EXECUTION COPY
300,000 Shares
WINSTAR COMMUNICATIONS, INC.
Series F 7 1/4% Senior Cumulative Convertible Preferred Stock
(Liquidation Preference $1,000 Per Share)
PURCHASE AGREEMENT
June 17, 1999
Credit Suisse First Boston Corporation
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxx Xxxxx Xxxxxx Inc.
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
1. Introductory. WinStar Communications, Inc., a Delaware corporation (
the "Issuer"), and WinStar Multichannel Corp., a Delaware corporation and a
wholly owned subsidiary of the Issuer ("WMC", and together with the Issuer, the
"Sellers"), propose, subject to the terms and conditions stated herein, to issue
and sell to the several initial purchasers named in Schedule A hereto (the
"Purchasers") 240,000 and 60,000 shares, respectively, of the Issuer's Series F
7 1/4% Senior Cumulative Convertible Preferred Stock (liquidation preference
$1,000 per share) (the "Convertible Preferred Stock"). The Convertible Preferred
Stock will be convertible into shares of Common Stock, par value $0.01 per
share, of the Issuer (the "Common Stock") at $61.96 per share, subject to
adjustment in accordance with the Certificate of Designations relating to the
Convertible Preferred Stock (the "Certificate of Designations") attached hereto
as Exhibit A. The shares of Convertible Preferred Stock are herein referred to
as the "Offered Securities" and the shares of Common Stock issuable upon
conversion thereof are referred to herein as the "Underlying Shares". The United
States Securities Act of 1933 is herein referred to as the "Securities Act".
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The Sellers hereby agree with the several Purchasers as follows:
2. Representations and Warranties of the Sellers. The Sellers represent
and warrant to, and agree with, the several Purchasers that:
(a) An offering circular relating to the Offered Securities to be
offered by the Purchasers is being prepared by the Issuer. Such offering
circular is hereinafter referred to as the "Offering Document". On the date of
this Agreement, the Offering Document 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 Offering Document based upon written information furnished to
the Issuer by any Purchaser specifically for use therein, it being understood
and agreed that the only such information is that described as such in Section
7(b). The Issuer's Annual Report on Form 10-K most recently filed with the
Securities and Exchange Commission (the "Commission") and all subsequent reports
(collectively, the "Exchange Act Reports") which have been filed by the Issuer
with the Commission or sent to stockholders pursuant to the United States
Securities Exchange Act of 1934 (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.
(b) The Issuer 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 Offering Document; and the Issuer 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
Issuer and its subsidiaries, taken as a whole (a "Material Adverse Effect").
(c) Each subsidiary of the Issuer, including WMC, 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 Offering Document;
and each subsidiary of the Issuer 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 Issuer has been duly authorized and
validly issued and is fully paid and nonassessable; and the capital stock of
each subsidiary owned by the Issuer, directly or through subsidiaries, is owned
free from liens, encumbrances and defects, other than shares of the direct or
indirect subsidiaries of WinStar New Media Company, Inc.
(d) The Offered Securities have been duly and validly authorized; and
when the Offered Securities have been delivered by the Sellers and paid for
pursuant to this Agreement on the Closing Date (as defined below), such Offered
Securities will be validly issued, fully paid and nonassessable and will
conform, in all material respects, to the description thereof contained in the
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Offering Document; the Underlying Shares have been duly and validly authorized
and reserved for issuance upon conversion of the Offered Securities; neither the
issuance of the Offered Securities nor the issuance of the Underlying Shares
upon conversion thereof is subject to preemptive or other similar rights.
(e) When the Offered Securities are delivered and paid for pursuant to
this Agreement on the Closing Date, such Offered Securities will be convertible
into the Underlying Shares in accordance with the terms of the Offered
Securities and the Certificate of Designations; the Underlying Shares initially
issuable upon conversion of the Offered Securities have been duly authorized and
reserved for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable; and the
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable and conforms in all material respects to the
description thereof contained in the Offering Document.
(f) Except as contemplated by this Agreement or as disclosed in the
Offering Document, there are no contracts, agreements or understandings between
the Sellers and any person that would give rise to a valid claim against the
Sellers or any Purchaser for a brokerage commission, finder's fee or other like
payment in connection with the transactions contemplated by this Agreement.
(g) 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 in connection with the issuance
and sale of the Offered Securities by the Sellers or the issuance of the
Underlying Shares by the Issuer, other than (a) filing the Certificate of
Designations with the Secretary of State of the State of Delaware, (b) as may be
required under the Securities Act and the Rules and Regulations of the
Commission thereunder with respect to the Registration Rights Agreement between
the Issuer and the Purchasers dated the date hereof (the "Registration Rights
Agreement") and the transactions contemplated thereunder, and (c) such as may be
required by securities or blue sky laws of any state of the United States or of
any foreign jurisdiction in connection with the offer and sale of the Offered
Securities.
(h) The execution, delivery and performance of the Registration Rights
Agreement and this Agreement, and the issuance and sale of the Offered
Securities and compliance with the terms and provisions thereof will not result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, (i) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over
either of the Sellers or any subsidiary of the Issuer or any of their
properties, (ii) any agreement or instrument to which either of the Sellers or
any such subsidiary is a party or by which either of the Sellers or any such
subsidiary is bound or to which any of the properties of the Sellers or any such
subsidiary is subject, or (iii) the charter or by-laws of either of the Sellers
or any such subsidiary, except, in the case of clause (i) or (ii), such
breaches, violations or defaults that individually or in the aggregate would not
have a Material Adverse Effect; and the Issuer has full corporate power and
authority to authorize, issue and sell the Offered Securities to be sold by the
Sellers as contemplated by this Agreement and to authorize and issue the
Underlying Shares upon conversion of the Offered Securities.
