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EXHIBIT 3.1(e)
AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
BY
WRITTEN CONSENT
This Amendment to the Limited Liability Company Agreement of Digital Television
Services, LLC by Written Consent (the "Amendment") is entered into effective
February 10, 1997, pursuant to sections 6.1, 6.2, 11.9 and 11.14 of the Limited
Liability Company Agreement (the "LLC Agreement") of Digital Television
Services, LLC, a Delaware limited liability company ("DTS").
R E C I T A L S:
A. The Members of DTS entered into the LLC Agreement effective February
10, 1997. Unless otherwise provided in this Amendment, capitalized terms have
the same meaning as set forth in the LLC Agreement.
B. Section 11.14 of the LLC Agreement provides that the Members of DTS
"shall complete and DTS, Columbia A, Columbia B, Whitney and Fleet shall initial
final forms of Exhibits I, J, K, L and M within 30 days of February 10, 1997,
with the understanding that a Preferred Stock Corporate Conversion and the forms
of documents to implement it, shall insofar as possible, mirror the relative
terms, rights, privileges and obligations of the parties reflected in this
Agreement."
C. The Undersigned Members desire to finalize the exhibits specified in
Recital B. above.
D. The undersigned Members also desire to amend the LLC Agreement to
provide that the Class D Units shall not be entitled to vote on any matter
(which is specifically permitted pursuant to Section 18-215(d) of the Act).
E. Section 11.4 of the Agreement provides that the Agreement may be
amended by one or more written amendments approved by the Manager, the vote of
the Members, and such class those may be required in the Agreement. Section 11.4
further provides that any written amendment that received such a vote need not
be signed by all the Members to be effective, but shall be effective in
accordance with its terms and shall be binding upon all Members.
F. Section 6.2 of the LLC Agreement provides that any action permitted
or required to be taken by the Members, including any amendment to the
Agreement, may be taken or ratified by written consent setting forth a specific
action to be taken and sent to all Members and signed within 30 days of being
sent by that number of Members in order to take the specified action.
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AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT OF
DIGITAL TELEVISION SERVICES, LLC BY WRITTEN CONSENT
PAGE 2
Now, therefore, it is agreed that the Agreement shall be amended as
follows:
1. FINAL FORMS OF EXHIBITS I, J, K, L, AND M. The final forms of
Exhibits I (Draft Certificate of Designations of Preferred Stock), J (Draft
Certificate of Merger -- Preferred Stock Corporate Conversion), K (Draft
Certificate of Merger -- Common Stock Corporate Conversion), L (Draft
Stockholders Agreement) and M (Draft Certificate of Incorporation and Bylaws
upon Qualified Corporate Conversion), each of which is attached hereto, be and
they hereby are approved as exhibits to the Agreement.
2. AMENDMENTS TO REMOVE VOTING RIGHTS OF CLASS D UNITS.
a. Section 2.5(d) is amended to add the following sentence at
the end thereof:
"Any provision in this Agreement to the contrary notwithstanding, the
Class D Units shall have no voting rights with respect to any matter, including
Amendments to this Agreement."
b. Section 5.1(a)(v) shall be amended to read as follows:
"One (1) individual elected by a vote of the holders of the Class B and
Class C Units, voting together as a single class, with each such holder being
entitled to cast that number of votes equal to the number of such Units held by
such holder."
c. The second sentence of the third paragraph in Section
5.1(a) is amended to read as follows:
"The two (2) additional seats shall be filled by individuals approved
by Columbia A, Whitney and Xxxxxxxx, and elected by holders of a majority of the
Class A, Class B and Class C Units voting together as a single class, and who
are not otherwise Affiliates of any of the Columbia Entities, Whitney or Fleet."
d. The last sentence of Section 5.3(a) is amended to read as
follows:
"The exercise of the Members' direct authority hereunder shall be by a
vote of those Members holding a majority of the Class A, B and C Units, voting
together as a single class, and such class vote as may be required in any
instance, and shall be pursuant to the procedures set forth in Article VI below,
except in those cases in which other procedures are expressly set forth."
e. The last sentence of Section 6.1(a) shall be amended to
read as follows:
"Except as otherwise provided in this Agreement, the vote, consent,
approval or ratification of Members holding a majority of the Class A, Class B
and Class C Units, voting together as a single class, shall be required in order
to constitute Member action. The holders of the Class D Units shall have no
voting rights on any matter."
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AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT OF
DIGITAL TELEVISION SERVICES, LLC BY WRITTEN CONSENT
PAGE 3
f. The second sentence of the definition of "Interest"
appearing in Exhibit C to the Agreement is amended to read as follows:
"With respect to any provision of this Agreement requiring the vote,
approval, consent or similar action by the Members or a group of Members with
respect to any matter, unless otherwise specified, reference to a majority (or
specified percentage) in Interest of the Members or group thereof means those
Members holding Class A, Class B and Class C Units constituting a majority (or
specified percentage) of all Class A, B and C Units held by such Members or
group of Members determined as of the date of such vote, approval, consent or
action unless an earlier record date has been established for determining the
Members entitled to participate in such action, in which case a determination
shall be made as of the earlier record date."
3. EFFECTIVENESS. The amendments to the Agreement set forth herein
shall become effective as if such amendments were included in the Agreement as
originally executed as of February 10, 1997, upon the execution of this
Amendment by Members of DTS holding the majority of outstanding Units.
4. COUNTERPARTS; FACSIMILE EXECUTION. This Amendment may be executed in
any one or more counterparts, each of which shall be deemed an original, and all
of which taken together shall constitute one and the same instrument. Receipt by
DTS or its counsel of a facsimile transmission of an execution of this Amendment
may be treated by DTS as an original execution.
5. NO OTHER MODIFICATIONS. Except as modified by this Amendment and the
exhibits hereto, the terms and conditions of the Agreement shall not be modified
and together with modifications set forth in this Amendment shall remain in full
force and effect.
IN WITNESS WHEREOF, the undersigned members have caused this Agreement to be
executed to be effective as described in Section 3 above.
________________ COLUMBIA DBS, INC.,
Date Executed A VIRGINIA CORPORATION
By: ___________________________
Name: Xxxx X. Xxxxx
Title: Vice President
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AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT OF
DIGITAL TELEVISION SERVICES, LLC BY WRITTEN CONSENT
PAGE 4
________________ COLUMBIA DBS CLASS A INVESTORS, LLC,
Date Executed A DELAWARE LIMITED LIABILITY COMPANY
By: __________________________
Name: __________________________
Title: Member
________________ COLUMBIA DBS INVESTORS, L.P.,
Date Executed A DELAWARE LIMITED PARTNERSHIP
By: Columbia Capital Corporation,
a Virginia corporation
Its: General Partner
By: _________________________
Name: Xxxx X. Xxxxx
Title: Vice President
________________ _______________________________________
Date Executed Xxxxxxx X. Xxxxxxxx, Xx.
________________ _______________________________________
Date Executed Xxxxxx X. Xxxxxxx
________________ _______________________________________
Date Executed Xxxxxxx X. Xxxxxx
________________ WEP INTERMEDIATE CORP.,
Date Executed A DELAWARE CORPORATION
By: ___________________________
Name: Xxxxxxx Xxxxxxxx, Xx.
Title: President
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AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT OF
DIGITAL TELEVISION SERVICES, LLC BY WRITTEN CONSENT
PAGE 5
________________ FLEET VENTURE RESOURCES, INC.,
Date Executed A RHODE ISLAND CORPORATION
By: ______________________________
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
________________ FLEET EQUITY PARTNERS VI, L.P.,
Date Executed A DELAWARE LIMITED PARTNERSHIP
By: Fleet Growth Resources II, Inc.
Its: General Partner
By: ______________________________
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
________________ XXXXXXXX PARTNERS III, L.P.,
Date Executed A DELAWARE LIMITED PARTNERSHIP
By: Silverado III, L.P.
Its: General Partner
By: Silverado III Corp.
Its: General Partner
By: _____________________
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
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AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT OF
DIGITAL TELEVISION SERVICES, LLC BY WRITTEN CONSENT
PAGE 6
_______________ XXXXXXX PLAZA PARTNERS,
Date Executed A RHODE ISLAND GENERAL PARTNERSHIP
By: ________________________________
Name: Xxxxxxx X. Xxxxx
Title: General Partner
MANAGER:
________________ DTS MANAGEMENT, LLC,
Date Executed A GEORGIA LIMITED LIABILITY COMPANY
By: ________________________________
Name: Xxxxxxx X. Xxxxxxxx, Xx.
Title: President
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EXHIBIT I
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
CERTIFICATE OF DESIGNATIONS
OF
SERIES A PAYMENT-IN-KIND CONVERTIBLE PREFERRED STOCK
OF
DIGITAL TELEVISION SERVICES, INC.
(Pursuant to Section 151 of the General
Corporation Law of the State of Delaware)
Digital Television Services, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Corporation (the "Board of Directors"):
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors by the Certificate of Incorporation of the
Corporation (as amended from time to time, the "Certificate of Incorporation"),
there hereby is created, out of the 10,000,000 shares of preferred stock, par
value $.01 per share, of the Corporation authorized in Article FOURTH of the
Certificate of Incorporation (the "Preferred Stock"), a series of Preferred
Stock consisting of 5,000,000 shares, which series shall have the following
powers, designations, preferences and relative, participating, optional and
other rights, and the following qualifications, limitations and restrictions (in
addition to the powers, designations, preferences and relative, participating,
optional and other rights, and the qualifications, limitations and restrictions,
stated in the Certificate of Incorporation as applicable to the Preferred
Stock):
"SECTION 1. DESIGNATION. The shares of such series created hereby shall
be designated as the "Series A Payment-in-Kind Convertible Preferred Stock"
(referred to herein as the "PIK Preferred Stock"), and the authorized number of
shares constituting such series shall be 5,000,000. The par value of the PIK
Preferred Stock shall be $.01 per share. The PIK Preferred Stock shall not be
subject to any sinking fund or mandatory redemption provision.
SECTION 2. PRIORITY. The PIK Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up or dissolution, whether
voluntary or involuntary, whether now or hereafter issued rank (i) on a parity
with any other series of Preferred Stock established hereafter by the Board of
Directors the terms of which shall specifically provide that such series shall
rank on a parity with the PIK Preferred Stock with respect to dividend rights
and rights on liquidation, winding up or dissolution (all of such series of
Preferred Stock to which the PIK Preferred Stock ranks on a parity, the "Parity
Securities"), (ii) junior to any series of Preferred
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Stock established hereafter by the Board of Directors the terms of which shall
specifically provide that such series shall rank senior to the PIK Preferred
Stock with respect to dividend rights and rights on liquidation, winding up or
dissolution (all of such series of Preferred Stock to which the PIK Preferred
Stock ranks junior, the "Senior Securities") and (iii) senior to the common
stock, par value $.01 per share (the "Common Stock") of the Corporation, and any
series of Preferred Stock established hereafter by the Board of Directors the
terms of which shall specifically provide that such series shall rank junior to
the PIK Preferred Stock with respect to dividend rights and rights on
liquidation, winding up or dissolution (all of such series of Preferred Stock to
which the PIK Preferred Stock ranks senior, the "Junior Securities").
SECTION 3. DIVIDENDS.
The holders of the PIK Preferred Stock shall be entitled to receive
when, as and if declared by the Corporation's Board of Directors, out of funds
legally available therefor, cumulative dividends payable on the shares of the
PIK Preferred Stock for each quarterly dividend period (a "Quarterly Dividend
Period"), which Quarterly Dividend Periods shall commence on March 15, June 15,
September 15 and December 15 of each year and shall end on and include the day
next preceding the first day of the next Quarterly Dividend Period, at a rate of
8% per annum, compounded annually, in respect of the Liquidation Preference (as
defined in Section 5(a)). All such dividends shall be payable on March 15, June
15, September 15 and December 15 of each year (each, a "Dividend Payment Date"),
commencing on the Dividend Payment Date next succeeding the date of issuance of
the Preferred Stock. Such dividends shall be paid to the holders of record at
the close of business on the date specified by the Board of Directors at the
time such dividend is declared, which date shall not be more than 50 or less
than 10 days prior to the applicable Dividend Payment Date.
The Corporation may, at its option, pay that portion of such dividends
through the issuance of that number of additional shares of the PIK Preferred
Stock having an aggregate Liquidation Preference equal to the aggregate dollar
amount of dividends to be paid on such Dividend Payment Date multiplied by the
Permitted Portion (as defined in Section 7). Dividends accrue from the date of
issuance, shall accrue on a daily basis without regard to the occurrence of a
Dividend Payment Date or the declaration of any dividend, and will accumulate
until paid in cash or additional shares of the PIK Preferred Stock. In the event
that a dividend is not declared on any Dividend Payment Date (the "Contemplated
Date"), such dividend must be declared on the first subsequent Dividend Payment
Date on which a dividend is declared and will accumulate from the Contemplated
Date. No fractional shares of PIK Preferred Stock shall be issued, so that the
number of shares permitted to be paid as a dividend pursuant to this Section 3
shall be rounded to the nearest whole number of shares. All dividends paid in
additional shares of PIK Preferred Stock shall be deemed issued on the
applicable Dividend Payment Date, and will thereupon be duly authorized, validly
issued, fully paid and nonassessable and free and clear of all liens and
charges.
SECTION 4. VOTING. Except as provided by the General Corporation Law of
the State of Delaware, holders of shares of the PIK Preferred Stock shall have
only those voting rights set forth in the Stockholders Agreement.
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SECTION 5. LIQUIDATION RIGHTS.
(a) PRIORITY. Upon any liquidation, winding up or dissolution,
whether voluntary or involuntary, after payment or provision for payment of all
of the debts and other liabilities of the Corporation, each holder of
outstanding shares of PIK Preferred Stock shall be entitled to receive, in cash,
out of the remaining net assets of the Corporation, $[NOTE 1] per share of PIK
Preferred Stock, plus an amount, in cash, equal to any accrued but unpaid
dividends on each such share up to the date fixed for distribution (the
"Liquidation Preference"), before any distribution shall be made to the holders
of shares of any Junior Securities or Common Stock. If, upon any liquidation of
the Corporation, the assets distributable among the holders of shares of PIK
Preferred Stock are insufficient to permit payment in full to the holders of
shares of the PIK Preferred Stock, any Parity Securities and any Senior
Securities, then the entire assets of the Corporation thus distributable shall
be distributed among the holders of the PIK Preferred Stock, any Parity
Securities and any Senior Securities in order of relative priority as to
distribution in liquidation and, as to classes and series ranking pari passu
with one another in that regard, in proportion to the respective amounts that
would be payable per share if such assets were sufficient to permit payment in
full.
(b) ADDITIONAL DISTRIBUTIONS. If assets remain in the
Corporation after payment of the full preferential amount provided for herein to
the holders of the PIK Preferred Stock, any Parity Securities and any Senior
Securities or after funds necessary for such payment have been set aside in
trust for the holders thereof, then all such remaining assets shall be
distributed:
(i) first, to the holders of the Common Stock, until such
holders have received an amount equal to the Liquidation Preference per share;
provided that if after February 10, 1997 the Corporation (A) pays a dividend in
shares of Common Stock, (B) makes a distribution in shares of Common Stock to
holders of the Common Stock, (C) subdivides the outstanding shares of Common
Stock into a greater number of shares of Common Stock or (D) combines the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then, and in any such case, each holder of Common Stock shall receive an
amount equal to (x) the Liquidation Preference multiplied by (y) the number of
shares of Common Stock that such holder would have had if no such dividends,
distributions, subdivisions and combinations had not been effected; and
(ii) second, on an equal per share basis to the holders of the
PIK Preferred Stock (on an as-if converted to Common Stock basis on the
distribution date), any Parity Securities, any Senior Securities, any Junior
Securities and the Common Stock.
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Note 1: Prior to the filing of this Certificate of Designations with the
Secretary of State of the State of Delaware, the Manager shall insert
here the number calculated pursuant to clause (B) of the definition of
"Preferred Stock Conversion Amount" set forth in Exhibit C to the LLC
Agreement.
