SHAREHOLDERS AGREEMENT
Dated as of [o], 2000
between
WINSTAR COMMUNICATIONS, INC.
and
CPQ HOLDINGS, INC.
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS........................................................1
SECTION 1.01. Definitions...........................................1
ARTICLE 2 RIGHTS AND OBLIGATIONS WITH RESPECT TO TRANSFER....................3
SECTION 2.01. General Restrictions..................................3
SECTION 2.02. Agreement to Be Bound.................................4
SECTION 2.03. Legends...............................................4
ARTICLE 3 REGISTRATION RIGHTS................................................5
SECTION 3.01. Definitions...........................................5
SECTION 3.02. Demand Registration Rights............................6
SECTION 3.03. Piggy-Back Registration Rights........................7
SECTION 3.04. Registration Procedures...............................9
SECTION 3.05. Participation in Underwritten Registrations..........11
SECTION 3.06. Holdback Agreements..................................11
SECTION 3.07. Indemnification......................................11
ARTICLE 4 CORPORATE GOVERNANCE; COVENANTS...................................14
SECTION 4.01. Financial Information................................14
ARTICLE 5 MISCELLANEOUS.....................................................14
SECTION 5.01. Headings.............................................14
SECTION 5.02. No Inconsistent Agreements...........................14
SECTION 5.03. Entire Agreement.....................................14
SECTION 5.04. Notices..............................................14
SECTION 5.05. Applicable Law; Submission to Jurisdiction...........15
SECTION 5.06. Severability.........................................15
SECTION 5.07. Successors, Assigns, Transferees.....................15
SECTION 5.08. Amendments; Waivers..................................15
SECTION 5.09. Counterparts.........................................16
SECTION 5.10. Recapitalization, etc................................16
SECTION 5.11. Remedies.............................................16
SECTION 5.12. Fees and Expenses....................................16
SECTION 5.13. Reasonable Best Efforts..............................16
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SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT dated as of [o], 2000 (this "Agreement"), by and
between Winstar Communications, Inc., a Delaware corporation (the "Issuer"), and
CPQ Holdings, Inc., a Delaware corporation ("CPQ"). Each of the parties to this
Agreement (other than the Issuer) and any other Person who, pursuant to the
terms hereof, shall become a party to or agree to be bound by the terms of this
Agreement after the date hereof is sometimes hereinafter referred to as a
"Holder".
WHEREAS, the parties hereto are among the parties to a Securities
Purchase Agreement dated as of November 7, 2000 (as amended from time to time,
the "Series H Subscription Agreement") pursuant to which the Holders purchased
Series H Shares (as defined below) and Warrants (as defined below) from the
Issuer; and
WHEREAS, the parties hereto desire to provide for certain rights and
obligations relating to the capital stock of the Issuer and certain matters
relating to the conduct of the business and the affairs of the Issuer following
the date hereof.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.(a) The following terms, as used herein,
have the following meanings:
"Affiliate" means, with respect to any Person, any other Person,
directly or indirectly, controlling, controlled by, or under common control
with, such Person; provided that, for purposes of this Agreement, (i) the Issuer
shall not be treated as an Affiliate of any Holder or its Affiliates, (ii) a
Holder and its Affiliates shall not be treated as Affiliates of the Issuer or
its Affiliates or as Affiliates of any other Holder or such Holder's Affiliates
solely by reason of its ownership interest in the Issuer and (iii) any portfolio
company of a Holder shall not be treated as an Affiliate of such Holder. For
purposes of this definition, the term "control" (including the correlative terms
"controlling", "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
"beneficial ownership" and "beneficially own" shall be determined in
accordance with Rules 13d-3 and 13d-5 under the Exchange Act.
"Board of Directors" means the Board of Directors of the Issuer.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized by law to close.
"Commission" means the Securities and Exchange Commission or any
successor commission or agency having similar powers.
"Common Shares" means shares of the common stock of the Issuer, par
value $0.01 per share.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Fully-Diluted Basis" means to take into account all outstanding Common
Shares and all shares issuable in respect of stock appreciation rights or
options, warrants and other rights to purchase or subscribe for Common Shares or
securities convertible into or exchangeable for Common Shares.
"group" shall have the meaning set forth in Section 13(d)(3) of the
Exchange Act.
"Initial Series H Holdings" means, with respect to any Person, the
number of Common Shares that would be received upon conversion of the Series H
Shares (i) purchased by such Person pursuant to the Series H Subscription
Agreement (other than any such Series H Shares that are transferred to an
Affiliate of such Person within 60 days from the date hereof) or (ii)
transferred to such Person within 60 days from the date hereof by an Affiliate
of such Person that purchased Series H Shares pursuant to the Series H
Subscription Agreement.
"Permitted Transferee" means any Affiliate of CPQ.