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(i) This Agreement has been duly authorized, executed and delivered by
each of the Sellers; the Registration Rights Agreement has been duly authorized,
executed and delivered by the Issuer and each of this Agreement and the
Registration Rights Agreement constitutes a valid and legally binding obligation
of the Sellers and the Issuer, as the case may be, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles and except that
rights to indemnity and contribution may be limited by federal and state
securities laws and public policy considerations.
(j) Except as disclosed in the Offering Document, the Issuer and its
subsidiaries have good and marketable title to all real properties and all other
properties and assets owned by them, in each case free from liens, encumbrances
and defects that would materially affect the value thereof or materially
interfere with the use made or to be made thereof by them; and except as
disclosed in the Offering Document, the Issuer and its subsidiaries hold any
leased real or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or to be made
thereof by them.
(k) The Issuer and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by them and have not received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(l) No labor dispute with the employees of the Issuer or any of its
subsidiaries exists or, to the knowledge of the Issuer, is imminent that could
reasonably be expected to have a Material Adverse Effect.
(m) The Issuer and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property (collectively, "intellectual property rights") necessary
to conduct the business as now operated by them, or used in the conduct of the
business as now operated by them, except to the extent that the failure to own
or possess or the inability to acquire such intellectual property rights would
not individually or in the aggregate have a Material Adverse Effect; and the
Issuer has not received any notice of infringement of or conflict with asserted
rights of others with respect to any intellectual property rights that, if
determined adversely to the Issuer or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(n) Except as disclosed in the Offering Document, neither the Issuer
nor any of its subsidiaries is in violation of any statute, rule, regulation,
decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively, "environmental
laws"), owns or operates any real property contaminated with any substance that
is subject to any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any claim
relating to any environmental laws, which violation, contamination, liability or
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claim would individually or in the aggregate have a Material Adverse Effect; and
the Issuer is not aware of any pending investigation which might lead to such a
claim.
(o) Except as disclosed in the Offering Document, there are no pending
actions, suits or proceedings against or affecting the Issuer, 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 Issuer to perform its
obligations under the Registration Rights Agreement or this Agreement, or which
are otherwise material in the context of the sale of the Offered Securities; and
to the Issuer's knowledge, no such actions, suits or proceedings are threatened
or contemplated.
(p) The financial statements included or incorporated by reference in
the Offering Document present fairly the financial position of the Issuer and
its consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such financial statements,
have been prepared in conformity with generally accepted accounting principles
in the United States applied on a consistent basis; and the assumptions used in
preparing the pro forma financial statements included in the Offering Document
provide a reasonable basis for presenting the significant effects directly
attributable to the transactions or events described therein, the related pro
forma adjustments give appropriate effect to those assumptions, and the pro
forma columns therein reflect the proper application of those adjustments to the
corresponding historical financial statement amounts.
(q) Except as disclosed in the Offering Document, since the date of the
latest audited financial statements included or incorporated by reference in the
Offering Document, 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 Issuer and its subsidiaries taken as a whole a change in the price of the
Common Stock or the continuation of operating losses consistent with the
Issuer's historical results shall be deemed not to be, in and of themselves,
such a material adverse change), and, except as disclosed in or contemplated by
the Offering Document, there has been no dividend or distribution of any kind
declared, paid or made by the Issuer on any class of its capital stock.
(r) The Issuer is not an open-end investment company, unit investment
trust or face-amount certificate company that is or is required to be registered
under Section 8 of the United States Investment Company Act of 1940 (the
"Investment Company Act"), nor is it a closed-end investment company required to
be registered, but not registered, thereunder; and the Issuer is not and, after
giving effect to the offering and sale of the Offered Securities and the
application of the proceeds thereof as described in the Offering Document, will
not be an "investment company" as defined in the Investment Company Act.
(s) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Offered Securities are listed on any
national securities exchange registered under Section 6 of the Exchange Act or
quoted in a U.S. automated inter-dealer quotation system.
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(t) Assuming the accuracy of the representations of the Purchasers
contained herein, the offer and sale of the Offered Securities in the manner
contemplated by this Agreement will be exempt from the registration requirements
of the Securities Act.
(u) Except for sales to or through the Purchasers or their affiliates,
neither the Issuer, nor any of its affiliates, nor any person acting on its or
their behalf (i) has, within the six-month period prior to the date hereof,
offered or sold in the United States or to any U.S. person (as such terms are
defined in Regulation S under the Securities Act) the Offered Securities or any
security of the same class or series as the Offered Securities or (ii) has
offered or will offer or sell the Offered Securities (A) in the United States by
means of any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act or (B) with respect to any such
securities sold in reliance on Rule 903 of Regulation S ("Regulation S") under
the Securities Act, by means of any directed selling efforts within the meaning
of Rule 902(c) of Regulation S. The Issuer, its affiliates and any person acting
on their behalf have complied and will comply with the offering restrictions
requirement of Regulation S. The Issuer has not entered and will not enter into
any contractual arrangement with respect to the distribution of the Offered
Securities except for this Agreement and the Registration Rights Agreement.
