EXHIBIT 4.2
EXECUTION COPY
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6 1/2% SERIES C CONVERTIBLE
PREFERRED STOCK
REGISTRATION RIGHTS AGREEMENT
Dated as of January 25, 2000
by and among
Pegasus Communications Corporation
and
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Bear, Xxxxxxx & Co. Inc.
Banc of America Securities LLC
Deutsche Bank Securities Inc.
CIBC World Markets Corp.
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This Registration Rights Agreement (this "Agreement") is made and
entered into as of January 25, 2000, by and among Pegasus Communications
Corporation, a Delaware corporation (the "Company"), and Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation, Bear, Xxxxxxx & Co. Inc., Bank of America
Securities LLC, Deutsche Bank Securities Inc. and CIBC World Markets Corp. (each
an "Initial Purchaser" and, collectively, the "Initial Purchasers"), each of
whom has agreed to purchase an aggregate of 2,500,000 shares of the 6 1/2%
Series C convertible preferred stock, par value $0.01, of the Company (the "Firm
Shares") pursuant and subject to the terms and conditions set forth in that
certain purchase agreement, dated as of January 19, 2000, by and among the
Company, as the seller and issuer, and the Initial Purchasers, as initial
purchasers (the "Purchase Agreement"). The Company also proposes to issue and
sell to the Initial Purchasers not more than an additional 500,000 shares of the
6 1/2% Series C convertible preferred stock, par value $0.01, of the Company
(the "Additional Shares"), if requested by the Initial Purchasers, as provided
in Section 2 of the Purchase Agreement. The Firm Shares and the Additional
Shares are herein collectively referred to as the "Shares." The Shares are to be
issued pursuant to the provisions of that certain Certificate of Designation,
Preferences and Relative, Participating, Optional and Other Special Rights of
Preferred Stock and Qualifications, Limitations and Restrictions Thereof, dated
as of January 24, 2000, of the Company (the "Certificate of Designation"), such
that the Shares will be convertible at the option of the holders thereof into
shares of the Company's Class A common stock, par value $0.01 per share (the
"Class A Common Stock"). The Shares and the Class A Common Stock issuable upon
conversion thereof are herein collectively referred to as the "Securities." The
Securities are more fully described in that certain offering memorandum, dated
January 19, 2000, offering to sell the Shares to the Initial Purchasers (the
"Offering Memorandum").
In order to induce the Initial Purchasers to purchase the Shares, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers set forth in Section 9 of the Purchase
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Certificate of Designation.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Business Day: A day other than a Saturday, a Sunday, or a legal
holiday on which national banks located in the State of New York are
not open for general banking business.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Effectiveness Deadline: As defined in Section 3(a) hereof
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Shares to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Act.
Filing Deadline: As defined in Section 3(a) hereof.
Holders: As defined in Section 2 hereof.
Prospectus: The Prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, all material incorporated
by reference into such Prospectus and any information previously
omitted in reliance upon Rule 430A of the Act.
Recommencement Date: As defined in Section 5(v) hereof.
Registration Default: As defined in Section 4 hereof
Regulation S: Regulation S promulgated under the Act.
Rule 144: Rule 144 promulgated under the Act.
Shelf Registration Statement: As defined in Section 3 hereof.
Suspension Notice: As defined in Section 5(v) hereof.
Transfer Restricted Securities: The Shares and the Class A Common Stock
into which the Shares are convertible, upon original issuance thereof,
and at all times subsequent thereto, until, in the case of any such
Shares or Class A Common Stock, (a) the date on which such Shares or
Class A Common Stock have been disposed of in accordance with a Shelf
Registration Statement, (b) the date on which such Shares of Class A
Common Stock are distributed to the public pursuant to Rule 144 or are
saleable pursuant to Rule 144 (or similar provisions then in effect)
under the Act or (c) the date on which such Shares or Class A Common
Stock cease to be outstanding.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person owns Transfer Restricted Securities.
