been
satisfied their judgment is final, and WinStar shall
order the Product(s) and/or Service(s) in question.
(b) If, however, the BIT cannot reach consensus or does
not act within the five business days, the matter is
referred to the BHA.
3.3. The BOB Highest Authority (BHA)
(a) Within five business days from the date that the
matter is received from the BIT, the BHA must have
asked for materials and/or presentations from their
respective organizations to familiarize themselves
with the basis for the BOB dispute.
(b) The BHA must meet in person and must resolve the
dispute and decide the course of action that will be
taken. If the BHA cannot agree on a decision and
course of action within five business days of their
face to face meeting, then the decision of the
WinStar BHA shall be final and binding.
- --------------------------------------------------------------------------------
Schedule H to Confidential - Winstar/Lucent
Supply Agreement - H-2 -
<PAGE>
4. Determination of BOB
In determining whether Lucent Products and/or Services are BOB, there
are some overall basic principles that should be considered. These
principles, which are listed below, are not in any order of priority,
and during one analysis could carry a different weight than on a
previous analysis, when all of the circumstances of the decision are
considered. These principles or criteria are to be judged in terms of
what is commercially available from other vendors and the price(s) that
WinStar could obtain from such vendors.
(a) The technology and Network Elements selected must
interoperate with the appropriate PSTN, be scalable
and servicable in both size and function, and meet
international and domestic standards including, but
not necessarily limited to CCITT
Recommendation/Standards, ITUR Standards, FCC type
acceptance, NEBS, IEEE, Y2K and other applicable
local codes and practices.
(b) Network Element(s) must support WinStar required
functionality and be consistent with the approved
architecture. End-to-end Network performance and
reliability should be considered as well as the
individual performance and functionality of
individual Network Elements.
(c) With respect to the performance of the Network
Elements, all of the following should be evaluated:
MTTR, MTBF, steady state specifications, environment,
capacity, growability, reliability, etc.
(d) Sufficient product must be available in sufficient
quantities at time(s) required.
(e) Optimal price performance over the life-cycle of the
Network Element including end-to-end network costs
for both capital and on-going operations.
(f) Care should be taken to ensure that the physical
size, weight, dimensions and environmental
requirements (e.g., HVAC and power) of any selected
elements does not cause a retrofit or upgrade in the
physical space and existing environmentals in which
it is to be placed.
(g) The length of warranty and other warranty terms
offered by other vendors is important to consider as
well as the repair/return policies that other vendors
provide.
- --------------------------------------------------------------------------------
Schedule H to Confidential - Winstar/Lucent
Supply Agreement - H-3 -
<PAGE>
Confidential -- WinStar/Lucent
- --------------------------------------------------------------------------------
Schedule I
Warranty Periods
Lucent will provide a minimum warranty of one (1) year for all new Equipment
purchased from Lucent and of the longer of six (6) months or any remaining
period of the underlying Product warranty for repaired products and parts. The
actual warranty will be determined on a product-by-product basis and will be
stated in the product addendums, which will be attached to the Agreement.
If Lucent, in its sole discretion, agrees to purchase Third Party Products on
WinStar's behalf, it will flow through to WinStar the vendor's warranty in
accordance with the terms of the Agreement.
- --------------------------------------------------------------------------------
Schedule I to Confidential -- Winstar/Lucent
Supply Agreement - I-1 -
<PAGE>
Schedule J
Key Lucent Positions
1. Key Positions
The following positions shall be the Key Lucent Positions, provided
that they cover the body of responsibility set forth in Section 2 of
this Schedule J. In the event that these positions do not encompass all
such responsibility, additional Key Lucent Positions shall be
designated by WinStar with Lucent's input, to cover the remaining
responsibility.
(a) Program Management Director;
(b) Network Solutions Vice President;
(c) Director of Integration Test Laboratory;
(d) Director of Engineering; and
(e) Sales Director.
2. Key Positions Responsibilities
The Lucent Program Management Office (PMO) will have overall
responsibility for delivery of EF&I services under this agreement. In
addition to the PMO, other key Lucent management roles have been
identified as part of this agreement with specific Project Office
responsibilities. The high level functional responsibility of each of
these Project Office individuals is outlined in the following
organization chart.
It is Lucent's responsibility to staff each Project Office with
adequate resources to carry out the scope of this agreement. Each
Project Office Manager will issue weekly status update reports to
identified WinStar oversight personnel. Each Project Office Manager
will regularly meet with WinStar personnel and will also serve as the
single point of contact for status and escalations within their
respective areas of responsibility. WinStar retains the right to
approve the selection of the PMO executive appointed by Lucent.