(v) The Issuer is subject to Section 13 or 15(d) of the Exchange Act.
(w) The Issuer and its subsidiaries are in compliance in all material
respects with the Communications Act of 1934, as amended by the
Telecommunications Act of 1996 (the "Communications Act") and with all
applicable rules, regulations and policies of the Federal Communications
Commission (the "FCC").
(x) The Issuer has provided to the Purchasers a complete and accurate
list of all licenses held as of June 14, 1999 by the Issuer and its subsidiaries
(other than experimental licenses in the 38 GHz portions of the radio spectrum
and licenses granted to the Issuer or its subsidiaries or acquired from Local
Area Telecommunications, Inc. that are not in the 38 GHz portion of the radio
spectrum and proceedings affecting the service rules and licensing of spectrum
in the 38 GHz band) by the FCC (the "Licenses"). All the Licenses are currently
valid and in full force and effect. Neither the Issuer nor any of its
subsidiaries has any knowledge of any investigation, notice of apparent
liability, violation, forfeiture or other order or complaint issued by or before
any court or regulatory body, including the FCC, or of any other proceedings
(other than proceedings relating to the wireless communications industries
generally) which could in any manner materially threaten or adversely affect the
validity or continued effectiveness of any of the Licenses, except that on
February 10, 1998, the FCC granted additional channels for 38 GHz licenses in
the following areas: Atlanta, Buffalo, Cincinnati, Dallas, Houston, Miami, New
York, St. Louis, Seattle, Spokane and Tampa. On March 12, 1998, several parties
filed petitions for reconsideration of each of these grants, with the exception
of the Seattle grant, alleging, among other things, that the February 10, 1998,
license grants to the Issuer were in violation of the FCC's processing rules and
the FCC's 38 GHz Order (as defined in the Offering Document). The Issuer filed
oppositions to these petitions. These petitions remain pending at the FCC. In
addition, on March 9, 1998, several parties filed petitions for reconsideration
of the FCC's 38 GHz Order, alleging, among other things, that the February 10,
1998, license grants to the Issuer were in violation of the FCC's processing
rules. The Issuer filed a consolidated opposition to these petitions. These
petitions remain pending at the FCC. In addition, on October 23, 1997, DCT
Communications, Inc. filed a petition for reconsideration seeking revocation of
the Issuer's license in Ft. Lauderdale, Florida. The Issuer opposed the
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petition. On January 21, 1999, the FCC released an order denying DCT's petition
for reconsideration. In response, DCT filed an application for review which the
Issuer opposed. The application for review remains pending.
(y) Except as disclosed in the Offering Document, no event has occurred
which (i) results in, or after notice or lapse of time or both would result in,
revocation, suspension, adverse modification, non-renewal, impairment,
restriction or termination of, or order of forfeiture with respect to, any
License the loss of which could reasonably be expected to have a material
adverse effect or (ii) materially and adversely affects or could reasonably be
expected in the future to materially adversely affect any of the rights of the
Issuer or any of its subsidiaries thereunder.
(z) The Issuer and its subsidiaries have duly filed in a timely manner
all material filings, reports, applications, documents, instruments and
information required to be filed by them under the Communications Act, and all
such filings are true, correct and complete in all material respects.
(aa) Neither the Issuer nor any of its subsidiaries has any reason to
believe that any of the Licenses will not be renewed in the ordinary course.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Sellers agree to sell to the
several Purchasers, and each of the Purchasers hereby agrees, severally and not
jointly, to purchase from the Sellers, the number of shares of Convertible
Preferred Stock set forth opposite the names of the several Purchasers in
Schedule A hereto, at a purchase price of $972.50 per share plus accrued
dividends (if any) from June 22, 1999 to the Closing Date (as hereinafter
defined).
The Issuers will deliver against payment of the purchase price the
Offered Securities in the form of one or more permanent global securities in
definitive form (the "Global Securities") deposited with Continental Stock
Transfer & Trust Company ("Continental") as custodian for The Depository Trust
Company ("DTC") and registered in the name of Cede & Co., as nominee for DTC.
Interests in any permanent Global Securities will be held only in book-entry
form through DTC, except in the limited circumstances described in the Offering
Document. Payment for the Offered Securities shall be made by the Purchasers in
Federal (same day) funds by wire transfer to accounts previously designated to
the Purchasers by the Sellers at one or more financial institutions acceptable
to the Purchasers, at the office of Cravath, Swaine & Xxxxx, Worldwide Plaza,
000 Xxxxxx Xxxxxx, Xxx Xxxx, X.X. 00000-0000 at 10:00 A.M. (New York time), on
June 22, 1999, or at such other time not later than seven full business days
thereafter as the Purchasers and the Sellers determine, such time being herein
referred to as the "Closing Date", against delivery to Continental as custodian
for DTC of the Global Securities representing all of the Offered Securities. The
Global Securities will be made available for checking at the offices of Cravath,
Swaine & Xxxxx at least 24 hours prior to the Closing Date.
4. Representations and Agreements by Purchasers; Resale by Purchasers.
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(a) Each Purchaser severally represents and warrants to the Issuer that
it is an "accredited investor" within the meaning of Regulation D under the
Securities Act.
