Document:

Form of Amendment No. 1 to Stockholder's Agreement

     WHEREAS, the undersigned (the "Stockholder") and Winstar Communications,
Inc. (the "Company") previously entered into a Stockholder's Agreement.

     WHEREAS, the Company has amended the terms of the Subordinated Notes
Exchange Offer such that holders of its 11% Notes and 15% Notes will receive
solely New Senior Notes or a combination of New Senior Notes and New Senior
Discount Notes in the Subordinated Notes Exchange Offer.

     WHEREAS, the Company desires to provide to the Stockholder the same
allocation of New Senior Notes and New Senior Discount Notes as will be
available to holders of 11% Notes and 15% Notes participating in the
Subordinated Notes Exchange Offer.

     Capitalized terms used and not otherwise defined in this Amendment shall
have the respective meanings assigned to them in the Stockholder's Agreement, as
amended hereby.

     NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, the parties agree as follows:

     1. Amendment to the Stockholder's Agreement.
        -----------------------------------------

     Upon the effectiveness of this Amendment, the Stockholder's Agreement shall
be and is hereby amended as set forth in paragraph (a) below.

     (a) Section (1) of the Stockholder's Agreement is deleted and replaced in
its entirety with the following:

                           The Stockholder hereby agrees that it shall
                  exchange its Exchange Debentures for New Senior
                  Notes and/or New Senior Discount Notes at the
                  Exchange Price (as defined) in the Debenture
                  Exchange Transaction (it being understood that the
                  obligation contained in this sentence is
                  unconditional, subject to Section 7), and that it
                  shall execute such other documentation as may be
                  required to effect its participation in the
                  Debenture Exchange Transaction.  The exchange
                  price (the "Exchange Price") will be (1) New
                  Senior Notes with a value (determined as of
                  June 16, 2000, and inclusive of principal amount
                  and accrued interest assuming issuance of such New
                  Senior Notes on the issue date of the New Senior
                  Notes issued in the Private Placement and the
                  Subordinated Notes Exchange Offer) of $1,545.91,
                  (2) New Senior Discount Notes with an Accreted

<PAGE>

                                                                            2

                  Value (as defined therein) of $1,545.91
                  (determined as of June 16, 2000) or (3) a
                  combination of New Senior Notes and New Senior
                  Discount Notes with a value and Accreted Value,
                  respectively, of $1,545.91 (determined as of June
                  16, 2000) for each $1,000 principal amount of the
                  Exchange Debentures.  The Company's obligation to
                  effect the Exchange Debenture Election and
                  consummate the Debenture Exchange Transaction is
                  subject to the following conditions (which may be
                  waived in the sole discretion of the
                  Company):  (a) the Company having accepted
                  Existing Senior Notes for payment in the Tender
                  Offer, (b) the Company having accepted Existing
                  Subordinated Notes for exchange in the
                  Subordinated Notes Exchange Offer, and (c) the
                  Company having consummated the Notes Offering.
                  Upon satisfaction (or waiver) of these conditions,
                  the Company will become unconditionally obligated
                  to effect the Exchange Debenture Election and
                  consummate the Debenture Exchange Transaction,
                  subject only to the next paragraph.

                           In lieu of the commitment by the Company to
                  effect the Exchange Debenture Election and the
                  Debenture Exchange Transaction, the Company
                  reserves the right, at any time after consummation
                  of the Refinancing, to commence a Direct Exchange
                  Offer wherein the Company would offer to exchange
                  any and all of the shares of Preferred Stock for
                  its New Senior Notes, New Senior Discount Notes or
                  a combination thereof.  In such event, the
                  Stockholder hereby agrees that it shall tender its
                  Shares into any Direct Exchange Offer and that it
                  shall not withdraw any Shares so tendered (it
                  being understood that the obligation contained in
                  this sentence is unconditional, subject to
                  Section 7).  The Offer Price in any Direct
                  Exchange Offer will be (1) New Senior Notes with a
                  value (determined as of June 16, 2000, and
                  inclusive of principal amount and accrued interest
                  assuming issuance of such New Senior Notes on the
                  issue date of the New Senior Notes issued in the
                  Private Placement and the Subordinated Notes
                  Exchange Offer) of $1,545.91, (2) New Senior
                  Discount Notes with an Accreted Value (as defined
                  therein) of $1,545.91 (determined as of June 16,
                  2000) or (3) a combination of New Senior Notes and
                  New Senior Discount Notes with a value and
                  Accreted Value, respectively, of $1,545.91
                  (determined as of June 16, 2000) for each $1,000
                  Initial Liquidation Preference (as defined in the
                  Certificate of Designation) of the Preferred
                  Stock.

<PAGE>

                                                                            3

                           In either instance, the Stockholder will
                  receive New Senior Notes and New Senior Discount
                  Notes in the proportions set forth below:

                  (1)      New Senior Discount Notes with an Accreted
                           Value (determined as of June 16, 2000) equal
                           to the aggregate principal amount of Exchange
                           Debentures (or aggregate Liquidation
                           Preference of Preferred Stock in the case of
                           a Direct Exchange Offer) held by the
                           Stockholder multiplied by a fraction equal to
                           (A) the amount of New Senior Discount Notes
                           available for issuance to holders of 11%
                           Notes and 15% Notes in the Subordinated Notes
                           Exchange Offer and to holders of Exchange
                           Debentures (or Preferred Stock) divided by
                           (B) the sum of (x) the aggregate Total
                           Exchange Value (which represents the offer
                           price plus the consent consideration to be
                           paid in the Subordinated Notes Exchange
                           Offer) of the 11% Notes and 15% Notes
                           tendered in the Subordinated Notes Exchange
                           Offer and (y) the result of (i) the Exchange
                           Price multiplied by (ii) the aggregate
                           Initial Liquidation Preference of the
                           Series C Preferred Stock; and

                  (2)      New Senior Notes with a value (determined as
                           of June 16, 2000, and inclusive of principal
                           amount and accrued interest assuming issuance
                           of such New Senior Notes on the issue date of
                           the New Senior Notes issued in the Private
                           Placement and the Subordinated Notes Exchange
                           Offer) equal to the aggregate principal
                           amount of Exchange Debentures (or aggregate
                           Liquidation Preference of Preferred Stock in
                           the case of a Direct Exchange Offer) held by
                           the Stockholder multiplied by the fraction
                           obtained by subtracting the fraction
                           calculated in the preceding paragraph from
                           1.0.

                  The Company will designate no more than
                  $450.0 million of New Senior Discount Notes
                  (calculated based on the issue date Accreted Value
                  of such notes) for issuance in the Subordinated
                  Notes Exchange Offer and in exchange for the
                  Exchange Debentures to be issued in respect of the
                  Preferred Stock (or in exchange for the Preferred
                  Stock in the case of a Direct Exchange Offer).
                  This amount will be reduced to less than $450.0
                  million (and may be reduced to zero) to the extent
                  the Company (1) sells New Senior Discount Notes in
                  the Private Placement and/or (2) holders of 10%

<PAGE>

                                                                           4

                  Notes elect to receive New Senior Discount Notes
                  in the Subordinated Notes Exchange Offer and (3)
                  the Company does not increase the amount of New
                  Senior Discount Notes to be issued.

