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EXHIBIT 3.1(d)
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
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TABLE OF CONTENTS
OF THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
RECITALS ......................................................................1
ARTICLE I-FORMATION............................................................1
SECTION 1.1. Formation; Conversion; Continuation; General Terms;
Effective Date.........................................1
SECTION 1.2. Name...................................................2
SECTION 1.3. Purposes...............................................2
SECTION 1.4. Registered Agent; Registered Office....................2
SECTION 1.5. Commencement and Term..................................2
SECTION 1.6. Tax Classification.....................................2
ARTICLE II-CAPITAL CONTRIBUTIONS; ISSUANCE OF ADDITIONAL
INTERESTS; CAPITAL ACCOUNTS...........................................3
SECTION 2.1. Initial Capital Contributions..........................3
SECTION 2.2. Additional Capital Contributions; Issuance of
Additional Interests...................................3
SECTION 2.3. Liability of Members...................................5
SECTION 2.4. Maintenance of Capital Accounts; Withdrawals;
Interest...............................................5
SECTION 2.5. Classes of Members and Units...........................5
SECTION 2.6. Registration Rights....................................6
ARTICLE III-INTERIM DISTRIBUTIONS..............................................6
SECTION 3.1. Tax Distributions......................................6
SECTION 3.2. Discretionary Distributions............................7
SECTION 3.3. Withholding............................................7
SECTION 3.4. Noncash Interim and Liquidating Distributions..........7
ARTICLE IV-ALLOCATIONS.........................................................8
SECTION 4.1. Profits................................................8
SECTION 4.2. Losses.................................................8
SECTION 4.3. Code Section 704(c) Tax Allocations....................9
SECTION 4.4. Miscellaneous..........................................9
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ARTICLE V-MANAGEMENT..........................................................10
SECTION 5.1. Management by the Manager Acting Through its Board of
Managers; Actions Requiring Member Vote...............10
SECTION 5.2. Ascertaining the Action of the Manager................14
SECTION 5.3. Direct Authority of Members with Respect to the
Manager; Restrictions on Authority of Manager.........14
SECTION 5.4. Limitation of Liability...............................17
SECTION 5.5. Indemnification.......................................18
SECTION 5.6. Expense Reimbursement.................................18
SECTION 5.7 Insurance.............................................18
ARTICLE VI-MEMBER MEETINGS....................................................18
SECTION 6.1. Actual Meetings of Members............................18
SECTION 6.2. Written Consent to Action in Lieu of
Actual Meetings.......................................19
ARTICLE VII-TRANSFER OF INTERESTS; RIGHTS OF FIRST REFUSAL AND
CO-SALE; CORPORATE CONVERSIONS.......................................19
SECTION 7.1. In General; Registration and Certification of
Interests; Mandatory Pledge of Interests..............19
SECTION 7.2 Conditions Precedent to Transfer of
Member's Interest.....................................20
SECTION 7.3. Rights of Assignees...................................21
SECTION 7.4. Admission of Assignees as Members.....................21
SECTION 7.5. Distributions and Allocations With Respect to
Transferred Interests.................................22
SECTION 7.6. Transfer of Interest of Columbia Inc. to
Columbia B or Columbia Capital........................22
SECTION 7.7. Right of First Refusal................................22
SECTION 7.8. Right of Co-Sale......................................26
SECTION 7.9. Corporate Conversions.................................27
SECTION 7.10. Limited Power of Attorney.............................30
ARTICLE VIII-CESSATION OF MEMBERSHIP..........................................31
SECTION 8.1. When Membership Ceases................................31
SECTION 8.2. Deceased, Incompetent or Dissolved Members............32
SECTION 8.3. Consequences of Cessation of Membership...............32
SECTION 8.4. No Voluntary Withdrawal or Resignation by Members.....32
ARTICLE IX-DISSOLUTION, WINDING UP AND LIQUIDATING
DISTRIBUTIONS........................................................32
SECTION 9.1. Dissolution Triggers..................................32
SECTION 9.2. Winding Up or Sale....................................33
SECTION 9.3. Liquidating Distributions.............................33
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ARTICLE X-BOOKS AND RECORDS; INFORMATION RIGHTS...............................35
SECTION 10.1. Books and Records; Visit to Business Premises.........35
SECTION 10.2. Taxable Year; Tax Accounting Methods..................35
SECTION 10.3. Information Rights....................................35
SECTION 10.4. Tax Information.......................................35
ARTICLE XI-MISCELLANEOUS......................................................36
SECTION 11.1. Notices...............................................36
SECTION 11.2. Binding Effect........................................36
SECTION 11.3. Construction..........................................36
SECTION 11.4. Entire Agreement; No Oral Limited Liability
Company Agreements; Amendments to the Limited
Liability Company Agreement...........................36
SECTION 11.5. Headings..............................................36
SECTION 11.6. Severability..........................................37
SECTION 11.7. Additional Documents..................................37
SECTION 11.8. Variation of Pronouns.................................37
SECTION 11.9. Governing Law; Consent to Jurisdiction;
Dispute Resolution................................... 37
SECTION 11.10. Waiver of Action for Partition........................37
SECTION 11.11. Counterpart Execution; Facsimile Execution............37
SECTION 11.12. Tax Matters Member....................................37
SECTION 11.13. Time of the Essence...................................38
SECTION 11.14. Exhibits; Preferred Stock Corporate
Conversion Documents..................................38
EXHIBIT A: Certificates of Conversion and Formation.
EXHIBIT B: Information Exhibit.
EXHIBIT C: Glossary of Terms.
EXHIBIT D: Regulatory Allocations Exhibit.
EXHIBIT E: Indemnification Exhibit.
EXHIBIT F: Dispute Resolution Exhibit.
EXHIBIT G: Appraisal Exhibit.
EXHIBIT H: Registration Rights Agreement.
EXHIBIT I: Draft Certificate of Designations of Preferred Stock.
EXHIBIT J: Draft Certificate of Merger -- Preferred Stock
Corporate Conversion.
EXHIBIT K: Draft Certificate of Merger -- Common Stock
Corporate Conversion.
EXHIBIT L: Draft Stockholders Agreement
EXHIBIT M: Draft Certificate of Incorporation and Bylaws
Upon Qualified Corporate Conversion
EXHIBIT N: Certificate of Limited Liability Company Interest
EXHIBIT O: Operating Agreement of DTS Management, LLC
EXHIBIT P: Designees to Management's Board of Managers
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT is made
and entered into as of February 10, 1997, by and among the Persons whose names,
addresses and taxpayer identification numbers are listed on the attached
Information Exhibit attached hereto as Exhibit B. Unless otherwise indicated,
capitalized words and phrases in this Amended and Restated Limited Liability
Company Agreement (the "Agreement") shall have the meanings set forth in the
attached Glossary of Terms attached hereto as Exhibit C.
RECITALS
A. DBS Holdings, L.P., a Delaware limited partnership (the
"Partnership"), was formed on January 30, 1996.
B. Pursuant to Act Section 18-214(d) the Partnership was converted into
a Delaware limited liability company (the "LLC") on November 19, 1996.
C. The Members now wish to amend and restate the Agreement for the
purposes of, among other things, creating multiple classes of Units and
admitting certain new Persons as Members in exchange for Capital Contributions
from such Persons as reflected on the Information Exhibit attached hereto as
Exhibit B.
NOW THEREFORE, in consideration of the mutual promises of the parties
hereto, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto, intending to be legally
bound, do hereby agree that the limited liability company agreement of the LLC
shall be amended and restated to read as follows:
ARTICLE I
FORMATION
SECTION 1.1. FORMATION; CONVERSION; CONTINUATION; GENERAL TERMS;
EFFECTIVE DATE.
The LLC is the successor in interest by conversion to the Partnership.
The LLC was formed upon the filing of the Certificate of Formation with the
Delaware Secretary of State on November 19, 1996, and the conversion of the
Partnership to the LLC occurred on that date. It is agreed that those Persons
whose names are listed on the attached Information Exhibit who were not Members
prior to the date hereof shall be admitted to the LLC as Members as of the date
of this Agreement. The initial and newly admitted Members agree that the LLC
shall continue to carry on the business of the LLC subject to the terms of this
Agreement in accordance with the provisions of the Act.
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The rights and obligations of the Members and the terms and conditions
of the LLC shall be governed by the Act and this Agreement, including all the
Exhibits to this Agreement. To the extent the Act and this Agreement are
inconsistent with respect to any subject matter covered in this Agreement, this
Agreement shall govern, but only to the extent permitted by law. This Agreement
shall be effective as of the date hereof.
The Manager shall cause to be executed and filed on behalf of the LLC
all other instruments or documents, and shall do or cause to be done all such
filing, recording, or other acts, including the filing of the LLC's annual
statement for the annual tax with the Delaware Secretary of State, as may be
necessary or appropriate from time to time to comply with the requirements of
law for the continuation and operation of a limited liability company in
Delaware and in the other states and jurisdictions in which the LLC shall
transact business.
SECTION 1.2. NAME. The name of the LLC shall be Digital Television
Services, LLC. The name of the LLC shall be the exclusive property of the LLC,
and no Member shall have any rights in the LLC's name or any derivation thereof,
even if the name contains such Member's own name or a derivation thereof. The
LLC's name may be changed only by an amendment to the Certificate of Formation
attached hereto as Exhibit A adopted pursuant to the voting requirements set
forth in this Agreement.
SECTION 1.3. PURPOSES. The purposes of the LLC shall be (i) to acquire,
own, hold and manage directly, or through investments in other entities, rights
to distribute direct broadcast satellite services, programming, and products, or
other services and products utilizing orbital satellites and related radio
frequencies, (ii) to own, hold, maintain, encumber, lease, sell, transfer or
otherwise dispose of all property or assets or interests in property or assets
as may be necessary, appropriate or convenient to accomplish the activities
described in clause (i) above, (iii) to incur indebtedness or obligations in
furtherance of the activities described in clauses (i) and (ii) above, and (iv)
to conduct such other activities as may be necessary or incidental to the
foregoing and in the best interest of the LLC, all on the terms and conditions
and subject to the limitations set forth in this Agreement.
SECTION 1.4. REGISTERED AGENT; REGISTERED OFFICE. The LLC's registered
agent and registered office are set forth in the Certificate of Formation
attached hereto as Exhibit A, and may be changed from time to time upon the vote
of the Members or as otherwise provided in the Act.
SECTION 1.5. COMMENCEMENT AND TERM. The term of the LLC commenced on
November 19, 1996, with the LLC being the successor in interest by conversion to
the Partnership the term of which commenced January 30, 1996. The term of the
LLC shall continue until it is dissolved, its affairs are wound up and final
liquidating distributions are made pursuant to this Agreement. Pursuant to Act
Section 18-801(1), and except as otherwise provided herein, the LLC shall have
perpetual existence.
SECTION 1.6. TAX CLASSIFICATION. The parties acknowledge that pursuant
to Treasury Regulation Section 301.7701-3, the LLC shall be classified as a
partnership for federal income tax purposes until the effective date of any
election it may make to change its classification for federal income tax
purposes to that of a corporation on IRS Form 8832, Entity
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Classification Election. It is agreed that the Manager shall have authority, on
behalf of the LLC and each Member, to file and make such election to change the
tax classification of the LLC from a partnership to a corporation at such time
as the Manager determines that such a change is in the best interests of the
LLC; provided, however, that no such election shall be made without the vote of
the holders of Class A Units as provided in Section 5.3(c)(xii) of this
Agreement.
ARTICLE II
CAPITAL CONTRIBUTIONS; ISSUANCE OF
ADDITIONAL INTERESTS;
CAPITAL ACCOUNTS
SECTION 2.1. INITIAL CAPITAL CONTRIBUTIONS. As of the date hereof, the
Members have made the Capital Contributions as set forth in the Information
Exhibit. The Class A Capital Contributions have been made and the related
Interests have been issued pursuant to that certain Class A Unit Membership
Interest Purchase Agreement between the LLC, Whitney, Fleet and Columbia A dated
the date hereof (the "Purchase Agreement").
SECTION 2.2. ADDITIONAL CAPITAL CONTRIBUTIONS; ISSUANCE OF ADDITIONAL
INTERESTS. No Member shall be permitted or required to make any additional
Capital Contributions except as expressly set forth in this Agreement. The LLC
shall accept no additional Capital Contributions and shall issue no additional
Interest except as set forth in this Section 2.2.
The Manager may at any time and from time to time cause the LLC to
issue Interests to and to admit any Person as a Member in exchange for such
Capital Contributions and pursuant such other terms and conditions as the
Manager shall determine, subject in all events to the following provisions:
(a) PARTICIPATION RIGHTS. Except in the case of issuance of Interests
(i) pursuant to the Employee Unit Plan, (ii) in connection with a Qualified
Financing, (iii) in exchange for Capital Contributions consisting of property
other than cash or (iv) to effectuate adjustments to the number of Class A Units
pursuant to Subsections 2.2(b) and 2.2(c), prior to issuing any additional
Interests all Members holding Class A Units, Class B Units or Class C Units
shall have been offered the right to purchase their proportionate share of such
additional Interests on the same terms and subject to the same conditions as the
proposed issuance to others, which rights to purchase shall be offered to such
Members in the ratio that their aggregate number of Class A Units, Class B Units
and Class C Units bear to the aggregate number of all such Units. Any Interests
not initially subscribed for by those Members holding Class A Units, Class B
Units and Class C Units shall be reoffered to those Members electing initially
to purchase their proportionate share hereunder in proportion to the relative
number of such Units held by those Members initially electing to purchase their
proportionate share. The Manager shall determine the timing and such other
procedures as may be necessary and appropriate to enable those Members holding
Class A Units, Class B Units or Class C Units to exercise their rights
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hereunder, provided that in any event such Members shall be given no less than
five (5) business days prior notice before being required to commit to purchase
the Interests subject to the Participation Rights hereunder.
(b) PRICE PROTECTION FOR CLASS A UNITS. Subject to the last sentence of
this Subsection 2.2(b), if the LLC shall issue any Interests or rights to
acquire Interests for a per Unit Capital Contribution less than the Second Round
Price, then, and in any such case, the number of Class A Units held by each
Person holding Class A Units shall be deemed automatically increased (and such
increase shall be reflected on the books and records of the LLC and additional
Certificates evidencing such increase shall be issued to such Persons) to an
amount equal to the number of Class A Units held by such Person immediately
before such issuance multiplied by the following ratio:
(B + N)/(B + X)
Where:
B equals the total number of Class A and Class B Units
outstanding immediately before the application of
this Subsection (and any such Units underlying any
rights to acquire Units).
N equals the number of Units to be issued at a price
less than the Second Round Price (or Units underlying
rights to acquire Units), which issuance results in
the application of this Subsection.
X equals the (i) aggregate amount of the Capital
Contributions to be received by the LLC in connection
with the issuance of Units that results in the
application of this Subsection, (ii) divided by the
Second Round Price.
Example:
Suppose that immediately after the date of this Agreement, the LLC
issues Interests in exchange for $50,000,000 in cash represented by 2,500,000
Units, i.e. $50,000,000 at $20 per Unit. The application of the foregoing
formula is illustrated as follows:
Class A Units
before adjustment = 1,333,333
B = 1,333,333 + 2,050,000 = 3,383,333
N = 2,500,000
X = 50,000,000/22.50 = 2,222,222
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Class A Units
after adjustment = 1,333,333 x (3,383,333+2,500,000)/
(3,383,333+2,222,222)
= 1,399,405
The adjustment described in this Subsection 2.2(b) shall become effective
concurrent with the issuance of the Interests resulting in the application of
this Subsection. The Manager shall promptly amend Exhibit B to reflect the
adjustment and provide the amended Exhibit B to all Members. In no event shall
any adjustment to the number of Class A Units outstanding be made pursuant to
this Subsection in respect of (i) any issuance of Interests pursuant to the
Employee Unit Plan, or (ii) any issuance of Interests in connection with any
Qualified Financing or Interim Financing.
(c) INTERIM FINANCING. If, in connection with any Interim Financing,
the LLC is required to issue Units or rights to acquire Units, then in lieu of
the price protection provided in Section 2.2(b) of this Agreement, the number of
Class A Units shall be increased so that the ratio of Class A Units to total
Units outstanding immediately after such Interim Financing equals the ratio of
Class A Units to total Units outstanding immediately before such Interim
Financing. In addition, any commitment, underwriting, structuring or syndication
fees (other than customary periodic agency fees for administrative services) in
excess of 4% of the principal amount of the Interim Financing which are payable
by the LLC in connection therewith shall be borne by Columbia A, Columbia B and
Columbia Inc. in proportion to their Interests without recourse to the LLC.
SECTION 2.3. LIABILITY OF MEMBERS. No Member shall be liable for any
debts or losses of capital or profits of the LLC or be required to contribute or
lend funds to the LLC other than Capital Contributions to the extent provided in
this Article.
SECTION 2.4. MAINTENANCE OF CAPITAL ACCOUNTS; WITHDRAWALS; INTEREST.
Separate Capital Accounts shall be maintained for each of the Members. In the
case of Members who hold more than one class of Units, a separate Capital
Account shall be maintained with respect to each such separate class. No Member
shall be entitled to withdraw any part of its Capital Account or to receive any
distribution except as provided in this Agreement. No Member shall be entitled
to receive any interest on its Capital Contributions or with respect to its
Capital Account except as provided in this Agreement. Each Member shall look
solely to the assets of the LLC for the return of its Capital Contributions and,
except as otherwise provided in this Agreement, shall have no right or power to
demand or receive property other than cash from the LLC. No Member shall have
priority over any other Member as to the return of its Capital Contributions,
distributions or allocations, except as provided in this Agreement.
SECTION 2.5. CLASSES OF MEMBERS AND UNITS. As authorized in Act Section
18-302, there shall be multiple classes of Members. Each Member shall hold an
Interest. Each Member's Interest shall be denominated in Units, and the relative
rights, privileges, preferences and obligations with respect to the Member's
Interest shall be determined under this Agreement and the Act based upon the
number and class of Units held by the Member with respect to the Member's
Interest. The classes of Units are as follows:
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(a) CLASS A UNITS. Class A Units shall consist of those Units held by
Members listed on the attached Information Exhibit as holding Class A Units as
may be adjusted from time to time pursuant to Subsections 2.2(b) and 2.2(c).
Class A Units shall have all the rights, privileges, preferences, and
obligations as are specifically provided for in this Agreement for Class A
Units, and as may otherwise be generally applicable to all classes of Units,
unless such application is specifically limited to one or more other classes of
Units.
(b) CLASS B UNITS. Class B Units shall consist of those Units held by
Members listed on the attached Information Exhibit as holding Class B Units.
Class B Units shall have all the rights, privileges, preferences, and
obligations as are specifically provided for in this Agreement for Class B
Units, and as may otherwise be generally applicable to all classes of Units,
unless such application is specifically limited to one or more other classes of
Units.
(c) CLASS C UNITS. Class C Units shall consist of those Units held by
Members listed on the attached Information Exhibit as holding Class C Units.
Class C Units shall have all the rights, privileges, preferences, and
obligations as are specifically provided for in this Agreement for Class C
Units, and as may otherwise be generally applicable to all classes of Units,
unless such application is specifically limited to one or more other classes of
Units.
(d) CLASS D UNITS. Class D Units shall consist of those Units that may
be issued pursuant to the Employee Unit Plan. Class D Units shall have all the
rights, privileges, preferences, and obligations as are specifically provided
for in this Agreement for Class D Units, and as may otherwise be generally
applicable to all classes of Units, unless such application is specifically
limited to one or more other classes of Units.
SECTION 2.6. REGISTRATION RIGHTS. The Members shall have registration
rights with respect to their Interests as specified in that certain Registration
Rights Agreement attached hereto as Exhibit H.
ARTICLE III
INTERIM DISTRIBUTIONS
SECTION 3.1. TAX DISTRIBUTIONS. If the LLC expects that as of the end
of any Tax Estimation Period the LLC will have Net Positive Taxable Income, then
the LLC shall distribute to each Member in proportion to their Units on or
before the 15th day after the end of the Tax Estimation Period, cash in an
amount equal to the LLC's estimate of the increase in Net Positive Taxable
Income over such Tax Estimation Period multiplied by the Combined Effective
Marginal Tax Rate, and on or before March 15th of each year shall adjust the
distributions pursuant to this Section 3.1 with respect to the previous Fiscal
Year to conform with the LLC's income tax returns for such Fiscal Year, which
adjustments shall take into account any withholding required pursuant to Section
3.3. Tax distributions made pursuant to this Section shall be deemed to
constitute an advance (without interest) against any distributions provided for
in Section 3.2 below. There shall be no tax distributions with respect to Profit
allocations under Sections
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4.1(c) and 4.1(d) (because the Members receive cash distributions in the full
amount of those allocations).
SECTION 3.2. DISCRETIONARY DISTRIBUTIONS. Prior to the dissolution of
the LLC, the LLC shall distribute cash or property, subject to Section 3.4, in
such amounts, at such times and as of such record dates as the Manager shall
determine, in the following order and priority:
(a) First to the holders of Class A Units in proportion to the Class A
Units held by them until they have received cumulative distributions pursuant to
this Subsection 3.2(a) equal to the Preferred Return;
(b) Next, to the holders of Class A and Class B Units in proportion to
such Units held by them until they have received cumulative distributions
pursuant to this Subsection 3.2(b) equal to $10.00 per such Unit;
(c) Next, to the holders of Class A, Class B, and Class C Units until
they have received cumulative distributions pursuant to this Subsection 3.2(c)
equal to $12.50 per such Unit;
(d) Next, to all Members in accordance with their Residual Interests.
SECTION 3.3. WITHHOLDING. In the event any federal, foreign, state or
local jurisdiction requires the LLC to withhold taxes or other amounts with
respect to any Member's allocable share of Profits, taxable income or any
portion thereof, or with respect to distributions, the LLC shall withhold from
distributions or other amounts then due to such Member (or shall pay to the
relevant taxing authority with respect to amounts allocable to such Member) an
amount necessary to satisfy the withholding responsibility. In such a case, the
Member for whom the LLC has paid the withholding tax shall be deemed to have
received the withheld distribution or other amount so paid, and to have paid the
withholding tax directly.
If it is anticipated that at the due date of the LLC's withholding
obligation the Member's share of cash distributions or other amounts due is less
than the amount of the withholding obligation, the Member to which the
withholding obligation applies shall have the option to pay to the LLC the
amount of such shortfall. In the event a Member fails to make such payment and
the LLC nevertheless pays the withholding, the amount paid by the LLC shall be
deemed a nonrecourse loan from the LLC to such Member bearing interest at the
Prime Rate, and the LLC shall apply all distributions or payments that would
otherwise be made to such Member toward payment of the loan and interest, which
payments or distributions shall be applied first to interest and then to
principal until the loan is repaid in full.
SECTION 3.4. NONCASH INTERIM AND LIQUIDATING DISTRIBUTIONS. The LLC
shall make interim and liquidating distributions to the Members other than in
cash only upon the vote of the Members specified in Sections 5.3(b)(vi) and
5.3(c) below. Notwithstanding such votes, no Member shall be required to accept
a noncash distribution unless such distribution is a distribution with respect
to Residual Interests under Section 3.2(d) and all Members receive a
proportionate interest in each item of property distributed based upon their
Residual Interests. In the event of such a noncash distribution, the Agreed
Value of the property to be distributed
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shall be determined, and any resulting Profits or Losses shall be posted to the
Capital Accounts as of the date the noncash distribution is made. Distributions
pursuant to this Section 3.4 shall be made in the priority set forth in Sections
9.3 and 3.2 and for purposes of Sections 9.3 and 3.2, noncash distributions
shall be deemed to constitute distributions to the extent of the Agreed Value of
the distributed property.
ARTICLE IV
ALLOCATIONS
SECTION 4.1. PROFITS. Except as provided in the Regulatory Allocations
Exhibit, Profits shall be allocated as follows:
(a) First, to the holders of Class A Units in proportion to their Units
until the cumulative Profits allocated pursuant to this Subsection 4.1(a) equal
the cumulative prior allocations of Losses under Subsection 4.2(c).
(b) Next, to the holders of Class B Units (and to the holders of Class
C and Class D Units if they have been allocated Losses under Subsection 4.2(b)
below) until the cumulative Profits allocated pursuant to this Subsection 4.1(b)
equal the cumulative prior allocations of Losses under Subsection 4.2(b).
(c) Next, to the holders of Class A Units in proportion to such Units
until the cumulative Profits allocated pursuant to this Subsection 4.1(c) equal
the cumulative distributions of the Preferred Return pursuant to Section 3.2(a)
above.
(d) Next, to the holders of Class B Units in proportion to such Units
and Class C Units in proportion to such Units until the cumulative amount
allocated pursuant to this Subsection equals the cumulative distributions with
respect to Class B and Class C Units pursuant to Section 3.2(c) above.
(e) All remaining Profits shall be allocated to the Members in
accordance with their Residual Interests.
SECTION 4.2. LOSSES. Except as provided in the Regulatory Allocations
Exhibit, Losses shall be allocated as follows:
(a) First, to the Members in proportion to their Units until the
cumulative Losses allocated pursuant to this Subsection 4.2(a) equal the
cumulative prior allocations of Profits under Subsection 4.1(e).
(b) Next, to the holders of Class B Units (and to the holders of the
Class C and Class D Units to the extent that they may have positive Capital
Accounts) in proportion to such Units until their Capital Account balances are
zero.
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(c) Next and finally, to the holders of the Class A Units in proportion
to such Units until their Capital Account balances are zero.
SECTION 4.3. CODE SECTION 704(c) TAX ALLOCATIONS. Income, gain, loss,
and deduction with respect to any property contributed to the capital of the LLC
shall, solely for tax purposes, be allocated among the Members so as to take
account of any variation between the adjusted basis of such property to the LLC
for federal income tax purposes and its initial Agreed Value pursuant to any
method allowable under Code Section 704(c) and the Treasury Regulations
promulgated thereunder.
In the event the Agreed Value of any LLC asset is adjusted after its
contribution to the LLC, subsequent allocations of income, gain, loss and
deduction with respect to such asset shall take into account any variation
between the adjusted basis of such asset for federal income tax purposes and its
Agreed Value pursuant to any method allowable under Code Section 704(c) and the
Treasury Regulations promulgated thereunder.
Any elections or other decisions relating to allocations under this
Section shall be determined by the Manager. Absent a determination by the
Manager, the remedial allocation method under Treasury Regulation Section
1.704-3(d) shall be used. Allocations pursuant to this Section are solely for
purposes of federal, state, and local taxes and shall not be taken into account
in computing any Member's Capital Account or share of Profits, Losses, other
items, or distributions pursuant to any provision of this Agreement.
It is acknowledged and agreed by the Members that on the date of this
Agreement the Agreed Value of the LLC's assets equals the adjusted basis of
those assets for federal income tax purposes.
SECTION 4.4. MISCELLANEOUS.
(a) Allocations Attributable to Particular Periods. For purposes of
determining Profits, Losses or any other items allocable to any period, such
items shall be determined on a daily, monthly, or other basis, as determined by
the Manager using any permissible method under Code Section 706 and the Treasury
Regulations thereunder.
(b) Other Items. Except as otherwise provided in this Agreement, all
items of LLC income, gain, loss, deduction, credit and any other allocations not
otherwise provided for shall be divided among the Members in the same proportion
as they share Profits or Losses, as the case may be, for the year.
(c) Tax Consequences; Consistent Reporting. The Members are aware of
the income tax consequences of the allocations made by this Article IV and by
the Regulatory Allocations and hereby agree to be bound by those allocations as
reflected on the information returns of the LLC in reporting their shares of LLC
income and loss for income tax purposes. Each Member agrees to report its
distributive share of LLC items of income, gain, loss, deduction and credit on
its separate return in a manner consistent with the reporting of such items to
it by the LLC.
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ARTICLE V
MANAGEMENT
SECTION 5.1. MANAGEMENT BY THE MANAGER ACTING THROUGH ITS BOARD OF
MANAGERS; ACTIONS REQUIRING MEMBER VOTE.
(a) General Authority of Manager; Size, Composition and Voting of
Manager's Board of Managers; Vote Shifts; Authority of Members. The Manager
shall be DTS Management, LLC, a Georgia limited liability company, all of the
member interests of which are owned by the LLC. Except as set forth in those
provisions of this Agreement that specifically require the vote, consent,
approval or ratification of the Members, the Manager shall have complete
authority and exclusive control over the management of the business and affairs
of the LLC. Complete authority and exclusive control over the management of the
business and affairs of the Manager shall in turn be vested in the Manager's
seven (7) person board of managers (the "Board"), the composition of which shall
be governed by this Agreement and the operating agreement of the Manager, which
shall be in the form of Exhibit O attached hereto. Unless required by this
Agreement and then in accordance with Section 5.3 below (to the extent such
Section is applicable to the subject action), the LLC shall take no action with
respect to its interest in the Manager, including without limitation, any action
that would affect the size, voting or composition of, or designation of Persons
to, the Board, the LLC's ownership interest in the Manager or any amendment to
the operating agreement of the Manager, without action by the Members as
specified in Section 5.3 below. The Members agree that they shall in all events
cause the LLC to vote the LLC's member interest in the Manager or otherwise
cause the Board to consist at all times of the following individuals (each of
whom shall have one vote, except as expressly provided otherwise in this
Agreement):
(i) Two (2) individuals designated in writing by Whitney (the
"Whitney Designees").
(ii) One (1) individual designated in writing by ▇▇▇▇▇▇▇▇ (the
"▇▇▇▇▇▇▇▇ Designee").
(iii) The chief executive officer of the Manager, as may be elected
from time to time by the board of managers of the Manager,
which individual is currently ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
(iv) Those two (2) individuals elected by a vote of the holders of
Class B Units (the "B Unit Designees") with each such holder
being entitled to cast that number of votes equal to the
number of such Units held by such holder, which vote shall be
taken separately with respect to each of the two (2) seats
without cumulative voting. The two (2) individuals designated
pursuant to this clause (iv) shall be entitled to two (2)
votes each on all matters before the Board until such time
that the size of the Board is increased to nine members as
provided below, or until there is a Vote Shift.
(v) One (1) individual elected by a vote of the holders of the
Class B, C and D Units, with each such holder being entitled
to cast that number of votes equal to the number of such Units
held by such holder.
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The individual designees to the Board, effective on the date hereof,
are listed on Exhibit P attached hereto. Such Persons shall continue to serve
until their death or resignation, or until their successor is designated as
provided herein.
Upon the affirmative vote of Columbia A, Whitney and ▇▇▇▇▇▇▇▇, the size
of the Board shall be increased from seven (7) to nine (9). The two additional
seats shall be filled by individuals approved by Columbia A, Whitney, and
▇▇▇▇▇▇▇▇, and elected by holders of a majority of the Units, and who are not
otherwise Affiliates of any of the Columbia Entities, Whitney or Fleet. In the
event of such an increase in the size of the Board, the two (2) B Unit Designees
and the two (2) new designated individuals shall be entitled to one vote each.
Within five (5) days following any Change in Control of Columbia, then
the Columbia Entities shall give notice of such event to Whitney and ▇▇▇▇▇▇▇▇
("Change Notice"). If the Columbia Entities do not give the required Change
Notice, Columbia A and Columbia B shall be in breach of this Agreement, and in
addition Whitney or ▇▇▇▇▇▇▇▇ still have the right at any time to give the Change
Notice. At any time following a Change Notice and continuing for a period of one
year thereafter, either Whitney or ▇▇▇▇▇▇▇▇ shall have the right to implement
the Vote Shift by notice to the Board and all of the Members. The Vote Shift
shall be effective immediately upon such notice; provided however, if the Change
in Control of Columbia is curable, the Columbia Entities shall have 90 days
following the Vote Shift to cure the Change in Control of Columbia, and if cured
within such period the Vote Shift shall be deemed rescinded as of the date of
such cure. In addition, the holders of the Class A Units may, by majority vote
of such Units, implement the Vote Shift under the circumstances described in
Section 9.2 below.
The Board shall meet not less often than once per quarter. In the event
that the Board shall create an "Executive Committee," a "Compensation
Committee," an "Audit Committee," or committees with similar functions such
committees shall have at least one member designated by each of Columbia A,
Whitney and ▇▇▇▇▇▇▇▇.
Except as set forth in Subsection 5.3(a) below, no Member shall have
the actual or apparent authority to cause the LLC to become bound to any
contract, agreement or obligation, and no Member shall take any action
purporting to be on behalf of the LLC. The Manager shall not cause the LLC to
become bound to any contract, agreement or obligation, and shall take no other
action on behalf of the LLC if such matter requires action by the Members,
unless such matter has received the Member vote, consent, approval or
ratification as required pursuant to this Agreement with respect to such matter.
(b) Specific Actions Authorized. Without limiting the generality of the
preceding Subsection, the Manager shall have the authority on behalf of the LLC,
if, as and when it deems necessary or appropriate, subject only to the express
terms, conditions and limitations of such authority contained in this Agreement
(including, without limitation, Section 5.3 below), to take any of the actions
listed below in furtherance of or relating to the LLC's business and purposes:
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(i) Expend Funds; Invest. Expend the LLC's funds; and
invest in debt obligations (including, but not
limited to, obligations of federal and state
governments and their agencies, commercial paper, and
certificates of deposit of federally-insured
commercial banks, savings banks, or savings and loan
associations) such of the LLC's funds as are
temporarily not required for the operation of the
business and affairs of the LLC.
(ii) Retain Service Providers. Employ, contract with or
retain from time to time, on such terms and for such
compensation as they may deem appropriate, such
Persons as it may deem advisable, including, without
limitation, attorneys, accountants, financial and
technical consultants, investment bankers, loan
brokers, insurance brokers, or others.
(iii) Acquire, Finance, Operate, Sell Assets. Enter into
and execute agreements for the purchase of securities
or the acquisition of real and personal property
(whether tangible or intangible) appropriate to the
LLC's business, and make and implement all decisions
relating to the financing, operation, sale or
disposition of the LLC's business and assets.
(iv) Exercise Rights of Ownership. Exercise all the LLC's
rights, powers, and privileges of ownership with
respect to the assets of the LLC, and any other
rights held by the LLC, including the transfer of
title to all or any portion of the assets of the LLC.
(v) Modify Agreements. Consent to the modification,
renewal, or extension of any obligations of the LLC
to any Person or of any agreement to which the LLC is
a party or of which it is a beneficiary.
(vi) Convey and Encumber Assets. Execute any security
agreement, financing statement, collateral
assignment, pledge, hypothecation agreement, deed,
lease, deed of trust, mortgage, promissory note, ▇▇▇▇
of sale, assignment, contract or other instrument
purporting to convey or encumber the interests of the
LLC in any other entity or any other LLC assets or to
create indebtedness of the LLC.
(vii) Repay, Refinance Indebtedness. Repay in whole or in
part, refinance, recast, increase, modify, or extend
any indebtedness of the LLC.
(viii) Prosecute Actions; Defend Claims. Adjust, compromise,
settle, or refer to arbitration any claim against or
in favor of the LLC; and institute, prosecute and
defend any actions or proceedings relating to the
LLC, and its business and assets.
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(ix) Acquire Insurance. Acquire and enter into any
contract of insurance (including without limitation
life insurance, property and casualty insurance,
workers compensation insurance and general liability
insurance) which they deem necessary or appropriate
for the protection of the LLC, for the conservation
of LLC assets, or for any purpose convenient or
beneficial to the LLC.
(x) Incur Debt. Cause the LLC to borrow funds from any
Person in such amounts and upon such terms (including
interest rates, payment provisions and security) as
they may determine to be desirable under the
circumstances; and, as security for any such
borrowing, mortgage, pledge, hypothecate or otherwise
encumber LLC assets, or Interests as provided in
Section 7.1 below.
(xi) CIBC Credit Facility. Cause the LLC (X) to execute,
deliver, and perform the LLC's obligations set forth
in that certain Credit Agreement dated as of November
27, 1996 by and among CIBC Wood Gundy Securities
Corp., ▇.▇. ▇▇▇▇▇▇ Securities, Inc., ▇▇▇▇▇▇ Guaranty
Trust Company of New York, and Canadian Imperial Bank
of Commerce (the "CIBC Credit Facility") and any
other of the "Loan Documents" as such term is defined
in the CIBC Credit Facility, including, without
limitation, the granting of the liens to be created
pursuant to the "Security Documents" as such term is
defined in the CIBC Credit Facility, (Y) to effect
the borrowings contemplated under the CIBC Credit
Facility, and (Z) to execute and deliver all
acknowledgements, statements, certificates or
affirmations that may be required or contemplated
under the Loan Documents.
(xii) Maintain Books and Reports. Exercise all rights and
powers necessary to produce and maintain the books,
bank accounts, accounting reports, financial
statements and tax returns of the LLC.
(xiii) Make Tax Elections. Cause the LLC to make any and all
elections for federal, state and local tax purposes
including, without limitation, any election to adjust
the basis of LLC assets pursuant to Code Sections
734(b), 743(b), 754 and 755 or comparable provisions
of state or local law, in connection with Transfers
of Interests and LLC distributions.
(xiv) Merge, Convert or Reorganize. Subject to Section 7.9
below, cause the LLC or any entity controlled by the
LLC to merge with or convert by filing into any other
form of entity, or engage in any reorganization or
similar transaction, and in connection therewith
cause the conversion of the Interests or the equity
interests of any entity controlled by the LLC into
capital stock of any resulting corporation or equity
interests in any other resulting entity, which
capital stock or equity interests in the resulting
entity having relative rights, limitations,
preferences and other terms consistent with the
Interests or other equity interests so converted.
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(xv) Execute Documents. Execute, acknowledge, and deliver
any and all documents or instruments in connection
with any of the foregoing.
(c) Right to Rely on Action of the Manager. Persons dealing with the
LLC shall have no duty to inquire whether the act of the Manager in carrying on
in the usual way the business of the LLC is pursuant to the Manager's actual
authority under this Agreement, and such acts shall be binding upon the LLC
regardless of whether the Manager had actual authority, unless the Person
dealing with such Manager had actual knowledge that the Manager was exceeding
his authority.
(d) Delegation of Authority. The Manager may, but shall not be required
to, delegate by written resolutions of its board of managers, which resolutions
may be general or may be limited to specific matters, to one Person, several
Persons or a committee of Persons (with such titles as the Manager shall
select), which Persons may but need not be Members, any powers or authority
granted to the Manager pursuant to this Agreement or pursuant to the Act;
provided, however, that the delegation of authority by the Manager pursuant to
this Subsection shall not relieve the Manager from the duties, limitations, and
responsibilities set forth in the Act or in this Agreement.
SECTION 5.2. ASCERTAINING THE ACTION OF THE MANAGER.
The requisite vote, consent, approval or ratification of the Manager
with respect to any matter may, pursuant to Act Section 18-404(c), be evidenced
in writing signed by the Manager or may be ascertained and evidenced in any
other formal or informal matter.
SECTION 5.3. DIRECT AUTHORITY OF MEMBERS WITH RESPECT TO THE MANAGER;
RESTRICTIONS ON AUTHORITY OF MANAGER.
(a) Direct Member Action Required. The Members and not the Manager
shall have and shall exercise complete authority and exclusive control over all
matters pertaining to the LLC's member interest in the Manager, including
without limitation, authority with respect to (i) the designation of the
Manager's board of managers (which designations the Members agree to make as set
forth in Subsection 5.1(a) above), (ii) amendments to the Manager's operating
agreement or articles of organization, (iii) the merger, consolidation or
conversion of the Manager with or into another entity or other matters in which
the LLC as a member of the Manager shall have voting or other rights and (iv)
the sale, pledge, encumbrance or any other transfer of the LLC's member interest
in the Manager (other than the granting of a security interest in such member
interest pursuant to the Guarantee and Collateral Agreement). The exercise of
the Members' direct authority hereunder shall be by vote of those Members
holding a majority of the Units and such class vote as may be required in any
instance, and shall be pursuant to the procedures set forth in Article VI below,
except in those cases in which other procedures are expressly set forth.
(b) Member Vote Required. Without the vote of the holders of a majority
of the Units voting together as a single class, as well as holders of seventy
percent (70%) of the Class A Units and seventy percent (70%) of the Class B
Units, each voting separately as a class, the Manager shall have no authority
to:
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(i) do any act in contravention of this Agreement.
(ii) amend this Agreement, except as expressly provided
otherwise herein.
(iii) possess any property or assign, transfer, or pledge
the rights of the LLC in specific property, for other
than the benefit of the LLC or any Person in which
the LLC has an interest.
(iv) employ, or permit to be employed, the funds or assets
of the LLC in any manner except for the benefit of
the LLC or any Person in which the LLC has an
interest.
(v) commingle the LLC's funds with its own or any other
Person's funds.
(vi) make distributions other than in cash.
(vii) cause the LLC to convert to a corporation by merger
or otherwise, other than pursuant to a Qualified
Corporate Conversion.
(c) Class Unit Votes Required. Subject to the last paragraph of this
Section 5.3(c), other than with respect to a Qualified Corporate Conversion as
described in Section 7.9 below, without the vote of the holders of at least
seventy percent (70%) of the Class A Units and, if there has been a Vote Shift
as a result of a Change of Control of Columbia, seventy percent (70%) of the
Class B Units, none of the LLC, the Manager and any of the Members shall have
any authority to take any action, directly or indirectly, that:
(i) Alters or changes the rights, preferences or
privileges with respect to the Class A Units (or, if
there has been a Vote Shift, the Class B Units).
(ii) Creates, by reclassification, amendment to this
Agreement or otherwise, any new class or series of
Units or Interests having rights, preferences or
privileges senior or pari passu to the Class A Units
(or, if there has been a Vote Shift, the Class B
Units).
(iii) Results in any merger, reorganization, Change of
Control of the LLC or any transaction or a series of
related transactions in which all or substantially
all of the assets, properties, or businesses of the
LLC and its Subsidiaries taken as a whole are sold or
otherwise transferred to Persons other than the LLC
or any of its Subsidiaries, unless such transaction
would result in cash proceeds to the holders of the
Class A Units with respect to those Units of an
amount equal to or greater than the Class A Capital,
plus the Preferred Return.
(iv) Results in an IPO that is not a Qualified IPO,
subject to the rights of the Members under the
Registration Rights Agreement.
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(v) Results in the redemption or repurchase of any
Interest, whether in the form of cash or promissory
notes, or otherwise (except in connection with the
redemption or acquisition of Interests held by
employees, managers, or consultants of the LLC or any
Subsidiary, or Permitted Transferees of such Persons,
in connection with or in furtherance of the
termination of such relationship).
(vi) Results in the issuance of any Interest or other
equity interest in the LLC or in any Subsidiary, or
rights to acquire such interests, other than under
the Employee Unit Plan or in connection with a
Qualified Financing or an Interim Financing.
(vii) Results in any distribution with respect to any
Interest (other than as permitted in clause (v)
above), other than the tax distributions under
Section 3.1, withholding under Section 3.3, Preferred
Return distributions under Section 3.2(a), or
liquidating distributions under Section 9.3.
(viii) Results in any contract, agreement, loan, transaction
or other relationship with the LLC or any Subsidiary
and any of the Columbia Entities, Whitney or Fleet,
or with an Affiliate of any of them (excluding for
this purpose any Subsidiary), other than the payment
of Permitted Reimbursements.