"Public Offering" means any underwritten public offering of equity
securities of the Issuer pursuant to an effective registration statement under
the Securities Act other than pursuant to a registration statement on Form S-4
or Form S-8 or any successor or similar form.
"Series H Shares" means shares of Series H Senior Cumulative
Participating Convertible Preferred Stock, par value $0.01 per share, of the
Issuer.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Shares" means the Common Shares, the Series H Shares and the Warrants.
"Subsidiary" means any entity of which ownership interests having
ordinary voting power to elect a majority of the board of directors or other
Persons performing similar functions are at the time directly or indirectly
owned by the Issuer.
"Transaction Agreements" means this Agreement, the Series H
Subscription Agreement and the Warrants.
"Transfer" means, with respect to any security, (i) when used as a
verb, to sell, assign, dispose of, exchange or otherwise transfer such security
or any interest therein, whether directly or indirectly, or agree or commit to
do any of the foregoing and (ii) when used as a noun, a direct or indirect sale,
assignment, disposition, exchange or other transfer of such security or any
interest therein or any agreement or commitment to do any of the foregoing.
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"Warrants" means the Warrants to purchase Common Shares granted
pursuant to the Series H Subscription Agreement.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- --------
Acquisition Proposal 5.01
CPQ Preamble
Daily Price 5.01
Disadvantageous Condition 3.02(a)
Holder Preamble
Indemnified Party 3.07(c)
Indemnifying Party 3.07(c)
Inspectors 3.04(h)
Issuer Preamble
Majority Requesting Holders 3.02(a)
Market Price Per Common Share 5.01
Maximum Offering Size 3.02(b)
Piggyback Holders 3.01
Records 3.04(h)
Registering Holders 3.01
Registrable Common Shares 3.01
Registration Expenses 3.01
Requesting Holder 3.01
Rule 144 2.01(a)
Series G Subscription Agreement Recitals
Series H Subscription Agreement Recitals
Voting Securities 5.01
ARTICLE 2
RIGHTS AND OBLIGATIONS WITH RESPECT TO TRANSFER
SECTION 2.01. General Restrictions.(a) No Holder may Transfer any
Shares to any Person or group to the extent that, after giving effect to such
Transfer, such Holder knows, or has reason to believe, after asking such Person
or group, that such Person or group would beneficially own more than 5% of the
outstanding Common Shares calculated on a Fully-Diluted Basis, except (i)
pursuant to a Public Offering in which the underwriters have been instructed to
pursue a broad distribution or pursuant to Rule 144 (or any successor provision)
under the Securities Act (as such Rule may be amended from time to time, "Rule
144"), (ii) to the Issuer or to a Permitted Transferee of such Holder or (iii)
with the prior written consent of the Issuer.
(b) Each Transfer of Shares must be made in compliance with the
Securities Act, any applicable state and foreign securities law and this Article
2. Each Holder understands and agrees that the Shares have not been registered
under the Securities Act and that they are restricted securities. Any attempt to
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Transfer, pledge, grant a security interest in, or otherwise encumber any Shares
not in compliance with this Agreement shall be null and void and neither the
Issuer nor any transfer agent shall give any effect in the Issuer's transfer
records to such Transfer, pledge, grant or encumbrance.
SECTION 2.02. Agreement to Be Xxxxx.Xx Transfer of Shares otherwise
permitted pursuant to Article 2 (other than Transfers pursuant to a Public
Offering or Rule 144 or Transfers to the Issuer) shall be effective unless (i)
the certificates representing such Shares delivered to such transferee shall
bear the legend set forth in Section 2.03, if required by such Section, and (ii)
prior to such Transfer, (A) such transferee (if not already a party to this
Agreement) shall have executed and delivered to the Issuer an instrument or
instruments substantially in the Form of Exhibit A hereto confirming that such
transferee has agreed to be bound as a "Holder" by the terms of this Agreement,
a copy of which instrument shall be maintained on file with the Secretary of the
Issuer and shall include the address of such transferee to which notices
hereunder shall be sent and (B) if so requested by the Issuer, the transferor
shall have delivered to the Issuer an opinion of counsel (which shall be
reasonably acceptable to the Issuer) to the effect that such Shares may be sold
or transferred pursuant to an exemption from registration under the Securities
Act; provided that the provisions of clause (ii) above shall not be applied to
any Transfer by a Holder of any of its Shares to the partners of such Holder
pursuant to a distribution in respect of the partnership interests of such
Holder.
SECTION 2.03. Legends.(a) Each certificate evidencing outstanding
Shares acquired by any Holder shall bear a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, OR
TRANSFERRED EXCEPT IN COMPLIANCE THEREWITH. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
SHAREHOLDERS AGREEMENT DATED AS OF [o ], 2000, A COPY OF
WHICH WILL BE FURNISHED BY THE ISSUER UPON REQUEST AND
WITHOUT CHARGE.