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SECTION 6. CONVERSION INTO COMMON STOCK.
(a) MANDATORY AND VOLUNTARY CONVERSION. Holders of the PIK
Preferred Stock shall have the right, exercisable at any time and from time to
time (unless otherwise prohibited by law, rule or regulation), to convert any or
all of their shares of the PIK Preferred Stock into Common Stock at an initial
conversion ratio of one share of PIK Preferred Stock for one share of Common
Stock, subject to adjustment as described in Section 6(e). In addition, upon the
closing of a Qualified IPO, each share of PIK Preferred Stock shall be converted
automatically upon such closing into Common Stock at an initial conversion ratio
of one share of PIK Preferred Stock for one share of Common Stock, subject to
adjustment as described in Section 6(e). The Corporation shall not issue
fractions of shares of Common Stock upon conversion of the PIK Preferred Stock.
If any fraction of a share of Common Stock would be issuable upon conversion of
the PIK Preferred Stock, then the Corporation shall, in lieu thereof, pay to the
Person entitled thereto an amount in cash equal to the initial issuance price of
a share of Common Stock pursuant to such Qualified IPO of such fraction of a
share of Common Stock, calculated to the nearest one-hundredth of a share, to be
computed on the date that the conversion occurs.
(b) PROCEDURES; ACCRUED DIVIDENDS UPON CONVERSION. The holders
of PIK Preferred Stock whose shares are converted as provided in Section 6(a)
shall deliver the certificate or certificates therefor to the principal office
of the Corporation together with written notice or acknowledgement of conversion
in form reasonably satisfactory to the Corporation and (if so required by the
Corporation or any conversion agent) accompanied by instruments of transfer in
form reasonably satisfactory to the Corporation or to such conversion agent,
duly executed by the registered holder or his duly authorized attorney, as well
as transfer taxes, stamps or funds therefor, or evidence of payment thereof, if
required by Section 6(c). The automatic conversion of any outstanding shares of
PIK Preferred Stock into Common Stock by reason of a Qualified IPO shall be
deemed to have occurred upon the closing of the Qualified IPO. The Persons
entitled to receive shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record holders of such shares at and from the
time that conversion is deemed to have occurred.
Upon the conversion of the PIK Preferred Stock into Common Stock, any
accrued but undeclared dividends on the PIK Preferred Stock shall be satisfied
as follows:
(i) to the extent permitted by law, the Corporation shall
declare such dividends on the conversion date as if the conversion date was a
Dividend Payment Date and any Permitted Portion of such dividend that the
Corporation elects to satisfy in PIK Preferred Stock under Section 3 above shall
be satisfied in Common Stock at the applicable conversion ratio; and
(ii) to the extent the Corporation is precluded by law from
declaring and paying cash dividends, such accrued and undeclared dividends shall
be declared and paid in Common Stock at the applicable conversion ratio on the
conversion date.
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(c) TAXES. If a share or shares of the PIK Preferred Stock are
converted, then the Corporation shall pay any documentary, stamp or similar
issue or transfer tax due on the issue of the Common Stock upon conversion, but
the holder shall pay to the Corporation the amount of any tax that is due (or
shall establish to the satisfaction of the Corporation payment thereof) if the
shares are to be issued in a name other than the name of such holder.
(d) RESERVATION OF SHARES. The Corporation shall at all times
reserve and keep available, out of its authorized but unissued shares of Common
Stock, enough shares of Common Stock to issue all shares of Common Stock
issuable upon conversion of the PIK Preferred Stock. All shares of Common Stock
that may be issued upon conversion of shares of PIK Preferred Stock shall be,
when so issued, validly issued, fully paid and nonassessable. In order that the
Corporation may issue shares of Common Stock upon conversion of shares of PIK
Preferred Stock, the Corporation will endeavor to comply with all applicable
federal and state securities laws.
(e) ADJUSTMENTS TO CONVERSION RATE. The conversion rate in
effect at any time shall be subject to adjustment from time to time as follows:
(i) ADJUSTMENTS FOR STOCK SPLITS, STOCK DIVIDENDS,
ETC. If the Corporation (1) pays a dividend in shares of the Common
Stock to holders of the Common Stock, (2) makes distributions in shares
of Common Stock to holders of the Common Stock, (3) subdivides the
outstanding shares of Common Stock into a greater number of shares of
Common Stock or (4) combines the outstanding shares of Common Stock
into a smaller number of shares of Common Stock, then, and in any such
case, the conversion rate in effect immediately prior to such action
shall be adjusted so that the holder of any shares of PIK Preferred
Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock that such holder would
have owned immediately following such action had such shares of PIK
Preferred Stock been converted immediately prior thereto. An adjustment
made pursuant to this Section 6(e)(i) shall become effective on the
record date in the case of a dividend or distribution and on the
effective date in the case of a subdivision or combination.
(ii) ADJUSTMENTS FOR OTHER DISTRIBUTIONS. If the
Corporation distributes pro rata to all holders of the Common Stock
shares of any class of capital stock (excluding the Common Stock), or
options, rights or warrants to acquire any class of capital stock
(including the Common Stock), or other assets of the Corporation
(excluding capital stock of the Corporation held in its treasury) and
does not make an equivalent distribution with respect to the PIK
Preferred Stock, then, and in any such case, the number of shares of
Common Stock into which each share of the PIK Preferred Stock shall be
convertible shall be adjusted so that the same shall equal the number
determined by multiplying the number of shares of Common Stock into
which such share of the PIK Preferred Stock was convertible immediately
prior to the record date of such distribution by a fraction of which
(x) the numerator shall be the Fair Market Value per share of the
Common Stock on the record date mentioned below and (y) the denominator
shall be such Fair Market Value less the then-Fair Market Value per
share of Common Stock or the securities or assets so distributed. Such
adjustment shall become effective on the record date for determination
of the holders of Common Stock entitled to receive
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the distribution. Notwithstanding the foregoing, if the Corporation
distributes rights or warrants pro rata to holders of the Common Stock
(the "Rights"), then the Corporation may, in lieu of making any
adjustment pursuant to this Section 6(e)(ii), make proper provision so
that each holder of a share of PIK Preferred Stock that is converted
into Common Stock after the record date for such distribution and prior
to the expiration or redemption of the Rights shall be entitled to
receive upon such conversion, in addition to the Common Stock issuable
upon such conversion (the "Conversion Shares"), a number of Rights to
be determined as follows: (i) if such conversion occurs on or prior to
the date for the distribution to the holders of Rights of separate
certificates evidencing such Rights ("the Distribution Date"), the same
number of Rights to which a holder of a number of shares of the Common
Stock equal to the number of Conversion Shares is entitled at the time
of such conversion in accordance with the terms and provisions of and
applicable to the Rights; and, (ii) if such conversion occurs after the
Distribution Date, the same number of Rights to which a holder of the
number of shares of the Common Stock into which a share of the PIK
Preferred Stock so converted was convertible immediately prior to the
Distribution Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of and applicable to the
Rights.
(iii) WEIGHTED AVERAGE PRICE PROTECTION. Subject to
the last sentence of this Section 6(e)(iii), if the Corporation shall,
in events other than as provided for in Sections 6(e)(i) and 6(e)(ii),
issue Common Stock or rights or warrants entitling the holders thereof
to subscribe for or to purchase shares of Common Stock at a price per
share (the "Exercise Price") less than $22.50 (adjusted for the events
described in Sections 6(e)(i) and 6(e)(ii) and this Section 6(e)(iii)),
then, and in any such case, the number of shares of Common Stock into
which each share of the PIK Preferred Stock shall be convertible shall
be adjusted to equal the number of shares of Common Stock into which
such share of PIK Preferred Stock was convertible immediately prior to
the date of such issuance multiplied by a fraction of which (x) the
numerator shall be the number of shares of Common Stock Deemed
Outstanding at the close of business on the day immediately prior to
such issuance plus the total number of shares of Common Stock (or
Common Stock underlying such rights or warrants) so offered for
subscription or purchase and (y) the denominator shall be the number of
shares of Common Stock Deemed Outstanding at the close of business on
the day immediately prior to such issuance plus the number of shares of
Common Stock that the aggregate of the Exercise Price for the shares of
Common Stock (or Common Stock underlying such rights or warrants) so
offered for subscription or purchase could purchase at $22.50 per share
(adjusted for the events set forth in Sections 6(e)(i) and 6(e)(ii) and
this Section 6(e)(iii)), such adjustment to become effective
immediately after the opening of business on the day following the date
fixed for such determination. For the purpose of this Section
6(e)(iii), the number of shares of Common Stock Deemed Outstanding at
any time shall not include shares held in the treasury of the
Corporation but shall include shares underlying outstanding options and
warrants and shares issuable upon the conversion of the PIK Preferred
Stock into shares of Common Stock. Notwithstanding the foregoing, in no
event shall any adjustment to the conversion ratio be made pursuant to
this Section 6(e)(iii) in respect of (i) any issuance of options,
rights or warrants in exchange for outstanding shares of Common Stock
if such options, rights or warrants entitle the holders thereof to
subscribe for no more than the number of shares of Common Stock
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exchanged therefor (subject to antidilution provisions similar to those
contained herein), (ii) any issuance of Common Stock upon conversion of
the PIK Preferred Stock, (iii) any issuance of Common Stock, rights or
warrants, in each case pursuant to the Employee Stock Plan or (iv) any
issuance of Common Stock (or options, rights or warrants to purchase
Common Stock) in connection with a Qualified Financing.
(iv) DEFERRAL OF ISSUANCE. In any case in which this
Section 6 shall require that an adjustment be made on or immediately
following a record date, the Corporation may elect to defer (but only
until five Business Days following the mailing of the notice described
in Section 6(h) issuing to the holder of any share of the PIK Preferred
Stock converted after such record date the shares of Common Stock into
which such PIK Preferred Stock shall have been converted, and in lieu
of the shares the issuance of which is so deferred the Corporation
shall issue or cause its transfer agent to issue temporary due bills or
other appropriate evidence of the right to receive such shares.
(f) COMPUTATIONS. All calculations under this Section 6 shall
be made to the nearest one-hundredth of a share.
(g) SHARES OTHER THAN COMMON SHARES. If, as result of any
adjustment made pursuant to Section 6(e), the holder of any share of PIK
Preferred Stock thereafter surrendered for conversion shall become entitled to
receive any shares of capital stock of the Corporation other than shares of
Common Stock, then the number of such other shares so receivable upon conversion
of any shares of the PIK Preferred Stock shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section 6.
(h) NOTICE OF CONVERSION RATE CHANGE. Whenever the conversion
rate is adjusted, the Corporation shall promptly mail to all holders of record
of shares of the PIK Preferred Stock a notice of the adjustment.
(i) VOLUNTARY CONVERSION PRIOR TO CERTAIN EVENTS. If the
Corporation consolidates or merges with, or transfers all or substantially all
of its assets to, another corporation, and stockholders of the Corporation must
approve such transaction, then a holder of shares of the PIK Preferred Stock may
convert some or all of such shares into shares of Common Stock simultaneously
with the record date for, or the effective date of, such transaction so as to
receive the rights, warrants, securities or assets that a holder of shares of
the Common Stock on that date may receive. In furtherance thereof, the
Corporation shall mail to holders of shares of the PIK Preferred Stock a notice
stating the proposed record date or effective date, as the case may be. The
Corporation shall mail the notice at least 10 days before such date.
(j) EQUIVALENT CONVERSION. If any of the following occurs,
namely: (i) any reclassification of, or change in, outstanding shares of capital
stock of the class issuable upon conversion of the PIK Preferred Stock (other
than a change in name, or par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination), or
(ii) any consolidation or merger to which the Corporation is a party and which
does not result in any reclassification of, or change in (other than a change in
name, or par
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14
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), outstanding shares of such capital
stock, then the Corporation or the successor corporation, as the case may be,
shall, as a condition precedent to such reclassification, change, consolidation
or merger, provide in its certificate of incorporation or other charter document
that each share of the PIK Preferred Stock shall be convertible into the number
and class of shares of capital stock issuable upon conversion of such share of
PIK Preferred Stock immediately prior to such reclassification, change,
consolidation or merger. Such certificate of incorporation or other charter
document shall provide for adjustments that shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 6. If this
Section 6(j) applies, then Section 6(e)(i) does not apply. If, in the case of
any such reclassification, change, consolidation or merger, the stock or other
securities and property (including cash) receivable thereupon by a holder of the
capital stock issuable upon conversion of the PIK Preferred Stock includes
shares of capital stock or other securities and property of a corporation other
than the successor corporation in such reclassification, change, consolidation
or merger, then the certificate of incorporation or other charter document of
such other corporation shall contain such additional provisions to protect the
interests of the holders of shares of the PIK Preferred Stock as the Board of
Directions shall reasonably consider necessary by reason of the foregoing, which
provisions shall be subject to approval by the affirmative vote or consent of
holders of at least 70% of the shares of the then-outstanding PIK Preferred
Stock. The provisions of this Section 6(j) shall similarly apply to successive
reclassifications, changes, consolidations and mergers.
SECTION 7. OTHER DEFINITIONS.
"Business Day" means any day other than a Saturday, Sunday or
other day on which banks are authorized or required to close by law or executive
order in Washington, D.C.
"Closing Price" with respect to any security on any Trading
Day shall mean the last reported sale price regular way or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case on the New York Stock Exchange or,
if the shares of such security are not listed or admitted to trading on such
exchange, on the principal national securities exchange on which such shares are
listed or admitted to trading or, if not listed or admitted to trading on any
national securities exchange, on the Nasdaq National Market.
"Deemed Outstanding" means the total number of outstanding
shares of Common Stock of the Corporation plus the total number of shares of
Common Stock of the Corporation into which all other outstanding securities of
the Corporation are exercisable or convertible, in each case other than (i)
shares of Common Stock issued in exchange for Class C Units of Digital
Television Services, LLC in connection with its conversion into the Corporation
and (ii) shares of Common Stock issued pursuant to the Employee Stock Plan or
any predecessor of the Employee Stock Plan.
"Employee Stock Plan" means the arrangements, terms and
procedures that the Corporation may establish from time to time for the issuance
of up to 180,000 shares of Common Stock (or such larger number of shares of
Common Stock as may be approved by (i)
I-8
15
the "Compensation Committee" of the Board of Directors, or if no such committee
exists, by the Board of Directors and (ii) the holders of at least 70% of the
shares of PIK Preferred Stock) to employees or independent contractors of the
Corporation or any Subsidiary at prices equal to the market value thereof as of
the date of issuance and pursuant to such terms and conditions (including
vesting) as the Board of Directors shall determine.
"Fair Market Value" means: (a) with respect to any security,
(i) if such security is listed on any national securities exchange or authorized
for quotation by any national securities association, the average Closing Price
of such security over the 20 consecutive Trading Days immediately preceding the
day as to which Fair Market Value is to be determined, provided that if the Fair
Market Value is being determined as of the date on which the Company consummates
a Qualified IPO, the Fair Market Value of one share of Common Stock shall be the
price paid for one share of Common Stock in such Qualified IPO, or (ii) if there
is no such closing bid price or such security is not so listed or authorized for
quotation, the value of such security as determined in good faith by a
registered broker-dealer selected by the Board of Directors; and (b) with
respect to any other asset, the value of such asset as determined in good faith
by an appraiser selected by the Board of Directors and approved by the holders
of a majority of the PIK Preferred Stock, which approval of such appraiser shall
not be unreasonably withheld.
"IPO" means an offering of equity securities of the
Corporation or its successor entity pursuant to a registration statement filed
in accordance with the Securities Act of 1933, as amended.