2.1. Program Management Office
(a) Contracts
(b) Schedules
(c) Forecasts
(d) Sub Contractors
(e) Tracking & Reporting
- --------------------------------------------------------------------------------
Schedule J to Confidential - Winstar/Lucent
Supply Agreement - J-1 -
<PAGE>
2.2. Lucent Sales Team
(a) National Account Manager
(b) Sales Specialists
(c) Support Specialists
2.3. Network Services Management
(a) Network Planning
(b) Service Engineering
(c) High Level Design
(d) Detailed Design
(e) Diversity and Protection and Restoration
(f) Test Lab
(g) Operations Support/3rd Level Support
2.4. Element Configuration
(a) Initial Load Definition
(b) OS and Generic Upgrades
2.5. Installation Management
(a) Service Planning issues
(b) Site selection coordination
(c) Installation
(d) Network Facility Provisioning
2.6. Logistics
(a) Warehousing
(b) Shipping/Receiving
(c) Staging
2.7. IT Engineering
(a) Network Management Systems
- --------------------------------------------------------------------------------
Schedule J to Confidential - Winstar/Lucent
Supply Agreement - J-2 -
<PAGE>
(b) DNS
(c) E Commerce
(d) Customer Web Access
2.8. Performance Assurance
(a) Performance Quality assurance
(b) Performance Monitoring and Analysis
(c) Traffic control
(d) Performance Management Control
2.9. Premises Services
(a) Wire Management
(b) ILEC Coordination
(c) Riser Access
(d) CPE Support
- --------------------------------------------------------------------------------
Schedule J to Confidential - Winstar/Lucent
Supply Agreement - J-3 -
<PAGE>
Schedule K
Lucent Indicia Co-Marketing Program Guidelines
The following pages represent the guidelines for use of Lucent trade and
service marks.
- --------------------------------------------------------------------------------
Schedule K to Confidential -- Winstar/Lucent
Supply Agreement - K-1 -
<PAGE>
Introduction to Co-Marketing
Sharing Brand Equity Helps You Increase Your Revenue
Lucent Technologies is the world's leading provider of telecommunications data
and voice systems. Leveraging the Lucent brand can provide a significant
advantage for you -- our customer. Research shows that the Lucent and Bell Labs
brands communicate high quality and innovation to end-users. In fact, Lucent
has reached high brand awareness with business leaders and consumers in a very
short period of time.
Both a New and Long-Established Identity
While the Lucent name was created in 1996, Bell Laboratories -- a brand with a
powerful heritage -- is also identified with our Lucent name. More important,
Bell Labs continues to be an integral part of our company.
For more than a century, Bell Labs has developed many patents -- everything from
the invention of the transistor to the foundation of all digital technology
traces their origins to Bell Labs.
The Bell Labs heritage and the highly successful launch of our corporate name
make Lucent a powerful co-marketing partner to help you broaden your promotional
reach to generate additional revenue.
Everything you need to co-market with Lucent is right here in this handy
portfolio. See for yourself - read through the guidelines and tools you'll need
to get started.
Co-Marketing General Guidelines
How to Link Our Brand Strengths With Yours
When you leverage the powerful Lucent brand in your promotions, you create a
third "bigger" brand that benefits us both. Our goal is simple: every time you
publicize Lucent's role in your network, you enhance your own image. We call
this "Contribution Branding." The result: stronger customer loyalty and
potential new revenue.
Are You Eligible? And How Can You Enroll?
The program is available to you when you include a Co-Marketing Program
agreement in your contract. Your Lucent Customer Team Representative can
confirm your eligibility.
Just fill out a Lucent Co-Marketing Program Enrollment Form (which signifies
agreement to conform with all Co-Marketing Program guidelines) and FAX
everything to:
Lucent Co-Marketing Program Office
(908) 559-3994 or (908) 559-1680
Once your application is approved, it will be counter-signed and immediately
returned to you.
Creating a Co-Marketing Plan
Your Customer Team Representative can play a vital role in helping you structure
a beneficial co-marketing plan based on your marketing goals.
Promotions that Cut Through the Clutter
With co-marketing, you can use our Co-Marketing logo, Lucent brands and product
names in advertising or promotions, with a
<PAGE>
phrase linking Lucent to your network. The Lucent Co-Marketing logo is unique
because it can include a "linking phrase" - embedded in the logo itself - that
identifies the specific advantage your network offers by using Lucent products
and services. The Lucent Co-Marketing logo and linking phrase can only be used
by participants in the Co-Marketing Program.
Using our logo with the linking phrase leverages the brand equity Lucent has
built to increase the impact of your promotions.
