AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
Dated as of [o], 2000
among
WINSTAR COMMUNICATIONS, INC.
WELSH, CARSON, XXXXXXXX & XXXXX VIII, L.P.
WCAS INFORMATION PARTNERS, L.P.
and
THE INDIVIDUAL INVESTORS LISTED
ON THE SIGNATURE PAGES HEREOF
TABLE OF CONTENTS
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PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions..............................................1
ARTICLE 2
RIGHTS AND OBLIGATIONS WITH RESPECT TO TRANSFER
SECTION 2.01. General Restrictions.....................................5
SECTION 2.02. Agreement to Be Bound....................................5
SECTION 2.03. Legends..................................................6
ARTICLE 3
REGISTRATION RIGHTS
SECTION 3.01. Definitions..............................................7
SECTION 3.02. Demand Registration Rights...............................8
SECTION 3.03. Piggy-Back Registration Rights..........................11
SECTION 3.04. Registration Procedures.................................13
SECTION 3.05. Participation in Underwritten Registrations.............16
SECTION 3.06. Holdback Agreements.....................................16
SECTION 3.07. Indemnification.........................................16
SECTION 3.08. Shelf Registration......................................20
ARTICLE 4
CORPORATE GOVERNANCE; COVENANTS
SECTION 4.01. Board of Directors......................................21
SECTION 4.02. Financial Information...................................23
ARTICLE 5
STANDSTILL
SECTION 5.01. Definitions.............................................23
SECTION 5.02. Acquisition of Voting Securities........................24
SECTION 5.03. Certain Actions.........................................24
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Headings................................................25
SECTION 6.02. No Inconsistent Agreements..............................25
SECTION 6.03. Entire Agreement........................................26
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PAGE
SECTION 6.04. Notices.................................................26
SECTION 6.05. Applicable Law; Submission to Jurisdiction..............26
SECTION 6.06. Severability............................................27
SECTION 6.07. Successors, Assigns, Transferees........................27
SECTION 6.08. Amendments; Waivers.....................................27
SECTION 6.09. Counterparts............................................27
SECTION 6.10. Recapitalization, etc...................................27
SECTION 6.11. Remedies................................................28
SECTION 6.12. Fees and Expenses.......................................28
SECTION 6.13. Reasonable Best Efforts.................................28
ii
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT dated as of [o], 2000 (this
"Agreement"), amending and restating the Shareholders Agreement dated as of
February 1, 2000, as amended, by and among Winstar Communications, Inc., a
Delaware corporation (the "Issuer"), Welsh, Carson, Xxxxxxxx & Xxxxx VIII, L.P.,
a Delaware limited partnership ("WCAS VIII"), WCAS Information Partners, L.P., a
Delaware limited partnership ("WCAS IP"), and each of the individual investors
and trusts listed on the signature pages hereof ("WCAS Individual Investors" and
together with WCAS VIII and WCAS IP, the "WCAS Entities"). 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 (i) a Securities
Purchase Agreement dated as of December 15, 1999 (as amended from time to time,
the "Series G Subscription Agreement") pursuant to which the Holders purchased
Series G Shares (as defined below) from the Issuer and (ii) 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 G Holdings" means, with respect to any Person, the
number of Common Shares that would be received upon conversion of the Series G
Shares issued to such Person pursuant to the Series G Subscription Agreement.
"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.
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"Permitted Transferee" means:
(i) with respect to any WCAS Entity, (u) any Affiliate of
such WCAS Entity, (v) any general or limited partner of such WCAS
Entity (a "Partner"), (w) any funds managed by such WCAS Entity, (x)
any officer, general partner, director or limited partner of such WCAS
Entity or Partner (collectively, "Associates"), (y) the heirs,
executors, administrators, testamentary trustees, legatees or
beneficiaries of any Associate and (z) a trust, corporation,
partnership or other entity substantially all the economic interests
of which are held by or for the benefit of such WCAS Entity or any of
its Affiliates, Partners, Associates, and any of their spouses or
children (whether by birth or adoption);
(ii) with respect to any other Holder, any Affiliate of such
Holder; and
(iii) with respect to any other Holder that is an
individual, (x) the spouse, children (whether by birth or adoption),
grandparents, grandchildren, aunts, uncles, nieces and nephews of such
Holder, (y) a Person to whom Shares are Transferred by such Holder by
will or the laws of descent and distribution and (z) a trust
established for the exclusive benefit of such Holder or any of the
Persons referred to in clause (x).