(b) Each Purchaser severally acknowledges that neither the Offered
Securities nor the Underlying Shares have been registered under the Securities
Act and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S.persons except pursuant to an exemption from the
registration requirements of the Securities Act. Each Purchaser severally
represents and agrees that it has offered and sold the Offered Securities, and
will offer and sell the Offered Securities only in accor dance with Rule 144A
under the Securities Act ("Rule 144A").
Unless otherwise defined herein, terms used in this subsection (b) have the
meanings given to them by Regulation S.
(c) Each Purchaser severally agrees that it and each of its affiliates
has not entered and will not enter into any contractual arrangement with respect
to the distribution of the Offered Securities except for any such arrangements
with the other Purchasers or affiliates of the other Purchasers and except with
the prior written consent of the Issuer.
(d) Each Purchaser severally agrees that it and each of its affiliates
has not offered or sold, and will not offer or sell the Offered Securities in
the United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act,
including, but not limited to (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio, or (ii) any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising. Each Purchaser
severally agrees, with respect to resales made in reliance on Rule 144A of any
of the Offered Securities, to deliver either with the confirmation of such
resale or otherwise prior to settlement of such resale a notice to the effect
that the resale of such Offered Securities has been made in reliance upon the
exemption from the registration requirements of the Securities Act provided by
Rule 144A.
(e) Each Purchaser agrees that promptly following the completion of its
initial resale of all the Offered Securities purchased by it pursuant to this
Agreement, it will notify the Issuer in writing thereof.
5. Certain Agreements of the Issuer. The Issuer agrees with the
several Purchasers that:
(a) The Issuer will advise the Purchasers promptly of any proposal to
amend or supplement the Offering Document and will not effect such amendment or
supplementation without the Purchasers' consent (which consent shall not be
unreasonably withheld). If, at any time prior to the completion of the resale of
the Offered Securities by the Purchasers, any event occurs as a result of which
the Offering Document as then amended or supplemented would include an 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, or if it is necessary at any such time to
amend or supplement the Offering Document to comply with any applicable law, the
Issuer promptly will notify the Purchasers of such event and promptly will
prepare, at its own expense, an amendment or supplement which will correct such
statement or omission or effect such compliance. Neither the Purchasers' consent
to, nor the Purchasers' delivery to offerees or investors of, any such amendment
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or supplement shall constitute a waiver of any of the conditions set forth in
Section 6.
(b) The Issuer will furnish to the Purchasers copies of the Offering
Document and all amendments and supplements to such document, as soon as
available and in such quantities as each Purchaser reasonably requests, and the
Issuer will furnish to the Purchasers on the Closing Date three copies of the
Offering Document signed by a duly authorized officer of the Issuer, one of
which will include the independent accountants' reports with respect to the
financial statements incorporated therein by reference manually signed by such
independent accountants. At any time when the Issuer is not subject to Section
13 or 15(d) of the Exchange Act, the Issuer will promptly furnish or cause to be
furnished to the Purchasers and, upon request of holders and prospective
purchasers of the Offered Securities, to such holders and purchasers, copies of
the information required to be delivered to holders and prospective purchasers
of the Offered Securities pursuant to Rule 144A(d)(4) under the Securities Act
(or any successor provision thereto) in order to permit compliance with Rule
144A in connection with resales by such holders of the Offered Securities. The
Issuer will pay the expenses of printing and distributing to the Purchasers all
such documents.
(c) The Issuer will use its best efforts to arrange for the
qualification of the Offered Securities for sale and the determination of their
eligibility for investment under the laws of such jurisdictions in the United
States as the Purchasers reasonably designate and will continue such
qualifications in effect so long as required for the resale of the Offered
Securities by the Purchasers; provided, however, that the Issuer will not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any such jurisdiction.
(d) During the period of five years after the Closing Date, the Issuer
will furnish to the Purchasers, as soon as practicable after the end of each
fiscal year, a copy of the Issuer's annual report to stockholders for such year;
and the Issuer will furnish to the Purchasers (i) as soon as available, a copy
of each report and any definitive proxy statement of the Issuer filed with the
Commission under the Exchange Act or mailed to stockholders and (ii) from time
to time, such other publicly available information concerning the Issuer as the
Purchasers may reasonably request.
(e) During the period of two years after the Closing Date, the Issuer
will, upon request, furnish to the Purchasers, and any holder of Offered
Securities or of the Underlying Shares, a copy of the restrictions on transfer
applicable to the Offered Securities and the Underlying Shares.
(f) During the period of two years after the Closing Date, the Issuer
will not, and will not permit any of its affiliates (as defined in Rule 144
under the Securities Act) to, resell any of the Offered Securities that have
been reacquired by any of them.
(g) During the period of two years after the Closing Date, the Issuer
will not be or become 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 Investment Company Act, and the Issuer is not, and will not be
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or become, a closed-end investment company required to be registered, but not
registered, under the Investment Company Act.
(h) The Issuer will pay all expenses incidental to the performance of
its obligations under this Agreement, including (i) all expenses in connection
with the execution, issue, authentication, packaging and initial delivery of the
Offered Securities, the printing of this Agreement, the Offered Securities, the
Offering Document and amendments and supplements thereto, and any other document
relating to the issuance, offer, sale and delivery of the Offered Securities;
(ii) the cost of qualifying the Offered Securities for trading in The Portal(sm)
Market ("PORTAL"), a subsidiary of The Nasdaq Stock Market, Inc. and any
expenses incidental thereto; (iii) the cost of any advertising approved by the
Issuer in connection with the issue of the Offered Securities; (iv) any expenses
(including fees and disbursements of counsel) incurred in connection with
qualification of the Offered Securities for sale under the laws of such
jurisdictions in the United States as the Purchasers designate and the printing
of memoranda relating thereto; and (v) all expenses incurred in distributing the
Offering Document (including any amendments and supplements thereto) to the
Purchasers. The Issuer will also pay or reimburse the Purchasers (to the extent
incurred by them) for all travel expenses of the Issuer's officers and employees
and any other expenses of the Issuer in connection with attending or hosting
meetings with prospective purchasers of the Offered Securities from the
Purchasers.
