WinStar Communications, Inc.
6% Cumulative Convertible Preferred Stock and
Warrants to Purchase Common Stock
REGISTRATION RIGHTS AGREEMENT
February 6, 1997
The Purchasers
c/o Credit Suisse First Boston Corporation
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
WinStar Communications, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to Credit Suisse First Boston Corporation
and such other purchasers as are set forth on the signature pages hereto
(collectively, the "Purchasers"), upon the terms set forth in a securities
purchase agreement of even date herewith (the "Purchase Agreement"), shares of
6% Series A Cumulative Convertible Preferred Stock (the "Preferred Stock", which
term includes any Other Shares (as defined herein) and any Additional Shares (as
defined in the Certificate of Designation with respect to the Preferred Stock))
of the Company and Warrants (the "Warrants") to purchase shares of Common Stock,
par value $0.01 per share, of the Company (the "Common Stock"). The Preferred
Stock will be issued to the Purchasers upon the terms and subject to the
limitations set forth in the Certificate of Designations, Rights and Preferences
of such Preferred Stock (the "Certificate of Designation"). As an inducement to
the Purchasers to enter into the Purchase Agreement and in satisfaction of a
condition to the Purchasers' obligations thereunder, the Company agrees with the
Purchasers, (i) for the benefit of the Purchasers and (ii) for the benefit of
the registered holders of the Preferred Stock and the Common Stock issuable upon
conversion of, or pursuant to a Change of Control Offer (as defined in the
Certificate of Designation) with respect to, the Preferred Stock (the
"Conversion Shares") and for the benefit of the registered holders of the
Warrants and the Common Stock issuable upon exercise of the Warrants (the
"Warrant Shares" and, collectively with the aforementioned securities, the
"Securities") from time to time until such time as such
Securities have been sold pursuant to a Registration Statement (as defined
below) (each of the foregoing a "Holder" and together the "Holders") or as
otherwise set forth herein, as follows:
1. Filing of Registration Statements. (a) Initial
Registration. Following the Closing Date, the Company shall, at its own cost, be
required to use its best reasonable efforts to file with the Securities and
Exchange Commission (the "Commission"), promptly, and to have declared effective
by August 15, 1997 (i) a registration statement covering the resale of shares of
Preferred Stock from time to time (the "Preferred Stock Registration Statement")
and (ii) a registration statement covering the resale of the Warrants from time
to time and the issuance of Warrant Shares as such Warrants are exercised from
time to time (the "Warrant Registration Statement"). In the Company's
discretion, the Preferred Stock Registration Statement and the Warrant
Registration Statement may be combined into one Registration Statement.
(b) Demand Registration. At any time after May 11, 1997, each
Holder of the Preferred Stock shall have the right, upon written demand given to
the Company (the "Demand Notice"), to request the Company to register such
Holder's Conversion Shares other than Conversion Shares underlying Preferred
Stock which has been sold by means of the Preferred Stock Registration Statement
("Registered Preferred Stock"). Upon receipt of a Demand Notice, the Company
shall, at its cost and within 30 days, prepare and file with the Commission and
thereafter shall use its best efforts to cause to be declared effective within
90 days following the date of such Demand Notice, a registration statement (a
"Common Stock Registration Statement") covering the resale of the Conversion
Shares by such Holder from time to time in accordance with the methods of
distribution set forth in the Common Stock Registration Statement and Rule 415
under the Securities Act of 1933, as amended (the "Securities Act"). Not later
than 30 days prior to the effectiveness of any Common Stock Registration
Statement, the Company will notify the Holders of the Preferred Stock of the
pending Registration Statement and will include in such Registration Statement
the shares of Preferred Stock of each Holder who elects to join therein within
10 days by motion to the Company. Notwithstanding anything else contained
herein, the Company will not be obligated to file more than two Common Stock
Registration Statements.
