EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated May 5, 2000 (the
"Agreement"), among PEGASUS COMMUNICATIONS CORPORATION, a Delaware corporation
(the "Company"), and the Persons executing this Agreement as Holders.
The Company, Pegasus GSS Merger Sub, Inc., a Delaware
corporation ("Merger Sub"), Golden Sky Holdings, Inc., a Delaware corporation
("GSS"), and certain shareholders of the Company and of GSS are parties to an
Agreement and Plan of Merger dated January 10, 2000 (the "Merger Agreement").
The Holders (this and certain other terms are defined in Section 1) are
shareholders of GSS.
At the Closing held today under the Merger Agreement, Merger
Sub is being merged with and into GSS, GSS is thereby becoming a wholly-owned
subsidiary of the Company, and the Holders are receiving shares of Class A
Common Stock as the Merger Consideration. It is a condition precedent to the
Closing that the parties execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the completion of the
transactions contemplated by the Merger Agreement and of the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows,
intending to be legally bound.
Section 1. Definitions. As used in this Agreement, the
following terms have the following meanings:
"Alta": Alta Communications, VI, L.P., a Delaware limited
partnership, Alta Subordinated Debt Partners III, L.P., a Delaware limited
partnership, and Alta-Comm S by S LLC, a Massachusetts limited liability
company.
"Business Day": any day on which the New York Stock Exchange
is open for trading.
"Class A Common Stock": the Company's Class A Common Stock,
par value $0.01 per share.
"Closing Date": the date of this Agreement.
"Exchange Act": the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder, all as the same
shall be in effect at the relevant time.
"Holder": each Person (other than the Company) executing this
Agreement and each Permitted Transferee of a Holder, for so long as (and to the
extent that) such Person or Permitted Transferee owns any Registrable
Securities.
"Holders' Agent" means the Holders' Agent appointed pursuant
to Section 13, or any successor Holders' Agent appointed pursuant to such
Section.
"Merger Agreement": as defined in the recitals.
"Merger Consideration": as defined in the Merger Agreement;
any reference in this Agreement to a number or percentage of Registrable
Securities initially included in the Merger Consideration shall be appropriately
adjusted to reflect stock dividends, stock splits, reverse stock splits,
recapitalizations and similar transactions that occur after the Closing Date.
"Permitted Transferee": (a) in the case of an individual (1) a
family member of such individual, (2) a charitable organization (including a
private foundation) described in Section 501(c)(3) of the Internal Revenue Code
of 1986, as amended, to which a Holder may transfer any Registrable Securities,
(3) a trust for the benefit of any of such individual, such charitable
organizations or any family member of such individual, or (4) a Person
substantially all of the equity interests in which are owned by such individual
or by Persons described in clauses (a)(1), (2) and (3); and (b) in the case of a
Person that is not an individual, (1) any shareholder, partner, member or other
owner of equity interests in such Person, or (2) a Person all of the equity
interests in which are owned by such first Person.
"Person": an individual, a partnership (general or limited),
corporation, limited liability company, joint venture, business trust,
cooperative, association or other form of business organization, whether or not
regarded as a legal entity under applicable law, a trust (inter vivos or
testamentary), an estate of a deceased, insane or incompetent person, a
quasi-governmental entity, a government or any agency, authority, political
subdivision or other instrumentality thereof, or any other entity.
"Registrable Securities": (1) the Class A Common Stock
included in the Merger Consideration and (2) any additional shares of Class A
Common Stock or other equity securities of the Company issued or issuable after
the Closing Date in respect of the Class A Common Stock included in the Merger
Consideration (or other equity securities issued in respect thereof) by way of a
stock dividend or stock split, in connection with a combination, exchange,
reorganization, recapitalization or reclassification of Company securities, or
pursuant to a merger, division, consolidation or other similar business
transaction or combination involving the Company; provided that as to any
particular Registrable Securities, such securities shall cease to constitute
Registrable Securities (a) when a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of thereunder, (b) when such securities
shall have been disposed of pursuant to Rule 144 (or any successor provision to
such Rule) under the Securities Act, (c) when such securities shall have been
disposed of to a Person other than a Permitted Transferee, or (d) when such
securities shall have ceased to be outstanding.