(i) In connection with the offering, until the Purchasers shall have
notified the Issuer of the completion of the resale of the Offered Securities,
neither the Issuer nor any of its affiliates has or will, either alone or with
one or more other persons, bid for or purchase for any account in which it or
any of its affiliates has a beneficial interest any Offered Securities or Common
Stock or attempt to induce any person to purchase any Offered Securities or
Common Stock; and neither it nor any of its affiliates will make bids or
purchases for the purpose of creating actual, or apparent, active trading in, or
of raising the price of, the Offered Securities or Common Stock.
(j) For a period of 90 days after the date hereof (the "Applicable
Period"), the Issuer will not sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or (except pursuant to agreements executed
on or prior to the date hereof) arrange to have declared effective during the
Applicable Period a registration statement under the Securities Act covering the
sale by the Issuer of, (a) any preferred stock or any other securities of the
Issuer which are substantially similar to the Convertible Preferred Stock, (b)
any shares of Common Stock of the Issuer or any other capital stock of the
Issuer, or (c) any other securities which are convertible into, or exercisable
or exchangeable for, preferred stock or such substantially similar securities of
the Issuer, Common Stock or other capital stock of the Issuer (collectively,
"Derivative Securities"), without the prior written consent of the Purchasers,
which shall not be unreasonably withheld, except (i) the Convertible Preferred
Stock, (ii) Common Stock or preferred stock issued or delivered as payment of
dividends on, or upon conversion, of any preferred stock of the Issuer, (iii)
securities issued or delivered upon conversion, exchange or exercise of any
other securities of the Issuer outstanding on the date of the Offering Document,
(iv) capital stock, options and other equity-based awards issued pursuant to
benefit or incentive plans maintained for the officers, directors or employees
of, or persons providing services to, the Issuer or its subsidiaries, or
pursuant to the Issuer's dividend reinvestment, 401(k), stock purchase or
similar plans, (v) securities issued in connection with, or in furtherance of,
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mergers, acquisitions of assets or equity of others (including spectrum licenses
and interests in entities with spectrum licenses) or similar transactions, (vi)
securities representing a minority interest in the Issuer issued to a strategic
investor who agrees not to resell such securities during the Applicable Period,
or (vii) Common Stock, preferred stock, other capital stock or Derivative
Securities in a transaction not registered under the Securities Act of 1933, if
the Company does not arrange to have a registration statement covering the
resale of any such securities declared effective during the Applicable Period.
The Issuer will not at any time offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, any securities under circumstances
where such offer, sale, pledge, contract or disposition would cause the
exemption afforded by Section 4(2) of the Securities Act or the safe harbor of
Regulation S thereunder to cease to be applicable to the offer and sale of the
Offered Securities.
(k) The Issuer will cause each certificate for the Offered Securities
or the Underlying Shares to bear the legend described in the Offering Document
until such legend shall no longer be necessary or advisable because the Offered
Securities and the Underlying Shares are no longer subject to the restrictions
on transfer described therein.
6. Conditions of the Obligations of the Purchasers. The obligations of
the several Purchasers to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Issuer herein, to the accuracy of the certificates of officers of the Issuer
delivered pursuant to the provisions hereof, to the performance by the Issuer of
its obligations hereunder and to the following additional conditions precedent:
(a) The Purchasers shall have received a letter, dated the Closing
Date, of Xxxxx Xxxxxxxx LLP, in agreed form, confirming that they are
independent public accountants within the meaning of 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 examined by them and
included or incorporated by reference in the Offering Document 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 a reading of the latest available interim
financial statements of the Issuer, inquiries of certain officials of the Issuer
who have responsibility for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them to believe that:
(A) at June 14, 1999, 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
Issuer and its subsidiaries, on a consolidated basis as compared with
amounts shown on the March 31, 1999 unaudited condensed consolidated
balance sheet incorporated by reference in the Offering Document; or
(B) for the period from April 1, 1999 to June 14, 1998, 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;
[NYCORP;858178.8:4205A:06/18/1999--9:57a]
12
except in all cases set forth in clauses (A) and (B) above for changes,
increases or decreases which the Offering Document discloses have occurred or
may occur or which are described in such letter; and
(iii) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained in
the Offering Document (in each case to the extent that such dollar amounts,
percentages and other financial information are derived from the general
accounting records of WinStar and its subsidiaries subject to the internal
controls of the Issuer'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.
(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 Purchasers, be likely to prejudice
materially the success of the proposed issue, sale or distribution of the
Offered Securities, whether in the primary market or in respect of dealings in
the secondary market, 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 Issuer and its subsidiaries taken as
one enterprise which, in the judgment of the Purchasers, is material and adverse
and makes it impractical or inadvisable to proceed with completion of the
offering or the sale of and payment for the Offered Securities (it being
understood that a change in the price of the Common Stock or the continuation of
operating losses consistent with the Issuer'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 Issuer 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 Issuer
(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 Issuer 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 Purchasers, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the offering or sale of and payment
for the Offered Securities.