"Permitted Portion" means the percentage of the dividends
payable on each share of PIK Preferred Stock that may, at the option of the
Company, be paid through the issuance of additional shares of the PIK Preferred
Stock, which percentage shall equal 100% prior to a Preferred Stock
Determination, and thereafter shall equal the lesser of (i) 50% and (ii) (A)
100% less (B) the Combined Effective Marginal Tax Rate. For purposes of this
definition, a "Preferred Stock Determination" shall mean the receipt by a
beneficial owner of the PIK Preferred Stock that is a citizen or resident of the
United States or a corporation, partnership or other entity organized or created
under the laws of the United States or a political subdivision thereof (a "PIK
Beneficial Owner") of advice from its tax advisors that there is a substantial
risk that such PIK Beneficial Owner will be required to recognize federal income
taxes (assuming no deductions or losses are available to such PIK Beneficial
Owner) as a result of the receipt of a dividend on the PIK Preferred Stock in
additional shares of PIK Preferred Stock, and such PIK Beneficial Owner so
notifies the Corporation of such occurrences; provided that no Preferred Stock
Determination shall occur if reasonably promptly after the Corporation's receipt
of such notice, such PIK Beneficial Owner receives an opinion of counsel
addressed to such PIK Beneficial Owner reasonably satisfactory to such PIK
Beneficial Owner (as to the identity of counsel (it being understood that
Xxxxxx, Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P. shall be reasonably satisfactory),
the substance of the opinion and the factual bases supporting the opinion) to
the effect that such PIK Beneficial Owner will not be required under Section 305
of the Internal Revenue Code of 1986, as amended, or of any successor internal
revenue laws of the United States (the "Code"), or similar provisions of the
Code, to recognize income for federal income tax purposes in respect of any
dividends payable in additional shares of PIK Preferred Stock pursuant to
Section 3 hereto as a result of either (x) the application of the Code or
interpretations thereof that constitute "substantial authority" under Code
Section 6662 or (y)
I-9
16
that given the facts and circumstances then existing there is a reasonable basis
for the conclusion that the PIK Preferred Stock is not properly characterized as
"preferred stock" for purposes of Code Section 305. For purposes of this
definition, the Combined Effective Marginal Tax Rate shall mean the highest
single effective rate (expressed as a percentage) of United States federal,
state and local income taxation applicable to holders of 5% or more of the PIK
Preferred Stock whose principal residence or commercial domicile is within the
United States determined as of each record date for the payment of dividends,
giving effect to any limitations on the deductibility of state and local income
taxes in computing United States federal taxable income, and assuming that such
holders of PIK Preferred Stock are individuals and subject to the highest United
Stated federal and highest state and local marginal income tax rates then
applicable in the jurisdictions in which they have their principal residence or
commercial domicile. The determination of the Combined Effective Marginal Tax
Rate shall be made by the Corporation.
"Person" means any natural person, partnership, trust, estate,
association, limited liability company, corporation, custodian, nominee,
governmental instrumentality or agency, body politic or any other entity in its
own or any representative capacity.
"Qualified Financing" means the first issuance after February
10, 1997 of $50,000,000 or more of indebtedness by the Corporation or any
Subsidiary in a single transaction, in which case the Corporation may issue
equity (or rights to acquire equity) in the Corporation in the same transaction
constituting no more than 5.0% of the outstanding capital stock of the
Corporation on a fully-diluted basis without resulting in the price protection
under Section 6(e)(iii).
"Qualified IPO" means an underwritten IPO resulting in gross
proceeds to the Corporation or its successor, before fees and expenses, of at
least $25,000,000 and for a per share price, which shall be determined by
dividing the then Total Equity Value of the Corporation by the total number of
shares of capital stock outstanding, equal to at least $33.75 per share if the
IPO is consummated on or before July 31, 1998; $39.37 per share if the IPO is
consummated after July 31, 1998 but on or before July 31, 1999; and $45.00 per
share if the IPO is consummated at any time after July 31, 1999, which per share
amounts shall be adjusted for the events described in Sections 6(e)(i) and
6(e)(ii).
"Subsidiary" means any entity more than 50% of the equity
interests of which are owned directly or indirectly by the Corporation or more
than 50% of the total voting power entitled to vote in the election of
directors, managers, general partners or trustees of which is held directly or
indirectly by the Corporation.
"Total Equity Value" means, as of any day of determination,
the enterprise value (without duplication) of the Corporation (including the
fair market value of its equity, but excluding the fair market value of its
debt), as determined by an independent investment banking firm of national
standing with experience in such valuations (which firm may be an underwriter of
the Qualified IPO) and evidenced by a written opinion in customary form,
addressed to the Board of Directors; provided that for purposes of any such
determination, the enterprise value of the Corporation shall be calculated as if
all of the shares of capital stock of the Corporation were registered and
publicly held with no restrictions on resale, and as if the Corporation had
I-10
17
no controlling stockholder. For purposes of any such determination, such banking
firm's written opinion may state that such fair market value is no less than a
specified amount.
"Trading Day" with respect to a securities exchange or
automated quotation system means a day on which such exchange or system is open
for a full day of trading.
[SIGNATURES FOLLOW ON THE NEXT PAGE]
I-11
18
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed by its authorized officers, this ________ day of
____________, ______.
DIGITAL TELEVISION SERVICES, INC.
By: _________________________________
Name:
Title:
Attest:
By: ___________________________
Name:
Title:
I-12
19
EXHIBIT J
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
CERTIFICATE OF MERGER -- PREFERRED STOCK CORPORATE CONVERSION
CERTIFICATE OF MERGER
OF
DIGITAL TELEVISION SERVICES, LLC
INTO
WEP INTERMEDIATE CORP.
The undersigned corporation, organized and existing under and by virtue of the
General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and jurisdiction of organization of each of the
constituent entities of the merger is as follows:
NAME JURISDICTION OF ORGANIZATION
---- ----------------------------
WEP Intermediate Corp. Delaware
Digital Television Services, LLC Delaware
SECOND: That a plan and agreement of merger among the parties to the
merger has been approved, adopted, certified, executed and acknowledged by each
of the constituent entities in accordance with the requirements of Section
18-209 of the Limited Liability Company Act of the State of Delaware and
Sections 264(c) and 251 of the General Corporation Law of the State of Delaware.
THIRD: That pursuant to Sections 264(e) and 251(e) of the General
Corporation Law of the State of Delaware, the certificate of incorporation of
the surviving corporation shall be substantially in the form of Exhibit M to the
Amended and Restated Limited Liability Agreement of Digital Television Services,
LLC (the "Limited Liability Company Agreement").
FOURTH: That the name of the surviving corporation of the merger is
Digital Television Services, Inc.
FIFTH: That the executed plan and agreement of merger is contained in
the Limited Liability Company Agreement. The merger effected by this Certificate
of Merger is a "Preferred Stock Corporate Conversion" as defined in the Limited
Liability Company
20
Agreement. The Limited Liability Company Agreement is on file at the principal
place of business of the surviving corporation. The address of the principal
place of business of the surviving corporation is Building C-200, 000 Xxxxxxx
Xxxxxx Xxxx, Xxxxxxx, XX 00000.
SIXTH: That a copy of the plan and agreement of merger will be
furnished by the surviving corporation, on request and without cost to any
member or stockholder or of any other person holding any interest in any
constituent entity.
IN WITNESS WHEREOF, WEP Intermediate Corp. has caused this Certificate
to be signed by Attorney-in-Fact, its authorized officer, this ______ day of
__________, ______.
WEP INTERMEDIATE CORP.
By: DTS Management, LLC,
as Attorney-in-Fact
By: ____________________________
Title:
J-2
21
EXHIBIT K
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
CERTIFICATE OF MERGER -- COMMON STOCK CORPORATE CONVERSION
CERTIFICATE OF MERGER
OF
DIGITAL TELEVISION SERVICES, LLC
INTO
WEP INTERMEDIATE CORP.
The undersigned corporation, organized and existing under and by virtue of the
General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and jurisdiction of organization of each of the
constituent entities of the merger is as follows:
NAME JURISDICTION OF ORGANIZATION
---- ----------------------------
WEP Intermediate Corp. Delaware
Digital Television Services, LLC Delaware
SECOND: That a plan and agreement of merger among the parties to the
merger has been approved, adopted, certified, executed and acknowledged by each
of the constituent entities in accordance with the requirements of Section
18-209 of the Limited Liability Company Act of the State of Delaware and
Sections 264(c) and 251 of the General Corporation Law of the State of Delaware.
THIRD: That pursuant to Sections 264(e) and 251(e) of the General
Corporation Law of the State of Delaware, the certificate of incorporation of
the surviving corporation shall be substantially in the form of Exhibit M to the
Amended and Restated Limited Liability Agreement of Digital Television Services,
LLC (the "Limited Liability Company Agreement").
FOURTH: That the name of the surviving corporation of the merger is
Digital Television Services, Inc.
FIFTH: That the executed plan and agreement of merger is contained in
the Limited Liability Company Agreement. The merger effected by this Certificate
of Merger is a "Common Stock Corporate Conversion" as defined in the Limited
Liability Company
22
Agreement. The Limited Liability Company Agreement is on file at the principal
place of business of the surviving corporation. The address of the principal
place of business of the surviving corporation is Building C-200, 000 Xxxxxxx
Xxxxxx Xxxx, Xxxxxxx, XX 00000.
SIXTH: That a copy of the plan and agreement of merger will be
furnished by the surviving corporation, on request and without cost to any
member or stockholder or of any other person holding any interest in any
constituent entity.
IN WITNESS WHEREOF, WEP Intermediate Corp. has caused this Certificate
to be signed by Attorney-in-Fact, its authorized officer, this ______ day of
__________, ______.
WEP INTERMEDIATE CORP.
By: DTS Management, LLC,
as Attorney-in-Fact
By: ____________________
Title:
K-2
23
EXHIBIT L
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement") is made as of this
______ day of _________, ______ by and among Digital Television Services, Inc.,
a Delaware corporation (the "Company"), and the stockholders (the
"Stockholders") listed on the signature pages hereto.
WHEREAS, the Company was formerly a Delaware limited liability company
known as Digital Television Services, LLC (the "LLC") and the Stockholders were
all of the members of the LLC; and
WHEREAS, in accordance with the Amended and Restated Limited Liability
Company Agreement of the LLC (the "LLC Agreement"), the LLC has been converted
into the Company pursuant to a Preferred Stock Corporate Conversion (as defined
in the LLC Agreement); and
WHEREAS, the LLC Agreement requires the Stockholders to enter into this
Stockholders Agreement in order to set forth certain agreements with respect to
the management of the Company, the transfer of the securities of the Company now
owned or hereafter acquired by each of the Stockholders and certain other
matters;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. When used herein, the following terms shall
have the following meanings:
"Affiliate" shall mean, with respect to any specified Person, any other
Person that directly or indirectly controls, or is under common control with, or
is owned or controlled by, the specified Person. For purposes of this
definition, (i) "control" means, with respect to any specified Person, either
(x) the beneficial ownership of 50% or more of the equity securities issued by
such Person or (y) the power to direct the management and policies of the
specified Person through the ownership of voting securities or other equity
interests, by contract or otherwise, (ii) the terms "controlling," "control
with" and "controlled by," etc., shall have
24
meanings correlative to the foregoing, and (iii) the stockholders and partners
of such Person shall be deemed to be Affiliates of such Person, provided,
however for purposes of the limitation on transactions with Affiliates set forth
in Section 2.3(a)(viii) (including the definition of Permitted Reimbursements),
the percentage in clause (i)(x) above shall be 10% and clause (iii) shall
include officers, directors and employees.
"Board of Directors" shall mean the board of directors of the Company.
"Certificate of Designations" shall mean the Certificate of
Designations of the PIK Preferred Stock as filed with the Secretary of State of
the State of Delaware, as amended from time to time.
"Change of Control of the Company" means (i) the merger, consolidation
or other business combination of the Company or any of its Subsidiaries with or
into, or the merger of, another Person (other than the Company or a Subsidiary
of the Company) with or into the Company with the effect that, immediately after
such transaction, the stockholders of the Company immediately prior to such
transaction hold less than a majority in interest of the total voting power
entitled to vote in the election of directors, managers or trustees of the
Person surviving such transaction or less than 50% of the economic interests in
such Person, or (ii) the acquisition by any Person or related group of Persons,
by way of merger, sale, transfer, consolidation or other business combination or
acquisition, of (x) all or substantially all of the assets, property or business
of the Company, (y) more than 50% of the total voting power entitled to vote in
the election of directors, managers or trustees of the Company or such other
Person as survives the transaction, or (z) more than 50% of the economic
interests in the Company or such other Person as survives the transaction.
"Change of Control of Columbia" shall mean, and such Change of Control
of Columbia shall be deemed to have occurred after, either of the following
events:
(A) if at any time, any Person or group of Persons other than
those Persons identified in that certain Class A Unit
Membership Interest Purchase Agreement between the LLC,
Whitney, Fleet and Columbia dated as of February 10, 1997 as
members of Columbia, partners of Columbia DBS Investors, L.P.,
shareholders of Columbia Capital Corporation or shareholders
of Columbia DBS, Inc., and their Family Members shall own in
the aggregate 50% or more of the partnership interests, member
interests, capital stock or other equity interests in either
Columbia or Columbia DBS Investors, L.P. or any successor
entity to either of them, or
(B) if at any time, Persons other than Xxxxxx X. Blow, Xxxxx X.
Xxxxxx, Xx., Xxxxx X. Mixer, Xxxx X. Xxxxxx, Xxxx X. Xxxxxxx,
Xxxxx X. Xxxxxx III, R. Xxxxxxx Xxxxxx III, Xxxxx Xxxxxxx,
Xxxxxx Xxxxxxxxx, or Xxxx X. Xxxxx shall constitute a majority
of the board of directors of the general partner of Columbia
DBS Investors, L.P., the managers of Columbia, or otherwise
have a majority of the votes on any board of directors, board
of managers or similar governing body that has plenary
authority over the business and affairs of Columbia or
Columbia
L-2
25
DBS Investors, L.P. or otherwise has the power to direct
either of such Stockholder's investment in the Company.
"Xxxxxxxx" shall mean Xxxxxxxx Partners III, L.P., a Delaware limited
partnership.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor federal revenue law.
"Columbia" shall mean Columbia DBS Class A Investors, LLC, a Delaware
limited liability company, or its successors or assigns.
"Columbia Entities" shall mean Columbia Capital Corporation, Columbia,
Columbia DBS, Inc. and Columbia DBS Investors, L.P.
"Common Stock" shall mean the Common Stock, par value $.01 per share,
of the Company.
"Employee Stock Plan" shall mean the arrangements, terms and procedures
that the Company may establish from time to time for the issuance of up to
180,000 shares of Common Stock (or such larger number of shares of Common Stock
as may be approved by (i) the "Compensation Committee" of the Board of
Directors, or if no such committee exists, the Board of Directors and (ii) the
holders of at least 70% of the shares of PIK Preferred Stock) to employees or
independent contractors of the Company or any Subsidiary at prices equal to the
market value thereof as of the date of issuance and pursuant to such terms and
conditions (including vesting) as the Board of Directors shall determine.
"Family Member" shall mean (a) with respect to any individual, such
individual's spouse, any descendants (whether natural, adopted or in the process
of adoption), any trust all of the beneficial interests of which are owned by
any of such individuals or by any of such individuals together with any
organization described in Code Section 501(c)(3), the estate of any such
individual, and any corporation, association, partnership or limited liability
company all of the equity interests of which are owned by those above-described
individuals, trusts or organizations and (b) with respect to any trust, the
owners of the beneficial interests of such trust.
"Fiscal Year" shall mean the calendar year.
"Fleet" shall mean collectively, the group consisting of the following
entities, or their successors: Fleet Venture Resources, Inc., a Rhode Island
corporation, Fleet Equity Partners VI, L.P., a Delaware limited partnership,
Xxxxxxxx and Xxxxxxx Plaza Partners, a Rhode Island general partnership.
X-0
00
"Xxxxxxxxx and Collateral Agreement" shall mean that certain Guarantee
and Collateral Agreement made by the Company, as a grantor, Columbia DBS
Management, LLC, certain Subsidiaries of the Company, as guarantors and
grantors, and Columbia DBS, Inc., Columbia Capital Corporation, Columbia DBS
Investors, L.P. and certain individuals, as investors and pledgors in favor of
Canadian Imperial Bank of Commerce, as administrative agent dated as of November
27, 1996.