(b) If any Shares (i) shall (in the case of Common Shares) cease to be
Registrable Common Shares, (ii) may be sold pursuant to Rule 144(k) or otherwise
in the public market without being registered under the Securities Act or (iii)
are sold pursuant to Rule 144 (other than Rule 144(k)), upon the written request
of the holder thereof, the Issuer shall issue, in the case of clauses (i) and
(ii), to such holder and, in the case of clause (iii), to the purchaser thereof,
a new certificate evidencing such Shares without the first sentence of the
legend required by Section 2.03(a) endorsed thereon. If any Shares shall cease
to be subject to the restrictions on Transfer set forth in this Agreement, the
Issuer shall, upon the written request of the holder thereof, issue to such
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holder a new certificate evidencing such Shares without the second sentence of
the legend (or the reference therein to the applicable agreement) required by
Section 2.03(a) endorsed thereon.
ARTICLE 3
REGISTRATION RIGHTS
SECTION 3.01. Definitions.The following terms, as used in this Article
3, have the following meanings:
"Piggyback Holders" means Persons (other than the Holders) who hold
Series H Shares or Warrants, or Common Shares received upon conversion of Series
H Shares or upon exercise of the Warrants, and who are entitled to incidental
registration rights pursuant to an agreement (other than this Agreement) with
the Issuer.
"Registering Holders" means Holders and Piggyback Holders whose
Registrable Common Shares are covered by or offered pursuant to a registration
statement filed pursuant to this Article 3.
"Registrable Common Shares" means all Common Shares of the Issuer owned
by the Holders and the Piggyback Holders or into which the Series H Shares or
Warrants owned by the Holders and the Piggyback Holders may be converted or
exercised. Registrable Common Shares shall cease to be Registrable Common Shares
when (i) a registration statement with respect to the sale of such Common Shares
shall have become effective under the Securities Act and such Common Shares
shall have been disposed of pursuant to such registration statement, or (ii)
such Common Shares shall have ceased to be outstanding.
"Registration Expenses" means all (i) registration, qualification and
filing fees, (ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of a qualified independent
underwriter, if any, and counsel in connection therewith and the reasonable fees
and disbursements of counsel in connection with blue sky qualifications of the
Registrable Common Shares), (iii) printing expenses, (iv) internal expenses of
the Issuer (including, without limitation, all salaries and expenses of officers
and employees performing legal or accounting duties), (v) fees and disbursements
of counsel for the Issuer, (vi) customary fees and expenses for independent
certified public accountants retained by the Issuer (including the expenses of
any comfort letters or costs associated with the delivery by independent
certified public accountants of a comfort letter or comfort letters), (vii) fees
and expenses of any special experts retained by the Issuer in connection with
such registration, (viii) reasonable fees and expenses of one separate firm of
attorneys for the Registering Holders (which counsel shall be selected by the
Registering Holders selling securities constituting a majority of all securities
to be included in such registration in the case of any registration pursuant to
Section 3.02) and (ix) fees and expenses of listing the Registrable Common
Shares on a securities exchange; but shall not include any underwriting fees or
discounts or commissions attributable to the sale of Registrable Common Shares.
"Requesting Holder" means CPQ or any of its Permitted Transferees.
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SECTION 3.02. Demand Registration Rights.(a) Registration on Request.
Subject to Section 3.08, if one or more Requesting Holders desire to effect the
registration under the Securities Act of outstanding Registrable Common Shares
pursuant to a Public Offering, such Requesting Holders may make a written
request that the Issuer effect such registration; provided that, no Requesting
Holder shall make any such written request (1) during the pendency of, and for a
period of 90 days after the effective date of, any Public Offering of securities
for the account of the Issuer, (2) for a period of six months after the
effective date of any Public Offering of Common Shares for the account of any
Person other than the Issuer pursuant to the exercise of a demand registration
right covering Common Shares acquired upon conversion or exercise of Series H
Shares or Warrants, (3) prior to February 1, 2001 and (4) following the first
anniversary of the date hereof. Each such request will specify the number of
shares of Registrable Common Shares proposed to be sold and will also specify
the intended method of disposition thereof. The Issuer will promptly give
written notice of such requested registration to all other Holders of
Registrable Common Shares and all Piggyback Holders of Registrable Common
Shares, and thereupon will use its best efforts to effect, as promptly as
practicable, the registration under the Securities Act of:
(i) the Registrable Common Shares which the Issuer has been
so requested to register by such Requesting Holders pursuant to this
Section 3.02; and
(ii) the Registrable Common Shares which the Issuer has been
requested to register by all Holders (other than such Requesting
Holders) and all Piggyback Holders by written request given to the
Issuer within 15 days after the giving of such written notice by the
Issuer;
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Common Shares so to be
registered; provided that:
(x) the Issuer shall not be obligated to effect more than
one registration pursuant to this Section 3.02; and
(y) at the time of any request to register Registrable
Common Shares pursuant to this Section 3.02, if the Board of Directors
determines in its good faith reasonable judgment that the Issuer
should not file any registration statement otherwise required to be
filed pursuant to Section 3.02(a) because the Issuer is engaged in any
financing, acquisition or other material transaction which would
require the Issuer to disclose material non-public information (a
"Disadvantageous Condition"), the Issuer shall be entitled to postpone
for the shortest reasonable period of time (but not exceeding 90 days
from the date of the request), the filing of such registration
statement and shall promptly give the Requesting Holders written
notice of such determination, containing a general statement of the
reasons for such postponement and an approximation of the anticipated
delay. Such right to delay a request for registration pursuant to this
Section 3.02 may not be exercised more than twice in any 12-month
period. If the Issuer shall so postpone the filing of the registration
statement, the Requesting Holders proposing to sell securities
constituting a majority of all securities requested to be included by
all Requesting Holders (the "Majority Requesting Holders") shall have
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the right to withdraw (without prejudice to their rights under clause
(y) above) the request for registration by giving written notice to
the Issuer within 30 days after receipt of the notice of postponement.