"Person" means an individual, partnership, corporation, limited
liability company, trust, joint stock company, association, joint venture, or
any other entity or organization.
"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.
"Xxxxxxx Letter Agreement" means a letter agreement dated as of the
date hereof among Xxxxxxx Xxxxxxx, Xx., Microsoft Corporation, WCAS VIII and
Credit Suisse First Boston Equity Partners, L.P.
"Series G Shares" means shares of Series G Senior Cumulative
Participating Convertible Preferred Stock, par value $0.01 per share, of the
Issuer.
"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.
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"Shares" means the Common Shares, the Series G 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 G
Subscription Agreement, the Series H Subscription Agreement, the Warrants and
the Xxxxxxx Letter Agreement.
"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.
"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
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)
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Series G Subscription Agreement Recitals
Series H Subscription Agreement Recitals
Voting Securities 5.01
WCAS Entities Preamble
WCAS Individual Investors Preamble
WCAS IP Preamble
WCAS VIII Preamble
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
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 Bound. No 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
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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 AMENDED AND
RESTATED 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
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.
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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 G Shares, Series H Shares or Warrants, or Common Shares received upon
conversion of Series G Shares or 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 G Shares,
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
7
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 any WCAS Entity or any of its Permitted
Transferees.
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 G
Shares, Series H Shares or Warrants and (3) prior to February 1, 2001. 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 a
registration pursuant to this Section 3.02 unless the aggregate number
of Registrable Common Shares to be sold is greater than or equal to
2,500,000;
(y) subject to Section 3.02(f), the Issuer shall not be
obligated to effect more than two registrations pursuant to this
Section 3.02; and
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(z) 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
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"),
9
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, if, pursuant to a
registration request under this Section 3.02, the Issuer proposes to effect
registration by filing of a registration statement on Form S-3 (or any successor
or similar short-form registration statement) and any managing underwriter shall
advise the Issuer in writing that, in its opinion, the use of another form of
registration statement is of material importance to the success of such proposed
offering, then such registration shall be effected on such other form.
(d) Expenses. The Issuer will pay promptly all Registration Expenses
in connection with the registration requests made pursuant to this Section 3.02.
(e) Underwriters. The managing underwriter or underwriters of any
Public Offering effected pursuant to this Section 3.02 shall be selected by the
Registering Holders proposing to sell securities constituting a majority of all
securities requested to be included by all Registering Holders, which selection
shall be reasonably satisfactory to the Issuer, it being understood that the
selection of Credit Suisse First Boston Corporation shall be deemed to be
satisfactory to the Issuer. The price, terms and provisions of such offering
shall be subject to the approval of the Requesting Holders. The Issuer will
enter into customary agreements (including an underwriting agreement in
customary form) and take such other actions as are reasonably required in order
to expedite or facilitate the disposition of such Registrable Common Shares. The
Holders shall not be required by the Issuer to make any representation or
warranty in the underwriting agreement in connection with such offering other
10
than as to their ownership and authority to Transfer, free of liens, claims and
encumbrances (other than those that arise under the terms of this Agreement).
(f) If at least 75% of the Registrable Common Shares requested to be
registered by the Requesting Holders are not included in such registration, then
the Requesting Holders shall have the right to require the Issuer to effect an
additional registration under the Securities Act of all or part of the
Requesting Holders' Registrable Common Shares in accordance with this Section
3.02 and the Issuer shall pay the Registration Expenses in connection with such
additional registration.
SECTION 3.03. Piggy-Back Registration Rights. (a) Right to Include
Registrable Common Shares. Subject to Section 3.08, 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
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, subject to Section 3.08, 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
11
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
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.