"Interim Financing" shall mean the issuance by the Company of up to
$25,000,000 of indebtedness prior to any Qualified Financing or IPO the proceeds
of which are used to fund the Company's acquisition of NRTC System Nos. 0422,
1071, 0120, 0073, and 0164 located in Georgia and Alabama.
"Liquidation Preference" shall have the meaning ascribed thereto in the
Certificate of Designations.
"NRTC" shall mean the National Rural Telecommunications Cooperative.
"NRTC System" shall mean any one of the geographical areas within the
United States of America specifically designated by the NRTC, within which the
NRTC has granted to any Person rights to distribute direct broadcast satellite
services.
"Permitted Reimbursements" shall mean the reimbursement by the Company
or any of its Subsidiaries to the Columbia Entities, Whitney or Fleet, or any of
their Affiliates of actual out-of-pocket travel expenses not to exceed $7,500
per year in the aggregate, and such other expenses as may be approved prior to
payment by the Chief Executive Officer or Chief Financial Officer of the
Company, and the Xxxxxxxx Designee and one Whitney Designee, which expenses in
each case are incurred in connection with services to the Company or any
Subsidiary in connection with the ongoing business and affairs (including
financing and acquisitions) of the Company or any Subsidiary, other than
services as a member of the Board of Directors or similar services associated
with monitoring the investment by Columbia, Columbia DBS Investors, L.P. or
Columbia DBS, Inc., Whitney or Fleet.
"Permitted Transferee" shall mean (i) in the case of Whitney, Whitney's
Affiliates and the Family Members of those Affiliates who are individuals, (ii)
in the case of each entity comprising the collective definition of "Fleet", the
Affiliates of such entity and the Family Member of those Affiliates who are
individuals (iii) in the case of Columbia, (a) Columbia's general partner
(Columbia Capital Corporation) and (b) Columbia Capital Corporation's and
Columbia's Affiliates and the Family Members of those Affiliates who are
individuals, and (iv) in the case of any other Stockholder, any Family Member of
such Stockholder; provided, however, that in each case such Person shall agree
in writing with the parties hereto to be bound by and to comply with all
applicable provisions of this Agreement.
"Person" shall mean any natural person, partnership, trust, estate,
association, limited liability company, corporation, custodian, nominee,
governmental instrumentality or agency, body politic or any other entity in its
own or any representative capacity.
L-4
27
"PIK Preferred Stock" shall mean the Series A Payment-in-Kind
Convertible Preferred Stock, par value $.01 per share, of the Company.
"Preferred Stockholders" shall mean the record holders of the PIK
Preferred Stock and a "Preferred Stockholder" shall mean any one of them.
"Prime Rate" as of a particular date shall mean the prime rate of
interest as published on that date in the Wall Street Journal, and generally
defined therein as "the base rate on corporate loans posted by at least 75% of
the nation's 30 largest banks." If the Wall Street Journal is not published on a
date for which the Prime Rate must be determined, the Prime Rate shall be the
prime rate published in the Wall Street Journal on the nearest-preceding date on
which the Wall Street Journal was published.
"Qualified Financing" means the first issuance after February 10, 1997
of $50,000,000 or more of indebtedness by the Company or any Subsidiary in a
single transaction, in which case the Company may issue equity (or rights to
acquire equity) in the Company in the same transaction constituting no more than
5.0% of the outstanding capital stock of the Company on a fully-diluted basis
without resulting in the price protection under Section 6(e)(iii) of the
Certificate of Designations.
"Registration Rights Agreement" shall mean that certain registration
rights agreement dated February 10, 1997, by and among the LLC and the members
of the LLC on the date of such agreement.
"Stock" shall mean the Common Stock and the PIK Preferred Stock.
"Subsidiary" shall mean any entity more than 50% of the equity
interests of which are owned directly or indirectly by the Company or more than
50% of the total voting power entitled to vote in the election of directors,
managers, general partners or trustees of which is held directly or indirectly
by the Company.
"10% Stockholder" shall mean any Stockholder that holds at least 10% of
all outstanding capital stock of the Company, and in all events the term "10%
Stockholder" shall include Columbia, Columbia DBS Investors, L.P., Whitney, and
each entity that is part of the group of entities collectively defined as
"Fleet" herein.
"Transfer" shall mean any sale, assignment, transfer, conveyance,
pledge, hypothecation, or other disposition, voluntarily or involuntarily, by
operation of law, with or without consideration, or otherwise (including,
without limitation, by way of intestacy, will, gift, bankruptcy, receivership,
levy, execution, charging order or other similar sale or seizure by legal
process) of all or any portion of any asset.
"Transfer Notice" shall mean written notice given to the Company and
all Stockholders of all the details of any proposed Transfer of Stock including
the name of the proposed transferee, the date of the proposed Transfer, the
portion of the Stockholder's Stock to be transferred, the price or other
consideration, if any, to be received, and a complete description of all noncash
consideration to be received.
L-5
28
"Vote Shift" shall mean (a) in the case there is a seven member Board
of Directors, (i) the elimination of the extra vote held by each of the two
directors entitled to two votes, and (ii) the increase in the number of votes
held by the Xxxxxxxx Designee and one of the Whitney Designees, in each case
from one vote to two votes, with the result that the Xxxxxxxx Designee and the
Whitney Designees shall have, in the aggregate, five of the nine votes on the
seven-member Board of Directors, and (b) in the case there is a nine member
Board of Directors, (i) the increase in the number of votes held by the Xxxxxxxx
Designee and one of the Whitney Designees from one vote to two votes each, and
(ii) the increase in the number of votes held by the other Whitney Designee from
one vote to three votes, with the result that the Xxxxxxxx Designee and the
Whitney Designees shall have, in the aggregate, seven of the thirteen total
votes on the nine member Board of Directors.
"Whitney" shall mean Whitney Equity Partners, L.P., a Delaware limited
partnership, or its successors or assigns.
SECTION 1.2. ADDITIONAL TERMS. The following terms shall have the
meanings indicated or referred to in the following Sections of this Agreement:
Term Section
---- -------
1933 Act 4.2(d)
AAA 6.10(b)
AAA Rules 6.10(b)
Agreement Introductory Paragraph
Appraisal Process 4.5(a)
Arbitration Notice 6.10(c)
Arbitrators 6.10(b)
Change Notice 5.1(b)
Xxxxxxxx Designee 5.1(a)
Class B Units 2.4(a)
Closing 4.4(b)
Company Introductory Paragraph
First Arbitrator 6.10(e)
Indirect Transfer 4.3(b)(iv)
LLC Introductory Paragraph
LLC Agreement Recitals
Offered Stock 4.3(a)
Optional Purchase Event 4.3(b)
Petitioner 6.10(d)
Respondent 6.10(d)
Second Arbitrator 6.10(e)
Sole Arbitrator 6.10(d)
Third Arbitrator 6.10(e)
Valuation Date 4.3(d)
Whitney Designee 5.1(a)
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ARTICLE II
CONDUCT OF BUSINESS
SECTION 2.1. SCOPE OF ARTICLE. The provisions of this Article II shall
apply to all Stock held by any Stockholder, whether or not held or acquired by
such Stockholder on or after the date of this Agreement or at or after any time
such Stockholder first became subject to this Agreement.
SECTION 2.2. INFORMATION TO BE PROVIDED. Within ninety (90) days after
the end of each Fiscal Year, each Stockholder shall be furnished with annual
financial statements containing a balance sheet, income statement, and statement
of changes in working capital as of or for the Fiscal Year then ending which
financial statements shall be prepared in accordance with generally accepted
accounting principles and shall be audited by Xxxxxx Xxxxxxxx & Co. or such
other firm of independent certified public accountants as may be selected by the
Board of Directors and reasonably satisfactory to the holders of at least 70% of
the PIK Preferred Stock. The Company shall also provide to each of Whitney,
Fleet and such other Stockholders as the Board of Directors may determine (i) an
annual operating budget and capital expenditure budget for each Fiscal Year
(which shall be delivered prior to December 1 of the previous Fiscal Year); (ii)
unaudited quarterly financial statements within 45 days of the completion of
each calendar quarter of the Fiscal Year; and (iii) unaudited monthly financial
statements containing a balance sheet, a statement of income, and a statement of
changes in working capital and showing variances to the annual operating budget
and capital expenditure budget within 30 days after the last day of each month.
SECTION 2.3. BOOKS AND RECORDS; VISIT TO BUSINESS PREMISES. The Company
shall keep books and records at its principal place of business, which shall set
forth an accurate account of all transactions of the Company. Any Stockholder or
its designated representative shall have the right, during normal business hours
and upon two business days prior written notice to the Company specifying the
records or information desired and the purpose for which the records or
information is sought, to have access to and inspect and copy, at its expense,
the contents of such books or records. Any 10% Stockholder or its designated
representative shall have the right, during normal business hours and upon three
(3) business days prior notice specifying the business premises of the Company
that the Stockholder wishes to visit and purpose for which the Stockholder
desires to visit, to personally visit and inspect any business premises of the
Company. The provisions of this Section 2.3 to the contrary notwithstanding, the
Company shall have the right to keep confidential from the Stockholder for such
period of time as the Company deems reasonable, any information which the
Company reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the Company in good faith believes is not in
the best interest of the Company.
SECTION 2.4. SPECIAL VOTING RIGHTS OF THE PIK PREFERRED STOCK.
(a) Class Vote Required. For so long as any shares of PIK Preferred
Stock are outstanding, without the vote of the holders of at least seventy
percent (70%) of the PIK Preferred Stock and, if there has been a Vote Shift as
a result of a Change of Control of Columbia, seventy percent (70%) of those
shares of the then outstanding Common Stock which
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were issued in exchange for Class B Units of the LLC (the "Class B Units"), the
Company shall not take any action that:
(i) Alters or changes the rights, preferences or
privileges with respect to the PIK Preferred Stock
(or, if there has been a Vote Shift, the Common
Stock).
(ii) Creates, by reclassification or otherwise, any new
class or series of capital stock having rights,
preferences or privileges senior or pari passu to the
PIK Preferred Stock (or, if there has been a Vote
Shift, the Common Stock).
(iii) Results in any merger, reorganization, Change of
Control of the Company or any transaction or a series
of related transactions in which all or substantially
all of the assets, properties, or businesses of the
Company and its Subsidiaries taken as a whole are
sold or otherwise transferred to Persons other than
the Company or any of its Subsidiaries, unless such
transaction would result in cash proceeds to the
holders of the PIK Preferred Stock with respect to
the PIK Preferred Stock of an amount per share equal
to or greater than the Liquidation Preference.
(iv) Results in an IPO that is not a Qualified IPO,
subject to the rights of the Stockholders under the
Registration Rights Agreement.
(v) Results in the redemption or repurchase of any
capital stock of the Company, whether in the form of
cash or promissory notes, or otherwise (except in
connection with the redemption or acquisition of
capital stock of the Company held by employees,
directors, or consultants of the Company or any
Subsidiary, or Permitted Transferees of such Persons,
in connection with or in furtherance of the
termination of such relationship).
(vi) Results in the issuance of any equity interest in the
Company or in any Subsidiary, or rights to acquire
such equity interests, other than under the Employee
Stock Plan or in connection with a Qualified
Financing or an Interim Financing.
(vii) Results in any distribution with respect to any
equity interests in the Company (other than as
permitted in clause (v) above).
(viii) Results in any contract, agreement, loan, transaction
or other relationship with the Company or any
Subsidiary and any of the Columbia Entities, Whitney
or Fleet, or with an Affiliate of any of them
(excluding for this purpose any Subsidiary) provided
that the foregoing shall not prohibit any payment of
Permitted Reimbursements.
(ix) Results in a change in the size, voting or
composition of the Board of Directors.
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(x) Results in an increase in the number of shares of
Common Stock authorized to be issued under the
Employee Stock Plan.
(xi) Results in the Company being engaged in any business
other than the distribution of, or the indirect
holding of rights to distribute, DirecTv broadcast
satellite services, programming and products.
(b) Special PIK Preferred Stock Vote. For so long as the any shares of
PIK Preferred Stock are outstanding, without the consent of holders of at least
fifty percent (50%) of the shares of PIK Preferred Stock neither the Company nor
any Subsidiary shall enter into or consummate an acquisition of any NRTC System
(other than those NRTC Systems permitted to be acquired by the LLC), or more
than one NRTC System in the same or a series of related transactions from a
single seller or group of Affiliated sellers, if the acquisition price per
household is greater than $120 or the aggregate purchase price exceeds
$25,000,000; provided, however, that this Section 2.4(b) shall expire on
February 10, 1999.
(c) Meetings of the Stockholders may be called by any 10% Stockholder
by notice to the other Stockholders setting forth the date and time of the
meeting, the nature of the business to be transacted and the place of the
meeting. Notice of any meeting shall be given in accordance with the Bylaws of
the Company to all Stockholders not less than two (2) days nor more than ninety
(90) days prior to the meeting.
ARTICLE III
PARTICIPATION RIGHTS
SECTION 3.1. PARTICIPATION RIGHTS. Except in the case of issuance of
shares of capital stock of the Company (i) pursuant to the Employee Stock Plan,
(ii) in connection with a Qualified Financing or Interim Financing, (iii) in
exchange for capital contributions consisting of property other than cash, or
(iv) pursuant to Section 6(e) of the Certificate of Designations, prior to
issuing any additional shares of capital stock of the Company all Stockholders
(other than any Stockholders who own shares of Common Stock solely through
participation in the Employee Stock Plan) shall have been offered the right to
purchase their proportionate share of such additional shares of capital stock on
the same terms and subject to the same conditions as the proposed issuance to
others, which rights to purchase shall be offered to such Stockholder in the
ratio that their aggregate number of shares of Stock (other than shares of
Common Stock obtained through the Employee Stock Plan) bear to the aggregate
number of shares of such Stock. Any shares of capital stock not initially
subscribed for by such Stockholders shall be reoffered to those Stockholders
electing initially to purchase their proportionate share hereunder in proportion
to the relative number of shares of Stock held by those Stockholders initially
electing to purchase their proportionate share. The Company shall determine the
timing and such other procedures as may be necessary and appropriate to enable
such Stockholders to exercise their rights hereunder, provided that in any event
such Stockholders shall be given no less than five (5) business days prior
notice before being required to commit to purchase the shares of capital stock
pursuant to this Section 3.1.
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ARTICLE IV
TRANSFERS OF STOCK
SECTION 4.1. SCOPE OF ARTICLE; MANDATORY PLEDGE OF STOCK. The
provisions of this Article IV shall apply to all Stock, whether or not held or
acquired by a Stockholder at or after the date of this Agreement or at or after
any time such Stockholder first became subject to this Agreement. Every Transfer
shall be subject to all of the terms, conditions, restrictions, and obligations
of this Agreement. Any attempted Transfer which does not comply with the
provisions of this Article shall be void and the Company shall not recognize the
attempted purchaser, assignee, or transferee for any purpose whatsoever, and the
Stockholder attempting such Transfer shall have breached this Agreement for
which the Company and the non-breaching Stockholders shall have all remedies
available for breach of contract.
Each Stockholder hereby agrees to grant a security interest in,
collaterally assign, pledge or hypothecate its Stock as security for the debts
of the Company and its Subsidiaries pursuant to the Guarantee and Collateral
Agreement. Each Stockholder agrees to execute any and all further instruments
and documents as may be necessary or appropriate to give effect to these
provisions. This provision shall no longer apply after such security interest is
released by the administrative agent under the Guarantee and Collateral
Agreement.
SECTION 4.2. CONDITIONS PRECEDENT TO TRANSFER OF STOCK. Subject to
Sections 4.3 and 4.4, a Stockholder may Transfer all or any shares of Stock held
by such Stockholder if all the following conditions are satisfied:
(a) Prior Notice. At least ten (10) days prior to any proposed Transfer
of Stock otherwise permitted pursuant to this Section, the Stockholder proposing
to Transfer all or any shares of Stock held by such Stockholder gives a Transfer
Notice.
(b) Expenses. The transferor agrees to reimburse the Company for any
expenses reasonably incurred by the Company in connection with the consummation
of the Transfer.