Promptly after the expiration of the 15-day period referred to in
clause (ii) above, the Issuer shall notify each holder of Registrable Common
Shares to be included in the registration of the other holders requesting
Registrable Common Shares to be included therein and the number of Registrable
Common Shares requested to be included therein. The Majority Requesting Holders
may, at any time prior to the effective date of the registration statement
relating to such registration, revoke such request, without liability to any
other holder holding Registrable Common Shares requested to be registered
pursuant to clause (ii) above, by providing a written notice to the Issuer
revoking such request; provided that, if as a result thereof such registration
is abandoned, all Registration Expenses shall be borne by the Requesting Holders
revoking such registration pro rata in accordance with the number of securities
requested by them to be included in such registration, in which case such
revocation shall be without prejudice to the rights of the Holders under clause
(y) above.
(b) Priority Participation in Requested Registrations. If the managing
underwriter shall advise the Issuer that, in its view, the number of securities
requested to be included in such registration (including securities which the
Issuer may request to be included which are not Registrable Common Shares)
exceeds the largest number of securities which can be sold without having a
material adverse effect on such offering (the "Maximum Offering Size"),
including the price at which such securities can be sold, the Issuer will
include in such registration:
(i) first, the Registrable Common Shares requested to be
included in such registration pursuant to Section 3.02(a)(i) or (ii)
by all Holders and their Permitted Transferees and all Piggyback
Holders, allocated (if necessary) among such holders pro rata based on
the number of Registrable Common Shares requested to be included in
such registration; and
(ii) second, Common Shares to be sold for the account of
other Persons (including the Issuer), with such priorities among them
as the Issuer shall determine.
(c) Registration Statement Form. Registrations under this Section 3.02
shall be on such appropriate registration Form of the Commission (i) as shall be
selected by the Issuer, subject to Section 3.02(a), and as shall be reasonably
acceptable to the Requesting Holders and (ii) as shall permit the disposition of
such Registrable Common Shares in accordance with the method or methods of
disposition intended on the part of the Requesting Holders who initiated the
request. Notwithstanding anything herein to the contrary, the Issuer shall not
be required under this Section 3.01 to effect an underwritten registration.
(d) Expenses. The Issuer will pay promptly all Registration Expenses
in connection with the registration requests made pursuant to this Section 3.02.
SECTION 3.03. Piggy-Back Registration Rights.(a) Right to Include
Registrable Common Shares. Subject to subsection (c) hereof, if the Issuer at
any time proposes to register any of its equity securities under the Securities
Act (other than (i) by a registration on Form X-0, Xxxx X-0 or any successor or
similar form, (ii) pursuant to a registration requested pursuant to Section
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3.02, (iii) in connection with a direct acquisition by the Issuer of another
Person or (iv) pursuant to an employee share purchase plan, dividend
reinvestment plan or similar plan of the Issuer), in each case whether or not
for sale for its own account, it will at each such time give prompt written
notice at least 30 days prior to the anticipated filing date of the registration
statement relating to such registration to all Holders of Registrable Common
Shares of its intention to do so and of such Holders' rights under this Section
3.03. Any such notice shall offer all such Holders the opportunity to include in
such registration such number of Registrable Common Shares as each such Holder
may request. Upon the written request of any Holder made within 15 days after
the receipt of any such notice (which request shall specify the number of
Registrable Common Shares intended to be disposed of by such Holder), the Issuer
will use its best efforts to effect the registration with the Commission under
the Securities Act and any related qualification or other compliance of all
Registrable Common Shares which the Issuer has been so requested to register, to
the extent required to permit the disposition of the Registrable Common Shares
to be so registered; provided that if, at any time after giving written notice
of its intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Issuer shall determine for any reason not to register or to delay registration
of such securities, the Issuer shall give written notice of such determination
to each Holder and, thereupon, (x) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable Common
Shares in connection with such registration (but not from its obligation to pay
the Registration Expenses in connection therewith), without prejudice, however,
to the rights of any Holder entitled to do so, to request that such registration
be effected as a registration under Section 3.02, and (y) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Common Shares for the same period as the delay in registering such
other securities. Each Holder holding Registrable Common Shares requesting to be
included in such registration may elect, in writing not less than 5 Business
Days prior to the effective date of the registration statement filed in
connection with such registration, not to register such securities in connection
with such registration. No registration effected under this Section 3.03 shall
relieve the Issuer of its obligation to effect any registration upon request
under Section 3.02. The Issuer will pay promptly all Registration Expenses in
connection with each registration of Registrable Common Shares requested
pursuant to this Section 3.03.