                  2.       Stockholder's Agreement.

                  Except as expressly amended or modified herein,
the Stockholder's Agreement (as amended hereby) shall
continue in full force and effect in accordance with the
provisions hereof and thereof as in existence on the date
hereof.  After the date hereof, any reference to the
Stockholder's Agreement, shall mean the Stockholder's
Agreement as amended by this Amendment.

                  3.  General Provisions.

                  (a)  Amendments.  This Amendment may be amended at
         any time only by a written instrument executed by each
         of the parties hereto.

                  (b)  Counterparts.  This Amendment may be executed
         in two or more counterparts, all of which shall be
         considered one and the same agreement and shall become
         effective when two or more counterparts have been
         signed by each of the parties and delivered to the
         other parties, it being understood that all parties
         need not sign the same counterpart.

                  (c)  Entire Agreement; No Third-Party
         Beneficiaries.  The Stockholder's Agreement (including
         the documents and instruments referred to herein), as
         amended by this Amendment, (i) constitutes the entire
         agreement and supersedes all prior agreements and
         understandings, both written and oral, among the
         parties with respect to the subject matter hereof and
         (ii) is not intended to confer upon any person other
         than the parties hereto any rights or remedies
         hereunder.

<PAGE>

                  (d)  Governing Law.  THIS AMENDMENT SHALL BE
         GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT
         GIVING EFFECT TO ITS CONFLICT OF LAWS RULES) AS TO ALL
         MATTERS, INCLUDING BUT NOT LIMITED TO, MATTERS OF
         VALIDITY, CONSTRUCTION, EFFECT AND PERFORMANCE.

                                                 WINSTAR COMMUNICATIONS, INC.

                                                 by __________________________
                                                   Name:
                                                   Title:

<PAGE>

                          [Counterpart Signature Page]

                                            -----------------------------
                                               (Stockholder)

Dated:                                      By:
       --------------------                    -----------------------------
                                                              (signature)
Aggregate Initial Liquidation
Preference of Preferred
by Stock held by                             ----------------------------------
Stockholder:                                            (name and title)

                                             ---------------------------------
$                                                   (city/state/zip code)
 ------------------------------------

                                             ---------------------------------
                                                             (phone)

                                            ----------------------------------
                                                            (facsimile)TENDER OFFER
                            DEALER MANAGER AGREEMENT

                                                           April 10, 2000

Salomon Smith Barney Inc.
390 Greenwich Street
New York, New York 10013

Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010

Ladies and Gentlemen:

     Winstar Communications, Inc., a Delaware corporation (the "Company"), is
making a tender offer (hereinafter called, together with any extensions,
supplements and amendments thereof or thereto, the "Tender Offer") to purchase
for cash any and all of (i) its outstanding 14% Senior Discount Notes Due 2005
(the "14% Notes") and 14- 1/2% Senior Deferred Interest Notes Due 2005 (the
"14-1/2% Notes"), (ii) the outstanding 12-1/2% Guaranteed Senior Secured Notes
Due 2004 (the "WEC Notes") of Winstar Equipment Corp., a Delaware corporation
("WEC"), and (iii) the outstanding 12- 1/2% Guaranteed Senior Secured Notes Due
2004 (the "WEC II Notes" and, together with the 14% Notes, the 14-1/2% Notes and
the WEC Notes, the "Existing Senior Notes") of Winstar Equipment II Corp., a
Delaware corporation ("WEC II"), on the terms and subject to the conditions set
forth in the Offer to Purchase and Consent Solicitation Statement dated March 3,
2000 (the "Tender Offer Statement"). The Company intends to amend (the "Company
Proposed Amendments") certain provisions of the indenture governing the 14%
Notes dated October 23, 1995 (the "14% Notes Indenture") between the Company and
United States Trust Company of New York, as trustee (the "Trustee"), and the
indenture governing the 14-1/2% Notes dated March 1, 1997 (the "14-1/2% Notes
Indenture") between the Company and the Trustee. The Company and WEC intend to
amend (the "WEC Proposed Amendments") certain provisions of the indenture
governing the WEC Notes dated March 1, 1997 (the "WEC Notes Indenture") among
the Company, WEC and the Trustee. The Company and WEC II intend to amend (the
"WEC II Proposed Amendments" and, together with the Company Proposed Amendments
and the WEC Proposed Amendments, the "Proposed Amendments") the indenture
governing the WEC II Notes dated August 1, 1997 (the "WEC II Notes Indenture"
and, together with the 14% Notes Indenture, the 14-1/2% Notes Indenture and the
WEC Notes Indenture, the "Indentures") among the Company, WEC II and the
Trustee. The Tender Offer and all the transactions related thereto, including
any financings in respect thereof, shall be collectively referred to herein as
the "Transactions". The Proposed Amendments will be contained in supplements to
the Indentures to be executed by the Company and the Trustee, the Company, WEC
and the Trustee and the Company, WEC II and the Trustee, as the case may be (the
"Supplemental Indentures"). Assuming (i) the execution and delivery by the
Company, WEC, WEC II and the Trustee of the applicable Supplemental Indentures
and (ii) receipt by the Company of the Requisite Consents (as defined in the
Tender Offer Statement), the Proposed Amendments will become operative when the

<PAGE>

                                                                           2

Existing Senior Notes are accepted for purchase by the Company pursuant to the
Tender Offer (the first date on which such event occurs being herein referred to
as the "Settlement Date"). The Tender Offer will be made on the terms and
subject to the conditions set forth in the Tender Offer Statement.

     Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Tender Offer Statement.

     Concurrently with the Tender Offer, the Company is (1) making the Exchange
Offer to purchase the Existing Subordinated Notes, (2) conducting the Private
Placement, consisting of 12 1/2% Senior Notes due 2008 (the "2008 Senior
Notes"), 12 3/4% Senior Notes due 2010 (the "2010 Senior Notes), and 12 3/4%
Senior Notes due 2010 denominated in euro (the "Euro Notes"), and (3) seeking to
enter into the Preferred Stock Transaction with the holders (the "Specified
Holders") of more than 75% of the outstanding shares of the Series C 14 1/4%
Senior Cumulative Exchangeable Preferred Stock due 2007 of the Company (the
"Series C Preferred Stock"), including (A) an agreement by the Specified Holders
to waive any defaults under the certificate of designation governing the Series
C Preferred Stock resulting from the Refinancing (as defined) and certain other
events, (B) the Company's agreement to issue, on June 15, 2000, exchange
debentures (the "Exchange Debentures") in exchange for all of the Series C
Preferred Stock, as provided by the terms of the Series C Preferred Stock
certificate of designation, (C) an agreement by the Specified Holders that
certain restrictive covenants and default provisions in the indenture that will
govern the Exchange Debentures will be eliminated and (D) the Company's
agreement to exchange all of the Exchange Debentures for 2010 Senior Notes and
Senior Discount Notes and the Specified Holders' agreement to participate in
such exchange.