(c) Transfer Documents; Effective Time of Transfer. Such Stockholder
and its purchaser, transferee or assignee shall execute, acknowledge, and
deliver to the Company such instruments of transfer and assignment with respect
to such transaction as are in form and substance reasonably satisfactory to the
Company, including, without limitation, the written agreement of the purchaser,
transferee or assignee to assume and be bound by all of the obligations of the
transferor under this Agreement.
(d) Securities Law Compliance. Either (i) the Transfer is to the heirs,
devisees or legatees of a deceased Stockholder; (ii) the Stock to be Transferred
is registered under the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "1933 Act"), and any applicable state securities
laws; or (iii) the Company determines that the Transfer qualifies for an
exemption from the registration requirements of the 1933 Act and any applicable
state securities laws. Except as specifically provided in the Registration
Rights Agreement, the Company has no obligation or intention to register any of
the Stock for resale under any federal
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or state securities laws or to take any action which would make available any
exemption from the registration requirements of such laws.
(e) Opinion of Counsel. In its discretion, the Company may require as a
condition precedent to any Transfer of Stock delivery to the Company, at the
proposed transferor Stockholder's expense, of an opinion of counsel satisfactory
(both as to the counsel and substance of the opinion) to the Company that the
proposed Transfer will satisfy all or certain of the conditions set forth in
Sections 4.2(c) and (d).
(f) Other Agreements. The Transfer complies with the provision of any
employment agreement or other agreement between the Stockholder and the Company
or any Subsidiary.
SECTION 4.3. RIGHT OF FIRST REFUSAL.
(a) Grant of Option. Upon the occurrence of an Optional Purchase Event
with respect to a Stockholder, the Company, followed by all of the 10%
Stockholders, shall have successive options to purchase all, but not less than
all, of the shares of Stock proposed to be sold, assigned or transferred by such
Stockholder (the "Offered Stock") pursuant to the terms and conditions set forth
in this Agreement.
Upon the occurrence of an Optional Purchase Event, the Stockholder with
respect to whom the Optional Purchase Event has occurred shall immediately give
written notice to the Company and to all 10% Stockholders, which notice shall
describe the Optional Purchase Event (unless the Optional Purchase Event is the
giving of a Transfer Notice, in which case the Transfer Notice shall suffice).
If the Stockholder with respect to whom the Optional Purchase Event has occurred
does not provide such notice and another Stockholder knows of the occurrence of
such Optional Purchase Event, such Stockholder may send written notice of the
Optional Purchase Event to the Company, and if the Company determines that
Optional Purchase Event has occurred, the Company shall provide to all 10%
Stockholders the Transfer Notice.
(b) Optional Purchase Events. For purposes of this Agreement, the term
"Optional Purchase Event" shall mean any of the following events with respect to
a Stockholder:
(i) The delivery of a Transfer Notice by the Stockholder
unless such Transfer is to a Permitted Transferee.
(ii) In the case of any Stockholder that is an individual,
the entry by any court of an order or adjudication
that the current or former spouse of the Stockholder
has acquired any rights in any shares of the
Stockholder's Stock as a result of divorce, equitable
distribution or community property partition
proceedings pursuant to the laws of any state or
jurisdiction.
(iii) In the case of any Stockholder who initially received
such Stock from the Company (or an equity interest in
a predecessor of the Company) when such Stockholder
was an officer, director, employee, manager or
independent contractor of the Company or any
Subsidiary, such
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Stockholder is no longer an officer, director,
employee, manager or an independent contractor of the
Company or any Subsidiary.
(iv) In the case of Columbia, Columbia DBS Investors,
L.P., Columbia DBS, Inc., or any other Stockholder
substantially all of the assets of which consist of
such Stockholder's Stock, any Transfer of its capital
stock or other equity interests, or the sale or
issuance of any capital stock or equity interest in
such Stockholder, unless such Transfer, sale or
issuance is to a Person who was an owner of such
Stockholder on February 10, 1997 or a Permitted
Transferee of such Stockholder (an "Indirect
Transfer"); provided however, Columbia, Columbia DBS
Investors, L.P. or Columbia DBS, Inc. may admit
partners, members or shareholders without triggering
this clause if such partners, members or shareholders
are employees of Columbia Capital Corporation or if
such additional partners, members or shareholders do
not acquire in the aggregate more than ten percent
(10%) of the equity interests in such Columbia
Entity. In the case of an Indirect Transfer, the
right of first refusal under this Section 4.3 and the
right of co-sale under Section 4.4 shall apply to
that number of shares of Stock of the Stockholder
with respect to which an Indirect Transfer has
occurred based upon the amount of the equity interest
of such Stockholder that is Transferred or issued in
the Indirect Transfer relative to the total equity
interests in such Stockholder.
(c) Proposed Transfer for Consideration. If the Optional Purchase Event
is the delivery of a Transfer Notice or an Indirect Transfer and the Transfer or
Indirect Transfer is for cash, indebtedness, property or other consideration,
then the Company's and the 10% Stockholders' successive options shall be to
purchase the Offered Stock for the fair market value of the consideration
proposed to be received in the Transfer or Indirect Transfer or payable at the
closing described below, and pursuant to all of the other terms and conditions
of the proposed Transfer or Indirect Transfer. The Stockholder desiring to
Transfer the Offered Stock (or the Stockholder with respect to which an Indirect
Transfer has occurred) and the Company (acting on behalf of all Persons who
exercise their option to purchase hereunder) shall attempt to agree, in writing,
on the fair market value of any noncash consideration to be received in the
proposed Transfer. If the Stockholder and the Company are unable to agree on the
fair market value of the noncash consideration within thirty (30) days following
the exercise of the options to purchase granted in this Section, either the
Stockholder or the Company may by notice to the other commence the Appraisal
Process.
(d) Other Optional Purchase Events. If the Optional Purchase Event is
not a proposed Transfer or Indirect Transfer for consideration, then the
successive options shall be for a purchase price equal to (i) the fair market
value of the Offered Stock as of the last day of the calendar month immediately
prior to the occurrence of the Optional Purchase Event (the "Valuation Date"),
plus (ii) interest at the Prime Rate on the amount determined under clause (i)
from the Valuation Date to the closing date, compounded monthly, reduced by
(iii) any dividends or other distributions with respect to the Offered Stock
from the Valuation Date through the closing. For purposes of determining the
purchase price, the fair market value of a share of Stock shall equal the amount
that would be received by the owner of such share of
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Stock if all of the assets of the Company were sold for cash equal to their fair
market value, the Company paid all of its liabilities and liquidated, all as of
the Valuation Date. The selling Stockholder and the Company (acting on behalf of
all Persons who have options to purchase hereunder) shall attempt in good faith
to agree on the fair market value of the Offered Stock. If they are unable to
agree, in writing, on the fair market value of the Offered Stock within thirty
(30) days following the exercise of the options to purchase granted in this
Section, either the selling Stockholder or the Company may by notice to the
other commence the Appraisal Process.
(e) Exercise of Option by the Company. The Company shall provide
written notice of exercise of the option to the Stockholder with respect to whom
an Optional Purchase Event has occurred and to all 10% Stockholders within
thirty (30) days following the Transfer Notice or the other written notice to
all 10% Stockholders of the occurrence of the Optional Purchase Event,
specifying whether or not the Company is exercising its option to purchase the
Offered Stock pursuant to this Section. A failure by the Company to give notice
within such period shall be deemed to be a notice of nonexercise.
(f) Exercise of Option by 10% Stockholders. In the event the Company
does not exercise its option, then each of the 10% Stockholders shall have the
option to (i) purchase the Offered Stock pursuant to this Section 4.3 on the
same terms as the Company in proportion to the relative number of shares of
Stock held by all the 10% Stockholders; (ii) exercise the rights of co-sale
specified in Section 4.4 below; or (iii) neither purchase any of such Offered
Stock nor exercise rights of co-sale. In order to exercise its option pursuant
to this Section, a 10% Stockholder shall provide written notice of exercise of
the option to the Stockholder with respect to whom an Optional Purchase Event
has occurred, to the Company and to all other 10% Stockholders within thirty
(30) days following the Company's nonexercise. If any 10% Stockholder elects not
to exercise their option, then those 10% Stockholders that do exercise their
option shall have the option, for an additional fifteen (15) days following the
end of the option period for all 10% Stockholders, to acquire the Offered Stock
that could have been acquired by the nonexercising 10% Stockholders in
proportion to the relative number of shares of Stock held by the exercising 10%
Stockholders.
(g) Waiver; Failure to Exercise Options. Any party with an option to
purchase Stock pursuant to this Article may waive its option at any time by
notice of such waiver to the Company. With respect to an Optional Purchase Event
that is the giving of a Transfer Notice, if Persons with options under this
Section shall fail to exercise their options to purchase the Offered Stock
within the applicable periods, or in the event the purchaser(s) shall fail to
tender the required consideration at the closing referred to below, then subject
to the rights of co-sale described in Section 4.4 below, the transferring
Stockholder may transfer the Offered Stock to the Person, and upon the terms and
price, specified in the notice of the proposed Transfer, but only if such
Transfer is consummated within ninety (90) days after the expiration or
withdrawal of the last option, or the failure to tender the consideration if
applicable. If the Offered Stock is not so transferred within the applicable
period, the Offered Stock shall again become subject to all of the terms and
conditions of the Agreement and may not thereafter be transferred except in the
manner and on the terms herein provided. In the event the Company or any 10%
Stockholder exercises an option hereunder, but fails to tender the required
consideration at the closing, the transferring Stockholder shall have all rights
and remedies against the Company or
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the exercising 10% Stockholders, as the case may be, available for breach of
contract, including the remedy of specific performance.
(h) Closing of Purchase of Stock; Payment of Purchase Price; Security.
The closing of the purchase of any Offered Stock by the Company or any of the
10% Stockholders pursuant to this Section shall occur at the offices of the
Company within thirty (30) days after the earlier of (a) the written agreement
of the parties on the fair market value of the Offered Stock or the
consideration to be received therefor, as the case may be, or (b) the conclusion
of the Appraisal Process. At the closing, the selling Stockholder shall deliver
to the purchaser(s) of the Offered Stock certificates evidencing the Offered
Stock, and the purchaser(s) shall deliver the purchase price as provided below
to the such Stockholder. The selling Stockholder and the purchaser(s) each shall
execute and deliver such other documents as may reasonably be requested by the
other.
The purchase price shall be delivered at closing as follows:
(i) If the purchase of the Offered Stock is as a result of a
proposed Transfer to a third party for consideration, the
purchase price determined under this Agreement shall be
payable on the same basis as the purchase price was to have
been paid by the third party.
(ii) If the purchase of the Offered Stock is as a result of any
other Optional Purchase Event the purchase price shall be
payable in cash or same day funds.
SECTION 4.4. RIGHT OF CO-SALE.
(a) Right of Co-Sale. In the event of a proposed Transfer of Stock to a
Person who is not a Permitted Transferee, to the extent the Stock proposed to be
transferred is not purchased by the Company pursuant to its right of first
refusal described in Section 4.3, each other Stockholder shall have the right to
participate in the Transfer in the manner set forth in this Section 4.4. Each
such nontransferring Stockholder may Transfer to the proposed transferee
identified in the Transfer Notice a pro rata share (defined below) of such
non-transferring Stockholders Stock, by giving written notice to the Company and
to the transferring Stockholder within the thirty (30) day period specified in
Section 4.3(f), which notice shall state that the Stockholder elects to exercise
its rights of co-sale under this Section 4.4. A notice of exercise of a
Stockholder's right of first refusal under Section 4.3(f) and a notice of
exercise of a Stockholder's rights of co-sale hereunder shall be mutually
exclusive and the first such notice given shall be binding and irrevocable. Each
nontransferring Stockholder shall be deemed to have waived its right of co-sale
hereunder either if it fails to give notice within the prescribed time period or
if such Stockholder gives notice exercising its right of first refusal pursuant
to Section 4.3(f). A nontransferring Stockholder's pro rata share for this
purpose shall equal that number of shares of the nontransferring Stockholder's
Stock represented by the number obtained by multiplying the number of shares of
Stock that are the subject of the proposed Transfer by a fraction, the numerator
of which is the number of shares of Stock then held by such nontransferring
Stockholder, and the denominator of which is the number of shares of Stock then
held by all persons entitled to this right of co-sale plus the number of shares
of Stock proposed to be Transferred by the transferring Stockholder. Insofar as
possible this right of co-sale shall
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apply to Stock of the same class or classes as the Stock subject to the Transfer
Notice. If any Stockholder desiring to exercise its rights of co-sale hereunder
does not have a sufficient number of Stock of the same class as the Stock
subject to the Transfer Notice, such Stockholder may substitute Stock of another
class so long as such class ranks senior in liquidation to the class of Stock
subject to the Transfer Notice. In the event the proposed Transfer is of Common
Stock and a Person wishing to exercise its rights of co-sale hereunder does not
have sufficient shares of Common Stock, but has PIK Preferred Stock, such Person
may convert a sufficient number of PIK Preferred Stock into Common Stock in
accordance with the procedures set forth in the Certificate of Designations.
(b) Consummation of Co-Sale. Each nontransferring Stockholder, in
exercising its right of co-sale hereunder, may participate in the Transfer by
delivering to the transferring Stockholder at the closing of the Transfer of the
transferring Stockholder's Stock to the transferee (the "Closing") one or more
certificates duly endorsed representing the shares of Stock to be transferred by
such nontransferring Stockholder. At the Closing, such certificates will be
delivered to the purchaser (whether such purchaser is the proposed transferee
set forth in the Transfer Notice or those Stockholders who have exercised their
rights of first refusal under Section 4.3) and the transferring Stockholder will
remit, or will cause to be remitted, to the nontransferring Stockholder at the
Closing that portion of the proceeds of the Transfer to which such
nontransferring Stockholder would otherwise be entitled by reason of such
nontransferring Stockholder's participation in such Transfer pursuant to these
rights of co-sale.
(c) Indirect Transfers. In the case of an Indirect Transfer, the right
of co-sale under this Section 4.4 shall be the right to put that number of
shares of Stock of the Stockholders electing their rights of co-sale hereunder
to the Stockholder with respect to whom the Indirect Transfer has occurred, as
if such Stockholder had Transferred that proportionate number of shares of Stock
described in Section 4.3(b)(iv) above.
SECTION 4.5. APPRAISAL PROCESS.
(a) If a Stockholder and the Company are unable to agree, in writing,
on the fair market value of any shares of Stock or the consideration to be
received in exchange for any shares of Stock within the time limits set forth in
Article IV, at any time following the expiration of such time limit either may
invoke the process described in this Section (the "Appraisal Process") by
sending the notice selecting an appraiser as described in subparagraph (i)
below, in which case the determination of fair market value in accordance with
this Article shall be final and binding on all parties to this Agreement. If the
purchaser of the Stock is one or more of the Stockholders, all decisions
relating to the Appraisal Process shall be made by the Company on behalf of the
Stockholders who have exercised their options to purchase; neither the
Stockholder whose Stock is being purchased nor the nonexercising Stockholders
shall participate in any of the Company's decisions relating to the Appraisal
Process.
(i) First Appraisal. The written notice invoking the Appraisal Process
shall state that the Appraisal Process is being invoked and shall set forth the
name and address of the unrelated third party appraiser selected by the party
invoking the Appraisal Process. Any appraiser selected pursuant to this Section
shall be a Person qualified with respect to determining the fair
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market value of the shares of Stock or other property that is in question. The
party to the purchase and sale transaction who did not invoke the Appraisal
Process shall have ten (10) days following the notice of the selection of the
first appraiser to select a second unrelated third party appraiser by sending to
the other party written notice setting forth the name and address of the second
appraiser.
If a second appraiser is not selected within the 10 day time period,
the appraiser selected by the party invoking the Appraisal Process shall prepare
his appraisal report and submit it to the owner of the shares of Stock and the
Company within sixty (60) days following the notice of his selection as an
appraiser, in which case the Appraisal Process shall be concluded and the fair
market value of the property in question shall be the amount set forth in the
appraiser's report.