(b) Priority in Incidental Registrations. If a registration pursuant
to this Section 3.03 involves a Public Offering and the managing underwriter
shall advise the Issuer that, in its view, the number or proposed mix of
securities (including all Registrable Common Shares) which the Issuer, the
Holders and any other Persons intend to include in such registration exceeds the
Maximum Offering Size, the Issuer will include in such registration, in the
priority listed below, securities up to the Maximum Offering Size:
(i) first, (A) if such registration has been initiated by
the Issuer for its own account, the equity securities the Issuer
proposes to sell or (B) if such registration has not been initiated by
the Issuer or a Piggyback Holder, the equity securities proposed to be
sold by the security holder(s) initiating such registration;
(ii) second, the Registrable Common Shares requested to be
included in such registration by all Holders and their Permitted
Transferees and all Piggyback Holders, allocated (if necessary) among
such holders pro rata based on the number of Registrable Common Shares
8
requested by them to be included in such registration, subject to any
incidental registration rights granted a higher priority under
contracts existing on February 1, 2000; and
(iii) third, equity securities to be sold for the account of
other Persons having incidental registration rights and, if such
registration has not been initiated by the Issuer, the Issuer, with
such priorities among them as the Issuer shall determine.
(c) Limitation of Rights. Notwithstanding anything to contrary herein,
the rights of any Holder under this Section 3.03 shall terminate upon the second
anniversary of the date hereof; provided, however, that, in the event that any
Holder seeks to exercise its rights under this Section 3.03 prior to the second
anniversary of the date hereof and such Holder is able at such time to dispose
of all of its Registrable Common Shares in a single transaction pursuant to Rule
144, then the rights of such Holder under this Section 3.03 shall terminate upon
such disposition.
SECTION 3.04. Registration Procedures.If the Issuer is required to use
its best efforts to effect the registration of any Registrable Common Shares
under the Securities Act as provided in Section 3.02 or 3.03, the Issuer will,
as promptly as possible:
(a) prepare and file with the Commission a registration statement on
an appropriate Form (subject to 3.02(c)), and thereafter use its best efforts to
cause such registration statement to become effective and to remain effective
until such time as all of the Registrable Common Shares are sold or may be sold
in a single transaction pursuant to Rule 144 and prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for the period specified above and to comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement until such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the Registering Holders thereof set forth in such registration
statement; provided that the Issuer will, at least 5 Business Days (or at least
3 Business Days in the case of incidental registrations) prior to filing a
registration statement or prospectus or any amendment or supplement thereto,
furnish to each Registering Holder copies of such registration statement or
prospectus (or amendment or supplement) as proposed to be filed (including, upon
the request of such Holder, documents to be incorporated by reference therein)
which documents will be subject to the reasonable review and comments of such
Holder (and its attorneys) during such 5-Business Day period (or 3-Business Day
period, as the case may be) and the Issuer will not file any registration
statement, any prospectus or any amendment or supplement thereto (or any such
documents incorporated by reference) containing any statements with respect to
such Holder to which such Holder shall reasonably object in writing;
(b) furnish to each Registering Holder such number of conformed copies
of such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), the prospectus contained in such
registration statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 or Rule 430A under the
Securities Act, in conformity with the requirements of the Securities Act,
documents incorporated by reference in such registration statement, amendment,
9
supplement or prospectus and such other documents (in each case including all
exhibits) as a Registering Holder may reasonably request;
(c) after the filing of the registration statement, promptly notify
each Registering Holder of the effectiveness thereof and of any stop order
issued or threatened by the Commission and take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered and promptly
notify such Registering Holder of such lifting or withdrawal of such order;
(d) use its reasonable best efforts to register or qualify all
Registrable Common Shares and other securities covered by such registration
statement under such other securities or blue sky laws of such jurisdictions as
the Registering Holders holding a majority of the Registrable Common Shares to
be included in such registration or the underwriter shall reasonably request, to
keep such registration or qualification in effect for so long as such
registration statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Registering Holders to
consummate the disposition in such jurisdictions of the securities owned by such
Registering Holders, except that the Issuer shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this Section
3.04(d) be obligated to be so qualified, to subject itself to taxation in any
such jurisdiction or to consent to general service of process in any such
jurisdiction;
(e) use its reasonable best efforts to cause all Registrable Common
Shares covered by such registration statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to enable
the Registering Holders to consummate the disposition of such Registrable Common
Shares;
(f) at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, immediately notify each Registering Holder
upon discovery that, or upon the happening of any event as a result of which,
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were made, and
promptly prepare and furnish to such Registering Holder a reasonable number of
copies of any supplement to or amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
statements therein not misleading in the light of the circumstances under which
they were made;
(g) use its reasonable best efforts to list all Registrable Common
Shares covered by such registration statement on any securities exchange or
quotation system on which any of the Registrable Common Shares is then listed or
traded; and
(h) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement or
such other document that shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.