(c) Maintain Effectiveness. The Company shall use its best
efforts to keep the Preferred Stock Registration Statement, the Warrant
Registration Statement and the Common Stock Registration Statement (each, a
"Registration Statement", and, collectively, the "Registration Statements")
continuously effective, in order to permit the prospectus included in each of
the Registration Statements to be lawfully delivered by or to the Holders of the
relevant Securities, until such time as all the Securities covered by the
Registration Statements have been sold pursuant thereto or may be sold without
limitation pursuant to Rule 144 under the Securities Act (or any successor rule
thereof), assuming for this purpose that the Holders thereof are not affiliates
of the Company (in any such case, such period being called the "Registration
Period"); provided, however, that no Holder (other than a Purchaser) shall be
entitled to have the Securities held by it covered by such any of the
Registration Statements unless such Holder agrees in writing to be bound by all
the provisions of this Agreement applicable to such Holder. The Company shall be
deemed not to have used its best efforts to keep any of the Registration
Statements effective during the requisite period if it voluntarily takes any
action that would result in Holders of Securities covered thereby not being able
to offer and sell such Securities during that period, unless (i) such action is
required by applicable law or (ii) upon the occurrence of any event contemplated
by paragraph 2(b)(iv) below, such action is taken by the Company in good faith
and for valid business reasons and the Company thereafter promptly complies with
the requirements of paragraph 2(h) below if the Company has determined in good
faith that there are no material legal or commercial impediments in so doing.
(d) Comply with SEC Rules. Notwithstanding any other
provisions of this Agreement to the contrary, the Company shall cause (other
than with respect to information required to be supplied by the selling Holders
pursuant to this Agreement) (i) each of the Registration Statements and the
prospectus related thereto and any amendment or supplement thereto to comply in
all material respects with the applicable requirements of the Securities Act and
the rules and regulations of the Commission thereunder, (ii) each of the
Registration Statements and any amendment thereto not to contain, when it
becomes effective, an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus
forming a part of any of the Registration Statements, and any amendment or
supplement to such prospectus, not to contain, as of the date of such prospectus
or amendment or supplement, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
2. Registration Procedures. In connection with the
Registration Statements contemplated by Section 1 hereof the following
provisions shall apply to each of the Registration Statements:
(a) The Company shall (i) furnish to each Purchaser, prior to
the filing thereof with the Commission, a copy of the Registration Statement and
each amendment thereof and each amendment or supplement, if any, to the
prospectus included therein and, in the event that a Purchaser (with respect to
any portion of an unsold allotment from the original offering) is participating
in the Registration Statement, shall consider in good faith reflecting in each
such document, when so filed with the Commission, such comments as such
Purchaser reasonably may propose through Designated Counsel and (ii) from time
to time include the names of the Holders, who propose to sell Securities
pursuant to such Registration Statement, as selling security holders.
(b) The Company shall give written notice to the Purchasers
and the Holders (which notice pursuant to clauses (ii)-(iv) hereof shall be
accompanied by an instruction to suspend the use of the prospectus until the
requisite changes have been made):
(i) when the Registration Statement or any amendment thereto has been filed
with the Commission and when the Registration Statement or any post-effective
amendment thereto has become effective;
(ii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose;
(iii) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose; and
(iv) of the happening of any event that the Company has in good faith
determined requires it to make changes in the Registration Statement or the
prospectus in order that the Registration Statement or the prospectus do not
contain an untrue statement of a material fact nor omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the prospectus, in light of the circumstances under which they were
made) not misleading, which written notice need not provide any detail as to the
nature of such event.
(c) The Company shall use reasonable commercial efforts to
obtain the withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Securities
included within the coverage of the Registration, without charge, one copy of
the Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits thereto (other than those, if any, incorporated by reference).
(e) The Company shall, during the Registration Period, deliver
to each Holder of Securities included within the coverage of the Registration
Statement, without charge, as many copies of the prospectus (including each
preliminary prospectus) included in the Registration Statement and any amendment
or supplement thereto as such Holder may reasonably request. The Company
consents, subject to the provisions of this Agreement, to the use of the
prospectus or any amendment or supplement thereto by each of the selling Holders
in connection with the offering and sale of the Securities covered by the
prospectus, or any amendment or supplement thereto, included in the Registration
Statement.