13
(c) The Purchasers shall have received an opinion, dated the Closing
Date, of Xxxxxxxx Mollen & Xxxxxx, counsel for the Sellers, substantially to the
effect set forth in (i)-(x) below, and of Xxxxxxx Xxxx & Xxxxxxxxx, regulatory
counsel for the Issuer, substantially to the effect set forth in (xi)-(xviii)
below:
(i) Each of the Issuer and WMC 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 Offering Document;
(ii) The Registration Rights Agreement has been duly authorized,
executed and delivered; the Registration Rights Agreement constitutes a valid
and legally binding obligation of the Issuer enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles, except that rights to
indemnity and contribution may be limited by federal and state securities laws
and public policy considerations;
(iii) The Offered Securities have been duly authorized and validly
issued, and upon payment therefor will be fully paid and nonassessable and
conform in all material respects to the description thereof contained in the
Offering Document; to their knowledge, the stockholders of the Issuer have no
preemptive or other similar rights with respect to the issuance of the Offered
Securities; the Offered Securities are convertible into Common Stock of the
Issuer in accordance with the Certificate of Designations; the Underlying Shares
have been duly authorized and reserved for issuance upon such conversion and,
when issued upon such conversion, will be validly issued, fully paid and
nonassessable; the outstanding shares of Common Stock conform in all material
respects to the description thereof contained in the Offering Document; and to
their knowledge the stockholders of the Issuer have no preemptive rights with
respect to the issuance of the Underlying Shares;
(iv) The Issuer is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof as
described in the Offering Document, will not be an "investment company" as
defined in the Investment Company Act;
(v) 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 in connection with the issuance
or sale of the Offered Securities by the Issuer and WMC, the issuance by the
Issuer of the Underlying Shares upon conversion thereof and the consummation of
the transactions under the Registration Rights Agreement, other than as may be
required under the Securities Act and the Rules and Regulations of the
Commission thereunder with respect to the Registration Rights Agreement and the
transactions contemplated thereunder, such as may be required by securities or
blue sky laws of the various states of the United States and of foreign
jurisdictions in connection with the offer and sale of the Offered Securities
and such as may be required by Nasdaq to include the Underlying Shares for
quotation on Nasdaq;
(vi) The execution, delivery and performance of the Registration Rights
Agreement and this Agreement, and the issuance and sale of the Offered
14
Securities and compliance with the terms and provisions 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
either of the Sellers or any subsidiary of the Issuer or any of their
properties, (B) any agreement or instrument listed as an exhibit to the Issuer'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 Issuer under the
Exchange Act through June 16, 1999, to which the Issuer or any such subsidiary
is a party or by which the Issuer or any such subsidiary is bound or to which
any of the properties of the Issuer or any such subsidiary is subject, or (C)
the charter or by-laws of the Issuer or any such 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 Issuer has full
power and corporate authority to authorize, issue and sell the Offered
Securities as contemplated by this Agreement and to authorize and issue the
Underlying Shares upon conversion;
(vii) Such counsel have no reason to believe that the Offering
Document, or any amendment or supplement thereto, as of the date thereof and as
of the Closing Date, 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 the
Offering Document;
(viii) The descriptions in the Offering Document of statutes, legal and
governmental proceedings and contracts and other documents are accurate in all
material respects and fairly present the information purported to be described
therein;
(ix) This Agreement has been duly authorized, executed and delivered
by the Sellers;
(x) Based upon the accuracy of the representations and warranties of
the Issuer set forth in Section 2(u) of this Agreement and of the Purchasers in
Section 4 hereof, it is not necessary in connection with (i) the offer, sale and
delivery of the Offered Securities by the Issuer to the several Purchasers
pursuant to this Agreement or (ii) the resales of the Offered Securities by the
several Purchasers in the manner contemplated by this Agreement, to register the
Offered Securities or the Underlying Shares under the Securities Act other than
in connection with the Issuer's obligations under the Registration Rights
Agreement.
(xi) No prior or subsequent consent, approval, authorization or order
of the FCC is required to be obtained, and no prior or subsequent notice to or
filing with the FCC is required to be made, in connection with the offering of
Offered Securities or the issuance of the Underlying Shares.
(xii) To the best of such counsel's knowledge, the Issuer and its
subsidiaries are in compliance in all material respects with all material terms
and conditions of each License.
(xiii) To the best of such counsel's knowledge, all of the Licenses are
currently valid and in full force and effect, and there is no investigation,
15
notice of apparent liability, violation, forfeiture or other order of complaint
issued by or before any court or regulatory body, including the FCC, or of any
other proceedings (other than proceedings relating to the wireless
communications industries generally and proceedings affecting the service rules
and licensing of spectrum in the 38 GHz band) which could in any manner
materially threaten or adversely affect the validity or continued effectiveness
of any of the Licenses; provided, however, on February 10, 1998, the FCC granted
additional channels for 38 GHz licenses in the following areas: Atlanta,
Buffalo, Cincinnati, Dallas, Houston, Miami, New York, St. Louis, Seattle,
Spokane and Tampa. On March 12, 1998, several parties filed petitions for
reconsideration of each of these grants, with the exception of the Seattle
grant, alleging, among other things, that the February 10, 1998, license grants
to the Issuer were in violation of the FCC's processing rules and the FCC's 38
GHz Order (as defined in the Offering Document). The Issuer filed oppositions to
these petitions. These petitions remain pending at the FCC. In addition, on
March 9, 1998, several parties filed petitions for reconsideration of the FCC's
38 GHz Order, alleging, among other things, that the February 10, 1998, license
grants to the Issuer were in violation of the FCC's processing rules. The Issuer
filed a consolidated opposition to these petitions. These petitions remain
pending at the FCC. In addition, on October 23, 1997, DCT Communications, Inc.