10
The Issuer may require each Registering Holder to promptly furnish to
the Issuer, as a condition precedent to including such Registering Holder's
Registrable Common Shares in any registration, such written information
regarding such Registering Holder and the distribution of such securities as the
Issuer may from time to time reasonably request in writing.
Each Holder agrees that upon receipt of any notice from the Issuer of
the happening of any event of the kind described in Section 3.04(g), such Holder
will forthwith discontinue such Holder's disposition of Registrable Common
Shares pursuant to the registration statement relating to such Registrable
Common Shares until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3.04(g) and, if so directed by the
Issuer, will deliver to the Issuer (at the Issuer's expense) all copies, other
than permanent file copies, then in such Holder's possession, of the prospectus
and any amendments or supplements thereto relating to such Registrable Common
Shares current at the time of receipt of such notice. In the event the Issuer
shall give such notice, the Issuer shall extend the period during which the
effectiveness of such registration statement shall be maintained by the number
of days during the period from and including the date of the giving of notice
pursuant to Section 3.04(g) to the date when the Issuer shall make available to
the Holders a prospectus supplemented or amended to conform with the
requirements of Section 3.04(g).
SECTION 3.05. Participation in Underwritten Xxxxxxxxxxxxx.Xx Person
may participate in any Public Offering pursuant to Section 3.02 or 3.03 unless
such Person (i) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.
SECTION 3.06. Holdback Agreements.If any registration or offering of
Registrable Common Shares shall be in connection with a Public Offering, the
Issuer and each Holder agrees not to effect any public sale or distribution of
any Common Shares or any securities convertible into or exchangeable or
exercisable for Common Shares (in each case other than as part of such Public
Offering), if and to the extent requested by the managing underwriter during the
90-day period beginning on the effective date of such registration statement
without the written consent of such managing underwriter; provided that each
such Holder has received written notice of such registration at least 5 Business
Days prior to the anticipated beginning of the 90-day period referred to above.
SECTION 3.07. Indemnification.(a) Indemnification by the Issuer. The
Issuer agrees to indemnify and hold harmless each Registering Holder, its
officers, directors and agents and each Person, if any, who controls such
Registering Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages, liabilities or expenses caused by any untrue statement or alleged
untrue statement of a material fact contained in any registration statement or
prospectus relating to the Registrable Common Shares (as amended or supplemented
if the Issuer shall have furnished any amendments or supplements thereto) or
caused by any 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 the Issuer will reimburse such Registering Holders for any legal
or any other expenses reasonably incurred by them in connection with
investigating or defending such loss, claim, damage, liability or expense,
11
except insofar as such losses, claims, damages, liabilities or expenses are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to the Issuer by such
Registering Holder or on such Registering Holder's behalf expressly for use
therein; provided that with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus, or in
any prospectus, as the case may be, the indemnity agreement contained in this
paragraph shall not apply to the extent that any such loss, claim, damage,
liability or expense results from the fact that a current copy of the prospectus
(or the amended or supplemented prospectus, as the case may be) was not sent or
given to the Person asserting any such loss, claim, damage, liability or expense
at or prior to the written confirmation of the sale of the Registrable Common
Shares concerned to such Person if it is determined that the Issuer has provided
such prospectus (or amended or supplemented prospectus) and it was the
responsibility of such Registering Holder to provide such Person with a current
copy of the prospectus (or such amended or supplemented prospectus, as the case
may be) and such current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. The Issuer also agrees to indemnify
any underwriters of the Registrable Common Shares, their officers and directors
and each Person who controls such underwriters on substantially the same basis
as that of the indemnification of the Registering Holders provided in this
Section 3.07(a).