(f) Prior to any public offering of the Securities, pursuant
to the Registration Statement, the Company shall register or qualify or
cooperate with the Holders of the Securities included therein and their
respective counsel in
connection with the registration or qualification of such Securities for offer
and sale under the securities or "blue sky" laws of such states of the United
States as any such Holder reasonably requests in writing and do any and all
other acts or things reasonably necessary or advisable to enable the offer and
sale in such jurisdictions of the Securities covered by the Registration
Statement; provided, however, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction where it is not then so
qualified or (ii) take any action which would subject it to general service of
process or to taxation in any jurisdiction where it is not then so subject.
(g) The Company shall cooperate with the Holders of the
Securities to facilitate the timely preparation and delivery of certificates
representing the Securities to be sold pursuant to the Registration Statements
free of any restrictive legends and in such denominations and registered in such
names as the Holders may request a reasonable period of time prior to sales of
the Securities pursuant to the Registration Statements.
(h) Upon the occurrence of any event contemplated by
paragraphs (ii) through (iv) of Section 2(b) above during the period for which
the Company is required to maintain an effective Registration Statement, the
Company shall promptly prepare and file post-effective amendments to the
Registration Statements or an amendment or supplement to the related prospectus
and any other required document or file the appropriate document under the
Exchange Act which is deemed to so amend or supplement, so that, as thereafter
delivered to Holders or purchasers of Securities, the prospectus will not
contain an untrue statement of a material fact or omit 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. If the
Company notifies the Purchasers or the Holders in accordance with paragraphs
(ii) through (iv) of Section 2(b) above to suspend the use of the prospectus
until the requisite changes to the prospectus have been made, then the
Purchasers and the Holders shall immediately suspend use of such prospectus.
(i) The Company will comply with all rules and regulations of
the Commission to the extent and so long as they are applicable to the
Registrations.
(j) The Company may require each Holder of Securities to be
sold pursuant to the Registration Statements to furnish to the Company such
information regarding the Holder and the distribution of the Securities as the
Company may from time to time reasonably require for inclusion in the
Registration Statements, and the Company may exclude from such registration the
Securities of any Holder that fails to furnish such information within a
reasonable time after receiving such request.
(k) The Company shall (i) make reasonably available for
inspection by the Holders of the Securities and any attorney, accountant or
other agent retained by the Holders of the Securities all relevant financial and
other records, pertinent corporate documents and properties of the Company and
(ii) cause the Company's officers, directors, employees, accountants and
auditors to supply all relevant information reasonably requested by the Holders
of the Securities or any such attorney, accountant or agent in connection with a
Registration Statement, in each case, as shall be reasonably necessary to enable
such persons, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that the foregoing
inspection and information gathering (i) shall be coordinated on behalf of the
Purchasers by Cravath, Swaine & Xxxxx (the "Designated Counsel"), (ii) shall not
be available for any such Holder that is a competitor of the Company and (iii)
shall be maintained as confidential by the Holders and the Designated Counsel
pursuant to customary confidentiality agreements.
(l) The Company, if requested by the Designated Counsel, shall
cause (i) its counsel to deliver an opinion and updates thereof relating to the
Securities in customary form, including customary and reasonable qualifications,
assumptions and limitations, addressed to such Holders, and dated, in the case
of the initial opinion, the effective date of such Registration Statement (it
being agreed that the matters to be covered by such opinion shall include,
without limitation, the due incorporation and good standing of the Company and
its subsidiaries; the qualification of the Company and its subsidiaries to
transact business as foreign corporations; the due authorization, execution,
authentication and issuance, and the validity and enforceability, of the
applicable Securities; the absence of material legal or governmental proceedings
involving the Company and its subsidiaries; the absence of governmental
approvals required to be obtained in connection with the Registration Statement,
or the offering and sale of the applicable Securities; the compliance as to form
of such Registration Statement and any documents incorporated by reference
therein; and, as of the date of the opinion and as of the effective date of the
Registration Statement or most recent post-effective amendment thereto, as the
case may be, the absence from such Registration Statement and the prospectus
included therein, as then amended or supplemented, and from any documents
incorporated by reference therein of an untrue statement of a material fact or
the omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading (in the case of any such
documents, in the light of the circumstances existing at the time that such
documents were filed with the Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), (ii) its officers to execute and deliver
all customary documents and certificates and updates thereof requested by the
Designated Counsel and (iii) its independent public accountants and the
independent public accountants with respect to any other entity for which
financial information is provided in the Registration Statement to provide to
the selling Holders of the applicable Securities a comfort letter in customary
form and covering matters of the type customarily covered in comfort letters in
connection with primary underwritten offerings, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
(m) The Company shall use reasonable commercial efforts to
take all other steps necessary to effect the registration of the Securities
covered by the Registration Statement contemplated hereby.
3. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance of its obligations under
Sections 1 through 2 hereof, whether or not the applicable Registration
Statement is filed or becomes effective, and shall bear or reimburse the Holders
of the Securities covered by such Registration Statement for the reasonable fees
and disbursements of the Designated Counsel (provided that Holders of Conversion
Shares issued upon the conversion of the Preferred Stock shall be deemed to be
Holders of the Preferred Stock from which such Conversion Shares were
converted) to act as counsel for the Holders in connection
therewith.
4. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Holder and each person, if any, who controls such Holder
within the meaning of the Securities Act or the Exchange Act (each Holder and
such controlling persons are referred to collectively as the "Indemnified
Parties") from and against any losses, claims, damages or liabilities, joint or
several, or any actions in respect thereof (including, but not limited to, any
losses, claims, damages, liabilities or actions relating to purchases and sales
of the Securities) to which each Indemnified Party becomes subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
applicable Registration Statement or prospectus or in any amendment or
supplement thereto or in any preliminary prospectus relating to such
Registration Statement, or arise out of, or are based upon, the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and subject to
subsection (c) below, shall reimburse, as incurred, the Indemnified Parties for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon (x) the use of any prospectus in violation of the last
sentence of Section 2(h), or (y) any untrue statement or alleged untrue
statement or omission or alleged omission made in the applicable Registration
Statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to such Registration Statement in reliance upon
and in conformity with written information pertaining to such Holder and
furnished to the Company by or on behalf of such Holder specifically for
inclusion therein and (ii) with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus relating
to the applicable Registration Statement, the indemnity agreement contained in
this subsection (a) shall not inure to the benefit of any Holder from whom the
person asserting any such losses, claims, damages or liabilities purchased the
Securities
concerned, to the extent that a prospectus relating to such Securities was
required to be delivered by such Holder under the Securities Act in connection
with such purchase and any such loss, claim, damage or liability of such Holder
results from the fact that there was not sent or given to such person, at or
prior to the written confirmation of the sale of such Securities to such person,
a copy of the final prospectus if the Company had previously furnished copies
thereof to such Holder; provided further, however, that this indemnity agreement
will be in addition to any liability which the Company may otherwise have to
such Indemnified Party.
(b) Each Holder, severally and not jointly, will indemnify and hold
harmless the Company and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act from and against any
losses, claims, damages or liabilities or any actions in respect thereof, to
which the Company or any such controlling person becomes subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, and to subsection (c)
below, shall reimburse, as incurred, the Company for any legal or other expenses
reasonably incurred by the Company or any such controlling person in connection
with investigating or defending any loss, claim, damage, liability or action in
respect thereof; provided, however, that no such Holder shall be required to pay
any amount pursuant to this subsection (b) in excess of the amount by which the
net proceeds received by such Holder from the sale of the Securities pursuant to
the applicable Registration Statement exceeds the amount of damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this
Section 4 of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 4,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in subsections (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, be counsel to the
indemnifying party if the representation of both such parties by the same
counsel would constitute a conflict of interest), and after notice from the
indemnifying party to such 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 4 for any legal or other expenses, other than
reasonable costs of investigation, subsequently incurred by such indemnified
party in connection with the defense thereof. No indemnifying party shall,
without the prior written consent of the indemnified party, 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.