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
12
cause such registration statement to become effective and to remain effective
pursuant to the terms of the underwriting agreement 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 pursuant to the terms
of the underwriting agreement 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 and to any underwriter 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, supplement or prospectus and such other documents (in each
case including all exhibits) as a Registering Holder or underwriter 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
13
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) furnish to each Registering Holder and to each underwriter, if
any, a signed counterpart of: (i) an opinion of counsel for the Issuer addressed
to such Holder and underwriter on which opinion such Holder and underwriter are
entitled to rely and (ii) a "comfort" letter signed by the independent public
accountants who have certified the Issuer's financial statements included in
such registration statement, each in customary form and covering such matters of
the type customarily covered by opinions or comfort letters, as the case may be,
as the Registering Holders holding a majority of the Registrable Common Shares
included in such registration or the managing underwriter therefor reasonably
request. The Issuer will use its best efforts to have such comfort letters
addressed to each Registering Holder;
(g) 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;
14
(h) make available for inspection by any Registering Holder, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other professional retained by any
such Holder or underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Issuer
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and shall cause (i) the Issuer's
officers, directors and employees to supply all information reasonably requested
by any Inspectors and (ii) the senior management of the Issuer and its
Subsidiaries to participate in any "road show" presentations to investors for
such period of time as is reasonably requested by the managing underwriters, in
each case in connection with such registration statement. Each such Holder
agrees that information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of the Issuer or its Affiliates unless and until
such information is made generally available to the public. Each such Holder
further agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Issuer and allow
the Issuer, at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(i) 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
(j) 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.
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
15
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 Registrations. No 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,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by any such untrue statement or omission or alleged untrue statement or
16
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 such Registering Holder also agrees to
indemnify and hold harmless the underwriters of the Registrable Common Shares,
their officers and directors and each Person who controls such underwriters on
17
substantially the same basis as that of the indemnification of the Issuer
provided in this Section 3.07(b). 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
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,
18
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 (i) as between the Issuer and the Registering Holders on the one
hand and the underwriters on the other, in such proportion as is appropriate to
reflect the relative benefits received by the Issuer and such Registering
Holders on the one hand and the underwriters on the other, from the offering of
the Registrable Common Shares, or if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits but also the relative fault of the Issuer and such Registering
Holders on the one hand and of such underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations and (ii) 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
benefits received by the Issuer and such Registering Holders on the one hand and
such underwriters on the other shall be deemed to be in the same proportion as
the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Issuer and such
Registering Holders bear to the total underwriting discounts and commissions
received by such underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Issuer and such
Registering Holders on the one hand and of such underwriters 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 the Issuer and such
Registering Holders or by such underwriters. 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 (even if the underwriters were treated as one entity for such
purpose) 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
19
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 3.07, no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Common Shares underwritten by it and distributed
to the public were offered to the public exceeds the aggregate amount of any
damages which such underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and no
Holder shall be required to contribute any amount in excess of the amount by
which the total price at 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.
SECTION 3.08. Shelf Registration. As promptly as practicable after
receiving a written request from any Holder, the Issuer will use its best
efforts to prepare, file and maintain with the Commission a shelf registration
statement on an appropriate form relating to all (but not less than all) of the
Series G Shares, the Series H Shares or the Registrable Common Shares of the
Holders in accordance with Rule 415 under the Securities Act (the "Shelf
Registration Statement"). The Holders shall be entitled to select their intended
method of distribution of the Shares covered by such Shelf Registration
Statement (including any such resale in a Public Offering), and if the method
selected is a Public Offering, the Holders shall be deemed to have exercised,
subject to Section 3.02(f), one of their demand rights under Section 3.02(a).
Except as set forth in the preceding sentence, the maintenance of such Shelf
Registration Statement shall not abridge any of the rights of the Holders set
forth in this Article 3. Without limiting the generality of the preceding
sentence, the provisions set forth in Sections 3.02(d) and 3.02(e), the last
sentence of Section 3.03(a), Section 3.04 (including Section 3.04(h)) and
Section 3.07 shall, to the extent relevant, apply to any such Shelf Registration
Statement (and to the extent such Shelf Registration Statement relates to the
Series G Shares or the Series H Shares, such provisions shall apply as if such
Series G Shares or the Series H Shares were Registrable Common Shares).