filed a petition for reconsideration seeking revocation of the Issuer's license
in Ft. Lauderdale, Florida. The Issuer opposed the petition. On January 21,
1999, the FCC released an order denying DCT's petition for reconsideration. In
response, DCT filed an application for review which the Issuer opposed. The
application for review remains pending.
(xiv) Such counsel is not aware of any event or instance in which the
Issuer was not in compliance with all applicable and material rules, regulations
and policies of the FCC pertaining to the Licenses.
(xv) Such counsel is not aware of the occurrence of any event which (i)
results in, or after notice or lapse of time or both would result in,
revocation, suspension, adverse modification, nonrenewal, impairment,
restriction or termination of, or order of forfeiture with respect to, any
License or (ii) materially and adversely affects or could reasonably be expected
in the future to materially adversely affect any of the rights of the Issuer or
any of its subsidiaries thereunder.
(xvi) To the best of such counsel's knowledge, the Issuer and its
subsidiaries have duly filed in a timely manner all material filings, reports,
applications, documents, instruments and information required to be filed by
them under the Communications Act pertaining to the Licenses.
(xvii) Such counsel is not aware of any reason to believe that any of
the Licenses will not be renewed in the ordinary course.
(xviii) The FCC has the authority, under certain circumstances, to
modify radio licenses that it has issued. On November 3, 1997, the FCC released
an Order concerning the 38.6-40 GHz band adopting licensing, service and
technical rules, and a plan to auction the remaining unlicensed portions of the
38.6-40 GHz band for commercial use. On February 20, 1998, a party filed a
petition for reconsideration of the FCC's 38 GHz Order seeking review of the
FCC's channelization and assignment of the 38 GHz band to ensure that spectrum
remains available for satellite services. In the 38 GHz Order, the FCC declined
16
to reserve spectrum in this band for satellite services. The Issuer filed an
opposition to this petition. The petition remains pending. On December 23, 1998,
the FCC issued an Order primarily designating the 38.6-40 GHz band for
terrestrial wireless services. Several parties filed petitions for
reconsideration of that decision seeking authority to use the 38.6-40 GHz band
for satellite services. The Issuer filed an opposition to those petitions which
remain pending. The FCC may adopt changes to the existing and proposed
regulations governing 38 GHz licensees, which could have an impact on the scope
of the Licenses and the operations of the Issuer and its subsidiaries. As of the
date of such letter, and except as otherwise discussed in such letter, such
counsel is not aware of any official FCC action that may permit or is likely to
lead to the revocation, nonrenewal, modification, impairment, restriction, or
suspension of any License or any right or authority thereunder in whole or in
part.
(d) The Purchasers shall have received from Cravath, Swaine & Xxxxx,
counsel for the Purchasers, such opinion or opinions, dated the Closing Date,
with respect to the incorporation of the Issuer, the validity of the Offered
Securities, the Offering Document, the exemption from registration for the offer
and sale of the Offered Securities by the Issuer to the several Purchasers and
the resales by the Purchaser as contemplated hereby and other related matters as
the Purchasers may reasonably require, and the Issuer shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(e) The Purchasers shall have received a certificate, dated the Closing
Date, of the Chief Executive Officer or any Vice President and a principal
financial or accounting officer of the Issuer in which such officers, to the
best of their knowledge after reasonable investigation, shall state that the
representations and warranties of such Issuer in this Agreement are true and
correct, that the Issuer has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date, and that, subsequent to the dates of the most recent financial
statements in the Offering Document 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 Issuer and its subsidiaries taken as a whole except as set
forth in or contemplated by the Offering Document or as described in such
certificate.
(f) The Issuer shall have filed with the Secretary of State of Delaware
the Certificate of Designations for the Convertible Preferred Stock.
The Issuer will furnish the Purchasers with such conformed copies of
such opinions, certificates, letters and documents as the Purchasers reasonably
request. The Purchasers may in their sole discretion waive compliance with any
conditions to the obligations of the Purchasers hereunder, whether in respect of
the Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Issuer will indemnify and
hold harmless each Purchaser, its directors and officers and each person, if
any, who controls such Purchaser within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such Purchaser may become subject, under the Securities Act or
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
breach of any of the representations and warranties of the Issuer contained
17
herein or any untrue statement or alleged untrue statement of any material fact
contained in the Offering Document, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and will
reimburse each Purchaser for any legal or other expenses reasonably incurred by
each Purchaser in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Issuer will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Issuer by such Purchaser specifically for use
therein, it being understood that the only such information consists of the
information described as such in subsection (b) below.