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SECTION 3. SHELF REGISTRATION
(a) Shelf Registration. As soon as practicable after the Closing Date
but in no event later than 90 days after the Closing Date (the such 90th day,
"Filing Deadline"), the Company shall file with the Commission a shelf
registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement"), relating to all Transfer Restricted Securities, and
shall use its reasonable best efforts to cause such Shelf Registration Statement
to be declared effective under the Act on or prior to 180 days after the Closing
Date (such 180th day, the "Effectiveness Deadline").
The Company shall use its reasonable best efforts to keep any Shelf
Registration Statement required by this Section 3(a) continuously effective,
supplemented and amended as required by and subject to the provisions of
Sections 5(a), 5(b) and 5(c) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 3(a), and to ensure that it conforms in
all material respects with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for the shorter of (i) two years (as extended pursuant to Section 5(c) or
Section 5(v) hereof) following the Closing Date) or (ii) the date on which all
Transfer Restricted Securities covered by such Shelf Registration Statement have
been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act and any other information reasonably requested by the Company for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to special dividends pursuant to Section 4 hereof unless and until
such Holder shall have provided all such information. Each selling Holder agrees
to promptly furnish additional information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.
(c) Holder's Obligation. Each Holder agrees, by acquisition of the
Transfer Restricted Securities, that no Holder of Transfer Restricted Securities
shall be entitled to sell any of such Transfer Restricted Securities pursuant to
a Registration Statement or to receive a Prospectus relating thereto, unless
such Holder has furnished the Company with the information reasonably requested
by the Company pursuant to Section 3(b) hereof. Each Holder agrees promptly to
furnish to the Company all information required to be disclosed in order to make
the information previously furnished to the Company by such Holder not
misleading and any other information regarding such Holder and the distribution
of such Transfer Restricted Securities as the Company may from time to time
reasonably request. Any sale of any Transfer Restricted Securities by any Holder
shall constitute a representation and warranty by such Holder that the
information relating to such Holder and its plan of distribution is as set forth
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in the Prospectus delivered by such Holder in connection with such disposition,
that such Prospectus does not as of the time of such sale contain any untrue
statement of a material fact relating to or provided by such Holder or its plan
of distribution and that such Prospectus does not as of the time of such sale
omit to state any material fact relating to or provided by such Holder or its
plan of distribution necessary to make the statements in such Prospectus, in
light of the circumstances under which they were made, not misleading.
SECTION 4. SPECIAL DIVIDENDS
If (i) the Shelf Registration Statement is not filed with the
Commission on or prior to the Filing Deadline (as such Filing Deadline may be
extended pursuant to Section 5(v) hereof), (ii) such Shelf Registration
Statement has not been declared effective by the Commission on or prior to the
Effectiveness Deadline (as such Effectiveness Deadline may be extended pursuant
to Section 5(v) hereof) or (iii) subject to Section 5(c) and Section 5(v)
hereof, such Shelf Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within ten Business Days
by a post-effective amendment to such Shelf Registration Statement that cures
such failure and that is itself declared effective within five Business Days of
filing such post-effective amendment to the Shelf Registration Statement (each
such event referred to in clauses (i) through (iii), a "Registration Default"),
then the Company hereby agrees to pay special dividends to each Holder with
respect to the first 90 consecutive-day period immediately following the
occurrence of such Registration Default in an amount equal to an increase in the
annual dividends on the Series C convertible preferred stock of 0.25% and with
respect to each subsequent 90 consecutive-day period in an amount equal to an
increase in the annual dividends of 0.25% until all Registration Defaults have
been cured, up to a maximum increase in the annual dividends equal to 1.0%;
provided that the Company shall in no event be required to pay special dividends
for more than one Registration Default at any given time. Notwithstanding
anything to the contrary set forth herein, (1) upon filing of the Shelf
Registration Statement, in the case of (i) above, (2) upon the effectiveness of
the Shelf Registration Statement, in the case of (ii) above, or (3) upon the
filing of a post-effective amendment to the Shelf Registration Statement that
causes the Shelf Registration Statement to again be declared effective or made
usable, in the case of (iii) above, the special dividends payable with respect
to the Transfer Restricted Securities as a result of such clause (i), (ii) or
(iii), as applicable, shall cease.