20
ARTICLE 4
CORPORATE GOVERNANCE; COVENANTS
SECTION 4.01. Board of Directors. (a) WCAS VIII shall be entitled to
designate one director nominee to the Board of Directors for so long as it
continues (together with its Permitted Transferees) to beneficially own Shares
representing at least 40% of its Initial Series G Holdings or at least 40% of
its Initial Series H Holdings. Such director nominee shall be reasonably
acceptable to the Issuer (it being understood that without limiting the
generality of the foregoing, Xxxxx Xxxxxx and each general partner of WCAS VIII
shall be deemed to be reasonably acceptable to the Issuer). The Issuer agrees to
use its best efforts to take all actions necessary to have such director nominee
elected to the Board of Directors. The Issuer shall be deemed to have used its
best efforts to elect a nominee director to the Board of Directors if it
nominates such designee, includes the designee in the Issuer's proxy statement,
recommends a vote for such designee and casts proxies given to the Issuer in
favor of such designee. At each meeting of the Board of Directors (or any
committee thereof) attended by such director nominee, such director nominee may
be accompanied by one individual (who shall not have any voting rights) selected
by such director nominee.
(b) For so long as WCAS VIII has the right to designate a director
nominee pursuant to Section 4.01(a), it shall have the right to have such
director appointed to the Compensation Committee of the Board of Directors.
(c) If, as a result of death, disability, retirement, resignation,
removal (with or without cause) or otherwise of a WCAS director nominee there
shall exist or occur a vacancy on the Board of Directors, WCAS VIII may
designate another individual nominee to be appointed by the Board of Directors
to fill such capacity and serve as such director.
(d) The Issuer hereby agrees to take, or cause to be taken, all
reasonable actions and to do, or cause to be done, all reasonable things
necessary to give effect to the rights of WCAS VIII hereunder.
(e) The director nominated pursuant to Section 4.01(a) shall be
entitled to receive the same compensation and benefits (including equity-based
compensation) that are provided to the other non-executive members of the Board
of Directors.
(f) For so long as WCAS VIII retains its right to nominate a director
pursuant to Section 4.01(a), the Issuer shall maintain policies of directors and
officers liability insurance, with financially sound and reputable insurers,
having terms that are customary for companies similarly situated and providing
coverage in amounts at least equal to the amounts in effect on the date hereof.
21
(g) Until such time as it shall cease to own at least 20% of its
Initial Series G Holdings and 20% of its Initial Series H Holdings (but only to
the extent that it no longer has the right to designate a director nominee
pursuant to Section 4.01(a)), WCAS VIII shall be entitled to designate one
individual as a non-voting observer to the Board of Directors. Such observer
shall have the right to (i) receive notice of each meeting of the Board of
Directors in the same manner as such notice is provided to the Issuer's
directors, (ii) attend and participate in discussions at each such meeting and
(iii) receive copies of all materials distributed to the directors in connection
with such meetings at the same time as such materials are distributed to the
directors. In the event that an observer, for whatever reason, fails to attend a
meeting of the Board of Directors, the Chairman of the Board of Directors or his
designee shall, upon the observer's request, brief the observer on the matters
discussed at such meeting, other than any such matters with respect to which
such observer would have been excluded from such meeting pursuant to Section
4.01(h).
(h) In respect of any director nominated pursuant to Section 4.01(a),
any individual who accompanies such director pursuant to Section 4.01(a) and
observer designated pursuant to Section 4.01(g), materials relating to any
matter may be withheld from such director, individual or observer, and such
director, individual or observer may be excluded from a meeting of the Board of
Directors during consideration of any matter, if, (i) in the good faith
determination of a majority of the members of the Board of Directors excluding
any conflicted director, such director, individual or observer has a conflict of
interest in such matter and (ii) such director, individual or observer is
informed of the general nature of such matter. Any such individual or observer
will be required to sign appropriate confidentiality and similar agreements as
the Issuer shall reasonably request. Each such individual or observer shall be
entitled to reimbursement from the Issuer for all reasonable and customary
expenses associated with attending meetings of the Board of Directors, but shall
not be entitled to any other form of compensation or benefits.