     As used herein, the term "Refinancing" means the Tender Offer, the Exchange
Offer, the Private Placement and the Preferred Stock Transaction, and the term
"Other Refinancing Agreements" means: (1) the Exchange Offer Dealer Manager
Agreement, dated the date hereof, between the Company and the Dealer Managers
(as defined) (the "Exchange Offer Dealer Manager Agreement"), (2) the
supplemental indentures to be entered into in connection with the Exchange
Offer, (3) the Purchase Agreement (the "Dollar Notes Purchase Agreement") dated
as of March 27, 2000, among the Company and the Dealer Managers, BNY Capital
Markets, Inc. and CIBC World Markets Corp., as representatives of the several
Purchasers identified therein, (4) the Purchase Agreement (the "Euro Notes
Purchase Agreement" and, together with the Dollar Notes Purchase Agreement, the
"Purchase Agreements") dated as of March 27, 2000, among the Company and Credit
Suisse First Boston (Europe) Limited, Salomon Brothers International Limited,
Goldman Sachs International, Merrill Lynch International, BNY Capital Markets,
Inc. and CIBC World Markets Corp., as representatives of the several Purchasers
identified therein, and (5) the Stockholder Agreements between the Company and
the Specified Holders in respect of the Preferred Stock Transaction, as amended
as of the date hereof.

     The following sets forth the agreement between the Company, on the one
hand, and Salomon Smith Barney Inc. and Credit Suisse First Boston Corporation,
as Joint Dealer Managers (the "Dealer Managers"), on the other hand.

     1. Appointment as Dealer Managers. (a) The Company hereby appoints you as
Dealer Managers and authorizes you to act as such in connection with the
Transactions. As Dealer Managers, you agree, in accordance with your customary
practice, to perform those services in connection with the Transactions as are
customarily performed by investment banking firms in connection with tender
offers of like nature, including, but not limited to, the solicitation of
tenders of Existing Senior Notes and related consents pursuant to the Tender
Offer. Your respective obligations as Dealer Managers hereunder shall be several

<PAGE>

                                                                             3

and not joint and several. The performance of such services by you hereunder
shall commence upon the mailing of the Tender Offer Statement to each holder of
record of the Existing Senior Notes (the date of the commencement of such
distribution being herein referred to as the "Commencement Date").

     (b) The Company expressly acknowledges that all opinions and advice
(written or oral) given by the Dealer Managers to the Company in connection with
the Dealer Managers' engagement are intended solely for the benefit and use of
the Company (including its management, directors and attorneys) in considering
the transactions to which they relate and the Company agrees that no such
opinion or advice shall be used for any other purpose or reproduced,
disseminated, quoted or referred to at any time, in any manner or for any
purpose, nor shall any public references to either of the Dealer Managers be
made by the Company (or such persons), without the prior consent of each of the
Dealer Managers, which consent shall not be unreasonably withheld, other than
pursuant to the order of any court or administrative agency or in any pending
legal or administrative proceeding, or otherwise as required by applicable law
or compulsory legal process (in which case the Company agrees to inform you
promptly thereof and, to the extent not expressly prohibited by such regulatory
process, prior to any such disclosure).

     2. No Liability for Acts of Dealers, Banks and Trust Companies. Each of you
shall have no liability (in tort, contract or otherwise) to the Company, the
other Dealer Manager or any other person for any losses, claims, damages,
liabilities and expenses (each a "Loss" and collectively, the "Losses") arising
from any act or omission on the part of any broker or dealer in securities
("Dealer") (other than yourself) or any bank or trust company or any other
person (other than yourself), and each of you shall not be liable for any Losses
arising from your own acts or omissions in performing your obligations as Dealer
Managers or as Dealers hereunder or otherwise in connection with the
Transactions, except for any such Losses which are finally judicially determined
by a court of competent jurisdiction not subject to further appeal to have
resulted primarily from your gross negligence or willful misconduct. In
soliciting or obtaining tenders, neither the Company, any Dealer, bank or trust
company, nor the other Dealer Manager shall be deemed to be acting as your agent
or the agent of the Company, and you, as Dealer Managers, shall not be deemed
the agent of the Company, any Dealer, bank or trust company, the other Dealer
Manager or any other person. The Company acknowledges and agrees that, in your
capacity as Dealer Managers, each of you shall act as an independent contractor,
and any of your duties arising out of your engagement pursuant to this Agreement
shall be owed solely to the Company.

     3. The Tender Offer Material. The Company agrees to furnish you as soon as
practicable on or following the Commencement Date with as many copies as you may
reasonably request of the Tender Offer Statement, the related Letter of
Transmittal and the Notice of Guaranteed Delivery, any other Tender Document and
any other documents or materials filed or to be filed on behalf of the Company
in connection with the Transactions with any governmental or regulatory
authorities, agencies or instrumentalities, any amendments or supplements to any
of the foregoing and all exhibits thereto, including, without limitation, any

<PAGE>

                                                                           4

materials incorporated by reference in the Tender Offer Statement, and any
related materials to be used by the Company in connection with the Transactions
(collectively, as amended or supplemented from time to time, the "Tender Offer
Material").

     You hereby agree, as Dealer Managers, that you will not disseminate any
written material for or in connection with the solicitation of tenders of
Existing Senior Notes pursuant to the Tender Offer other than the Tender Offer
Material, and you agree that you will not make any statements in connection with
such solicitation, other than the statements that are set forth in the Tender
Offer Material or as otherwise authorized by the Company.

     The Company agrees that, a reasonable time prior to publishing, using, or
filing with the U.S. Securities and Exchange Commission (the "Commission") or
with any other Federal, state, provincial, territorial or other governmental
agency, authority, or instrumentality of the United States, Canada or any other
jurisdiction ("Other Agency"), any Tender Offer Material (whether preliminary or
otherwise) or any other materials which refer to either of you, it will submit
copies of such materials to you and will give reasonable consideration to your
and your counsel's comments, if any, thereon. In the event that the Company uses
or permits the use of, or files with the Commission or any Other Agency, any
Tender Offer Material or any such other material (i) which has not been
submitted to you for your comments, or (ii) which has been so submitted and with
respect to which you have made comments, but which comments have not resulted in
a response reasonably satisfactory to you and your counsel to reflect your
comments, then you shall be entitled to withdraw as Dealer Managers in
connection with the Tender Offer as set forth in Section 4.