All accrued special dividends shall be paid to the Holders entitled
thereto, in the manner provided for the payment of dividends in the Certificate
of Designation, on each dividend payment date as more fully set forth in the
Certificate of Designation. Notwithstanding anything herein to the contrary, no
special dividends shall accrue as to any Transfer Restricted Security from and
after the earlier of the date such security is no longer a Transfer Restricted
Security. All of the Company's obligations set forth in this Section 4 that are
outstanding with respect to any Transfer Restricted Security at the time such
security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such security have been satisfied
in full.
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SECTION 5. SHELF REGISTRATION PROCEDURES
In connection with the Shelf Registration Statement, the Company shall:
(a) use its reasonable best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 3(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a Shelf
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof (including, without limitation, one or more underwritten
offerings) within the time periods and otherwise in accordance with the
provisions hereof. The Company shall not be permitted to include in the Shelf
Registration Statement any securities other than the Transfer Restricted
Securities;
(b) use its reasonable best efforts to contact the Holders of Transfer
Restricted Securities and notify each Holder of its right to include its
Transfer Restricted Securities in such Shelf Registration Statement;
(c) use its reasonable best efforts to keep such Shelf Registration
Statement continuously effective for the period specified in Section 3 of this
Agreement. Upon the occurrence of any event that would cause any such Shelf
Registration Statement or the Prospectus contained therein (i) to contain an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading, including, without limitation,
under circumstances described in this Section 5(c), or (ii) not to be effective
and usable for resale of Transfer Restricted Securities during the period
required by this Agreement, the Company shall file promptly an appropriate
amendment to such Shelf Registration Statement curing such defect, and, if
Commission review is required, use its reasonable best efforts to cause such
amendment to be declared effective as soon as practicable. Notwithstanding the
foregoing, if the Board of Directors of the Company determines in good faith
that it is in the best interests of the Company not to disclose the existence of
or facts surrounding any proposed or pending material corporate transaction or
event involving the Company, the Company may, after notice to the Holders of
Transfer Restricted Securities (which notice need not disclose the details of
such transaction or event), suspend the availability of the Shelf Registration
Statement or any Prospectus in connection with such transaction or event for up
to 120 days during the two-year period of effectiveness required by Section 3
hereof, but in no event for any period in excess of 60 consecutive days;
(d) subject to Section 5(c) hereof, prepare and file with the
Commission such amendments and post-effective amendments to the Shelf
Registration Statement as may be necessary to keep such Shelf Registration
Statement effective for the applicable period set forth in Section 3 hereof,
cause the Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with Rules 424, 430A and 462, as applicable, under the Act in a
timely manner; and comply with the provisions of the Act with respect to the
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disposition of all Transfer Restricted Securities covered by such Shelf
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth in
such Shelf Registration Statement or supplement to the Prospectus;
(e) advise the Holders and underwriters, if any, promptly and, if
requested by such Persons, confirm such advice in writing, (i) when the
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to any Shelf Registration Statement or any
post-effective amendment thereto, when the same has become effective, (ii) of
any request by the Commission for amendments to the Shelf Registration Statement
or amendments or supplements to the Prospectus or for additional information
relating thereto, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement under the Act
or of the suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes and (iv)
subject to Section 5(c) hereof, of the existence of any fact or the happening of
any event that makes any statement of fact made in the Shelf Registration
Statement, the Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of any
additions to or changes in the Shelf Registration Statement in order to make the
statements therein not misleading, or that requires the making of any additions
to or changes in the Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. If at any
time the Commission shall issue any stop order suspending the effectiveness of
the Shelf Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities under state
securities or Blue Sky laws, the Company shall use its reasonable best efforts
to obtain the withdrawal or lifting of such order at the earliest possible time;
(f) subject to Section 5(c) hereof, if any fact or event contemplated
by Section 5(e)(iv) above shall exist or have occurred, prepare a supplement or
post-effective amendment to the Shelf Registration Statement or related
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(g) furnish to each Holder named in any Shelf Registration Statement or
Prospectus and underwriter, if any, in connection with such sale before filing
with the Commission, copies of any Shelf Registration Statement or any
Prospectus included therein or any amendments or supplements to any such Shelf
Registration Statement or Prospectus (including all documents incorporated by
reference after the initial filing of such Shelf Registration Statement), which
documents will be subject to the review and comment of such Persons in
connection with such sale, if any, for a period of at least five Business Days,
and the Company will not file any such Shelf Registration Statement or
Prospectus or any amendment or supplement to any such Shelf Registration
Statement or Prospectus (including all such documents incorporated by reference)
to which such Persons shall reasonably object within five Business Days after
the receipt thereof.
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Any such Person shall be deemed to have reasonably objected to such filing if
such Registration Statement, amendment, Prospectus or supplement, as applicable,
as proposed to be filed, contains an untrue statement of a material fact or
omits to state any material fact necessary to make the statements therein not
misleading or fails to comply with the applicable requirements of the Act;
(h) prior to effectiveness of the Shelf Registration Statement,
promptly, prior to the filing of any document that is to be incorporated by
reference into a Shelf Registration Statement or Prospectus, provide copies of
such document to the Holders, and underwriters, if any, in connection with such
sale, make the Company's representatives available for discussion of such
document and other customary due diligence matters, and include such information
in such document prior to the filing thereof as such Holders may reasonably
request; provided that such Persons shall first agree in writing with the
Company that any information that is reasonably and in good faith designated by
the Company in writing as confidential at the time of delivery of such
information shall be kept confidential by such Persons and shall be used solely
for the purpose of exercising rights under this Agreement, unless (i) disclosure
of such information is required by court or administrative order or is necessary
to respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements pursuant
to federal securities laws in connection with the filing of any Registration
Statement or the use of any prospectus referred to in this Agreement), (iii)
such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by any such Persons or (iv) such
information becomes available to any such Persons from a source other than the
Company and such source is not bound by a confidentiality agreement;
(i) make available at reasonable times for inspection by the Holders
and underwriters, if any, and any attorney or accountant retained by such
Holders or underwriters, if any, all relevant financial and other records,
pertinent corporate documents of the Company and cause the Company's officers,
directors and employees to supply all information reasonably requested in
writing by any such Holder, underwriters, if any, attorney or accountant in
connection with such Shelf Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness;
(j) if requested by any Holders or underwriters, if any, in connection
with such sale, promptly include in any Shelf Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment if necessary,
such information as such Holders or underwriters, if any, may reasonably request
to have included therein, including, without limitation, information relating to
the "Plan of Distribution" of the Transfer Restricted Securities; and make all
required filings of such Prospectus supplement or post-effective amendment as
soon as practicable after the Company is notified of the matters to be included
in such Prospectus supplement or post-effective amendment;
(k) furnish to each Holder and underwriter, if any, without charge, at
least one copy of the Shelf Registration Statement, as first filed with the
Commission, and of each amendment thereto (other than documents incorporated by
reference therein and exhibits thereto);
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(l) deliver to each Holder and underwriter, if any, without charge, as
many copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons reasonably may request; the
Company hereby consents to the use (in accordance with law and except during the
period during which a Suspension Notice is in effect and prior to a
Recommencement Date) of the Prospectus and any amendment or supplement thereto
by each Holder and each underwriter, if any, in connection with the offering and
the sale of the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(m) upon the request of any Holder or underwriter, if any, enter into
such agreements (including underwriting agreements) and make such
representations and warranties and take all such other reasonable actions in
connection therewith in order to expedite or facilitate the disposition of the
Transfer Restricted Securities pursuant to any Shelf Registration Statement
contemplated by this Agreement as may be reasonably requested by such Person in
connection with any sale or resale pursuant to any applicable Shelf Registration
Statement and in such connection, the Company shall:
(A) upon request of any Holder or underwriter, if any, furnish (or in
the case of paragraphs (2) and (3) below, use its reasonable best
efforts to cause to be furnished) to each Holder or underwriter,
if any, upon the effectiveness of the Shelf Registration
Statement:
(1) a certificate, dated such date, signed on behalf of the
Company by (x) the President or any Vice President and (y) a
principal financial or accounting officer of the Company,
confirming, as of the date thereof, the matters set forth in
Sections 6(aa), 9(a) and 9(b) of the Purchase Agreement and
such other similar matters as the Holders may reasonably
request;
(2) an opinion, dated the date effectiveness of the Shelf
Registration Statement, of counsel for the Company covering
matters similar to those set forth in paragraph (e) of
Section 9 of the Purchase Agreement and such other matter as
the selling Holders may reasonably request, and in any event
including a statement to the effect that such counsel has
participated in conferences with officers and other
representatives of the Company, representatives of the
independent public accountants for the Company and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or
fairness of such statements; and that such counsel advises
that, on the basis of the foregoing (relying as to
materiality to the extent such counsel deems appropriate
upon the statements of officers and other representatives of
the Company and without independent check or verification),
no facts came to such counsel's attention that caused such
counsel to believe that the Shelf Registration Statement, at
the time such Shelf Registration Statement or any
post-effective amendment thereto
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became effective, contained an untrue statement of a
material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contained in
such Shelf Registration Statement, as of its date, contained
an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading. Without limiting the foregoing,
such counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial data
included in any Registration Statement contemplated by this
Agreement or the related Prospectus; and
(3) customary comfort letters, dated as of the date of
effectiveness of the Shelf Registration Statement from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters to underwriters in connection with underwritten
offerings, and affirming the matters set forth in the
comfort letters delivered pursuant to Section 9(i) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may be reasonably
requested by the Holders and underwriters, if any, to evidence
compliance with the matters set forth in clause (A) above and with
any customary conditions contained in any agreement entered into
by the Company pursuant to this clause (m);
(n) prior to any public offering of Transfer Restricted Securities,
cooperate with the Holders, underwriters, if any, and their respective counsel
in connection with the registration and qualification of the Transfer Restricted
Securities under the securities or Blue Sky laws of such jurisdictions as such
Persons may request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Registration Statement;
provided, however, that the Company shall not be required to register or qualify
as a foreign corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to taxation, other
than as to matters and transactions relating to the Shelf Registration
Statement, in any jurisdiction where it is not now so subject;
(o) in connection with any sale of Transfer Restricted Securities that
will result in such securities no longer being Transfer Restricted Securities,
cooperate with the Holders to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold and not
bearing any restrictive legends; and to register such Transfer Restricted
Securities in such denominations and such names as the Holders may request at
least two Business Days prior to such sale of Transfer Restricted Securities;
(p) (i) list all Shares of Class A Common Stock covered by such Shelf
Registration Statement on any securities exchange on which the Class A Common
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Stock is then listed or (ii) authorize for quotation on the Nasdaq National
Market System all Shares of Class A Common Stock covered by such Shelf
Registration Statement if the Class A Common Stock is then so authorized for
quotation;
(q) use its best efforts to cause the disposition of the Transfer
Restricted Securities covered by the Shelf 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 to consummate the
disposition of such Transfer Restricted Securities, subject to the proviso
contained in clause (n) above;
(r) provide a CUSIP number for all Transfer Restricted Securities not
later than the effective date of a Shelf Registration Statement covering such
Transfer Restricted Securities and provide the transfer agent under the
Certificate of Designation with printed certificates for the Transfer Restricted
Securities which are in a form eligible for deposit with the Depository Trust
Company;
(s) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make generally available
to its security holders with regard to any applicable Registration Statement, as
soon as practicable, a consolidated earnings statement meeting the requirements
of Rule 158 (which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term is defined
in paragraph (c) of Rule 158 under the Act);
(t) if underwritten, make appropriate officers of the Company available
to the underwriters for meetings with prospective purchasers of Transfer
Restricted Securities and prepare and present to potential investors customary
"road show" material in a manner consistent with other new issuances of other
securities similar to the Transfer Restricted Securities; and
(u) provide promptly to each Holder upon request each document filed
with the Commission pursuant to the requirements of Section 13 or Section 15(d)
of the Exchange Act.
(v) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 5(c) or Section 5(e)(iii) or any notice from the Company of the
existence of any fact of the kind described in Section 5(e)(iv) hereof (in each
case, a "Suspension Notice"), such Holder will forthwith discontinue disposition
of Transfer Restricted Securities pursuant to the applicable Registration
Statement until (i) such Holder has received copies of the supplemented or
amended Prospectus contemplated by Section 5(f) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "Recommencement
Date"). Each Holder receiving a Suspension Notice hereby agrees that it will
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Holder's possession which have been replaced by the Company with more
recently dated Prospectuses or (ii) deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of the Suspension Notice. The time period
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regarding the effectiveness of the Shelf Registration Statement and the Filing
Deadline set forth in Section 3 hereof shall be extended by a number of days
equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the date of delivery of the Recommencement
Date or the date that the Holder has received copies of the supplemented or
amended Prospectus, as the case may be.
SECTION 6. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a Shelf
Registration Statement required by this Agreement becomes effective, including
without limitation: (i) all registration and filing fees and expenses; (ii) all
fees and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing certificates
for the Class A Common Stock to be issued upon conversion of the Shares and
printing of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Company and the Holders of
Transfer Restricted Securities (provided that the Company shall not be liable
for the fees and expenses of more than one separate firm for all Holders of
Transfer Restricted Securities); (v) all application and filing fees in
connection with listing the Class A Common Stock on a national securities
exchange or automated quotation system pursuant to the requirements hereof, and
(vi) all fees and disbursements of independent certified public accountants of
the Company (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
(b) In connection with any Shelf Registration Statement required by
this Agreement, the Company will reimburse the Initial Purchasers and the
Holders selling Transfer Restricted Securities pursuant to the "Plan of
Distribution" contained in the Shelf Registration Statement, for the reasonable
fees and disbursements of not more than one counsel, who shall be Xxxxxx &
Xxxxxxx, unless another firm shall be chosen by the Holders of a majority of
number of the Transfer Restricted Securities for whose benefit such Shelf
Registration Statement is being prepared.
SECTION 7. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Holder, its
directors, its officers and each Person, if any, who controls such Holder
(within the meaning of Section 15 of the Act and Section 20 of the Exchange
Act), from and against any and all losses, claims, damages, liabilities,
judgments, (including without limitation, any legal or other expenses incurred
in connection with investigating or defending any matter including any action
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
11
material fact contained in any Shelf Registration Statement, preliminary
prospectus or Prospectus (or any amendment or supplement thereto) provided by
the Company to any Holder or any prospective purchaser of the Securities or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by an untrue statement or omission or alleged untrue
statement or omission that is based upon information relating to any of the
Holders furnished in writing to the Company by any of the Holders; provided,
however, that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Holder who failed to deliver a
Prospectus (as then amended or supplemented, provided by the Company to such
Holder in the reasonable quantity requested by such Holder and on a timely basis
to permit proper delivery) to the Person asserting any losses, claims, damages
and liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in 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 not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in the Prospectus.