SECTION 4.02. Financial Information. WCAS VIII 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, (iii) receive copies of
management "flash" reports (to be mutually agreed upon), (iv) receive other
information reasonably requested by WCAS VIII in order to monitor its equity
interests in the Issuer, in each such case, for so long as the WCAS Entities and
their Permitted Transferees beneficially own Shares representing at least 20% of
their Initial Series G Holdings or 20% of their Initial Series H Holdings and
(v) disclose on a confidential basis all such information referred to in clauses
22
(i) through (iv) above to the other WCAS Entities and their Permitted
Transferees; provided that no information furnished to WCAS VIII pursuant to
clause (iv) above shall be disclosed to any portfolio company of any WCAS Entity
that competes with the Issuer's operations.
ARTICLE 5
STANDSTILL
SECTION 5.01. Definitions. The following terms, as used in this
Article 5, have the following meanings:
"Acquisition Proposal" means any offer or proposal for, or any
indication of interest in, a merger or other business combination involving the
Issuer or any Subsidiary or the acquisition of any equity interest in, or a
substantial portion of the assets of, the Issuer or any Subsidiary, including
engaging in any tender offer or exchange offer for Voting Securities.
"Daily Price" means, as of any date, (i) if the Common Shares then are
listed and traded on the New York Stock Exchange, Inc. ("NYSE"), the closing
price on such date as reported on the NYSE Composite Transactions Tape; (ii) if
the Common Shares then are not listed and traded on the NYSE, the closing price
on such date as reported by the principal national securities exchange on which
the shares are listed and traded; (iii) if the Common Shares then are not listed
and traded on any such securities exchange, the last reported sale price on such
date on the National Market of the National Association of Securities Dealers,
Inc. Automated Quotation System ("NASDAQ"); or (iv) if the Common Shares then
are not traded on the NASDAQ National Market, the average of the highest
reported bid and lowest reported asked price on such date as reported by NASDAQ.
"Market Price Per Common Share" means, as of any date, the average
(weighted by daily trading volume) of the Daily Prices per Common Share for the
20 consecutive trading days immediately prior to such date.
"Voting Securities" means all securities of the Issuer entitled, in the
ordinary course, to vote in the election of directors of the Issuer.
SECTION 5.02. Acquisition of Voting Securities. (a) Each Holder agrees
that, until the earlier of (i) February 1, 2010 or (ii) the date on which such
Holder owns less than 20% of its Initial Series G Holdings and 20% of its
Initial Series H Holdings, such Holder will not, directly or indirectly,
purchase or otherwise acquire, or agree or offer to purchase or otherwise
23
acquire, beneficial ownership of any Voting Securities without the Issuer's
prior written consent, except (x) for Voting Securities owned by such Holder on
the date hereof, (y) upon conversion or exchange of securities outstanding on
the date hereof or (z) for Voting Securities acquired as a dividend or in
connection with any transaction described in Section 6.10.
(b) Notwithstanding anything to the contrary herein, the parties
hereto agree that the provisions of this Section 5.02 shall apply only to the
WCAS Entities and not to any of their Partners, other Affiliates or portfolio
companies that are not otherwise a holder of Shares and a Holder under this
Agreement.