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"Registration Expenses": all expenses incident to the
Company's performance of or compliance with the registration requirements set
forth in this Agreement including, without limitation, the following: (a) the
fees, disbursements and expenses of the Company's counsel, accountants, and
experts in connection with the registration under the Securities Act of
Registrable Securities; (b) all expenses in connection with the preparation,
printing and filing of the registration statement, any preliminary prospectus or
final prospectus, any other offering document and amendments and supplements
thereto, and the mailing and delivering of copies thereof to underwriters and
dealers, if any; (c) the cost of printing or producing any agreement(s) among
underwriters, underwriting agreement(s) and blue sky or legal investment
memoranda, any selling agreements, and any other documents in connection with
the offering, sale or delivery of Registrable Securities to be disposed of; (d)
the fees and expenses incurred in connection with the listing of Registrable
Securities on each securities exchange on which Company securities of the same
class are then listed or with the Nasdaq National Market System; (e) the
reasonable fees and expenses of a single counsel retained by the Holders
participating in a particular registration pursuant to this Agreement, (f) any
SEC or blue sky registration or filing fees attributable to Registrable
Securities or transfer taxes applicable to Registrable Securities, (g) any other
expenses in connection with the qualification of Registrable Securities for
offer and sale under state securities laws, including the fees and disbursements
of counsel for the underwriters in connection with such qualification and in
connection with any blue sky and legal investment surveys; and (h) the fees and
expenses incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of Registrable Securities to
be disposed of (including, if applicable, the reasonable fees and expenses of
any "qualified independent underwriter" and its counsel); but the term
"Registration Expenses" does not include (i) underwriters' discounts or
compensation, brokers' commissions or similar selling expenses attributable to
the sale of Registrable Securities.
"Registration Statement": a registration statement under the
Securities Act filed by the Company pursuant to this Agreement, including all
amendments thereto, all preliminary and final prospectuses included therein and
all exhibits thereto.
"SEC": the United States Securities and Exchange Commission,
or such other federal agency at the time having the principal responsibility for
administering the Securities Act.
"Securities Act": the Securities Act of 1933, as amended, and
the rules and regulations of the SEC thereunder, all as the same shall be in
effect at the relevant time.
"Spectrum": Spectrum Equity Investors, L.P., and Spectrum
Equity Investors II, L.P. (each a Delaware limited partnership).
Section 2. Underwritten Demand Registration.
(a) At any time on or after November 5, 2000, and before the
fifth anniversary of the Closing Date the Holders' Agent may (by written notice
delivered to the Company) require registration of all or any portion of the
Registrable Securities for sale in an underwritten public offering. In each such
case, such notice shall specify the number of Registrable Securities for which
such underwritten offering is to be made and identify the Holders thereof.
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Within three Business Days after the time when other Persons having rights to
include securities in such offering pursuant to agreements with the Company are
required to notify the Company of their intention to do so, the Company shall
notify the Holders' Agent of (1) the aggregate number of securities proposed to
be included in the offering by such other Persons and (2) the proposed
commencement date of the offering, which shall be a date not more than thirty
days after the Company gives such notice. The managing underwriter for such
offering shall be chosen by the Holders' Agent and shall be reasonably
satisfactory to the Company.
(b) If any request for an underwriting shall have been made
pursuant to subsection (a), the Company shall, at the request of the managing
underwriter for such offering, prepare and file a Registration Statement with
the SEC as promptly as reasonably practicable, but in any event within thirty
days after the managing underwriter's request therefor.
(c) The Company shall not have any obligation to permit or
participate in more than two underwritten public offerings pursuant to this
Section, or to file a Registration Statement pursuant to this Section with
respect to less than ten percent of the Registrable Securities initially
included in the Merger Consideration.
(d) The Company shall have the right to defer the filing or
effectiveness of a Registration Statement relating to any registration requested
under this Section for a reasonable period of time not to exceed 90 days if (1)
the Company is, at such time, working on an underwritten public offering of its
securities for the account of the Company and is advised by its managing
underwriter in writing (with a copy to the Holders' Agent) that such offering
would in its opinion be materially and adversely affected by such filing; or (2)
the Company in good faith determines that any such filing or the offering of any
Registrable Securities would (A) materially impede, delay or interfere with any
proposed financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction involving the Company or (B)
require the disclosure of material non-public information, the disclosure of
which would have a material adverse effect on the Company. If the Company shall
exercise its deferral right under this subsection, it may not do so again until
90 days shall have elapsed since the expiration of such deferral.
(e) The Company shall have no obligation to file a
Registration Statement pursuant to this Section earlier than 360 days after the
effective date of a prior registration statement of the Company, if any,
covering an underwritten public offering of common equity securities for the
account of the Company the closing date of which is after the Closing Date if
(1) the Company shall have offered pursuant to Section 4 to include the Holders'
Registrable Securities in such Registration Statement; (2) the Holders (through
the Holders' Agent) shall not have elected to include in such Registration
Statement at least ten percent of the Registrable Securities initially included
in the Merger Consideration; (3) no Registrable Securities requested to be
included in such registration statement shall have been excluded therefrom
pursuant to Section 4(c) or 4(d); and (4) if such registration statement is
filed before November 5, 2000, the offering price per share of Class A Common
Stock is not less than $100.
(f) The Holders of any Registrable Securities requested to be
included in any offering pursuant to this Section may elect by written notice to
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the Company (given through the Holders' Agent) not to include their Registrable
Securities in the offering. If they do so, the Company shall be obligated to
proceed with the registration relating to the offering only if the offering
continues to include at least the number of shares of Registrable Securities
specified in Section 2(c). In any such case in which the Company is not
obligated to and does not proceed with the registration, the Holders on whose
behalf the Holders' Agent shall have requested Registrable Securities to be
included in the offering but that shall have elected not to include their shares
shall pay all Registration Expenses incurred by the Company in connection with
such offering.