(b) Each Purchaser will severally and not jointly indemnify and hold
harmless the Issuer and WMC, its directors and officers and each person, if any,
who controls the Issuer or WMC within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities to which the
Issuer may become subject, under the Securities Act or the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Offering Document, or any
amendment or supplement thereto or arise out of or are based upon the omission
or the alleged omission to state therein a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Issuer by such Purchaser specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Issuer in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by any Purchaser consists of the
following information in the Offering Document furnished on behalf of the
Purchasers: under the caption "Plan of Distribution," (i) the third sentence of
the second paragraph thereunder, (ii) the fifth paragraph thereunder (iii) the
third sentence in the eighth paragraph thereunder and (iv) the ninth paragraph
thereunder.
(c) Promptly after receipt by an indemnified party under this Section
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
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party (which consent shall not be unreasonably withheld), be counsel
to the indemnifying party), and after notice from the indemnifying party to such
18
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be unreasonably
withheld), effect any settlement of any pending or threatened action in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all liability
on any claims that are the subject matter of such action and does not include a
statement as to or an admission of fault, culpability or failure to act by or on
behalf of any indemnified party.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Issuer on the
one hand and the Purchasers on the other from the offering of the Offered
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Issuer on the one hand and the Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Issuer on the one hand and
the Purchasers on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses but after
deducting the Purchasers' discounts and commissions) received by the Sellers
bear to the total discounts and commissions received by the Purchasers from the
Sellers under this Agreement. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuer or the Purchasers and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Offered Securities purchased by it were
resold exceeds the amount of any damages which such Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. The Purchasers' obligations in this subsection (d) to
contribute are several in proportion to their respective purchase obligations
and not joint.
(e) The obligations of the Issuers under this Section shall be in
addition to any liability which the Issuer may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Purchaser within the meaning of the Securities Act or the Exchange Act; and the
obligations of the Purchasers under this Section shall be in addition to any
19
liability which the respective Purchasers may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Issuer within the meaning of the Securities Act or the Exchange Act.
8. Default of Purchasers. If any Purchaser or Purchasers default in
their obligations to purchase Offered Securities hereunder and the aggregate
number of shares of Offered Securities that such defaulting Purchaser or
Purchasers agreed but failed to purchase does not exceed 10% of the total number
of shares of Offered Securities, the Purchasers may make arrangements
satisfactory to the Sellers for the purchase of such Offered Securities by other
persons, including any of the Purchasers, but if no such arrangements are made
by the Closing Date, the non-defaulting Purchasers shall be obligated severally,
in proportion to their respective commitments hereunder, to purchase the Offered
Securities that such defaulting Purchasers agreed but failed to purchase. If any
Purchaser or Purchasers so default and the aggregate number of shares of Offered
Securities with respect to which such default or defaults occur exceeds 10% of
the number of shares of Offered Securities and arrangements satisfactory to the
Purchasers and the Sellers for the purchase of such Offered Securities by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Purchaser or the
Sellers, except as provided in Section 9. As used in this Agreement, the term
"Purchaser" includes any person substituted for a Purchaser under this Section.
Nothing herein will relieve a defaulting Purchaser from liability for its
default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Issuer or its officers and of the several Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Purchaser, the Issuers or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If for any reason the purchase of the
Offered Securities by the Purchaser is not consummated, the Issuer shall remain
responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 (other than with respect to a defaulting Purchaser) and the respective
obligations of the Issuer and the Purchasers pursuant to Section 7 shall remain
in effect. If the purchase of the Offered Securities by the Purchasers is not
consummated for any reason other than solely because of the termination of this
Agreement pursuant to Section 8 or solely because of the occurrence of any event
specified in clause (C), (D) or (E) of Section 6(b)(ii), the Issuer will
reimburse the Purchasers for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Purchasers will be mailed, delivered or telecopied and confirmed to
the Purchasers, Credit Suisse First Boston Corporation, Eleven Xxxxxxx Xxxxxx,
Xxx Xxxx, XX 00000 Attention: Investment Banking Department-Transaction Advisory
Group and Xxxxxxx Xxxxx Xxxxxx, Seven Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 or,
if sent to the Sellers, will be mailed, delivered or electronically transmitted
and confirmed to them at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxx
Xxxxxx; provided, however, that any notice to a Purchaser pursuant to Section 7
will be mailed, delivered or telecopied and confirmed to such Xxxxxxxxx.
00
00. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder, except that holders of Offered Securities shall
be entitled to enforce the agreements for their benefit contained in the second
and third sentences of Section 5(b) hereof against the Issuers as if such
holders were parties thereto.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without regard to
principles of conflicts of laws.
Each of the parties hereby submits to the non-exclusive jurisdiction of
the Federal and state courts in the Borough of Manhattan in The City of New York
in any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
21
If the foregoing is in accordance with the Purchasers' understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Sellers and the
Purchasers in accordance with its terms.
Very truly yours,
WinStar Communications, Inc.
By.................................
Name:
Title:
WinStar Multichannel Corp.
By.................................
Name:
Title:
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
Credit Suisse First Boston Corporation
Xxxxxxx Xxxxx Xxxxxx Inc.
By Credit Suisse First Boston Corporation
By..........................................
Name:
Title:
SCHEDULE A
Number of Shares Number of Shares
of Convertible of Convertible
Preferred Stock Preferred Stock
Purchaser from the Issuer from WMC Total
------------------- ----------------- ---------------- ------
Credit Suisse First
Boston Corporation
Xxxxxxx Xxxxx Barney Inc.
----------------- --------------- -------
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Exhibit A
Form of Designation Certificate
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