     Prior to and during the period of the Tender Offer, the Company will inform
you promptly after it receives notice or becomes aware of the happening of any
event, or the discovery of any fact, which would require the making of any
change in any Tender Offer Material or would affect in any material respect the
truth or completeness of any representation or warranty contained in this
Agreement if such representation or warranty were being made immediately after
the happening of such event or discovery of such fact. Any such change shall be
promptly made to such Tender Offer Material, subject to the foregoing paragraph.

     The Company represents that the Tender Offer Material has been or will be
prepared and approved by, and is the sole responsibility of, the Company (except
for information describing you that is provided by you in writing) and the
Company authorizes you to use the Tender Offer Material in connection with the
Transactions.

     The Company recognizes and confirms that in connection with the
Transactions, you will be using and relying upon information (both written and
oral), documents (including the Tender Offer Material), and data furnished by
the Company, and information available from public sources (collectively, the
"Information"). The Company further recognizes that you do not assume
responsibility for the accuracy or completeness of the Information and will not
undertake to independently verify its accuracy or completeness.

     4. Withdrawal. If the Company (a) uses or permits the use of any Tender
Offer Material (i) which has not been submitted to you for your comments or (ii)
which has been so submitted and with respect to which you have made comments but

<PAGE>

                                                                             5

as to which the Company has not complied with the provisions of Section 3 or (b)
shall have breached any of its representations, warranties, agreements or
covenants herein or in any of the Other Refinancing Agreements, then, in each
case, you shall be entitled to withdraw as Dealer Managers in connection with
the Transactions without any liability or penalty whatsoever for such withdrawal
and without loss of any right to indemnification or contribution provided in
Section 13 or right to the payment of all fees and expenses payable hereunder
which have accrued to the date of such withdrawal (it being agreed that in the
event of any such withdrawal, for the purposes determining the fees payable to
you pursuant to Section 5, the principal amount of Existing Senior Notes
tendered (and not subsequently withdrawn) pursuant to the Tender Offer as of the
close of business on the date of such withdrawal which are thereafter acquired
by the Company pursuant to the Tender Offer shall be deemed to have been
acquired as of the date of such withdrawal). If you shall withdraw as Dealer
Managers for any of the reasons set forth in the preceding sentence, the
reimbursement for your expenses through the date of such withdrawal shall be
paid to you promptly after such date.

     5. Compensation. The Company agrees to pay you as compensation for your
services as Dealer Managers a fee of $2.50 for each $1,000 in principal amount
at issuance (or, in the case of the 14% Notes, at maturity) of Existing Senior
Notes acquired by the Company pursuant to the Tender Offer. Such fee shall be
payable upon consummation of the Tender Offer.

     6. Reimbursement of Fees and Expenses. In addition to your compensation for
your services as Dealer Managers, the Company agrees to pay (i) all fees and
expenses relating to the preparation, filing, printing, mailing and publishing
of all the Tender Offer Material, (ii) all fees and expenses of the Depositary
and the Information Agent (each as defined in Section 8 hereof), (iii) all
advertising charges in connection with the Transactions, (iv) all customary
mailing and handling fees and expenses of Dealers (including you), banks and
trust companies in forwarding the Tender Offer Material to their customers and
(v) all other reasonable costs and expenses incurred by you in connection with
the Transactions (but excluding any such costs and expenses incurred in
connection with the Private Placement). The Company also agrees to promptly
reimburse you, upon request made from time to time, for all reasonable fees and
disbursements of your counsel and all your reasonable travel and other
out-of-pocket expenses incurred in connection with or arising out of the
Transactions (but excluding any such fees, costs and expenses incurred in
connection with the Private Placement). All payments to be made by the Company
pursuant to this Section 6 shall be made promptly against delivery to the
Company of statements thereof. The Company shall perform its obligations set
forth in this Section 6 regardless of whether or not the Tender Offer is
commenced or the Company acquires any Existing Senior Notes pursuant to the
Tender Offer or whether you withdraw pursuant to Section 4.

     7. Securityholder Lists. The Company shall provide you with copies of its
records showing the names and addresses of, and the principal amounts of
Existing Senior Notes held by, all Holders for purposes of the Tender Offer and
will cause you to be advised from day to day during the period of the Tender
Offer as to any transfers of Existing Senior Notes.

<PAGE>

                                                                            6

     8. Other Agents. The Company will arrange for United States Trust Company
of New York to serve as depositary (the "Depositary") and ChaseMellon Financial
Services, LLC to serve as Information Agent (the "Information Agent") in
connection with the Transactions and, as such, to advise you as to such matters
relating to the Transactions as frequently as you may reasonably request.

     9. Sufficient Funds; Settlement. The Company represents and warrants to you
that, subject to the consummation of the Private Placement, it will have
sufficient funds available, and has or will have sufficient authority to use
such funds under applicable law, to enable it to pay in accordance with the
terms of and subject to the conditions contained in the Tender Offer Statement
and Sections 5 and 6 hereof, and the Company hereby agrees to pay on the
Settlement Date the full purchase price and related costs for all Existing
Senior Notes tendered and accepted for payment pursuant to the Tender Offer (as
more fully described in the Tender Offer Statement) and the fees and expenses
payable hereunder.

     10. Representations, Warranties and Covenants of the Company. The Company
represents and warrants to you, and agrees with you, that:

          (a) The Company has been duly incorporated and is an existing
     corporation in good standing under the laws of the State of Delaware, with
     corporate power and authority to own its properties and conduct its
     business as described in the Exchange Act Reports (as defined); and the
     Company is duly qualified to do business as a foreign corporation in good
     standing in all other jurisdictions in which its ownership or lease of
     property or the conduct of its business requires such qualification, except
     to the extent that the failure to be so qualified or be in good standing
     would not have a material adverse effect on the condition (financial or
     other), business, properties or results of operations of the Company and
     its subsidiaries, taken as a whole (a "Material Adverse Effect"). The
     Company is qualified to do business as a foreign corporation in the State
     of New York.

          (b) Each Significant Subsidiary (as defined in Regulation S-X under
     the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
     the Company, WEC and WEC II has been duly incorporated and is an existing
     corporation in good standing under the laws of the jurisdiction of its
     incorporation, with corporate power and authority to own its properties and
     conduct its business as described in the Exchange Act Reports; and each
     subsidiary of the Company (including WEC and WEC II) is duly qualified to
     do business as a foreign corporation in good standing in all other
     jurisdictions in which its ownership or lease of property or the conduct of
     its business requires such qualification, except to the extent that the
     failure to be so qualified or be in good standing would not have a Material
     Adverse Effect; all of the issued and outstanding capital stock of each
     subsidiary of the Company (including WEC and WEC II) has been duly
     authorized and validly issued and is fully paid and nonassessable; and the
     capital stock of each subsidiary owned by the Company (including WEC and
     WEC II), directly or through subsidiaries, is owned free from liens,
     encumbrances and defects.

