SUPPLY AGREEMENT
BY AND BETWEEN
WINSTAR COMMUNICATIONS, INC.
AND
LUCENT TECHNOLOGIES INC.
Effective as of October 21, 1998
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
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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
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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 Current Network Diagrams
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
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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 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("WinStar"), and LUCENT TECHNOLOGIES INC., a
Delaware corporation with offices located at 000 Xxxxxxxx Xxxxxx, Xxxxxx Xxxx,
Xxx Xxxxxx 00000 ("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
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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
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(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).
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(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 xxxx-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 -
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 -
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 -
(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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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
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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 "Xxxx Labs" and "Xxxx
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
- 9 -
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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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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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
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(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
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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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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
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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
- 16 -
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 xxxx 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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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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(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
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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 -
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 -
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 -
(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 -
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 -
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 -
(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
$___________ 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 -
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. $___________.
(i) WinStar may use up to _________ percent
(____%) 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
__________ percent (___%) 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 _____________ percent
(____%) for the First Contract Year
and less than or equal to ______
percent (___%) 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
_________ percent (____%) in the
First Contract Year or exceeds
________ percent (___%) 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 ___________ dollars
(U.S. $_______) per each one
hundredth of a percentage (1/100%)
in excess of _______ percent (____%)
for the First Contract Year and
_____ percent (___%) 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 -
(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
28 -
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,
Supply Agreement Confidential - WinStar/Lucent
29 -
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
Supply Agreement Confidential - WinStar/Lucent
30 -
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
Supply Agreement Confidential - WinStar/Lucent
31 -
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.
Supply Agreement Confidential - WinStar/Lucent
32 -
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.
Supply Agreement Confidential - WinStar/Lucent
33 -
(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
Supply Agreement Confidential - WinStar/Lucent
34 -
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
Supply Agreement Confidential - WinStar/Lucent
35 -
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
Supply Agreement Confidential - WinStar/Lucent
36 -
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
Supply Agreement Confidential - WinStar/Lucent
37 -
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
Supply Agreement Confidential - WinStar/Lucent
38 -
(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 U.S.
Dollars (U.S. $___________).
(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.
Supply Agreement Confidential - WinStar/Lucent
39 -
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:
Supply Agreement Confidential - WinStar/Lucent
40 -
(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
Supply Agreement Confidential - WinStar/Lucent
41 -
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
Supply Agreement Confidential - WinStar/Lucent
42 -
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
43 -
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
Supply Agreement Confidential - WinStar/Lucent
44 -
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.
Supply Agreement Confidential - WinStar/Lucent
45 -
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
46 -
If to WinStar: If to Lucent:
WinStar Communications, Inc. Lucent Technologies Inc.
0000 Xxxxxxxx Xxxx 0 Xxxx Xxxxxx Xx
Xxxxx Xxxxxx, Xxxxxxxx 00000 Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Senior VP, Network Operations Attn: President, Global
Commercial Markets
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
With a copy to: With a copy to:
WinStar Communications, Inc. Lucent Technologies Inc.
000 Xxxx Xxxxxx 000 Xxxx Xxxxxx Xx.
Xxx Xxxx, Xxx Xxxx 00000 Xxxxxx, Xxx Xxxxxx 00000
Attn: General Counsel Attn: Vice President of Law
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
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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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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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
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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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(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: By:
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Name: Name:
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Title: Title:
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Date: Date:
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