(ix) Results in a change in the size, voting or
composition of the Board.
(x) Results in an increase in the number of Class D Units
authorized to be issued under the Employee Unit Plan.
(xi) Results in the LLC being engaged in any business
other than the distribution of, or the indirect
holding of rights to distribute, DirecTv broadcast
satellite services, programming and products.
(xii) Results in the LLC or any Subsidiary that is not a
juridical corporation electing on IRS Form 8832 or
otherwise electing to be treated as a corporation for
federal tax purposes as provided in Section 1.6 of
this Agreement.
(xiii) Results in any amendment to this Agreement adversely
affecting the holders of the class or classes of
Units entitled to a class vote under this Section
5.3(c).
In the event that the Class A Capital and Preferred Return has been
reduced to zero, the class vote required above by the holders of Class A Units
shall apply only to the items in clauses (i), (iv), (viii), (ix) and (xiii)
above. In the event a class vote is required above by the holders of the Class B
Units, such class vote shall not apply to the item in clause (vii) above.
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(d) Special Class Vote on Acquisitions. Without the vote of at least
fifty percent (50%) of the Class A Units (and a 50% vote of the Class B Units if
there has been a Vote Shift) neither the LLC nor any Subsidiary shall enter into
or consummate an acquisition of any NRTC System (other than those NRTC Systems
under contract on the date hereof or referred to in the definition of Interim
Financing), or more than one NRTC System in the same or a series of related
transactions from a single seller or a group of Affiliated sellers, if the
acquisition price per household is greater than $120 or the aggregate purchase
price exceeds $25,000,000; provided, however, that this Section 5.3(d) shall
expire on the date that is two years after the date hereof.
SECTION 5.4. LIMITATION OF LIABILITY.
(a) Notwithstanding any other provision to the contrary contained in
this Agreement, no Manager, Member or member of the Manager's board of managers
shall be liable, responsible, or accountable in damages or otherwise to the LLC
or to any Member or assignee of a Member for any loss, damage, cost, liability,
or expense incurred by reason of or caused by any act or omission performed or
omitted by such Manager, Member or member of the Manager's board of managers,
whether alleged to be based upon or arising from errors in judgment, negligence,
or breach of duty (including alleged breach of any duty of care or duty of
loyalty or other fiduciary duty), except for (i) acts or omissions the Manager,
Member or member of the Manager's board of managers knew at the time of the acts
or omissions were clearly in conflict with the interests of the LLC, (ii) any
transaction from which the Manager, Member or member of the Manager's board of
managers derived an improper personal benefit, (iii) a willful breach of this
Agreement, or (iv) gross negligence, recklessness, or willful misconduct or
knowing violation of law. Without limiting the foregoing, no Manager, Member or
member of the Manager's board of managers shall in any event be liable for (A)
the failure to take any action not specifically required to be taken by the
Manager, Member or member of the Manager's board of managers under the terms of
this Agreement, (B) any action or omission taken or suffered by any other
Manager, Member or member of the Manager's board of managers, or (C) any
mistake, misconduct, negligence, dishonesty or bad faith on the part of any
employee or other agent of the LLC appointed by such Manager, or Member or
member of the Manager's board of managers in good faith.
(b) Any Manager, Member or member of the Manager's board of managers
may consult with legal counsel selected by it, and any act or omission suffered
or taken by it on behalf of the LLC or in furtherance of the interests of the
LLC in good faith reliance upon and in accordance with the prior written advice
of such counsel shall be full justification for any such act or omission, and
the Manager, Member or member of the Manager's board of managers shall be fully
protected in so acting or omitting to act, provided that if it is ultimately
determined that such action was a breach of this Agreement or results in the
improper receipt, directly or indirectly, of personal benefit to such Manager,
Member or member of the Manager's board of managers, the Manager, Member or
member of the Manager's board of managers shall be accountable to the Members
for such action or omission notwithstanding such prior legal advice.
(c) The Manager may, but is not required to, provide for the limitation
of liability of Persons to whom the Manager may delegate management authority,
which limitation of liability must be in writing in order to be effective.
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SECTION 5.5. INDEMNIFICATION. The provisions regarding the
indemnification of the Manager, Members and members of the Board and their
representatives are set forth in the Indemnification Exhibit attached hereto as
Exhibit E.
SECTION 5.6. EXPENSE REIMBURSEMENT. The LLC shall reimburse all
reasonable out-of-pocket expenses incurred by the members of the Board in
connection with attendance at meetings of such Board (including any meetings of
committees of the Board). In addition, the LLC shall make Permitted
Reimbursements.
SECTION 5.7 INSURANCE. The LLC shall obtain "directors and officers"
insurance or comparable insurance for the members of the Board in such form and
with such coverage amounts as shall be determined by the Board and satisfactory
to Whitney and Fleet (but in no event shall coverage in excess of $3,000,000 be
required by Whitney and Fleet) within 45 days after the date hereof, and in any
event prior to the closing of any Qualified Financing. The LLC shall obtain
within sixty (60) days of the date hereof, and thereafter maintain in force so
long as requested to do so by Whitney, Fleet, or Columbia A, key man insurance
on the life of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. in an amount of coverage not less than
$10,000,000 and on the life of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ in an amount of coverage not
less than $3,000,000, provided, however, that such individuals are insurable at
commercially reasonable rates.
ARTICLE VI
MEMBER MEETINGS
SECTION 6.1. ACTUAL MEETINGS OF MEMBERS.
(a) Meetings of the Members may be called by any 10% Unit Member by
notice to the other Members setting forth the date and time of the meeting, the
nature of the business to be transacted, and, unless the meeting is a conference
call meeting as provided in Subsection (d) below, the place of the meeting.
Notice of any meeting shall be given pursuant to Section 11.1 below to all
Members not less than two (2) days nor more than ninety (90) days prior to the
meeting.
Notice of any meeting of the Members shall be deemed to have been
waived by attendance at the meeting, unless the Member attends the meeting
solely for the purpose of objecting to notice and so objects at the beginning of
the meeting. Members may attend and vote in person or by proxy at such meeting,
and the LLC shall make reasonable arrangements to permit Members to attend and
vote at meetings by telephone. Whenever the vote or consent of Members is
permitted or required under this Agreement, such vote or consent may be given at
a meeting of Members or may be given in accordance with the procedure prescribed
in the following Section for written consent to action in lieu of actual
meetings. Except as otherwise provided in this Agreement, the vote, consent,
approval or ratification of Members holding a majority of the Units shall be
required in order to constitute Member action.
(b) For the purpose of determining the Members entitled to receive
notice of, or to vote at, any meeting of the Members or any adjournment thereof
or entitled to take any other
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action (including informal action authorized by the following Section), the
Person(s) requesting such meeting or seeking such informal action may fix, in
advance, a date as the record date for any such determination of Members. Such
date shall not be more than ten (10) days prior to any such meeting or action.
(c) At the beginning of any meeting of Members, the Manager shall
designate an individual to preside over the meeting, and the meeting shall be
conducted pursuant to such rules of order as the presiding individual deems
appropriate. The presiding individual shall cause a record to be kept of the
meeting, which shall be filed with the LLC's permanent records.
(d) Meetings may be held via conference call with no physical location
designated as the place of the meeting, provided that all Members and other
persons on the conference call can hear and speak to one another and notice of
the conference call is given or waived as required in the case of a meeting
called for a specific place. The Member calling a conference call meeting shall
be responsible for arranging the conference call and shall specify in the notice
of the conference call meeting the method by which the Members can participate
in the conference call.
SECTION 6.2. WRITTEN CONSENT TO ACTION IN LIEU OF ACTUAL MEETINGS.
Pursuant to Act Section 18-302(c), any action that is permitted or required to
be taken by Members, including any amendment to the Certificate of Formation or
to this Agreement, may be taken or ratified by written consent setting forth the
specific action to be taken and sent to all Members and signed within thirty
(30) days of being sent by that number of Members required in order to take the
specified action (including such class vote as may be required under Section
5.3).
ARTICLE VII
TRANSFER OF INTERESTS; RIGHTS OF FIRST REFUSAL AND CO-SALE;
CORPORATE CONVERSIONS
SECTION 7.1. IN GENERAL; REGISTRATION AND CERTIFICATION OF INTERESTS;
MANDATORY PLEDGE OF INTERESTS. Every Transfer shall be subject to all of the
terms, conditions, restrictions, and obligations of this Agreement. Any
attempted Transfer which does not comply with the provisions of this Article
shall be void and the LLC shall not recognize the attempted purchaser, assignee,
or transferee for any purpose whatsoever, and the Member attempting such
Transfer shall have breached this Agreement for which the LLC and the
non-breaching Members shall have all remedies available for breach of contract.
Ownership of the Interests (whether by Members or assignees) shall be
registered upon the books and records of the LLC and, pursuant to Section
18-702(c) of the Act, evidenced by certificates issued to the owners of such
Interests in the form of Exhibit N attached hereto and any Transfer of Interests
shall be effected only by the surrender of such certificates to the LLC and
reissuance of the certificates and re-registration of ownership on the books and
records of the LLC. The Manager shall also establish procedures for the
replacement of lost, destroyed or stolen certificates upon such undertaking as
the Manager deems advisable to indemnify the LLC with respect to the reissuance
of replacement certificates.
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Each Member and other owner of an Interest hereby agrees to grant a
security interest in, collaterally assign, pledge or hypothecate its Interest as
security for the debts of the LLC and its Subsidiaries pursuant to the
Collateral and Guarantee Agreement. Each Member and other owners of an Interest
agrees to execute any and all further instruments and documents as may be
necessary or appropriate to give effect to these provisions. This provision
shall no longer apply after such security interest is released by the
administrative agent under the Collateral and Guarantee Agreement.
SECTION 7.2 CONDITIONS PRECEDENT TO TRANSFER OF MEMBER'S INTEREST.
Subject to Sections 7.7 and 7.8 below, a Member may Transfer all or any portion
of his Interest if all the following conditions are satisfied:
(a) Prior Notice. At least ten (10) days prior to any proposed Transfer
of an Interest otherwise permitted pursuant to this Section, the Member
proposing to Transfer all or any portion of its Interest gives a Transfer
Notice.
(b) Expenses. The transferor agrees to reimburse the LLC for any
expenses reasonably incurred by the LLC in connection with the consummation of
the Transfer.
(c) Transfer Documents; Effective Time of Transfer. Such Member and its
purchaser, transferee or assignee, shall execute, acknowledge, and deliver to
the LLC such instruments of transfer and assignment with respect to such
transaction as are in form and substance reasonably satisfactory to the LLC,
including, without limitation, the written agreement of the purchaser,
transferee or assignee to assume and be bound by all of the obligations of the
transferor under this Agreement.
(d) No Tax Termination. The Transfer does not result in the tax
termination of the LLC within the meaning of Code Section 708(b).
(e) Securities Law Compliance. Either (i) the Transfer is to the heirs,
devisee or legatees of a deceased Member; (ii) the LLC determines that the
Interests are not securities; (iii) the Interests are registered under the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "1933 Act"), and any applicable state securities laws; or (iv) the LLC
determines that the Transfer qualifies for an exemption from the registration
requirements of the 1933 Act and any applicable state securities laws. Except as
specifically provided in the Registration Rights Agreement, the LLC has no
obligation or intention to register Interests for resale under any federal or
state securities laws or to take any action which would make available any
exemption from the registration requirements of such laws.
(f) Not a Publicly Traded Partnership. The Transfer does not result in
the LLC being treated as a corporation pursuant to Code Section 7704 or Treasury
Regulations Section 1.7704-1.
(g) Opinion of Counsel. In its discretion, the Manager may require as a
condition precedent to any Transfer of an LLC Interest, delivery to the LLC, at
the proposed transferor Member's expense, of an opinion of counsel satisfactory
(both as to the counsel and substance
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of the opinion) to the Manager that the proposed Transfer will satisfy all or
certain of the conditions set forth in Sections 7.2(c)-(f).
(h) Other Agreements. The Transfer complies with the provision of any
employment agreement or other agreement between the Member and the LLC or any
Subsidiary.
(i) Consent of Holder of Security Interest. In the event the Interest
is subject to a security interest, collateral assignment, pledge or
hypothecation pursuant to Section 7.1 above, the Member proposing to make the
Transfer obtains the written consent to the Transfer of the holder or
beneficiary of such encumbrance, and such Transfer must in any event be subject
to such prior encumbrance.
SECTION 7.3. RIGHTS OF ASSIGNEES. If a Transfer complies with the
provisions of the preceding Section, but the Person acquiring such Interest is
not admitted as a Member pursuant to the following Section, such Person shall
become an assignee with respect to such Interest pursuant to Section
18-702(b)(1) of the Act.
An assignee with respect to an Interest is entitled only to receive
distributions and allocations with respect to such Interest as set forth in this
Agreement, and shall have no other rights, benefits or authority of a Member
under this Agreement or the Act, including without limitation no right to
receive notices to which Members are entitled under this Agreement, no right to
vote, no right to inspect the books or records of the LLC, no right to bring
derivative actions on behalf of the LLC, and no other rights of a Member under
the Act or this Agreement. Provided, however, the Interest of an assignee shall
be subject to all of the restrictions, obligations and limitations under this
Agreement and the Act, including, without limitation, the restrictions on
Transfers of Interests, the obligations (but not the rights) pursuant to the
co-sale provisions and provisions giving Members an option to purchase the
Interest of an assignee upon the occurrence of an Optional Purchase Event with
respect to the assignee, as contained in this Article.
SECTION 7.4. ADMISSION OF ASSIGNEES AS MEMBERS. No Person taking or
acquiring, by whatever means, the Interest of any Member in the LLC shall be
admitted as a Member unless either (i) such Person is a Permitted Transferee of
the transferor, or (ii) such Person is admitted as a Member with the consent of
the Manager. In determining whether to consent to the admission of a Member's
transferee, only those members of the Board who are not Affiliates or Family
Members of the transferor and the transferee shall have a vote. In addition, no
Person shall be admitted as a Member unless such Person:
(a) Elects to become a Member by executing and delivering such Person's
written acceptance and adoption of the provisions of this Agreement;
(b) Executes, acknowledges, and delivers to the LLC such other
instruments as the LLC may deem necessary or advisable to effect the admission
of such Person as a Member; and
(c) Pays a transfer fee to the LLC in an amount sufficient to cover all
reasonable expenses of the LLC incurred in connection with the admission of such
Person as a Member.
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The Manager shall amend the Information Exhibit from time to time to
reflect the admission of Members or the assignment of Interests pursuant to this
Article, any permitted issuance of additional Interests, the operation of
Section 2.2 or any other provision of this Agreement pursuant to which matters
set forth on the Information Exhibit have changed pursuant to or as permitted
under this Agreement and shall promptly provide such amended Information Exhibit
to the Members.
SECTION 7.5. DISTRIBUTIONS AND ALLOCATIONS WITH RESPECT TO TRANSFERRED
INTERESTS. If any Interest is Transferred during any Fiscal Year in compliance
with the provisions of this Article, then (i) Profits, Losses, and all other
items attributable to the Interest for such period shall be divided and
allocated between the transferor and the transferee by taking into account their
varying interests during the period in accordance with Code Section 706(d),
using any conventions permitted by the Code and selected by the Members; (ii)
all distributions on or before the date of such Transfer shall be made to the
transferor, and all distributions thereafter shall be made to the transferee;
and (iii) the transferee shall succeed to and assume the Capital Account, the
Class A Capital, the number and type of Units, and other similar items of the
transferor to the extent related to the transferred Interest. Solely for
purposes of making the allocations and distributions, the LLC shall recognize
such Transfer not later than the end of the calendar month during which the LLC
receives notice of such Transfer. If the LLC does not receive a notice stating
the date the Interest was transferred and such other information as the LLC may
reasonably require within thirty days after the end of the Fiscal Year during
which the Transfer occurs, then all of such items shall be allocated, and all
distributions shall be made to the Person, who, according to the books and
records of the LLC on the last day of the Fiscal Year during which the Transfer
occurs, was the owner of the Interest. Neither the LLC nor any Member shall
incur any liability for making allocations and distributions in accordance with
the provisions of this Section, whether or not any Member or the LLC had
knowledge of any Transfer of ownership of any Interest.
SECTION 7.6. TRANSFER OF INTEREST OF COLUMBIA INC. TO COLUMBIA B OR
COLUMBIA CAPITAL. Any provision in this Agreement to the contrary
notwithstanding, in the event Columbia Inc. transfers its Interest to Columbia B
via a contribution to the capital of Columbia B or otherwise, or to Columbia
Capital via a merger of Columbia Inc., with and into Columbia Capital, then in
either such case the transferee shall succeed to all of the rights of Columbia
Inc. in and to its Interest, including its rights as a Member, and shall be
bound by all of the obligations of Columbia Inc. under this Agreement, all
without the necessity of the execution or delivery of any further agreement,
document or instrument.
SECTION 7.7. RIGHT OF FIRST REFUSAL.
(a) Grant of Option. Upon the occurrence of an Optional Purchase Event
with respect to a Member, the LLC (acting through the Manager), followed by all
of the 10% Unit Members, shall have successive options to purchase all, but not
less than all, of such Member's Interest pursuant to the terms and conditions
set forth in this Agreement; provided, however, that if the Optional Purchase
Event is a proposed Transfer of only a portion of the Member's Interest, the
LLC's and the 10% Unit Members' options shall apply only to the portion of the
Interest that is proposed to be Transferred. In those cases in which the Manager
is acting on behalf of the LLC under this Section 7.7, such action shall be
taken by the Board, provided that any member
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of the Board who is an Affiliate or designee of any Member with an interest in
the right of first refusal transaction under this Section 7.7 as a selling
Member shall not participate in the Board action.
Upon the occurrence of an Optional Purchase Event, the Member with
respect to whom the Optional Purchase Event has occurred shall immediately give
written notice to the LLC and to all 10% Unit Members, which notice shall
describe the Optional Purchase Event (unless the Optional Purchase Event is the
giving of a Transfer Notice, in which case the Transfer Notice shall suffice).
If the Member with respect to whom the Optional Purchase Event has occurred does
not provide such notice and another Member or the Manager knows of the
occurrence of such Optional Purchase Event, such Member or the Manager may send
written notice of the Optional Purchase Event to the LLC, and if the LLC
determines that Optional Purchase Event has occurred, the LLC shall provide to
all 10% Unit Members the Transfer Notice.
(b) Optional Purchase Events. For purposes of this Agreement, the term
"Optional Purchase Event" shall mean any of the following events with respect to
a Member:
(i) The delivery of a Transfer Notice by the Member
unless such Transfer is to a Permitted Transferee.
(ii) In the case of any Member that is an individual, the
entry by any court of an order or adjudication that
the current or former spouse of the Member has
acquired any rights in the Member's Interest as a
result of divorce, equitable distribution or
community property partition proceedings pursuant to
the laws of any state or jurisdiction.
(iii) In the case of any Member who holds Class C or Class
D Units, if the Member who initially received such
Units from the LLC or its predecessor is no longer an
officer, director, employee, manager or an
independent contractor of the LLC or any Subsidiary.
(iv) In the case of Whitney, Columbia A, Columbia B,
Columbia Inc., or any other Member substantially all
of the assets of which consist of such Member's
Interest in the LLC, any Transfer of its capital
stock or other equity interests, or the sale or
issuance of any capital stock or equity interest in
such Member, unless such Transfer, sale or issuance
is to a Person who is an owner of such Member on the
date of this Agreement or a Permitted Transferee of
such Member (an "Indirect Transfer"); provided
however, Columbia A, Columbia B or Columbia Inc. may
admit partners, members or shareholders without
triggering this clause if such partners, members or
shareholders are employees of Columbia Capital or if
such additional partners, members or shareholders do
not acquire in the aggregate more than ten percent
(10%) of the equity interests in such Columbia
Entity. In the case of an Indirect Transfer, the
right of first refusal under this Section 7.7 and the
right of co-sale under Section 7.8 shall apply to a
proportionate part of the Interest of the Member with
respect to which an Indirect Transfer has occurred
based upon the amount
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of the equity interest of such Member that is
Transferred or issued in the Indirect Transfer
relative to the total equity interests in such
Member.
(c) Proposed Transfer for Consideration. If the Optional Purchase Event
is the delivery of a Transfer Notice or an Indirect Transfer and the Transfer or
Indirect Transfer is for cash, indebtedness, property or other consideration,
then the LLC's and the 10% Unit Members' successive options shall be to purchase
the Interest for the fair market value of the consideration proposed to be
received in the Transfer or Indirect Transfer or payable at the closing
described below, and pursuant to all of the other terms and conditions of the
proposed Transfer or Indirect Transfer. The Member desiring to Transfer its
Interest (or the Member with respect to which an Indirect Transfer has occurred)
and the Manager (acting on behalf of all Persons who exercise their option to
purchase hereunder) shall attempt to agree, in writing, on the fair market value
of any noncash consideration to be received in the proposed Transfer. If the
Member and the Manager are unable to agree on the fair market value of the
noncash consideration within thirty (30) days following the exercise of the
options to purchase granted in this Section, either the Member or the Manager
may by notice to the other commence the Appraisal Process described in the
Appraisal Exhibit.
(d) Other Optional Purchase Events. If the Optional Purchase Event is
not a proposed Transfer or Indirect Transfer for consideration, then the
successive options shall be for a purchase price equal to (i) the fair market
value of such Interest as of the last day of the calendar month immediately
prior to the occurrence of the Optional Purchase Event (the "Valuation Date"),
plus (ii) interest at the Prime Rate on the amount determined under clause (i)
from the Valuation Date to the closing date, compounded monthly, reduced by
(iii) any distributions with respect to such Interest from the Valuation Date
through the closing. For purposes of determining the purchase price, the fair
market value of an Interest shall equal the amount that would be received by the
owner of such Interest if all of the assets of the LLC were sold for cash equal
to their fair market value, the LLC paid all of its liabilities and liquidated
in accordance with this Agreement, all as of the Valuation Date. The selling
Member and the Manager (acting on behalf of all Persons who have options to
purchase hereunder) shall attempt in good faith to agree on the fair market
value of the Interest. If they are unable to agree, in writing, on the fair
market value of the Interest within thirty (30) days following the exercise of
the options to purchase granted in this Section, either the selling Member or
the Manager may by notice to the other commence the Appraisal Process described
in the Appraisal Exhibit.
(e) Exercise of Option by LLC. The Manager shall provide written notice
of exercise of the option to the Member with respect to whom an Optional
Purchase Event has occurred and to all 10% Unit Members within thirty (30) days
following the Transfer Notice or the other written notice to all 10% Unit
Members of the occurrence of the Optional Purchase Event, specifying whether or
not the LLC is exercising its option to purchase the Interest pursuant to this
Section. A failure by the Manager to give notice within such period shall be
deemed to be a notice of nonexercise.
(f) Exercise of Option by 10% Unit Members. In the event the LLC does
not exercise its option, then each of the 10% Unit Members shall have the option
to (i) purchase the Interest pursuant to this Section 7.7 on the same terms as
the LLC in proportion to the relative number of Units held by all the 10% Unit
Members; (ii) exercise the rights of co-sale specified
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in Section 7.8 below; or (iii) neither purchase a proportionate part of such
Interest nor exercise rights of co-sale. In order to exercise its option
pursuant to this Section, a 10% Unit Member shall provide written notice of
exercise of the option to the Member with respect to whom an Optional Purchase
Event has occurred, to the LLC and to all other 10% Unit Members within thirty
(30) days following the LLC's nonexercise. If any 10% Unit Member elects not to
exercise their option, then those 10% Unit Members that do exercise their option
shall have the option, for an additional fifteen (15) days following the end of
the option period for all 10% Unit Members, to acquire the Interest that could
have been acquired by the nonexercising 10% Unit Members in proportion to the
relative number of Units held by the exercising 10% Unit Members.
(g) Waiver; Failure to Exercise Options. Any party with an option to
purchase an Interest pursuant to this Article may waive its option at any time
by notice of such waiver to the Manager. With respect to an Optional Purchase
Event that is the giving of a Transfer Notice, if Persons with options under
this Section shall fail to exercise their options to purchase such Interest, or
such portion thereof, within the applicable periods, or in the event the
purchaser(s) shall fail to tender the required consideration at the closing
referred to below, then subject to the rights of co-sale described in Section
7.8 below, the transferring Member may transfer the Interest to the Person, and
upon the terms and price, specified in the notice of the proposed Transfer, but
only if such Transfer is consummated within ninety (90) days after the
expiration or withdrawal of the last option, or the failure to tender the
consideration if applicable; provided, however, the holder of such transferred
Interest shall be a mere assignee and shall not become a Member unless admitted
as such pursuant to the terms of the Agreement. If the subject Interest is not
so transferred within the applicable period, the Interest shall again become
subject to all of the terms and conditions of the Agreement and may not
thereafter be transferred except in the manner and on the terms herein provided.
In the event the LLC or any 10% Unit Member exercises an option hereunder, but
fails to tender the required consideration at the closing, the transferring
Member shall have all rights and remedies against the LLC or the exercising 10%
Unit Members, as the case may be, available for breach of contract, including
the remedy of specific performance.
(h) Closing of Purchase of Interest; Payment of Purchase Price;
Security. The closing of the purchase of any Interest by the LLC or any of the
10% Unit Members pursuant to this Section shall occur at the offices of the LLC
within thirty (30) days after the earlier of (a) the written agreement of the
parties on the fair market value of the Interest or the consideration to be
received therefor, as the case may be, or (b) the conclusion of the Appraisal
Process. At the closing, the selling Member shall deliver to the purchaser(s) of
the Interest an executed assignment of the subject Interest satisfactory in form
to counsel for the LLC, and the purchaser(s) shall deliver the purchase price as
provided below to the owner of the Interest. The selling Member and the
purchaser(s) each shall execute and deliver such other documents as may
reasonably be requested by the other.
The purchase price shall be delivered at closing as follows:
(i) If the purchase of the Interest is as a result of a proposed
Transfer to a third party for consideration, the purchase
price determined under this Agreement shall be
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payable on the same basis as the purchase price was to have
been paid by the third party.
(ii) If the purchase of the Interest is as a result of any other
Optional Purchase Event the purchase price shall be payable in
cash or same day funds at closing.
SECTION 7.8. RIGHT OF CO-SALE.
(a) Right of Co-Sale. In the event of a proposed Transfer of an
Interest to a Person who is not a Permitted Transferee, to the extent the
Interest proposed to be transferred is not purchased by the LLC pursuant to its
right of first refusal described in Section 7.7, each other Member shall have
the right to participate in the Transfer in the manner set forth in this Section
7.8. Each such nontransferring Member may Transfer to the proposed transferee
identified in the Transfer Notice a pro rata share (defined below) of such
nontransferring Member's Interest by giving written notice to the Manager and to
the transferring Member within the thirty (30) day period specified in Section
7.7(f), which notice shall state that the Member elects to exercise its rights
of co-sale under this Section 7.8. A notice of exercise of a Member's right of
first refusal under Section 7.7(f) and a notice of exercise of a Member's rights
of co-sale hereunder shall be mutually exclusive and the first such notice given
shall be binding and irrevocable. Each nontransferring Member shall be deemed to
have waived its right of co-sale hereunder either if it fails to give notice
within the prescribed time period or if such Member gives notice exercising its
right of first refusal pursuant to Section 7.7(f). A nontransferring Member's
pro rata share for this purpose shall equal that portion of the nontransferring
Member's Interest represented by that number of Units obtained by multiplying
the number of Units that are the subject of the proposed Transfer by fraction,
the numerator of which is the number of Units then held by such nontransferring
Member, and the denominator of which is the number of Units then held by all
persons entitled to this right of co-sale plus the number of Units represented
by the Interests proposed to be Transferred by the transferring Member. Insofar
as possible this right of co-sale shall apply to Units of the same class or
classes as the Units subject to the Transfer Notice. If any Member desiring to
exercise its rights of co-sale hereunder does not have a sufficient number of
Units of the same class as the Units subject to the Transfer Notice, such Member
may substitute Units of another class so long as such class ranks senior in
liquidation to the class of Units subject to the Transfer Notice. In the event
the proposed Transfer is of Class B Units and a Person wishing to exercise its
rights of co-sale hereunder does not have sufficient Class B Units, but has
Class A Units, such Person may convert a sufficient portion of such Class A
Units into Class B Units on the same basis as in the case of a Common Stock
Corporate Conversion so as to enable such Person to exercise its rights of
co-sale without surrendering such Person's accrued Preferred Return as of the
date of such conversion or the Preferred Return which shall accrue on such
Person's remaining Class A Units (and on any remaining accrued Preferred Return)
after the exercise of the rights of co-sale.
(b) Consummation of Co-Sale. Each nontransferring Member, in exercising
its right of co-sale hereunder, may participate in the Transfer by delivering to
the transferring Member at the closing of the Transfer of the transferring
Member's Interest to the transferee (the "Closing") one or more certificates
duly endorsed (if the Interests are certificated and are not pledged as
authorized in this Agreement) or an assignment (if the Interests are not
certificated or if they are pledged as authorized in this Agreement),
representing the Interest to be
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transferred by such nontransferring Member. At the Closing, such certificates or
assignments will be delivered to the purchaser (whether such purchaser is the
proposed transferee set forth in the Transfer Notice or those Members who have
exercised their rights of first refusal under Section 7.7) and the transferring
Member will remit, or will cause to be remitted, to the nontransferring Member
at the Closing that portion of the proceeds of the Transfer to which such
nontransferring Member would otherwise be entitled by reason of such
nontransferring Member's participation in such Transfer pursuant to these rights
of co-sale.
(c) Indirect Transfers. In the case of an Indirect Transfer, the right
of co-sale under this Section 7.8 shall be the right to put a portion of the
Interest of the Members electing their rights of co-sale hereunder to the Member
with respect to whom the Indirect Transfer has occurred, as if such member had
Transferred that proportionate part of such Member's Interest described in
Section 7.7(b)(iv) above.
SECTION 7.9. CORPORATE CONVERSIONS.
(a) In General. Upon the formation of the LLC, it was the express
intention and understanding of the Persons who were then the Members of the LLC
that upon the occurrence of certain specified events the LLC was to be converted
into a corporation by action of the Manager without the necessity of any action
or any investment decision on the part of any such Member. Upon the execution of
this Agreement, it is the express intention and understanding of the existing
Members and those Persons who became Members at the time of the execution of
this Agreement that upon the occurrence of those events specified below the LLC
shall be converted into a corporation in the manner set forth herein by the
action of the Manager and without the necessity of any action or any investment
decision on the part of any Member.
(b) Qualified Corporate Conversion -- Preferred Stock Corporate
Conversion. Upon the determination at any time by the Manager acting by a
majority vote of its board of managers that it is in the best interests of the
LLC that it be converted into a corporation, the Manager shall cause to be
executed and filed the certificate of merger in the form of Exhibit J attached
hereto, and cause to be executed and delivered such other instruments and
documents as it shall determine to be necessary or appropriate in order to
effectuate a Preferred Stock Corporate Conversion.
(c) Qualified Corporate Conversion -- Common Stock Corporate
Conversion.
(i) Conversion in Connection with a Qualified IPO. Upon
the determination by the Manager acting by a majority
vote of the Board in connection with the consummation
of a Qualified IPO that it is in the best interests
of the LLC that it be converted into a corporation
with a single class of common stock and after the
request of the managing underwriter of the Qualified
IPO selected by the Board, the Manager shall cause to
be executed and filed the certificate of merger in
the form of Exhibit K attached hereto, and cause to
be executed and delivered such other instruments
and documents as it shall determine to be necessary
or appropriate, in order to effectuate a Common
Stock Corporate Conversion.
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(ii) Conversion in Connection with any other IPO. Upon the
determination by the Manager acting by a majority
vote of its board of managers in connection with the
consummation of an IPO that is not a Qualified IPO,
but which has been approved by the requisite class
vote of the holders of the Class A Units as specified
in Section 5.3(c) above, that it is in the best
interests of the LLC that it be converted into a
corporation with a single class of common stock, the
Manager shall cause to be executed and filed the
certificate of merger, and cause to be executed and
delivered such other instruments and documents as it
shall determine to be necessary or appropriate, in
order to effectuate a Common Stock Corporate
Conversion.
(d) Satisfaction of Preferred Return in Cash in Connection with a
Qualified Corporate Conversion. In connection with the consummation of a
Qualified Corporate Conversion, the Manager shall have the authority acting by
majority vote of the Board to cause the LLC to declare a distribution of all or
any portion of any remaining unpaid Preferred Return, which amounts shall be
paid within five (5) business days following the consummation of the Qualified
Corporate Conversion and shall be treated as reducing the amount of the
Preferred Return outstanding on the date the Qualified Corporate Conversion is
consummated for purposes of determining the Common Stock Conversion Amount and
the Preferred Stock Conversion Amount.
(e) Board of Directors. In connection with the consummation of a
Preferred Stock Corporate Conversion the board of directors of the surviving
corporation shall be the same size and shall have the same composition and shall
be subject to the same voting and other rules as the board of managers of the
Manager. In the case of a Common Stock Corporate Conversion, the size,
composition and governing rules with respect to the board of directors of the
surviving corporation shall be determined by the Manager in consultation with
the managing underwriter.
(f) Procedures. In order to effectuate a Qualified Corporate Conversion
as authorized in this Section, the Manager shall execute the applicable
certificate of merger in the name of Whitney, as the surviving other business
entity in the merger, pursuant to the Manager's limited power of attorney set
forth in Section 7.10 below, shall date the certificate of merger as of the date
the Manager determines the Qualified Corporate Conversion should become
effective and shall file such certificate of merger in accordance with the Act.
For purposes of the General Corporation Law of the State of Delaware and Section
18-209(c)(2) of the Act this Agreement shall constitute the agreement of merger
approved and executed by each of the constituent entities to the merger. Whitney
hereby represents that the board of directors and the stockholders of Whitney
have approved and adopted this Agreement in accordance with the provisions of
the General Corporation Law of the State of Delaware relating to the adoption of
an agreement and plan of merger.
(g) Other Corporate Conversions. Upon a vote of the holders of a
majority of the Units and such class vote of the holders of the Class A Units as
may be required pursuant to Section 5.3(c) above, the Manager shall have the
authority to cause a Corporate Conversion by merger into another corporation or
otherwise, and in connection therewith cause the conversion
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of the Interests into the capital stock of any resulting corporation having
relative rights, limitations, preferences and other terms consistent with the
Interests so converted.
(h) No Appraisal Rights. The Members shall have no appraisal rights
pursuant to Act Section 18-210 or otherwise in connection with a Corporate
Conversion or any other transaction authorized under this Agreement.
(i) Other Permitted Ancillary Transactions. In connection with the
consummation of a Qualified Corporate Conversion, the Manager acting by majority
vote of its Board of Managers shall have the authority to merge, consolidate or
reorganize one or more of the Subsidiaries with one or more other Subsidiaries
or other entities wholly-owned directly or indirectly by the LLC or the Manager
or the surviving corporation in the Qualified Corporate Conversion.
(j) Covenants of Whitney. In order to ensure that the LLC can
effectuate a Qualified Corporate Conversion as described above, Whitney hereby
agrees not to take any of the following actions prior to the consummation of a
Corporate Conversion without the prior written consent of the Manager, which
shall not be unreasonably withheld:
(i) modify or amend in any respect its certificate of
incorporation, bylaws or any similar organizational document;
(ii) permit or allow any changes or modifications to be made to its
capital structure;
(iii) permit any of its capital stock to be owned by any Person who
does not agree to execute and be bound by the provisions of
this Agreement constituting an agreement and plan of merger
with respect to a Qualified Corporate Conversion;
(iv) enter into any merger, consolidation or amalgamation or
liquidate, wind up or dissolve itself (or permit any
liquidation or dissolution), or, convey, sell, lease, assign,
transfer or otherwise dispose of its Interests in the LLC;
(v) acquire or hold any asset, including, but not limited to, any
interest in any entity other than the LLC, other than its
Interests in the LLC and other than distributions received
from the LLC as may be invested and reinvested from time to
time;
(vi) create, incur, assume or permit to exist any indebtedness,
liabilities or other obligations other than pursuant to this
Agreement, and other than liabilities for corporate franchise
tax, fees due to Persons serving as registered agent and
similar amounts necessary to maintain its corporate status and
good standing and to prepare and file its tax returns and its
annual and periodic financial statements, and liabilities for
federal, state and local income taxes with respect to its
Interest hereinafter ("Permitted Liabilities");
(vii) create, incur, assume or permit to exist any lien upon its
assets or revenues;
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(viii) create, incur, assume or permit to exist any obligation
guaranteeing or in effect guaranteeing any indebtedness or
other obligations of any third Person in any manner, whether
directly or indirectly; or
(ix) declare or pay any dividend or distribution with respect to
its capital stock except to the extent its assets exceed its
Permitted Liabilities; or
(x) fail to have reserved for issuance sufficient shares of its
capital stock in order to implement a Qualified Corporate
Conversion.
In the event Whitney breaches any of the foregoing covenants with the result
that the LLC is unable to effectuate a Qualified Corporate Conversion as
contemplated herein, then the LLC shall have all the rights and remedies
available for breach of contract. In addition, the LLC shall have the right, to
effectuate the Qualified Corporate Conversion and to either (i) offset against
distributions or amounts otherwise receivable by Whitney with respect to their
shares received in the merger the amount any liabilities of Whitney as of the
date of the Qualified Corporate Conversion not authorized to be incurred
hereunder ("Unauthorized Liabilities"), or (ii) reduce the number of shares that
Whitney is entitled to receive in the Qualified Corporate Conversion by an
amount equal to the amount of Unauthorized Liabilities divided by the fair
market value per share of the shares to be issued in the Qualified Corporate
Conversion. For this purpose, the fair market value per share of the Common
Stock shall equal the price at which it is sold in the IPO, and the fair market
value of the Preferred Stock shall equal the fair market value of the underlying
Common Stock. Prior to exercising its right of offset or right to reduce the
number of shares Whitney is to receive, the LLC shall give notice to Whitney. If
Whitney's breach of covenant is curable, the LLC shall establish a reserve in
the amount of any such offset or consisting of the number of shares that would
be distributable to Whitney but for the breach. To the extent such breach is not
cured within 90 days of the LLC's notice, the LLC shall retain the reserve and
to the extent such breach is cured, the reserve shall be distributed to Whitney,
in each case at the end of such 90 day period.
(k) Further Assurances. The Manager is specifically authorized to take
any and all further action, and to execute, deliver and file any and all
additional agreements, documents or instruments, as it may determine to be
necessary or appropriate in order to effectuate the provisions of this Section
7.9, and each Member hereby agrees to execute, deliver and file any such
agreements, documents or instruments or to take such action as may be reasonably
requested by the Manager for the purpose of effectuating the provisions of this
Section 7.9.
SECTION 7.10. LIMITED POWER OF ATTORNEY. Each Member hereby constitutes
and appoints the Manager and each and every successor manager, with full power
of substitution and resubstitution, its true and lawful attorney-in-fact for
such Member and in such Member's name, place and stead and for such Member's use
and benefit, to sign, execute, certify, acknowledge, swear to, file, deliver and
record any and all agreements, certificates, instruments and other documents
which the Manager may deem necessary, desirable, or appropriate for the purposes
of (i) effecting any grant of security interest, collateral assignment, pledge
or hypothecation of its Interest as security as provided in Section 7.1, (ii) on
behalf of a selling Member closing the exercise of any rights of the LLC or any
right exercised by any 10% Unit Member to purchase
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an Interest, pursuant to the right of first refusal provision in Section 7.7
hereof, and (iii) effectuating any Corporate Conversion as authorized in Section
7.9.
Each Member authorizes each such attorney-in-fact to take any action
necessary or advisable in connection with the foregoing, hereby giving each
attorney-in-fact full power and authority to do and perform each and every act
or thing whatsoever requisite or advisable to be done in connection with the
foregoing as fully as such Member might or could do so personally, and hereby
ratifying and confirming all that any such attorney-in-fact shall lawfully do or
cause to be done by virtue thereof or hereof.
This power of attorney is a special power of attorney coupled with an
interest and is irrevocable, may be exercised by any such attorney-in-fact by
listing the Member executing any agreement, certificate, instrument, or other
document with the single signature of any such attorney-in-fact acting as
attorney-in-fact for such Members, shall survive the death, disability, legal
incapacity, bankruptcy, insolvency, dissolution, or cessation of existence of a
Member and shall survive the delivery of an assignment by a Member of the whole
or a portion of his Interest in the LLC, except that where the assignment is of
such Member's entire Interest in the LLC and the assignee is admitted as a
Member under the terms of this Agreement, the power of attorney shall survive
the delivery of such assignment for the sole purpose of enabling any such
attorney-in-fact to effect such substitution.
ARTICLE VIII
CESSATION OF MEMBERSHIP
SECTION 8.1. WHEN MEMBERSHIP CEASES. A Person who is a Member shall
cease to be a Member only upon the occurrence of one of the following events of
withdrawal:
(a) The Transfer, as permitted under this Agreement, of the Member's
entire Interest.
(b) The occurrence of an Event of Bankruptcy with respect to the
Member.
(c) In the case of an individual Member, the Member's death; provided,
however, Section 8.2 below shall apply with respect to the administration of the
deceased Member's estate, assignment of his Interest and admission of his heirs
as Members in the LLC.
(d) In the case of an individual Member, the adjudication by a court
that the Member is incompetent to manage his person or property; provided,
however, Section 8.2 below shall apply with respect to the administration of the
incompetent Member's property.
(e) In the case of a Member that is acting as a Member by virtue of
being the trustee of a trust, the termination of the trust.
(f) In the case of a Member that is a partnership or another limited
liability company, the dissolution and commencement of winding up of the Member;
provided, however, Section
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8.2 below shall apply with respect to the winding up and liquidation of the
entity, assignment of such Member's Interest and admission of such Member's
assignees as Members.
(g) In the case of a Member that is a corporation, the dissolution of
the Member, or the revocation of its charter unless the charter is reinstated
within 30 days of the corporation's actual notice of the revocation; provided,
however, Section 8.2 below shall apply with respect to the winding up and
liquidation of the corporation, assignment of such Member's Interest and
admission of such Member's assignees as Members.
(h) In the case of a Member that is a decedent's estate, the
distribution by the fiduciary of the Member's entire Interest.
If any of the foregoing events constitutes a Transfer, then in addition to the
Member ceasing to be a Member, Article VII shall apply with respect to the
former Member's Interest.
SECTION 8.2. DECEASED, INCOMPETENT OR DISSOLVED MEMBERS. The personal
representative, executor, administrator, guardian, conservator or other legal
representative of a deceased individual Member or of an individual Member who
has been adjudicated incompetent may exercise the rights of the Member for the
purpose of administration of such deceased Member's estate or such incompetent
Member's property. The beneficiaries of a deceased Member's estate may become
assignees of the deceased Member only upon compliance with the conditions of
this Agreement. If a Member who is a Person other than an individual is
dissolved, the legal representative or successor of such Person may exercise the
rights of the Member pending liquidation. The distributees of such Person may
become assignees of the dissolved Member only upon compliance with the
conditions of this Agreement.