Ask your Customer Team Representative about existing authorized linkage
statements, or the possibility of creating your own customized statement.
Linking Phrase Requirements
You can use our brand as a means of competitive differentiation. But the Program
does not permit customers to position themselves directly against other Lucent
customers. Here are examples of (A) Correctly Worded Linking phrases and
(B) Incorrect Wording.
(A) Correctly Worded Linking Phrases
Linking phrases which are authorized include:
[Graphics Omitted]
All of the linking phrases shown above have one thing in common. They are
factual statements informing the end user your network is based on technology
from Lucent.
(B) Incorrect Wording of Linking Phrases
You cannot use phrases with the Lucent logo
which seek to establish a competitive advantage like these:
"Better digital quality Lucent network"
"Better sound by Bell Labs"
"The Best Network Supplied By"
The Incorrectly Worded linking phrases have this in common. They state a network
is "better" because of Lucent Using a linking phrase to claim superiority
because of Lucent product or services is not permissible.
Advance Creative Approval of Promotions Required
All advertising and promotions supported under the Co-Marketing Program must be
submitted for advance creative approval (including specific wording of the
linking phrase, correct use of the Lucent Co-Marketing logo, and other
Co-Marketing Program requirements).
Unique Co-Marketing Logos
If you receive approval for a unique linking phrase to use with the Lucent
Co-Marketing logo in your promotions, Lucent will provide you with small, medium
and large versions (color and black and white) of this unique logo in the
electronic format(s) of your choice. The Co-Marketing logo must never be altered
and must be reproduced from the Lucent supplied logo sheets or diskettes.
The following trademark acknowledgment must also appear within your trademark
notification copy:
<PAGE>
"The Lucent logo is a registered trademark of Lucent Technologies."
Co-Marketing Logo Requirements
There are other important requirements for the way Lucent's
name and Innovation Ring are presented visually in advertising
and promotions to: 1) ensure that Lucent's identity
is consistent wherever it appears and 2) to protect
our trademark. (See Brand and Logo Usage Guidelines
booklet in this portfolio.)
Backgrounds - Incorrect Usage
o Do not position the logo within a contained space.
o Do not place the logo on a patterned background.
o Do not add any additional graphic elements or text to the logo.
o Do not alter parts of the logo in any way.
o Do not separate parts of the logo in any way.
Other Important Co-Marketing Requirements
o As part of our diverstiture agreement with AT&T and to avoid confusing your
customers, it is important that Lucent not be perceived through the
Co-Marketing Program as a partner in providing service. We provide the network
or network elements. You provide the service to your customers.
o The Lucent brand and Co-Marketing logo must not be used in any advertising or
promotions that disparagingly refer to other customers of Lucent Technologies.
o Advertising and promotions must not misrepresent features and/or benefits of
Lucent Technologies.
o Participation in the Co-Marketing Program should not be construed as approval
by Lucent of any brand, product or company name.
o All advertising and promotions must be in compliance with federal, state and
local law. By its advance approval of advertising and promotions under
Co-Marketing, Lucent does not assume responsibility for compliance of the
advertising or promotions with relevant laws or regulation.
o Lucent reserves the right to refuse approval of advertising and promotions.
Program Changes With Notice
Lucent Technologies reserves the right to amend the Co-Marketing Program at any
time. If changes are made, participants will be given 60 days' notice.
Ingredient Branding Program
Leverage the Lucent Brand in Your Promotion Efforts
Terms and Conditions
You may use the Lucent Co-Marketing logo and linkage statement in your
advertising and direct marketing program, provided you follow all Program
Guidelines.
Lucent will furnish all necessary Co-Marketing logo materials at no cost.
Getting Creative Approval
Before you run a Co-Marketing promotion with the Lucent name and Co-Marketing
logo and linkage statement, contact the Lucent Co-Marketing Program Office.
Simply, FAX final creative with a media list before it runs to:
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Lucent Co-Marketing Program Office Within 90 days after your adversiting or
(908) 559-3994 or (908) 559-1680 promotion runs, send documentation to our
Co-Marketing Program agency addressed to:
A Creative Approval form we provide in this
portfolio must accompany your request. A Lucent Co-Marketing Program
signed copy of the form will be returned to you c/o TradeOne Marketing
within two business days. if we suggest a few 440 Ninth Avenue
changes, they will accompany this form. New York, NY 10001
What You Need to Send: For print: Send a complete full-page tearsheet
showing your name and date of the publication.
For print: FAX a final proof of your Co- Provide a list of publications in which the ad appeared.
Marketing ad showing all headlines and body
copy as it will appear. For broadcast: Send ANA/RAB, ANA/TVB,
and/or ANA/CAB certification forms from all
For television: FAX a storyboard of your stations carrying your commercials along with
complete television commercial including the scripts and storyboards.
Lucent name and Co-Marketing logo and
voiceover text. For outdoor: Send a picture of the outdoor
board and the outdoor company's list of outdoor
For radio: FAX complete commercial script. locations.
For direct mail: FAX a completed proof with NOTE: If you run the same ad/promotion
all headlines, text and artwork of the direct mail within a 6-month period, creative approval is
piece as it will appear. NOT needed again. But please forward materials
to TradeOne EVERY time you run an ad or
For outdoor: FAX a completed proof of your promotion and attach a copy of your Creative
board as it will appear with all copy and artwork. Review form.
What Media Can You Use?
Advertising: If you have any questions about the Lucent
Newspapers (general interest, daily, Sunday, Co-Marketing Program or wish to explore
weekly) additional Co-Marketing opportunities with
Magazines Lucent, speak with your Customer Team
Television (broadcast or cable) Representative.
Radio
Outdoor Good Luck and Good Marketing!
Direct Mail
Please Call for Approval To Use:
Trade Show Exhibits
Special Events
Seminars
Sales Incentives
Telemarketing
After Your Co-Marketing Promotion
Runs
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Lucent Technologies [LOGO] Planning Form
Company Information
Co-Marketing Acct. No. ______ (Provided by Lucent Co-Marketing Program Office)
Company Name ________________________________________________________________
Form Completed By:
Name ____________________________________ Title _____________________________
Phone ____________________ Fax ____________________ E-mail __________________
Address _____________________________________________________________________
Proposed Activity
Program Theme ______________________ Product Group Promoted _________________
Program Description _________________________________________________________
_____________________________________________________________________________
Marketing Plan
Target Audience ____________________ Target Geography ______________________
Activity Dates: From / / to / /
Advertising Medium types:
(check all that apply)
/ / Newspaper / / Magazine / / Other ______________
/ / Radio / / Outdoor ________________________
/ / TV / / Direct Mail ________________________
Publications or Media: _____________________________________________________
(be specific)
Estimated Project Cost $ ____________
Strategic Objectives
Business Objective __________________________________________________________
_____________________________________________________________________________
How will the Co-Marketing Program contribute to this goal? __________________
_____________________________________________________________________________
Is there a promotional offer included? / / Yes / / No What is it? __________
What are the Incremental sales expected from this promotion? ____% $________
How will you measure program effectiveness? __________________________________
Will you share results with Lucent? / / Yes / / No
All creative must be submitted for creative review by Lucent prior to placement.
For Internal Use
Lucent Customer Representative Approval ____________________ Date ____________
Lucent CPO Approval ________________________________________ Date ____________
Fax or overnight
approval form to: Lucent Technologies Co-Marketing Contact: Alan Aikort
283 King George Rd.
Room A2C22 Phone: (908) 559-7206
Warren, NJ 07059 Fax: (908) 559-3994
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Lucent Technologies [LOGO] Creative Approval Form
Company Information
Co-Marketing Acct. No._________(Provided by Lucent Co-Marketing Program Office)
Company Name__________________________________________________________
Form Completed By:
Name_______________________________Title_____________________________________
Phone_______________________Fax_____________________________E-mail____________
Address_______________________________________________________________________
Activity Description
Publication or Media Name (or attach a media list):__________________________
Advertising Medium Type: (check all that apply)
/ / Newspaper / / Magazine / / Outdoor
/ / Radio / / Direct Mail / / Other____________
/ / TV ________________________
Run Dates Expected: ____________________________________________________
(be specific)
Attach creative to this form for approval.
For Lucent Co-Marketing Use Only / / Approved / / NOT Approved
Reason __________________________________________________________________
________________________________________________________________________
________________________________________________________________________
_____________________________ _______________
Lucent Co-Marketing Signature Date
PLEASE NOTE:
o All creative bearing the Lucent Co-Marketing logo, name and/or other Lucent
product trademarks must be approved prior to placing the creative in any
media.
o When Lucent requires modifications to meet the approved guidelines, all
required revisions must be made and resubmitted to Lucent for final approval.
o Complete performance (e.g. tearsheet) must be submitted to Lucent Co-Marketing
Program (address below) upon completion of promotional activity.
Please mail or fax to:
LUCENT TECHNOLOGIES
ATTN: ALAN AIKEN
283 King George Road, Rm. AZC22
Warren, NJ 07059
Tel: 908-559-7208
Fax: 908-559-3994