          (c) Each of this Agreement and the Supplemental Indentures has been
     duly authorized, executed and delivered; and this Agreement constitutes,
     and when the Existing Senior Notes have been delivered to the Company and
     paid for pursuant to this Agreement and the Tender Offer Material on the
     Settlement Date, the Supplemental Indentures will constitute valid and
     legally binding obligations of the Company enforceable in accordance with
     their terms, subject to bankruptcy, insolvency, fraudulent transfer,
     reorganization, moratorium and similar laws of general applicability

<PAGE>

                                                                           7

     relating to or affecting creditors' rights and to general equity
     principles, and with respect to this Agreement, except that rights to
     indemnity and contribution may be limited by Federal and state securities
     laws and public policy considerations.

          (d) Except as contemplated by this Agreement or as disclosed in the
     Tender Offer Material, there are no contracts, agreements or understandings
     between the Company and any person that would give rise to a valid claim
     against the Company or either Dealer Manager for a brokerage commission,
     finder's fee or other like payment in connection with the transactions
     contemplated by this Agreement.

          (e) No consent, approval, authorization, or order of, or filing with,
     any governmental agency or body or any court is required for the
     consummation of the transactions contemplated by this Agreement or the
     consummation of the other transactions contemplated as part of the
     Refinancing, other than those which have been obtained and such as may be
     required by securities or blue sky laws of any state of the United States
     or of any foreign jurisdiction.

          (f) The execution, delivery and performance of this Agreement and the
     Supplemental Indentures and the consummation of the Transactions and the
     other transactions contemplated as part of the Refinancing and compliance
     with the terms hereof and thereof will not result in a breach or violation
     of any of the terms and provisions of, or constitute a default under, (A)
     any statute, rule, regulation or order of any governmental agency or body
     or any court, domestic or foreign, having jurisdiction over the Company or
     any subsidiary of the Company or any of their properties, (B) any agreement
     or instrument to which the Company or any such subsidiary is a party or by
     which the Company or any such subsidiary is bound or to which any of the
     properties of the Company or any such subsidiary is subject, or (C) the
     charter or by-laws of either of the Company or any such subsidiary, except,
     in the case of clause (A) or (B), such breaches, violations or defaults
     that individually or in the aggregate would not have a Material Adverse
     Effect; and the Company has full corporate power and authority to
     authorize, engage in and consummate the Transactions, as contemplated by
     this Agreement and the other transactions contemplated as part of the
     Refinancing.

          (g) Except as disclosed in the Tender Offer Material, there are no
     pending actions, suits or proceedings against or affecting the Company, any
     of its subsidiaries or any of their respective properties that,
     individually or in the aggregate, could reasonably be expected to have a
     Material Adverse Effect, or to materially and adversely affect the ability
     of the Company to perform its obligations under this Agreement and the
     Supplemental Indentures, or which are otherwise material in the context of
     the Transactions or the other transactions contemplated as part of the
     Refinancing; and, to the Company's knowledge, no such actions, suits or
     proceedings are threatened or contemplated.

          (h) None of the Company, WEC or WEC II is an open-end investment
     company, unit investment trust or face-amount certificate company that is
     or is required to be registered under Section 8 of the United States

<PAGE>

                                                                         8

     Investment Company Act of 1940 (the "Investment Company Act"); none of the
     Company, WEC or WEC II is a closed-end investment company required to be
     registered, but not registered, thereunder; and none of the Company, WEC or
     WEC II is and, after giving effect to the Transactions or the other
     transactions contemplated as part of the Refinancing and the application of
     the proceeds thereof as described in the Tender Offer Material, will be an
     "investment company" as defined in the Investment Company Act.

          (i) There are no material agreements or arrangements relating to the
     Company or its subsidiaries to which WEC or WEC II, or to the best of WEC's
     and WEC II's knowledge, to which any direct or indirect stockholder of WEC
     or WEC II is a party, which are required to be described in the Tender
     Offer Material that are not so described.

          (j) All necessary corporate and stockholder action has been duly taken
     by the Company to authorize the Transactions and the other transactions
     contemplated as part of the Refinancing, the execution, delivery and
     performance of this Agreement, the Supplemental Indentures and the Other
     Refinancing Agreements and all other actions contemplated by this Agreement
     and the Other Refinancing Agreements and the consummation of the
     Transactions and the other transactions contemplated as part of the
     Refinancing, and no other corporate or stockholder proceedings are
     necessary to authorize any such actions.

          (k) The Company has no knowledge of any material fact or information
     concerning the Company or any of its subsidiaries or affiliates, or the
     operations, assets, condition (financial or otherwise), earnings, business
     affairs or business prospects of the Company, or any of its subsidiaries or
     affiliates, which is required to be made generally available to the public
     and which has not been, or is not being, or will not be, made generally
     available to the public.

          (l) In connection with the Transactions, the Company has complied, and
     will continue to comply, in all material respects with the Exchange Act and
     the rules and regulations thereunder, including, without limitation,
     Sections 10 and 14 of the Exchange Act and Rule 10b-5, Rule 14e-1 and Rule
     14e-5 of the Exchange Act.

          (m) On the date of this Agreement, the Tender Offer Material does not
     include any untrue statement of a material fact or omit to state any
     material fact necessary in order to make the statements therein, in the
     light of the circumstances under which they were made, not misleading. The
     preceding sentence does not apply to statements in or omissions from the
     Tender Offer Material based upon written information furnished to the
     Company by any Dealer Manager specifically for use therein. The Company's
     Annual Report on Form 10-K most recently filed with the Commission and all
     subsequent reports (collectively, the "Exchange Act Reports") which have
     been filed by the Company with the Commission or sent to stockholders
     pursuant to the Exchange Act, when they were filed with the Commission,
     conformed in all material respects to the requirements of the Exchange Act
     and the rules and regulations of the Commission thereunder.

<PAGE>

                                                                               9

          (n) Each of the representations and warranties set forth in this
     Agreement will be true and correct on and as of the date hereof and the
     Settlement Date.