(g) Neither the Company nor any other Person not party to this
Agreement (collectively with the Company, "Third Parties") shall be entitled to
include any securities held by any of them in any underwritten offering pursuant
to this Section, unless all Registrable Securities for which inclusion has been
requested are also included and unless the managing underwriter concludes that
the inclusion of such securities of Third Parties will not interfere with an
orderly sale and distribution of Registrable Securities being sold in such
offering or adversely affect the price of such Registrable Securities; provided,
however, that if the managing underwriter concludes that the inclusion of less
than all of such securities of Third Parties will not interfere with the orderly
sale and distribution of the Registrable Securities being sold in the offering
or adversely affect the price of such Registrable Securities, the number of
shares to be included in the registration by the Third Parties shall be reduced
among the Third Parties in accordance with the agreements that allow the
inclusion of such shares in the registration.
(h) No registration of Registrable Securities under this
Section shall relieve the Company of its obligation to effect registrations of
Registrable Securities pursuant to Sections 3 and 4.
Section 3. Shelf Registrations.
(a) At any time on or after November 5, 2000, and before the
fifth anniversary of the Closing Date, the Holders' Agent may (by written notice
to the Company) require registration of all or any portion of the Registrable
Securities for sale through broker-dealers, through agents or directly to one or
more purchasers in one or more transactions in the over-the-counter market,
through writing of options or otherwise effected at market prices prevailing at
the time of sale, at prices related to such prevailing prices, at negotiated
prices or at fixed prices. Within three Business Days after the time when other
Persons having rights to include securities in such registration pursuant to
agreements with the Company are required to notify the Company of their
intention to do so, the Company shall notify the Holders' Agent of the aggregate
number of securities proposed to be included in the registration by such other
Persons.
(b) If any request for registration shall have been made
pursuant to subsection (a), the Company shall prepare and file a Registration
Statement with the SEC as promptly as reasonably practicable, but in any event
within thirty days after the expiration of the time within which other Persons
having rights to include securities in such registration pursuant to agreements
with the Company were required to request inclusion in the registration.
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(c) The Company shall not have any obligation under this
Section to file a Registration Statement with respect to fewer than 100,000
shares of Registrable Securities.
(d) The Company shall have no obligation to file a
Registration Statement pursuant to this Section earlier than 180 days after the
effective date of any earlier Registration Statement filed pursuant to this
Section.
(e) The Holders of any of Registrable Securities requested to
be included in any registration pursuant to this Section may elect by written
notice to the Company (given through the Holders' Agent) not to include their
Registrable Securities in such registration. If they do so, the Company shall be
obligated to proceed with the registration only if it continues to include at
least the number of shares of Registrable Securities specified in Section 3(c).
In any such case in which the Company is not obligated to and does not proceed
with the registration, the Holders on whose behalf the Holders' Agent shall have
requested Registrable Securities to be included in the registration but shall
have elected not to include their shares shall pay all Registration Expenses
incurred by the Company in connection with such registration.
(f) No registration of Registrable Securities under this
Section shall relieve the Company of its obligation to effect registrations of
Registrable Securities under Sections 2 and 4.
Section 4. Incidental Registration.
(a) From and after the Closing Date, if the Company proposes,
other than pursuant to Section 2 or 3, to file a Registration Statement under
the Securities Act to register any of its common equity securities for public
sale under the Securities Act (whether proposed to be offered for sale by the
Company or by any other Person), it will give prompt written notice (which
notice shall specify the intended method or methods of disposition) to the
Holders of its intention to do so, and upon the written request of the Holders'
Agent delivered to the Company within ten Business Days after any such notice
(which request shall identify the Holders that wish to dispose of Registrable
Securities pursuant to such Registration Statement and specify the number of
Registrable Securities intended to be disposed of by each such Holder), the
Company shall, subject to the other provisions of this Section 4, include in
such Registration Statement all Registrable Securities which the Company has
been so requested to register by the Holders' Agent.
(b) If at any time prior to the effective date of any
Registration Statement described in subsection (a), the Company shall in good
faith determine for any reason not to proceed with such registration, the
Company may, at its election, give written notice of such determination to the
Holders' Agent and thereupon the Company shall be relieved of its obligation to
register such Registrable Securities in connection with such registration.
(c) The Company will not be required to effect any
registration of Registrable Securities pursuant to this Section in connection
with an offering of securities for the account of the Company if the Company
shall have been advised in writing (with a copy to the Holders' Agent) by a
nationally recognized investment banking firm (which may be the managing
underwriter for the offering) selected by the Company that, in such firm's
opinion, registration of Registrable Securities and of any other securities
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requested to be included in such registration by other Persons having rights to
include securities therein at that time may interfere with an orderly sale and
distribution of the securities being sold by the Company in such offering or
adversely affect the price of such securities; but if the inclusion of less than
all of the Registrable Securities requested to be registered by the Holders'
Agent and other securities requested to be included in such registration by
other Persons having rights to include securities therein at that time would
not, in the opinion of such firm, adversely affect the distribution or price of
the securities to be sold by the Company in the offering, the aggregate number
of Registrable Securities requested to be included in such offering by the
Holders (through the Holders' Agent) shall be reduced pro rata in accordance
with the proportion that the number of shares proposed to be included in such
registration by Holders bears to the number of shares proposed to be included in
such registration by Holders and all other such Persons having rights to include
securities therein at that time. The reduction attributable to the Holders shall
be allocated among Holders by the Holders' Agent, whose determination shall be
conclusive.
(d) The Company will not be required to effect any
registration of Registrable Securities pursuant to this Section in connection
with an offering of securities for the account of any former stockholders of
Digital Television Services, Inc. (the "DTS Holders"), pursuant to the
Registration Rights Agreement dated April 27, 1998, among the Company and
certain former stockholders of Digital Television Services, Inc. (the "DTS
Registration Rights Agreement") if the Company shall have been advised in
writing (with a copy to the Holders' Agent) by a nationally recognized
investment banking firm (which may be the managing underwriter for the offering)
selected by the DTS Holders that, in such firm's opinion, registration of
Registrable Securities and of any other securities requested to be included in
such registration by other persons having rights to include securities therein
at that time may interfere with an orderly sale and distribution of the
securities being sold by the DTS Holders in such offering or adversely affect
the price of such securities; but if the inclusion of less than all of the
Registrable Securities requested to be registered by the Holders and other
securities requested to be included in such registration by other Persons having
rights to include securities therein at that time would not, in the opinion of
such firm, adversely affect the distribution or price of the securities to be
sold by the DTS Holders in the offering, the aggregate number of Registrable
Securities requested to be included in such offering by the Holders shall be
reduced pro rata in accordance with the proportion that the number of shares
proposed to be included in such registration by Holders bears to the number of
shares proposed to be included in such registration by Holders and all such
other Persons (other than the DTS Holders) having rights to include securities
therein at that time. The reduction attributable to the Holders shall be
allocated among Holders by the Holders' Agent, whose determination shall be
conclusive.
(e) The Company shall not be required to give notice of, or
effect any registration of Registrable Securities under this Section incidental
to the registration of any of its securities on Form S-4 or S-8 or in connection
with dividend reinvestment plans.
(f) No registration of Registrable Securities effected under
this Section shall relieve the Company of its obligations to effect
registrations of Registrable Securities pursuant to Sections 2 and 3.
Section 5. Holdbacks and Other Transfer Restrictions.
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(a) No Holder shall sell, transfer or otherwise dispose of any
Registrable Securities or any interest therein before November 5, 2000, except
to a Permitted Transferee or pursuant to an effective Registration Statement
described in Section 4 that includes the Registrable Securities to be disposed
of.
(b) No Holder shall, if requested by the managing underwriter
in an underwritten offering that includes such Holder's Registrable Securities,
effect any public sale or distribution of securities of the Company of the same
class as the securities included in such Registration Statement (or convertible
into such class), including a sale pursuant to Rule 144(k) under the Securities
Act (except as part of such underwritten registration), during the ten day
period prior to, and during the 90-day period (or such longer period, not to
exceed 180 days, as the managing underwriter shall request) beginning on the
closing date of each underwritten offering made pursuant to such Registration
Statement, to the extent timely notified in writing by the Company or the
managing underwriter. If the Company or such managing underwriter so requests,
each Holder shall enter into a holdback agreement reflecting such restrictions.
(c) No Holder shall, during any period in which any of its
Registrable Securities are included in any effective Registration Statement, (1)
effect any stabilization transactions or engage in any stabilization activity in
connection with the Class A Common Stock or other equity securities of the
Company in contravention of Regulation M under the Exchange Act; or (2) permit
any Affiliated Purchaser (as that term is defined in Regulation M under the
Exchange Act) to bid for or purchase for any account in which such Holder has a
beneficial interest, or attempt to induce any other person to purchase, any
shares of Common Stock or Registrable Securities in contravention of Regulation
M under the Exchange Act.
(d) The Company, upon request by the Holders' Agent, shall, at
the Company's expense, in the case of a registration including Registrable
Securities to be offered by Holders for sale through brokers transactions,
furnish each broker through whom such Holders offer Registrable Securities such
number of copies of the prospectus as the broker may require, and such Holders
shall otherwise comply with the prospectus delivery requirements under the
Securities Act, and the Company shall comply with Rule 153 under the Securities
Act.
Section 6. Registration Procedures. If and whenever the
Company is required by the provisions of this Agreement to effect a registration
of Registrable Securities:
(a) The Company shall prepare and file with the SEC, within
the time periods specified herein, a Registration Statement on Form S-3 or its
equivalent (or on such other registration form available to the Company that
permits the greatest extent of incorporation by reference of materials filed by
the Company under the Exchange Act or, if no incorporation by reference is
permitted, any form then available to the Company), and will use its best
efforts to cause such registration statement to become effective as promptly as
practicable (and, in any event, within sixty days) thereafter and to remain
effective under the Securities Act until (1) the earlier of such time as all
securities covered thereby have been disposed of pursuant to such Registration
Statement or 90 days after such Registration Statement becomes effective, in the
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case of registrations pursuant to Section 2, or (2) 180 days after such
Registration Statement becomes effective, in the case of registrations pursuant
to Section 3, in every case as any such period may be extended pursuant to
subsection (h) or Section 8.
(b) The Company shall prepare and file with the SEC such
amendments, post-effective amendments and supplements to such Registration
Statement and the prospectus used in connection therewith as may be necessary to
keep such Registration Statement effective for such period of time required by
subsection (a), as such period may be extended pursuant to subsection (h) or
Section 8.
(c) The Company shall comply in all material respects with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the period during which
any such Registration Statement is required to be effective.
(d) The Company shall furnish to any Holder whose Registrable
Securities are being registered hereunder and any underwriter of Registrable
Securities (1) such number of copies (including manually executed and conformed
copies) of such Registration Statement and of each amendment thereof and
supplement thereto (including all annexes, appendices, schedules and exhibits),
(2) such number of copies of the prospectus used in connection with such
Registration Statement (including each preliminary prospectus, any summary
prospectus and the final prospectus and including prospectus supplements), and
(3) such number of copies of other documents, in each case as such Holder or
such underwriter may reasonably request.
(e) The Company shall use its best efforts to register or
qualify all Registrable Securities covered by such Registration Statement under
the securities or "blue sky" laws of such states of the United States as any
Holder whose Registrable Securities are being registered or any underwriter
shall reasonably request, and do any and all other acts and things which may be
reasonably requested by such Holder or such underwriter to consummate the
offering and disposition of Registrable Securities in such jurisdictions; but
the Company shall not be required to qualify generally to do business as a
foreign corporation or as a dealer in securities, subject itself to taxation, or
consent to general service of process in any jurisdiction wherein it is not then
so qualified or subject.
(f) The Company shall use its best efforts to cause the
Registrable Securities covered by such Registration Statement to be registered
with, or approved by, such other United States public, governmental or
regulatory authorities, if any, as may be required in connection with the
disposition of such Registrable Securities.
(g) The Company shall list the Registrable Securities covered
by such Registration Statement on any securities exchange (or if applicable, the
Nasdaq National Market System) on which any securities of the Company are then
listed.
(h) The Company shall notify the Holders' Agent as promptly as
practicable and, if requested by Holders' Agent, confirm such notification in
writing, (1) when a prospectus or any prospectus supplement has been filed with
the SEC, and when a Registration Statement or any post-effective amendment
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thereto has been filed with and declared effective by the SEC, (2) of the
issuance by the SEC of any stop order or the coming to its knowledge of the
initiation of any proceedings for that purpose, (3) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of any of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (4) of the
occurrence of any event which requires the making of any changes to a
Registration Statement or related prospectus so that such documents 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 light of the circumstances under which they were made, not misleading (and
the Company shall promptly prepare and furnish to each Holder (through the
Holders' Agent) a reasonable number of copies of a supplemented or amended
prospectus such that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading), and (5) of the Company's determination
that the filing of a post-effective amendment to a Registration Statement shall
be necessary or appropriate. Upon the receipt by the Holders' Agent of any
notice from the Company of the occurrence of any event of the kind described in
clause (4), the Holders shall forthwith discontinue any offer and disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until all Holders shall have received copies of a
supplemented or amended prospectus which is no longer defective and, if so
directed by the Company, shall deliver to the Company all copies (other than
permanent file copies) of the defective prospectus covering such Registrable
Securities which are then in the Holders' possession. If the Company shall
provide any notice of the type referred to in the preceding sentence, the period
during which the Registration Statement is required by subsection (a) to be
effective shall be extended by the number of days from and including the date
such notice is provided, to and including the date when Holders shall have
received copies of the corrected prospectus.
(i) The Company shall enter into such agreements and take such
other appropriate actions as are customary and reasonably necessary to expedite
or facilitate the disposition of such Registrable Securities, and in that
regard, deliver to the Holders such documents and certificates as may be
reasonably requested by the Holders of a majority of the Registrable Securities
being sold or, as applicable, the managing underwriters, to evidence the
Company's compliance with this Agreement, including, in the case of any
underwritten offering, using commercially reasonable efforts to cause its
independent accountants to deliver to the managing underwriters an accountants'
comfort letter substantially similar in scope to that customarily delivered in
an underwritten public offering and covering audited and interim financial
statements included in the registration statement, or if such letter can not be
obtained through the exercise of commercially reasonable efforts, cause its
independent accountants to deliver to the managing underwriters a comfort letter
based on negotiated procedures providing comfort with respect to the Company's
financial statements included or incorporated by reference in the registration
statement at the highest level permitted to be given by such accountants under
the then applicable standards of the American Institute of Certified Public
Accountants with respect to such Registration Statement.
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Section 7. Underwriting.
(a) If requested by the underwriters for any underwritten
offering of Registrable Securities pursuant to a registration under Section 2,
the Company will enter into and perform its obligations under an underwriting
agreement with the underwriters for such offering, such agreement to contain
such representations and warranties by the Company and such other terms and
provisions as are customarily contained in underwriting agreements with respect
to secondary distributions, including, without limitation, customary provisions
relating to indemnities and contribution and the provision of opinions of
counsel and accountants' comfort letters. If Registrable Securities are to be
distributed by such underwriters on behalf of any Holder, such Holder shall also
be a party to any such underwriting agreement; provided, however, that no Holder
shall be required to make representations or warranties concerning the Company
or any other Holder.
(b) If any registration pursuant to Section 4 shall involve an
underwritten offering, the Company may require Registrable Securities requested
to be registered pursuant to Section 4 to be included in such underwriting on
the same terms and conditions as shall be applicable to the securities being
sold through underwriters under such registration. In such case, each Holder
requesting registration shall be a party to any such underwriting agreement.
Such agreement shall contain such representations and warranties by the Holders
requesting registration and such other terms and provisions as are customarily
contained in underwriting agreements with respect to secondary distributions,
including, without limitation, provisions relating to indemnities and
contribution; provided, however, that no Holder shall be required to make
representations or warranties concerning the Company or any other Holder.
(c) In any offering of Registrable Securities pursuant to a
registration hereunder, each Holder requesting registration shall also enter
into such additional or other agreements as may be customary in such
transactions, which agreements may contain, among other provisions, such
representations and warranties as the Company or the underwriters of such
offering may reasonably request (including, without limitation, those concerning
such Holder, its Registrable Securities, such Holder's intended plan of
distribution and any other information supplied by it to the Company for use in
such registration statement), and customary provisions relating to indemnities
and contribution.
Section 8. Information Blackout.
(a) At any time when a Registration Statement is effective,
upon written notice from the Company to the Holders' Agent that the Company has
determined in good faith that sale of Registrable Securities pursuant to the
Registration Statement would require disclosure of non-public material
information, the disclosure of which would have a material adverse effect on the
Company, all Holders shall suspend sales of Registrable Securities pursuant to
such Registration Statement until the earlier of (1) 90 days after the Company
notifies the Holders' Agent of such good faith determination, and (2) such time
as the Company notifies the Holders that such material information has been
disclosed to the public or has ceased to be material or that sales pursuant to
such Registration Statement may otherwise be resumed (the number of days from
such suspension of sales by the Holders until the day when such sales may be
resumed hereunder is hereinafter called a "Sales Blackout Period").
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(b) The time periods set forth in Section 6(a)(1) or (2) shall
be extended for a number of days equal to the number of days in each Sales
Blackout Period.
(c) No Sales Blackout Period shall be commenced by the Company
within 60 days after the end of a Sales Blackout Period.
Section 9. Rule 144. The Company shall take all actions
reasonably necessary to comply with the filing requirements described in Rule
144(c)(1) under the Securities Act so as to enable the Holders to sell
Registrable Securities without registration under the Securities Act. Upon the
written request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with the filing requirements under such
Rule 144(c)(1).
Section 10. Preparation; Reasonable Investigation;
Information. In connection with the preparation and filing of each Registration
Statement registering Registrable Securities under the Securities Act, (a) the
Company will give the Holders' Agent, on behalf of the Holders, and the
underwriters, if any, and their respective counsel and accountants, drafts of
such registration statement for their review and comment prior to filing and
(during normal business hours and subject to such reasonable limitations as the
Company may impose to prevent disruption of its business) such reasonable and
customary access to its books and records and such opportunities to discuss the
business of the Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary, in the
reasonable opinion of the Holders' Agent and such underwriters or their
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act and (b) as a condition precedent to including any Registrable
Securities of any Holder in any such registration, the Company may require such
Holder to furnish the Company such information regarding such Holder and the
distribution of such securities as the Company may from time to time reasonably
request in writing or as shall be required by law or the SEC in connection with
any registration.
Section 11. Indemnification and Contribution.
(a) In the case of each offering of Registrable Securities
made pursuant to this Agreement, the Company shall indemnify and hold harmless
each Holder, its officers, directors, members and partners, each underwriter of
Registrable Securities so offered and each Person, if any, who controls any of
the foregoing persons within the meaning of the Securities Act ("Holder
Indemnitees"), from and against any and all claims, liabilities, losses,
damages, expenses and judgments, joint or several, to which they or any of them
may become subject, including any amount paid in settlement of any litigation
commenced or threatened, and shall promptly reimburse them, as and when
incurred, for any legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as such losses,
claims, damages, liabilities or actions shall arise out of, or shall be based
upon, any violation or alleged violation by the Company of the Securities Act,
any blue sky laws, securities laws or other applicable laws of any state or
county in which the Registrable Securities are offered, and relating to action
taken or action or inaction required of the Company in connection with such
offering, or shall arise out of, or shall be based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in any preliminary or final prospectus included therein) relating
to the offering and sale of such Registrable Securities, or any amendment
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thereof or supplement thereto, or in any document incorporated by reference
therein, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; but the
Company shall not be liable to any Holder Indemnitee in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement, or any omission
or alleged omission, if such statement or omission shall have been made in
reliance upon and in conformity with information furnished to the Company in
writing by or on behalf of such Holder (including information furnished by the
Holders' Agent) specifically for inclusion in the Registration Statement (or in
any preliminary or final prospectus included therein), or any amendment thereof
or supplement thereto. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any Holder and shall
survive the transfer of such securities. The foregoing indemnity agreement is in
addition to any liability which the Company may otherwise have to any Holder
Indemnitee.
(b) In the case of each offering of Registrable Securities
made pursuant to this Agreement, each Holder whose Registrable Securities are
included in such offering shall indemnify and hold harmless the Company, its
officers and directors and each person, if any, who controls any of the
foregoing within the meaning of the Securities Act (the "Company Indemnitees"),
from and against any and all claims, liabilities, losses, damages, expenses and
judgments, joint or several, to which they or any of them may become subject,
including any amount paid in settlement of any litigation commenced or
threatened, and shall promptly reimburse them, as and when incurred, for any
legal or other expenses incurred by them in connection with investigating any
claims and defending any actions, insofar as any such losses, claims, damages,
liabilities or actions shall arise out of, or shall be based upon, any violation
or alleged violation by such Holder or the Holders' Agent of the Securities Act,
any blue sky laws, securities laws or other applicable laws of any state or
country in which the Registrable Securities are offered and relating to action
taken or action or inaction required of such Holder or the Holders' Agent in
connection with such offering, or shall arise out of, or shall be based upon,
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or in any preliminary or final prospectus included
therein) relating to the offering and sale of such Registrable Securities or any
amendment thereof or supplement thereto, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, but in each case only to the extent that such untrue
statement is contained in, or such fact is omitted from, information furnished
in writing to the Company by or on behalf of such Holder or the Holders' Agent
specifically for inclusion in such Registration Statement (or in any preliminary
or final prospectus included therein). Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of any Company
Indemnitee. The foregoing indemnity is in addition to any liability which a
Holder or the Holders' Agent may otherwise have to any Company Indemnitee.
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(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 11, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in subsection (a) or (b) shall be available to any
person who shall fail to give notice as provided in this subsection (c) if the
indemnifying party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was materially prejudiced by the
failure to give such notice, but the failure to give such notice shall not
relieve the indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise than on account
of the provisions of subsection (a) or (b). In case any such proceeding shall be
brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay as incurred the fees and expenses of the counsel retained by the
indemnified party in the event (1) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (2) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel, in the written opinion of such counsel, would be
inappropriate due to actual or potential differing interests between them. The
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties (in
addition to local counsel). Such firm shall be designated in writing by the
Holders' Agent in the case of Holder Indemnitees and by the Company in the case
of Company Indemnitees. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if settled
with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 11 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) in respect of any losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) referred to therein, or if the
indemnified party failed to give the notice required under subsection (c), then
each indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) in such proportion as is appropriate
to reflect not only both the relative benefits received by such party (as
compared to the benefits received by all other parties) from the offering in
respect of which indemnity is sought, but also the relative fault of all parties
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by a party shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by it bear
to the total amounts received by each other party. Relative fault shall be
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determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties agree that it would not be just
and equitable if contributions pursuant to this subsection (d) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this subsection
(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), 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.
(e) The indemnity provided for hereunder shall not inure to
the benefit of any indemnified party to the extent that the claim is based on
such indemnified party's failure to comply with the applicable prospectus
delivery requirements of the Securities Act as then applicable to the person
asserting the loss, claim, damage or liability for which indemnity is sought.
Section 12. Expenses. In connection with any registration
under this Agreement the Company shall pay all Registration Expenses (to the
extent not borne by underwriters or others), except as provided in Section 2(f)
or 3(e), and each Holder participating in such registration shall pay its pro
rata share of the items described in clause (i) of the definition of
"Registration Expenses" in Section 1.
Section 13. Appointment of Holders' Agent; Reliance. The
Holders appoint ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as their agent and representative (the
"Holders' Agent") to take such actions under this Agreement on their behalf as
the Holders' Agent shall consider advisable. Notwithstanding anything herein or
in the Merger Agreement to the contrary, the Holders' Agent shall not be
required to request registration of any Registrable Securities of any Holders
other than Spectrum or Alta (to the extent requested by Spectrum or Alta) in any
Registration Statement pursuant to this Agreement, and the decision of whether
to include or exclude any such Registrable Securities in or from any such
Registration Statement shall be in the sole discretion of the Holders' Agent.
