TENDER OFFER
DEALER MANAGER AGREEMENT
April 10, 2000
Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Credit Suisse First Boston Corporation
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
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
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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,
Xxxxxxx Xxxxx International, Xxxxxxx Xxxxx 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 Xxxxxxx Xxxxx 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
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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
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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
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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.
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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
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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
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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.
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(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 Xxxxx Xxxxxxxx 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
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(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 Xxxxxxxx Xxxxxx & Xxxxxx,
counsel for the Company, substantially to the effect set forth in (i)-(vi)
below:
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(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
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 Xxxxx Xxxxxxxx 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.
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 Xxxxxxx Xxxxx Xxxxxx Inc., Credit Suisse
First Boston Corporation and their respective affiliates may own for their own
account Existing Senior Notes, and agrees that Xxxxxxx Xxxxx 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.
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
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.
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.
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:
Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
Confirm: (000) 000-0000
and
Credit Suisse First Boston Corporation
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Transaction Advisory Group
Fax: (000) 000-0000
Confirm: (000) 000-0000
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
Fax: (000) 000-0000
Confirm: (000) 000-0000
(b) If to the Company:
Winstar Communications, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
Confirm: (000) 000-0000
18
with a copy to:
Xxxxxxxx Xxxxxx & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
Confirm: (000) 000-0000
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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/ Xxxxxxx X. Xxxxxxxx
by ________________________
Name: Xxxxxxx X. Xxxxxxxx
Title:Senior Vice President
Accepted as of the date
first set forth above:
XXXXXXX XXXXX XXXXXX INC.
/s/ Xxxxxxx Xxxxxx
by___________________________
Name: Xxxxxxx Xxxxxx
Title: Director
CREDIT SUISSE FIRST BOSTON CORPORATION
/s/ Xxxxxx X. Xxxxxx
by______________________________
Name: Xxxxxx X. Xxxxxx
Title: Director