     11. Conditions to the Obligations of the Dealer Managers. The obligations
of the Dealer Managers to act hereunder will be subject to the accuracy of the
representations and warranties on the part of the Company contained in this
Agreement, to the performance by the Company of its obligations contained in
this Agreement, to the accuracy of the certificates of officers of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its obligations hereunder and to the following additional conditions
precedent:

          (a) The Dealer Managers shall have received a letter, dated the date
     of the Tender Offer Statement, of Grant Thornton LLP, in agreed form,
     confirming that they are independent public accountants within the meaning
     of the Securities Act of 1933 (the "Securities Act') and the applicable
     published rules and regulations thereunder ("Rules and Regulations") and
     stating to the effect that:

               (i) in their opinion the financial statements and schedules
          examined by them and included in the Tender Offer Material comply as
          to form in all material respects with the applicable accounting
          requirements of the Securities Act and the related published Rules and
          Regulations;

               (ii) on the basis of certain procedures undertaken by them,
          nothing came to their attention that caused them to believe that:

               (A) at a date no later than two business days prior to the date
          of the Tender Offer Statement there was any change in the capital
          stock or paid-in capital, increase in long-term debt or any decreases
          in consolidated net current assets or stockholders' equity of the
          Company and its subsidiaries, on a consolidated basis, as compared
          with amounts shown on the December 31, 1999 audited consolidated
          balance sheet included in the Tender Offer Material;

               (B) for the period from January 1, 2000 to a date no later than
          two business days prior to the date of the Tender Offer Statement,
          there were any decreases, as compared with the corresponding period in
          the preceding year, in consolidated operating revenues or in the total
          or per-share amounts of net loss; or

               (C) the unaudited pro forma condensed consolidated financial
          statements included in the Tender Offer Material do not comply as to
          form in all material respects with the applicable accounting
          requirements of the Securities Act and the related published Rules and
          Regulations thereunder or the pro forma adjustments have not been
          properly applied to the historical amounts in the compilation of those
          statements,

          except in all cases set forth in clauses (A) and (B) above for
          changes, increases or decreases which are described in such letter;
          and

<PAGE>
                                                                              10

               (iv) they have compared specified dollar amounts (or percentages
          derived from such dollar amounts) and other financial information
          contained in the Tender Offer Material (in each case to the extent
          that such dollar amounts, percentages and other financial information
          are derived from the general accounting records of the Company and its
          subsidiaries subject to the internal controls of the Company's
          accounting system or are derived directly from such records by
          analysis or computation) with the results obtained from inquiries, a
          reading of such general accounting records and other procedures
          specified in such letter and have found such dollar amounts,
          percentages and other financial information to be in agreement with
          such results, except as otherwise specified in such letter.

          All financial statements and schedules included in material
          incorporated by reference into the Tender Offer Material shall be
          deemed included in the Tender Offer Material for purposes of this
          subsection.

          (b) Subsequent to the execution and delivery of this Agreement, there
     shall not have occurred (i) a change in U.S. or international financial,
     political or economic conditions or currency exchange rates or exchange
     controls as would, in the reasonable judgment of the Dealer Managers, be
     likely to prejudice materially the success of the Transactions or any of
     the other transactions contemplated as part of the Refinancing, or (ii) (A)
     any change, or any development or event involving a prospective change, in
     the condition (financial or other), business, properties or results of
     operations of the Company or its subsidiaries which, in the judgment of the
     Dealer Managers, is material and adverse and makes it impractical or
     inadvisable to proceed with completion of the Transactions or any of the
     other transactions contemplated as part of the Refinancing (it being
     understood that a change in the price of the Company's common stock or the
     continuation of operating losses consistent with the Company's historical
     results shall be deemed not to be, in and of itself, a material adverse
     change); (B) any downgrading in the rating of any debt securities of the
     Company by any "nationally recognized statistical rating organization" (as
     defined for purposes of Rule 436(g) under the Securities Act), or any
     public announcement that any such organization has under surveillance or
     review its rating of any debt securities of the Company (other than an
     announcement with positive implications of a possible upgrading, and no
     implication of a possible downgrading, of such rating); (C) any material
     suspension or material limitation of trading in securities generally on the
     New York Stock Exchange, or any setting of minimum prices for trading on
     such exchange, or any suspension of trading of any securities of the
     Company on any exchange or in the over-the-counter market; (D) any banking
     moratorium declared by U.S. Federal or New York authorities; or (E) any
     outbreak or escalation of major hostilities in which the United States is
     involved, any declaration of war by Congress or any other substantial
     national or international calamity or emergency if, in the judgment of the
     Dealer Managers, the effect of any such outbreak, escalation, declaration,
     calamity or emergency makes it impractical or inadvisable to proceed with
     completion of the Transactions or any of the other transactions
     contemplated as part of the Refinancing.

          (c) The Dealer Managers shall have received an opinion, dated the date
     upon which the Tender Offer is consummated, of Graubard Mollen & Miller,
     counsel for the Company, substantially to the effect set forth in (i)-(vi)
     below:

<PAGE>

                                                                             11

               (i) The Company has been duly incorporated and is an existing
          corporation in good standing under the laws of the State of Delaware,
          with corporate power and authority to own its properties and conduct
          its business as described in the Exchange Act Reports;

               (ii) Each of this Agreement and the Supplemental Indentures has
          been duly authorized, executed and delivered; and this Agreement
          constitutes, and when the Existing Senior Notes have been delivered to
          the Company and paid for pursuant to this Agreement and the Tender
          Offer Material on the Settlement Date, the Supplemental Indentures
          will constitute valid and legally binding obligations of the Company
          enforceable in accordance with their terms, subject to bankruptcy,
          insolvency, fraudulent transfer, reorganization, moratorium and
          similar laws of general applicability relating to or affecting
          creditors' rights and to general equity principles; and, with respect
          to this Agreement, except that rights to indemnity and contribution
          may be limited by Federal and state securities laws and public policy
          considerations;

               (iii) The Company is not and, after giving effect to the
          Transactions and the other transactions contemplated as part of the
          Refinancing and the application of the proceeds thereof as described
          in the Tender Offer Material, will not be an "investment company" as
          defined in the Investment Company Act;

               (iv) No consent, approval, authorization or order of, or filing
          with, any governmental agency or body or any court is required for the
          consummation of the transactions contemplated by this Agreement or the
          consummation of the other transactions contemplated as part of the
          Refinancing, other than as may be required under the Securities Act of
          1933 and the rules and regulations promulgated thereunder with respect
          to the registration rights agreements to be entered into by the
          Company and the transactions contemplated thereunder and such as may
          be required by securities or blue sky laws of the various states of
          the United States and of foreign jurisdictions;

               (v) The execution, delivery and performance of this Agreement and
          the Supplemental Indentures, the Other Refinancing Agreements and
          consummation of the Transactions and the other transactions
          contemplated as part of the Refinancing and compliance with the terms
          and provisions hereof and thereof will not result in a breach or
          violation of any of the terms and provisions of, or constitute a
          default under, (A) any statute, rule or regulation or any order known
          to such counsel of any governmental agency or body or any court having
          jurisdiction over the Company or any subsidiary of the Company or any
          of its properties, (B) any agreement or instrument listed as an
          exhibit to the Company's Annual Report on Form 10-K most recently
          filed with the Commission or listed as an exhibit to or filed with any
          subsequent reports filed by the Company under the Exchange Act through
          the date of such opinion to which the Company or any such subsidiary
          is a party or by which the Company or any such subsidiary is bound or
          to which any of the properties of the Company or any such subsidiary
          is subject, or (C) the charter or by-laws of the Company or any such

<PAGE>

                                                                           12

          subsidiary, except, in the case of clause (A) or (B), breaches,
          violations or defaults that individually or in the aggregate would not
          have a Material Adverse Effect; and the Company has full power and
          corporate authority to engage in and consummate the Transactions as
          contemplated by this Agreement and the other transactions contemplated
          as part of the Refinancing; and

               (vi) Such counsel have no reason to believe that the Tender Offer
          Material or any amendment or supplement thereto, as of the date hereof
          and as of the date upon which the Tender Offer is consummated,
          contained any untrue statement of a material fact or omitted to state
          any material fact required to be stated therein or necessary to make
          the statements therein, in light of the circumstances under which they
          were made, not misleading; it being understood that such counsel need
          express no opinion as to the financial statements or other financial
          data contained in or incorporated by reference in the Tender Offer
          Material.