(d) If the indemnification provided for in this Section 4 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (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 (or actions in respect thereof) referred
to in subsections (a) or (b) above (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party or parties on
the one hand and the indemnified party on the other from the registration of the
Securities, pursuant to the applicable Registration Statement, 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 clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties 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 Company
on the one hand or such Holder or such other indemnified party, as the case may
be, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such 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 any other
provision of this Section 4(d), no Holder shall be required to contribute any
amount in excess of the amount by which the net proceeds received by such Holder
from the sale of the Securities pursuant to the applicable Registration
Statement exceeds the amount of damages which such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who
controls such indemnified party within the meaning of the Securities Act or the
Exchange Act shall have the same rights to contribution as such indemnified
party and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act shall have the same rights to
contribution as the Company.
(e) The agreements contained in this Section 4 shall survive
the sale of the Securities pursuant to the applicable Registration Statement and
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
indemnified party.
5. Registration Defaults. (a) The occurrence of any
of the following events constitutes a "Registration Default":
(i) if by August 15, 1997 either the Preferred Stock
Registration Statement or the Warrant Registration Statement has not
been declared effective by the Commission;
(ii) if on the date 90 days following the receipt by the Company
of a Demand Notice, the applicable Common Stock Registration Statement
has not been declared effective by the Commission; or
(iii) with respect to any of the Registration Statements, if after
a Registration Statement is declared effective (A) such Registration
Statement thereafter ceases to be effective; or (B) such Registration
Statement or the related prospectus ceases to be usable (in each case
except as permitted in paragraph (c) below) in connection with the
issuance or resales of the Securities covered thereby in accordance
with and during the periods specified herein because either (1) any
event occurs as a result of which the related prospectus forming part
of such Registration Statement would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they
were made not misleading, or (2) it shall be necessary to amend such
Registration Statement or supplement the related prospectus, to comply
with the Securities Act or the Exchange Act or the respective rules
thereunder.
(b) Upon the occurrence of a Registration Default
(i) with respect to the Preferred Stock Registration Statement
or the Warrant Registration Statement, the dividend rate payable on the
Preferred Stock as set forth in Section 3(a) of the Certificate of Designation
will increase to 6.5% until
such time as the Registration Default has been cured (or such Registration
Statement is no longer required to be effective pursuant to the terms hereof);
and
(ii) with respect to a Common Stock Registration Statement the
Company will be required to pay to the holders of the Preferred Stock that gave
the Demand Notice with respect thereto or that joined therein pursuant to
Section 1(b), on each share of Preferred Stock then owned by such holder (other
than Registered Preferred Stock), an amount equal to 2% of the Liquidation
Preference of such Preferred Stock (as defined in the Certificate of Designation
with respect thereto) (the "Registration Default Amount"), payable for each
month during which there has occurred a Registration Default for at least 15
days until such time as such Registration Default has been cured (or such
Registration Statement is no longer required to be effective pursuant to the
terms hereof). With respect to each month for which the Registration Default
Amount is payable, such payment will be made within five business days following
the end of such month (i) by certified check or bank check or (ii) through the
issuance of a number of additional shares (or fractional shares) of Preferred
Stock (the "Other Shares") equal to the Registration Default Amount divided by
the Stated Value (as defined in the Certificate of Designation with respect
thereto) of the Preferred Stock, to the holders of Preferred Stock at such
address as appears for the holder on the record books of the Company (or at such
other address as such holder shall hereafter give to the Company by written
notice).
(c) A Registration Default referred to in Section 5(a)(iii)
shall be deemed not to have occurred and be continuing in relation to the
applicable Registration Statement or the related prospectus if (i) such
Registration Default has occurred solely as a result of (x) the filing of a
post-effective amendment to such Registration Statement to incorporate annual
audited financial information with respect to the Company where such
post-effective amendment is not yet effective and needs to be declared effective
to permit Holders to use the related prospectus or (y) other material events,
with respect to the Company that would need to be described in such Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company proceeds promptly and in good faith to amend or supplement such
Registration Statement and related prospectus to describe such events if the
Company has determined
in good faith that there are no material legal or commercial impediments in so
doing; provided, however, that in any case if such Registration Default occurs
for a continuous period in excess of 45 days, a Registration Default shall be
deemed to have occurred and the applicable dividend rate or Registration Default
Amount shall be payable in accordance with the above paragraph following such
date.