(ii) Second Appraisal. If a second appraiser has been selected pursuant
to subparagraph (i) above, the two appraisers so selected shall consult with
each other in an effort to reach an agreement as to the fair market value. If
the two appraisers shall agree in writing as to the fair market value of the
property in question within forty-five (45) days following the appointment of
the second appraiser, the fair market value of such property shall be the amount
to which the appraisers have agreed, and the Appraisal Process shall be
concluded.
In the event the two appraisers are unable to agree as to the fair
market value, the two appraisers shall prepare their separate reports and submit
them to the Company and the owner of the shares of Stock within sixty (60) days
following the appointment of the second appraiser. If the higher fair market
value exceeds the lower fair market value by 10% or less of the lower fair
market value the Appraisal Process shall be concluded and the fair market value
of the property in question shall be the average of the two fair market values
as set forth in the two appraisal reports. If the higher fair market value
exceeds the lower fair market value by more than 10% of the lower fair market
value, the owner of the shares of Stock and the Company shall further attempt to
agree as to the fair market value.
(iii) Third Appraisal. If the higher fair market value of the two
appraisals exceeds the lower fair market value by more than 10% of the lower
fair market value and, as of the eleventh (11th) day following the submission of
both appraisal reports, neither party has sent written notice calling for a
third appraiser, the Appraisal Process shall be concluded and the fair market
value of the property in question shall be the average of the two fair market
values as set forth in the two appraisal reports. If, however, the higher fair
market value exceeds the lower fair market value by more than 10% of the lower
fair market value and, within ten (10) days following the submission of the
first two appraisers' reports, either party sends written notice to the other
calling for a third appraiser, the two previously-selected appraisers shall
promptly (but in any event within thirty (30) days following the submission of
both appraisal reports) select a third appraiser to determine the fair market
value of the property in question. The first two appraisers shall notify the
Company, which shall in turn notify the owner of the shares of Stock and all
other Stockholders, of the name and address of the third appraiser so selected;
provided, however, that if the Company has not received notice of the name and
address of the third appraiser within such thirty (30) day period, then the fair
market value of the property in question shall be the average of the two
appraisals that have been completed. Neither the previously selected appraisers,
the Stockholder whose shares of Stock are being
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purchased, the Company, the Stockholders nor any Persons related to any of them
shall disclose to the third appraiser the appraisal reports of the first two
appraisers or the results of the first two appraisals. Within thirty (30) days
following his appointment, the third appraiser shall submit to the owner of the
shares of Stock and the Company his appraisal report, in which case the
Appraisal Process shall be concluded and the fair market value of the property
in question shall be the average of the two appraisals that are closest to each
other.
(b) Costs of Appraisal Process.
(i) General Rules. Unless provided otherwise in clause (b)(ii) below,
the costs of the Appraisal Process shall be borne equally by the Stockholder
whose shares of Stock are being purchased and by the Person(s) obligated to
purchase such shares of Stock. If one or more of the Stockholders exercised its
option to purchase such shares of Stock, the portion of the costs of the
Appraisal Process that are not borne by the owner of such shares of Stock shall
be divided among the exercising Stockholders based upon the relative number of
shares of Stock being purchased.
(ii) Exception. Notwithstanding subparagraph (i) above, in the event a
party calls for a third appraiser as provided above and the fair market value of
the property in question as determined pursuant to the Appraisal Process is less
favorable to that party than if the fair market value was determined by
averaging the appraised fair market values as determined by the first two
appraisers, the entire costs of the Appraisal Process shall be borne by the
party calling for the third appraiser.
ARTICLE V
BOARD OF DIRECTORS
SECTION 5.1. SIZE AND COMPOSITION OF BOARD OF DIRECTORS. (a) Each of
the Stockholders agrees that the number of members of the Board of Directors
shall be seven (7) and that such Stockholder shall not take or permit to be
taken any action, unless expressly permitted by this Section 5.1, which would
change such number. Each Stockholder agrees to vote or otherwise cause the
election of the following individuals as directors:
(i) Two (2) individuals designated in writing by Whitney (each, a
"Whitney Designee").
(ii) One (1) individual designated in writing by Xxxxxxxx (the
"Xxxxxxxx Designee").
(iii) The chief executive officer of the Company, as may be elected
from time to time by the Board of Directors.
(iv) Those two (2) individuals elected by a vote of the holders of
Common Stock who received such Common Stock in exchange for
Class B Units pursuant to the Preferred Stock Corporate
Conversion, with each such holder being entitled to cast that
number of votes equal to the number of such shares of Common
Stock
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held by such holder, which vote shall be taken separately with
respect to each of the two (2) seats without cumulative
voting. The two (2) individuals designated pursuant to this
clause (iv) shall be entitled to two (2) votes each on all
matters before the Board of Directors until such time that the
size of the Board of Directors is increased to nine members as
provided below, or until there is a Vote Shift.
(v) One (1) individual elected by a vote of the holders of the
Common Stock, with each such holder being entitled to cast
that number of votes equal to the number of such shares of
Common Stock held by such holder.
Those Persons serving on the board of managers of the LLC on the date
hereof shall continue to serve as members of the Board of Directors until their
death or resignation, or until their successor is designated as provided herein.
(b) Upon the affirmative vote of Columbia, Whitney and Xxxxxxxx, the
size of the Board of Directors shall be increased from seven (7) to nine (9).
The two additional seats shall be filled by individuals approved by Columbia,
Whitney and Xxxxxxxx, and elected by holders of a majority of the Stock, and who
are not otherwise Affiliates of any of the Columbia Entities, Whitney or Fleet.
In the event of such an increase in the size of the Board of Directors, the two
(2) individuals designated pursuant to clause (iv) above and the two (2) new
designated individuals shall be entitled to one vote each.
Within five (5) days following any Change of Control of Columbia, then
the Columbia Entities shall give notice of such event to Whitney and Xxxxxxxx
("Change Notice"). If the Columbia Entities do not give the required Change
Notice, Columbia and Columbia DBS Investors, L.P. shall be in breach of this
Agreement, and in addition Whitney or Xxxxxxxx still have the right at any time
to give the Change Notice. At any time following a Change Notice and continuing
for a period of one year thereafter, either Whitney or Xxxxxxxx shall have the
right to implement the Vote Shift by notice to the Board and all of the
Stockholders. The Vote Shift shall be effective immediately upon such notice;
provided however, if the Change of Control of Columbia is curable, the Columbia
Entities shall have 90 days following the Vote Shift to cure the Change of
Control of Columbia, and if cured within such period the Vote Shift shall be
deemed rescinded as of the date of such cure.
(c) The Board of Directors shall meet not less often than once per
quarter. In the event that the Board of Directors create an "Executive
Committee," a "Compensation Committee," an "Audit Committee," or committees with
similar functions such committees shall have at least one member designated by
each of Columbia, Whitney and Xxxxxxxx.
(d) At such time as there are no longer any shares of PIK Preferred
Stock outstanding, the following shall be the composition of the Board of
Directors: (i) the size of the Board of Directors shall be the same as that
immediately prior to such time, (ii) each member of the Board of Directors shall
have one vote on all matters and (iii) all directors shall be elected by the
holders of the Common Stock.
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SECTION 5.2 INSURANCE. The Company shall obtain "directors and
officers" insurance for the members of the Board of Directors in such form and
with such coverage amounts as shall be determined by the Board of Directors and
satisfactory to Whitney and Fleet (but in no event shall coverage in excess of
$3,000,000 be required by Whitney and Fleet) no later than the earlier to occur
of March 25, 1997 and the closing of any Qualified Financing. The Company shall
obtain no later than April 10, 1997, and thereafter maintain in force so long as
requested to do so by Whitney, Fleet, or Columbia, key man insurance on the life
of the Company's Chief Executive Officer in an amount of coverage not less than
$10,000,000 and on the life of the Company's Chief Financial Officer in an
amount of coverage not less than $3,000,000, provided, however, that such
individuals are insurable at commercially reasonable rates.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. NOTICES. Any notice, payment, demand, or communication
required or permitted to be given by any provision of this Agreement shall be in
writing and shall be delivered personally to the Person or to an officer or
manager of the Person to whom the same is directed, or sent by regular,
registered, or certified United States mail, or by facsimile transmission or by
private mail or courier service, addressed as follows: if to the Company, to the
principal office address of the Company, or to such other address as may be
specified from time to time by notice to the Stockholders; if to a Stockholder,
to the address set forth in the records of the Company, or to such other address
as the Stockholder may specify from time to time by notice to the Company. Any
such notice shall be deemed to be delivered, given, and received for all
purposes (i) as of the date of actual receipt if delivered personally or if sent
by regular mail, facsimile transmission or by private mail or courier service,
or (ii) four (4) business days after the date on which the same was deposited in
a regularly-maintained receptacle for the deposit of United States mail, if sent
by registered or certified United States mail, postage and charges prepaid,
return receipt requested.
SECTION 6.2. BINDING EFFECT. Except as otherwise provided in this
Agreement, every covenant, term, and provision of this Agreement shall be
binding upon and inure to the benefit of the Stockholders, and their respective
heirs, legatees, legal representatives, successors, transferees, and assigns.
SECTION 6.3. CONSTRUCTION. Every covenant, term and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against any Stockholder. No provision of this Agreement is to be
interpreted as a penalty upon, or a forfeiture by, any party to this Agreement.
The parties acknowledge that each party to this Agreement has shared equally in
the drafting and construction of this Agreement and, accordingly, no court
construing this Agreement shall construe it more strictly against one party
hereto than the other.
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SECTION 6.4. ENTIRE AGREEMENT; RELATIONSHIP TO CERTIFICATE OF
INCORPORATION AND BYLAWS; AMENDMENTS. This Agreement constitutes the entire
agreement among the Stockholders with respect to the affairs of the Company and
the conduct of its business, and supersedes all prior agreements and
understandings, whether oral or written. To the extent any provision of this
Agreement is inconsistent with any provision of the Certificate of Incorporation
(including the Certificate of Designations) or Bylaws of the Company, the
Stockholders agree that as among themselves this Agreement shall control. The
Stockholders agree to take any action necessary, including voting their Stock,
to give effect to the foregoing sentence. This Agreement may only be amended by
an agreement in writing signed by the Company and by (i) Preferred Stockholders
holding of record 70% or more of the then outstanding PIK Preferred Stock and
(ii) Stockholders holding of record 70% or more of those shares of the then
outstanding Common Stock which were issued in exchange for Class B Units. Any
such amendment shall be binding on the Company and all Stockholders.
SECTION 6.5. HEADINGS. Section and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any provision hereof.
SECTION 6.6. SEVERABILITY. Every provision of this Agreement is
intended to be severable. If any term or provision hereof is illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the
validity or legality of the remainder of this Agreement.
SECTION 6.7. ADDITIONAL DOCUMENTS. Each Stockholder, upon the request
of the Company, agrees to perform all further acts and execute, acknowledge, and
deliver any documents that may be reasonably necessary, appropriate, or
desirable to carry out the provisions of this Agreement.
SECTION 6.8. VARIATION OF PRONOUNS. All pronouns and any variations
thereof shall be deemed to refer to masculine, feminine, or neuter, singular or
plural, as the identity of the Person or Persons may require.
SECTION 6.9. TERMINATION. Notwithstanding any other provision herein
contained to the contrary, this Agreement shall be terminated and shall cease to
have any force and effect upon the consummation of a Qualified IPO (as defined
in the Certificate of Designations of the PIK Preferred Stock).
SECTION 6.10. GOVERNING LAW; CONSENT TO JURISDICTION; DISPUTE
RESOLUTION.
(a) The laws of the State of Delaware shall govern the validity of this
Agreement and the construction and interpretation of its terms. All disputes
between or among any Stockholders arising out of or in any way connected with
the execution, interpretation and performance of this Agreement (including the
validity, scope and enforceability of the dispute resolution provisions
contained herein) shall be solely and finally settled in accordance with this
Section 6.10. Each Stockholder hereby irrevocably consents to the personal
jurisdiction of the courts of the Commonwealth of Virginia with respect to
matters arising out of or related to the enforcement of the provisions of this
Section 6.10 and with respect to matters, if any, related to this Agreement not
required to be resolved pursuant to this Section 6.10.
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(b) Mandatory Arbitration. All disputes between or among any
Stockholders arising out of or in connection with the execution, interpretation
and performance of this Agreement (including the validity, scope and
enforceability of this arbitration provision) shall be solely and finally
settled by a board of arbitrators consisting of either one arbitrator or three
arbitrators, as set forth below (the term "Arbitrators" shall refer to the board
of arbitrators, whether it consists of one or three members). The arbitration
proceedings shall be held in the Washington, D.C. metropolitan area, and except
as otherwise may be provided in this Section, the arbitration proceedings shall
be conducted in accordance with the Commercial Arbitration Rules (the "AAA
Rules") of the American Arbitration Association (the "AAA").
(c) Arbitration Notice. If a Stockholder or Stockholders determine to
submit a dispute for arbitration pursuant to this Section, such Stockholder(s)
shall furnish the other Stockholders with a dated, written statement (the
"Arbitration Notice") indicating (i) such Stockholder's intent to commence
arbitration proceedings, (ii) the nature, with reasonable detail, of the dispute
and (iii) the remedy or remedies such Stockholder will seek.
(d) Selection of Sole Arbitrator. Within ten (10) days of the date of
the Arbitration Notice, the Stockholder or Stockholders commencing the
arbitration (collectively, the "Petitioner") and the party with whom the
Petitioner has its dispute (collectively, the "Respondent") shall attempt to
agree on and then select one neutral arbitrator (the "Sole Arbitrator"). A
"neutral" arbitrator shall be a Person who would not be subject to
disqualification under rule No. 19 of the AAA Rules.
(e) Arbitration Panel. If, within such ten (10) day period, the
Petitioner and Respondent are unable to agree upon a Sole Arbitrator, each of
them shall have five (5) business days (following the expiration of the ten (10)
day period) to select (and provide written notice of such selection to the other
Stockholders and the Company) a qualifying arbitrator. A "qualifying" arbitrator
is a Person who is not (i) an Affiliate or Family Member of either the
Petitioner or Respondent or (ii) counsel to any such Person at such time. If
either the Petitioner or Respondent fails to select a qualifying arbitrator or
provide such notice within the five (5) day period, the AAA shall have the right
to make such selection. (Such qualifying arbitrators hereafter may be referred
to, respectively, as the "First Arbitrator" and the "Second Arbitrator.") Within
ten (10) days following their selection, the First and Second Arbitrator shall
select (and provide written notice to the Stockholders and the Company of such
selection) a third arbitrator (the "Third Arbitrator") from a list of members of
the AAA's National Panel of Commercial Arbitrators. The Third Arbitrator must be
"neutral" as that term is defined above. Notwithstanding the foregoing, if a
dispute involves more than two Stockholders, all proceedings shall be conducted
before a Sole Arbitrator, who shall be selected by the AAA if the Stockholders
are unable to agree upon such Sole Arbitrator within the ten (10) day period
mentioned above.
(f) Discovery Requests. At any time within forty (40) days after the
date of the Arbitration Notice, the Petitioner and Respondent can make discovery
requests of the other (including, but not limited to, requests for delivery of
documents, production of witnesses for testimony and delivery of interrogatory
responses). The recipient of a discovery request shall have ten (10) days after
the receipt of such request to object to any or all portions of such request and
make an application to the Arbitrators to limit the scope of such discovery
request,
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and shall respond to any portions of such request not so objected to within
twenty (20) days of the receipt of such request. All objections shall be in
writing and shall indicate the reasons for such objections. Within five (5)
business days after the end of the period for the submission by the requested
party of an application to limit the discovery request, the Arbitrators shall
grant or deny such discovery request, in whole or in part, to the extent the
Arbitrators determine such discovery is or is not, as the case may be,
reasonably necessary to enable the requesting party to obtain information
relevant to the dispute without unreasonably burdening the requested party. The
requested party shall comply with a discovery request granted by the Arbitrators
within ten (10) business days after such discovery request is granted, or within
such longer period as the Arbitrators may determine upon application of the
requested party for extension thereof for reasonable cause. Neither party shall
be permitted to make more than one application for discovery to the Arbitrators.