SECTION 8.3. CONSEQUENCES OF CESSATION OF MEMBERSHIP. In the event a
Person ceases to be a Member as provided in Section 8.1 above, such Person (or
the Person's successor in interest) shall continue to be liable for all
obligations of the former Member to the LLC, including any obligation to make
Capital Contributions, and, with respect to any Interest owned by such Person,
shall be an assignee with only the rights and subject to the restrictions,
conditions and limitations described in Section 7.3 above, except as provided in
Section 8.2.
SECTION 8.4. NO VOLUNTARY WITHDRAWAL OR RESIGNATION BY MEMBERS. No
Member shall have the right to voluntarily withdraw or resign from the LLC under
this Agreement or under the Act.
ARTICLE IX
DISSOLUTION, WINDING UP AND LIQUIDATING DISTRIBUTIONS
SECTION 9.1. DISSOLUTION TRIGGERS. The LLC shall dissolve only upon the
first to occur of any of the following events:
(a) The vote of the Members following the recommendation of dissolution
by the Manager.
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(b) The entry of a decree of judicial dissolution under Act Section
18-802.
(c) The sale or other disposition of all or substantially all of the
assets of the LLC in accordance with this Agreement.
(d) At any time after the sixth (6th) anniversary of the date hereof,
if at such time the Class A Capital is equal to or greater than $7.5 million and
holders of at least a majority of Class A Units then outstanding vote to
dissolve the LLC and provide notice of such vote to the Manager; provided,
however, that in the event that such a vote and resulting dissolution of the LLC
would result in an event of default or an incipient default under any then
existing indebtedness of the LLC or any Subsidiary with an outstanding balance
of $10 million or more, then such majority vote shall not cause the dissolution
of the LLC, but rather shall constitute notice by the holders of the Class A
Units to the Manager that such holders desire that the Manager promptly arrange
the sale of the LLC (including its Subsidiaries) or a sale of all or
substantially all of its assets.
SECTION 9.2. WINDING UP OR SALE. Pursuant to Act Section 18-803, upon
dissolution of the LLC the Manager shall wind up the LLC's affairs; but the
Delaware Court of Chancery, upon cause shown, may wind up the LLC's affairs upon
application of any 10% Unit Member or Manager, his legal representative or
assignee, and in connection therewith, may appoint a liquidating trustee. The
Persons charged with winding up the LLC shall settle and close the LLC's
business, and dispose of and convey the LLC's noncash assets as promptly as
reasonably possible following dissolution as is consistent with obtaining the
fair market value for the LLC's assets (other than those noncash assets to be
distributed to the Members in liquidation pursuant to Section 3.4).
If the holders of the Class A Units have given notice under Section
9.1(d) (regardless of whether such notice has caused the dissolution of the
LLC), and if the LLC has not entered into a definitive agreement for the sale or
other disposition of substantially all of its equity interests or assets on or
prior to the date that is six (6) months after the date of such notice, or if
the LLC has not closed the sale or other disposition of substantially all of its
equity interests or assets on or prior to the date that is nine (9) months after
the date of such notice, then at any time after either of such dates the holders
of the Class A Units acting by a vote of the holders of a majority such Class A
Units may give notice of a Vote Shift, which Vote Shift shall be immediately
effective.
SECTION 9.3. LIQUIDATING DISTRIBUTIONS. Following the dissolution of
the LLC, upon the disposition of the LLC's noncash assets (other than those
noncash assets to be distributed to the Members in liquidation pursuant to
Section 3.4), the LLC's cash and the proceeds from the disposition of the LLC's
noncash assets and those noncash assets to be distributed in kind to the Members
pursuant to Section 3.4 shall be distributed in the following order of priority:
(a) To the LLC's creditors, including the Manager and Members if they
are creditors, to the extent otherwise permitted by law, in satisfaction of
liabilities of the LLC (whether by payment or the making of reasonable provision
for payment thereof) other than liabilities for
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which reasonable provision for payment has been made and liabilities for
distributions to Members and former Members under Act Sections 18-601 or 18-604;
(b) To the Members, Manager, and former Members who are creditors whose
claims are not satisfied by distributions pursuant to the preceding subsection
(including, with respect to Members or former Members, in satisfaction of
liabilities for distributions under Act Sections 18-601 or 18-604);
(c) To the holders of the Class A Units in an amount equal to the
remaining balance of the Class A Capital.
(d) To the holders of the Class A Units in an amount equal to the
remaining balance of the Preferred Return.
(e) To the Members in accordance with the provisions of Subsections
3.2(b), 3.2(c) and 3.2(d), taking into account that the holders of the Class A
Units have received their share of the distributions described in Subsections
3.2(b) and 3.2(c) by virtue of the distributions to them under Subsections
9.3(c) and 9.3(d) above.
To the extent that the credit balances in the Capital Accounts, after
adjusting the Capital Accounts for all allocations of Profits and Losses and all
Regulatory Allocations and all distributions other than liquidating
distributions under Subsections 9.3(c), 9.3(d) and 9.3(e) above (the "Tentative
Liquidation Capital Account") do not equal the amounts to be distributed
pursuant to Subsections 9.3(c), 9.3(d) and 9.3(e), then any provision in this
Agreement to the contrary notwithstanding the LLC shall allocate gross income or
gross deductions for its last Fiscal Year to the extent necessary in order that
the Tentative Liquidation Capital Accounts equal the distributions to be made to
the Members pursuant to such Subsections; and to the extent such gross income or
gross deductions are not sufficient, shall allocate gross income or gross
deductions for the next preceding Fiscal Year to the extent necessary in order
that the Capital Accounts equal such distributions; and to the extent such gross
income or gross deductions are not sufficient, shall allocate gross income or
gross deductions for the second preceding Fiscal Year, and so forth, with
respect to all LLC taxable years for which an amended return can be timely
filed, to the extent necessary to cause the Tentative Liquidation Capital
Accounts to equal the respective distributions under this Section 9.3.
Distributions pursuant to this Section 9.3 may be made to a liquidating
trust established by the Persons charged with winding up the LLC for the benefit
of the Members for the purposes of liquidating LLC assets, collecting amounts
owed to the LLC, and paying liabilities or obligations of the LLC. The assets of
any such trust shall be distributed to the Members from time to time, in the
reasonable discretion of the trustee of the liquidating trust, in the same
proportions as the amount distributed to such trust by the LLC would otherwise
have been distributed to the Members pursuant to this Agreement.
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ARTICLE X
BOOKS AND RECORDS; INFORMATION RIGHTS
SECTION 10.1. BOOKS AND RECORDS; VISIT TO BUSINESS PREMISES. The LLC
shall keep books and records at its principal place of business, which shall set
forth an accurate account of all transactions of the LLC. Any Member or its
designated representative shall have the right, during normal business hours and
upon two business days prior written notice to the Manager specifying the
records or information desired and the purpose for which the records or
information is sought, to have access to and inspect and copy, at its expense,
the contents of such books or records. Any 10% Unit Member or its designated
representative shall have the right, during normal business hours and upon three
(3) business days prior notice specifying the business premises of the LLC that
the Member wishes to visit and purpose for which the Member desires to visit, to
personally visit and inspect any business premises of the LLC. The provisions of
this Section 10.1 to the contrary notwithstanding, subject to Act Section
18-305(f), the Manager shall have the right to keep confidential from the
Members for such period of time as the Manager deems reasonable, any information
which the Manager reasonably believes to be in the nature of trade secrets or
other information the disclosure of which the Manager in good faith believes is
not in the best interest of the LLC.
SECTION 10.2. TAXABLE YEAR; TAX ACCOUNTING METHODS. The LLC shall use
the Fiscal Year as its taxable year. The LLC shall report its income for income
tax purposes using the accrual method of accounting.
SECTION 10.3. INFORMATION RIGHTS. Within ninety (90) days after the end
of each Fiscal Year, each Member shall be furnished with annual financial
statements containing a balance sheet, income statement, statement of Members'
capital and statement of changes in working capital as of or for the Fiscal Year
then ending which financial statements shall be prepared in accordance with
generally accepted accounting principles and shall include supplementary
statements prepared pursuant to the Capital Account accounting methods
prescribed by this Agreement and Treasury Regulations Section 1.704-1(b) and
shall be audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or such other firm of independent
certified public accountants as may be selected by the Manager and reasonably
satisfactory to the holders of at least 70% of the Class A Units. The LLC shall
also provide to each of Whitney, Fleet and such other Members as the Manager may
determine (i) an annual operating budget and capital expenditure budget for the
balance of 1997 (which shall be delivered prior to February 28, 1997) and for
each subsequent Fiscal Year (which shall be delivered prior to December 1 of the
previous Fiscal Year); (ii) unaudited quarterly financial statements within 45
days of the completion of each calendar quarter of the Fiscal Year; and (iii)
unaudited monthly financial statements containing a balance sheet, a statement
of income, and a statement of changes in working capital and showing variances
to the annual operating budget and capital expenditure budget within 30 days
after the last day of each month.
SECTION 10.4. TAX INFORMATION. Tax information necessary to enable each
Member to prepare its state, federal, local and foreign income tax returns shall
be delivered to each Member as soon as reasonably available after the end of
each Fiscal Year.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1. NOTICES. Any notice, payment, demand, or communication
required or permitted to be given by any provision of this Agreement shall be in
writing and shall be delivered personally to the Person or to an officer or
manager of the Person to whom the same is directed, or sent by regular,
registered, or certified United States mail, or by facsimile transmission or by
private mail or courier service, addressed as follows: if to the LLC or to the
Manager, to the principal office address of the LLC, or to such other address as
may be specified from time to time by notice to the Members; if to a Member, to
the address set forth on the Information Exhibit attached hereto, or to such
other address as the Member may specify from time to time by notice to the
Members. Any such notice shall be deemed to be delivered, given, and received
for all purposes (i) as of the date of actual receipt if delivered personally or
if sent by regular mail, facsimile transmission or by private mail or courier
service, or (ii) four (4) business days after the date on which the same was
deposited in a regularly-maintained receptacle for the deposit of United States
mail, if sent by registered or certified United States mail, postage and charges
prepaid, return receipt requested.
SECTION 11.2. BINDING EFFECT. Except as otherwise provided in this
Agreement, every covenant, term, and provision of this Agreement shall be
binding upon and inure to the benefit of the Members and Manager, and their
respective heirs, legatees, legal representatives, successors, transferees, and
assigns.
SECTION 11.3. CONSTRUCTION. Every covenant, term and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against any Member. No provision of this Agreement is to be
interpreted as a penalty upon, or a forfeiture by, any party to this Agreement.
The parties acknowledge that each party to this Agreement has shared equally in
the drafting and construction of this Agreement and, accordingly, no court
construing this Agreement shall construe it more strictly against one party
hereto than the other.
SECTION 11.4. ENTIRE AGREEMENT; NO ORAL LIMITED LIABILITY COMPANY
AGREEMENTS; AMENDMENTS TO THE LIMITED LIABILITY COMPANY AGREEMENT. This
Agreement constitutes the entire agreement among the Members with respect to the
affairs of the LLC and the conduct of its business, and supersedes all prior
agreements and understandings, whether oral or written. The LLC shall have no
oral operating agreements. This Agreement may be amended by one or more written
amendments approved by the Manager, the vote of the Members, and such class vote
as may be required under this Agreement. Any written amendment that receives
such a vote need not be signed by all Members to be effective, but shall be
effective in accordance with its terms and shall be binding upon all Members.
SECTION 11.5. HEADINGS. Section and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any provision hereof.
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SECTION 11.6. SEVERABILITY. Every provision of this Agreement is
intended to be severable. If any term or provision hereof is illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the
validity or legality of the remainder of this Agreement.
SECTION 11.7. ADDITIONAL DOCUMENTS. Each Member and Manager, upon the
request of the LLC, agrees to perform all further acts and execute, acknowledge,
and deliver any documents that may be reasonably necessary, appropriate, or
desirable to carry out the provisions of this Agreement.
SECTION 11.8. VARIATION OF PRONOUNS. All pronouns and any variations
thereof shall be deemed to refer to masculine, feminine, or neuter, singular or
plural, as the identity of the Person or Persons may require.
SECTION 11.9. GOVERNING LAW; CONSENT TO JURISDICTION; DISPUTE
RESOLUTION. The laws of the State of Delaware shall govern the validity of this
Agreement, the construction and interpretation of its terms, and organization
and internal affairs of the LLC and the limited liability of the Members. All
disputes between or among any Members or Manager arising out of or in any way
connected with the LLC or with the execution, interpretation and performance of
this Agreement (including the validity, scope and enforceability of the dispute
resolution provisions contained herein) shall be solely and finally settled in
accordance with the Dispute Resolution Exhibit attached hereto as Exhibit F.
Each Member and Manager hereby irrevocably consents to the personal jurisdiction
of the courts of the Commonwealth of Virginia with respect to matters arising
out of or related to the enforcement of the provisions of the Dispute Resolution
Exhibit and with respect to matters, if any, related to the LLC not required to
be resolved pursuant to the Dispute Resolution Exhibit.
SECTION 11.10. WAIVER OF ACTION FOR PARTITION. Each of the Members
irrevocably waives any right that it may have to maintain any action for
partition with respect to any of the assets of the LLC.
SECTION 11.11. COUNTERPART EXECUTION; FACSIMILE EXECUTION. This
Agreement may be executed in any number of counterparts with the same effect as
if all of the Members and Manager had signed the same document. Such executions
may be transmitted to the LLC and/or the other Members and Manager by facsimile
and such facsimile execution shall have the full force and effect of an original
signature. All fully executed counterparts, whether original executions or
facsimile executions or a combination, shall be construed together and shall
constitute one and the same agreement.
SECTION 11.12. TAX MATTERS MEMBER. For so long as there are no Members
elected or designated as "member-managers" (as such term is defined in Treas.
Reg. Section 301.6231(a)(7)-2(b)(iii)), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or such other Member
as the Manager shall subsequently designate (pursuant to Treas. Reg. Section
301.6231(a)(7)-1(d), (e), or (f)) shall be the Tax Matters Member, and as such
shall have all power and authority with respect to the LLC and its Members as a
"tax matters partner" would have with respect to a partnership and its partners
under the Code and in any similar capacity under state or local law. In
accordance with Treas. Reg. Section 301.6231(a)(7)-1(c), the LLC shall designate
the Tax Matters Member for an LLC taxable year on the partnership return for
that taxable year. After a Tax Matters
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Member has been designated for a particular taxable year, a successor Tax
Matters Member may be selected by the Manager, and the current Tax Matters
Member shall certify to the Internal Revenue Service that another Member has
been selected as the Tax Matters Member in accordance with Treas. Reg. Section
301.6231(a)(7)-1(d).
In addition, at any time after the filing of a partnership return for a
taxable year, the LLC may designate a Tax Matters Member for an LLC taxable year
pursuant to the provisions of Treas. Reg. Section 301.6231(a)(7)-1(e) or (f) by
filing a statement with the Internal Revenue Service, and obtaining the consent
of Members as provided in the regulations.
The Tax Matters Member shall continue to serve as such until the
earlier of (A) his death; (B) his incompetency (as determined pursuant to Treas.
Reg. Section 301.6231(a)(7)-1(l)(1)(ii)); (C) the liquidation or dissolution of
the Tax Matters Member, if the Tax Matters Member is an entity; (D) the
"partnership items" of the Tax Matters Member become "nonpartnership items"
under Code Section 6231(c); (E) the day on which the Tax Matters Member resigns
at any time by a written statement to that effect and filed with the Internal
Revenue Service pursuant to Treas. Reg. Section 301.6231(a)(7)-1(i); (F) the day
on which the LLC makes a subsequent designation of a Tax Matters Member pursuant
to Treas. Reg. Section 301.6231(a)(7)-1(d), (e), or (f); or (G) the day on which
the LLC revokes the designation of the Tax Matters Member for an LLC taxable
year pursuant to Treas. Reg. Section 301.6231(a)(7)-1(j). For purposes of items
(E), (F), and (G) of the preceding sentence, the day on which any of the
specified events occurs shall mean the day on which the statement that is
required to be filed with the Internal Revenue Service is filed.
The Tax Matters Member shall have the power and authority (i) to extend
the statute of limitations for assessment of tax deficiencies against Members
with respect to adjustments to the LLC's federal, state, or local tax returns;
and (ii) to represent the LLC and the Members before taxing authorities or
courts of competent jurisdiction in tax matters affecting the LLC and the
Members in their capacity as Members, and to execute any agreements or other
documents relating to or affecting such tax matters, including agreements or
other documents that bind the Members with respect to such tax matters or
otherwise affect the rights of the LLC or the Members; provided, however, that
the Tax Matters Member shall keep the LLC and the other Members reasonably
informed as to the status of any tax investigations, audits, lawsuits or other
judicial or administrative tax proceedings and shall promptly copy all other
Members on any correspondence to or from the Internal Revenue Service or state,
local or foreign taxing authority relating to such proceedings.
SECTION 11.13. TIME OF THE ESSENCE. Time is of the essence with respect
to each and every term and provision of this Agreement.
SECTION 11.14. EXHIBITS; PREFERRED STOCK CORPORATE CONVERSION
DOCUMENTS. The Exhibits to this Agreement, each of which are incorporated by
reference, are:
EXHIBIT A: Certificates of Conversion and Formation.
EXHIBIT B: Information Exhibit.
EXHIBIT C: Glossary of Terms.
EXHIBIT D: Regulatory Allocations Exhibit.
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EXHIBIT E: Indemnification Exhibit.
EXHIBIT F: Dispute Resolution Exhibit.
EXHIBIT G: Appraisal Exhibit.
EXHIBIT H: Registration Rights Agreement.
EXHIBIT I: Draft of Certificate of Designations of
Preferred Stock.
EXHIBIT J: Draft Certificate of Merger -- Preferred Stock
Corporate Conversion.
EXHIBIT K: Draft Certificate of Merger -- Common Stock
Corporate Conversion.
EXHIBIT L: Draft of Stockholders Agreement.
EXHIBIT M: Draft Certificate of Incorporation and
Bylaws Upon Qualified Corporate Conversion.
EXHIBIT N: Certificate of Limited Liability Company Interest.
EXHIBIT O: Operating Agreement of DTS Management, LLC
EXHIBIT P: Designees to Management's Board of Managers
The parties acknowledge that on the date hereof Exhibits I, J, K, L and
M are in draft form. The parties agree that they shall complete and the LLC,
Columbia A, Columbia B, Whitney and Fleet shall initial final forms of those
Exhibits within 30 days of the date hereof, with the understanding that a
Preferred Stock Corporate Conversion and the forms of documents to implement it
shall, in so far as possible, mirror the relative terms, rights, privileges and
obligations of the parties reflected in this Agreement.
IN WITNESS WHEREOF, the Members and Manager have executed this
Agreement on the following execution pages, to be effective as of the date
described in Article I.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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EXECUTION PAGE
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
PAGE 1 OF 4
MEMBERS:
_______________ COLUMBIA DBS, INC.,
Date Executed A VIRGINIA CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
________________ COLUMBIA DBS CLASS A INVESTORS, LLC,
Date Executed A DELAWARE LIMITED LIABILITY COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member
________________ COLUMBIA DBS INVESTORS, L.P.,
Date Executed A DELAWARE LIMITED PARTNERSHIP
By: Columbia Capital Corporation,
a Virginia corporation
Its: General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------- ---------------------------------------
Date Executed ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------- ---------------------------------------
Date Executed ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------- ---------------------------------------
Date Executed ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
45
Execution Page to the
Amended and Restated Limited
Liability Company Agreement of
Digital Television Services, LLC, a
Delaware limited liability company
Page 2 of 4
---------------- WEP INTERMEDIATE CORP.,
Date Executed A DELAWARE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
Title: President
---------------- FLEET VENTURE RESOURCES, INC.,
Date Executed A RHODE ISLAND CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
---------------- FLEET EQUITY PARTNERS VI, L.P.,
Date Executed A DELAWARE LIMITED PARTNERSHIP
By: Fleet Growth Resources II, Inc.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
46
Execution Page to the
Amended and Restated Limited
Liability Company Agreement of
Digital Television Services, LLC, a
Delaware limited liability company
Page 3 of 4
---------------- ▇▇▇▇▇▇▇▇ PARTNERS III, L.P.,
Date Executed A DELAWARE LIMITED PARTNERSHIP
By: Silverado III, L.P.
Its: General Partner
By: Silverado III Corp.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
---------------- ▇▇▇▇▇▇▇ PLAZA PARTNERS,
Date Executed A RHODE ISLAND GENERAL PARTNERSHIP
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: General Partner
MANAGER:
---------------- DTS MANAGEMENT, LLC,
Date Executed A GEORGIA LIMITED LIABILITY COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: President
47
Execution Page to the
Amended and Restated Limited
Liability Company Agreement of
Digital Television Services, LLC, a
Delaware limited liability company
Page 4 of 4
THE UNDERSIGNED IS EXECUTING
THIS AGREEMENT FOR THE
PURPOSES OF AGREEING TO BE
BOUND BY THE PROVISIONS OF
SECTION 7.9 HEREOF:
---------------- WHITNEY EQUITY PARTNERS, L.P.
Date Executed By: ▇.▇. ▇▇▇▇▇▇▇ Equity Partners LLC
Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
Title: Managing Member
48
EXHIBIT A
CERTIFICATE OF FORMATION
OF
COLUMBIA DBS HOLDINGS, LLC
The undersigned, desiring to form a limited liability company pursuant
to Sections 18-214(b)(2) and 18-201 of the Delaware Limited Liability Company
Act, 6 Delaware Code, Chapter 18, do hereby certify as follows:
I.
The name of the limited liability company is COLUMBIA DBS HOLDINGS,
LLC.
II.
The address of the registered office of the LLC in the State of
Delaware is Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of
New Castle. The name of the LLC's registered agent for service of process in the
State of Delaware at such address is The Corporation Trust Company.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Formation of Columbia DBS Holdings, LLC as of November ___, 1996.
Member:
COLUMBIA DBS, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Member:
COLUMBIA DBS INVESTORS, L.P.
By: Columbia Capital Corporation,
its general partner
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
A-1
49
CERTIFICATE OF CONVERSION TO LIMITED LIABILITY COMPANY
OF
DBS HOLDINGS, L.P.
TO
COLUMBIA DBS HOLDINGS, LLC
The undersigned, desiring to convert DBS HOLDINGS, L.P., a Delaware
limited partnership, to COLUMBIA DBS HOLDINGS, LLC, a Delaware limited liability
company, pursuant to Section 18-214 of the Delaware Limited Liability Company
Act, 6 Delaware Code, Chapter 18, do hereby certify as follows:
I.
The date on which and jurisdiction where the entity that is converting
to a limited liability company was first formed was January 30, 1996 in the
State of Delaware.
II.
The name of the entity that is converting to a limited liability
company immediately prior to the filing of this Certificate of Conversion is DBS
HOLDINGS, L.P.
III.
The name of the limited liability company as set forth in its
certificate of formation filed in accordance with Section 18-214(b) of the
Delaware Limited Liability Company Act is COLUMBIA DBS HOLDINGS, LLC.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Conversion of DBS Holdings, L.P. to Columbia DBS Holdings, LLC as of November
___, 1996.
General Partner:
COLUMBIA DBS, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Limited Partner:
COLUMBIA DBS INVESTORS, L.P.
By: Columbia Capital Corporation,
its general partner
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
A-2
50
EXHIBIT B
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
INFORMATION EXHIBIT
Class A Other
Taxpayer Capital Capital Total Capital
Member Name and Notice Address ID No. Contributions Contributions Contributions
------------------------------- ---------------- -------------------- ------------------ ----------------
WEP Intermediate Corp. ▇▇-▇▇▇▇▇▇▇ $13,000,000.00 0 $13,000,000.00
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fleet Venture Resources, Inc. ▇▇-▇▇▇▇▇▇▇ $5,503,450.00 0 $5,503,450.00
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fleet Equity Partners VI, L.P. ▇▇-▇▇▇▇▇▇▇ $2,358,621.43 0 $2,358,621.43
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ Partners III, L.P. ▇▇-▇▇▇▇▇▇▇ $2,000,000.00 0 $2,000,000.00
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Plaza Partners ▇▇-▇▇▇▇▇▇▇ $137,928.57 0 $137,928.57
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Columbia DBS Class A Investors, ▇▇-▇▇▇▇▇▇▇ $7,000,000.00 0 $7,000,000.00
LLC
▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Columbia DBS Investors, L.P. ▇▇-▇▇▇▇▇▇▇ 0 $19,375,790.00 $19,375,790.00
▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Columbia DBS, Inc. ▇▇-▇▇▇▇▇▇▇ 0 $119,210.00 $119,210.00
▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. ###-##-#### 0 $460,000.00 $460,000.00
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ###-##-#### 0 $370,000.00 $370,000.00
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ###-##-#### 0 $175,000.00 $175,000.00
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------- -------------------- ------------------ ----------------
TOTALS $30,000,000.00 $20,500,000.00 $50,500,000.00
============== ============== ==============
Units
----------------------------------------------------------------------------------
Member Name and Notice Address Class A Class B Class C Class D Total
------------------------------- ----------------------------------------------------------------------------------
WEP Intermediate Corp. 577,778.00* 0 0 0 577,778.00
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fleet Venture Resources, Inc. 244,597.53* 0 0 0 244,597.53
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fleet Equity Partners VI, L.P. 104,827.52* 0 0 0 104,827.52
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ Partners III, L.P. 88,888.80* 0 0 0 88,888.80
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Plaza Partners 6,130.15* 0 0 0 6,130.15
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Columbia DBS Class A Investors, 311,111.00* 0 0 0 311,111.00
LLC
▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Columbia DBS Investors, L.P. 0 1,937,579* 0 0 1,937,579.00
▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Columbia DBS, Inc. 0 11,921* 0 0 11,921.00
▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. 0 46,000* 40,111* 0 86,111.00
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 0 37,000* 26,882* 0 63,882.00
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 0 17,500* 20,056* 0 37,556.00
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------------------------------------------------------
TOTALS 1,333,333.00 2,050,000 87,049 0 3,470,382.00
============ ========= ====== =========== ============
* Subject to grant of security interest pursuant to the Guarantee and
Collateral Agreement.
51
EXHIBIT C
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
GLOSSARY OF TERMS
Many of the capitalized words and phrases used in this Agreement are
defined below. Some defined terms used in this Agreement are applicable to only
a particular Section of this Agreement or an Exhibit and are not listed below,
but are defined in the Section or Exhibit in which they are used.
"Act" shall mean the Delaware Limited Liability Company Act, as in
effect in Delaware and set forth at 6 Delaware Code, Chapter 18, Sections 18-101
through 18-1109 (or any corresponding provisions of succeeding law).
"Affiliate" means, with respect to any specified Person, any other
Person that directly or indirectly controls, or is under common control with, or
is owned or controlled by, the specified Person. For purposes of this
definition, (i) "control" means, with respect to any specified Person, either
(x) the beneficial ownership of 50% or more of the equity securities issued by
such Person or (y) the power to direct the management and policies of the
specified Person through the ownership of voting securities or other equity
interests, by contract or otherwise, (ii) the terms "controlling," "control
with" and "controlled by," etc., shall have meanings correlative to the
foregoing, and (iii) the stockholders and partners of such Person shall be
deemed to be Affiliates of such Person, provided, however for purposes of the
limitation on transactions with Affiliates set forth in Section 5.3(c)(viii)
(including the definition of Permitted Reimbursements), the percentage in clause
(i)(x) above shall be ten percent (10%) and clause (iii) shall include officers,
directors and employees.
"Agreed Value" shall mean with respect to any noncash asset of the LLC
an amount determined and adjusted in accordance with the following provisions:
(a) The initial Agreed Value of any noncash asset contributed to the
capital of the LLC by any Member shall be its gross fair market value, as agreed
to by the contributing Member and the Manager.
(b) The initial Agreed Value of any noncash asset acquired by the LLC
other than by contribution by a Member shall be its adjusted basis for federal
income tax purposes.
(c) The initial Agreed Values of all the LLC's noncash assets,
regardless of how those assets were acquired, shall be reduced by depreciation
or amortization, as the case may be, determined in accordance with the rules set
forth in Treasury Regulations Section 1.704-1(b)(2)(iv)(f) and (g).
52
(d) The Agreed Values, as reduced by depreciation or amortization, of
all noncash assets of the LLC, regardless of how those assets were acquired,
shall be adjusted from time to time to equal their gross fair market values, as
determined by appraisal by a nationally recognized investment banking firm or
other qualified Person selected pursuant to a vote of no less than seven (7) of
the nine (9) votes of the board of managers of the Manager, as of the following
times:
(i) the acquisition of an Interest or an additional
Interest in the LLC by any new or existing Member in
exchange for more than a de minimis Capital
Contribution;
(ii) the distribution by the LLC of more than a de minimis
amount of money or other property as consideration
for all or part of an Interest in the LLC; and
(iii) the termination of the LLC for federal income tax
purposes pursuant to Code Section 708(b)(1)(B).
If, upon the occurrence of one of the events described in (i), (ii) or
(iii) above the Manager does not determine the gross fair market values of the
LLC's assets, it shall be deemed that the fair market values of all the LLC's
assets equal their respective Agreed Values immediately prior to the occurrence
of the event and thus no adjustment to those values shall be made as a result of
such event.
"Agreement" shall mean this Limited Liability Company Agreement as
amended from time to time.
"B Unit Designees" shall mean the two individuals designated to the
Board by the holders of a majority of the B Units pursuant to their rights under
Section 5.1(a)(iv).
"Board" shall mean the board of managers of the Manager.
"Capital Account" shall mean with respect to each Member or assignee an
account maintained and adjusted in accordance with the following provisions:
(a) Each Person's Capital Account shall be increased by Person's
Capital Contributions, such Person's distributive share of Profits, any items in
the nature of income or gain that are allocated pursuant to the Regulatory
Allocations and the amount of any LLC liabilities that are assumed by such
Person or that are secured by LLC property distributed to such Person.
(b) Each Person's Capital Account shall be decreased by the amount of
cash and the Agreed Value of any LLC property distributed to such Person
pursuant to any provision of this Agreement, such Person's distributive share of
Losses, any items in the nature of loss or deduction that are allocated pursuant
to the Regulatory Allocations, and the amount of any liabilities of such Person
that are assumed by the LLC or that are secured by any property contributed by
such Person to the LLC.
C-2
53
In the event any Interest is transferred in accordance with the terms
of this Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the transferred Interest.
In the event the Agreed Values of the LLC assets are adjusted pursuant
to the definition of Agreed Value contained in this Agreement, the Capital
Accounts of all Members shall be adjusted simultaneously to reflect the
aggregate adjustments as if the LLC recognized gain or loss equal to the amount
of such aggregate adjustment.
In the case of Members who hold more than one class of Units, a
separate Capital Account shall be maintained for each such class, and Capital
Contributions, distributions and allocations that are with respect to a
particular class of Units shall be credited or debited, as the case may be, to
such separate Capital Account. Allocations of Profit pursuant to Section 4.1(e)
shall be credited to an unclassified Capital Account and distributions pursuant
to Section 3.2(d) shall be debited to such unclassified Capital Account.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulations Section 1.704-1(b), and shall be interpreted and applied in
a manner consistent with such regulations.
"Capital Contribution" shall mean with respect to any Member, the
amount of money and the initial Agreed Value of any property (other than money)
contributed to the LLC with respect to the Interest of such Member.
"Certificate of Formation" shall mean the certificate of formation
required to be filed by the LLC pursuant to the Act together with any amendments
thereto.
"Change Notice" shall mean notice required to be given by the Columbia
Entities in the event of a Change of Control of Columbia, or permitted to be
given by Whitney or ▇▇▇▇▇▇▇▇ in the event of a Change of Control of Columbia.
"Change of Control of the LLC" means (i) the merger, consolidation or
other business combination of the LLC or any of its Subsidiaries with or into,
or the merger of, another Person (other than the LLC or a Subsidiary of the LLC)
with or into the LLC with the effect that, immediately after such transaction,
the Members of the LLC immediately prior to such transaction hold less than a
majority in interest of the total voting power entitled to vote in the election
of directors, managers or trustees of the Person surviving such transaction or
less than fifty percent of the economic interests in such Person, or (ii) the
acquisition by any Person or related group of Persons, by way of merger, sale,
transfer, consolidation or other business combination or acquisition, of (x) all
or substantially all of the assets, property or business of the LLC, (y) more
than fifty percent of the total voting power entitled to vote in the election of
directors, managers or trustees of the LLC or such other Person as survives the
transaction, or (z) more than fifty percent of the economic interests in the LLC
or such other Person as survives the transaction.
"Change of Control of Columbia" shall mean, and such change in Control
of Columbia shall be deemed to have occurred after, either of the following
events:
C-3
54
(A) if at any time, any Person or group of Persons other than
those Persons identified in the Purchase Agreement as members
of Columbia A, partners of Columbia B, shareholders of
Columbia Capital or shareholders of Columbia Inc., and their
Family Members shall own in the aggregate 50% or more of the
partnership interests, member interests, capital stock or
other equity interests in either Columbia A or Columbia B or
any successor entity to either of them, or
(B) if at any time, Persons other than ▇▇▇▇▇▇ ▇. Blow, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. Mixer, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III, R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, or ▇▇▇▇ ▇. ▇▇▇▇▇ shall constitute a majority
of the board of directors of the general partner of Columbia
B, the managers of Columbia A, or otherwise have a majority of
the votes on any board of directors, board of managers or
similar governing body that has plenary authority over the
business and affairs of Columbia A or Columbia B or otherwise
has the power to direct either of such Member's investment in
the LLC.
"▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇▇ Partners III, L.P., a Delaware limited
partnership, one of the entities constituting the collective definition of
Fleet.
"▇▇▇▇▇▇▇▇ Designee" shall mean the individual designated to the Board
of Directors by ▇▇▇▇▇▇▇▇ pursuant to its rights under Section 5.1(a)(ii).
"Class A, B, C, D Units" shall have the respective meanings set forth
in Section 2.5.
"Class A Capital" shall mean the sum of the Class A Capital
Contributions as set forth on the Information Exhibit less the cumulative amount
of distributions made by the LLC to the holders of the Class A Units pursuant to
Subsections 3.2(b), 3.2(c) and 9.3(c).
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor federal revenue law.
"Columbia A" shall mean Columbia DBS Class A Investors, LLC, a Delaware
limited liability company, or its successors or assigns.
"Columbia B" shall mean Columbia DBS Investors, L.P., a Delaware
limited partnership, or its successors or assigns.
"Columbia Capital" shall mean Columbia Capital Corporation, a Virginia
corporation, or its successors or assigns.
"Columbia Entities" shall mean Columbia Capital, Columbia A, Columbia
Inc. and Columbia B.
"Columbia Inc." shall mean Columbia DBS, Inc., a Virginia corporation.
"Combined Effective Marginal Tax Rate" shall mean the highest single
effective rate (expressed as a percentage) of United States federal, state and
local income taxation applicable
C-4
55
to holders of 5% or more of the Units whose principal residence or commercial
domicile is within the United States determined as of the last day of each Tax
Estimation Period, giving effect to any limitation on the deductibility of state
and local income taxes in computing United States federal taxable income, and
assuming that such Unit holders are individuals and subject to the highest
United States federal and highest state and local marginal income tax rates then
applicable in the jurisdictions in which they have their principal residence or
commercial domicile.
"Common Stock Conversion Amount" shall mean the number of shares of
common stock of the surviving corporation in a Qualified Corporate Conversion
that a Member is entitled to receive with respect to its Units which amount
shall equal:
(i) In the case of Members holding Class A Units, zero shares if
the Qualified Corporate Conversion is a Preferred Stock
Conversion, or if the Qualified Corporate Conversion is a
Common Stock Corporate Conversion, one share for each Class A
Unit plus that number of shares equal to
(A) the accumulated unpaid Preferred Return that such
Member is entitled to as of the date of the
consummation of the Qualified Corporate Conversion,
divided by
(B) the price per share of common stock of the surviving
corporation upon its initial issuance pursuant to the
IPO,
rounded to the nearest whole share.
(ii) In the case of Members holding Class B Units, one share for
each such Unit.
(iii) In the case of Members holding Class C Units, (A) in the case
of a Common Stock Corporate Conversion as a result of a
Qualified IPO, .5556 share for each Class C Unit held, plus
the right to purchase .4444 share for $10 per share for each
Class C Unit held, and (B) in the case of any other Qualified
Corporate Conversion, the right to purchase one share for each
Class C Unit held for a purchase price of $10 per share, in
each case rounded to the nearest whole share.
(iv) In the case of Members holding Class D Units, the right to
purchase one share for each Class D Unit held for a purchase
price of $22.50 per share.
In the case of Members holding Class C or Class D Units, their rights to
purchase common stock of the surviving corporation may be exercised by
delivering cash, shares of common stock valued as set by the Manager just prior
to the consummation of the Qualified Corporate Conversion, or the holder's
nonrecourse, noninterest bearing promissory note secured by a pledge of the
purchased shares due at the earlier of (i) five (5) years from the date of the
Qualified Corporate Conversion, (ii) any sale or any other transfer (by
operation of law or otherwise) of the acquired shares, or (iii) the cessation of
employment by the LLC or any Subsidiary of the Member who originally received
such Class C or Class D Units from the LLC for any reason, and such promissory
note shall be prepaid with any dividends or distribution
C-5
56
with respect to such purchased shares. Any shares received by any Member whose
Units are subject to vesting, repurchase rights or similar restrictions related
to their employment shall continue to be subject to those or to comparable
provisions. The form of subscription agreement, promissory note, pledge
agreement, restriction or vesting agreement and any other related instruments
shall be determined by the Manager.
"Common Stock Corporate Conversion" means a Qualified Corporate
Conversion pursuant to which the LLC is merged into Whitney pursuant to a
certificate of merger in the form of Exhibit K attached hereto and (i) the
Interests in the LLC held by Whitney are cancelled, (ii) all of the capital
stock of Whitney outstanding on the date of the Qualified Corporate Conversion
is converted into the right to receive that number of shares of common stock of
the surviving corporation equal to its Common Stock Conversion Amount, and (iii)
the Interests evidenced by Units held by Persons other than Whitney are
converted into that number of shares of common stock of the surviving
corporation equal to the Common Stock Conversion Amount.
"Corporate Conversion" shall mean any merger, consolidation, conversion
by filing, assignment of assets, or similar transaction or series of
transactions resulting in a corporation substantially all of the assets of which
consist of substantially all of the assets that were held directly or indirectly
by the LLC immediately prior to such transaction and substantially all the
capital stock of which corporation is held by Persons who were either (i)
Members immediately prior to such transaction or (ii) the owners of a Member the
sole or principal asset of which Member was an Interest in the LLC.
"Employee Unit Plan" shall mean the arrangements, terms and procedures
that the Manager may establish from time to time for the issuance of up to
180,000 Class D Units (or such larger number of Units as may be approved by (i)
the "Compensation Committee" of the board of managers of the Manager, or if no
such committee exists, the board of managers of the Manager and (ii) the holders
of at least 70% of the Class A Units) to employees or independent contractors of
the LLC or any Subsidiary at prices equal to the market value thereof as of the
date of issuance and pursuant to such terms and conditions (including vesting)
as the Manager shall determine.
"Event of Bankruptcy" shall mean, with respect to any Person, the
occurrence any of the events set forth in Section 18-304 of the Act.
"Family Member" shall mean (a) with respect to any individual, such
individual's spouse, any descendants (whether natural, adopted or in the process
of adoption), any trust all of the beneficial interests of which are owned by
any of such individuals or by any of such individuals together with any
organization described in Code Section 501(c)(3), the estate of any such
individual, and any corporation, association, partnership or limited liability
company all of the equity interests of which are owned by those above-described
individuals, trusts or organizations and (b) with respect to any trust, the
owners of the beneficial interests of such trust.
"Fiscal Year" shall mean, with respect to the first year of the LLC,
the period beginning upon the formation of the Partnership on January 30, 1996,
and ending on December 31, 1996 with respect to subsequent years of the LLC, the
calendar year, and, with respect to the last year
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of the LLC, the portion of the calendar year ending with the date of the final
liquidating distributions.
"Fleet" shall mean collectively, the group consisting of the following
entities, or their successors: Fleet Venture Resources, Inc. (a Rhode Island
corporation), Fleet Equity Partners VI, L.P. (a Delaware limited partnership),
▇▇▇▇▇▇▇▇ Partners III, L.P.(a Delaware limited partnership), and ▇▇▇▇▇▇▇ Plaza
Partners(a Rhode Island general partnership).
"Guarantee and Collateral Agreement" shall mean that certain Guarantee
and Collateral Agreement made by Columbia DBS Holdings, LLC as a Grantor,
Columbia DBS Management, LLC, certain Subsidiaries of Columbia DBS Holdings,
LLC, as Guarantors and Grantors, and Columbia DBS, Inc., Columbia Capital
Corporation, Columbia DBS Investors, L.P. and certain individuals, as Investors
and Pledgors in favor of Canadian Imperial Bank of Commerce, as Administrative
Agent dated as of November 27, 1996.
"Indirect Transfer" shall have the meaning set forth in Section
7.7(b)(iv).
"Interim Financing" shall mean the issuance by the LLC of up to
$25,000,000 of indebtedness prior to any Qualified Financing or IPO the proceeds
of which are used to fund the LLC's acquisition of NRTC System Nos. 0422, 1071,
0120, 0073, and 0164 located in Georgia and Alabama.
"Interest" shall mean all of the rights, privileges, preferences and
obligations of each Member or assignee with respect to the LLC created under
this Agreement or under the Act. With respect to any provision of this Agreement
requiring the vote, approval, consent or similar action by the Members or a
group of Members with respect to any matter, unless otherwise specified,
reference to a majority (or a specified percentage) in Interest of the Members
or group thereof means those Members holding Units constituting a majority (or
specified percentage) of the Units of the Members or group of Members,
determined as the date of such vote, approval, consent or action unless an
earlier record date has been established for determining the Members entitled to
participate in such action, in which case the determination shall be made as of
the earlier record date.
"IPO" shall mean an offering of equity interests in the LLC or its
successor entity pursuant to a registration statement filed in accordance with
the Securities Act of 1933, as amended.
"LLC" shall mean the limited liability company formed pursuant to this
Agreement.
"Manager" shall mean DTS Management, LLC, a Georgia limited liability
company.
"Members" shall refer collectively to the Persons listed on the
Information Exhibit as Members and to any other Persons who are admitted to the
LLC as Members or who become Members under the terms of this Agreement until
such Persons have ceased to be Members under the terms of this Agreement.
"Member" means any one of the Members.
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"NRTC System" shall mean any one of the geographical areas with in the
United States of America specifically designated by the National Rural
Telecommunications Cooperative, or its successor, (the "NRTC") within which the
NRTC has granted to any Person rights to distribute direct broadcast satellite
services.
"Net Positive Taxable Income" shall mean, for any period, the LLC's
cumulative items of income or gain under the Code less cumulative items of loss
or deduction under the Code for the period beginning January 30, 1996 and ending
on the date of dissolution of the LLC.
"Optional Purchase Event" shall have the meaning set forth in Section
7.7(b).
"Partnership" shall have the meaning set forth in the Recitals of this
Agreement.
"Permitted Reimbursements" shall mean the reimbursement by the LLC or
any of its Subsidiaries to the Columbia Entities, Whitney or Fleet, or any of
their Affiliates of (i) actual out-of-pocket travel expenses not to exceed
$7,500 per year in the aggregate, and such other expenses as may be approved
prior to payment by the Chief Executive Officer or Chief Financial Officer of
the Manager, and the ▇▇▇▇▇▇▇▇ Designee and one Whitney Designee, which expenses
in each case are incurred in connection with services to the LLC or any
Subsidiary in connection with the ongoing business and affairs (including
financing and acquisitions) of the LLC or any Subsidiary, other than services as
a member of the Board or similar services associated with monitoring the
investment by Columbia A, Columbia B, or Columbia Inc., Whitney or Fleet and
(ii) the costs not to exceed $5,000 per year actually incurred by Whitney for
corporate franchise tax, fees due to any Person serving as its registered agent,
and similar amounts necessary to maintain its corporate status and good standing
and to prepare and file its tax returns and its annual and periodic financial
statements.
"Permitted Transferee" shall mean (i) in the case of Whitney, (a)
Whitney's parent company (Whitney Equity Partners, L.P.) ("Whitney Parent") and
(b) Whitney Parent's and Whitney's Affiliates and the Family Members of those
Affiliates who are individuals, (ii) in the case of each entity comprising the
collective definition of "Fleet", the Affiliates of such entity and the Family
Members of those Affiliates who are individuals, (iii) in the case of Columbia,
(a) Columbia's general partner (Columbia Capital Corporation) ("CCC") and (b)
CCC's and Columbia's Affiliates' and the Family Members of those Affiliates who
are individuals, and (iv) in the case of any other Member, any Family Member of
such Member; provided, however, that in each case such Person shall agree in
writing with the parties hereto to be bound by and to comply with all applicable
provisions of this Agreement.
"Person" shall mean any natural person, partnership, trust, estate,
association, limited liability company, corporation, custodian, nominee,
governmental instrumentality or agency, body politic or any other entity in its
own or any representative capacity.
"Preferred Return" shall mean a return to Members in respect of their
Class A Units equal to (Y) a cumulative compounded annual rate of return equal
to eight percent (8%) applied to the Class A Capital less (Z) the cumulative
amount of distributions made by the LLC pursuant to Subsections 3.2(a) and
9.3(d).
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"Preferred Stock" shall mean the Series A Payment-in-Kind Convertible
Preferred Stock of the surviving corporation in a Preferred Stock Corporate
Conversion, which preferred stock shall have the powers, designations,
preferences and relative rights as set forth in the certificate of designations
of such surviving corporation substantially in the form of Exhibit I attached
hereto.
"Preferred Stock Conversion Amount" shall mean the number of shares of
Preferred Stock that a Person is entitled to receive in a Preferred Stock
Corporate Conversion, which number equals the number obtained by dividing (A)
such Member's Class A Capital plus Preferred Return, by (B) the amount equal to
the total Class A Capital Contributions divided by the number of Class A Units
then outstanding, rounded to the nearest whole share.
"Preferred Stock Corporate Conversion" means a Qualified Corporate
Conversion pursuant to which the LLC is merged into Whitney pursuant to a
certificate of merger in the form of Exhibit J hereto and (i) the Interests in
the LLC held by Whitney are cancelled, (ii) all of the capital stock of Whitney
outstanding on the date of the Qualified Corporate Conversion is converted into
the right to receive that number of shares of Preferred Stock equal to Whitney's
Preferred Stock Conversion Amount, (iii) the Interests evidenced by Class A
Units held by Persons other than Whitney are converted into that number of
shares of Preferred Stock equal to their respective Preferred Stock Conversion
Amounts, (iv) the Interests evidenced by Units other than Class A Units are
converted into the right to receive or purchase that number of shares of common
stock equal to the Common Stock Conversion Amount, and (v) all of the capital
stock is subject to a stockholders agreement in form of Exhibit L hereto.
"Prime Rate" as of a particular date shall mean the prime rate of
interest as published on that date in the Wall Street Journal, and generally
defined therein as "the base rate on corporate loans posted by at least 75% of
the nation's 30 largest banks." If the Wall Street Journal is not published on a
date for which the Prime Rate must be determined, the Prime Rate shall be the
prime rate published in the Wall Street Journal on the nearest-preceding date on
which the Wall Street Journal was published.
"Profits and Losses" shall mean, for each Fiscal Year or other period,
an amount equal to the LLC's taxable income or loss for such year or period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(l) shall be included in taxable income or loss), with the
following adjustments:
(a) Any income of the LLC that is exempt from federal income tax and
not otherwise taken into account in computing Profits or Losses shall be added
to such taxable income or loss;
(b) Any expenditures of the LLC described in Code Section 705(a)(2)(B)
or treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Profits or Losses, shall be subtracted from such taxable income or
loss;
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(c) Gain or loss resulting from dispositions of LLC assets shall be
computed by reference to the Agreed Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property differs from its
Agreed Value.
"Purchase Agreement" shall mean that certain Class A Unit Membership
Interest Purchase Agreement between the LLC, Whitney, Fleet and Columbia A dated
as of February 10, 1997.
"Qualified Corporate Conversion" shall mean a Corporate Conversion
effectuated solely by action of the Manager without the necessity of any action
or any investment decision by any Member through the merger of the LLC with and
into Whitney pursuant to Section 18-209 of the Act and Sections 264 and 251 of
the Delaware General Corporation Law, which is either a Preferred Stock
Corporate Conversion or Common Stock Corporate Conversion, and pursuant to which
the certificate of incorporation attached hereto as Exhibit M shall become the
certificate of incorporation of the surviving entity.
"Qualified Financing" shall mean the first issuance after the date
hereof of $50,000,000 or more of indebtedness by the LLC or any Subsidiary in a
single transaction, in which case the LLC may issue equity (or rights to acquire
equity) in the LLC in the same transaction constituting no more than 5.0% of the
outstanding Units of the LLC on a fully-diluted basis without resulting in the
price protection under Section 2.2(b) or 2.2(c).
"Qualified IPO" shall mean an underwritten IPO resulting in gross
proceeds to the LLC or its successor, before fees and expenses, of at least
$25,000,000 and for a per share price, which shall be determined by dividing the
Total Equity Value of the LLC by the total number of Units outstanding, equal to
at least $33.75 per Unit if the IPO is consummated on or before July 31, 1998;
$39.37 per Unit if the IPO is consummated after July 31, 1998 but on or before
July 31, 1999; and $45.00 per Unit if the IPO is consummated after July 31,
1999.
"Registration Rights Agreement" shall mean that certain registration
rights agreement dated the date hereof by and among the LLC and the Members.
"Regulatory Allocations" shall mean those allocations of items of LLC
income, gain, loss or deduction set forth on the Regulatory Allocations Exhibit
and designed to enable the LLC to comply with the alternate test for economic
effect prescribed in Treasury Regulations Section 1.704-1(b)(2)(ii)(d), and the
safe-harbor rules for allocations attributable to nonrecourse liabilities
prescribed in Treasury Regulations Section 1.704-2.
"Residual Interest" shall mean the percentage of Units held by the
relevant Member of the total number of Units then outstanding.
"Second Round Price" shall mean a cash price per Unit equal to $22.50,
as adjusted for any Unit splits, Unit-on-Unit distributions (other than relating
to or resulting from the Preferred Return) or similar transactions.
"Subsidiary" shall mean any entity more than 50% of the equity
interests of which are owned directly or indirectly by the LLC or more than 50%
of the total voting power entitled to
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vote in the election of directors, managers, general partners or trustees of
which is held directly or indirectly by the LLC.
"Tax Estimation Periods" shall mean (i) January, February and March
(ii) April and May, (iii) June, July and August, and (iv) September, October,
November and December of each year during the term of the LLC, or other periods
for which estimates of individual federal income tax liability are required to
be made under the Code.
"10% Unit Member" shall mean any Member that holds at least 10% of all
outstanding Units, and in all events the term "10% Unit Member" shall include
Columbia A, Columbia B, Whitney, and each entity that is part of the group of
entities collectively defined as "Fleet" pursuant to this Exhibit C.
"Total Equity Value" shall mean, as of any day of determination, the
enterprise value (without duplication) of the LLC (including the fair market
value of its equity, but excluding the fair market value of its debt), as
determined by an independent banking firm of national standing with experience
in such valuations (which firm may be an underwriter of the Qualified IPO) and
evidenced by a written opinion in customary form, directed to the Manager;
provided that for purposes of any such determination, the enterprise value of
the LLC shall be calculated as if all of the Interests in the LLC were
registered and publicly held with no restrictions on resale, and as if the LLC
had no controlling member. For purposes of any such determination, such banking
firm's written opinion may state that such fair market value is no less than a
specified amount.
"Transfer" shall mean any sale, assignment, transfer, conveyance,
pledge, hypothecation, or other disposition, voluntarily or involuntarily, by
operation of law, with or without consideration, or otherwise (including,
without limitation, by way of intestacy, will, gift, bankruptcy, receivership,
levy, execution, charging order or other similar sale or seizure by legal
process) of all or any portion of any asset.
"Transfer Notice" shall mean written notice given to the Manager and
all Members of all the details of any proposed Transfer of an Interest including
the name of the proposed transferee, the date of the proposed Transfer, the
portion of the Member's Interest to be transferred, the price or other
consideration, if any, to be received, and a complete description of all noncash
consideration to be received.
"Treasury Regulations" shall mean the final and temporary Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"Units" represent the basis on which the Interests are denominated and
basis on which the Members' relative rights, privileges, preferences and
obligations are determined under this Agreement and the Act, and the total
number and class of Units attributed to each Member shall be the number recorded
on the Information Exhibit as of the relevant time.
"Valuation Date" shall have the meaning set forth in Section 7.7(d).
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"Vote Shift" shall mean (a) in the case there is a seven member Board,
(i) the elimination of the extra vote held by each of the two B Unit Designees,
and (ii) the increase in the number of votes held by one of the Whitney
Designees (as Whitney shall determine) and by the ▇▇▇▇▇▇▇▇ Designee, in each
case from one vote to two votes, with the result that the Whitney Designees
(three votes) and ▇▇▇▇▇▇▇▇ Designee (two votes) shall have five of the nine
votes on the seven-member Board, and (b) in the case there is a nine member
Board, (i) the increase in the number of votes held by each Whitney Designee
from one vote to two votes each, and (ii) the increase in the number of votes
held by the ▇▇▇▇▇▇▇▇ Designee from one vote to three votes, with the result that
the Whitney Designees (four votes) and ▇▇▇▇▇▇▇▇ Designee (three votes) shall
have seven of the thirteen total votes on the nine-member Board.
"Whitney" shall mean WEP Intermediate Corp., a Delaware corporation, or
its successors or assigns.
"Whitney Designees" shall mean the two individuals designated to the
Board by Whitney pursuant to its rights set forth in Section 5.1(a)(i).
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EXHIBIT D
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
REGULATORY ALLOCATIONS
This Exhibit contains special rules for the allocation of items of LLC
income, gain, loss and deduction that override the basic allocations of Profits
and Losses in Sections 4.1 and 4.2 of the Agreement to the extent necessary to
cause the overall allocations of items of LLC income, gain, loss and deduction
to have substantial economic effect pursuant to Treasury Regulations Section
1.704-1(b) and shall be interpreted in light of that purpose. Subsection (a)
below contains special technical definitions. Subsections (b) through (h)
contain the Regulatory Allocations themselves. Subsections (i), (j) and (k) are
special rules applicable in applying the Regulatory Allocations.
(a) Definitions Applicable to Regulatory Allocations. For purposes of
the Agreement, the following terms shall have the meanings indicated:
(i) "LLC Minimum Gain" has the meaning of "partnership minimum
gain" set forth in Treasury Regulations Section 1.704-2(d),
and is generally the aggregate gain the LLC would realize if
it disposed of its property subject to Nonrecourse Liabilities
in full satisfaction of each such liability, with such other
modifications as provided in Treasury Regulations Section
1.704-2(d). In the case of Nonrecourse Liabilities for which
the creditor's recourse is not limited to particular assets of
the LLC, until such time as there is regulatory guidance on
the determination of minimum gain with respect to such
liabilities, all such liabilities of the LLC shall be treated
as a single liability and allocated to the LLC's assets using
any reasonable basis selected by the Manager.
(ii) "Member Nonrecourse Deductions" shall mean losses, deductions
or Code Section 705(a)(2)(B) expenditures attributable to
Member Nonrecourse Debt under the general principles
applicable to "partner nonrecourse deductions" set forth in
Treasury Regulations Section 1.704-2(i)(2).
(iii) "Member Nonrecourse Debt" means any LLC liability with respect
to which one or more but not all of the Members or related
Persons to one or more but not all of the Members bears the
economic risk of loss within the meaning of Treasury
Regulations Section 1.752-2 as a guarantor, lender or
otherwise.
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(iv) "Member Nonrecourse Debt Minimum Gain" shall mean the minimum
gain attributable to Member Nonrecourse Debt as determined
pursuant to Treasury Regulations Section 1.704-2(i)(3). In the
case of Member Nonrecourse Debt for which the creditor's
recourse against the LLC is not limited to particular assets
of the LLC, until such time as there is regulatory guidance on
the determination of minimum gain with respect to such
liabilities, all such liabilities of the LLC shall be treated
as a single liability and allocated to the LLC's assets using
any reasonable basis selected by the Manager.
(v) "Nonrecourse Deductions" shall mean losses, deductions, or
Code Section 705(a)(2)(B) expenditures attributable to
Nonrecourse Liabilities (see Treasury Regulations Section
1.704-2(b)(1)). The amount of Nonrecourse Deductions for a
Fiscal Year shall be determined pursuant to Treasury
Regulations Section 1.704-2(c), and shall generally equal the
net increase, if any, in the amount of LLC Minimum Gain for
that taxable year, determined generally according to the
provisions of Treasury Regulations Section 1.704-2(d), reduced
(but not below zero) by the aggregate distributions during the
year of proceeds of Nonrecourse Liabilities that are allocable
to an increase in LLC Minimum Gain, with such other
modifications as provided in Treasury Regulations Section
1.704-2(c).
(vi) "Nonrecourse Liability" means any LLC liability (or portion
thereof) for which no Member bears the economic risk of loss
under Treasury Regulations Section 1.752-2.
(vii) "Regulatory Allocations" shall mean allocations of Nonrecourse
Deductions provided in Paragraph (b) below, allocations of
Member Nonrecourse Deductions provided in Paragraph (c) below,
the minimum gain chargeback provided in Paragraph (d) below,
the member nonrecourse debt minimum gain chargeback provided
in Paragraph (e) below, the qualified income offset provided
in Paragraph (f) below, the gross income allocation provided
in Paragraph (g) below, and the curative allocations provided
in Paragraph (h) below.
(viii) "Adjusted Capital Account" shall mean the Capital Account of
any Member adjusted for the items described in the next to
last sentences of Treasury Regulations Section
1.704-2(g)(1)(share of minimum gain) and Section
1.704-2(i)(5)(share of Member nonrecourse minimum gain).
(b) Nonrecourse Deductions. All Nonrecourse Deductions for any Fiscal
Year shall be allocated to the Members in proportion to their Units.
(c) Member Nonrecourse Deductions. All Member Nonrecourse Deductions
for any Fiscal Year shall be allocated to the Member who bears the economic risk
of loss under
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Treasury Regulations Section 1.752-2 with respect to the Member Nonrecourse Debt
to which such Member Nonrecourse Deductions are attributable.
(d) Minimum Gain Chargeback. If there is a net decrease in LLC Minimum
Gain for a Fiscal Year, each Member shall be allocated items of LLC income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
such Member's share of such net decrease in LLC Minimum Gain, determined in
accordance with Treasury Regulations Section 1.704-2(g)(2) and the definition of
LLC Minimum Gain set forth above. This provision is intended to comply with the
minimum gain chargeback requirement in Treasury Regulations Section 1.704-2(f)
and shall be interpreted consistently therewith.
(e) Member Nonrecourse Debt Minimum Gain Chargeback. If there is a net
decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member
Nonrecourse Debt for any Fiscal Year, each Member who has a share of the Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt as of
the beginning of the Fiscal Year, determined in accordance with Treasury
Regulations Section 1.704-2(i)(5), shall be allocated items of LLC income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
such Member's share of the net decrease in Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with
Treasury Regulations Sections 1.704-2(i)(4) and (5) and the definition of Member
Nonrecourse Debt Minimum Gain set forth above. This Paragraph is intended to
comply with the member nonrecourse debt minimum gain chargeback requirement in
Treasury Regulations Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(f) Qualified Income Offset. In the event any Member unexpectedly
receives any adjustments, allocations, or distributions described in Treasury
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of LLC income
and gain (consisting of a pro rata portion of each item of LLC income, including
gross income, and gain for such year) shall be allocated to such Member in an
amount and manner sufficient to eliminate, to the extent required by the
Treasury Regulations, any deficit in such Member's Adjusted Capital Account
created by such adjustments, allocations or distributions as quickly as
possible.
(g) Gross Income Allocation. In the event any Member has a deficit in
its Adjusted Capital Account at the end of any Fiscal Year, each such Member
shall be allocated items of LLC gross income and gain, in the amount of such
Adjusted Capital Account deficit, as quickly as possible.
(h) Curative Allocations. When allocating Profits and Losses under
Sections 4.1 and 4.2, such allocations shall be made so as to offset any prior
allocations of gross income under Paragraph (g) above to the greatest extent
possible so that overall allocations of Profits and Losses shall be made as if
no such allocations of gross income occurred.
(i) Ordering. The allocations in this Exhibit to the extent they apply
shall be made before the allocations of Profits and Losses under Sections 4.1
and 4.2 and in the order in which they appear above.
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66
(j) Waiver of Minimum Gain Chargeback Provisions. If the Manager
determines that (i) either of the two minimum gain chargeback provisions
contained in this Exhibit would cause a distortion in the economic arrangement
among the Members, (ii) it is not expected that the LLC will have sufficient
other items of income and gain to correct that distortion, and (iii) the Members
have made Capital Contributions or received net income allocations that have
restored any previous Nonrecourse Deductions or Member Nonrecourse Deductions,
the Manager shall have the authority, but not the obligation, after giving
notice to the Members, to request on behalf of the LLC the Internal Revenue
Service to waive the minimum gain chargeback or member nonrecourse debt minimum
gain chargeback requirements pursuant to Treasury Regulations Sections
1.704-2(f)(4) and 1.704-2(i)(4). The LLC shall pay the expenses (including
attorneys' fees) incurred to apply for the waiver. The Manager shall promptly
copy all Members on all correspondence to and from the Internal Revenue Service
concerning the requested waiver.
(k) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any LLC asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such gain or loss shall be specially
allocated to the Members in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
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EXHIBIT E
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
INDEMNIFICATION EXHIBIT
(a) Rights to Indemnification.
(i) Pursuant to Act Section 18-108, and to the full extent
otherwise permitted by law, the LLC shall indemnify and save
harmless each Manager and each Member, its Affiliates and all
such Persons' respective members, managers, partners,
shareholders, directors, officers, trustees, employees and
agents ("Representatives"), and Persons to whom the Manager
have delegated management authority pursuant to the Agreement
(collectively, the "Indemnitees") from and against any and all
claims, liabilities, damages, losses, costs and expenses
(including amounts paid in satisfaction of judgments,
compromises and settlements, as fines and penalties and legal
or other costs and expenses of investigating or defending
against any claim or alleged claim) of any nature whatsoever,
known or unknown, liquidated or unliquidated, that are
incurred by any Indemnitee and arise out of or in connection
with the business of the LLC or the performance by such
Indemnitee of any of the Person's responsibilities under this
Agreement. The rights created by this Exhibit shall continue
as to an Indemnitee who has ceased to be a Manager or a
Member, or Person to whom management authority is delegated,
or a Representative and shall inure to the benefit of such
Indemnitee's heirs, executors, administrators, legal
representatives, successors and assigns.
(ii) Without limiting any other provisions of this Exhibit, the LLC
shall pay or reimburse, and indemnify and hold harmless each
Indemnitee against, expenses incurred by such Indemnitee in
connection with his appearances as a witness or other
participation in a Proceeding involving or affecting the LLC
at a time when the Indemnitee is not a named defendant or
respondent in the Proceeding. For the purposes of this
Exhibit, a "Proceeding" shall mean any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, any appeal in
such an action, suit or proceeding, and any inquiry or
investigation that could lead to such an action, suit or
proceeding.
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(iii) Notwithstanding any other provision of this Exhibit any
indemnification hereunder shall be provided out of and to the
extent of LLC assets only, and no Member (or Affiliate of, or
Representative of such Member) shall have personal liability
on account thereof.
(b) Indemnification Procedures.
(i) Any Person seeking indemnification pursuant to this Exhibit
(including any Advancement of Expenses as provided in
Subsection (c) of this Exhibit) shall be subject to the
procedures of this Subsection (b) for indemnification.
(ii) Any indemnification under this Exhibit, unless ordered by a
court or arbitration panel, shall be made by the LLC only as
authorized in the specific case and only upon a determination
by a majority in Interest of the disinterested Members (or by
special legal counsel pursuant to Subsection (v) below if so
requested by an Indemnitee) that (1) the Indemnitee acted in
good faith, (2) the Indemnitee reasonably believed that its
conduct was in the best interests of the LLC or at least not
opposed to the best interests of the LLC, and in the case of a
criminal Proceeding, had no cause to believe that its conduct
was criminal, and (3) Indemnitee's conduct did not constitute
gross negligence, recklessness, or intentional misconduct,
fraud, or a knowing violation or breach of this Agreement. The
termination of any Proceeding by judgment, order, settlement,
conviction or on a plea of nolo contendere or its equivalent
shall not alone determine that Indemnitee did not meet the
requirements set forth in the preceding sentence.
(iii) To claim indemnification under this Exhibit, Indemnitee shall
submit to the Members a written request for indemnification,
including therewith (or affirming that there will be made
available to the LLC) such documentation and information as is
reasonably available to Indemnitee and as the Members may
reasonably request to support such claims and enable the
Members to make or cause to be made the determinations
hereinafter provided for. If at the time of receipt of such
request, the LLC has in effect or is entitled to claim
reimbursement for such request under any policy of insurance
covering such claim, the LLC shall thereafter take proper
action to cause such insurers to accept coverage and
thereafter shall take all necessary action to cause such
insurers to pay such claim to or on behalf of Indemnitee.
(iv) Indemnitee and the LLC shall cooperate with each other and the
Person making the indemnification determination, including
providing upon reasonable advance request such information
that is not privileged or otherwise protected from disclosure
and which is reasonably necessary to such determination.
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69
(v) Any "special legal counsel" selected to make any
indemnification determination required hereunder shall be a
law firm, or member of a law firm, experienced in matters of
corporation, partnership and LLC law and which neither
presently is, nor in the past five (5) years has been,
retained to represent the LLC, Indemnitee, an Affiliate of the
LLC or Indemnitee or any other party to the Proceeding giving
rise to the claim for indemnification, and shall not include
any Person who, under prevailing applicable standards of
professional conduct, would have a conflict of interest with
Indemnitee or the LLC or any other party to the Proceeding.
Any determination required herein, if Indemnitee has so
requested, shall be made by special legal counsel selected by
the Indemnitee and reasonably satisfactory to the Members.
(vi) An Indemnitee shall not be denied indemnification in whole or
in part under this Subsection (b) solely on the grounds that
it had an interest in the transaction with respect to which
the indemnification applies, if the transaction was fully
disclosed to the Members in advance and was otherwise
permitted to be carried out by the terms of the Agreement.
(vii) The indemnification provided in this Exhibit is solely for the
benefit of Indemnitees and shall not give rise to any right to
indemnification in favor of any other Persons.
(c) Advance Payment of Expenses. Expenses incurred by an Indemnitee in
defense or settlement of any claim that may be subject to a right of
indemnification hereunder may be advanced by the LLC prior to the final
disposition thereof (an "Advancement of Expense") upon receipt of a written
agreement by the Indemnitee to repay such amount to the extent that it shall be
determined ultimately that such Indemnitee is not entitled to be indemnified
hereunder.
(d) Right of Indemnitee to Commence Proceeding.
(i) If a claim under Subsection (a) of this Exhibit is not paid in
full by the LLC within sixty (60) days after a written claim
has been received by the LLC, except in the case of a claim
for an Advancement of Expenses, in which case the applicable
period shall be twenty (20) days, an Indemnitee may at any
time thereafter commence a Proceeding against the LLC pursuant
to the dispute resolution provisions set forth in the Dispute
Resolution Exhibit to recover the unpaid amount of the claim.
If successful in whole or in part in any such Proceeding, or
in a Proceeding brought by the LLC to recover any Advancement
of Expenses, the Indemnitee shall also be entitled to be paid
the expenses of prosecuting or defending such Proceeding.
(ii) In any Proceeding brought by an Indemnitee to enforce a right
to Indemnification hereunder (but not in a Proceeding brought
by Indemnitee to enforce a right to an Advancement of
Expenses) it shall be a defense that (and in any Proceeding by
the LLC to recover an Advancement of
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70
Expenses, the LLC shall be entitled to recover such expenses
upon a final adjudication that) the Indemnitee has not met the
requirements for indemnification hereunder; provided, however,
that in any such Proceeding, neither (A) the failure of the
Members to have made the determination prior to the
commencement of such Proceeding that indemnification of
Indemnitee is proper in the circumstances, (B) an actual
determination by the Members that Indemnitee has not met such
applicable requirements, nor (C) termination of any Proceeding
by any judgment, order, settlement, or plea therein shall, of
itself, create a presumption that Indemnitee has not met such
applicable legal requirements or, in the case of such a
Proceeding brought by Indemnitee, be a defense to such a
Proceeding.
(iii) In any Proceeding brought by Indemnitee to enforce a right to
indemnification or to an Advancement of Expenses hereunder, or
by the LLC to recover an Advancement of Expenses, the burden
of proving that Indemnitee is not entitled to be indemnified,
or to such Advancement or Expenses, under this Exhibit or
otherwise shall be on the LLC.
(iv) Without limiting the foregoing, any action commenced pursuant
to this Subsection (d) shall be conducted in all respect as a
de novo adjudication on the merits. Provided, however, if a
determination shall have been made, or deemed to have been
made pursuant to Subsection (b) above, that a Person is
entitled to indemnification, the LLC shall be bound thereby.
The LLC and all Members shall be precluded from asserting in
any action pursuant to this Subsection (d) that the procedures
and presumptions of this Exhibit are not valid, binding and
enforceable.
(e) Non-Exclusivity of Rights. The rights to indemnification and to the
Advancement of Expenses conferred in this Exhibit shall not be exclusive of any
other right which any Person may have or hereafter acquire under applicable law,
under any other agreement, pursuant to any vote of Members or otherwise,
provided that the Indemnitee shall not be entitled to recover more than once for
the same damage.
(f) Insurance. The LLC shall be authorized to maintain insurance, in
reasonable amounts and with responsible carriers, at the LLC's expense, to
insure any amounts indemnifiable hereunder as well as to protect the Indemnitees
or any employee or agent of the LLC or another enterprise against any expense,
liability or loss of the kind referred to in this Exhibit, whether or not the
LLC would have the power to indemnify such Person against such expense,
liability or loss under the applicable law.
(g) Contribution by LLC. The LLC hereby agrees that, in the event that
the indemnification provided for in this Exhibit is for any reason finally
judicially determined to be unavailable, the LLC shall contribute to the payment
of any and all expenses, liability and loss (including attorneys' fees,
judgments, fines, ERISA or other excise taxes or penalties, and amounts paid in
settlement) in such proportion as is appropriate to reflect the relative fault
of the LLC and the Indemnitee with respect to such expenses, liability and loss.
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(h) Other Indemnification Sources. Any Indemnitees entitled to
indemnification from the LLC hereunder shall first seek recovery under any
insurance policies by which such Indemnitee is covered and shall obtain the
written consent of the Members prior to entering into any compromise or
settlement that would result in an obligation of the LLC to indemnify such
Indemnitee. If the amounts in respect of which such indemnification is sought
arise out of the conduct of the business and affairs of the LLC and also of any
other Person for which the Person entitled to indemnification from the LLC
hereunder was then acting in a similar capacity, the amount of the
indemnification provided by the LLC shall be limited to the LLC's proportionate
share thereof as determined in good faith by the Members.
(i) Survival. The provisions of this Exhibit shall survive any
termination or dissolution of the LLC.
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▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
DISPUTE RESOLUTION EXHIBIT
(a) Mandatory Arbitration. All disputes between or among any Members or
Manager, including without limitation any disputes for which application to the
Delaware Court of Chancery could otherwise be made pursuant to Act Section
18-110, arising out of or in connection with the execution, interpretation and
performance of this Agreement (including the validity, scope and enforceability
of this arbitration provision) shall be solely and finally settled by a board of
arbitrators consisting of either one arbitrator or three arbitrators, as set
forth below (the term "Arbitrators" shall refer to the board of arbitrators,
whether it consists of one or three members). The arbitration proceedings shall
be held in the Washington, D.C. metropolitan area, and except as otherwise may
be provided in this Exhibit, the arbitration proceedings shall be conducted in
accordance with the Commercial Arbitration Rules (the "AAA Rules") of the
American Arbitration Association (the "AAA").
(b) Arbitration Notice. If a Member or Members determine to submit a
dispute for arbitration pursuant to this Exhibit, such Member(s) shall furnish
the other Members with a dated, written statement (the "Arbitration Notice")
indicating (i) such Member's intent to commence arbitration proceedings, (ii)
the nature, with reasonable detail, of the dispute and (iii) the remedy or
remedies such Member will seek.
(c) Selection of Sole Arbitrator. Within ten (10) days of the date of
the Arbitration Notice, the Member or Members commencing the arbitration
(collectively, the "Petitioner") and the party with whom the Petitioner has its
dispute (collectively, the "Respondent") shall attempt to agree on and then
select one neutral arbitrator (the "Sole Arbitrator"). A "neutral" arbitrator
shall be a Person who would not be subject to disqualification under rule No. 19
of the AAA Rules.
(d) Arbitration Panel. If, within such ten (10) day period, the
Petitioner and Respondent are unable to agree upon a Sole Arbitrator, each of
them shall have five (5) business days (following the expiration of the ten (10)
day period) to select (and provide written notice of such selection to the other
Members and the LLC) a qualifying arbitrator. A "qualifying" arbitrator is a
Person who is not (i) an Affiliate or Family Member of either the Petitioner or
Respondent or (ii) counsel to any such Person at such time. If either the
Petitioner or Respondent fails to select a qualifying arbitrator or provide such
notice within the five (5) day period, the AAA shall have the right to make such
selection. (Such qualifying arbitrators hereafter may be referred to,
respectively, as the "First Arbitrator" and the "Second Arbitrator.") Within ten
(10) days following their selection, the First and Second Arbitrator shall
select (and provide written notice to the Members and the LLC of such selection)
a third arbitrator (the "Third Arbitrator") from a list of members of the AAA's
National Panel of
73
Commercial Arbitrators. The Third Arbitrator must be "neutral" as that term is
defined above. Notwithstanding the foregoing, if a dispute involves more than
two Members, all proceedings shall be conducted before a Sole Arbitrator, who
shall be selected by the AAA if the Members are unable to agree upon such Sole
Arbitrator within the ten (10) day period mentioned above.
(e) Discovery Requests. At any time within forty (40) days after the
date of the Arbitration Notice, the Petitioner and Respondent can make discovery
requests of the other (including, but not limited to, requests for delivery of
documents, production of witnesses for testimony and delivery of interrogatory
responses). The recipient of a discovery request shall have ten (10) days after
the receipt of such request to object to any or all portions of such request and
make an application to the Arbitrators to limit the scope of such discovery
request, and shall respond to any portions of such request not so objected to
within twenty (20) days of the receipt of such request. All objections shall be
in writing and shall indicate the reasons for such objections. Within five (5)
business days after the end of the period for the submission by the requested
party of an application to limit the discovery request, the Arbitrators shall
grant or deny such discovery request, in whole or in part, to the extent the
Arbitrators determine such discovery is or is not, as the case may be,
reasonably necessary to enable the requesting party to obtain information
relevant to the dispute without unreasonably burdening the requested party. The
requested party shall comply with a discovery request granted by the Arbitrators
within ten (10) business days after such discovery request is granted, or within
such longer period as the Arbitrators may determine upon application of the
requested party for extension thereof for reasonable cause. Neither party shall
be permitted to make more than one application for discovery to the Arbitrators.
All depositions shall be taken in the city in which the Person being deposed
resides or has its principal place of business, unless otherwise agreed by the
parties. The Arbitrators are not authorized to subpoena documents or perform
independent investigations.
(f) Timing of Hearings. Hearings must commence no later than ninety
(90) days following the date of the Arbitration Notice and such hearings shall
be conducted for no more than five (5) business days.
(g) Format of Hearings. Each of the Petitioner and the Respondent shall
submit a brief, outlining such party's claim for relief or defense to any claim,
to the other and to the Arbitrators on or before the tenth (10th) day following
the date of the last hearing. Reply briefs must be exchanged and submitted to
the Arbitrators on or before the twentieth (20th) day following the date of the
last hearing. The final decision of the Arbitrators is due on or before the
thirtieth (30th) day following the date of the last hearing. The Arbitrators
shall choose the form of final decision that, in their judgment, is most
consistent with the terms of this Agreement and the intent of the Members, as
supported by evidence presented by the Petitioner and Respondent in the
arbitration proceeding or, if the subject matter of the dispute is not clearly
addressed in or determinable under this Agreement, that, in their opinion, would
be most fair to the Petitioner and Respondent under the arbitration. The
Arbitrators shall not be required to provide reasons for their decision.
(h) Fees and Expenses. The fees of the First and Second Arbitrators
shall be borne by the Petitioner and Respondent, respectively. All other
expenses of the arbitration shall be shared equally by the Petitioner and
Respondent in accordance with the AAA Rules.
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(i) Arbitrators' Discretion. The foregoing time periods and procedural
steps may be modified or extended by the Arbitrators in their discretion to the
extent they deem necessary to prevent fundamental unfairness; provided that at
all times the Arbitrators shall be mindful of the Members' desire for the most
expeditious possible resolution of the Members' disputes; and provided, further,
that a final decision of the Arbitrators shall be rendered within 120 days of
the Arbitration Notice.
(j) Enforceability. To the extent permissible under applicable law, the
Members agree that the award of the Arbitrators shall be final and shall not be
subject to judicial review. Judgment on the arbitration award may be entered and
enforced in any court having jurisdiction over the parties or their assets. It
is the intent of the parties that the arbitration provisions hereof be enforced
to the fullest extent permitted by applicable law, including the Federal
Arbitration Act, 9 U.S.C. Section 2.
(k) Injunctive Relief. Nothing contained in this Exhibit shall prevent
a Member from seeking injunctive relief or require arbitration of any issue for
which injunctive relief is sought by either party hereto.
(l) Members to Include Manager. For purposes of this Exhibit only, any
reference to a Member or Members shall also be defined to include Manager.
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EXHIBIT G
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
APPRAISAL EXHIBIT
(a) Appraisal Process. If the Member and the LLC are unable to agree,
in writing, on the fair market value of the Interest or the consideration to be
received in exchange for the Interest within the time limits set forth in
Article VII of the Agreement, at any time following the expiration of such time
limit either may invoke the process described in this Appraisal Exhibit (the
"Appraisal Process") by sending the notice selecting an appraiser as described
in subparagraph (i) below, in which case the determination of fair market value
in accordance with this Appraisal Exhibit shall be final and binding on all
parties to the Agreement. If the purchaser of the Interest is one or more of the
Members, all decisions relating to the Appraisal Process shall be made by the
LLC on behalf of the Members who have exercised their options to purchase;
neither the Member whose Interest being purchased nor the nonexercising Members
shall participate in any of the LLC's decisions relating to the Appraisal
Process.
(i) First Appraisal. The written notice invoking the Appraisal
Process shall state that the Appraisal Process is being
invoked and shall set forth the name and address of the
unrelated third party appraiser selected by the party invoking
the Appraisal Process. Any appraiser selected pursuant to this
Appraisal Exhibit shall be a Person qualified with respect to
determining the fair market value of the Interest or other
property that is in question. The party to the purchase and
sale transaction who did not invoke the Appraisal Process
shall have ten (10) days following the notice of the selection
of the first appraiser to select a second unrelated third
party appraiser by sending to the other party written notice
setting forth the name and address of the second appraiser.
If a second appraiser is not selected within the 10 day time
period, the appraiser selected by the party invoking the
Appraisal Process shall prepare his appraisal report and
submit it to the owner of the Interest and the LLC within
sixty (60) days following the notice of his selection as an
appraiser, in which case the Appraisal Process shall be
concluded and the fair market value of the property in
question shall be the amount set forth in the appraiser's
report.
(ii) Second Appraisal. If a second appraiser has been selected
pursuant to subparagraph (i) above, the two appraisers so
selected shall consult with each other in an effort to reach
an agreement as to the fair market value. If the two
appraisers shall agree in writing as to the fair market value
of
76
the property in question within forty-five (45) days following
the appointment of the second appraiser, the fair market value
of such property shall be the amount to which the appraisers
have agreed, and the Appraisal Process shall be concluded.
In the event the two appraisers are unable to agree as to the
fair market value, the two appraisers shall prepare their
separate reports and submit them to the LLC and the owner of
the Interest within sixty (60) days following the appointment
of the second appraiser. If the higher fair market value
exceeds the lower fair market value by 10% or less of the
lower fair market value the Appraisal Process shall be
concluded and the fair market value of the property in
question shall be the average of the two fair market values as
set forth in the two appraisal reports. If the higher fair
market value exceeds the lower fair market value by more than
10% of the lower fair market value, the owner of the Interest
and the LLC shall further attempt to agree as to the fair
market value.
(iii) Third Appraisal. If the higher fair market value of the two
appraisals exceeds the lower fair market value by more than
10% of the lower fair market value and, as of the eleventh
(11th) day following the submission of both appraisal reports,
neither party has sent written notice calling for a third
appraiser, the Appraisal Process shall be concluded and the
fair market value of the property in question shall be the
average of the two fair market values as set forth in the two
appraisal reports. If, however, the higher fair market value
exceeds the lower fair market value by more than 10% of the
lower fair market value and, within ten (10) days following
the submission of the first two appraisers' reports, either
party sends written notice to the other calling for a third
appraiser, the two previously-selected appraisers shall
promptly (but in any event within thirty (30) days following
the submission of both appraisal reports) select a third
appraiser to determine the fair market value of the property
in question. The first two appraisers shall notify the LLC,
which shall in turn notify the owner of the Interest and all
Members, of the name and address of the third appraiser so
selected; provided, however, that if the LLC has not received
notice of the name and address of the third appraiser within
such thirty (30) day period, then the fair market value of the
property in question shall be the average of the two
appraisals that have been completed. Neither the previously
selected appraisers, the Member whose Interest is being
purchased, the LLC, the Members nor any Persons related to any
of them shall disclose to the third appraiser the appraisal
reports of the first two appraisers or the results of the
first two appraisals. Within thirty (30) days following his
appointment, the third appraiser shall submit to the owner of
the Interest and the LLC his appraisal report, in which case
the Appraisal Process shall be concluded and the fair market
value of the property in question shall be the average of the
two appraisals that are closest to each other.
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(b) Costs of Appraisal Process.
(i) General Rules. Unless provided otherwise in clause (b)(ii)
below, the costs of the Appraisal Process shall be borne
equally by the Member whose Interest is being purchased and by
the Person(s) obligated to purchase the Interest. If one or
more of the Members exercised its option to purchase the
Interest, the portion of the costs of the Appraisal Process
that are not borne by the owner of the Interest shall be
divided among the exercising Members based upon their relative
shares of the Interest being purchased.
(ii) Exception. Notwithstanding subparagraph (i) above, in the
event a party calls for a third appraiser as provided above
and the fair market value of the property in question as
determined pursuant to the Appraisal Process is less favorable
to that party than if the fair market value was determined by
averaging the appraised fair market values as determined by
the first two appraisers, the entire costs of the Appraisal
Process shall be borne by the party calling for the third
appraiser.
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EXHIBIT H
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as of
July 30, 1997, by and among Digital Television Services, LLC, a Delaware limited
liability company and DTS Capital, Inc., a Delaware corporation (the "Issuers"),
the parties listed on Schedule 1 attached hereto (each a "Guarantor" and,
collectively, the "Guarantors") and ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation, CIBC Wood Gundy Securities Corp. and ▇.▇. ▇▇▇▇▇▇ Securities Inc.
(together, the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of July 25, 1997, among the Issuers, Guarantors and the
Initial Purchasers (the "Purchase Agreement") relating to the sale by the
Issuers to the Initial Purchasers of $155,000,000 aggregate principal amount of
their 12 1/2% Senior Subordinated Notes due 2007 (the "Notes"). In order to
induce the Initial Purchasers to enter into the Purchase Agreement, the Issuers
have agreed to provide the registration rights set forth in this Agreement for
the equal benefit of the Initial Purchasers and their respective direct and
indirect transferees. The execution and delivery of this Agreement is a
condition to the Initial Purchasers' obligation to purchase the Notes under the
Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a).
Advice: See the last paragraph of Section 5.
Applicable Period: See Section 2(b).
Closing Date: The Closing Date as defined in the Purchase
Agreement.
Effectiveness Date: The 150th day after the Closing Date;
provided, however, that, with respect to the Initial Shelf Registration
Statement, (i) if the Filing Date in respect thereof is fewer than 60 days prior
to the 150th day after the Closing Date, then the Effectiveness Date in respect
thereof shall be the 60th day after such Filing Date and (ii) if the Filing Date
is after the filing of the Exchange Offer Registration Statement with the SEC,
then the Effectiveness Date in respect thereof shall be the 60th day after such
Filing Date.
Effectiveness Period: See Section 3.
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Event Date: See Section 4.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2(a).
Exchange Offer Registration Statement: See Section 2(a).
Exchange Securities: See Section 2(a).
Expiration Date: See Section 2(a).
Filing Date: The 120th day after the Closing Date; provided,
however, that, with respect to the Initial Shelf Registration Statement, (i) if
a Shelf Registration Event shall have occurred fewer than 30 days prior to the
120th day after the Closing Date, then the Filing Date in respect thereof shall
be the 30th day after such Shelf Registration Event and (ii) if a Shelf
Registration Event shall have occurred after the filing of the Exchange Offer
Registration Statement with the SEC, then the Filing Date in respect thereof
shall be the 45th day after such Shelf Registration Event.
Guarantors: The Guarantors defined in the preamble hereto and
any Person that becomes a guarantor after the date hereof pursuant to the terms
of the Indenture. See Section 10(d).
Holder: Any record holder of Registrable Securities.
Indemnified Person: See the third paragraph of Section 7.
Indemnifying Person: See the third paragraph of Section 7.
Indenture: The Indenture, dated as of July 30, 1997, between
the Issuers and Guarantors and The Bank of New York, as trustee, pursuant to
which the Notes are being issued, as amended or supplemented from time to time
in accordance with the terms thereof.
Initial Purchasers: See the introductory paragraph to this
Agreement.
Initial Shelf Registration Statement: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date of original issuance of the Notes.
Issuers: See the introductory paragraph to this Agreement.
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Manager: Any officer or member of the board of managers or
similar governing body of Digital Television Services, LLC.
NASD: See Section 5(t).
Notes: See the second introductory paragraph to this
Agreement.
Participant: See the first paragraph of Section 7.
Participating Broker-Dealer: See Section 2(b).
Person: An individual, corporation, limited or general
partnership, limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
Private Exchange: See Section 2(b).
Private Exchange Securities: See Section 2(b).
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
Purchase Agreement: See the second introductory paragraph to
this Agreement.
Records: See Section 5(o).
Registrable Securities: The Notes upon original issuance
thereof and at all times subsequent thereto, each Exchange Security as to which
Section 2(c)(v) hereof is applicable upon original issuance and at all times
subsequent thereto and, if issued, the Private Exchange Securities, until in the
case of any such Notes, Exchange Securities or Private Exchange Securities, as
the case may be, (i) a Registration Statement (other than, with respect to any
Exchange Security as to which Section 2(c)(v) hereof is applicable, the Exchange
Offer Registration Statement) covering such Notes, Exchange Securities or
Private Exchange Securities has been declared effective by the SEC and such
Notes, Exchange Securities or Private Exchange Securities, as the case may be,
have been disposed of in accordance with such effective Registration Statement,
(ii) such Notes, Exchange Securities or Private Exchange Securities, as the case
may be, are sold in compliance with Rule 144, (iii) such Note has been exchanged
for an Exchange Note pursuant to the Exchange Offer and Section 2(c)(v) is not
applicable thereto, or (iv) such Notes, Exchange Securities or Private Exchange
Securities, as the case may be, cease to be outstanding.
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81
Registration Statement: Any registration statement of the
Issuers and Guarantors (including, but not limited to, the Exchange Offer
Registration Statement) that covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration Statement: See Section 3(b).
Shelf Registration Event: See Section 2(c).
Subsequent Shelf Registration Statement: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if applicable,
the trustee under any indenture governing the Exchange Securities and Private
Exchange Securities (if any).
Underwritten registration or underwritten offering: A
registration in which securities of the Issuers are sold to an underwriter for
reoffering to the public.
2. EXCHANGE OFFER
(a) The Issuers and Guarantors agree to file with the SEC on
or before the Filing Date an offer to exchange (the "Exchange Offer") any and
all of the Registrable Securities for
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a like aggregate principal amount of senior subordinated debt securities of the
Issuers that are identical to the Notes (the "Exchange Securities") (and that
are entitled to the benefits of a trust indenture that is identical to the
Indenture (other than such changes as are necessary to comply with any
requirements of the SEC to effect or maintain the qualification of such trust
indenture under the TIA) and that has been qualified under the TIA), except that
the Exchange Securities shall have been registered pursuant to an effective
Registration Statement under the Securities Act and shall contain no restrictive
legend thereon. The Exchange Offer will be registered under the Securities Act
on the appropriate form (the "Exchange Offer Registration Statement") and will
comply with all applicable tender offer rules and regulations under the Exchange
Act. The Issuers and Guarantors agree to use their commercially reasonable best
efforts (i) to cause the Exchange Offer Registration Statement to become
effective and to commence the Exchange Offer on or prior to the Effectiveness
Date, (ii) to keep the Exchange Offer open for 30 days (or longer if required by
applicable law) (the last day of such period, the "Expiration Date") and (iii)
to exchange Exchange Securities for all Notes validly tendered and not withdrawn
pursuant to the Exchange Offer on or prior to the fifth day following the
Expiration Date.
Each Holder who participates in the Exchange Offer will be
deemed to represent that any Exchange Securities received by it will be acquired
in the ordinary course of its business, that at the time of the consummation of
the Exchange Offer such Holder will have no arrangement with any person to
participate in the distribution of the Exchange Securities in violation of the
provisions of the Securities Act, and that such Holder is not an affiliate of
the Issuers within the meaning of the Securities Act.
Upon consummation of the Exchange Offer in accordance with
this Section 2, the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Registrable Securities that are Private
Exchange Securities, Exchange Securities to which Section 2(c)(v) is applicable
and Exchange Securities held by Participating Broker-Dealers, and no Issuer or
Guarantor shall have any further obligation to register Registrable Securities
(other than Private Exchange Securities and other than Exchange Securities as to
which Section 2(c)(v) hereof applies) pursuant to Section 3 of this Agreement.
No securities other than the Exchange Securities shall be included in the
Exchange Offer Registration Statement.
(b) The Issuers and Guarantors shall include within the
Prospectus contained in the Exchange Offer Registration Statement a section
entitled "Plan of Distribution," reasonably acceptable to the Initial
Purchasers, which shall contain a summary statement of the positions taken or
policies made by the Staff of the SEC (and publicly disseminated) with respect
to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Securities received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"). Such "Plan of Distribution" section shall also
allow the use of the prospectus by all persons subject to the prospectus
delivery requirements of the Securities Act, including all Participating
Broker-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Securities.
The Issuers and Guarantors shall use their commercially
reasonable best efforts to keep the Exchange Offer Registration Statement
effective and to amend and supplement the Prospectus
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contained therein in order to permit such Prospectus to be lawfully delivered by
all persons subject to the prospectus delivery requirements of the Securities
Act for at least 180 days following the consummation of the Exchange Offer (or
such shorter time as such persons must comply with such requirements in order to
resell the Exchange Securities) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, any Initial
Purchaser holds any Notes acquired by it and having, or which are reasonably
likely to be determined to have, the status of an unsold allotment in the
initial distribution, the Issuers upon the request of such Initial Purchaser
shall, simultaneously with the delivery of the Exchange Securities in the
Exchange Offer, issue and deliver to such Initial Purchaser, in exchange (the
"Private Exchange") for the Notes held by such Initial Purchaser, a like
principal amount of debt securities of the Issuers that are identical to the
Exchange Securities (the "Private Exchange Securities") (and which are issued
pursuant to the same indenture as the Exchange Securities) (except for the
placement of a restrictive legend on such Private Exchange Securities). The
Private Exchange Securities shall bear the same CUSIP number as the Exchange
Securities. Interest on the Exchange Securities and Private Exchange Securities
will accrue from the last interest payment date on which interest was paid on
the Notes surrendered in exchange therefor or, if no interest has been paid on
the Notes, from the Issue Date.
Any indenture under which the Exchange Securities or the
Private Exchange Securities will be issued shall provide that the holders of any
of the Exchange Securities and the Private Exchange Securities will vote and
consent together on all matters to which such holders are entitled to vote or
consent as one class and that none of the holders of the Exchange Securities and
the Private Exchange Securities will have the right to vote or consent as a
separate class on any matter.
(c) If, (i) because of any change in law or in currently
prevailing interpretations of the Staff of the SEC, the Issuers reasonably
determine in good faith, after consultation with counsel, that they are not
permitted to effect the Exchange Offer, (ii) the Exchange Offer is not commenced
on or prior to the Effectiveness Date, (iii) the Exchange Offer is not, for any
reason, consummated on or prior to the 180th day after the Closing Date, (iv)
any Holder of Private Exchange Securities so requests, or (v) in the case of any
Holder that participates in the Exchange Offer, such Holder does not receive
Exchange Securities on the date of the exchange that may be sold without
restriction under state and federal securities laws (the occurrence of any such
event, a "Shelf Registration Event"), then, in the case of each of clauses (i)
to and including (v) of this sentence, the Issuers shall promptly deliver to the
Holders and the Trustee notice thereof (the "Shelf Notice") and the Issuers and
Guarantors shall thereafter file an Initial Shelf Registration Statement
pursuant to Section 3.
3. SHELF REGISTRATION
If a Shelf Registration Event has occurred (and whether or not
an Exchange Offer Registration Statement has been filed with the SEC or has
become effective, or the Exchange Offer has been consummated), then:
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(a) Initial Shelf Registration Statement. The Issuers and
Guarantors shall promptly prepare and file with the SEC a Registration Statement
for an offering to be made on a continuous basis pursuant to Rule 415 covering
all of the Registrable Securities (the "Initial Shelf Registration Statement").
The Issuers and Guarantors shall file with the SEC the Initial Shelf
Registration Statement on or prior to the Filing Date. The Initial Shelf
Registration Statement shall be on Form S-1 or another appropriate form if
available, permitting registration of such Registrable Securities for resale by
such Holders in the manner designated by them (including, without limitation, in
one or more underwritten offerings). The Issuers and Guarantors shall not permit
any securities other than the Registrable Securities to be included in the
Initial Shelf Registration Statement or any Subsequent Shelf Registration
Statement. The Issuers and Guarantors shall use their commercially reasonable
best efforts to cause the Initial Shelf Registration Statement to be declared
effective under the Securities Act on or prior to the Effectiveness Date, and to
keep the Initial Shelf Registration Statement continuously effective under the
Securities Act until the date that is 24 months from the Issue Date, or such
shorter period ending when (i) all Registrable Securities covered by the Initial
Shelf Registration Statement have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration Statement or (ii) a Subsequent
Shelf Registration Statement covering all of the Registrable Securities has been
declared effective under the Securities Act (such 24 month or shorter period,
the "Effectiveness Period").
(b) Subsequent Shelf Registration Statements. If the Initial
Shelf Registration Statement or any Subsequent Shelf Registration Statement
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the securities registered
thereunder), the Issuers and Guarantors shall use their commercially reasonable
best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event the Issuers and Guarantors shall within
45 days of such cessation of effectiveness amend the Shelf Registration
Statement in a manner reasonably expected to obtain the withdrawal of the order
suspending the effectiveness thereof, or file an additional "shelf" Registration
Statement pursuant to Rule 415 covering all of the Registrable Securities (a
"Subsequent Shelf Registration Statement"). If a Subsequent Shelf Registration
Statement is filed, the Issuers and Guarantors shall use their commercially
reasonable best efforts to cause the Subsequent Shelf Registration Statement to
be declared effective as soon as reasonably practicable after such filing and to
keep such Registration Statement continuously effective until the end of the
Effectiveness Period. As used herein the term "Shelf Registration Statement"
means the Initial Shelf Registration Statement and any Subsequent Shelf
Registration Statement.
(c) Supplements and Amendments. The Issuers and Guarantors
shall promptly supplement and amend the Shelf Registration Statement if required
by the rules, regulations or instructions applicable to the registration form
used for such Shelf Registration Statement, if required by the Securities Act,
or if reasonably requested by the Holders of a majority in aggregate principal
amount of the Registrable Securities covered by such Registration Statement or
by any underwriter of such Registrable Securities.
(d) Hold-Back Agreements.
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(i) Restrictions on Public Sale by Holders of Registrable
Securities. Each Holder of Registrable Securities whose Registrable
Securities are covered by a Shelf Registration Statement (which
Registrable Securities are not being sold in the underwritten offering
described below) agrees, if requested (pursuant to a timely written
notice) by the Issuers and Guarantors or by the managing underwriter or
underwriters in an underwritten offering, not to effect any public sale
or distribution of any securities within the class of securities
covered by such Shelf Registration Statement or any similar class of
securities of any Issuer or Guarantor, including a sale pursuant to
Rule 144 or Rule 144A (except as part of such underwritten offering),
during the period beginning 10 days prior to, and ending 60 days after,
the closing date of each underwritten offering made pursuant to each
Shelf Registration Statement, to the extent timely notified in writing
by the Issuers or by the managing underwriter or underwriters;
provided, however, that each holder of Registrable Securities shall be
subject to the hold-back restrictions of this Section 3(d)(i) only once
during the term of this Agreement.
The foregoing provisions shall not apply to any Holder of
Registrable Securities if such Holder is prevented by applicable
statute or regulation from entering into any such agreement; provided,
however, that any such Holder shall undertake, in its request to
participate in any such underwritten offering, not to effect any public
sale or distribution of the class of securities covered by such Shelf
Registration Statement (except as part of such underwritten offering)
during such period unless it has provided 45 days' prior written notice
of such sale or distribution to the Issuers or the managing underwriter
or underwriters, as the case may be.
(ii) Restrictions on the Issuers, Guarantors and Others. The
Issuers and Guarantors agree (A) not to effect any public or private
sale or distribution (including, without limitation, a sale pursuant to
Regulation D under the Securities Act) of any securities the same as or
similar to those covered by a Shelf Registration Statement or any
securities convertible into or exchangeable or exercisable for such
securities, during the 10 days prior to, and during the 60-day period
beginning on, the commencement of an underwritten public distribution
of Registrable Securities, where the managing underwriter or
underwriters so requests pursuant to timely written notice; (B) to
include in any agreements entered into by any Issuer or Guarantor on or
after the date of this Agreement (other than any underwriting agreement
relating to a public offering registered under the Securities Act)
pursuant to which any Issuer or Guarantor issues or agrees to issue
securities the same as or similar to the Notes a provision
substantially identical to Section 3(d)(i); and (C) not to grant or
agree to grant any "piggy-back registration" or other similar rights to
any holder of any Issuer or Guarantor or any of their respective
subsidiaries' securities issued on or after the date of this Agreement
with respect to any Registration Statement.
(e) Limitations, Conditions and Qualifications to Obligations
Under Registration Covenants. The obligations of the Issuers and Guarantors set
forth in this Section 3 are subject to each of the following limitations,
conditions and qualifications:
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(i) Subject to the next sentence of this paragraph, the
Issuers and Guarantors shall be entitled to postpone, for a reasonable
period of time, the filing or effectiveness of, or suspend the rights
of any Holders to make sales pursuant to, any Registration Statement
otherwise required to be prepared, filed and made and kept effective by
them hereunder; provided, however, that the duration of such
postponement or suspension may not extend beyond the earlier to occur
of (A) the day after the cessation of the circumstances described in
the next sentence of this paragraph on which such postponement or
suspension is based or (B) 90 days after the date of the determination
of the Board of Directors referred to in the next sentence. Such
postponement or suspension may be effected only if the Manager and
Board of Directors, as applicable, of the Issuers determine reasonably
and in good faith that the filing or effectiveness of, or sales
pursuant to, such Registration Statement would materially impede, delay
or interfere with any financing, offer or sale of securities,
acquisition, corporate reorganization or other significant transaction
involving the Issuers or any of their affiliates or require disclosure
of material information that the Issuers have a bona fide business
purpose for preserving as confidential; provided, however, that the
Issuers shall be entitled to such postponement or suspension only once
during the term of this Agreement. If the Issuers so postpone the
filing of a Registration Statement they shall, as promptly as possible,
deliver a certificate signed by the chief executive officer of each of
the Issuers to the Holders as to such determination. The exercise by
the Issuers of their rights under this Section 3(e) shall not relieve
them of their obligation to pay Additional Interest pursuant to Section
4 if the Registration Statement is not filed by the applicable Filing
Date or declared effective by the applicable Effectiveness Date or
postponed or suspended beyond the period specified therein.
4. ADDITIONAL INTEREST
(a) The Issuers, Guarantors and the Initial Purchasers agree
that the Holders of Notes will suffer damages if the Issuers and Guarantors fail
to fulfill their obligations under Section 2 or Section 3 hereof (including by
virtue of their exercise of their rights under Section 3(d) hereof) and that it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, the Issuers and Guarantors agree jointly and severally to pay, as
liquidated damages, additional interest on the Registrable Securities
("Additional Interest") under the circumstances and to the extent set forth
below (each of which shall be given independent effect):
(i) if either the Exchange Offer Registration Statement or the
Initial Shelf Registration Statement required to be filed under this
Agreement has not been filed on or prior to the Filing Date (unless,
with respect to the Exchange Offer Registration Statement, a Shelf
Registration Event described in clause (i) of Section 2(c) shall have
occurred prior to the Filing Date), Additional Interest shall accrue on
the Registrable Securities over and above the stated interest in an
amount equal to $0.05 per week (or any part thereof), per $1,000 of
principal amount (as of the first day of each such week) of the
Registrable Securities for the first 90 days immediately following such
date, such Additional Interest rate increasing by an additional $0.05
per week (or any part thereof)
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per $1,000 of principal amount (as of the first day of each such week)
of the Registrable Securities for each subsequent 90-day period;
(ii) if either the Exchange Offer Registration Statement or the
Initial Shelf Registration Statement required to be filed under this
Agreement is not declared effective by the SEC on or prior to the
Effectiveness Date (unless, with respect to the Exchange Offer
Registration Statement, a Shelf Registration Event described in clause
(i) of Section 2(c) above shall have occurred), Additional Interest
shall accrue on the Registrable Securities over and above the stated
interest in an amount equal to $0.05 per week (or any part thereof) per
$1,000 of principal amount (as of the first day of each such week) of
the Registrable Securities for the first 90 days immediately following
the day after such date, such Additional Interest rate increasing by an
additional $0.05 per week (or any part thereof) per $1,000 of principal
amount (as of the first day of each such week) of the Registrable
Securities for each subsequent 90-day period; and
(iii) if (A) the Issuers have not exchanged Exchange Securities for
all Registrable Securities validly tendered and not withdrawn in
accordance with the terms of the Exchange Offer on or prior to the
fifth day after the Expiration Date, or (B) the Exchange Offer
Registration Statement ceases to be effective at any time prior to the
Expiration Date, or (C) if applicable, any Shelf Registration Statement
has been declared effective and such Shelf Registration Statement
ceases to be effective at any time during the Effectiveness Period,
then Additional Interest shall accrue on the Registrable Securities
(over and above any interest otherwise payable on the Registrable
Securities) in an amount equal to $0.05 per week (or any part thereof)
per $1,000 of principal amount (as of the first day of each such week)
of the Registrable Securities for the first 90 days commencing on (x)
the sixth day after the Expiration Date, in the case of (A) above, or
(y) the day the Exchange Offer Registration Statement ceases to be
effective in the case of (B) above, or (z) the day such Shelf
Registration Statement ceases to be effective in the case of (C) above,
such Additional Interest rate increasing by an additional $0.05 per
week (or any part thereof) per $1,000 of principal amount (as of the
first day of each such week) of the Registrable Securities at the
beginning of each such subsequent 90-day period;
provided, however, that the Additional Interest rate on the Registrable
Securities may not exceed at any one time in the aggregate $0.40 per week per
$1,000 of principal amount (as of the first day of each such week) of the
Registrable Securities; provided, further, that (1) upon the filing of the
Exchange Offer Registration Statement or a Shelf Registration Statement as
required hereunder (in the case of clause (i) of this Section 4(a)), (2) upon
the effectiveness of the Exchange Offer Registration Statement or the Shelf
Registration Statement as required hereunder (in the case of clause (ii) of this
Section 4(a)) or (3) upon the exchange of Exchange Securities for all
Registrable Securities validly tendered and not withdrawn (in the case of clause
(iii)(A) of this Section 4(a)), or upon the effectiveness of the Exchange Offer
Registration Statement that had ceased to remain effective (in the case of
clause (iii)(B) of this Section 4(a)), or upon the effectiveness of the Shelf
Registration Statement that had ceased to remain effective (in the case of
clause (iii)(C) of this Section 4(a)), Additional Interest on the Registrable
Securities as a result of such clause (or the relevant subclause thereof), as
the case may be, shall cease to accrue (but any accrued amount shall be
payable).
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(b) The Issuers shall notify the Trustee within one business
day after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). The Issuers shall
jointly and severally pay the Additional Interest due on the Registrable
Securities by depositing with the Trustee, in trust, for the benefit of the
Holders thereof, on or before the applicable semi-annual interest payment date,
immediately available funds in sums sufficient to pay the Additional Interest
then due to Holders of Registrable Securities. Each obligation to pay Additional
Interest shall be deemed to accrue immediately following the occurrence of the
applicable Event Date. Any accrued Additional Interest amount shall be due and
payable on each interest payment date immediately after the applicable Event
Date to the record Holder of Registrable Securities entitled to receive the
interest payment to be made on such date as set forth in the Indenture. The
parties hereto agree that the Additional Interest provided for in this Section 4
constitutes a reasonable estimate of the damages that may be incurred by Holders
of Registrable Securities by reason of the failure of a Shelf Registration
Statement or Exchange Offer Registration Statement to be filed or declared
effective, or a Shelf Registration Statement to remain effective, as the case
may be, in accordance with this Section 4.
5. REGISTRATION PROCEDURES
In connection with the registration of any Registrable
Securities pursuant to Sections 2 or 3 hereof, the Issuers and Guarantors shall
use their commercially reasonable best efforts to effect such registrations to
permit the sale of such Registrable Securities in accordance with the intended
method or methods of disposition thereof, and pursuant thereto the Issuers and
Guarantors shall:
(a) prepare and file with the SEC on or before the Filing
Date, a Registration Statement or Registration Statements as prescribed by
Section 2 or 3, and to use their commercially reasonable best efforts to cause
each such Registration Statement to become effective and remain effective as
provided herein, provided that, if such filing is pursuant to Section 3, before
filing any Registration Statement or Prospectus or any amendments or supplements
thereto, the Issuers shall furnish to and afford the Holders of the Registrable
Securities covered by such Registration Statement, their counsel and the
managing underwriters, if any, a reasonable opportunity to review copies of all
such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (at least five
days prior to such filing); the Issuers and Guarantors shall not file any
Registration Statement or Prospectus or any amendments or supplements thereto in
respect of which the Holders must be afforded a reasonable opportunity to review
prior to the filing of such document, if the Holders of a majority in aggregate
principal amount of the Registrable Securities covered by such Registration
Statement, their counsel, or the managing underwriters, if any, shall reasonably
object;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration Statement or Exchange Offer
Registration Statement, as the case may be, as may be necessary to keep such
Registration Statement continuously effective for the Effectiveness Period, in
the case of a Shelf Registration Statement, or until the later of the Expiration
Date and the Applicable Period (if applicable), in the case of the Exchange
Offer Registration Statement; cause the related Prospectus to be supplemented by
any required
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Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) under the Securities Act; and comply
with the provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to them with respect to
the disposition of all securities covered by such Registration Statement as so
amended or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating Broker-Dealer
covered by any such Prospectus;
(c) if (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period that has notified the Issuers in writing
that it will be a Participating Broker-Dealer in the Exchange Offer, notify the
selling Holders of Registrable Securities, or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing underwriters,
if any, promptly (but in any event within five business days), and confirm such
notice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective
(including in such notice a written statement that any Holder may, upon request,
obtain, without charge, one conformed copy of such Registration Statement or
post-effective amendment including financial statements and schedules, documents
incorporated or deemed to be incorporated by reference and exhibits); (ii) of
the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose;
(iii) if at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Securities the
representations and warranties of the Issuers contained in any agreement
(including any underwriting agreement) contemplated by Section 5(n) below cease
to be true and correct; (iv) of the receipt by the Issuers of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Securities
or the Exchange Securities to be sold by any such Participating Broker-Dealer
for offer or sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose; (v) of the happening of any event or any
information becoming known that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading provided,
however, that such notification need not specifically identify such event if
notification of the occurrence thereof would in the Issuers' reasonable
judgment, involve the disclosure of confidential non-public information; and
(vi) of the Issuers' reasonable determination that a post-effective amendment to
the Registration Statement would be appropriate;
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(d) if (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, use their commercially reasonable best
efforts to prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of a
Prospectus or suspending the qualification (or exemption from qualification) of
any of the Registrable Securities or the Exchange Securities to be sold by any
Participating Broker-Dealer, for sale in any jurisdiction, and, if any such
order is issued, use their commercially reasonable best efforts to obtain the
withdrawal of any such order at the earliest possible moment;
(e) if a Shelf Registration Statement is filed pursuant to
Section 3 and if requested by the managing underwriters, if any, or the Holders
of a majority in aggregate principal amount of the Registrable Securities being
sold in connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, or such Holders or their respective counsel
reasonably request to be included therein; and (ii) make all required filings of
such prospectus supplement or such post-effective amendment as soon as
reasonably practicable after the Issuers have received notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment;
(f) if a Shelf Registration Statement is filed pursuant to
Section 3, furnish to each selling Holder of Registrable Securities and upon
request to its counsel and each managing underwriter, if any, without charge,
one conformed copy of the Registration Statement or Statements and each
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated or deemed to be incorporated therein by reference and
all exhibits;
(g) if (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, deliver to each selling Holder of
Registrable Securities, or each such Participating Broker-Dealer, as the case
may be, their counsel, and the underwriters, if any, without charge, as many
copies of the Prospectus or Prospectuses (including each form of preliminary
prospectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably request; and,
subject to the last paragraph of this Section 5, the Issuers and Guarantors
hereby consent to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registrable Securities or each such
Participating Broker-Dealer, as the case may be, and the underwriters or agents,
if any, and dealers (if any), in connection with the offering and sale of the
Registrable Securities covered by or the sale by Participating Broker-Dealers of
the Exchange Securities pursuant to such Prospectus and any amendment or
supplement thereto, provided that such use complies with all applicable laws and
regulations;
(h) prior to any public offering of Registrable Securities or
any delivery of a Prospectus contained in the Exchange Offer Registration
Statement by any Participating Broker-
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Dealer who seeks to sell Exchange Securities during the Applicable Period, use
their commercially reasonable best efforts to register or qualify, and to
cooperate with the selling Holders of Registrable Securities or each such
Participating Broker-Dealer, as the case may be, the underwriters, if any, and
their respective counsel in connection with the registration or qualification
(or exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder, Participating
Broker-Dealer, or the managing underwriters reasonably request in writing,
provided that where Exchange Securities held by Participating Broker-Dealers or
Registrable Securities are offered other than through an underwritten offering,
the Issuers and Guarantors shall cause their counsel to (i) perform Blue Sky
investigations and file registrations and qualifications required to be filed
pursuant to this Section 5(h); (ii) use their commercially reasonable best
efforts to keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective; and (iii) do any and all other acts or things necessary or advisable
to enable the disposition in such jurisdictions of the Exchange Securities held
by Participating Broker-Dealers or the Registrable Securities covered by the
applicable Registration Statement, provided further that no Issuer or Guarantor
shall in any case be required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject, (C) subject itself to taxation in excess of a nominal
dollar amount in any such jurisdiction or (D) conform its capitalization or the
composition of its assets to the securities or Blue Sky laws of any such
jurisdiction;
(i) if a Shelf Registration Statement is filed pursuant to
Section 3, cooperate with the selling Holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company; and enable such
Registrable Securities to be in such denominations and registered in such names
as the managing underwriter or underwriters, if any, or Holders may reasonably
request;
(j) use their commercially reasonable best efforts to cause
the Registrable Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof or the underwriters,
if any, to consummate the disposition of such Registrable Securities, except as
may be required solely as a consequence of the nature of such selling Holder's
business, in which case the Issuers and Guarantors will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals;
(k) if (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, upon the occurrence of any event
contemplated by paragraph 5(c)(v) or 5(c)(vi) above, as promptly as practicable
prepare and (subject to Section 5(a) above) file with the SEC, solely at the
expense of the Issuers and Guarantors, a supplement or post-effective amendment
to the Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated
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therein by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder
or to the purchasers of the Exchange Securities to whom such Prospectus will be
delivered by a Participating Broker-Dealer, any such Prospectus will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(l) use their commercially reasonable best efforts to cause
the Registrable Securities covered by a Registration Statement or the Exchange
Securities, as the case may be, to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate principal
amount of Registrable Securities covered by such Registration Statement or the
Exchange Securities, as the case may be, or the managing underwriters, if any;
(m) prior to the effective date of the first Registration
Statement relating to the Registrable Securities, (i) provide the Trustee with
printed certificates for the Registrable Securities in a form eligible for
deposit with The Depository Trust Company; and (ii) provide a CUSIP number for
the Registrable Securities;
(n) in connection with an underwritten offering of Registrable
Securities pursuant to a Shelf Registration Statement, enter into an
underwriting agreement as is customary in underwritten offerings, provided such
agreement is reasonably acceptable to the Issuers and provided that the
underwriters are reasonably acceptable to the Issuers, and take all such other
actions as are reasonably requested by the managing underwriters in order to
expedite or facilitate the registration or the disposition of such Registrable
Securities, and in such connection if reasonably requested, (i) make such
representations and warranties to the underwriters, with respect to the business
of the Issuers and their subsidiaries and the Registration Statement, Prospectus
and documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when reasonably requested;
(ii) use their commercially reasonable best efforts to obtain opinions of
counsel to the Issuers and updates thereof in form and substance reasonably
satisfactory to the managing underwriters, addressed to the underwriters
covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by underwriters;
(iii) use their commercially reasonable best efforts to obtain "cold comfort"
letters and updates thereof in form and substance reasonably satisfactory to the
managing underwriters from the independent certified public accountants of the
Issuers (and, if necessary, any other independent certified public accountants
of any subsidiary of any Issuer or of any business acquired by any Issuer or any
of their subsidiaries for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed to each
of the underwriters, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested by
underwriters; and (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures comparable to those set
forth in Section 7 hereof (or such other provisions and procedures reasonably
acceptable to the Issuers and the Holders of a majority in aggregate principal
amount of Registrable Securities covered by such Registration Statement and the
managing underwriters or agents) with respect to all parties to be indemnified
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pursuant to said Section, all of which shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder;
(o) if a Shelf Registration Statement is filed pursuant to
Section 3, subject to the prior receipt by the Issuers of undertakings to use
commercially reasonable efforts to preserve the confidentiality of any
information disclosed by the Issuers pursuant hereto in form and substance
reasonably satisfactory to the Issuers, make available for inspection by any
selling Holder of such Registrable Securities being sold, any underwriter
participating in any such disposition of Registrable Securities, if any, and any
attorney, accountant or other agent retained by any such selling holder or
underwriter (collectively, the "Inspectors"), at the offices where normally
kept, during reasonable business hours, all relevant financial and other
records, pertinent corporate documents and properties of the Issuers and their
subsidiaries (collectively, the "Records") as shall be necessary to enable them
to exercise any applicable due diligence responsibilities, and cause the
officers, directors and employees of the Issuers and their subsidiaries to
supply all information in each case requested by any such Inspector in
connection with such Registration Statement; however, records that the Issuers
determine, in good faith, to be confidential and any Records that the Issuers
notify the Inspectors are confidential shall not be disclosed by the Inspectors
unless (i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Registration Statement; (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction; (iii) the information in such Records has been made
generally available to the public; or (iv) release thereof is necessary or
advisable in connection with any action, suit or proceeding involving any Holder
or other Inspector;
(p) provide for an indenture trustee for the Registrable
Securities or the Exchange Securities, as the case may be, and cause the
Indenture or the trust indenture provided for in Section 2(a), as the case may
be, to be qualified under the TIA not later than the effective date of the
Exchange Offer or the first Registration Statement relating to the Registrable
Securities; and in connection therewith, cooperate with the trustee under any
such indenture and the holders of the Registrable Securities, to effect such
changes to such indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the TIA; and execute, and use their
commercially reasonable best efforts to cause such trustee to execute, all
documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such indenture to be so
qualified in a timely manner;
(q) comply with all applicable rules and regulations of the
SEC to the extent and so long as they are applicable to the Exchange Offer
Registration Statement or the Shelf Registration Statement and make generally
available to their securityholders earning statements satisfying the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 45 days after the end
of any 12- month period (or 90 days after the end of any 12-month period if such
period is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm commitment or
commercially reasonable best efforts underwritten offering; and (ii) if not sold
to underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Issuers after the effective date of a Registration
Statement, which statements shall cover said 12-month periods;
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(r) upon consummation of an Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Issuers in customary form,
relating to the Exchange Securities or the Private Exchange Securities, as the
case may be, addressed to the Trustee for the benefit of all Holders of
Registrable Securities participating in the Exchange Offer or the Private
Exchange, as the case may be, and which includes an opinion that (i) the Issuers
have duly authorized, executed and delivered the Exchange Securities and Private
Exchange Securities and the related indenture; and (ii) each of the Exchange
Securities or the Private Exchange Securities, as the case may be, and related
indenture constitute legal, valid and binding obligations of the Issuers,
enforceable against the Issuers in accordance with their respective terms (with
customary exceptions);
(s) if an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Securities by Holders to the
Issuers (or to such other Person as directed by the Issuers) in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may be,
▇▇▇▇, or caused to be marked, on such Registrable Securities that such
Registrable Securities are being cancelled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be; in no event
shall such Registrable Securities be marked as paid or otherwise satisfied;
(t) cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD"); and
(u) use their commercially reasonable best efforts to take all
other steps necessary to effect the registration of the Registrable Securities
covered by a Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Securities
or Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuers such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
as the Issuers may, from time to time, reasonably request. The Issuers and
Guarantors may exclude from such registration the Registrable Securities of any
seller or Participating Broker-Dealer who unreasonably fails to furnish such
information within a reasonable time after receiving such request.
Each Holder of Registrable Securities and each Participating
Broker-Dealer agrees by acquisition of such Registrable Securities or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
that, upon receipt of any notice from the Issuers of the happening of any event
of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such
Holder will forthwith discontinue disposition of such Registrable Securities
covered by such Registration Statement or Prospectus or Exchange Securities to
be sold by such Participating Broker-Dealer, as the case may be, until such
holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k), or until it is advised in writing (the "Advice")
by the Issuers that the use of the applicable Prospectus may be resumed, and has
received copies of any amendments or supplements thereto.
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6. REGISTRATION EXPENSES
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuers and Guarantors shall be borne
jointly and severally by the Issuers and Guarantors whether or not the Exchange
Offer Registration Statement or a Shelf Registration Statement is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel) in
such jurisdictions (x) where the holders of Registrable Securities are located,
in the case of the Exchange Securities, or (y) as provided in Section 5(h), in
the case of Registrable Securities to be sold in a public offering or Exchange
Securities to be sold by a Participating Broker-Dealer during the Applicable
Period); (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities or Exchange Securities in a
form eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriters, if any, or, in respect of Registrable Securities or Exchange
Securities to be sold by any Participating Broker-Dealer during the Applicable
Period, by the Holders of a majority in aggregate principal amount of the
Registrable Securities included in any Registration Statement or of such
Exchange Securities, as the case may be); (iii) messenger, telephone and
delivery expenses incurred by the any Issuer or Guarantor; (iv) fees and
disbursements of counsel for any Issuer or Guarantor and reasonable fees and
disbursements of special counsel for the sellers of Registrable Securities but
only with respect to such counsel's review of the Registration Statement and
Prospectus, including, without limitation, any portions of the Registration
Statement and Prospectus relating to the Holders, and all documentation related
thereto, including any underwriting agreement and all related documentation
(subject to the provisions of Section 6(b)); (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(n)(iii)
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance); (vi) the
reasonable fees and expenses of any "qualified independent underwriter" or other
independent appraiser participating in an offering pursuant to Rule 2710 of the
Conduct Rules of the NASD; (vii) rating agency fees; (viii) Securities Act
liability insurance, if any Issuer or Guarantor desires such insurance; (ix)
fees and expenses of all other Persons retained by any Issuer or Guarantor; (x)
internal expenses of any Issuer or Guarantor (including, without limitation, all
salaries and expenses of officers and employees of any Issuer or Guarantor
performing legal or accounting duties); (xi) the expense of any annual audit of
any Issuer or Guarantor; (xii) the fees and expenses incurred by any Issuer or
Guarantor in connection with the listing of the Registrable Securities on any
securities exchange; and (xiii) the expenses relating to printing, word
processing and distributing all Registration Statements, underwriting
agreements, securities sales agreements, indentures and any other documents
necessary in order to comply with this Agreement. Anything contained herein to
the contrary notwithstanding, no Issuer or Guarantor shall have any obligation
whatsoever in respect of any underwriters' discounts or commissions, brokerage
commissions, dealers' selling concessions, transfer taxes or any other selling
expenses (other than those expressly enumerated in clauses (i) through (xiii)
above) incurred in connection with the underwriting, offering or sale of
Registrable Securities or Exchange Securities by or on behalf of any Person.
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(b) In connection with any Shelf Registration Statement
hereunder, the Issuers and Guarantors shall jointly and severally reimburse the
Holders of the Registrable Securities being registered in such registration for
the reasonable fees and disbursements of not more than one counsel (in addition
to appropriate local counsel) chosen by the Holders of a majority in aggregate
principal amount of the Registrable Securities to be included in such
Registration Statement and other reasonable out-of-pocket expenses of the
Holders of Registrable Securities incurred in connection with the registration
of the Registrable Securities.
7. INDEMNIFICATION
The Issuers and Guarantors agree to jointly and severally
indemnify and hold harmless each Holder of Registrable Securities and each
Participating Broker-Dealer selling Exchange Securities during the Applicable
Period, the officers and directors of each such person, and each person, if any,
who controls any such person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other expenses actually
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement (or any amendment thereto)
or Prospectus (as amended or supplemented if the Issuers and Guarantors shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, 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, in the light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
such Participant furnished to the Issuers and Guarantors in writing by such
Participant (or, if such Participant is not a Holder or a Participating
Broker-Dealer, furnished in writing by the Holder or Participating Broker-Dealer
in respect of which such person is a Participant relating to such Participant)
expressly for use therein; provided that (i) the foregoing indemnity with
respect to any preliminary prospectus shall not inure to the benefit of any
Participant (or to the benefit of any officer or director of, or of any person
controlling, such Participant) from whom the person asserting any such losses,
claims, damages or liabilities purchased Registrable Securities to the extent
that such untrue statement or omission or alleged untrue statement or omission
made in such preliminary prospectus is eliminated or remedied in the related
Prospectus (as amended or supplemented if the Issuers and Guarantors shall have
furnished any amendments or supplements thereto) and a copy of the related
Prospectus (as so amended or supplemented) shall not have been furnished to such
person at or prior to the sale of such Registrable Securities or Exchange
Securities, as the case may be, to such person and (ii) the foregoing indemnity
with respect to any Prospectus shall not inure to the benefit of a Holder of
Registrable Securities or Participating Broker-Dealer to the extent that such
Holder or Participating Broker-Dealer uses such Prospectus three business days
after such time as the Issuers shall have advised such Holder or Participating
Broker-Dealer in writing of the happening of any event that makes any statement
of a material fact made in such Prospectus untrue or which requires the making
of any additions to or changes in such Prospectus in order that it will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they are made, not misleading.
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Each Participant will be required to agree, severally and not
jointly, to indemnify and hold harmless each of the Issuers and Guarantors,
their respective managers, directors, and officers who sign the Registration
Statement and each person who controls any Issuer or Guarantor within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Issuers and Guarantors to
each Participant, but only with reference to information relating to such
Participant furnished to the Issuers and Guarantors in writing by such
Participant expressly for use in any Registration Statement or Prospectus, any
amendment or supplement thereto, or any preliminary prospectus. The liability of
any Participant under this paragraph shall in no event exceed the net proceeds
received by such Participant from sales of Registrable Securities giving rise to
such obligations.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the
reasonable fees and expenses incurred by such counsel related to such
proceeding, provided that the failure to so notify the Indemnifying Person shall
not relieve it of any obligation or liability which it may have hereunder or
otherwise (unless and only to the extent that such failure actually prejudices
the Indemnifying Person). In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but, other than in circumstances
involving a conflict among Indemnified Persons, the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have agreed to the
contrary; (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person; or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to an actual or
potential conflict of interest or because there may be legal defenses available
to an indemnified party that are different from or in addition to those
available to the indemnifying party. It is understood that, other than in
circumstances involving a conflict among Indemnified Persons, the Indemnifying
Person shall not, in connection with any proceeding or related proceeding in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm for
the Participants shall be designated in writing by Participants who sold a
majority in interest of Registrable Securities sold by all such Participants and
any such separate firm for any Issuer or Guarantor, their respective managers,
directors, and officers and such control persons of any Issuer or Guarantor
shall be designated in writing by such Issuer or Guarantor. The Indemnifying
Person 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 Person agrees to indemnify any
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall
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have requested an Indemnifying Person to reimburse the Indemnified Person for
reasonable fees and expenses incurred by counsel as contemplated by the third
sentence of this paragraph, the Indemnifying Person agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 60 days after receipt by such
Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such request
prior to the date of such settlement; provided, however, that the Indemnifying
Person shall not be liable for any settlement effected without its consent
pursuant to this sentence if the Indemnifying Party is contesting, in good
faith, the request for reimbursement. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party, unless such settlement includes an unconditional
written release of such Indemnified Person in form and substance satisfactory to
the Indemnified Persons from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first and second
paragraphs of this Section 7 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under
such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Indemnifying Person or Persons on the
one hand and the Indemnified Person or Persons on the other from the initial
offering of the Notes or (ii) if the allocation provided by the foregoing clause
(i) is not permitted by applicable law, not only such relative benefits but also
the relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative benefits received by the
Issuers and Guarantors on the one hand and the Participants on the other shall
be deemed to be in the same proportion as the total proceeds from the initial
offering (net of discounts and commissions but before deducting expenses) of the
Notes received by the Issuers bears to the total proceeds received by such
Participant from the sale of Registrable Securities. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by any Issuer
or Guarantor, on the one hand, or such Participant or such other Indemnified
Person, as the case may be, on the other, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances.
The parties shall agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by
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such Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no event
shall a Participant be required to contribute any amount in excess of the amount
by which net proceeds received by such Participant from sales of Registrable
Securities exceeds the amount of any damages that such Participant 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.
The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. RULE 144 AND RULE 144A
Each Issuer and Guarantor covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder in a timely manner
and, if at any time such Issuer or Guarantor is not required to file such
reports, it will, upon the request of any Holder of Registrable Securities, make
publicly available other information so long as necessary to permit sales
pursuant to Rule 144 and Rule 144A under the Securities Act. Each Issuer and
Guarantor further covenants that it will take such further action as any Holder
of Registrable Securities may reasonably request, to the extent required from
time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 and Rule 144A under the Securities Act.
9. UNDERWRITTEN REGISTRATIONS
If any of the Registrable Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will manage
the offering will be selected by the Holders of a majority in aggregate
principal amount of such Registrable Securities included in such offering and
reasonably acceptable to the Issuers.
No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements (however the terms applicable to each Holder shall be identical in
all respects) and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements applicable to all Holders.
10. MISCELLANEOUS
(a) Remedies. In the event of a breach by any Issuer or
Guarantor of any of its obligations under this Agreement, each Holder of
Registrable Securities, in addition to being entitled to exercise all rights
provided herein, in the Indenture or, in the case of the Initial
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Purchasers, in the Purchase Agreement or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. Each Issuer and Guarantor agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Each Issuer and Guarantor has
not, as of the date hereof, entered into and shall not, after the date of this
Agreement, enter into any agreement with respect to any of its securities that
is inconsistent with the rights granted to the Holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof. Each Issuer
and Guarantor has not entered into and will not enter into any agreement with
respect to any of its securities which will grant to any Person "piggy-back"
rights with respect to a Registration Statement.
(c) Adjustments Affecting Registrable Securities. Each Issuer
and Guarantor shall not, directly or indirectly, take any action with respect to
the Registrable Securities as a class that would adversely affect the ability of
the Holders of Registrable Securities to include such Registrable Securities in
a registration undertaken pursuant to this Agreement.
(d) Guarantors. So long as any Registrable Securities remain
outstanding, each Issuer and Guarantor shall cause each of its subsidiaries that
becomes a guarantor of the Notes under the Indenture to execute and deliver a
counterpart to this Agreement which subjects such subsidiary to the provisions
of this agreement as a guarantor (all such subsidiaries, the "Guarantors"). Each
of the Guarantors agrees to join the Issuers in all of their undertakings
hereunder to effect the Exchange Offer for the Exchange Securities (which will
be guaranteed by each of the Guarantors with terms identical to such Guarantors'
guaranty of the Notes) and the filing of any Shelf Registration Statement
required hereunder (including, without limitation, the undertakings in Section 5
hereof).
(e) Amendments and Waivers. Except as provided in paragraph
(c) above, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of (A) the
Holders of not less than a majority in aggregate principal amount of the then
outstanding Registrable Securities and (B) in circumstances that would adversely
affect the Participating Broker-Dealers, the Participating Broker-Dealers
holding not less than a majority in aggregate principal amount of the Exchange
Securities held by all Participating Broker-Dealers; provided, however, that
Section 7 and this Section 10(e) may not be amended, modified or supplemented
without the prior written consent of each Holder and each Participating
Broker-Dealer (including any person who was a Holder or Participating
Broker-Dealer of Registrable Securities or Exchange Securities, as the case may
be, disposed of pursuant to any Registration Statement) affected by any such
amendment, modification or supplement. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect, impair, limit or compromise the rights of other
Holders of
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Registrable Securities may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Securities being sold by such
Holders pursuant to such Registration Statement.
(f) Notices. All notices and other communications (including
without limitation any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day courier or telecopier:
(i) if to a Holder of Registrable Securities, at the most
current address given by the Trustee to the Issuers; and
(ii) if to the Issuers, at Digital Television Services, LLC,
Building C-200, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Chief Financial Officer.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; one business
day after being timely delivered to a next-day courier; and when receipt is
acknowledged by the addressee's telecopier machine, if telecopied.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the trustee
under the Indenture at the address specified in such Indenture.
(g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Securities.
(h) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or
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unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(l) Entire Agreement. This Agreement, together with the
Purchase Agreement, is intended by the parties as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(m) Securities Held by the Issuers and Guarantors or their
Affiliates. Whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by any Issuer or Guarantor or its respective affiliates (as such
term is defined in Rule 405 under the Securities Act) shall be deemed to be not
outstanding for purposes of determining whether such consent or approval was
given by the Holders of such required percentage.
[Signature Pages Follow]
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Please confirm that the foregoing correctly sets forth the
agreement between the Issuers and the Guarantors and the Initial Purchasers.
Very truly yours,
DIGITAL TELEVISION SERVICES, LLC
DIGITAL TELEVISION SERVICES OF
CALIFORNIA, LLC
DIGITAL TELEVISION SERVICES OF
COLORADO, LLC
DIGITAL TELEVISION SERVICES OF
GEORGIA, LLC
DIGITAL TELEVISION SERVICES OF
KANSAS, LLC
DIGITAL TELEVISION SERVICES OF
KENTUCKY, LLC
DIGITAL TELEVISION SERVICES OF NEW
MEXICO, LLC
DIGITAL TELEVISION SERVICES OF NEW
YORK I, LLC
DIGITAL TELEVISION SERVICES OF SOUTH
CAROLINA I, LLC
DIGITAL TELEVISION SERVICES OF
VERMONT, LLC
By: DTS Management, LLC
their manager
By: __________________________
Name:
Title:
DTS MANAGEMENT, LLC
By: _______________________________
Name:
Title:
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SPACENET, INC.
By: _______________________________
Name:
Title:
DTS CAPITAL, INC.
By: _______________________________
Name:
Title:
Accepted and Agreed to as of
the date first above written.
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
By:___________________________________
Name:
Title:
CIBC WOOD GUNDY SECURITIES CORP.
By:___________________________________
Name:
Title:
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
By:___________________________________
Name:
Title:
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Schedule 1
Digital Television Services of New Mexico, LLC
Digital Television Services of Colorado, LLC
Digital Television Services of New York I, LLC
Digital Television Services of South Carolina I, LLC
Digital Television Services of Kentucky, LLC
Digital Television Services of Kansas, LLC
Digital Television Services of Vermont, LLC
Digital Television Services of Georgia, LLC
Digital Television Services of California, LLC
Spacenet, Inc.
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EXHIBIT I
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
CERTIFICATE OF DESIGNATIONS
OF
SERIES A PAYMENT-IN-KIND PREFERRED STOCK
OF
DIGITAL TELEVISION SERVICES, INC.
(Pursuant to Section 151 of the General
Corporation Law of the State of Delaware)
Digital Television Services, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Corporation (the "Board of Directors"):
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors by the Certificate of Incorporation of the
Corporation (as amended from time to time, the "Certificate of Incorporation"),
there hereby is created, out of the 10,000,000 shares of preferred stock, par
value $.01 per share, of the Corporation authorized in Article FOURTH of the
Certificate of Incorporation (the "Preferred Stock"), a series of Preferred
Stock consisting of 5,000,000 shares, which series shall have the following
powers, designations, preferences and relative, participating, optional and
other rights, and the following qualifications, limitations and restrictions (in
addition to the powers, designations, preferences and relative, participating,
optional and other rights, and the qualifications, limitations and restrictions,
stated in the Certificate of Incorporation as applicable to the Preferred
Stock):
"SECTION 1. DESIGNATION. The shares of such series created hereby shall
be designated as the "Series A Payment-in-Kind Preferred Stock" (referred to
herein as the "PIK Preferred Stock"), and the authorized number of shares
constituting such series shall be 5,000,000. The par value of the PIK Preferred
Stock shall be $.01 per share. The PIK Preferred Stock shall not be subject to
any sinking fund or mandatory redemption provision.
SECTION 2. PRIORITY. The PIK Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up or dissolution, whether
voluntary or involuntary, whether now or hereafter issued rank (i) on a parity
with any other series of Preferred Stock established hereafter by the Board of
Directors the terms of which shall specifically provide that such series shall
rank on a parity with the PIK Preferred Stock with respect to dividend rights
and rights on liquidation, winding up or dissolution (all of such series of
Preferred Stock to which the PIK Preferred Stock ranks on a parity, the "Parity
Securities"), (ii) junior to any series of Preferred
107
Stock established hereafter by the Board of Directors the terms of which shall
specifically provide that such series shall rank senior to the PIK Preferred
Stock with respect to dividend rights and rights on liquidation, winding up or
dissolution (all of such series of Preferred Stock to which the PIK Preferred
Stock ranks junior, the "Senior Securities") and (iii) senior to the common
stock, par value $.01 per share (the "Common Stock") of the Corporation, and any
series of Preferred Stock established hereafter by the Board of Directors the
terms of which shall specifically provide that such series shall rank junior to
the PIK Preferred Stock with respect to dividend rights and rights on
liquidation, winding up or dissolution (all of such series of Preferred Stock to
which the PIK Preferred Stock ranks senior, the "Junior Securities").
SECTION 3. DIVIDENDS.
The holders of the PIK Preferred Stock shall be entitled to receive
when, as and if declared by the Corporation's Board of Directors, out of funds
legally available therefor, cumulative dividends payable on the shares of the
PIK Preferred Stock for each quarterly dividend period (a "Quarterly Dividend
Period"), which Quarterly Dividend Periods shall commence on March 15, June 15,
September 15 and December 15 of each year and shall end on and include the day
next preceding the first day of the next Quarterly Dividend Period, at a rate of
8% per annum, compounded annually, in respect of the Liquidation Preference (as
defined in Section 5(a). All such dividends shall be payable on March 15, June
15, September 15 and December 15 of each year (each, a "Dividend Payment Date"),
commencing __________ 15, ________. Such dividends shall be paid to the holders
of record at the close of business on the date specified by the Board of
Directors at the time such dividend is declared, which date shall not be more
than 50 or less than 10 days prior to the applicable Dividend Payment Date.
The Corporation may, at its option, pay a Permitted Portion (as defined
in Section 8) such dividends through the issuance of such number of additional
shares of the PIK Preferred Stock with a Liquidation Preference equal to the
aggregate dollar value of dividends to be paid on such Dividend Payment Date.
Dividends accrue from the date of issuance, shall accrue on a daily basis
without regard to the occurrence of a Dividend Payment Date or the declaration
of any dividend, and will accumulate until paid in cash or additional shares of
the PIK Preferred Stock. No fractional shares of PIK Preferred Stock shall be
issued, so that the number of shares to be paid as a dividend pursuant to this
Section 3 shall be rounded to the nearest whole number of shares. All dividends
paid in additional shares of PIK Preferred Stock shall be deemed issued on the
applicable Dividend Payment Date, and will thereupon be duly authorized, validly
issued, fully paid and nonassessable and free and clear of all liens and
charges.
SECTION 4. PIK PREFERRED STOCK DIRECTORS. The holders of the
outstanding shares of PIK Preferred Stock, voting as a class, shall be entitled
to elect three members of the Board of Directors (the "PIK Preferred Stock
Directors"). Each PIK Preferred Stock Director shall hold office until the next
annual meeting of stockholders and until his successor is elected and qualified
or until his earlier resignation or removal. A PIK Preferred Stock Director may
be removed by, and shall not be removed otherwise than by, a vote or consent of
the holders of a majority of the outstanding shares of PIK Preferred Stock who
are entitled to vote in the PIK Preferred Stock Director's election, voting as a
class. Any vacancy in the office of a PIK Preferred Stock Director shall be
filled by a vote of the holders of a majority of the outstanding shares of the
PIK Preferred Stock who are entitled to vote in the election of such PIK
Preferred
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Stock Director. Holders of shares of the PIK Preferred Stock shall not, as such
stockholders, be entitled to vote on the election or removal of directors other
than PIK Preferred Stock Directors.
SECTION 5. LIQUIDATION RIGHTS.
(a) PRIORITY. Upon any liquidation, winding up or dissolution,
whether voluntary or involuntary, after payment or provision for payment of all
of the debts and other liabilities of the Corporation, each holder of
outstanding shares of PIK Preferred Stock shall be entitled to receive, in cash,
out of the remaining net assets of the Corporation, $[NOTE 1] per share of PIK
Preferred Stock, plus an amount, in cash, equal to any accrued but unpaid
dividends on each such share up to the date fixed for distribution (the
"Liquidation Preference"), before any distribution shall be made to the holders
of shares of any Junior Securities. If, upon any liquidation of the Corporation,
the assets distributable among the holders of shares of PIK Preferred Stock are
insufficient to permit payment in full to the holders of shares of the PIK
Preferred Stock, any Parity Securities and any Senior Securities, then the
entire assets of the Corporation thus distributable shall be distributed among
the holders of the PIK Preferred Stock, any Parity Securities and any Senior
Securities in order of relative priority as to distribution in liquidation and,
as to classes and series ranking pari passu with one another in that regard, in
proportion to the respective amounts that would be payable per share if such
assets were sufficient to permit payment in full.
(b) ADDITIONAL DISTRIBUTIONS. If assets remain in the
Corporation after payment of the full preferential amount provided for herein to
the holders of the PIK Preferred Stock, any Parity Securities and any Senior
Securities or after funds necessary for such payment have been set aside in
trust for the holders thereof, then all such remaining assets shall be
distributed first, to the holders of the Common Stock, until such holders have
received the Liquidation Preference per share, and then to the holders of the
PIK Preferred Stock (on an as-if converted to Common Stock basis on the
conversion date), any Parity Securities, any Senior Securities, any Junior
Securities and the Common Stock on an equal per share basis.
SECTION 6. CONVERSION INTO COMMON STOCK.
(a) CONVERSION. Upon the closing of a Qualified IPO, each
share of PIK Preferred Stock shall be converted automatically upon such closing
into Common Stock at an initial conversion ratio of one share of PIK Preferred
Stock for one share of Common Stock, subject to adjustment as described in
Section 6(e). The Corporation shall not issue fractions of shares of Common
Stock upon conversion of the PIK Preferred Stock. If any fraction of a share of
Common Stock would be issuable upon conversion of the PIK Preferred Stock, then
the Corporation shall, in lieu thereof, pay to the Person entitled thereto an
amount in cash equal to
----------
Note 1: Prior to the filing of this Certificate of Designations with the
Secretary of State of the State of Delaware, the Manager shall insert
here the number calculated pursuant to clause (B) of the definition of
"Preferred Stock Conversion Amount" set forth in Exhibit C to the LLC
Agreement.
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the initial issuance price of a share of Common Stock pursuant to such Qualified
IPO of such fraction of a share of Common Stock, calculated to the nearest
one-hundredth of a share, to be computed on the date that the conversion occurs.
(b) PROCEDURES. The holders of PIK Preferred Stock whose
shares are converted as provided in Section 6(a) shall deliver the certificate
or certificates therefor to the principal office of the Corporation together
with written notice or acknowledgement of conversion in form reasonably
satisfactory to the Corporation and (if so required by the Corporation or any
conversion agent) accompanied by instruments of transfer in form reasonably
satisfactory to the Corporation or to such conversion agent, duly executed by
the registered holder or his duly authorized attorney, as well as transfer
taxes, stamps or funds therefor, or evidence of payment thereof, if required by
Section 6(c). The automatic conversion of any outstanding shares of PIK
Preferred Stock into Common Stock by reason of a Qualified IPO shall be deemed
to have occurred upon the closing of the Qualified IPO. The Persons entitled to
receive shares of Common Stock issuable upon conversion shall be treated for all
purposes as the record holders of such shares at and from the time that
conversion is deemed to have occurred.
(c) TAXES. If a share or shares of the PIK Preferred Stock are
converted, then the Corporation shall pay any documentary, stamp or similar
issue or transfer tax due on the issue of the Common Stock upon conversion, but
the holder shall pay to the Corporation the amount of any tax that is due (or
shall establish to the satisfaction of the Corporation payment thereof) if the
shares are to be issued in a name other than the name of such holder.
(d) RESERVATION OF SHARES. The Corporation shall at all times
reserve and keep available, out of its authorized but unissued shares of Common
Stock, enough shares of Common Stock to issue all shares of Common Stock
issuable upon conversion of the PIK Preferred Stock. All shares of Common Stock
that may be issued upon conversion of shares of PIK Preferred Stock shall be,
when so issued, validly issued, fully paid and nonassessable. In order that the
Corporation may issue shares of Common Stock upon conversion of shares of PIK
Preferred Stock, the Corporation will endeavor to comply with all applicable
federal and state securities laws.
(e) ADJUSTMENTS TO CONVERSION RATE. The conversion rate in
effect at any time shall be subject to adjustment from time to time as follows:
(i) ADJUSTMENTS FOR STOCK SPLITS, STOCK DIVIDENDS,
ETC. If the Corporation (1) pays a dividend in shares of the Common
Stock to holders of the Common Stock, (2) makes distributions in shares
of Common Stock to holders of the Common Stock, (3) subdivides the
outstanding shares of Common Stock into a greater number of shares of
Common Stock or (4) combines the outstanding shares of Common Stock
into a smaller number of shares of Common Stock, then, and in any such
case, the conversion rate in effect immediately prior to such action
shall be adjusted so that the holder of any shares of PIK Preferred
Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock that such holder would
have owned immediately following such action had such shares of PIK
Preferred Stock been converted immediately prior thereto. An adjustment
made pursuant to this Section
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6(e)(i) shall become effective on the record date in the case of a
dividend or distribution and on the effective date in the case of a
subdivision or combination.
(ii) ADJUSTMENTS FOR OTHER DISTRIBUTIONS. If the
Corporation distributes pro rata to all holders of the Common Stock
shares of any class of capital stock (excluding the Common Stock), or
options, rights or warrants to acquire any class of capital stock
(including the Common Stock), or other assets of the Corporation
(excluding capital stock of the Corporation held in its treasury) and
does not make an equivalent distribution with respect to the PIK
Preferred Stock, then, and in any such case, the number of shares of
Common Stock into which each share of the PIK Preferred Stock shall be
convertible shall be adjusted so that the same shall equal the number
determined by multiplying the number of shares of Common Stock into
which such share of the PIK Preferred Stock was convertible immediately
prior to the record date of such distribution by a fraction of which
(x) the numerator shall be the Fair Market Value per share of the
Common Stock on the record date mentioned below and (y) the denominator
shall be such Fair Market Value less the then-Fair Market Value per
share of Common Stock of the securities or assets so distributed. Such
adjustment shall become effective on the record date for determination
of the holders of Common Stock entitled to receive the distribution.
Notwithstanding the foregoing, if the Corporation distributes rights or
warrants pro rata to holders of the Common Stock (the "Rights"), then
the Corporation may, in lieu of making any adjustment pursuant to this
Section 6(e)(ii), make proper provision so that each holder of a share
of PIK Preferred Stock that is converted into Common Stock after the
record date for such distribution and prior to the expiration or
redemption of the Rights shall be entitled to receive upon such
conversion, in addition to the Common Stock issuable upon such
conversion (the "Conversion Shares"), a number of Rights to be
determined as follows: (i) if such conversion occurs on or prior to the
date for the distribution to the holders of Rights of separate
certificates evidencing such Rights ("the Distribution Date"), the same
number of Rights to which a holder of a number of shares of the Common
Stock equal to the number of Conversion Shares is entitled at the time
of such conversion in accordance with the terms and provisions of and
applicable to the Rights; and, (ii) if such conversion occurs after the
Distribution Date, the same number of Rights to which a holder of the
number of shares of the Common Stock into which a share of the PIK
Preferred Stock so converted was convertible immediately prior to the
Distribution Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of and applicable to the
Rights.
(iii) WEIGHTED AVERAGE PRICE PROTECTION. Subject to
the last sentence of this Section 6(e)(iii), if the Corporation shall,
in events other than as provided for in Sections 6(e)(i) and 6(e)(ii),
issue Common Stock or rights or warrants entitling the holders thereof
to subscribe for or to purchase shares of Common Stock at a price per
share (the "Exercise Price") less than $22.50 (adjusted for the events
described in Sections 6(e)(i), 6(e)(ii) and 6(e)(iii)), then, and in
any such case, the number of shares of Common Stock into which each
share of the PIK Preferred Stock shall be convertible shall be adjusted
to equal the number of shares of Common Stock into which such share of
PIK Preferred Stock was convertible immediately prior to the date of
such issuance multiplied by a fraction of which (x) the numerator shall
be the number of shares of Common Stock Deemed Outstanding at the close
of business on the day immediately
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prior to such issuance plus the total number of shares of Common Stock
(or Common Stock underlying such rights or warrants) so offered for
subscription or purchase and (y) the denominator shall be the number of
shares of Common Stock Deemed Outstanding at the close of business on
the day immediately prior to such issuance plus the number of shares of
Common Stock that the aggregate of the Exercise Price for the shares of
Common Stock (or Common Stock underlying such rights or warrants) so
offered for subscription or purchase could purchase at $22.50 per share
(adjusted for the events set forth in Sections 6(e)(i), 6(e)(ii) and
6(e)(iii)), such adjustment to become effective immediately after the
opening of business on the day following the date fixed for such
determination. For the purpose of this Section 6(e)(iii), the number of
shares of Common Stock Deemed Outstanding at any time shall not include
shares held in the treasury of the Corporation but shall include shares
underlying outstanding options and warrants and shares issuable upon
the conversion of the PIK Preferred Stock into shares of Common Stock.
Notwithstanding the foregoing, in no event shall any adjustment to the
conversion ratio be made pursuant to this Section 6(e)(iii) in respect
of (i) any issuance of options, rights or warrants in exchange for
outstanding shares of Common Stock if such options, rights or warrants
entitle the holders thereof to subscribe for no more than the number of
shares of Common Stock exchanged therefor (subject to antidilution
provisions similar to those contained herein), (ii) any issuance of
Common Stock upon conversion of the PIK Preferred Stock, (iii) any
issuance of Common Stock, rights or warrants, in each case pursuant to
the Employee Stock Plan or (iv) any issuance of Common Stock (or
options, rights or warrants to purchase Common Stock) in connection
with a Qualified Financing.
(iv) DEFERRAL OF ISSUANCE. In any case in which this
Section 6 shall require that an adjustment be made on or immediately
following a record date, the Corporation may elect to defer (but only
until five Business Days following the mailing of the notice described
in Section 6(i)) issuing to the holder of any share of the PIK
Preferred Stock converted after such record date the shares of Common
Stock into which such PIK Preferred Stock shall have been converted,
and in lieu of the shares the issuance of which is so deferred the
Corporation shall issue or cause its transfer agent to issue due bills
or other appropriate evidence of the right to receive such shares.
(f) COMPUTATIONS. All calculations under this Section 6 shall
be made to the nearest one-hundredth of a share.
(g) SHARES OTHER THAN COMMON SHARES. If, as result of any
adjustment made pursuant to Section 6(e), the holder of any share of PIK
Preferred Stock thereafter surrendered for conversion shall become entitled to
receive any shares of capital stock of the Corporation other than shares of
Common Stock, then the number of such other shares so receivable upon conversion
of any shares of the PIK Preferred Stock shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section 6.
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(h) OTHER INCREASES IN CONVERSION RATE. The Corporation may
make such increases in the conversion rate, in addition to those required by
Sections 6(e)(i), 6(e)(ii) and 6(e)(iii), as it considers advisable in order
that any event treated for federal income tax purposes as a dividend of stock or
stock rights shall not be taxable to recipients thereof.
(i) NOTICE OF CONVERSION RATE CHANGE. Whenever the conversion
rate is adjusted, the Corporation shall promptly mail to all holders of record
of shares of the PIK Preferred Stock a notice of the adjustment.
(j) VOLUNTARY CONVERSION PRIOR TO CERTAIN EVENTS. If the
Corporation consolidates or merges with, or transfers all or substantially all
of its assets to, another corporation, and stockholders of the Corporation must
approve the transaction, then a holder of shares of the PIK Preferred Stock may
convert some or all of such shares into shares of Common Stock simultaneously
with the record date for, or the effective date of, the transaction so as to
receive the rights, warrants, securities or assets that a holder of shares of
the Common Stock on that date may receive. In furtherance thereof, the
Corporation shall mail to holders of shares of the PIK Preferred Stock a notice
stating the proposed record date or effective date, as the case may be. The
Corporation shall mail the notice at least 10 days before such date.
(k) EQUIVALENT CONVERSION. If any of the following occurs,
namely: (i) any reclassification of, or change in, outstanding shares of capital
stock of the class issuable upon conversion of the PIK Preferred Stock (other
than a change in name, or par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination), or
(ii) any consolidation or merger to which the Corporation is a party and which
does not result in any reclassification of, or change in (other than a change in
name, or par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), outstanding shares
of such capital stock, then the Corporation or the successor corporation, as the
case may be, shall, as a condition precedent to such reclassification, change,
consolidation or merger, provide in its certificate of incorporation or other
charter document that each share of the PIK Preferred Stock shall be convertible
into the number and class of shares of capital stock issuable upon conversion of
such share of PIK Preferred Stock immediately prior to such reclassification,
change, consolidation or merger. Such certificate of incorporation or other
charter document shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
6. If this Section 6(k) applies, then Section 6(e)(i) does not apply. If, in the
case of any such reclassification, change, consolidation or merger, the stock or
other securities and property (including cash) receivable thereupon by a holder
of the capital stock issuable upon conversion of the PIK Preferred Stock
includes shares of capital stock or other securities and property of a
corporation other than the successor corporation in such reclassification,
change, consolidation or merger, then the certificate of incorporation or other
charter document of such other corporation shall contain such additional
provisions to protect the interests of the holders of shares of the PIK
Preferred Stock as the Board of Directions shall reasonably consider necessary
by reason of the foregoing, which provisions shall be subject to approval by the
affirmative vote or consent of holders of at least two-thirds of the shares of
the then-outstanding PIK Preferred Stock. The provisions of this Section 6(k)
shall similarly apply to successive reclassifications, changes, consolidations,
mergers.
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SECTION 7. DISSOLUTION OF THE CORPORATION.
(a) TRIGGERS. The Corporation shall dissolve at any time after
the February [7], 2003, if at such time at least 25% of the shares of PIK
Preferred Stock outstanding on February [7], 1997 remain outstanding and holders
of at least a majority of PIK Preferred Stock then outstanding vote to dissolve
the Corporation and provide notice of such vote to the Corporation; provided,
however, that in the event that such a vote and resulting dissolution of the
Corporation would result in an event of default or an incipient default under
any then existing indebtedness of the Corporation or any Subsidiary with an
outstanding balance of $10 million or more, then such majority vote shall not
cause the dissolution of the Corporation, but rather shall constitute notice by
the holders of the PIK Preferred Stock to the Board of Directors that such
holders desire that the Board of Directors promptly arrange the sale of the
Corporation (including its Subsidiaries) or a sale of all or substantially all
of its assets.
(b) WINDING UP OR SALE. Upon dissolution of the Corporation
the Board of Directors shall wind up the Corporation's affairs; but the Delaware
Court of Chancery, upon cause shown, may wind up the Corporation's affairs upon
application of any 10% Stockholder, his legal representative or assignee, and in
connection therewith, may appoint a liquidating trustee. The Persons charged
with winding up the Corporation shall settle and close the Corporation's
business, and dispose of and convey the Corporation's noncash assets as promptly
as reasonably possible following dissolution as is consistent with obtaining the
fair market value for the Corporation's assets.
If the holders of the PIK Preferred Stock have given notice under
Section 7(a) (regardless of whether such notice has caused the dissolution of
the Corporation), and if the Corporation has not entered into a definitive
agreement for the sale or other disposition of substantially all of its equity
interests or assets on or prior to the date that is six (6) months after the
date of such notice, or if the Corporation has not closed the sale or other
disposition of substantially all of its equity interests or assets on or prior
to the date that is nine (9) months after the date of such notice, then at any
time after either of such dates the holders of the PIK Preferred Stock acting by
a vote of the holders of a majority such PIK Preferred Stock may (i) increase
the size of the Board of Directors by four (4) individuals who shall each have a
single vote, and (ii) elect by majority vote four (4) individuals to serve as
members of the Board of Directors with the result that the four (4) individuals
thus elected, together with the three (3) PIK Preferred Stock Directors, shall
have a majority of the votes on the Board of Directors.
SECTION 8. OTHER DEFINITIONS.
"Affiliate" means, with respect to any specified Person, any
other Person that directly or indirectly controls, or is under common control
with, or is owned or controlled by, the specified Person. For purposes of this
definition, (i) "control" means, with respect to any specified Person, either
(x) the beneficial ownership of 50% or more of the equity securities issued by
such Person or (y) the power to direct the management and policies of the
specified Person through the ownership of voting securities or other equity
interests, by contract or otherwise, (ii) the terms "controlling," "control
with" and "controlled by," etc., shall have meanings correlative to the
foregoing, and (iii) the officers, directors, stockholders, employees and
partners of such Person shall be deemed to be Affiliates of such Person.
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"Business Day" means any day other than a Saturday, Sunday or
other day on which banks are authorized or required to close by law or executive
order in Washington, D.C.
"Change of Control" means (i) the merger, consolidation or
other business combination of the Corporation or any of its Subsidiaries with or
into, or the merger of, another Person (other than the Corporation or a
Subsidiary of the Corporation) with or into the Corporation with the effect
that, immediately after such transaction, the stockholders of the Corporation
immediately prior to such transaction hold less than a majority in interest of
the total voting power entitled to vote in the election of directors, managers
or trustees of the Person surviving such transaction or less than 50% of the
equity interests in such Person, or (ii) the acquisition by any Person or
related group of Persons, other than a Permitted Transferee, by way of merger,
sale, transfer, consolidation or other business combination or acquisition, of
(x) all or substantially all of the assets, property or business of the
Corporation, (y) more than fifty percent of the total voting power entitled to
vote in the election of directors, managers or trustees of the Corporation or
such other Person as survives the transaction, or (z) more than 50% of the
equity interests in the Corporation or such other Person as survives the
transaction.
"Columbia" shall mean Columbia DBS Investors, L.P., a Delaware
limited partnership, or its successors or assigns.
"Deemed Outstanding" means the total number of outstanding
shares of Common Stock of the Corporation plus the total number of shares of
Common Stock of the Corporation into which all other outstanding securities of
the Corporation are exercisable or convertible.
"Employee Stock Plan" means the arrangements, terms and
procedures that the Corporation may establish from time to time for the issuance
of up to 180,000 shares of Common Stock (or such larger number of shares as may
be approved by (i) the "Compensation Committee" of the Board of Directors, or if
no such committee exists, by the Board of Directors and (ii) the holders of at
least 70% of the shares of PIK Preferred Stock) to employees or independent
contractors of the Corporation or any Subsidiary at prices equal to the market
value thereof as of the date of issuance and pursuant to such terms and
conditions (including vesting) as the Board of Directors shall determine.
"Fair Market Value" means: (a) with respect to any security,
(i) if such security is listed on any national securities exchange or authorized
for quotation by any national securities association, the last sale price of
such security in such market (or the quoted closing bid price if there shall
have been no sale), or (ii) if there is no such closing bid price or such
security is not so listed or authorized for quotation, the value of such
security as determined in good faith by a registered broker-dealer selected by
the Board of Directors; and (b) with respect to any other asset, the value of
such asset as determined in good faith by an appraiser selected by the Board of
Directors and approved by the holders of a majority of the PIK Preferred Stock,
which approval shall not be unreasonably withheld.
"Fleet" shall mean collectively, the group consisting of the
following entities, or their successors: Fleet Venture Resources, Inc., Fleet
Equity Partners VI, LP, ▇▇▇▇▇▇▇▇ Partners III, LP, and ▇▇▇▇▇▇▇ Plaza Partners.
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"IPO" shall mean an offering of equity securities of the
Corporation or any successor entity pursuant to a registration statement filed
in accordance with the Securities Act of 1933, as amended.
"Permitted Portion" shall mean the percentage of the dividends
payable on each share of PIK Preferred Stock that may be paid through the
issuance of additional shares of the PIK Preferred Stock, which percentage shall
equal the lesser of (i) 50%, or (ii) (A) 100% less (B) the Combined Effective
Marginal Tax Rate. For this purpose, the Combined Effective Marginal Tax Rate
shall mean the highest single effective rate (expressed as a percentage) of
United States federal, state and local income taxation applicable to holders of
5% or more of the PIK Preferred Stock whose principal residence or commercial
domicile is within the United States determined as of each record date for the
payment of dividends, giving effect to any limitations on the deductibility of
state and local income taxes in computing United States federal taxable income,
and assuming that such holders are individuals and subject to the highest United
Stated federal and highest state and local marginal income tax rates then
applicable in the jurisdictions in which they have their principal residence or
commercial domicile. The determination of the Combined Effective Marginal Tax
Rate shall be made by the Corporation.
"Permitted Transferee" shall mean (i) in the case of Whitney,
(a) Whitney's parent company (Whitney Equity Partners, L.P.) ("Whitney Parent")
and (b) Whitney Parent's and Whitney's Affiliates' partners, retired partners,
stockholders and retired stockholders, the estates and family members of any
such partners, retired partners, stockholders and retired stockholders and of
their spouses, and any trusts for the benefit of any of the foregoing Persons,
(ii) in the case of each entity comprising the collective definition of "Fleet",
the Affiliates, partners, retired partners, stockholders and retired
stockholders of such entity and its respective Affiliates, the estates and
family members of any such partners, retired partners, stockholders and retired
stockholders and of their spouses, and any trusts for the benefit of any of the
foregoing Persons, (iii) in the case of Columbia, (a) Columbia's general partner
(Columbia Capital Corporation) ("CCC") and (b) CCC's and Columbia's Affiliates'
partners, retired partners, stockholders and retired stockholders, the estates
and family members of any such partners, retired partners, stockholders and
retired stockholders and of their spouses, and any trusts for the benefit of or
any partnership or limited liability company all of the equity interests of
which are owned by any of the foregoing Persons, and (iv) in the case of any
other Stockholder, any Related Party or Affiliate of such Stockholder; provided,
however, that in each case such Person shall agree in writing with the parties
hereto to be bound by and to comply with all applicable provisions of this
Agreement.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Qualified Financing" means the issuance of $50 million or
more of indebtedness by the Corporation or any Subsidiary on one or more
occasions together with the issuance of capital stock of the Corporation (or
options, rights or warrants to acquire capital stock) in the Corporation in the
same transaction constituting in the aggregate with respect to all such
issuances up to 5% of the capital stock of the Corporation on a fully-diluted
basis.
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"Qualified IPO" shall mean an underwritten IPO resulting in
gross proceeds to the Corporation or its successor, before fees and expenses, of
at least $25,000,000 and for a per share price, which shall be determined by
dividing the Total Equity Value of the Corporation by the total number of shares
of capital stock outstanding, equal to at least $33.75 per share if the IPO is
consummated on or before July 31, 1998; $39.37 per share if the IPO is
consummated after July 31, 1998 but on or before July 31, 1999; $[42.19] per
share if the IPO is consummated after July 31, 1999 but on or before July 31,
2000; and $45.00 per share if the IPO is consummated at any time after July 31,
2000.
"Subsidiary" shall mean any entity more than 50% of the equity
interests of which are owned directly or indirectly by the Corporation or more
than 50% of the total voting power entitled to vote in the election of
directors, managers, general partners or trustees of which is held directly or
indirectly by the Corporation.
"Total Equity Value" shall mean, as of any day of
determination, the enterprise value (without duplication) of the Corporation
(including the fair market value of its equity, but excluding the fair market
value of its debt), as determined by an independent banking firm of national
standing with experience in such valuations (which firm may be an underwriter of
the Qualified IPO) and evidenced by a written opinion in customary form,
directed to the Board of Directors of the Corporation; provided that for
purposes of any such determination, the enterprise value of the Corporation
shall be calculated as if all of the shares of the Corporation were registered
and publicly held with no restrictions on resale, and as if the Corporation had
no controlling stockholder. For purposes of any such determination, such banking
firm's written opinion may state that such fair market value is no less than a
specified amount.
"Whitney" shall mean WEP Intermediate Corp., a Delaware
corporation, or its successors or assigns.
[SIGNATURES FOLLOW ON THE NEXT PAGE]
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed by its authorized officers, this ________ day of
___________, _____.
DIGITAL TELEVISION SERVICES, INC.
By: _________________________________
Name:
Title:
Attest:
By: ___________________________
Name:
Title:
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EXHIBIT J
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
CERTIFICATE OF MERGER -- PREFERRED STOCK CORPORATE CONVERSION
CERTIFICATE OF MERGER
OF
DIGITAL TELEVISION SERVICES, LLC
INTO
WEP INTERMEDIATE CORP.
The undersigned corporation, organized and existing under and by virtue of the
General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and jurisdiction of organization of each of the
constituent entities of the merger is as follows:
NAME JURISDICTION OF ORGANIZATION
---- ----------------------------
WEP Intermediate Corp. Delaware
Digital Television Services, LLC Delaware
SECOND: That a plan and agreement of merger among the parties to the
merger has been approved, adopted, certified, executed and acknowledged by each
of the constituent entities in accordance with the requirements of Section
18-209 of the Limited Liability Company Act of the State of Delaware and
Sections 264(c) and 251 of the General Corporation Law of the State of Delaware.
THIRD: That pursuant to Sections 264(e) and 251(e) of the General
Corporation Law of the State of Delaware, the certificate of incorporation of
the surviving corporation shall be substantially in the form of Exhibit M to the
Amended and Restated Limited Liability Agreement of Digital Television Services,
LLC (the "Limited Liability Company Agreement").
FOURTH: That the name of the surviving corporation of the merger is
Digital Television Services, Inc.
119
FIFTH: That the executed plan and agreement of merger is contained in
the Limited Liability Company Agreement. The merger effected by this Certificate
of Merger is a "Preferred Stock Corporate Conversion" as defined in the Limited
Liability Company Agreement. The Limited Liability Company Agreement is on file
at the principal place of business of the surviving corporation. The address of
the principal place of business of the surviving corporation is Building C-200,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
SIXTH: That a copy of the plan and agreement of merger will be
furnished by the surviving corporation, on request and without cost to any
member or stockholder or of any other person holding any interest in any
constituent entity.
IN WITNESS WHEREOF, WEP Intermediate Corp. has caused this Certificate
to be signed by Attorney-in-Fact, its authorized officer, this ______ day
of _______________, _________ .
WEP INTERMEDIATE CORP.
By: DTS Management, LLC,
as Attorney-in-Fact
By:
----------------------------
Title:
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120
EXHIBIT K
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
CERTIFICATE OF MERGER -- COMMON STOCK CORPORATE CONVERSION
CERTIFICATE OF MERGER
OF
DIGITAL TELEVISION SERVICES, LLC
INTO
WEP INTERMEDIATE CORP.
The undersigned corporation, organized and existing under and by virtue of the
General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and jurisdiction of organization of each of the
constituent entities of the merger is as follows:
NAME JURISDICTION OF ORGANIZATION
---- ----------------------------
WEP Intermediate Corp. Delaware
Digital Television Services, LLC Delaware
SECOND: That a plan and agreement of merger among the parties to the
merger has been approved, adopted, certified, executed and acknowledged by each
of the constituent entities in accordance with the requirements of Section
18-209 of the Limited Liability Company Act of the State of Delaware and
Sections 264(c) and 251 of the General Corporation Law of the State of Delaware.
THIRD: That pursuant to Sections 264(e) and 251(e) of the General
Corporation Law of the State of Delaware, the certificate of incorporation of
the surviving corporation shall be substantially in the form of Exhibit M to the
Amended and Restated Limited Liability Agreement of Digital Television Services,
LLC (the "Limited Liability Company Agreement").
FOURTH: That the name of the surviving corporation of the merger is
Digital Television Services, Inc.
121
FIFTH: That the executed plan and agreement of merger is contained in
the Limited Liability Company Agreement. The merger effected by this Certificate
of Merger is a "Common Stock Corporate Conversion" as defined in the Limited
Liability Company Agreement. The Limited Liability Company Agreement is on file
at the principal place of business of the surviving corporation. The address of
the principal place of business of the surviving corporation is Building C-200,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
SIXTH: That a copy of the plan and agreement of merger will be
furnished by the surviving corporation, on request and without cost to any
member or stockholder or of any other person holding any interest in any
constituent entity.
IN WITNESS WHEREOF, WEP Intermediate Corp. has caused this Certificate
to be signed by Attorney-in-Fact, its authorized officer, this ______ day of
_____________, ______.
WEP INTERMEDIATE CORP.
By: DTS Management, LLC,
as Attorney-in-Fact
By:
-------------------------
Title:
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122
EXHIBIT L
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement") is made as of this _____
day of ___________, _____ by and among Digital Television Services, Inc., a
Delaware corporation (the "Company"), and the stockholders (the "Stockholders")
listed on the signature pages hereto.
WHEREAS, the Company was formerly a Delaware limited liability company
known as Digital Television Services, LLC (the "LLC") and the Stockholders were
all of the members of the LLC; and
WHEREAS, in accordance with the Limited Liability Company Agreement of
the LLC (the "LLC Agreement"), the LLC has been converted into the Company
pursuant to a Preferred Stock Corporate Conversion (as defined in the LLC
Agreement); and
WHEREAS, the LLC Agreement requires the Stockholders to enter into this
Stockholders Agreement in order to set forth certain agreements with respect to
the management of the Company, the transfer of the securities of the Company now
owned or hereafter acquired by each of the Stockholders and certain other
matters;
NOW, THEREFORE, in consideration of the premised and the mutual
promises herein contained, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
"Affiliate" means, with respect to any specified Person, any other
Person that directly or indirectly controls, or is under common control with, or
is owned or controlled by, the specified Person. For purposes of this
definition, (i) "control" means, with respect to any specified Person, either
(x) the beneficial ownership of 50% or more of the equity securities issued by
such Person or (y) the power to direct the management and policies of the
specified Person through the ownership of voting securities or other equity
interests, by contract or otherwise, (ii) the terms "controlling," "control
with" and "controlled by," etc., shall have meanings correlative to the
foregoing, and (iii) the officers, directors, stockholders, employees and
partners of such Person shall be deemed to be Affiliates of such Person.
123
"Board of Directors" shall mean the board of directors of the Company.
"Certificate of Designations" means the Certificate of Designations of
the PIK Preferred Stock as filed with the Secretary of State of the State of
Delaware, as amended from time to time.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor federal revenue law.
"Columbia" shall mean Columbia DBS Investors, L.P., a Delaware limited
partnership, or its successors or assigns.
"Common Stock" shall mean the Common Stock, par value $.01 per share,
of the Company.
"Employee Stock Plan" shall mean the arrangements, terms and procedures
that the Company may establish from time to time for the issuance of up to
180,000 shares of Common Stock (or such larger number of shares as may be
approved by (i) the "Compensation Committee" of the Board of Directors, or if no
such committee exists, the Board of Directors and (ii) the holders of at least
70% of the shares of PIK Preferred Stock) to employees or independent
contractors of the Company or any Subsidiary at prices equal to the market value
thereof as of the date of issuance and pursuant to such terms and conditions
(including vesting) as the Board of Directors shall determine.
"Fiscal Year" shall mean the calendar year.
"Fleet" shall mean collectively, the group consisting of the following
entities, or their successors: Fleet Venture Resources, Inc., Fleet Equity
Partners VI, LP, ▇▇▇▇▇▇▇▇ Partners III, LP, and ▇▇▇▇▇▇▇ Plaza Partners.
"Interim Financing" shall mean the issuance by the Company of up to
$25,000,000 of indebtedness prior to any Qualified Financing or IPO the proceeds
of which are used to fund the Company's acquisition of NRTC System Nos. 0422,
1071, 0120, 0073, and 0164 located in Georgia and Alabama.
"NRTC System" shall mean any one of the geographical areas with in the
United States of America specifically designated by the National Rural
Telecommunications Cooperative, or its successor, (the "NRTC") within which the
NRTC has granted to any Person rights to distribute direct broadcast satellite
services.
"Permitted Reimbursements" shall mean the reimbursement by the Company
or any of its Subsidiaries to Columbia Capital Corporation, Whitney or Fleet, or
any of their Affiliates of (i) the costs with respect to any employee of any
such entity who is requested by the Chief Executive Officer of the Company to
provide services to the Company or any Subsidiary in connection with the ongoing
business and affairs (including financing) of the Company or any Subsidiary,
other than services as a member of the Board of Directors or similar services
associated with monitoring the investment by Columbia, Whitney, Fleet or their
Affiliates in the
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Company, which engagement and reimbursement amount is approved by the Board of
Directors (with at least one designee of Whitney or Fleet approving the
engagement and the amount, and (ii) the costs not to exceed $5,000 per year
actually incurred by Whitney for corporate franchise tax, fees due to any Person
serving as its registered agent, and similar amounts necessary to maintain its
corporate status and good standing and to prepare and file its tax returns and
its annual and periodic financial statements.