(d) A Registration Default with respect to the Common Stock
Registration Statement shall be deemed not to have occurred and be continuing if
(i) such Registration Default consists of the failure of the Common Stock
Registration Statement to be declared effective by the Commission due to the
refusal of the Commission to allow the Company to use the Common Stock
Registration Statement for its intended purposes and (ii) at such time the
Preferred Stock Registration Statement is effective and there is no Registration
Default referred to in Section 5(a)(iii) with respect to the Preferred Stock
Registration Statement; provided, however, if the failure described in cause (i)
continues beyond 90 days, a Registration Default shall be deemed to have
occurred and the Registration Default Amount shall be payable in accordance with
paragraph (b) above following such date.
6. Rule 144. The Company shall use its best efforts to file
the reports required to be filed by it under the Securities Act and the Exchange
Act in a timely manner and, if at any time the Company is not required to file
such reports, it will, upon the request of any Holder of Securities, make
publicly available other information so long as necessary to permit sales of
their securities pursuant to Rule 144. The Company covenants that, if in the
event the Company is no longer subject to Sections 13 or 15(d) of the Exchange
Act and the Securities represent more than the right to receive cash upon
exercise and conversion thereof, it will take such further action as any Holder
of Securities may reasonably request, all to the extent required from time to
time to enable such Holder to sell Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144. The
Company will provide a copy of this Agreement to prospective purchasers of
Securities identified to the Company by the Purchasers upon request.
Notwithstanding the foregoing, nothing in this Section 6 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
7. Miscellaneous. (a) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, except by the Company
and upon the written consent of the Holders of a majority of shares of Preferred
Stock (provided that Holders of Conversion Shares issued upon conversion of the
Preferred Stock shall be deemed to be Holders of the number of shares of
Preferred Stock from which such Common Stock was converted) affected by such
amendment, modification, supplement, waiver or consents.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, first-class
mail, facsimile transmission, or air courier which guarantees overnight
delivery:
if to the Company, at its address as follows:
WinStar Communications, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx,
Executive Vice President
with a copy to:
Xxxxxxxx Mollen & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxx Xxxxxx, Esq.
if to one of the Purchasers, at the addresses set forth
on the applicable signature page of the Purchase Agreement;
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; three
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(c) No Inconsistent Agreements; Damages. The Company has not,
as of the date hereof, entered into, nor shall it, on or after the date hereof,
enter into, any agreement with respect to its securities that violates the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof. Notwithstanding anything to the contrary contained in this Agreement, it
is hereby acknowledged and agreed that the Company shall have no liability for
monetary damages to the Purchasers or any Holder for any breaches, failures to
comply or violations by it of Section 1 or 2 of this Agreement except as
expressly provided in Section 4 or 5 hereof; provided, however, in the event
that the Company breaches, fails to comply or violates the provisions of Section
1 or 2 hereof, the Holders shall be entitled to, and the Company shall not
oppose the granting of, equitable relief, including injunction and specific
performance.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders of Securities. The Company hereby agrees
to extend the benefits of this Agreement to any Holder of Securities and any
such Holder may specifically enforce the provisions of this Agreement as if an
original party hereto subject to its compliance with the provision of Section
2(j).
(e) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing 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.
By the execution and delivery of this Agreement, the Company
submits to the nonexclusive jurisdiction of any federal or state court in the
State of New York.
(h) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(i) Securities Held by the Company. Whenever the consent or
approval of Holders of a specified percentage of the outstanding shares of
Preferred Stock is required hereunder, Preferred Stock held by the Company or
its affiliates (other than subsequent Holders of Preferred Stock if such
subsequent Holders are deemed to be affiliates solely by reason of their
holdings of such Preferred Stock) shall not be counted in determining whether
such consent or approval was given by the Holders of such required percentage.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the several Purchasers and the Company in accordance with its
terms.
Very truly yours,
WINSTAR COMMUNICATIONS, INC.
By: /s/
---------------------
Name:
Title:
The foregoing Registration Rights Agreement is hereby confirmed and accepted as
of the date first above written.
CREDIT SUISSE FIRST BOSTON
CORPORATION
By: /s/
----------------------
Name:
Title:
