Form of Stockholder's Agreement
WHEREAS, the undersigned (the "Stockholder") is the beneficial owner of
shares of the Series C 14-1/4% Cumulative Exchangeable Preferred Stock due 2007
(the "Preferred Stock") of Winstar Communications, Inc. (the "Company"), with an
aggregate Initial Liquidation Preference (as defined) as set forth on the
signature page hereto (the "Shares").
WHEREAS, the Company intends to engage in a refinancing transaction
consisting of (i) an offer to purchase for cash (the "Tender Offer") any and all
of its outstanding 14% Senior Discount Notes due 2005 and 14-1/2% Senior
Deferred Interest Notes due 2005, any and all of the outstanding 12-1/2%
Guaranteed Senior Secured Notes due 2004 of Winstar Equipment Corp. and any and
all of the outstanding 12-1/2% Guaranteed Senior Secured Notes due 2004 of
Winstar Equipment II Corp. (collectively, the "Existing Senior Notes"), (ii) an
offer to exchange (the "Subordinated Notes Exchange Offer") (a) its Senior Notes
Due 2010 (the "New Senior Notes") and its Senior Discount Notes Due 2010 (the
"New Senior Discount Notes" and, together with the New Senior Notes, the "New
Notes") for any and all of its outstanding 10% Senior Subordinated Notes Due
2008 (the "10% Subordinated Notes") and (b) its New Senior Discount Notes for
any and all of its outstanding 15% Senior Subordinated Deferred Interest Notes
Due 2007 and 11% Senior Subordinated Deferred Interest Notes Due 2008 (together
with the 10% Subordinated Notes, the "Existing Subordinated Notes"), and (iii) a
private placement of additional New Notes in an aggregate principal amount of at
least $250.0 million plus the amount required to fund the Tender Offer pursuant
to a Rule 144A/Regulation S distribution (the "Notes Offering" and, together
with the Tender Offer and the Subordinated Notes Exchange Offer, the
"Refinancing").
WHEREAS, in connection with the Refinancing, the Company intends (1) in
accordance with the Certificate of Designation (the "Certificate of
Designation"), a copy of which is attached hereto as Exhibit A, governing the
Preferred Stock, on June 15, 2000 (the "Exchange Date"), to exercise its
election to exchange (the "Exchange Debenture Election") the Preferred Stock for
Exchange Debentures (the "Exchange Debentures"), to be issued pursuant to an
indenture (the "Exchange Debenture Indenture"), in an aggregate Accumulated
Amount (as defined in the Exchange Debenture Indenture) equal to the aggregate
Accumulated Amount (as defined in the Certificate of Designation) of the
Preferred Stock then outstanding, all in accordance with the Certificate of
Designation; and (2) to exchange with holders of Preferred Stock that have
entered into agreements having the terms set forth herein any and all of such
holders' Exchange Debentures for its New Senior Discount Notes (the
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"Debenture Exchange Transaction"), which exchange shall be effective as of June
16, 2000.
WHEREAS, in lieu of the Exchange Debenture Election and Debenture Exchange
Transaction, the Company may at any time commence a registered or a private
offer to exchange (the "Direct Exchange Offer") any and all of the Preferred
Stock directly for its New Senior Discount Notes without the intervening
Exchange Debenture Election.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, the parties agree as follows:
1. Tender and Exchange of Debentures.
The Stockholder hereby agrees that it shall exchange its Exchange
Debentures for New Senior Discount Notes at the Exchange Price (as defined) in
the Debenture Exchange Transaction (it being understood that the obligation
contained in this sentence is unconditional, subject to Section 7), and that it
shall execute such other documentation as may be required to effect its
participation in the Debenture Exchange Transaction. The exchange price (the
"Exchange Price") will be New Senior Discount Notes with an Accreted Value (as
defined therein) of $1,545.91 (determined as of June 16, 2000) for each $1,000
principal amount of the Exchange Debentures. The Company's obligation to effect
the Exchange Debenture Election and consummate the Debenture Exchange
Transaction is subject to the following conditions (which may be waived in the
sole discretion of the Company): (a) the Company having accepted Existing Senior
Notes for payment in the Tender Offer, (b) the Company having accepted Existing
Subordinated Notes for exchange in the Subordinated Notes Exchange Offer, and
(c) the Company having consummated the Notes Offering. Upon satisfaction (or
waiver) of these conditions, the Company will become unconditionally obligated
to effect the Exchange Debenture Election and consummate the Debenture Exchange
Transaction, subject only to the next paragraph.