"Permitted Transferee" shall mean (i) in the case of Whitney, (a)
Whitney's parent company (Whitney Equity Partners, L.P.) ("Whitney Parent") and
(b) Whitney Parent's and Whitney's Affiliates' partners, retired partners,
stockholders and retired stockholders, the estates and family members of any
such partners, retired partners, stockholders and retired stockholders and of
their spouses, and any trusts for the benefit of any of the foregoing Persons,
(ii) in the case of each entity comprising the collective definition of "Fleet",
the Affiliates, partners, retired partners, stockholders and retired
stockholders of such entity and its respective Affiliates, the estates and
family members of any such partners, retired partners, stockholders and retired
stockholders and of their spouses, and any trusts for the benefit of any of the
foregoing Persons, (iii) in the case of Columbia, (a) Columbia's general partner
(Columbia Capital Corporation) ("CCC") and (b) CCC's and Columbia's Affiliates'
partners, retired partners, stockholders and retired stockholders, the estates
and family members of any such partners, retired partners, stockholders and
retired stockholders and of their spouses, and any trusts for the benefit of or
any partnership or limited liability company all of the equity interests of
which are owned by any of the foregoing Persons, and (iv) in the case of any
other Stockholder, any Related Party or Affiliate of such Stockholder; provided,
however, that in each case such Person shall agree in writing with the parties
hereto to be bound by and to comply with all applicable provisions of this
Agreement.
"PIK Preferred Stock" shall mean the Series A Payment-in-Kind Preferred
Stock, par value $.01 per share, of the Company.
"Preferred Stockholders" shall mean the record holders of the PIK
Preferred Stock and a "Preferred Stockholder" shall mean any one of them.
"Prime Rate" as of a particular date shall mean the prime rate of
interest as published on that date in the Wall Street Journal, and generally
defined therein as "the base rate on corporate loans posted by at least 75% of
the nation's 30 largest banks." If the Wall Street Journal is not published on a
date for which the Prime Rate must be determined, the Prime Rate shall be the
prime rate published in the Wall Street Journal on the nearest-preceding date on
which the Wall Street Journal was published.
"Qualified Financing" means the issuance of $50 million or more of
indebtedness by the Company or any Subsidiary on one or more occasions together
with the issuance of capital stock of the Company (or options, rights or
warrants to acquire capital stock) in the Company in the same transaction
constituting in the aggregate with respect to all such issuances up to 5% of the
capital stock of the Company on a fully-diluted basis.
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125
"Registration Rights Agreement" shall mean that certain registration
rights agreement dated ________, ________ by and among the LLC and the members
of the LLC on the date of such agreement.
"Related Party" shall mean (a) with respect to any individual, such
individual's spouse, any descendants (whether natural, adopted or in the process
of adoption), any sibling, a spouse of any descendant or sibling, any ancestor,
any trust 90% or more of the beneficial interests of which are owned by such
individuals or any organization described in Code Section 501(c)(3), and any
corporation, association, partnership or limited liability company 90% of the
equity interests of which are owned by those above-described individuals, trusts
or organizations and (b) with respect to any trust, the owners of the beneficial
interests of such trust.
"Stock" shall mean the Common Stock and the PIK Preferred Stock.
"Subsidiary" shall mean any entity more than 50% of the equity
interests of which are owned directly or indirectly by the Company or more than
50% of the total voting power entitled to vote in the election of directors,
managers, general partners or trustees of which is held directly or indirectly
by the Company.
"10% Stockholder" shall mean any Stockholder that holds at least 10% of
all outstanding capital stock of the Company, and in all events the term "10%
Stockholder" shall include Columbia, Whitney, and each entity that is part of
the group of entities collectively defined as "Fleet" herein.
"Transfer" shall mean any sale, assignment, transfer, conveyance,
pledge, hypothecation, or other disposition, voluntarily or involuntarily, by
operation of law, with or without consideration, or otherwise (including,
without limitation, by way of intestacy, will, gift, bankruptcy, receivership,
levy, execution, charging order or other similar sale or seizure by legal
process) of all or any portion of any asset.
"Transfer Notice" shall mean written notice given to the Company and
all Stockholders of all the details of any proposed Transfer of an Interest
including the name of the proposed transferee, the date of the proposed
Transfer, the portion of the Stockholder's Stock to be transferred, the price or
other consideration, if any, to be received, and a complete description of all
noncash consideration to be received.
"Whitney" shall mean WEP Intermediate Corp., a Delaware corporation, or
its successors or assigns.
ARTICLE II
CONDUCT OF BUSINESS
SECTION 2.1. SCOPE OF ARTICLE. The provisions of this Article II shall
apply to all Stock held by any Stockholder, whether or not held or acquired by
such Stockholder on or
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126
after the date of this Agreement or at or after any time such Stockholder first
became subject to this Agreement.
SECTION 2.2. INFORMATION TO BE PROVIDED. Within ninety (90) days after
the end of each Fiscal Year, each Stockholder shall be furnished with annual
financial statements containing a balance sheet, income statement, and statement
of changes in working capital as of or for the Fiscal Year then ending which
financial statements shall be prepared in accordance with generally accepted
accounting principles and shall be audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or such
other firm of independent certified public accountants as may be selected by the
Board of Directors and reasonably satisfactory to the holders of at least 70% of
the PIK Preferred Stock. The Company shall also provide to each of the Preferred
Stockholders and such other Stockholders as the Board of Directors may determine
(i) an annual operating budget and capital expenditure budget for each Fiscal
Year (which shall be delivered prior to February 15 of each such Fiscal Year);
(ii) unaudited quarterly financial statements within 45 days of the completion
of each calendar quarter of the Fiscal Year; and (iii) unaudited monthly
financial statements containing a balance sheet, a statement of income, and a
statement of changes in working capital and showing variances to the annual
operating budget and capital expenditure budget within 30 days after the last
day of each month.
SECTION 2.3. SPECIAL VOTING RIGHTS OF THE PIK PREFERRED STOCK.
(a) Class Vote Required. For so long as any shares of PIK Preferred
Stock are outstanding, without the vote of the holders of at least seventy
percent (70%) of the PIK Preferred Stock, the Company shall not take any action
that:
(i) Alters or changes the rights, preferences or privileges with
respect to the PIK Preferred Stock.
(ii) Creates, by reclassification or otherwise, any new class or
series of capital stock having rights, preferences or
privileges senior or pari passu to the PIK Preferred Stock.
(iii) Results in any merger, reorganization, Change of Control or
any transaction or a series of related transactions in which
all or substantially all of the assets, properties, or
businesses of the Company and its Subsidiaries taken as a
whole are sold or otherwise transferred to Persons other than
the Company or any of its Subsidiaries, unless such
transaction would result in cash proceeds to the holders of
the PIK Preferred Stock with respect to the PIK Preferred
Stock of an amount per share equal to or greater than the
Liquidation Preference.
(iv) Results in an IPO that is not a Qualified IPO.
(v) Results in the redemption or repurchase of any capital stock
of the Company, whether in the form of cash or promissory
notes, or otherwise (except in connection with the redemption
or acquisition of capital stock of the Company held by
employees, managers, or consultants of the
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Company or any Subsidiary, or Permitted Transferees of such
Persons, in connection with or in furtherance of the
termination of such relationship).
(vi) Results in the issuance of any equity interest in the Company
or in any Subsidiary, or rights to acquire such equity
interests, other than under the Employee Stock Plan or in
connection with a Qualified Financing.
(vii) Results in any distribution with respect to any equity
interests in the Company (other than as permitted in clause
(v) above).
(viii) Results in any contract, agreement, loan, transaction or other
relationship with the Company or any Subsidiary and any of
Columbia, Columbia DBS, Inc., Columbia Capital Corporation,
Whitney or Fleet, or with an Affiliate of any of them
(excluding for this purpose any Subsidiary) provided that the
foregoing shall not prohibit any payment of Permitted
Reimbursements.
(ix) Results in a change in the size or composition of the Board of
Directors.
(x) Results in an increase in the number of shares of Common Stock
authorized to be issued under the Employee Stock Plan.
(xi) Results in the Company engaged in any business other than the
distribution of, or the indirect holding of rights to
distribute, DirecTv broadcast satellite services, programming
and products or results in the Company exceeding the scope of
the purpose for which the Company was formed.
(xii) Results in any Subsidiary that is not a juridical corporation
electing on IRS Form 8832 or otherwise electing to be treated
as a corporation for federal tax purposes.
(b) Special PIK Preferred A Vote. For so long as the any shares of PIK
Preferred Stock are outstanding, without the vote of at least fifty percent
(50%) of the PIK Preferred Stock neither the Company nor any Subsidiary shall
enter into or consummate an acquisition of any NRTC System (other than those
NRTC Systems under contract on the date hereof or referred to in the definition
of Interim Financing) if the acquisition price per household is greater than
$120 or the aggregate purchase price exceeds $25,000,000; provided, however,
that this Section 2.2(b) shall expire on February [7], 1999.
ARTICLE III
PARTICIPATION RIGHTS
SECTION 3.1. PARTICIPATION RIGHTS. Except in the case of issuance of
shares of capital stock of the Company (i) pursuant to the Employee Stock Plan,
(ii) in connection with
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a Qualified Financing or (iii) in exchange for capital contributions consisting
of property other than cash, prior to issuing any additional shares of capital
stock of the Company all Stockholders shall have been offered the right to
purchase their proportionate share of such additional shares of capital stock on
the same terms and subject to the same conditions as the proposed issuance to
others, which rights to purchase shall be offered to such Stockholder in the
ratio that their aggregate number of shares of Stock bear to the aggregate
number of shares of Stock. Any shares of capital stock not initially subscribed
for by those Stockholders holding Stock shall be reoffered to those Stockholders
electing initially to purchase their proportionate share hereunder in proportion
to the relative number of shares of Stock held by those Stockholders initially
electing to purchase their proportionate share. The Company shall determine the
timing and such other procedures as may be necessary and appropriate to enable
the Stockholders to exercise their rights hereunder, provided that in any event
such Stockholders shall be given no less than five (5) business days prior
notice before being required to commit to purchase the shares of capital stock
subject to the Participation Rights hereunder.
ARTICLE IV
TRANSFERS OF STOCK
SECTION 4.1. SCOPE OF ARTICLE. The provisions of this Article IV shall
apply to all Stock, whether or not held or acquired by a Stockholder at or after
the date of this Agreement or at or after any time such Stockholder first became
subject to this Agreement. Every Transfer shall be subject to all of the terms,
conditions, restrictions, and obligations of this Agreement. Any attempted
Transfer which does not comply with the provisions of this Article shall be void
and the Company shall not recognize the attempted purchaser, assignee, or
transferee for any purpose whatsoever, and the Stockholder attempting such
Transfer shall have breached this Agreement for which the Company and the
non-breaching Stockholders shall have all remedies available for breach of
contract.
SECTION 4.2. CONDITIONS PRECEDENT TO TRANSFER OF STOCK. A Stockholder
may Transfer all or any shares of Stock held by such Stockholder if all the
following conditions are satisfied:
(a) Prior Notice. At least ten (10) days prior to any proposed Transfer
of Stock otherwise permitted pursuant to this Section, the Stockholder proposing
to Transfer all or any shares of Stock held by such Stockholder gives a Transfer
Notice.
(b) Expenses. The transferor agrees to reimburse the Company for any
expenses reasonably incurred by the Company in connection with the consummation
of the Transfer.
(c) Transfer Documents; Effective Time of Transfer. Such Stockholder
and its purchaser, transferee or assignee shall execute, acknowledge, and
deliver to the Company such instruments of transfer and assignment with respect
to such transaction as are in form and substance reasonably satisfactory to the
Company, including, without limitation, the written agreement of the purchaser,
transferee or assignee to assume and be bound by all of the obligations of the
transferor under this Agreement.
▇-▇
▇▇▇
(▇) Securities Law Compliance. Either (i) the Transfer is to the heirs,
devisees or legatees of a deceased Stockholder; (ii) the Stock to be Transferred
is registered under the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "1933 Act"), and any applicable state securities
laws; or (iii) the Company determines that the Transfer qualifies for an
exemption from the registration requirements of the 1933 Act and any applicable
state securities laws. Except as specifically provided in the Registration
Rights Agreement, the Company has no obligation or intention to register any of
the Stock for resale under any federal or state securities laws or to take any
action which would make available any exemption from the registration
requirements of such laws.
(e) Opinion of Counsel. In its discretion, the Company may require as a
condition precedent to any Transfer of Stock delivery to the Company, at the
proposed transferor Stockholder's expense, of an opinion of counsel satisfactory
(both as to the counsel and substance of the opinion) to the Company that the
proposed Transfer will satisfy all or certain of the conditions set forth in
Section 4.2(d).
(f) Other Agreements. The Transfer complies with the provision of any
employment agreement or other agreement between the Stockholder and the Company
or any Subsidiary.
(g) Right of First Refusal. If the proposed Transfer is an Optional
Purchase Event, the Transferring Stockholder shall have complied with the
provisions contained in this Article.
(h) Right of Co-Sale. In the event that the proposed Transfer is to a
Person that is not a Permitted Transferee of the transferring Stockholder, then
all nontransferring Stockholders shall have the right to participate in such
Transfer based upon the relative number of shares of Stock held by each such
Stockholder as set forth in Section 4.4 below.
SECTION 4.3. RIGHT OF FIRST REFUSAL.
(a) Grant of Option. Upon the occurrence of an Optional Purchase Event
with respect to a Stockholder, the Company, followed by all of the other 10%
Stockholders, shall have successive options to purchase all, but not less than
all, of the shares of Stock proposed to be sold, assigned or transferred by such
Stockholder (the "Offered Stock") pursuant to the terms and conditions set forth
in this Agreement.
Upon the occurrence of an Optional Purchase Event, the Stockholder with
respect to whom the Optional Purchase Event has occurred shall immediately give
written notice to the Company and to all 10% Stockholders, which notice shall
describe the Optional Purchase Event (unless the Optional Purchase Event is the
giving of a Transfer Notice, in which case the Transfer Notice shall suffice).
If the Stockholder with respect to whom the Optional Purchase Event has occurred
does not provide such notice and another Stockholder knows of the occurrence of
such Optional Purchase Event, such Stockholder may send written notice of the
Optional Purchase Event to the Company, and if the Company determines that
Optional Purchase Event has occurred, the Company shall provide to all 10%
Stockholders the Transfer Notice.
(b) Optional Purchase Events. For purposes of this Agreement, the term
"Optional Purchase Event" shall mean any of the following events with respect to
a stockholder:
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(i) The delivery of a Transfer Notice by the Stockholder unless
such Transfer is to a Permitted Transferee.
(ii) In the case of any Stockholder that is an individual, the
entry by any court of an order or adjudication that the
current or former spouse of the Stockholder has acquired any
rights in any shares of the Stockholder's Stock as a result of
divorce, equitable distribution or community property
partition proceedings pursuant to the laws of any state or
jurisdiction.
(iii) In the case of any Stockholder who initially received such
Stock from the Company (or an equity interest in a predecessor
of the Company) when such Stockholder was an officer,
director, employee, manager or independent contractor of any
member of the Group, such Stockholder is no longer an officer,
director, employee, manager or an independent contractor of
the Company or any Subsidiary.
(iv) In the case of Whitney, Columbia, or any other Stockholder
substantially all of the assets of which consist of such
Stockholder's Stock, any Transfer of more than ten percent
(10%) of its capital stock or other equity interests, or the
sale or issuance of any capital stock or equity interest in
such Stockholder unless such Transfer, sale or issuance, is to
a then current owner of such Stockholder or a Permitted
Transferee of such Stockholder.
(v) In the case of any estate or trust, any Transfer to any
beneficiary of such estate or trust who is not a Related Party
to the estate's decedent or to the grantor of the trust.
(vi) In the case of Columbia and Columbia DBS, Inc., if any Person
or group of Persons who are Affiliates, other than those
Persons who are shareholders of Columbia Capital Company,
Columbia DBS, Inc., or partners of Columbia on the date hereof
or Affiliates or Related Parties to such Persons, shall become
the owner of more than 50% of the equity interests of Columbia
or be entitled to direct the business and affairs of Columbia.
(c) Proposed Transfer for Consideration. If the Optional Purchase Event
is the delivery of a Transfer Notice and the Transfer is for cash, indebtedness,
property or other consideration, then the Company's and the 10% Stockholders'
successive options shall be to purchase the Offered Stock for the fair market
value of the consideration proposed to be received in the Transfer or payable at
the closing described below, and pursuant to all of the other terms and
conditions of the proposed Transfer. The Stockholder desiring to Transfer the
Offered Stock and the Company (acting on behalf of all Persons who exercise
their option to purchase hereunder) shall attempt to agree, in writing, on the
fair market value of any noncash consideration to be received in the proposed
transfer. If the Stockholder and the Company are
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unable to agree on the fair market value of the noncash consideration within
thirty (30) days following the exercise of the options to purchase granted in
this Section, either the Stockholder or the Company may by notice to the other
commence the Appraisal Process.
(d) Other Optional Purchase Events. If the Optional Purchase Event is
not a proposed Transfer for consideration, then the successive options shall be
for a purchase price equal to (i) the fair market value of the Offered Stock as
of the last day of the calendar month immediately prior to the occurrence of the
Optional Purchase Event (the "Valuation Date"), plus (ii) interest at the Prime
Rate on the amount determined under clause (i) from the Valuation Date to the
closing date, compounded monthly, reduced by (iii) any dividends or other
distributions with respect to the Offered Stock from the Valuation Date through
the closing (including dividends with respect to the PIK Preferred Stock
consisting of additional shares of PIK Preferred Stock). For purposes of
determining the purchase price, the fair market value of a share of Stock shall
equal the amount that would be received by the owner of such share of Stock if
all of the assets of the Company were sold for cash equal to their fair market
value, the Company paid all of its liabilities and liquidated, all as of the
Valuation Date. The selling Stockholder and the Company (acting on behalf of all
Persons who have options to purchase hereunder) shall attempt in good faith to
agree on the fair market value of the Offered Stock. If they are unable to
agree, in writing, on the fair market value of the Offered Stock within thirty
(30) days following the exercise of the options to purchase granted in this
Section, either the selling Stockholder or the Company may by notice to the
other commence the Appraisal Process.
(e) Exercise of Option by the Company. The Company shall provide
written notice of exercise of the option to the Stockholder with respect to whom
an Optional Purchase Event has occurred and to all 10% Stockholders within
thirty (30) days following the Transfer Notice or the other written notice to
all 10% Stockholders of the occurrence of the Optional Purchase Event,
specifying whether or not the Company is exercising its option to purchase the
Offered Stock pursuant to this Section. A failure by the Company to give notice
within such period shall be deemed to be a notice of nonexercise.
(f) Exercise of Option by 10% Stockholders. In the event the Company
does not exercise its option, then each of the 10% Stockholders shall have the
option to (i) purchase the Offered Stock pursuant to this Section 4.3 on the
same terms as the Company in proportion to the relative number of shares of
Stock held by all the 10% Stockholders; (ii) exercise the rights of co-sale
specified in Section 4.4 below; or (iii) neither purchase any of such Offered
Stock nor exercise rights of co-sale. In order to exercise its option pursuant
to this Section, a 10% Stockholder shall provide written notice of exercise of
the option to the Stockholder with respect to whom an Optional Purchase Event
has occurred, to the Company and to all other 10% Stockholders within thirty
(30) days following the Company's nonexercise. If any 10% Stockholder elects not
to exercise their option, then those 10% Stockholders that do exercise their
option shall have the option, for an additional fifteen (15) days following the
end of the option period for all 10% Stockholders, to acquire the Offered Stock
that could have been acquired by the nonexercising 10% Stockholders in
proportion to the relative number of shares of Stock held by the exercising 10%
Stockholders.
Any party with an option to purchase Stock pursuant to this Article may
waive its option at any time by notice of such waiver to the Company.
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(g) Waiver; Failure to Exercise Options. With respect to an Optional
Purchase Event that is the giving of a Transfer Notice, if Persons with options
under this Section shall fail to exercise their options to purchase the Offered
Stock within the applicable periods, or in the event the purchaser(s) shall fail
to tender the required consideration at the closing referred to below, then
subject to the rights of co-sale described in Section 4.4 below, the
transferring Stockholder may transfer the Offered Stock to the Person, and upon
the terms and price, specified in the notice of the proposed transfer, but only
if such transfer is consummated within ninety (90) days after the expiration or
withdrawal of the last option, or the failure to tender the consideration if
applicable. If the Offered Stock is not so transferred within the applicable
period, the Offered Stock shall again become subject to all of the terms and
conditions of the Agreement and may not thereafter be transferred except in the
manner and on the terms herein provided. In the event the Company or any 10%
Stockholder exercises an option hereunder, but fails to tender the required
consideration at the closing, the transferring Stockholder shall have all rights
and remedies against the Company or the exercising 10% Stockholders, as the case
may be, available for breach of contract, including the remedy of specific
performance.
(h) Closing of Purchase of Stock; Payment of Purchase Price; Security.
The closing of the purchase of any Offered Stock by the Company or any of the
10% Stockholders pursuant to this Section shall occur at the offices of the
Company within thirty (30) days after the earlier of (a) the written agreement
of the parties on the fair market value of the Offered Stock or the
consideration to be received therefor, as the case may be, or (b) the conclusion
of the Appraisal Process. At the closing, the selling Stockholder shall deliver
to the purchaser(s) of the Offered Stock certificates evidencing the Offered
Stock, and the purchaser(s) shall deliver the purchase price as provided below
to the such Stockholder. The selling Stockholder and the purchaser(s) each shall
execute and deliver such other documents as may reasonably be requested by the
other.
The purchase price shall be delivered at closing as follows:
(i) If the purchase of the Offered Stock is as a result of a
proposed Transfer to a third party for consideration, the
purchase price determined under this Agreement shall be
payable on the same basis as the purchase price was to have
been paid by the third party.
(ii) If the purchase of the Offered Stock is as a result of any
other Optional Purchase Event the purchase price shall be
payable in cash or same day funds.
SECTION 4.4. RIGHT OF CO-SALE.
(a) Right of Co-Sale. In the event of a proposed Transfer of Stock to a
Person who is not a Permitted Transferee, to the extent the Stock proposed to be
transferred is not purchased by the Company pursuant to its right of first
refusal described in Section 4.3, each other Stockholder shall have the right to
participate in the Transfer in the manner set forth in this Section 4.4. Each
such nontransferring Stockholder may Transfer to the proposed transferee
identified in the Transfer Notice a pro rata share (defined below) of such
non-transferring Stockholders Stock, by giving written notice to the Company and
to the transferring Stockholder within the thirty (30) day period specified in
Section 4.3(f), which notice shall state that the
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Stockholder elects to exercise its rights of co-sale under this Section 4.4. A
notice of exercise of a Stockholder's right of first refusal under Section
4.3(f) and a notice of exercise of a Stockholder's rights of co-sale hereunder
shall be mutually exclusive and the first such notice given shall be binding and
irrevocable. Each nontransferring Stockholder shall be deemed to have waived its
right of co-sale hereunder either if it fails to give notice within the
prescribed time period or if such Stockholder gives notice exercising its right
of first refusal pursuant to Section 4.3(f). A nontransferring Stockholder's pro
rata share for this purpose shall equal that number of shares of the
nontransferring Stockholder's Stock represented by the number obtained by
multiplying the number of shares of Stock that are the subject of the proposed
Transfer by a fraction, the numerator of which is the number of shares of Stock
then held by such nontransferring Stockholder, and the denominator of which is
the number of shares of Stock then held by all persons entitled to this right of
co-sale plus the number of shares of Stock proposed to be Transferred by the
transferring Stockholder. Insofar as possible this right of co-sale shall apply
to Stock of the same class or classes as the Stock subject to the Transfer
Notice. If any Stockholder desiring to exercise its rights of co-sale hereunder
does not have a sufficient number of Stock of the same class as the Stock
subject to the Transfer Notice, such Stockholder may substitute Stock of another
class so long as such class ranks senior in liquidation to the class of Stock
subject to the Transfer Notice.
(b) Consummation of Co-Sale. Each nontransferring Stockholder, in
exercising its right of co-sale hereunder, may participate in the Transfer by
delivering to the transferring Stockholder at the closing of the Transfer of the
transferring Stockholder's Stock to the transferee (the "Closing") one or more
certificates duly endorsed representing the shares of Stock to be transferred by
such nontransferring Stockholder. At the Closing, such certificates will be
delivered to the purchaser (whether such purchaser is the proposed transferee
set forth in the Transfer Notice or those Stockholders who have exercised their
rights of first refusal under Section 4.3) and the transferring Stockholder will
remit, or will cause to be remitted, to the nontransferring Stockholder at the
Closing that portion of the proceeds of the Transfer to which such
nontransferring Stockholder would otherwise be entitled by reason of such
nontransferring Stockholder's participation in such Transfer pursuant to these
rights of co-sale.
SECTION 4.5. APPRAISAL PROCESS.
(a) If a Stockholder and the Company are unable to agree, in writing,
on the fair market value of any shares of Stock or the consideration to be
received in exchange for any shares of Stock within the time limits set forth in
Article IV, at any time following the expiration of such time limit either may
invoke the process described in this Section (the "Appraisal Process") by
sending the notice selecting an appraiser as described in subparagraph (i)
below, in which case the determination of fair market value shall be final and
binding on all parties to this Agreement.
(i) First Appraisal. The written notice invoking the Appraisal Process
shall state that the Appraisal Process is being invoked and shall set forth the
name and address of the unrelated third party appraiser selected by the party
invoking the Appraisal Process. Any appraiser selected pursuant to this Section
shall be a Person qualified with respect to determining the fair market value of
the shares of Stock or other property that is in question. The party to the
purchase and sale transaction who did not invoke the Appraisal Process shall
have ten (10) days
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following the notice of the selection of the first appraiser to select a second
unrelated third party appraiser by sending to the other party written notice
setting forth the name and address of the second appraiser.
If a second appraiser is not selected within the 10 day time period,
the appraiser selected by the party invoking the Appraisal Process shall prepare
his appraisal report and submit it to the owner of the shares of Stock and the
Company within sixty (60) days following the notice of his selection as an
appraiser, in which case the Appraisal Process shall be concluded and the fair
market value of the property in question shall be the amount set forth in the
appraiser's report.
(ii) Second Appraisal. If a second appraiser has been selected pursuant
to subparagraph (i) above, the two appraisers so selected shall consult with
each other in an effort to reach an agreement as to the fair market value. If
the two appraisers shall agree in writing as to the fair market value of the
property in question within forty-five (45) days following the appointment of
the second appraiser, the fair market value of such property shall be the amount
to which the appraisers have agreed, and the Appraisal Process shall be
concluded.
In the event the two appraisers are unable to agree as to the fair
market value, the two appraisers shall prepare their separate reports and submit
them to the Company and the owner of the shares of Stock within sixty (60) days
following the appointment of the second appraiser. If the higher fair market
value exceeds the lower fair market value by 10% or less of the lower fair
market value the Appraisal Process shall be concluded and the fair market value
of the property in question shall be the average of the two fair market values
as set forth in the two appraisal reports. If the higher fair market value
exceeds the lower fair market value by more than 10% of the lower fair market
value, the owner of the shares of Stock and the Company shall further attempt to
agree as to the fair market value.
(iii) Third Appraisal. If the higher fair market value of the two
appraisals exceeds the lower fair market value by more than 10% of the lower
fair market value and, as of the eleventh (11th) day following the submission of
both appraisal reports, neither party has sent written notice calling for a
third appraiser, the Appraisal Process shall be concluded and the fair market
value of the property in question shall be the average of the two fair market
values as set forth in the two appraisal reports. If, however, the higher fair
market value exceeds the lower fair market value by more than 10% of the lower
fair market value and, within ten (10) days following the submission of the
first two appraisers' reports, either party sends written notice to the other
calling for a third appraiser, the two previously-selected appraisers shall
promptly (but in any event within thirty (30) days following the submission of
both appraisal reports) select a third appraiser to determine the fair market
value of the property in question. The first two appraisers shall notify the
Company, which shall in turn notify the owner of the shares of Stock and all
other Stockholders, of the name and address of the third appraiser so selected;
provided, however, that if the Company has not received notice of the name and
address of the third appraiser within such thirty (30) day period, then the fair
market value of the property in question shall be the average of the two
appraisals that have been completed. Neither the previously selected appraisers,
the Stockholder whose shares of Stock are being purchased, the Company, the
Stockholders nor any Persons related to any of them shall disclose to the third
appraiser the appraisal reports of the first two appraisers or the results of
the first
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two appraisals. Within thirty (30) days following his appointment, the third
appraiser shall submit to the owner of the shares of Stock and the Company his
appraisal report, in which case the Appraisal Process shall be concluded and the
fair market value of the property in question shall be the average of the two
appraisals that are closest to each other.
(b) Costs of Appraisal Process.
(i) General Rules. Unless provided otherwise in clause (b)(ii) below,
the costs of the Appraisal Process shall be borne equally by the Stockholder
whose shares of Stock are being purchased and by the Person(s) obligated to
purchase such shares of Stock. If one or more of the Stockholders exercised its
option to purchase such shares of Stock, the portion of the costs of the
Appraisal Process that are not borne by the owner of such shares of Stock shall
be divided among the exercising Stockholders based upon the relative number of
shares of Stock being purchased.
(ii) Exception. Notwithstanding subparagraph (i) above, in the event a
party calls for a third appraiser as provided above and the fair market value of
the property in question as determined pursuant to the Appraisal Process is less
favorable to that party than if the fair market value was determined by
averaging the appraised fair market values as determined by the first two
appraisers, the entire costs of the Appraisal Process shall be borne by the
party calling for the third appraiser.
ARTICLE V
BOARD OF DIRECTORS
SECTION 5.1. SIZE AND COMPOSITION OF BOARD OF DIRECTORS. (a) Each of
the Stockholders agrees that the number of members of the Board of Directors
shall be seven (7) and that such Stockholder shall not take or permit to be
taken any action which would change such number. Each Stockholder agrees to vote
or otherwise cause the election of the following individuals as directors:
(i) Two (2) individuals designated in writing by Whitney (which
shall be two of the three PIK Preferred Stock Directors
provided for in the Certificate of Designations).
(ii) One (1) individual designated in writing by Fleet (which shall
be one of the three PIK Preferred Stock Directors provided for
in the Certificate of Designations).
(iii) The chief executive officer of the Company, as may be elected
from time to time by the Board of Directors, which individual
is currently ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
(iv) Those two (2) individuals elected by a vote of the holders of
Common Stock with each such holder being entitled to cast that
number of votes equal to the number of such shares of Common
Stock held by such holder, which vote shall be taken
separately with respect to each of the two (2) seats without
cumulative voting. The two (2) individuals designated pursuant
to this clause (iv) shall also be
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designated by the Stockholders as entitled to two (2) votes
each on all matters before the Board of Directors.
(v) One (1) individual elected by a vote of the holders of the
Common Stock, with each such holder being entitled to cast
that number of votes equal to the number of such shares of
Common Stock held by such holder.
The individual designees to the Board of Directors, effective on the
date hereof, are listed on Exhibit A attached hereto. Such Persons shall
continue to serve until their death or resignation, or until their successor is
designated as provided herein.
(b) Upon the affirmative vote of Columbia, Whitney and Fleet, the size
of the Board of Directors shall be increased from seven (7) to nine (9). The two
additional seats shall be filled by individuals approved by Columbia, Whitney,
and Fleet, and elected by holders of a majority of the Common Stock, and who are
not otherwise a Related Party to or Affiliated with any of Columbia, Whitney,
Fleet or the Company. In the event of such an increase in the size of the Board
of Directors, the two (2) individuals designated pursuant to clause (iv) above
and the two (2) new designated individuals shall be entitled to one vote each.
(c) The Board of Directors shall meet not less often than once per
quarter. In the event that the Board of Directors create an "Executive
Committee," a "Compensation Committee," an "Audit Committee," or committees with
similar functions such committees shall have at least one member designated by
each of Columbia, Whitney and Fleet.
(d) At such time as there are no longer any shares of PIK Preferred
Stock outstanding, the following shall be the composition of the Board of
Directors: (i) the size of the Board of Directors shall be the same as that
immediately to such time, (ii) each member of the Board of Directors shall have
one vote on all matters and (iii) all directors shall be elected by the holders
of the Common Stock.
SECTION 5.2 INSURANCE. The Company shall obtain "directors and
officers" insurance or comparable insurance coverage of a minimum of $5,000,000
for the members of the Board of Directors as soon as reasonably possible after
the date hereof, and in any event prior to the closing of any Qualified
Financing. The Company shall obtain within sixty (60) days of the date hereof,
and thereafter maintain in force so long as requested to do so by Whitney,
Fleet, or Columbia, key man insurance on the life of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. in
an amount of coverage not less than $10,000,000 and on the life of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ in an amount of coverage not less than $3,000,000, provided, however,
that such individuals are insurable at commercially reasonable rates.
SECTION 5.3 WHITNEY AND FLEET REPRESENTATIVES. The Persons that
collectively constitute Fleet and any Permitted Transferee or other Person
permitted under this Agreement to acquire any portion of Fleet's Class Units
shall designate one such Person to have and exercise all of the rights of Fleet
under this Agreement, which designation shall be made by notice to the Company
signed by each Fleet entity and each such Permitted Transferee or other Person;
provided, however, that until Fleet shall otherwise notify the Company to the
contrary,
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▇▇▇▇▇▇▇▇ Partners III, LP shall have and exercise all of the rights of Fleet
under this Agreement.
In the event that Whitney shall transfer all or any of its PIK
Preferred Stock to any Permitted Transferee or other Person permitted under this
Agreement to acquire any of ▇▇▇▇▇▇▇'▇ ▇▇▇ Preferred Stock, Whitney and such
Persons shall designate one such Person to have and exercise all of the rights
of Whitney under this Agreement, which designation shall be made by notice to
the Company signed by each such Person. Until such designation is made, Whitney
shall have and exercise all of the rights of Whitney under this Agreement.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. NOTICES. Any notice, payment, demand, or communication
required or permitted to be given by any provision of this Agreement shall be in
writing and shall be delivered personally to the Person or to an officer or
manager of the Person to whom the same is directed, or sent by regular,
registered, or certified United States mail, or by facsimile transmission or by
private mail or courier service, addressed as follows: if to the Company, to the
principal office address of the Company, or to such other address as may be
specified from time to time by notice to the Stockholders; if to a Stockholder,
to the address set forth in the records of the Company, or to such other address
as the Stockholder may specify from time to time by notice to the Company. Any
such notice shall be deemed to be delivered, given, and received for all
purposes (i) as of the date of actual receipt if delivered personally or if sent
by regular mail, facsimile transmission or by private mail or courier service,
or (ii) four (4) business days after the date on which the same was deposited in
a regularly-maintained receptacle for the deposit of United States mail, if sent
by registered or certified United States mail, postage and charges prepaid,
return receipt requested.
SECTION 6.2. BINDING EFFECT. Except as otherwise provided in this
Agreement, every covenant, term, and provision of this Agreement shall be
binding upon and inure to the benefit of the Stockholders, and their respective
heirs, legatees, legal representatives, successors, transferees, and assigns.
SECTION 6.3. CONSTRUCTION. Every covenant, term and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against any Stockholder. No provision of this Agreement is to be
interpreted as a penalty upon, or a forfeiture by, any party to this Agreement.
The parties acknowledge that each party to this Agreement has shared equally in
the drafting and construction of this Agreement and, accordingly, no court
construing this Agreement shall construe it more strictly against one party
hereto than the other.
SECTION 6.4. ENTIRE AGREEMENT; AMENDMENTS. This Agreement may only be
amended by an agreement in writing signed by the Company and by (i) Preferred
Stockholders holding of record 70% or more of the then outstanding PIK Preferred
Stock and (ii) Stockholders holding of records two-thirds (2/3) or more of the
then outstanding Common Stock. Any such amendment shall be binding on the
Company and all Stockholders.
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SECTION 6.5. HEADINGS. Section and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any provision hereof.
SECTION 6.6. SEVERABILITY. Every provision of this Agreement is
intended to be severable. If any term or provision hereof is illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the
validity or legality of the remainder of this Agreement.
SECTION 6.7. ADDITIONAL DOCUMENTS. Each Stockholder, upon the request
of the Company, agrees to perform all further acts and execute, acknowledge, and
deliver any documents that may be reasonably necessary, appropriate, or
desirable to carry out the provisions of this Agreement.
SECTION 6.8. VARIATION OF PRONOUNS. All pronouns and any variations
thereof shall be deemed to refer to masculine, feminine, or neuter, singular or
plural, as the identity of the Person or Persons may require.
SECTION 6.9. TERMINATION. Notwithstanding any other provision herein
contained to the contrary, this Agreement shall be terminated and shall cease to
have any force and effect upon the consummation of a Qualified IPO (as defined
in the Certificate of Designations of the PIK Preferred Stock).
SECTION 6.10. GOVERNING LAW; CONSENT TO JURISDICTION; DISPUTE
RESOLUTION.
(a) The laws of the State of Delaware shall govern the validity of this
Agreement and the construction and interpretation of its terms. All disputes
between or among any Stockholders arising out of or in any way connected with
the execution, interpretation and performance of this Agreement (including the
validity, scope and enforceability of the dispute resolution provisions
contained herein) shall be solely and finally settled in accordance with this
Section 6.10. Each Stockholder hereby irrevocably consents to the personal
jurisdiction of the courts of the Commonwealth of Virginia with respect to
matters arising out of or related to the enforcement of the provisions of this
Section 6.10 and with respect to matters, if any, related to this Agreement not
required to be resolved pursuant to this Section 6.10.
(b) Mandatory Arbitration. All disputes between or among any
Stockholders arising out of or in connection with the execution, interpretation
and performance of this Agreement (including the validity, scope and
enforceability of this arbitration provision) shall be solely and finally
settled by a board of arbitrators consisting of either one arbitrator or three
arbitrators, as set forth below (the term "Arbitrators" shall refer to the board
of arbitrators, whether it consists of one or three members). The arbitration
proceedings shall be held in the Washington, D.C. metropolitan area, and except
as otherwise may be provided in this Section, the arbitration proceedings shall
be conducted in accordance with the Commercial Arbitration Rules (the "AAA
Rules") of the American Arbitration Association (the "AAA").
(c) Arbitration Notice. If a Stockholder or Stockholders determine to
submit a dispute for arbitration pursuant to this Section, such Stockholder(s)
shall furnish the other Stockholders with a dated, written statement (the
"Arbitration Notice") indicating (i) such
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Stockholder's intent to commence arbitration proceedings, (ii) the nature, with
reasonable detail, of the dispute and (iii) the remedy or remedies such
Stockholder will seek.
(d) Selection of Sole Arbitrator. Within ten (10) days of the date of
the Arbitration Notice, the Stockholder or Stockholders commencing the
arbitration (collectively, the "Petitioner") and the party with whom the
Petitioner has its dispute (collectively, the "Respondent") shall attempt to
agree on and then select one neutral arbitrator (the "Sole Arbitrator"). A
"neutral" arbitrator shall be a Person who would not be subject to
disqualification under rule No. 19 of the AAA Rules.
(e) Arbitration Panel. If, within such ten (10) day period, the
Petitioner and Respondent are unable to agree upon a Sole Arbitrator, each of
them shall have five (5) business days (following the expiration of the ten (10)
day period) to select (and provide written notice of such selection to the other
Stockholders and the Company) a qualifying arbitrator. A "qualifying" arbitrator
is a Person who is not (i) an Affiliate or Related Person of either the
Petitioner or Respondent or (ii) counsel to any such Person at such time. If
either the Petitioner or Respondent fails to select a qualifying arbitrator or
provide such notice within the five (5) day period, the AAA shall have the right
to make such selection. (Such qualifying arbitrators hereafter may be referred
to, respectively, as the "First Arbitrator" and the "Second Arbitrator.") Within
ten (10) days following their selection, the First and Second Arbitrator shall
select (and provide written notice to the Stockholders and the Company of such
selection) a third arbitrator (the "Third Arbitrator") from a list of members of
the AAA's National Panel of Commercial Arbitrators. The Third Arbitrator must be
"neutral" as that term is defined above. Notwithstanding the foregoing, if a
dispute involves more than two Stockholders, all proceedings shall be conducted
before a Sole Arbitrator, who shall be selected by the AAA if the Stockholders
are unable to agree upon such Sole Arbitrator within the ten (10) day period
mentioned above.
(f) Discovery Requests. At any time within forty (40) days after the
date of the Arbitration Notice, the Petitioner and Respondent can make discovery
requests of the other (including, but not limited to, requests for delivery of
documents, production of witnesses for testimony and delivery of interrogatory
responses). The recipient of a discovery request shall have ten (10) days after
the receipt of such request to object to any or all portions of such request and
make an application to the Arbitrators to limit the scope of such discovery
request, and shall respond to any portions of such request not so objected to
within twenty (20) days of the receipt of such request. All objections shall be
in writing and shall indicate the reasons for such objections. Within five (5)
business days after the end of the period for the submission by the requested
party of an application to limit the discovery request, the Arbitrators shall
grant or deny such discovery request, in whole or in part, to the extent the
Arbitrators determine such discovery is or is not, as the case may be,
reasonably necessary to enable the requesting party to obtain information
relevant to the dispute without unreasonably burdening the requested party. The
requested party shall comply with a discovery request granted by the Arbitrators
within ten (10) business days after such discovery request is granted, or within
such longer period as the Arbitrators may determine upon application of the
requested party for extension thereof for reasonable cause. Neither party shall
be permitted to make more than one application for discovery to the Arbitrators.
All depositions shall be taken in the city in which the Person being
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deposed resides or has its principal place of business, unless otherwise agreed
by the parties. The Arbitrators are not authorized to subpoena documents or
perform independent investigations.
(g) Timing of Hearings. Hearings must commence no later than ninety
(90) days following the date of the Arbitration Notice and such hearings shall
be conducted for no more than five (5) business days.
(h) Format of Hearings. Each of the Petitioner and the Respondent shall
submit a brief, outlining such party's claim for relief or defense to any claim,
to the other and to the Arbitrators on or before the tenth (10th) day following
the date of the last hearing. Reply briefs must be exchanged and submitted to
the Arbitrators on or before the twentieth (20th) day following the date of the
last hearing. The final decision of the Arbitrators is due on or before the
thirtieth (30th) day following the date of the last hearing. The Arbitrators
shall choose the form of final decision that, in their judgment, is most
consistent with the terms of this Agreement and the intent of the Stockholders,
as supported by evidence presented by the Petitioner and Respondent in the
arbitration proceeding or, if the subject matter of the dispute is not clearly
addressed in or determinable under this Agreement, that, in their opinion, would
be most fair to the Petitioner and Respondent under the arbitration. The
Arbitrators shall not be required to provide reasons for their decision.
(i) Fees and Expenses. The fees of the First and Second Arbitrators
shall be borne by the Petitioner and Respondent, respectively. All other
expenses of the arbitration shall be shared equally by the Petitioner and
Respondent in accordance with the AAA Rules.
(j) Arbitrators' Discretion. The foregoing time periods and procedural
steps may be modified or extended by the Arbitrators in their discretion to the
extent they deem necessary to prevent fundamental unfairness; provided that at
all times the Arbitrators shall be mindful of the Stockholders' desire for the
most expeditious possible resolution of the Stockholders' disputes; and
provided, further, that a final decision of the Arbitrators shall be rendered
within 120 days of the Arbitration Notice.