All depositions shall be taken in the city in which the Person being deposed
resides or has its principal place of business, unless otherwise agreed by the
parties. The Arbitrators are not authorized to subpoena documents or perform
independent investigations.
(g) Timing of Hearings. Hearings must commence no later than ninety
(90) days following the date of the Arbitration Notice and such hearings shall
be conducted for no more than five (5) business days.
(h) Format of Hearings. Each of the Petitioner and the Respondent shall
submit a brief, outlining such party's claim for relief or defense to any claim,
to the other and to the Arbitrators on or before the tenth (10th) day following
the date of the last hearing. Reply briefs must be exchanged and submitted to
the Arbitrators on or before the twentieth (20th) day following the date of the
last hearing. The final decision of the Arbitrators is due on or before the
thirtieth (30th) day following the date of the last hearing. The Arbitrators
shall choose the form of final decision that, in their judgment, is most
consistent with the terms of this Agreement and the intent of the Stockholders,
as supported by evidence presented by the Petitioner and Respondent in the
arbitration proceeding or, if the subject matter of the dispute is not clearly
addressed in or determinable under this Agreement, that, in their opinion, would
be most fair to the Petitioner and Respondent under the arbitration. The
Arbitrators shall not be required to provide reasons for their decision.
(i) Fees and Expenses. The fees of the First and Second Arbitrators
shall be borne by the Petitioner and Respondent, respectively. All other
expenses of the arbitration shall be shared equally by the Petitioner and
Respondent in accordance with the AAA Rules.
(j) Arbitrators' Discretion. The foregoing time periods and procedural
steps may be modified or extended by the Arbitrators in their discretion to the
extent they deem necessary to prevent fundamental unfairness; provided that at
all times the Arbitrators shall be mindful of the Stockholders' desire for the
most expeditious possible resolution of the Stockholders' disputes; and
provided, further, that a final decision of the Arbitrators shall be rendered
within 120 days of the Arbitration Notice.
(k) Enforceability. To the extent permissible under applicable law, the
Stockholders agree that the award of the Arbitrators shall be final and shall
not be subject to judicial review. Judgment on the arbitration award may be
entered and enforced in any court having jurisdiction over the parties or their
assets. It is the intent of the parties that the arbitration provisions
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hereof be enforced to the fullest extent permitted by applicable law, including
the Federal Arbitration Act, 9 U.S.C. Section 2.
(l) Injunctive Relief. Nothing contained in this Section shall prevent
a Stockholder from seeking injunctive relief or require arbitration of any issue
for which injunctive relief is sought by either party hereto.
SECTION 6.11. COUNTERPART EXECUTION; FACSIMILE EXECUTION. This
Agreement may be executed in any number of counterparts with the same effect as
if the Company and all of the Stockholders had signed the same document. Such
executions may be transmitted to the Company and/or the other Stockholders by
facsimile and such facsimile execution shall have the full force and effect of
an original signature. All fully executed counterparts, whether original
executions or facsimile executions or a combination, shall be construed together
and shall constitute one and the same agreement.
SECTION 6.12. DISSOLUTION OF THE COMPANY.
(a) TRIGGERS. The Company shall dissolve at any time after
February 10, 2003, if at such time the aggregate Liquidation Preference is at
least $7.5 million (excluding the Liquidation Preference on any PIK Preferred
Stock distributed as a dividend) and holders of at least a majority of PIK
Preferred Stock then outstanding vote to dissolve the Company and provide notice
of such vote to the Board of Directors; provided, however, that in the event
that such a vote and resulting dissolution of the Company would result in an
event of default or an incipient default under any then existing indebtedness of
the Company or any Subsidiary with an outstanding balance of $10 million or
more, then such majority vote shall not cause the dissolution of the Company,
but rather shall constitute notice by the holders of the PIK Preferred Stock to
the Board of Directors that such holders desire that the Board of Directors
promptly arrange the sale of the Company (including its Subsidiaries) or a sale
of all or substantially all of its assets.
(b) WINDING UP OR SALE. Upon dissolution of the Company the
Board of Directors shall wind up the Company's affairs; but the Delaware Court
of Chancery, upon cause shown, may wind up the Company's affairs upon
application of any 10% Stockholder, his legal representative or assignee, and in
connection therewith, may appoint a liquidating trustee. The Persons charged
with winding up the Company shall settle and close the Company's business, and
dispose of and convey the Company's noncash assets as promptly as reasonably
possible following dissolution as is consistent with obtaining the fair market
value for the Company's assets.
If the holders of the PIK Preferred Stock have given notice under
Section 6.12(a) (regardless of whether such notice has caused the dissolution of
the Company), and if the Company has not entered into a definitive agreement for
the sale or other disposition of substantially all of its equity interests or
assets on or prior to the date that is six (6) months after the date of such
notice, or if the Company has not closed the sale or other disposition of
substantially all of its equity interests or assets on or prior to the date that
is nine (9) months after the date of such notice, then at any time after either
of such dates the holders of the PIK
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Preferred Stock acting by a vote of the holders of a majority of such PIK
Preferred Stock may give notice of a Vote Shift, which Vote Shift shall be
immediately effective.
SECTION 6.13. SPECIAL PRICE ADJUSTMENT IN THE CASE OF INTERIM
FINANCING. If, in connection with any Interim Financing, the Company is required
to issue Common Stock or rights or warrants entitling the holders thereof to
subscribe for or to purchase shares of Common Stock, then in lieu of the
weighted average price protection provided in Section 6(e)(iii) of the
Certificate of Designations, the number of shares of Common Stock into which the
shares of PIK Preferred Stock shall be convertible shall be increased so that:
(i) the ratio of (x) the number of shares of Common Stock into
which the PIK Preferred Stock is convertible immediately after such Interim
Financing to (y) the sum of (A) the total number of shares of Common Stock
outstanding (on a fully diluted basis) immediately after such Interim Financing
plus (B) shares of Common Stock underlying the PIK Preferred Stock immediately
after such Interim Financing equals
(ii) the ratio of (x) shares of Common Stock underlying the
PIK Preferred Stock immediately before such Interim Financing to (y) the sum of
(A) the total number of shares of Common Stock outstanding (on a fully diluted
basis) immediately before such Interim Financing plus (B) the total number of
shares of Common Stock into which the PIK Preferred Stock is convertible
immediately before such Interim Financing.
In addition, any commitment, underwriting, structuring or syndication fees
(other than customary periodic agency fees for administrative services) in
excess of four percent (4%) of the principal amount of the Interim Financing
which are payable by the Company in connection therewith shall be borne by the
Columbia Entities in proportion to their equity interests without recourse to
the Company.
SECTION 6.14. TIME OF THE ESSENCE. Time is of the essence with respect
to each and every term and provision of this Agreement.
[SIGNATURES FOLLOW ON THE NEXT PAGE]
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Execution Page to the Stockholders Agreement
IN WITNESS WHEREOF, the Company and Stockholders have executed this
Agreement on the following execution pages, to be effective as of the date first
set forth above.
THE COMPANY:
DIGITAL TELEVISION SERVICES, INC.
A DELAWARE CORPORATION
By: ___________________________
Title: ___________________________
STOCKHOLDERS:
COLUMBIA DBS, INC.,
A VIRGINIA CORPORATION
COLUMBIA DBS CLASS A INVESTORS, LLC
A DELAWARE LIMITED LIABILITY COMPANY
COLUMBIA DBS INVESTORS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
WHITNEY EQUITY PARTNERS, L.P.
A DELAWARE LIMITED PARTNERSHIP
FLEET VENTURE RESOURCES, INC.
A RHODE ISLAND CORPORATION
FLEET EQUITY PARTNERS VI, L.P.,
A DELAWARE LIMITED PARTNERSHIP
XXXXXXXX PARTNERS III, L.P.,
A DELAWARE LIMITED PARTNERSHIP
XXXXXXX PLAZA PARTNERS,
A RHODE ISLAND GENERAL PARTNERSHIP
XXXXXXX X. XXXXXXXX, XX.
XXXXXX X. XXXXXXX
XXXXXXX X. XXXXXX
By: DTS Management, LLC,
a Delaware limited liability company,
their Attorney-in-Fact
By: ______________________
Title: ______________________
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EXHIBIT M
TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIGITAL TELEVISION SERVICES, LLC
A DELAWARE LIMITED LIABILITY COMPANY
CERTIFICATE OF INCORPORATION
AND BYLAWS
UPON QUALIFIED CORPORATE CONVERSION
FIRST: The name of this corporation is Digital Television Services,
Inc. (hereinafter referred to as the "Corporation").
SECOND: The address of the Corporation's registered office in the State
of Delaware is 0000 Xxxxxx Xxxxxx, in the City of Wilmington, County of New
Castle, 19801, and its registered agent at such address is THE CORPORATION TRUST
COMPANY.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which the Corporation may be organized under the General
Corporation Law of the State of Delaware.
The purpose specified in the foregoing paragraph shall in no way be
limited or restricted by the reference to, or inference from, the terms of any
provision in this Certificate of Incorporation.
The Corporation shall possess and may exercise all powers and
privileges necessary or convenient to effect the foregoing purpose, including
the general powers now or hereafter conferred by the laws of the State of
Delaware upon corporations formed under the General Corporation Law of the State
of Delaware.
FOURTH: The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is twenty million (20,000,000) shares,
of which ten million (10,000,000) shares shall be designated common stock, par
value $.01 per share (the "Common Stock"), and ten million (10,000,000) shares
shall be designated preferred stock, par value $.01 per share (the "Preferred
Stock").
The Board of Directors is authorized, subject to limitations prescribed
by law and the provisions of this Article FOURTH, to provide for the issuance of
the shares of Preferred Stock in series, and by filing a certificate pursuant to
the applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
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The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable, and,
if so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;
(f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;
(g) The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, and
the relative rights of priority, if any, of payment of shares of that series;
(h) Any other relative rights, preferences and limitations of that
series.
Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment before any dividends shall be paid or
declared and set apart for payment on the Common Stock with respect to the same
dividend period.
If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation the assets available for distribution to holders
of shares of Preferred Stock of all series shall be insufficient to pay such
holders the full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares of all series of Preferred
Stock in accordance with the respective preferential amounts (including unpaid
cumulative dividends, if any) payable with respect thereto.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The private property of the stockholders of the Corporation
shall not be subject to the payment of the corporate debts to any extent
whatsoever.
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SEVENTH: The following provisions are inserted for the management of
the business and for the conduct of the affairs of the Corporation, and for
further definition, limitation and regulation of the powers of the directors and
stockholders:
(1) The number of directors of the Corporation shall be no
less than seven and no more than nine. Election of directors need not be by
written ballot unless the bylaws of the Corporation so provide.
(2) The Board of Directors shall have power without the assent
or vote of the stockholders:
(a) To make, alter, amend, change, add to or repeal the bylaws
of the Corporation; to determine the use and disposition of any surplus
or net profits; and to fix the times for the declaration and payment of
dividends; and
(b) To determine from time to time whether, and to what
extent, and at what time and places, and under what conditions and
regulation, the accounts and books of the Corporation (other than the
stock ledger), or any of them, shall be open to the inspection of the
stockholders.
(3) In addition to the powers and authorities hereinbefore or
by statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and to do all such acts and things as may be exercised
or done by the Corporation; subject, nevertheless, to the provisions of the
General Corporation Law of Delaware, of this Certificate of Incorporation, and
to any bylaws from time to time adopted by the stockholders; provided, however,
that no bylaw so adopted shall invalidate any prior act of the directors which
would have been valid if such bylaw had not been made.
EIGHTH: The Corporation shall, to the fullest extent permitted by the
provisions of the General Corporation Law of Delaware, as now or hereafter in
effect, indemnify all persons whom it may indemnify under such provisions. The
indemnification provided by this Article EIGHTH shall not limit or exclude any
rights, indemnities or limitations of liability to which any person may be
entitled, whether as a matter of law, under the bylaws of the Corporation, by
agreement, vote of the stockholders or disinterested directors of the
Corporation or others. The personal liability of the directors of the
Corporation is hereby eliminated to the fullest extent permitted by paragraph
(7) of subsection (b) of Section 102 of the General Corporation Law of the State
of Delaware as the same may be amended or supplemented. Except as specifically
required by the Delaware General Corporation Law as the same exists or may
hereafter be amended, no director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of his or her
fiduciary duty as a director. No amendment to or repeal of this provision shall
apply to or have any effect on the liability or alleged liability of any
director for or with respect to any acts or omissions of such director occurring
prior to such amendment or repeal.
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NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by statute, and all rights and powers
conferred upon stockholders, directors, and officers herein are granted subject
to this reservation.
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BYLAWS OF
DIGITAL TELEVISION SERVICES, INC.
ARTICLE I.
STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of stockholders for the
purpose of electing directors and of transacting such other business as may come
before it shall be held at such time as may be specified by resolution of the
Board of Directors.
Section 2. Special Meetings. Special meetings of the stockholders or of
a class of stockholders for any purpose or purposes may be called at any time by
the Chairman of the Board, by the President, by resolution of the Board of
Directors or by the Secretary. At a special meeting of the stockholders or of a
class of stockholders, no business shall be transacted and no corporate action
shall be taken other than that stated in the notice of the meeting.
Section 3. Time and Place. Meetings of the stockholders shall be held
at such time and place either within or without the State of Delaware as shall
be designated from time to time by the Board of Directors and stated in the
notice of meeting or in a duly executed waiver of notice thereof.
Section 4. Notice of Meetings. It shall be the duty of the Secretary to
cause a notice of each meeting of the stockholders or of a class of stockholders
of the Corporation to be mailed at least ten and not sooner than sixty days
before the meeting, unless a different period is prescribed by law, to each
stockholder entitled to vote at such meeting at his or her address as it appears
upon the books of the Corporation, stating the place, date and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is held.
Section 5. Quorum. At any meeting of the stockholders or of a class of
stockholders, the stockholders present in person or by proxy of a majority of
the outstanding shares of capital stock entitled to vote shall constitute a
quorum of the stockholders for all purposes (unless the representation of a
larger number of shares shall be required by law or by the Certificate of
Incorporation, in which case the representation of the number of shares so
required shall constitute a quorum).
The holders of a majority of the outstanding shares of capital stock
entitled to vote who are present in person or by proxy at any meeting (whether
or not constituting a quorum of the outstanding shares) may adjourn the meeting
from time to time without notice other than by announcement thereat; and at any
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally called,
but only those stockholders entitled to vote at the meeting originally noticed
shall be entitled to vote at any adjournment or adjournments thereof. However,
if the adjournment is for more than thirty days, or if after the adjournment a
new record date is fixed, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
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Section 6. Organization and Conduct of Meetings. The President shall
call meetings of stockholders to order and shall act as Chairman of such
meetings. In the absence of the President at any meeting, the Chairman of the
Board shall act as Chairman. In the absence of the President or the Chairman of
the Board at any meeting, the holders of a majority of the shares of capital
stock entitled to vote present in person or by proxy at such meeting shall elect
a Chairman.
The Secretary of the Corporation shall act as Secretary of all meetings
of the stockholders; but, in the absence of the Secretary, the Chairman may
appoint any person to act as Secretary of the meeting.
It shall be the duty of the Secretary to prepare and make, at least ten
days before every meeting of stockholders, a complete list of stockholders
entitled to vote at said meeting, arranged in alphabetical order and showing the
address of each stockholder and the number of shares registered in his or her
name. Such list shall be open to the examination of any stockholder for any
purpose germane to the meeting, during ordinary business hours, for the ten days
preceding the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 7. Voting. Except as otherwise provided in the Certificate of
Incorporation or by law, every holder of capital stock of the Corporation which
is entitled to vote shall be entitled to one vote in person or by proxy for each
share of such stock registered in the name of such stockholder upon the books of
the Corporation, but no proxy shall be voted on after three years from its date,
unless the proxy provides for a longer period. All elections for directors shall
be decided by a plurality of the vote of the shares of capital stock present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors; all other questions shall be decided by vote of the
majority of shares of capital stock entitled to vote on the subject matter who
are present in person or by proxy, except as otherwise provided by the
Certificate of Incorporation or the laws of the State of Delaware.