In lieu of the commitment by the Company to effect the Exchange Debenture
Election and the Debenture Exchange Transaction, the Company reserves the right,
at any time after consummation of the Refinancing, to commence a Direct Exchange
Offer wherein the Company would offer to exchange any and all of the shares of
Preferred Stock for its New Senior Discount Notes. In such event, the
Stockholder hereby agrees that it shall tender its Shares into any Direct
Exchange Offer and that it shall not withdraw any Shares so tendered (it being
understood that the obligation contained in this sentence is unconditional,
subject to Section 7). The Offer Price in any Direct Exchange Offer
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will be New Senior Discount Notes with an Accreted Value (as defined therein) of
$1,545.91 (determined as of June 16, 2000) for each $1,000 Initial Liquidation
Preference (as defined in the Certificate of Designation) of the Preferred
Stock.
2. Amendments to Exchange Debentures Indenture.
The Stockholder hereby irrevocably consents to amend the Exchange
Indenture, in accordance with Section (f)(iii)(D) of the Certificate of
Designation, to eliminate substantially all the restrictive covenants contained
therein. A draft of the form of Exchange Indenture is attached hereto as Exhibit
B, and the form of Supplemental Indenture, which sets forth the amendments, is
attached hereto as.
3. Waiver of Defaults.
The Stockholder hereby irrevocably (A) waives (i) any voting rights or
rights to elect directors of the Company in respect of the Preferred Stock that
would accrue to it pursuant to clause (f)(ii)(A)(3) of the Certificate of
Designation to which it may now or hereafter be entitled, (ii) any condition
precedent to the exchange of Preferred Stock for Exchange Debentures under the
Certificate of Designation (such waiver to be deemed to be the Stockholder's
consent to amend the Certificate of Designation in any manner necessary to
consummate the exchange of Preferred Stock for Exchange Debentures), and (iii)
any other breach, violation or default under paragraph (l) of the Certificate of
Designation and (B) agrees that it shall not take any action, including, without
limitation, providing notice to the Company of the occurrence of an event that
would give rise to voting rights or the right to elect directors of the Company
pursuant to clause (f)(ii)(A)(3) of the Certificate of Designation, to give rise
to voting rights or the right to elect directors to other holders of Preferred
Stock.
4. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to the Company as follows:
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(a) Authority. The Stockholder has all requisite power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Stockholder. This Agreement has been duly
executed and delivered by the Stockholder and constitutes a valid and
binding obligation of the Stockholder enforceable against the Stockholder
in accordance with its terms. Neither the execution, delivery or
performance of this Agreement by the Stockholder nor the consummation by
the Stockholder of the transactions contemplated hereby will (i) require
any filing with, or permit, authorization, consent or approval of, any
Federal, state or local government or any court, tribunal, administrative
agency or commission or other governmental or regulatory authority or
agency, domestic, foreign or supranational (a "Governmental Entity"), (ii)
result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default under, or give rise to any right
of termination, amendment, cancelation or acceleration under, or result in
the creation of any pledge, claim, lien, charge, encumbrance or security
interest of any kind or nature whatsoever (a "Lien") upon any of the
properties or assets of the Stockholder under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license,
permit, concession, franchise, contract, agreement or other instrument or
obligation (a "Contract") to which the Stockholder is a party or by which
the Stockholder or any of the Stockholder's properties or assets, including
the Shares and the Debentures, may be bound or (iii) violate any judgment,
order, writ, preliminary or permanent injunction or decree (an "Order") or
any statute, law, ordinance, rule or regulation of any Governmental Entity
(a "Law") applicable to the Stockholder or any of the Stockholder's
properties or assets, including the Shares and the Exchange Debentures.
(b) The Shares and Exchange Debentures. The Shares and the
certificates representing such Shares are now and at all times during the
term hereof will be, and the Exchange Debentures and the certificates
representing such Exchange Debentures after the Exchange Date will be, held
by such Stockholder, or by a nominee or custodian for the benefit of such
Stockholder, and the Stockholder has good and marketable title to such
Shares, and will have good and marketable title to such Exchange
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5
Debentures, free and clear of any Liens, proxies, voting trusts or
agreements, understandings or arrangements, except for any such Liens or
proxies arising hereunder. The Stockholder owns of record or beneficially
no shares of Preferred Stock other than the Shares.
