AMENDMENT NO. 1 (this "Amendment"), dated July 30, 2003, to Warrant and
Investor Rights Agreement dated as of April 2, 2003 (the "Warrant Agreement"),
among PEGASUS COMMUNICATIONS CORPORATION (the "Company") and the entities set
forth on Schedule I thereto. Terms defined in the Warrant Agreement are used
herein as so defined, unless another definition is specified or unless the
context clearly requires otherwise.
The Warrant Agreement provides for the issuance of Warrants to purchase
up to 1,000,000 shares of the Company's Non-Voting Common Stock. Pursuant to
Section 9.4 of the Warrant Agreement, the parties may amend the Warrant
Agreement as provided herein. The Company has been advised by The Nasdaq Stock
Market that under Marketplace Rule 4350, The Nasdaq Stock Market takes the
position that provisions of the Warrant Agreement providing for adjustment in
the number of shares of Warrant Stock in certain circumstances may result in the
issuance of 20 percent or more of the Company's Common Stock, and, accordingly,
requires approval of the Company's stockholders.
NOW, THEREFORE, the parties agree as follows, intending to be legally
bound.
1. The Warrant Agreement is hereby amended by adding the following
immediately after Section 3.9 thereof:
"SECTION 3.10. Limitation on Number Issuable.
-----------------------------
"(a) Except as provided in subsection (b), but notwithstanding
anything else to the contrary in this Agreement, in no event shall any
adjustment to the Number Issuable (other than under Section 3.2) cause
the Number Issuable to equal or exceed 20 percent of the number of
shares of Common Stock outstanding on April 2, 2003, excluding shares
of Common Stock issuable pursuant to Common Stock Equivalents
outstanding on that date.
"(b) Subsection (a) shall cease to apply when the Company's
stockholders shall have approved the potential issuance of Common Stock
on the terms (other than subsection (a)) provided in this Agreement."
2. The Company will seek approval of its stockholders for the matter
described in Section 3.10(b) of the Warrant Agreement, as added by this
Amendment, at the Company's 2003 annual meeting of stockholders currently
expected to be held in August or September, 2003, including any adjournment or
postponement thereof. The Company will use its commercially reasonable efforts
to cause such meeting to occur before September 30, 2003.
3. This Amendment shall not constitute a waiver, amendment or
modification of any other provision of the Warrant Agreement not expressly
referred to herein. Except as expressly amended hereby, the Warrant Agreement
and the other documents executed in connection therewith remain in full force
and effect. This Amendment shall be governed by and construed in accordance with
New York law, without regard to the conflict of law principles thereof.
4. The parties intend this Amendment to be effective as of April 2,
2003.
5. This Amendment shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors and assigns.
6. This Amendment may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Amendment by signing any such counterpart
signature page or counterpart.
7. Damages in the event of breach of this Amendment by a Holder or the
Company would be difficult, if not impossible, to ascertain, and it is therefore
agreed that each Holder and the Company, in addition to and without limiting any
other remedy or right it may have, will have the right to an injunction or other
equitable relief in any court of competent jurisdiction, enjoining any such
breach, and enforcing specifically the terms and provisions hereof, and each
Holder and the Company hereby waives any and all defenses it may have on the
ground of lack of jurisdiction or competence of the court to grant such an
injunction or other equitable relief. The existence of this right will not
preclude the Holders or the Company from pursuing any other rights and remedies
at law or in equity, which the Holders or the Company may have.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed the date first written above.
PEGASUS COMMUNICATIONS CORPORATION
By Xxxxx X. Blank
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Name: Xxxxx X. Blank
Title: Senior Vice President
DBS INVESTORS, LLC
By Xxxxxxxx X. Xxxxxx
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Name: Xxxxxxxx X. Xxxxxx
Title: President and Secretary
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AVENUE SPECIAL SITUATIONS FUND II, LP
By AVENUE CAPITAL PARTNERS II, LLC,
General Partner
By GL PARTNERS II, LLC,
Managing Member of the
General Partner
By Xxxxx Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxx
Title: Member
SPCP GROUP, LLC
By Xxxxxx X. Mule
-----------------------------------------------
Name: Xxxxxx X. Mule
Title: Principal
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