SECTION 5.03. Certain Actions. (a) Each Holder agrees that, until the
earliest of (x) February 1, 2010, (y) the date on which such Holder owns less
than 20% of its Initial Series G Holdings and 20% of its Initial Series H
Holdings and (z) from and after February 1, 2003, such time as the Market Price
Per Common Share has been less than $10.00 for any continuous 90-day period,
without the Issuer's prior written consent, such Holder will not, directly or
indirectly:
(i) make, or take any action to solicit, initiate or
encourage, either alone or in conjunction with another Person, an
Acquisition Proposal;
(ii) "solicit", or become a "participant" in any
"solicitation" of, any "proxy" (as such terms are defined in
Regulation 14A under the Exchange Act) from any holder of Voting
Securities in connection with any vote on any matter, or agree or
announce its intention to vote with any Person undertaking a
"solicitation" in opposition to any matter which has been approved by
the Board of Directors;
(iii) initiate, support or in any way participate in a
"group" with respect to any Voting Securities (other than a group
comprised solely of such Holder and its Affiliates);
(iv) grant any proxies with respect to any Voting Securities
to any Person (other than as recommended by the Board of Directors) or
deposit any Voting Securities in a voting trust or enter into any
other arrangement or agreement with respect to the voting thereof
(other than a proxy granted to, or a voting trust or arrangement with,
one or more of its Affiliates); or
(v) except as otherwise provided in Article 4, take any
action to seek to control or influence the management, policies or
affairs, of the Issuer;
24
(vi) initiate, support or otherwise solicit stockholders for
the approval of one or more stockholder proposals with respect to the
Issuer as described in Rule 14a-8 under the Exchange Act, or induce or
attempt to induce any other Person to initiate any such stockholder
proposal; or
(vii) propose any amendment to or waiver of this Article 5
that is or may be required to be publicly disclosed or publicly
announce such Holder's intentions, views or opinions in favor of any
of the foregoing.
(b) Notwithstanding anything to the contrary herein, the parties
hereto agree that the provisions of this Section 5.03 shall apply only to the
WCAS Entities and not to any of their financial partners, portfolio companies or
other Affiliates that are not otherwise a holder of Shares and a Holder under
this Agreement.
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. 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 6.02. 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 6.03. 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 6.04. 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
25
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 6.05. 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 6.06. 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 6.07. 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
26
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 6.08. 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
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 6.09. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original with the same effect
as if the signatures thereto and hereto were upon the same instrument.
SECTION 6.10. Recapitalization, etc. In 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 6.11. 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 6.12. 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.
27
SECTION 6.13. 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.
28
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
29
WELSH, CARSON, XXXXXXXX &
XXXXX VIII, L.P.
By: WCAS VIII Associates, LLC,
as General Partner
By:
___________________________________
Name:
Title: Member
Address for notices:
-------------------
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx or Xxxxxx
Xxxxx
WCAS INFORMATION PARTNERS, L.P.
By: WCAS Info Partners, as General Partner
By:
____________________________________
Name: Xxxxxxxx Rather
Title: Attorney-in-Fact
Address for notices:
-------------------
x/x Xxxxx, Xxxxxx, Xxxxxxxx & Xxxxx
XXXX, X.X.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Rather
30
WCAS Individual Investors:
By:
____________________________________
Xxxxxxxx Rather, as Attorney-in-Fact
for the individual investors listed
below:
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxx X. Xxxx
Xxxxxx X. XxXxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. xx Xxxxxx
Xxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
D. Xxxxx Xxxxxxx
Xxxxxx Xxxxx
Xxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxx X. Xxx
Xxxxxxxx X. Rather
Xxxxx XxxXxxxx
By:
____________________________________
Xxxxx Xxxxx, as Trustee
for the investors listed below:
Trust dated 11/26/84 for the benefit
of Xxxx Xxxxx Trust dated 11/26/84
for the benefit of Xxxxxxx Xxxxx
Trust dated 11/26/84 for the benefit
of Xxxxxxxx Xxxxx
By:
____________________________________
Xxxxxxx X. Xxxxx, as Trustee
for the investors listed below:
Xxxxxxx X. Xxxxxxxx Trust
Xxxx X. Xxxxxxxx Trust
Xxxxxx X. Xxxxxxxx Trust
Address for notices:
-------------------
x/x Xxxxx, Xxxxxx, Xxxxxxxx & Xxxxx
XXXX, X.X.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Rather
31
EXHIBIT A
FORM OF AGREEMENT TO BE BOUND
[Date]
To the Parties to the Amended and Restated Shareholders
Agreement dated as of [o], 2000
Ladies and Gentlemen:
Reference is made to the Amended and Restated Shareholders Agreement
dated as of [o], 2000 (the "Shareholders Agreement") among Winstar
Communications, Inc., a Delaware corporation, Welsh, Carson, Xxxxxxxx & Xxxxx
VIII, L.P., a Delaware limited partnership, and the other Persons listed on the
signature pages thereof 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