5. Covenants of the Stockholder. The Stockholder shall not, except as
contemplated by the terms of this Agreement, (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any Contract, option or other arrangement
(including any profit sharing arrangement) or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of, the Shares or the
Exchange Debentures to any person other than the Company or the Company's
designee, other than to a transferee that is a "qualified institutional buyer"
(as defined under the Securities Act of 1933) who agrees in writing (a form of
which is attached hereto as Exhibit C) prior to such transfer to be bound by the
terms of this Agreement, (ii) enter into any voting arrangement, whether by
proxy, voting agreement, voting trust, power-of-attorney or otherwise, with
respect to the Shares or the Exchange Debentures or (iii) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby.
6. Assignment. Except as set forth in clause (i) of Section 5, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns. The Stockholder agrees that this Agreement and the
obligations of the Stockholder hereunder shall attach to the Shares and the
Exchange Debentures and shall be binding upon any person or entity to which
legal or beneficial ownership of such Shares or Exchange Debentures shall pass,
whether by operation of law or otherwise, including without limitation the
Stockholder's heirs, guardians, administrators or successors.
7. Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate immediately if the transactions constituting
the Refinancing are abandoned by the Company.
8. Stop Transfer. The Stockholder agrees with, and covenants to, the
Company that the Company shall not register the transfer of any certificate
representing any Shares or Exchange Debentures unless such transfer is made in
accordance with the terms of this Agreement. The Stockholder authorizes any
applicable depositary or securities custodian for the Preferred Stock or the
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Exchange Debentures to restrict transfer of the Stockholder's beneficial
interests in any global security that represents the Preferred Stock or Exchange
Debentures.
9. General Provisions.
(a) Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense.
(b) Amendments. This Agreement may be amended at any time only by a
written instrument executed by each of the parties hereto.
(d) Notice. Any notices and other communications required or permitted
hereunder shall be in writing and shall be addressed as follows:
(i) if to the Company, to
Winstar Communications, Inc.
The Winstar Building
685 Third Avenue
New York, NY 10017
Attention: Timothy Graham
Telephone: (212) 584-4012
Telecopy: (212) 584-4001
and
(ii) if to the Stockholder, to the address set forth under
the name of such Stockholder on the signature page
hereto
or such other address as shall be furnished in writing by either party in
accordance with this Section 9, and any such notice or communication shall
be deemed to have been given as of the date so mailed. Notices or other
communications shall be deemed given (i) if delivered personally, upon
delivery, (ii) if delivered by registered or certified mail (return receipt
requested), upon the earlier of actual delivery or three business days
after being mailed, (iii) if delivered by overnight courier or similar
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service, upon delivery, or (iv) if given by fax, upon confirmation of
transmission by fax; provided that if such notice or other communications
would be otherwise deemed given on a day which is not a business day, the
delivery shall be deemed given the first business day following such day.
(d) Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include", "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
(e) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed
by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
(f) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAWS RULES) AS
TO ALL MATTERS, INCLUDING BUT NOT LIMITED TO, MATTERS OF VALIDITY,
CONSTRUCTION, EFFECT AND PERFORMANCE.
(h) Publicity. Except in connection with the Refinancing or as
otherwise required by law, court process or the rules of a national
securities exchange or the Nasdaq National Market, for so long as this
Agreement is in effect, neither the Stockholder nor the Company shall issue
or cause the publication of any press release or other public announcement
with respect to the transactions contemplated by this Agreement without the
consent of the other party, which consent shall not be unreasonably
withheld.
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10. Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
<PAGE>
Capitalized terms used herein and not otherwise defined shall have the
meaning set forth in the Certificate of Designation.
WINSTAR COMMUNICATIONS, INC.
by __________________________
Name:
Title:
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[Counterpart Signature Page]
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(Stockholder)
Dated: By:
-------------------- -----------------------------
(signature)
Aggregate Initial Liquidation
Preference of Preferred
by Stock held by ----------------------------------
Stockholder: (name and title)
---------------------------------
$ (city/state/zip code)
------------------------------------
---------------------------------
(phone)
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(facsimile)