(b) Indemnification by the Registering Holders. Each Registering
Holder agrees, severally but not jointly, to indemnify and hold harmless the
Issuer, its officers, directors and agents and each Person, if any, who controls
the Issuer within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Issuer to such Registering Holder, but only (i) with respect to
information furnished in writing by such Registering Holder or on such
Registering Holder's behalf expressly for use in any registration statement or
prospectus relating to the Registrable Common Shares, or any amendment or
supplement thereto, or any preliminary prospectus or (ii) to the extent that any
loss, claim, damage, liability or expense described in Section 3.07(a) results
from the fact that a current copy of the prospectus (or the amended or
supplemented prospectus, as the case may be) was not sent or given to the Person
asserting any such loss, claim, damage, liability or expense at or prior to the
written confirmation of the sale of the Registrable Common Shares concerned to
such Person if it is determined that it was the responsibility of such
Registering Holder to provide such Person with a current copy of the prospectus
(or such amended or supplemented prospectus, as the case may be) and such
current copy of the prospectus (or such amended or supplemented prospectus, as
the case may be) would have cured the defect giving rise to such loss, claim,
damage, liability or expense. Each Registering Holder's obligation to indemnify
pursuant to this Section is several in the proportion that the proceeds of the
offering received by such Holder bears to the total proceeds of the offering
received by all the Holders and not joint.
(c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this Section
3.07, such Person (an "Indemnified Party") shall promptly notify the Person
against whom such indemnity may be sought (the "Indemnifying Party") in writing
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all fees and expenses; provided that the failure of
any Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such failure to notify. In any
such proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
12
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of such Indemnified Party representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the Indemnified
Party that had the largest number of Registrable Common Shares included in such
registration. The Indemnifying Party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent, or if there be a final judgment for the plaintiff, the Indemnifying
Party shall indemnify and hold harmless such Indemnified Parties from and
against any loss or liability (to the extent stated above) by reason of such
settlement or judgment. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened proceeding 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 arising out of such proceeding.
(d) Contribution. If the indemnification provided for in this Section
3.07 is unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein, then each Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities as between the Issuer on the one hand and each such Registering
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Issuer and of each such Registering Holder in connection
with such statements or omissions, as well as any other relevant equitable
considerations. The relative fault of the Issuer on the one hand and of each
such Registering Holder on the other 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 such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Issuer and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 3.07 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. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities 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.
Notwithstanding the provisions of this Section 3.07, no Holder shall be required
to contribute any amount in excess of the amount by which the total price at
13
which the Registrable Common Shares of such Holder were offered to the public
exceeds the amount of any 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. Each such Holder's obligation to contribute pursuant to this
Section 3.07 is several in the proportion that the proceeds of the offering
received by such Holder bears to the total proceeds of the offering received by
all such Holders and not joint.
ARTICLE 4
CORPORATE GOVERNANCE; COVENANTS
SECTION 4.01. Financial Information. CPQ shall be entitled to (i)
receive all information made available to shareholders of the Issuer or members
of the Board of Directors, in each case, at the same time as such materials are
distributed to the shareholders or directors, as the case may be, (ii) meet on a
quarterly basis with members of senior management, and (iii) receive other
information reasonably requested by CPQ in order to monitor its equity interests
in the Issuer, in each case for so long as CPQ or its Permitted Transferees
beneficially own Shares representing at least 20% of their Initial Series H
Holdings and (iv) disclose on a confidential basis all such information referred
to in clauses (i) through (iii) above to its Affiliates.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Headings.The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof.
SECTION 5.02. No Inconsistent Agreements.The Issuer will not hereafter
enter into or amend any agreement with respect to its securities which prevents
the Issuer from discharging its obligations under this Agreement or grant rights
superior to the rights granted to the Holders in this Agreement.
SECTION 5.03. Entire Agreement.The Transaction Agreements constitute
the entire agreement and understanding of the parties hereto and thereto in
respect of the subject matter contained herein and therein, and there are no
restrictions, promises, representations, warranties, covenants, or undertakings
with respect to the subject matter hereof or thereof, other than those expressly
set forth or referred to herein or therein. The Transaction Agreements supersede
all prior agreements and understandings between the parties hereto and thereto
with respect to the subject matter hereof and thereof.
SECTION 5.04. Notices.All notices, requests and other communications
to any party hereunder shall be in writing (including telecopier) and shall be
deemed to have been duly given or made if sent by telecopy, delivered personally
or sent by registered or certified mail (postage prepaid, return receipt
requested) to such party at its address or telecopier number set forth on the
signature pages hereof, or such other address or telecopier number as such party
14
may hereinafter specify for the purpose to the party giving such notice. All
such notices, requests and other communications shall be deemed received on the
date of receipt by the recipient thereof if received prior to 5:00 p.m. in the
place of receipt and such day is a Business Day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding Business Day in the place of receipt.