(k) Enforceability. To the extent permissible under applicable law, the
Stockholders agree that the award of the Arbitrators shall be final and shall
not be subject to judicial review. Judgment on the arbitration award may be
entered and enforced in any court having jurisdiction over the parties or their
assets. It is the intent of the parties that the arbitration provisions hereof
be enforced to the fullest extent permitted by applicable law, including the
Federal Arbitration Act, 9 U.S.C. Section 2.
(l) Injunctive Relief. Nothing contained in this Section shall prevent
a Stockholder from seeking injunctive relief or require arbitration of any issue
for which injunctive relief is sought by either party hereto.
SECTION 6.11. COUNTERPART EXECUTION; FACSIMILE EXECUTION. This
Agreement may be executed in any number of counterparts with the same effect as
if the Company and all of the Stockholders had signed the same document. Such
executions may be transmitted to the Company and/or the other Stockholders by
facsimile and such facsimile execution shall have the full force and effect of
an original signature. All fully executed counterparts, whether original
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executions or facsimile executions or a combination, shall be construed together
and shall constitute one and the same agreement.
SECTION 6.12. TIME OF THE ESSENCE. Time is of the essence with respect
to each and every term and provision of this Agreement.
[SIGNATURES FOLLOW ON THE NEXT PAGE]
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Execution Page to the Stockholders Agreement
IN WITNESS WHEREOF, the Company and Stockholders have executed this
Agreement on the following execution pages, to be effective as of the date first
set forth above.
THE COMPANY:
DIGITAL TELEVISION SERVICES, INC.
A DELAWARE CORPORATION
By: ___________________________
Title: ___________________________
STOCKHOLDERS:
COLUMBIA DBS, INC.,
A VIRGINIA CORPORATION
COLUMBIA DBS INVESTORS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
WEP INTERMEDIATE CORP.,
A DELAWARE CORPORATION
FLEET VENTURE RESOURCES INC.
A
FLEET EQUITY PARTNERS VI, LP,
A
▇▇▇▇▇▇▇▇ PARTNERS III, LP,
A
▇▇▇▇▇▇▇ PLAZA PARTNERS,
A
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: DTS Management, LLC,
a Delaware limited liability company,
their Attorney-in-Fact
By: ______________________
Title: ______________________
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EXHIBIT A
TO THE
STOCKHOLDERS AGREEMENT
OF
DIGITAL TELEVISION SERVICES, INC.
DESIGNEES TO BOARD OF DIRECTORS
As of February 7, 1997, pursuant to and in accordance with Section 5.1(a),
clause
(i) Whitney has designated the following two (2) individuals:
-------------------------------------
-------------------------------------
(ii) Fleet has designated the following individual:
-------------------------------------
(iii) The Chief Executive Officer of the Company is:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
(iv) The holders of the Common Stock have designated the following two
(2) individuals (who each shall have two (2) votes on the board of managers):
--------------------------------------
--------------------------------------
(v) The holders of the Common Stock have designated the following
individual:
--------------------------------------
to serve on the Board of Directors.
144
EXHIBIT M
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
CERTIFICATE OF INCORPORATION
UPON QUALIFIED CORPORATE CONVERSION
FIRST: The name of this corporation is Digital Television Services,
Inc. (hereinafter referred to as the "Corporation").
SECOND: The address of the Corporation's registered office in the State
of Delaware is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, in the City of Wilmington, County of New
Castle, 19801, and its registered agent at such address is THE CORPORATION TRUST
COMPANY.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which the Corporation may be organized under the General
Corporation Law of the State of Delaware.
The purpose specified in the foregoing paragraph shall in no way be
limited or restricted by the reference to, or inference from, the terms of any
provision in this Certificate of Incorporation.
The Corporation shall possess and may exercise all powers and
privileges necessary or convenient to effect the foregoing purpose, including
the general powers now or hereafter conferred by the laws of the State of
Delaware upon corporations formed under the General Corporation Law of the State
of Delaware.
FOURTH: The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is ______________ ( ___________ )
shares, of which _________ ( _______ ) shares shall be designated common stock,
par value $.01 per share (the "Common Stock"), and _________ ( __________ )
shares shall be designated preferred stock, par value $.01 per share (the
"Preferred Stock").
The Board of Directors is authorized, subject to limitations prescribed
by law and the provisions of this Article FOURTH, to provide for the issuance of
the shares of Preferred Stock in series, and by filing a certificate pursuant to
the applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
145
The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable, and,
if so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;
(f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;
(g) The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, and
the relative rights of priority, if any, of payment of shares of that series;
(h) Any other relative rights, preferences and limitations of that
series.
Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment before any dividends shall be paid or
declared and set apart for payment on the Common Stock with respect to the same
dividend period.
If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation the assets available for distribution to holders
of shares of Preferred Stock of all series shall be insufficient to pay such
holders the full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares of all series of Preferred
Stock in accordance with the respective preferential amounts (including unpaid
cumulative dividends, if any) payable with respect thereto.
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146
FIFTH: The name and mailing address of the sole incorporator is as
follows:
NAME MAILING ADDRESS
---- ---------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P.
NationsBank Corporate Center
Suite 3350
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: The private property of the stockholders of the Corporation
shall not be subject to the payment of the corporate debts to any extent
whatsoever.
EIGHTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the directors and
stockholders:
(1) The number of directors of the Corporation shall be seven, of
which two shall be entitled to two votes with respect to any matter and five
shall be entitled to one vote with respect to any matter. Election of directors
need not be by written ballot unless the bylaws of the Corporation so provide.
(2) The Board of Directors shall have power without the assent or
vote of the stockholders:
(a) To make, alter, amend, change, add to or repeal the bylaws
of the Corporation; to determine the use and disposition of any surplus
or net profits; and to fix the times for the declaration and payment of
dividends; and
(b) To determine from time to time whether, and to what
extent, and at what time and places, and under what conditions and
regulation, the accounts and books of the Corporation (other than the
stock ledger), or any of them, shall be open to the inspection of the
stockholders.
(3) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and to do all such acts and things as may be exercised
or done by the Corporation; subject, nevertheless, to the provisions of the
General Corporation Law of Delaware, of this Certificate of Incorporation, and
to any bylaws from time to time adopted by the stockholders; provided, however,
that no bylaw so adopted shall invalidate any prior act of the directors which
would have been valid if such bylaw had not been made.
M-3
147
NINTH: The Corporation shall, to the fullest extent permitted by the
provisions of the General Corporation Law of Delaware, as now or hereafter in
effect, indemnify all persons whom it may indemnify under such provisions. The
indemnification provided by this Section shall not limit or exclude any rights,
indemnities or limitations of liability to which any person may be entitled,
whether as a matter of law, under the bylaws of the Corporation, by agreement,
vote of the stockholders or disinterested directors of the Corporation or
others. The personal liability of the directors of the Corporation is hereby
eliminated to the fullest extent permitted by paragraph (7) of subsection (b) of
Section 102 of the General Corporation Law of the State of Delaware as the same
may be amended or supplemented. Except as specifically required by the Delaware
General Corporation Law as the same exists or may hereafter be amended, no
director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of his or her fiduciary duty as a
director. No amendment to or repeal of this provision shall apply to or have any
effect on the liability or alleged liability of any director for or with respect
to any acts or omissions of such director occurring prior to such amendment or
repeal.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by statute, and all rights and powers
conferred upon stockholders, directors, and officers herein are granted subject
to this reservation.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this Certificate of Incorporation, hereby
declaring and certifying that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hand the _______ day of
______________, ______.
--------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Sole Incorporator
M-4
148
EXHIBIT N
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
CERTIFICATE OF LIMITED LIABILITY COMPANY INTEREST
Pursuant to Section 18-702(c) of the
Delaware Limited Liability Company Act and
Section 7.1 of the Limited Liability Company Agreement ("Agreement") of
Digital Television Services, LLC
CERTIFICATE CAPITAL CLASS
NUMBER CONTRIBUTION OF UNIT UNITS
$
---------------- ----------- ------------ ---------------
DIGITAL TELEVISION SERVICES, LLC
a Delaware limited liability company
This Certifies that ______________________________ is the
registered owner of an Interest in the Company, which Interest is represented by
Capital Contributions to the Company in the aggregate amount of $___________
and denominated as ________ Class ___ Units, with all the rights, limitations,
preferences, obligations, and restrictions attendant thereto as set forth in
the Limited Liability Company Agreement of Digital Television Services, LLC.
The Interest in DIGITAL TELEVISION SERVICES, LLC represented by
this Certificate is transferable only on the books of the Company
by the holder hereof in person or by Attorney upon surrender of
this Certificate properly endorsed.
THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE '33 ACT),
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE '33 ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE '33 ACT AND SUCH LAWS.
IN WITNESS WHEREOF, the said Company has caused this Certificate
to be signed by duly authorized officers of its Manager
this _______________ day of __________________________ A.D. 19____
---------------------------------- -------------------------------
President Vice-President
DTS Management, LLC DTS Management, LLC
149
[Reverse of CERTIFICATE OF LIMITED LIABILITY COMPANY INTEREST
of DIGITAL TELEVISION SERVICES, LLC]
IN ADDITION TO THE
RESTRICTIONS SPECIFIED
IN THE LEGEND APPEARING ON THE FACE
OF THIS CERTIFICATE, THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT IN ALL RESPECTS
TO THE LIMITED LIABILITY COMPANY AGREEMENT OF DIGITAL
TELEVISION SERVICES, LLC, INCLUDING RESTRICTIONS ON TRANSFER,
AND PURSUANT TO SUCH AGREEMENT EACH OWNER OF AN INTEREST HAS AGREED
TO GRANT A SECURITY INTEREST IN, COLLATERALLY ASSIGN, PLEDGE, OR HYPOTHECATE
ITS INTEREST REPRESENTED BY THIS CERTIFICATE FOR ANY AND ALL DEBTS OF THE
COMPANY OR CERTAIN RELATED ENTITIES IF, AS, AND WHEN CALLED UPON TO DO
SO BY THE MANAGER OF THE COMPANY, SUBJECT TO SATISFACTION OF CERTAIN
SPECIFIED CONDITIONS, AND THE HOLDER HEREOF CONSTITUTES THE MANAGER,
WITH RIGHTS OF SUBSTITUTION AND RESUBSTITUTION, ITS TRUE AND LAWFUL
ATTORNEY-IN-FACT TO SIGN, EXECUTE, CERTIFY, AND ACKNOWLEDGE ANY
AND ALL INSTRUMENTS AND DOCUMENTS AS MAY BE NECESSARY
FOR THESE PURPOSES, ALL AS DEFINITIVELY
DESCRIBED IN SAID AGREEMENT.
FOR VALUE RECEIVED ___________________________________________ hereby
sell, assign, and transfer unto ________________________________________________
(name)
________________________________________________________________________________
(address)
______________________ Units of Interest represented by the within Certificate,
and do hereby irrevocably constitute and appoint _______________________________
Attorney to transfer the said Units on the books of the within-named LLC with
full power of substitution and resubstitution in the premises.
-------------------------------------------------
[Print name of owner as it appears on the
face of this Certificate]
-------------------------------------------------
[Authorized Signature]
-------------------------------------------------
[Title]
Dated:
------------------------------------------
N-2
150
EXHIBIT O
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
OPERATING AGREEMENT OF DTS MANAGEMENT, LLC
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
DTS MANAGEMENT, LLC
A GEORGIA LIMITED LIABILITY COMPANY
151
TABLE OF CONTENTS
OF THE
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
DTS MANAGEMENT, LLC
A GEORGIA LIMITED LIABILITY COMPANY
RECITALS.......................................................................1
ARTICLE I - FORMATION..........................................................1
SECTION 1.1. Formation; Assignment.................................1
SECTION 1.2. Name..................................................2
SECTION 1.3. Purposes..............................................2
SECTION 1.4. Registered Agent; Registered Office...................2
SECTION 1.5. Commencement and Term.................................2
SECTION 1.6. Tax Classification; Requirement of Separate
Books and Records and Segregation of Assets
and Liabilities.......................................2
SECTION 1.7. Title to Assets; Transactions.........................3
ARTICLE II - CAPITAL CONTRIBUTIONS.............................................3
SECTION 2.1. Capital Contributions.................................3
SECTION 2.2. Liability of Members ................................3
ARTICLE III - DISTRIBUTIONS....................................................3
SECTION 3.1. Distributions.........................................3
ARTICLE IV - MANAGEMENT........................................................4
SECTION 4.1. Management............................................4
SECTION 4.2. Limitation of Liability; Indemnification..............4
ARTICLE V - TRANSFER OF INTERESTS..............................................4
SECTION 5.1. Transfer of Interests.................................4
ARTICLE VI - DISSOLUTION, WINDING UP AND LIQUIDATING DISTRIBUTIONS.............5
SECTION 6.1. Dissolution Triggers..................................5
SECTION 6.2. Winding Up............................................5
SECTION 6.3. Liquidating Distributions.............................5
O-i
152
ARTICLE VII - BOOKS AND RECORDS................................................5
SECTION 7.1. Books and Records.....................................5
ARTICLE VIII - MISCELLANEOUS...................................................5
SECTION 8.1. Binding Effect........................................5
SECTION 8.2. Construction..........................................5
SECTION 8.3. Entire Agreement; No Oral Operating Agreements........6
SECTION 8.4. Headings..............................................6
SECTION 8.5. Severability..........................................6
SECTION 8.6. Variation of Pronouns.................................6
SECTION 8.7. Governing Law; Consent to Jurisdiction................6
SECTION 8.8. Counterpart Execution; Facsimile Execution............6
SECTION 8.9. Time of the Essence...................................6
SECTION 8.10. Exhibits..............................................6
EXHIBIT A: Articles of Organization.
EXHIBIT B: Glossary of Terms.
EXHIBIT C: Indemnification Exhibit.
O-ii
153
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
DTS MANAGEMENT, LLC
A GEORGIA LIMITED LIABILITY COMPANY
THIS AMENDED AND RESTATED OPERATING AGREEMENT is made and entered into
as of 10:00 A.M. Eastern Time, February 7, 1997, (the "Effective Time") by and
between Digital Television Services, LLC, a Delaware limited liability company
(formerly Columbia DBS Holdings, LLC (successor by conversion to DBS Holdings,
L.P., a Delaware limited partnership)) ("Holdings"), and Columbia Capital
Corporation, a Virginia corporation ("Columbia"). Unless otherwise indicated,
capitalized words and phrases in this Amended and Restated Operating Agreement
(the "Agreement") shall have the meanings set forth in the Glossary of Terms
attached hereto as Exhibit B.
RECITALS
B. DTS Management, LLC (the "LLC") was formed on June 21, 1996, upon
the filing of the Articles of Organization with the Secretary of State of
Georgia.
B. The LLC has had two members from its formation until the effective
date of this Agreement, specifically, Columbia with a 1% Interest and Holdings
with a 99% Interest.
C. The LLC is the sole manager of Holdings and Holdings is consummating
a series of transactions, including the admission of additional Members and the
amendment and restatement of Holdings' limited liability company agreement.
NOW THEREFORE, in consideration of the mutual promises of the parties
hereto, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto, intending to be legally
bound, do hereby agree that the operating agreement of the LLC shall be amended
and restated to read as follows:
ARTICLE I
FORMATION
SECTION 1.1. FORMATION; ASSIGNMENT.
The LLC was formed on June 21, 1996, and shall be continued pursuant to
the terms hereof.
By virtue of its execution of this Agreement and without the necessity
of the execution or delivery of any other document or instrument, Columbia
hereby assigns and transfers all of its right, title and interest in and to its
1% member Interest in the LLC to Holdings, as a capital contribution with
respect to its interest in Holdings without any further issuance of equity
interests in Holdings, and shall be deemed to have withdrawn as a Member of the
LLC, all effective 10:01 A.M. Eastern Time, February 7, 1997, which assignment
and transfer shall be
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in all respects subject to the security interest granted under Section 3 of the
Guarantee and Collateral Agreement (the "Security Interest"), with the effect
that as of 10:01 A.M. Eastern Time, February 7, 1997, Holdings shall hold 100%
of the Interests in the LLC, and thus become the sole member of the LLC, with
its entire Interest subject to the Security Interest. Columbia hereby represents
and warrants to the LLC and to Holdings that with the exception of the Security
Interest, its Interest in the LLC assigned hereby is free and clear of all
liens, claims and encumbrances of any nature whatsoever. Columbia shall cause or
take all necessary further action as may be requested by the LLC or by Holdings
to confirm and ensure the complete assignment of its Interest as provided
herein.
The rights and obligations of the Members and the terms and conditions
of the LLC shall be governed by the Act and this Agreement, including all the
Exhibits to this Agreement. To the extent the Act and this Agreement are
inconsistent with respect to any subject matter covered in this Agreement, this
Agreement shall govern, but only to the extent permitted by law.
SECTION 1.2. NAME. The name of the LLC shall be as set forth in the
Articles of Organization, as amended, attached hereto as Exhibit A.
SECTION 1.3. PURPOSES. The purposes of the LLC shall be (i) to provide
management and administrative services to various entities operating direct
satellite broadcast businesses, including Holdings, (ii) to serve as an
intermediate holding company owning interests in entities operating direct
satellite broadcast businesses, (iii) to own, hold, maintain, encumber, lease,
sell, transfer or otherwise dispose of all property or assets or interests in
property or assets as may be necessary, appropriate or convenient to accomplish
the activities described in clauses (i) and (ii) above, (iv) to incur
indebtedness or obligations in furtherance of the activities described in
clauses (i), (ii) and (iii) above, and (v) to conduct such other activities as
may be necessary or incidental to the foregoing, all on the terms and conditions
and subject to the limitations set forth in this Agreement.
SECTION 1.4. REGISTERED AGENT; REGISTERED OFFICE. The LLC's registered
agent shall be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. and the LLC's registered office shall be
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇. ▇-▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The LLC's registered
agent or registered office may be changed as provided in Act Section ▇▇-▇▇-▇▇▇,
or successor provision.
SECTION 1.5. COMMENCEMENT AND TERM. The term of the LLC commenced at
the time and date appearing in the Articles of Organization and shall continue
until it is dissolved, its affairs are wound up and final liquidating
distributions are made pursuant to this Agreement but in any event, not later
than December 31, 2036.
SECTION 1.6. TAX CLASSIFICATION; REQUIREMENT OF SEPARATE BOOKS AND
RECORDS AND SEGREGATION OF ASSETS AND LIABILITIES. The parties acknowledge that
because the LLC will have a single Member pursuant to Treasury Regulations
Section 301.7701-3, the LLC shall be disregarded as an entity separate from its
owner for federal income tax purposes until the effective date of any election
it may make (but only as may be permitted under the Parent LLC Agreement) to
change its classification for federal income tax purposes to that of a
corporation by filing IRS Form 8832, Entity Classification Election or until the
LLC has more than one Member in which case it would be treated as a partnership
for federal income tax purposes
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(provided that the LLC has not elected on Form 8832 to be treated as a
corporation). In all events, however, the LLC shall keep books and records
separate from those of its Member and its Subsidiaries and shall at all times
segregate and account for all of its assets and liabilities separately from
those of its sole Member and of its Subsidiaries.
SECTION 1.7. TITLE TO ASSETS; TRANSACTIONS. The LLC shall keep title to
all of its assets in its own name and not in the name of its Member or any
Subsidiary. The LLC shall enter into and engage in all transactions in its own
name and not in the name of its Member or any Subsidiary. In furtherance
thereof, the LLC shall evidence its execution of instruments as follows:
DTS Management, LLC,
a Georgia limited liability company
By:__________________________________
Title: Manager [or other authorized person]
ARTICLE II
CAPITAL CONTRIBUTIONS
SECTION 2.1. CAPITAL CONTRIBUTIONS. As of the date hereof, the Member
has made Capital Contributions to the LLC on the dates and equal to the amounts
reflected in the books and records of the LLC. The Member shall make additional
Capital Contributions in such form and at such time as the Member and the
Managers shall determine; provided, however, that any such additional Capital
Contributions shall be evidenced in writing and recorded in the books and
records of the LLC.
SECTION 2.2. LIABILITY OF MEMBERS. No Member shall be liable for any
debts or losses of capital or profits of the LLC or be required to contribute or
lend funds to the LLC.
ARTICLE III
DISTRIBUTIONS
SECTION 3.1. DISTRIBUTIONS. Subject only to (i) the laws of fraudulent
conveyance of the State of Georgia, (ii) any and all restrictions in the Parent
LLC Agreement, and (iii) any and all other contractual restrictions agreed to by
the LLC or its Member in writing, the Member shall have authority to cause the
LLC to distribute cash or property to the Member, in such amounts, at such times
and as of such record dates as the Managers shall determine.
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ARTICLE IV
MANAGEMENT
SECTION 4.1. MANAGEMENT. The LLC shall be managed by a board of
managers, which board of managers shall consist of such individuals and shall be
governed in all respects by the Parent LLC Agreement. Except as provided in the
Parent LLC Agreement, the LLC's board of managers shall have complete authority
and exclusive control over the business and affairs of the LLC; provided,
however, in no event shall the board of managers or the Member take any action
or cause the LLC to take any action inconsistent with the relative rights,
privileges and obligations of the members of Holdings as reflected in the Parent
LLC Agreement.
SECTION 4.2. LIMITATION OF LIABILITY; INDEMNIFICATION. Notwithstanding
any other provision to the contrary contained in this Agreement, no manager or
Member shall be liable, responsible, or accountable in damages or otherwise to
the LLC or to any Member or assignee of a Member for any loss, damage, cost,
liability, or expense incurred by reason of or caused by any act or omission
performed or omitted by such manager or Member, whether alleged to be based upon
or arising from errors in judgment, negligence, or breach of duty (including
alleged breach of any duty of care or duty of loyalty or other fiduciary duty),
except for (i) acts or omissions the manager or Member knew at the time of the
acts or omissions were clearly in conflict with the interest of the LLC, or (ii)
any transaction from which the manager or Member derived an improper personal
benefit, (iii) a willful breach of this Agreement, or (iv) gross negligence,
recklessness, willful misconduct, or knowing violation of law. Without limiting
the foregoing, no manager or Member shall in any event be liable for (A) the
failure to take any action not specifically required to be taken by the manager
or Member under the terms of this Agreement, (B) any action or omission taken or
suffered by any other manager or Member, or (C) any mistake, misconduct,
negligence, dishonesty or bad faith on the part of any employee or other agent
of the LLC appointed in good faith by such manager or Member. The provisions
regarding the indemnification of certain Persons are set forth in the
Indemnification Exhibit attached hereto as Exhibit C.
ARTICLE V
TRANSFER OF INTERESTS
SECTION 5.1. TRANSFER OF INTERESTS. Subject to the Parent LLC
Agreement, the Member may transfer its Interest at such time, in such amount and
pursuant to such terms, in whole or in part, as the Member shall in its sole
discretion determine.
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ARTICLE VI
DISSOLUTION, WINDING UP AND LIQUIDATING DISTRIBUTIONS
SECTION 6.1. DISSOLUTION TRIGGERS. The LLC shall dissolve only upon the
first to occur of any of the following events:
(a) Upon the delivery for filing with the Secretary of State of a
Statement of Commencement of Winding Up of the LLC pursuant to Act Section
▇▇-▇▇-▇▇▇.
(b) The entry of a decree of judicial dissolution under Act Section
14-11-603(a).
SECTION 6.2. WINDING UP. Upon dissolution of the LLC the same Persons
who are entitled to wind up the Member under the Parent LLC Agreement shall wind
up the LLC's affairs.
SECTION 6.3. LIQUIDATING DISTRIBUTIONS. Following the dissolution of
the LLC, the assets of the LLC shall be applied to satisfy claims of creditors
and distributed to the Member in liquidation as provided in the Act, by the
Persons charged with winding up the affairs of the LLC.
ARTICLE VII
BOOKS AND RECORDS
SECTION 7.1. BOOKS AND RECORDS. The LLC shall keep books and records at
its principal place of business, which shall set forth an accurate account of
all transactions of the LLC and which shall enable the LLC to comply with the
requirement under Section 1.6 above that it segregate and account for its assets
and liabilities separately from those of the Member and of its Subsidiaries. The
LLC shall prepare financial statements at least annually, which shall include at
least a balance sheet and income statement prepared in accordance with GAAP,
which financial statements need not be audited, except in connection with any
audit that the Member or the LLC's ultimate parent entity may obtain.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. BINDING EFFECT. Except as otherwise provided in this
Agreement, every covenant, term, and provision of this Agreement shall be
binding upon and inure to the benefit of the Members and their successors,
transferees, and assigns.
SECTION 8.2. CONSTRUCTION. Every covenant, term and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against
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any Member. No provision of this Agreement is to be interpreted as a penalty
upon, or a forfeiture by, any party to this Agreement.
SECTION 8.3. ENTIRE AGREEMENT; NO ORAL OPERATING AGREEMENTS. This
Agreement, together with the Parent LLC Agreement, constitutes the entire
agreement with respect to the affairs of the LLC and the conduct of its
business, and supersede all prior agreements and understandings, whether oral or
written. The LLC shall have no oral operating agreements.
SECTION 8.4. HEADINGS. Section and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any provision hereof.
SECTION 8.5. SEVERABILITY. Every provision of this Agreement is
intended to be severable. If any term or provision hereof is illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the
validity or legality of the remainder of this Agreement.
SECTION 8.6. VARIATION OF PRONOUNS. All pronouns and any variations
thereof shall be deemed to refer to masculine, feminine, or neuter, singular or
plural, as the identity of the Person or Persons may require.
SECTION 8.7. GOVERNING LAW; CONSENT TO JURISDICTION. The laws of the
State of Georgia shall govern the validity of this Agreement, the construction
and interpretation of its terms, and organization and internal affairs of the
LLC and the limited liability of its managers, Members, and other owners. The
Member hereby irrevocably consents to the personal jurisdiction of the courts of
the State of Georgia with respect to matters arising out of or related to the
enforcement of the provisions of this Agreement.
SECTION 8.8. COUNTERPART EXECUTION; FACSIMILE EXECUTION. This Agreement
may be executed in any number of counterparts with the same effect as if all of
the Members had signed the same document. Such executions may be transmitted to
the LLC and/or any other Member by facsimile and such facsimile execution shall
have the full force and effect of an original signature. All fully executed
counterparts, whether original executions or facsimile executions or a
combination, shall be construed together and shall constitute one and the same
agreement.
SECTION 8.9. TIME OF THE ESSENCE. Time is of the essence with respect
to each and every term and provision of this Agreement.
SECTION 8.10. EXHIBITS. The Exhibits to this Agreement, each of which
are incorporated by reference, are:
EXHIBIT A: Articles of Organization.
EXHIBIT B: Glossary of Terms.
EXHIBIT C: Indemnification Exhibit.
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IN WITNESS WHEREOF, the Members have executed this Agreement on the
following execution page, to be effective as of the date described in Article I.
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EXECUTION PAGE
TO THE
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
DTS MANAGEMENT, LLC,
A GEORGIA LIMITED LIABILITY COMPANY
INITIAL AND CONTINUING MEMBER:
DIGITAL TELEVISION SERVICES, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
By: DTS Management, LLC
Its: Manager
By: ___________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
INITIAL AND WITHDRAWING MEMBER:
(Signing solely for the purpose
of acknowledging and consenting
to the provisions of Section 1.1.)
COLUMBIA CAPITAL CORPORATION,
A VIRGINIA CORPORATION
By: ___________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
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EXHIBIT A
CERTIFICATE OF FORMATION
OF
COLUMBIA DBS HOLDINGS, LLC
The undersigned, desiring to form a limited liability company pursuant
to Sections 18-214(b)(2) and 18-201 of the Delaware Limited Liability Company
Act, 6 Delaware Code, Chapter 18, do hereby certify as follows:
I.
The name of the limited liability company is COLUMBIA DBS HOLDINGS,
LLC.
II.
The address of the registered office of the LLC in the State of
Delaware is Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of
New Castle. The name of the LLC's registered agent for service of process in the
State of Delaware at such address is The Corporation Trust Company.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Formation of Columbia DBS Holdings, LLC as of November ___, 1996.
Member:
COLUMBIA DBS, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Member:
COLUMBIA DBS INVESTORS, L.P.
By: Columbia Capital Corporation,
its general partner
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
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CERTIFICATE OF CONVERSION TO LIMITED LIABILITY COMPANY
OF
DBS HOLDINGS, L.P.
TO
COLUMBIA DBS HOLDINGS, LLC
The undersigned, desiring to convert DBS HOLDINGS, L.P., a Delaware
limited partnership, to COLUMBIA DBS HOLDINGS, LLC, a Delaware limited liability
company, pursuant to Section 18-214 of the Delaware Limited Liability Company
Act, 6 Delaware Code, Chapter 18, do hereby certify as follows:
I.
The date on which and jurisdiction where the entity that is converting
to a limited liability company was first formed was January 30, 1996 in the
State of Delaware.
II.
The name of the entity that is converting to a limited liability
company immediately prior to the filing of this Certificate of Conversion is DBS
HOLDINGS, L.P.
III.
The name of the limited liability company as set forth in its
certificate of formation filed in accordance with Section 18-214(b) of the
Delaware Limited Liability Company Act is COLUMBIA DBS HOLDINGS, LLC.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Conversion of DBS Holdings, L.P. to Columbia DBS Holdings, LLC as of November
___, 1996.
General Partner:
COLUMBIA DBS, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Limited Partner:
COLUMBIA DBS INVESTORS, L.P.
By: Columbia Capital Corporation,
its general partner
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
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EXHIBIT B
TO THE
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
DTS MANAGEMENT, LLC
A GEORGIA LIMITED LIABILITY COMPANY
GLOSSARY OF TERMS
"Act" shall mean the Georgia Limited Liability Company Act, as in
effect in Georgia and set forth at Section ▇▇-▇▇-▇▇▇ et. seq. (or any
corresponding provision of succeeding law).
"Agreement" shall mean this Amended and Restated Operating Agreement as
amended from time to time and, as the context shall require, includes the Parent
LLC Agreement.
"Articles of Organization" shall mean the articles of organization
required to be filed by the LLC pursuant to the Act together with any amendments
thereto.
"Capital Contribution" shall mean with respect to the Member, the
amount of money and any property (other than money) contributed to the LLC with
respect to the Interest of such Member.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor federal revenue law.
"Effective Time" shall have the meaning set forth in the paragraph
immediately preceding the Recitals.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time, including without
limitation, those principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entities as approved
by a significant segment of the accounting profession.
"Guarantee and Collateral Agreement" shall mean that certain Guarantee
and Collateral Agreement made by Columbia DBS Holdings, LLC as a Grantor,
Columbia DBS Management, LLC, certain Subsidiaries of Columbia DBS Holdings,
LLC, as Guarantors and Grantors, and Columbia DBS, Inc., Columbia Capital
Corporation, Columbia DBS Investors, L.P. and certain individuals, as Investors
and Pledgors in favor of Canadian Imperial Bank of Commerce, as Administrative
Agent dated as of November 27, 1996.
"Holdings" shall mean Digital Television Services, LLC, a Delaware
limited liability company, formerly Columbia DBS Holdings, LLC, a Delaware
limited liability company, successor by conversion to DBS Holdings, L.P., a
Delaware limited partnership.
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"Interest" shall mean all of the rights, privileges, preferences and
obligations of the Member or assignee with respect to the LLC created under this
Agreement or under the Act.
"LLC" shall mean the limited liability company formed pursuant to this
Agreement.
"Managers" shall refer collectively to those individuals who constitute
the board of managers of the LLC which individuals are designated as members of
the LLC's board of managers pursuant to the provisions of that certain Amended
and Restated Limited Liability Company Agreement of Digital Television Services,
LLC, a Delaware limited liability company.
"Member" shall mean (i) at any time prior to 10:01 A.M., February 7,
1997, Holdings and Columbia, and (ii) at any time on or thereafter, Holdings.
"Parent LLC Agreement" shall mean the Amended and Restated Limited
Liability Company Agreement of Holdings dated February 10, 1997, as amended
thereafter from time to time as provided therein.
"Person" shall mean any natural person, partnership, trust, estate,
association, limited liability company, corporation, custodian, nominee,
governmental instrumentality or agency, body politic or any other entity in its
own or any representative capacity.
"Subsidiaries" shall mean Digital Television Services of Alabama, LLC,
Digital Television Services of California, LLC, Digital Television Services of
Colorado, LLC, Digital Television Services of Georgia, LLC, Digital Television
Services of Kansas, LLC, Digital Television Services of Kentucky, LLC, Digital
Television Services of New Mexico, LLC, Digital Television Services of New York
I, LLC, Digital Television Services of New York II, LLC, Digital Television
Services of South Carolina I, LLC, Digital Television Services of South Carolina
II, LLC, Digital Television Services of Vermont, LLC, Spacenet, Inc., or any
other Person all of the equity interests of which are owned directly or
indirectly by the LLC.
[THE REMAINDER OF THIS PAGE INTENTIONALLY HAS BEEN LEFT BLANK.]
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EXHIBIT C
TO THE
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
DTS MANAGEMENT, LLC
A GEORGIA LIMITED LIABILITY COMPANY
INDEMNIFICATION EXHIBIT
(a) Rights to Indemnification.
(i) Pursuant to Act Section ▇▇-▇▇-▇▇▇, and to the full
extent otherwise permitted by law, the LLC shall
indemnify and save harmless its Member, the members
of the board of managers of the LLC, its Member's
members, and all members, partners, shareholders,
directors, officers, trustees, employees and agents
of any of those Persons ("Representatives"),
(collectively, the "Indemnitees") from and against
any and all claims, liabilities, damages, losses,
costs and expenses (including amounts paid in
satisfaction of judgments, compromises and
settlements, as fines and penalties and legal or
other costs and expenses of investigating or
defending against any claim or alleged claim) of any
nature whatsoever, known or unknown, liquidated or
unliquidated, that are incurred by any Indemnitee and
arise out of or in connection with the business of
the LLC or the performance by such Indemnitee of any
of the Person's responsibilities under this
Agreement. The rights created by this Exhibit shall
continue as to an Indemnitee who has ceased to be a
Member, or a Representative and shall inure to the
benefit of such Indemnitee's heirs, executors,
administrators, legal representatives, successors and
assigns.
(ii) Without limiting any other provisions of this
Exhibit, the LLC shall pay or reimburse, and
indemnify and hold harmless each Indemnitee against,
expenses incurred by such Indemnitee in connection
with his appearances as a witness or other
participation in a Proceeding involving or affecting
the LLC at a time when the Indemnitee is not a named
defendant or respondent in the Proceeding. For the
purposes of this Exhibit, a "Proceeding" shall mean
any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative,
arbitrative or investigative, any appeal in such an
action, suit or proceeding, and any inquiry or
investigation that could lead to such an action, suit
or proceeding.
(iii) Notwithstanding any other provision of this Exhibit
any indemnification hereunder shall be provided out
of and to the extent of LLC assets only, and no
Member of the LLC shall have personal liability on
account thereof.
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(b) Indemnification Procedures.
(i) Any Person seeking indemnification pursuant to this
Exhibit (including any Advancement of Expenses as
provided in Subsection (c) of this Exhibit) shall be
subject to the procedures of this Subsection (b) for
indemnification.
(ii) Any indemnification of any Representative under this
Exhibit, unless ordered by a court or arbitration
panel, shall be made by the LLC only as authorized in
the specific case and only upon a determination by
the LLC's Member (or by special legal counsel
pursuant to Subsection (v) below if so requested by
an Indemnitee) that (1) the Indemnitee acted in good
faith, (2) the Indemnitee reasonably believed that
its conduct was in the best interests of the LLC or
at least not opposed to the best interests of the
LLC, and in the case of a criminal Proceeding, had no
cause to believe that its conduct was criminal, and
(3) Indemnitee's conduct did not constitute gross
negligence, recklessness, or intentional misconduct,
fraud, or a knowing violation or breach of this
Agreement. The termination of any Proceeding by
judgment, order, settlement, conviction or on a plea
of nolo contendere or its equivalent shall not alone
determine that Indemnitee did not meet the
requirements set forth in the preceding sentence.
(iii) To claim indemnification under this Exhibit, a
Representative shall submit to the Member a written
request for indemnification, including therewith (or
affirming that there will be made available to the
LLC) such documentation and information as is
reasonably available to Indemnitee and as the Member
may reasonably request to support such claims and
enable the Member to make or cause to be made the
determinations hereinafter provided for. If at the
time of receipt of such request, the LLC has in
effect or is entitled to claim reimbursement for such
request under any policy of insurance covering such
claim, the LLC shall thereafter take proper action to
cause such insurers to accept coverage and thereafter
shall take all necessary action to cause such
insurers to pay such claim to or on behalf of
Indemnitee.
(iv) Indemnitee and the LLC shall cooperate with each
other and the Person making the indemnification
determination, including providing upon reasonable
advance request such information that is not
privileged or otherwise protected from disclosure and
which is reasonably necessary to such determination.
(v) Any "special legal counsel" selected to make any
indemnification determination required hereunder
shall be a law firm, or member of a law firm,
experienced in matters of corporation, partnership
and LLC law and which neither presently is, nor in
the past five (5) years has been, retained to
represent the LLC, the Indemnitee or any other party
to the Proceeding
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giving rise to the claim for indemnification, and
shall not include any Person who, under prevailing
applicable standards of professional conduct, would
have a conflict of interest with Indemnitee or the
LLC or any other party to the Proceeding. Any
determination required herein, if Indemnitee has so
requested, shall be made by special legal counsel
selected by the Indemnitee and reasonably
satisfactory to the Member.
(vi) An Indemnitee shall not be denied indemnification in
whole or in part under this Subsection (b) solely on
the grounds that it had an interest in the
transaction with respect to which the indemnification
applies, if the transaction was fully disclosed to
the Member in advance and was otherwise permitted to
be carried out by the terms of the Agreement.
(vii) The indemnification provided in this Exhibit is
solely for the benefit of Indemnitees and shall not
give rise to any right to indemnification in favor of
any other Persons.
(c) Advance Payment of Expenses. Expenses incurred by an
Indemnitee in defense or settlement of any claim that may be subject to a right
of indemnification hereunder may be advanced by the LLC prior to the final
disposition thereof (an "Advancement of Expense") upon receipt of a written
agreement by the Indemnitee to repay such amount to the extent that it shall be
determined ultimately that such Indemnitee is not entitled to be indemnified
hereunder.
(d) Right of Indemnitee to Commence Proceeding.
(i) If a claim under Subsection (a) of this Exhibit is
not paid in full by the LLC within sixty (60) days
after a written claim has been received by the LLC,
except in the case of a claim for an Advancement of
Expenses, in which case the applicable period shall
be twenty (20) days, an Indemnitee may at any time
thereafter commence a Proceeding against the LLC in
the State Courts of Georgia. If successful in whole
or in part in any such Proceeding, or in a Proceeding
brought by the LLC to recover any Advancement of
Expenses, the Indemnitee shall also be entitled to be
paid the expenses of prosecuting or defending such
Proceeding.
(ii) In any Proceeding brought by an Indemnitee to enforce
a right to Indemnification hereunder (but not in a
Proceeding brought by Indemnitee to enforce a right
to an Advancement of Expenses) it shall be a defense
that (and in any Proceeding by the LLC to recover an
Advancement of Expenses, the LLC shall be entitled to
recover such expenses upon a final adjudication that)
the Indemnitee has not met the requirements for
indemnification hereunder; provided, however, that in
any such Proceeding, neither (A) the failure of the
Member to have made the determination prior to the
commencement of such Proceeding that indemnification
of Indemnitee is proper in the circumstances, (B) an
actual determination by the Member that Indemnitee
has not met such applicable requirements, nor (C)
termination of any Proceeding by any judgment,
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order, settlement, or plea therein shall, of itself,
create a presumption that Indemnitee has not met such
applicable legal requirements or, in the case of such
a Proceeding brought by Indemnitee, be a defense to
such a Proceeding.
(iii) In any Proceeding brought by Indemnitee to enforce a
right to indemnification or to an Advancement of
Expenses hereunder, or by the LLC to recover an
Advancement of Expenses, the burden of proving that
Indemnitee is not entitled to be indemnified, or to
such Advancement or Expenses, under this Exhibit or
otherwise shall be on the LLC.
(iv) Without limiting the foregoing, any action commenced
pursuant to this Subsection (d) shall be conducted in
all respects as a de novo adjudication on the merits;
provided, however, if a determination shall have been
made, or deemed to have been made pursuant to
Subsection (b) above, that a Person is entitled to
indemnification, the LLC shall be bound thereby. The
LLC and all Members shall be precluded from asserting
in any action pursuant to this Subsection (d) that
the procedures and presumptions of this Exhibit are
not valid, binding and enforceable.
(e) Non-Exclusivity of Rights. The rights to indemnification and
to the Advancement of Expenses conferred in this Exhibit shall not be exclusive
of any other right which any Person may have or hereafter acquire under
applicable law, under any other agreement, pursuant to any determination by the
Member or otherwise, provided that the Indemnitee shall not be entitled to
recover more than once for the same damage.
(f) Insurance. The LLC shall be authorized to maintain insurance,
in reasonable amounts and with responsible carriers, at the LLC's expense, to
insure any amounts indemnifiable hereunder as well as to protect the
Indemnitees or any employee or agent of the LLC or another enterprise against
any expense, liability or loss of the kind referred to in this Exhibit, whether
or not the LLC would have the power to indemnify such Person against such
expense, liability or loss under the applicable law.
(g) Contribution by LLC. The LLC hereby agrees that, in the event
that the indemnification provided for in this Exhibit is for any reason finally
judicially determined to be unavailable, the LLC shall contribute to the
payment of any and all expenses, liability and loss (including attorneys' fees,
judgments, fines, ERISA or other excise taxes or penalties, and amounts paid in
settlement) in such proportion as is appropriate to reflect the relative fault
of the LLC and the Indemnitee with respect to such expenses, liability and
loss.
(h) Other Indemnification Sources. Any Indemnitees entitled to
indemnification from the LLC hereunder shall first seek recovery under any
insurance policies by which such Indemnitee is covered and shall obtain the
written consent of the Member prior to entering into any compromise or
settlement that would result in an obligation of the LLC to indemnify such
Indemnitee. If the amounts in respect of which such indemnification is sought
arise out of the conduct of the business and affairs of the LLC and also of any
other Person for which the Person entitled to indemnification from the LLC
hereunder was then acting in a similar capacity,
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169
the amount of the indemnification provided by the LLC shall be limited to the
LLC's proportionate share thereof as determined in good faith by the Member.
(i) Survival. The provisions of this Exhibit shall survive the
dissolution of the LLC.
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170
EXHIBIT P
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
DESIGNEES TO MANAGEMENT'S BOARD OF MANAGERS
As of February 10, 1997, pursuant to and in accordance with Agreement Section
5.1(a), clause
(i) Whitney has designated the following two (2) individuals:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(ii) ▇▇▇▇▇▇▇▇ has designated the following individual:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(iii) The Chief Executive Officer of DTS Management, LLC is:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
(iv) The holders of Class B Units have designated the following two (2)
individuals (each of whom shall have two (2) votes on the board of managers
subject to the provisions of Subsection 5.1(a)):
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
(v) The holders of the Class B, C, and D Units have designated the
following individual:
▇▇▇▇▇ ▇. Mixer
to serve on the board of managers of DTS Management, LLC, Manager of the LLC.