(b) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless the Company and its directors
and officers, and each Person, if any, who controls (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) the Company, to the
same extent as the foregoing indemnity from the Company set forth in section
(a) above, but only with reference to information relating to such Holder
furnished in writing to the Company by such Holder expressly for use in any
Registration Statement. In no event shall any Holder, its directors, its
officers or any Person, if any, who controls such Holder be liable or
responsible for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of Transfer Restricted
Securities pursuant to a Shelf Registration Statement exceeds (i) the amount
paid by such Holder for such Transfer Restricted Securities and (ii) the amount
of any damages that such Holder, its directors, its officers or any Person, if
any, who controls such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any Person in
respect of which indemnity may be sought pursuant to Section 7(a) or 7(b) (the
"indemnified party"), the indemnified party shall promptly notify the Person
against whom such indemnity may be sought (the "indemnifying person") in writing
and the indemnifying person shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 7(a) and 7(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 7(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
12
the indemnifying person, (ii) the indemnifying person shall have failed to
assume the defense of such action or employ counsel reasonably satisfactory to
the indemnified party or (iii) the named parties to any such action (including
any impleaded parties) include both the indemnified party and the indemnifying
person, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying person (in which case the
indemnifying person shall not have the right to assume the defense of such
action on behalf of the indemnified party). In any such case, the indemnifying
person shall not, in connection with any one action or separate but
substantially similar or related actions 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 of attorneys (in addition to any local
counsel) for all indemnified parties and all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by a
majority of the Holders, in the case of the parties indemnified pursuant to
Section 7(a), and by the Company, in the case of parties indemnified pursuant to
Section 7(b). The indemnifying person shall indemnify and hold harmless the
indemnified party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i) effected
with its written consent or (ii) effected without its written consent if the
settlement is entered into more than twenty business days after the indemnifying
person shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying person) and, prior to the
date of such settlement, the indemnifying person shall have failed to comply
with such reimbursement request. No indemnifying person shall, without the prior
written consent of the indemnified party, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section
7 is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
person, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Holders, on the other hand, from their sale of Transfer Restricted
Securities or (ii) if the allocation provided by clause 7(d)(i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 7(d)(i) above but also the relative
fault of the Company on the one hand, and of the Holders, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Company, on the one hand,
and of the Holders, on the other hand, 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
13
information supplied by the Company, on the one hand, or by the Holders, on the
other hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and judgments referred to above shall be deemed to include, subject
to the limitations set forth in the second paragraph of Section 7(a), any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action that could have given rise to such losses, claims, damages, liabilities
or judgments. Notwithstanding the provisions of this Section 7, no Holder, its
directors, its officers or any Person, if any, who controls such holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total received by such Holder with respect to the sale of its Transfer
Restricted Securities pursuant to a Registration Statement exceeds (i) the
amount paid by such Holder for such Transfer Restricted Securities and (ii) the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 7(d) are several in
proportion to the respective principal amount of Transfer Restricted Securities
held by each of the Holders hereunder and not joint.
SECTION 8. RULE 144A AND RULE 144
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder of Transfer Restricted Securities, to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of
the Exchange Act, to make all filings required thereby in a timely manner in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144.
14
SECTION 9. UNDERWRITTEN REGISTRATIONS
(a) The Company shall not be required to participate in an underwritten
offering unless Holders of at least $100,000,000 (i) in aggregate liquidation
preference of Shares constituting Transfer Restricted Securities or (ii) in
aggregate fair market value (determined at the time of the request referenced
below) of shares of Class A Common Stock constituting Transfer Restricted
Securities so request, nor shall the Company be required to participate in more
than one underwritten offering; provided that, this paragraph in no way alters
the Company's other obligations with respect to this Agreement.
(b) If any of the Transfer Restricted 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
administer the offering will be selected by the Holders of a majority in amount
of such Transfer Restricted Securities included in such offering, subject to the
consent of the Company (which will not be unreasonably withheld or delayed).