SECTION 5.05. Applicable Law; Submission to Jurisdiction.This
Agreement shall be construed in accordance with and governed by the laws of the
State of Delaware, without regard to the conflicts of law rules of such state.
Each of the parties hereto hereby consents to the exclusive jurisdiction of the
United States District Court for the District of Delaware and the Chancery Court
of the State of Delaware (and of the appropriate appellate courts therefrom)
over any suit, action or proceeding arising out of or relating to this
Agreement. Each party hereto irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of venue
in any such court or that any such proceeding which is brought in accordance
with this Section has been brought in an inconvenient forum. Subject to
applicable law, process in any such proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing and subject to applicable law, each party
agrees that service of process on such party as provided in Section 6.04 shall
be deemed effective service of process on such party. Nothing herein shall
affect the right of any party to serve legal process in any other manner
permitted by law or at equity or to enforce in any lawful manner a judgment
obtained in one jurisdiction in any other jurisdiction. WITH RESPECT TO A
PROCEEDING IN ANY SUCH COURT, EACH OF THE PARTIES IRREVOCABLY WAIVES AND
RELEASES TO THE OTHER ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT
SEEK A TRIAL BY JURY IN ANY SUCH PROCEEDING.
SECTION 5.06. Severability.The invalidity or unenforceability of any
provisions of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
SECTION 5.07. Successors, Assigns, Transferees.The provisions of this
Agreement shall be binding upon and accrue to the benefit of the parties hereto
and their respective heirs, executors, administrators, successors and permitted
assigns. Notwithstanding the foregoing, neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Issuer or any Holder, except (i) as specifically provided
pursuant to the terms hereof and (ii) in connection with a Transfer of
securities of the Issuer described in Section 2.02 and otherwise permitted
pursuant to the terms hereof. Nothing in this Agreement, expressed or implied,
is intended to confer on any Person other than the parties hereto, and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
SECTION 5.08. Amendments; Waivers.(a) No failure or delay on the part
of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
15
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
(b) Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by the parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.
SECTION 5.09. Counterparts.This Agreement may be executed in any
number of counterparts, including counterparts transmitted by telecopier or
telefax, each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 5.10. Recapitalization, xxx.Xx the event that any capital
stock or other securities are issued in respect of, in exchange for, or in
substitution of, any Shares by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Shares or any other change in capital
structure of the Issuer, appropriate adjustments shall be made with respect to
the relevant provisions of this Agreement so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of the
parties hereto under this Agreement.
SECTION 5.11. Remedies.The parties hereto acknowledge and agree that
in the event of any breach of this Agreement, the parties would be irreparably
harmed and could not be made whole by monetary damages. Each party hereto
accordingly agrees (i) not to assert by way of defense or otherwise that a
remedy at law would be adequate, and (ii) that the parties agree, in addition to
any other remedy to which they may be entitled, that the remedy of specific
performance of this Agreement is appropriate in any action in court.
SECTION 5.12. Fees and Expenses.Unless otherwise provided herein or in
the other Transaction Agreements, all costs and expenses incurred in connection
with the transactions contemplated by the Transaction Agreements shall be paid
by the party incurring such costs and expenses.
SECTION 5.13. Reasonable Best Efforts.Subject to the terms and
conditions of this Agreement, the Issuer and each of the Holders will use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under applicable laws and
regulations to give effect to the terms and conditions of the Transaction
Agreements.
16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
WINSTAR COMMUNICATIONS, INC.
By: ____________________________________
Name:
Title:
Address for notices:
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
CPQ HOLDINGS, INC.
By: __________________________
Name:
Title:
Address for notices:
CPQ Holdings, Inc.
c/o Compaq Computer Corporation
00000 Xxxxx Xxxxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel (Office of the
Corporate Secretary)
18
EXHIBIT A
FORM OF AGREEMENT TO BE BOUND
[Date]
To the Parties to the Shareholders Agreement dated as of [o], 2000
Ladies and Gentlemen:
Reference is made to the Shareholders Agreement dated as of [o], 2000
(the "Shareholders Agreement") among Winstar Communications, Inc., a Delaware
corporation, CPQ Holdings, Inc., a Delaware corporation, and each other Person
who has or shall become a party to the Shareholders Agreement as provided
therein. Capitalized terms used herein and not defined have the meanings
ascribed to them in the Shareholders Agreement to the same extent and in the
same manner as the assignor.
In consideration of the covenants and agreements contained in the
Shareholders Agreement, the undersigned hereby confirms and agrees that it shall
be bound as a "Holder" by all of the provisions of the Shareholders Agreement.
This letter shall be construed and enforced in accordance with the
internal laws of the State of Delaware.
Very truly yours,
______________________________
Address for notices:
____________________
A-1