The Holders' Agent shall deliver copies of all materials and notices required
hereunder to the Holders in a timely fashion, and shall comply with written
direction from any Holder concerning the Registrable Securities beneficially
owned by such Holder. The Holders' Agent may be removed by Spectrum and Alta,
acting together, by their written notice to the Holders' Agent and Pegasus. Upon
any vacancy in the position of Holders' Agent caused by resignation or removal,
Spectrum and Alta, acting together, shall appoint a new Holders' Agent by
written notice to Pegasus and the Holders. The Holders will indemnify the
Holders' Agent for any liability it may incur by reason of acting as such,
except liability caused by its gross negligence or willful misconduct. Pegasus
shall be entitled to rely on the statements and directions of the Holders'
Agent, notwithstanding any statement or direction to the contrary by one or more
of the Holders.
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Section 14. Notices. Except as otherwise provided below,
whenever it is provided in this Agreement that any notice, demand, request,
consent, approval, declaration or other communication shall or may be given to
or served upon any of the parties hereto, or whenever any of the parties hereto
wishes to provide to or serve upon the other party any other communication with
respect to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be delivered in
person, delivered by the U.S. mail, delivered by overnight courier service, or
sent by telecopy, as follows: (a) if to the Holders' Agent or any Holder, to
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ at the address set forth in the Merger Agreement, with a
copy to ▇▇▇▇▇ ▇. ▇▇▇▇▇, at the address set forth in the Merger Agreement; and
(b) if to the Company, at the Company's address set forth in the Merger
Agreement. Any party may change the address at which it wishes to receive notice
by giving notice of the same in accordance with the provisions of this Section
14. The furnishing of any notice required hereunder may be waived in writing by
the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly furnished or served on the party to which it is addressed, in
the case of delivery in person or by telecopy, on the date when sent (with
receipt personally acknowledged in the case of telecopied notice), in the case
of delivery by overnight courier service, on the dated delivered as evidenced by
delivery receipt, and in all other cases, five business days after it is sent.
Section 15. Entire Agreement. This Agreement represents the
entire agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersedes any and all prior oral and written
agreements, arrangements and understandings among the parties hereto with
respect to such subject matter; and this Agreement can be amended, supplemented
or changed, and any provision hereof can be waived or a departure from any
provision hereof can be consented to, only by a written instrument making
specific reference to this Agreement signed by the Company and the Holders of a
majority of the Registrable Securities then outstanding.
Section 16. Headings. The section headings contained in this
Agreement are for general reference purposes only and shall not affect in any
manner the meaning, interpretation or construction of the terms or other
provisions of this Agreement.
Section 17. Applicable Law. This Agreement shall be governed
by, construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts to be made, executed, delivered and performed wholly
within such state and, in any case, without regard to the conflicts of law
principles of such state.
Section 18. Severability. If any provision of this Agreement
shall be held by any court of competent jurisdiction to be illegal, void or
unenforceable, such provision shall be of no force and effect, but the
illegality or unenforceability of such provision shall have no effect upon and
shall not impair the enforceability of any other provision of this Agreement.
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Section 19. No Waiver. The failure of any party at any time or
times to require performance of any provision hereof shall not affect the right
at a later time to enforce the same. No waiver by any party of any condition,
and no breach of any provision, term, covenant, representation or warranty
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be construed as a further or continuing waiver of
any such condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
Section 20. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one and the same original instrument. Not
all parties need sign the same counterpart. Delivery by facsimile of a signature
page to this Agreement shall have the same effect or delivery of an original
executed counterpart.
Section 21. Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors, assigns and transferees of
each of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; but nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of applicable law. If any Holder shall acquire Registrable
Securities, in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities such Holder
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement, and such Holder shall be entitled to receive the
benefits hereof.
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IN WITNESS WHEREOF, this Agreement has been executed and
delivered as of the date first above written.
PEGASUS COMMUNICATIONS CORPORATION
By /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Financial Officer
HOLDERS' AGENT
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------------------------
HOLDERS:
ALTA SUBORDINATED DEBT PARTNERS III, L.P.
By: Alta Subordinated Debt Management III, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: General Partner
ALTA COMMUNICATIONS VI, L.P.
By: Alta Communications VI Management Partners,
L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: General Partner
ALTA-COMM BY S, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Member
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HARBOURVEST PARTNERS V-DIRECT FUND L.P.
By: HVP V-Direct Associates, LLC
Its General Partner
By: HarbourVest Partners, LLC
Its Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
SPECTRUM EQUITY INVESTORS, L.P.
By: Spectrum Equity Associates L.P., General
Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: General Partner
SPECTRUM EQUITY INVESTORS II, L.P.
By: Spectrum Equity Associates L.P., General
Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: General Partner
BANCBOSTON VENTURES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director
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