No Holder of Transfer Restricted Securities may participate in any
underwritten registration hereunder unless such Holder (i) agrees to sell its
Transfer Restricted Securities on the basis reasonably provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
(c) Each Holder of Transfer Restricted Securities agrees, if requested
(pursuant to a timely written notice) by the managing underwriters in an
underwritten offering made pursuant to a Shelf Registration Statement, not to
effect any private sale or distribution (including a sale pursuant to Rule
144(k) and Rule 144A, but excluding non-public sales to any of its affiliates,
officers, directors, employees and controlling Persons) of any of the Shares, in
the case of an underwritten offering of the Shares, or the Class A Common Stock,
in the case of an underwritten offering of shares of Class A Common Stock,
during the period beginning 10 days prior to, and ending 90 days after, the
closing date of such underwritten offering.
The foregoing provisions of Section 9(c) shall not apply to any Holder
of Transfer Restricted Securities if such Holder is prevented by applicable
statute or regulation from entering into any such agreement.
(d) If any of the Transfer Restricted Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the underwriters, their
controlling Persons and their respective officers, directors, employees,
representatives and agents shall be entitled to indemnity (substantially similar
to the indemnity set forth in Section 7 of this Agreement) from the Company and
the Holders, which indemnity may be set forth in an underwriting agreement.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company acknowledges and agrees that any failure by
the Company to comply with its obligations under Section 3 hereof may result in
15
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
the Initial Purchasers or any Holder may obtain such relief as may be required
to specifically enforce the Company's obligations under Section 3 hereof The
Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof.
(c) No Piggybacks on Shelf Registration Statement. The Company shall
not grant to any of its security holders (other than the holders of Transfer
Restricted Securities in such capacity) the right to include any of its
securities in any Shelf Registration Statement provided for in this Agreement
other than the Transfer Restricted Securities; provided that the Company shall
be permitted to fulfill its obligations to holders of piggyback rights pursuant
to agreements entered into prior to the date hereof.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 4
hereof and this Section 10(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of shares of Transfer Restricted Securities
(excluding Transfer Restricted Securities held by the Company or its
Affiliates). 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 Transfer Restricted Securities whose securities are being
sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders of Transfer Restricted Securities
may be given by Holders of at least a majority of Transfer Restricted Securities
being sold by such Holders pursuant to such Registration Statement; provided
that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(e) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(f) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
transfer agent under the Certificate of Designation, with a copy to the transfer
agent under the Certificate of Designation; and
16
(ii) if to the Company:
Pegasus Communications Corporation
c/o Pegasus Management Company
000 Xxxx Xxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxx X. Lodge, Esq.
With a copy to:
Drinker Xxxxxx & Xxxxx LLP
1 Xxxxx Square
00xx xxx Xxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the transfer agent at
the address specified in the Certificate of Designation.
(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 Transfer Restricted Securities; provided, that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Transfer Restricted Securities in violation of the terms hereof or of the
Purchase Agreement or the Certificate of Designation. If any transferee of any
Holder shall acquire Transfer Restricted Securities in any manner, whether by
operation of law or otherwise, such Transfer Restricted Securities shall be held
subject to all of the terms of this Agreement, and by taking and holding such
Transfer Restricted Securities such Person 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,
if applicable, the Purchase Agreement, and such Person shall be entitled to
receive the benefits hereof.
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
17
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, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(k) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(l) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and 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. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PEGASUS COMMUNICATIONS
CORPORATION
By: /s/ Xxxxx X. Blank
-------------------------------------
Name: Xxxxx X. Blank
Title: Vice President,
and Assistant Secretary
of Pegasus Communications Corporation
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
BANC OF AMERICA SECURITIES LLC
BEAR, XXXXXXX & CO. INC.
CIBC WORLD MARKETS CORP.
DEUTSCHE BANK SECURITIES INC.
Acting severally on behalf of
themselves and the Initial Purchasers
By: XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