          (d) The Dealer Managers shall have received a certificate, dated the
     date upon which the Tender Offer is consummated, of the Chief Executive
     Officer or any Vice President and a principal financial or accounting
     officer of the Company in which such officers, to the best of their
     knowledge after reasonable investigation, shall state that the
     representations and warranties of the Company in this Agreement are true
     and correct, that the Company has complied with all agreements and
     satisfied all conditions on its part to be performed or satisfied hereunder
     at or prior to the date hereof, or thereof, as the case may be, and that,
     subsequent to the dates of the most recent financial statements included or
     incorporated by reference in the Tender Offer Statement there has been no
     material adverse change, nor any development or event involving a
     prospective material adverse change, in the condition (financial or other),
     business, properties or results of operations of the Company and its
     subsidiaries taken as a whole except as set forth in or contemplated by the
     Tender Offer Statement or as described in such certificate.

          (e) The Dealer Managers shall have received a letter, dated the date
     upon which the Tender Offer is consummated, of Grant Thornton LLP which
     meets the requirements of subsection (a) of this Section, except that the
     specified date referred to in such subsection will be a date not more than
     five days prior to the date upon which the Tender Offer is consummated for
     the purposes of this subsection.

          (f) No restraining order or denial of an application for approval
     shall have been issued and no litigation shall have been commenced or
     threatened with respect to this Agreement, the Transactions or the other
     transactions contemplated as part of the Refinancing and no development in
     any pending litigation with respect to this Agreement, the Transactions or
     the other transactions contemplated as part of the Refinancing shall have
     occurred by or before any agency, court or other governmental body of any
     jurisdiction which you believe in good faith makes it inadvisable for you
     to continue to act hereunder.

<PAGE>
                                                                              13

          The Company will furnish the Dealer Managers with such conformed
     copies of such certificates, letters and documents as the Dealer Managers
     reason ably request.

     12. Additional Covenants of the Company. (a) Prior to and during the term
of the Transactions and the Refinancing, the Company will advise you promptly of
(i) the occurrence of any event, or the discovery of any fact, which could cause
the Company to fail to commence or withdraw or terminate the Tender Offer or the
other transactions contemplated as part of the Refinancing or would permit the
Company to exercise any right not to purchase the Existing Senior Notes tendered
pursuant to the Tender Offer, not to exchange the Existing Subordinated Notes
tendered pursuant to the Exchange Offer or not to exchange the shares of Series
C Preferred Stock (or Exchange Debentures) tendered pursuant to the Preferred
Stock Transaction, (ii) any proposal or requirement to amend or supplement any
Tender Offer Material, Exchange Offer Material or the Circular, (iii) any
extension, termination, completion or expiration of the Tender Offer, the
Exchange Offer, the Private Placement or the Preferred Stock Transaction, (iv)
any communication from the Commission or any Other Agency relating to the
Transactions or any of the Tender Offer Material, including any order suspending
or preventing the use of any thereof, (v) any other material developments in
connection with the Transactions, (vi) any other material developments in
connection with the Refinancing and (vii) any other information relating to the
Tender Offer, the Exchange Offer, the Private Placement or the Preferred Stock
Transaction which you may from time to time reasonably request.

     (b) The Company will comply with the Securities Act, the Exchange Act, the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
applicable rules and regulations promulgated thereunder, as well as all
applicable stock exchange regulations, in connection with the Tender Offer
Material and the Transactions. If any event shall occur or condition exist as a
result of which it is necessary to amend or supplement any Tender Offer Material
in order that such Tender Offer Material will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time they
are delivered, not misleading or if it shall be necessary at any such time to
amend or supplement the Tender Offer Material in order to comply with the
requirements of the Securities Act, the Exchange Act or the Trust Indenture Act,
the Company will promptly prepare such amendment or supplement as may be
necessary to correct such untrue statement or omission or to make the Tender
Offer Material comply with such requirements. The Company will disseminate, as
required, any and all necessary amendments and supplements to the Tender Offer
Material and the other documents to be distributed to the holders in connection
with the Transactions and will promptly furnish to you a true and accurate copy
of each such amendment or supplement prior to the distribution thereof.

     (c) The Company acknowledges that Salomon Smith Barney Inc., Credit Suisse
First Boston Corporation and their respective affiliates may own for their own
account Existing Senior Notes, and agrees that Salomon Smith Barney Inc., Credit
Suisse First Boston Corporation and their respective affiliates may tender such
Existing Senior Notes pursuant to the Offer and receive the full purchase price
therefor in accordance with the terms of the Tender Offer.

<PAGE>
                                                                              14

     13. Indemnification and Contribution. The Company agrees to indemnify and
hold harmless each of you, your respective directors, officers, employees and
agents and each person who controls either of you within the meaning of either
the Securities Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, or other expenses reasonably incurred
in connection with investigating or defending any such loss, claim, damage,
liability or action, and each such indemnified party shall have no liability to
the Company or its parents, owners, creditors or security holders for any loss,
claim, damage or liability or other expense, (a) arising out of or based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in any Tender Offer Material, or any omission or alleged omission to
state in any Tender Offer Material a material fact necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading or (ii) any withdrawal, termination or cancelation by the
Company of, or failure by the Company to make or consummate, the Tender Offer
according to its terms or (iii) any breach or alleged breach by the Company of
any representation or warranty or failure to comply with any of the agreements
contained herein or (iv) any other action or failure to act by the Company, its
employees or other agents or by you at the Company's request or with the
Company's consent or (b) otherwise arising out of, relating to or in connection
with or alleged to arise out of, relate to or be in connection with the proposed
purchase by the Company of any Existing Senior Notes or your role as Dealer
Managers in connection with either thereof, whether the event allegedly giving
rise to such claim shall have occurred prior to the commencement of, during the
period of, or subsequent to the consummation of, the Tender Offer, and, in each
case, agrees to reimburse each such indemnified party, as incurred, for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable to the extent that any
such loss, claim, damage or liability arises out of or is based upon (1) in the
case of clause (a)(i), any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by you specifically for
inclusion therein or (2) in the case of clause (b), that is finally judicially
determined by a court of competent jurisdiction not subject to further appeal to
have resulted primarily from either of your gross negligence or willful
misconduct. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.