Section 8. Action by Written Consent. Any action required to be taken
at any annual or special meeting of stockholders or a class of stockholders of
the Corporation, or any action which may be taken at any annual or special
meeting of such stockholders or class of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of issued and
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
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ARTICLE II.
BOARD OF DIRECTORS
Section 1. General Powers. The business of the Corporation shall be
managed by or under the direction of the Board of Directors, which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute, the Certificate of Incorporation or these Bylaws directed or
required to be exercised or done by the stockholders.
Section 2. Number. The Sole Incorporator of the Corporation shall
determine the number of directors to constitute the first Board of Directors of
the Corporation. Thereafter, the number of directors of the Corporation shall be
determined from time to time by resolution adopted by the Board of Directors.
The directors shall be elected at the annual meeting of the stockholders, except
for the first Board of Directors, which shall be elected by the Sole
Incorporator, and except as provided in Section 3 of this Article, each director
shall hold office until his successor is duly elected and qualified or until his
earlier death, resignation or removal. Directors need not be stockholders.
Section 3. Vacancies, Removal and Newly Created Directorships.
Vacancies occurring for any reason and newly created directorships resulting
from any increase in the authorized number of directors shall be filled by the
affirmative vote of a majority of the directors then in office, though less than
a quorum, or by a sole remaining director, and each director so chosen shall
hold office until the next annual election and until his successor is duly
elected and qualified or until his earlier death, resignation or removal. If
there are no directors in office, an election of directors may be held in the
manner provided by statute. Except as otherwise provided by the Certificate of
Incorporation, at any special meeting of the stockholders the notice of which
shall state that the removal of a director or directors and the filling of a
vacancy or vacancies are among the purposes of the meeting, the holders of
capital stock entitled to vote thereon, present in person or by proxy, by vote
of a majority of the outstanding shares thereof, may remove any director for or
without cause and may fill any vacancy caused by such removal.
Section 4. Place of Meeting, etc. The Board of Directors may hold its
meetings and may have an office and keep the books of the Corporation (except as
may be otherwise provided by law) in such place or places in the State of
Delaware or outside the State of Delaware as the Board of Directors from time to
time shall determine.
Section 5. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as the Board of Directors shall
determine. No notice shall be required for any regular meeting of the Board of
Directors.
Section 6. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board, by the President, or
by a majority of the directors in office at the time. Notice of each such
meeting shall be either delivered personally or by telephone to each director at
least one day prior to the date of each such meeting, or sent by mail, telegram,
telex, cable or like transmission to each director at least two days prior to
the date of each such meeting. Each such notice shall state the time and place
of the meeting but need not state the purposes thereof. Any notice given
personally or by telephone shall be
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confirmed by mail, telegram, telex, cable or like transmission, which
confirmation shall be sent at least one day before the meeting. Notice of any
meeting of the Board of Directors need not be given to any director, however, if
waived by him in writing or by mail, telegram, telex or like transmission,
whether before or after such meeting is held, or if he shall be present at such
meeting, and any meeting of the Board of Directors shall be a legal meeting
without any notice thereof having been given, if all the directors then in
office shall be present thereat.
Section 7. Quorum. A quorum for the transaction of business shall
consist of no fewer than one-half of the total number of directors, and except
as otherwise provided in the Certificate of Incorporation or in these Bylaws,
the act of a majority of the directors present at any meeting of the Board of
Directors at which a quorum is present shall be the act of the Board of
Directors. If at any meeting of the Board of Directors there be less than a
quorum present, a majority of those present may adjourn the meeting from time to
time, and no notice need be given of any such adjourned session of the meeting.
Section 8. Compensation of Directors. The amount, if any, which each
director shall be entitled to receive as compensation for his services as such
shall be fixed from time to time by resolution of the Board of Directors. If any
director shall serve as a member of any committee of the Board of Directors or
perform special services at the instance of the Board of Directors, such
director may be paid such additional compensation as the Board of Directors may
from time to time determine. Each director shall be entitled to reimbursement
for traveling expenses incurred by him in attending any meeting of the Board of
Directors or of a committee of the Board of Directors. Such compensation and
reimbursement shall be payable even though there be an adjournment because of
the absence of a quorum. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
Section 9. Conduct of Meetings. At all meetings of the Board of
Directors business shall be transacted in such order as the Board of Directors
may determine.
The Chairman of the Board shall preside at all meetings of the Board of
Directors. In the absence of the Chairman of the Board, a Chairman of the
meeting shall be elected from the directors present. The Secretary of the
Corporation shall act as Secretary of all meetings of the directors, but in the
absence of the Secretary, the Chairman of the meeting may appoint any person to
act as Secretary of the meeting.
Section 10. Action Without Meeting. Nothing contained in these Bylaws
shall be deemed to restrict the power of the directors or members of any
committee to take any action required or permitted to be taken by them, without
a meeting, in accordance with applicable provisions of law.
Section 11. Telecommunication Meetings. Members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors or such committee by means of
conference telephone or other telecommunications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
in a meeting shall constitute presence in person at such meeting.
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Section 12. Contracts. The Board of Directors of the Corporation in its
discretion may submit for approval, ratification or confirmation by the
stockholders any contract, transaction or act of the Board of Directors or any
committee thereof or of any officer, agent or employee of the Corporation, and
any such contract, transaction or act which shall have been so approved,
ratified or confirmed by the holders of a majority of the issued and outstanding
stock entitled to vote shall be as valid and binding upon the Corporation and
upon the stockholders thereof as though it had been approved and ratified by
each and every stockholder of the Corporation.
ARTICLE III.
COMMITTEES
The Board of Directors may, by resolution passed by a majority of the
whole Board of Directors, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. If provision be made
for any such committee or committees, the members thereof shall be appointed by
the Board of Directors and shall serve during the pleasure of the Board of
Directors. The Board of Directors may designate one or more directors as
alternate members of any such committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending these Bylaws; and, unless the
resolution, these Bylaws or the Certificate of Incorporation shall expressly so
provide, no such committee shall have the power or authority to declare a
dividend, to authorize the issuance of stock or to adopt a certificate of
ownership and merger. Such committee or committees shall have such name or names
as may be determined from time to time by resolution adopted by the Board of
Directors. The Board of Directors may at its pleasure discontinue any such
committee or committees.
ARTICLE IV.
OFFICERS
Section 1. Officers. The officers of the Corporation shall be a Chief
Executive Officer, a President, one or more Vice-Presidents (who may be further
classified by such descriptions as executive or senior, as determined by the
Board of Directors), a Treasurer, a Secretary and a Chief Financial Officer,
each of whom shall be elected by the Board of Directors. The Board of Directors
may also from time to time appoint Assistant Treasurers and Assistant
Secretaries and such other officers as the Board of Directors may deem
advisable, and who shall have such
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authority and shall perform such duties as from time to time may be prescribed
by the Board of Directors. In the event of any office becoming vacant because of
removal, resignation or other reason, the Board of Directors may fill the
vacancy at such time as it may determine. The Chief Executive Officer shall be a
member of the Board of Directors; the other officers may, but need not, be
directors.
All officers, agents and employees shall be subject to removal, with or
without cause, at any time by the affirmative vote of a majority of the
directors in office at the time. Any agent or employee other than one elected or
appointed by the Board of Directors shall also be subject to removal at any time
by the officer or by the committee appointing him or her.
In addition to the powers and duties of the officers of the Corporation
as set forth in these Bylaws, the officers shall have such authority and shall
perform such duties as from time to time may be determined by the Board of
Directors.
Section 2. The Chief Executive Officer. The Chief Executive Officer
shall preside at all meetings of the Board of Directors and shall do and perform
such other duties as from time to time may be assigned to him by the Board of
Directors.
Section 3. The President. The President shall preside at all meetings
of the stockholders and shall have such additional powers and shall perform such
duties as from time to time may be assigned to him by the Board of Directors.
The President shall, subject to the control of the Board of Directors, have
general and active management and control of the affairs and business of the
Corporation, and shall perform all other duties and exercise all other powers
commonly incident to his office, or which are or may at any time be authorized
or required by law.
Section 4. The Vice Presidents. The Vice Presidents in the order of
their seniority, unless otherwise determined by the Board of Directors, shall,
in the absence or disability of the President, perform the duties and exercise
the powers of the President. They shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
Section 5. The Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors or by any officer appointed by the Board of Directors. The Treasurer
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the President and the Board of Directors, at its regular meetings, or when the
Board of Directors so requires, an account of all his or her transactions as
Treasurer and of the financial condition of the Corporation. If required by the
Board of Directors, the Treasurer shall give the Corporation a bond for such
term in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of his or her
office and for the restoration to the Corporation, in case
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of his or her death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in his or her
possession or under his or her control belonging to the Corporation.
Section 6. The Assistant Treasurers. The Assistant Treasurers in the
order of their seniority, unless otherwise determined by the Board of Directors,
shall, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer. They shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
Section 7. The Secretary. The Secretary shall attend all meetings of
the Board of Directors and all meetings of the stockholders or a class of
stockholders and record all the proceedings of the meetings of the Corporation
and of the Board of Directors in a book to be kept for that purpose and shall
perform like duties for the standing committees of the Board of Directors when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders or a class of stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may be assigned to him or
her by the Board of Directors or the President, under whose supervision he or
she shall be. The Secretary shall have custody of the corporate seal of the
Corporation and he or she shall have authority to affix the same to any
instrument requiring it and, when so affixed, it may be attested by his or her
signature. The President or the Board of Directors may authorize any other
officer to affix the seal of the Corporation and to attest the affixing by his
signature.
Section 8. The Assistant Secretaries. The Assistant Secretaries in the
order of their seniority, unless otherwise determined by the Board of Directors,
shall, in the absence or disability of the Secretary, perform the duties and
exercise the powers of the Secretary. They shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
Section 9. Chief Financial Officer. The Chief Financial Officer shall
have the responsibilities and duties as set forth by the Board of Directors or
the Chief Executive Officer.
Section 10. Giving of Bond by Officers. Any officer of the Corporation,
if required to do so by the Board of Directors, shall furnish a bond to the
Corporation for the faithful performance of his or her duties, in such penalties
and with such conditions and security or surety or sureties as the Board shall
require.
Section 11. Voting Upon Stocks. Unless otherwise ordered by the Board
of Directors, the President, or any other officer of the Corporation designated
by the President, shall have full power and authority on behalf of the
Corporation to attend and to act and to vote in person or by proxy at any
meeting of the holders of securities of any corporation in which the Corporation
may own or hold stock or other securities, and at such meeting shall possess and
may exercise in person or by proxy any and all rights, powers and privileges
incident to the ownership of such stock or other securities which the
Corporation, as the owner or holder thereof, might have possessed and exercised
if present. The President, or any other officer of the Corporation designated by
the President, may also execute and deliver on behalf of the Corporation powers
of attorney, proxies, waivers of notice and other instruments relating to the
stocks or securities
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owned or held by the Corporation. The Board of Directors may, from time to time,
by resolution confer like powers upon any other person or persons.
Section 12. Compensation of Officers. The officers of the Corporation
shall be entitled to receive such compensation for their services as shall from
time to time be determined by the Board of Directors.
ARTICLE V.
CAPITAL STOCK CERTIFICATES - TRANSFER OF STOCK - SEAL - FISCAL YEAR
Section 1. Certificates for Shares. The certificates for shares of the
capital stock of the Corporation shall be in such form as is prescribed by law
and approved by the Board of Directors.
Section 2. Lost, Stolen, or Destroyed Certificates. Any person claiming
a stock certificate in lieu of one alleged to have been lost, stolen or
destroyed shall give the Corporation or its agent an affidavit as to his or her
ownership of the certificate and of the facts which go to prove that it has been
lost, stolen or destroyed. If required by the Board of Directors, he or she also
shall give the Corporation a bond, in such form as may be approved the Board of
Directors, sufficient to indemnify the Corporation against any claim that may be
made against it or on account of the alleged loss, theft or destruction of the
certificate or the issuance of a new certificate.
Section 3. Transfer of Shares. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 4. Regulations. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of certificates for shares of the capital
stock of the Corporation.
Section 5. Fixing of Record Dates. The powers of the Board of Directors
with respect to the fixing of record dates shall be as provided by the laws of
the State of Delaware at the time in effect.
Section 6. Corporate Seal. The Board of Directors shall provide a
suitable seal, containing the name of the Corporation, which seal shall be in
the charge of the Secretary. If and when so directed by the Board of Directors,
a duplicate of the seal may be kept and be used by any officer of the
Corporation designated by the Board of Directors.
Section 7. Fiscal Year. The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
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Section 8. Only Record Holders Recognized. The Corporation shall be
entitled to treat the holder of record of any share of capital stock as the
holder in fact thereof and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share on the part of any other
person, whether or not it shall have express or other notice thereof, save as
otherwise expressly provided by the laws of the State of Delaware.
Section 9. Addresses of Stockholders. It shall be the responsibility of
every stockholder to notify the Corporation of his or her post office address
and of any change therein. The latest address furnished by each stockholder
shall be entered on the stock ledger of the Corporation and the latest address
appearing thereon shall be deemed conclusively to be the post office address and
the last-known post office address of such stockholder. If any stockholder shall
fail to notify the Corporation of his or her post office address, it shall be
sufficient to send corporate notices to such stockholder at the address, if any,
understood by the Secretary to be such stockholder's post office address.
ARTICLE VI.
MISCELLANEOUS PROVISIONS
Section 1. Checks, Notes, etc. Checks and other orders for the payment
of money shall be signed by the Treasurer or by such person or persons as the
Board of Directors shall from time to time by resolution determine.
Section 2. Notices. Whenever any notice is required to be given to any
stockholder, director, committee member or officer, whether by statute, the
Certificate of Incorporation, these Bylaws or committee Bylaws or otherwise,
such notice, except as otherwise provided by law, may be given personally or, in
the case of directors, committee members or officers, by telephone or by
telegram, telex, cable or like transmission, addressed to such director,
committee member or officer at his or her place of business with the
Corporation, if any, or at such address as appears on the books of the
Corporation; or the notice may be given in writing by mail, in a sealed wrapper,
postage prepaid, addressed to such stockholder at the address as it appears on
the books of the Corporation, or to such director, committee member or officer
at his or her place of business with the Corporation, if any, or at such address
as appears on the books of the Corporation. Any notice given by telegram, telex,
cable or like transmission shall be deemed to have been given when it shall have
been delivered for transmission and any notice given by mail shall be deemed to
have been given when it shall have been deposited in a post office, in a
regularly maintained letter box or with a postal carrier.
Section 3. Waivers of Notice. Whenever notice is required to be given
under any provision of law or of the Certificate of Incorporation or of these
Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting of stockholders or of directors or
of a committee shall constitute waiver of notice of such meeting, except where
otherwise provided by law.
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ARTICLE VII.
INDEMNIFICATION
The Corporation shall indemnify each director and officer of the
Corporation, and each person serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, to the fullest extent permitted by the laws of Delaware, as
from time to time in effect. The Corporation may, if and to the extent
authorized by the Board of Directors of the Corporation in a specific case,
indemnify employees or agents of the Corporation in the same manner and to the
same extent. The indemnification obligations set forth herein shall inure to the
benefit of heirs, executors, administrators and personal representatives of
those entitled to indemnification and shall be binding upon any successor to the
Corporation to the fullest extent permitted by the laws of Delaware, as from
time to time in effect. The foregoing shall not be construed to limit the powers
of the Board of Directors to provide any other rights of indemnity which it may
deem appropriate.
ARTICLE VIII.
AMENDMENTS
These Bylaws and any amendments thereof may be altered, amended,
changed or repealed, or new Bylaws may be adopted, by the Board of Directors at
any regular or special meeting by the affirmative vote of a majority of all the
members of the Board of Directors; but these Bylaws and any amendments thereof,
including Bylaws adopted by the Board of Directors, may be altered, amended,
changed or repealed and other Bylaws may be enacted by the stockholders at any
annual meeting or at any special meeting, provided that notice of such proposed
alteration, amendment, change, repeal or enactment shall have been given in the
notice of the meeting.
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