     Promptly after receipt by an indemnified party under this Section 13 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 13, notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from liability under the first paragraph of this Section 13 unless
and to the extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in the first paragraph of this Section 13. The indemnifying
party shall be entitled to appoint counsel of the indemnifying party's choice at
the indemnifying party's expense to represent the indemnified party in any
action for which indemnification is sought (in which case the indemnifying party
shall not thereafter be responsible for the fees and expenses of any separate
counsel retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party

<PAGE>

                                                                              15

shall have the right to employ one firm or separate counsel (plus local
counsel), and the indemnifying party shall bear the reasonable fees, costs and
expenses of such separate counsel, if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it or other indemnified parties
which are different from or additional to those available to the indemnifying
party, (iii) the indemnifying party shall not have employed counsel satisfactory
to the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding.

     If the indemnity provided for in the foregoing paragraphs of this Section
13 is for any reason unavailable to an indemnified party in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then you
and the Company, in lieu of the Company's indemnifying such indemnified party,
agree that the Company shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and by you from the Transactions or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in the foregoing clause (i), but also the relative fault of
the Company and of you in connection with the statements, actions or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations; provided, however, that in no
event shall your aggregate contribution to the amount paid or payable exceed the
aggregate amount of fees actually received by you pursuant to this Agreement.
The relative benefits received by the Company on the one hand and by you on the
other shall be deemed to be in the same proportion as (i) the maximum aggregate
value of the consideration proposed to be paid by the Company for the purchase
of Existing Senior Notes pursuant to the Tender Offer bears to (ii) the maximum
aggregate fee proposed to be paid to you pursuant to Section 5. The relative
fault of the Company on the one hand and of you on the other (i) in the case of
an untrue or alleged untrue statement of a material fact or an omission or
alleged omission to state a material fact, shall be determined by reference to,
among other things, whether such statement or omission relates to information
supplied by the Company or by you and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission and (ii) in the case of any other action or omission, shall be
determined by reference to, among other things, whether such action or omission
was taken or omitted to be taken by the Company or by you and the parties'
relative intent, knowledge, access to information and opportunity to prevent
such action or omission.

<PAGE>
                                                                              16

     The Company and you agree that it would not be just and equitable if
contribution pursuant to this Section 13 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. For
purposes of this Section 13, each person who controls either of you and each of
your respective directors, officers, employees and agents shall have the same
rights to contribution as you, subject in each case to the applicable terms and
conditions set forth above. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, liabilities or expenses referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim.

     The foregoing indemnity and contribution agreements shall be in addition to
any other rights that any indemnified party may otherwise have.

     14. Termination; Full Force and Effect. This Agreement shall terminate upon
the earlier of (i) the Settlement Date, (ii) the date of termination or
withdrawal of the Tender Offer and (iii) the termination or withdrawal of the
Exchange Offer, the Private Placement or the Preferred Stock Transaction. The
indemnity and contribution agreements contained in Section 13 hereof, the fee
and expense reimbursement agreements contained in Sections 4, 5 and 6 hereof and
the representations, warranties, covenants and agreements of the Company set
forth in this Agreement shall remain operative and in full force and effect
regardless of (i) any failure to commence, or the withdrawal, termination or
consummation of, the Tender Offer, the Exchange Offer, the Private Placement or
the Preferred Stock Transaction, or the termination or assignment of this
Agreement, (ii) any investigation made by or on behalf of any indemnified party,
(iii) any termination of your appointment hereunder pursuant to Section 4
hereof, this Section 14 or otherwise and (iv) the completion of your services
hereunder.

     15. Severability. In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction).

     16. Counterparts. This Agreement may be executed in any number of separate
counterparts, and all the said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed counterpart by
facsimile transmission shall be effective as delivery of a manually signed
counterpart.

     17. Binding Effect. This Agreement, including any right to indemnity or
contribution hereunder, shall inure to the benefit of and be binding upon the
Company, you and the other indemnified parties, and each of the Company's, your
and their respective successors and assigns. Nothing in this Agreement is
intended, or shall be construed, to give to any other person or entity any right
or obligation hereunder or by virtue hereof.

<PAGE>

                                                                             17

     18. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.

     19. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof.

     20. Notices. All notices and other communications required or permitted to
be given under this Agreement shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by registered or certified mail,
return receipt requested, postage prepaid, or by facsimile transmission,
subsequently confirmed in writing as aforesaid, to the parties hereto as
follows:

                  (a)      If to you:

                           Salomon Smith Barney Inc.
                           388 Greenwich Street
                           New York, NY 10013
                           Attention:  General Counsel
                           Fax:     (212) 816-7912
                           Confirm: (212) 816-7000

                           and

                           Credit Suisse First Boston Corporation
                           Eleven Madison Avenue
                           New York, NY 10010
                           Attention:  Transaction Advisory Group
                           Fax:  (212) 325-8000
                           Confirm:  (212) 325-2000

                           with a copy to:

                           Cravath, Swaine & Moore
                           Worldwide Plaza
                           825 Eighth Avenue
                           New York, NY 10019
                           Attention:  Kris F. Heinzelman, Esq.
                           Fax:  (212) 474-3700
                           Confirm:  (212) 474-1000

                  (b)      If to the Company:

                           Winstar Communications, Inc.
                           685 Third Avenue
                           New York, NY 10017
                           Attention: General Counsel
                           Fax:  (212) 584-4001
                           Confirm:  (212) 792-9800

<PAGE>

                                                                              18

                           with a copy to:

                           Graubard Mollen & Miller
                           600 Third Avenue
                           New York, NY 10158
                           Attention:  David Miller, Esq.
                           Fax:  (212) 818-8881
                           Confirm:  (212) 818-8000

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

                                                                             19

     Please indicate your willingness to act as Dealer Managers on the terms set
forth herein and your acceptance of the foregoing provisions by signing in the
space provided below for that purpose and returning to us a copy of this
Agreement, whereupon this Agreement and your acceptance shall constitute a
binding agreement among us.

                                        Very truly yours,

                                        WINSTAR COMMUNICATIONS, INC.

                                          /s/ Kenneth J. Zinghini
                                        by ________________________
                                              Name: Kenneth J. Zinghini
                                              Title:Senior Vice President

Accepted as of the date
first set forth above:

SALOMON SMITH BARNEY INC.

    /s/ Michael Zicari
 by___________________________
      Name:   Michael Zicari
      Title:  Director

CREDIT SUISSE FIRST BOSTON CORPORATION

    /s/  Robert A. Hansen
 by______________________________
      Name:  Robert A. Hansen
      Title: Director

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