EXHIBIT 1.1
DEALER MANAGER AND CONSENT SOLICITATION AGREEMENT
April [ ], 2001
Pegasus Satellite Communications, Inc.
c/o Pegasus Communications Management Company
000 Xxxx Xxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Ladies and Gentlemen:
This agreement (this "Agreement") will confirm the
understanding between Pegasus Satellite Communications, Inc., a Delaware
corporation (the "Company"), CIBC World Markets Corp. ("CIBC") and Credit Suisse
First Boston Corporation ("CSFBC" and, together with CIBC, the "Dealer
Managers") pursuant to which the Company has retained the Dealer Managers to
render financial advisory services to the Company and act as the exclusive
dealer managers and solicitation agents for the Company, on the terms and
subject to the conditions set forth herein, in connection with (i) the Company's
offers to exchange (each, an "Exchange Offer" and together, the "Exchange
Offers") (a) approximately $193.1 million in principal amount at maturity of its
13 1/2% Senior Subordinated Discount Notes due 2007 (the "New Subordinated
Securities") in exchange for any and all of the approximately $193.1 million in
principal amount at maturity of Golden Sky DBS, Inc.'s 13 1/2% Series B Senior
Discount Notes due 2007 (the "DBS Securities") and (b) approximately $195.0
million in principal amount of its 12 3/8% Senior Notes due 2006 (the "New
Senior Securities") in exchange for any and all of the approximately $195.0
million in principal amount of Golden Sky Systems, Inc.'s 12 3/8% Series A and B
Senior Subordinated Notes due 2006 (the "GSS Securities") and (ii) the Consent
Solicitations (as defined). The DBS Securities were issued under an indenture
dated February 19, 1999 by Golden Sky DBS, Inc. and United States Trust Company
of New York, as trustee (the "DBS Indenture") and the New Subordinated
Securities, if and when issued, will be issued under a new indenture governing
such securities (the "New Subordinated Indenture"). The GSS Securities were
issued under an indenture dated July 31, 1998 by Golden Sky Systems, Inc. and
State Street Bank and Trust Company of Missouri, as trustee (the "GSS
Indenture") and the New Senior Securities, if and when issued, will be issued
under a new indenture governing such securities (the "New Senior Indenture").
The Dealer Managers acknowledge that the Exchange Offers are subject to the
conditions set forth in the Prospectus (as defined herein).
Concurrently with the Exchange Offers, the Company is
soliciting (each a "Consent Solicitation") the consent (each a "Consent") of the
Holders (as deferred herein) of DBS Securities and GSS Securities, in each case,
to certain proposed amendments (the "Proposed Amendments") to the DBS Indenture
and the GSS Indenture, respectively. Upon receipt of Consents representing a
majority of the outstanding principal amount of the DBS Securities, the
amendments to the DBS Indenture (the "Amended DBS Indenture") will become
effective. Upon receipt of Consents representing a majority of the outstanding
principal amount of the GSS Securities, the amendments to the GSS Indenture (the
"Amended GSS Indenture") will become effective.
The New Subordinated Securities and the New Senior Securities
will be offered and exchanged pursuant to a registration statement on Form S-4
filed and declared effective pursuant to the registration requirements of the
Securities Act of 1933, as amended (the "Act"). Each Exchange Offer will be made
to all registered holders of the GSS Securities and the DBS Securities
(collectively, the "Holders").
The Company has prepared a registration statement and
prospectus relating to each Exchange Offer, each Consent Solicitation, each of
the Proposed Amendments, the New Subordinated Securities and the New Senior
Securities.
1. RETENTION. The Company hereby retains the Dealer Managers as
the exclusive dealer managers and solicitation agents in
connection with each Exchange Offer and related Consent
Solicitation and, subject to the terms and conditions hereof,
the Dealer Managers agree to act as the exclusive dealer
managers and solicitation agents in connection with each
Exchange Offer and related Consent Solicitation until the
close of business on the date each Exchange Offer has been
consummated. The Company hereby authorizes the Dealer Managers
to act on its behalf in accordance with this Agreement and the
terms of the Offering Documents (as hereinafter defined),
which Offering Documents the Dealer Managers and any other
broker or dealer or any commercial bank or trust company
approved by the Company are entitled to use in connection with
each solicitation of tenders, exchanges, consents,
authorizations, waivers, and/or acceptances in connection with
each Exchange Offer and related Consent Solicitation. In so
soliciting, the Dealer Managers shall not be deemed to act as
agents of the Company or its direct or indirect subsidiaries
(each a "Subsidiary" and, collectively, the "Subsidiaries"),
and the Company and its Subsidiaries shall not be deemed to
act as agents of the Dealer Managers. In addition, in so
soliciting, no broker, dealer, commercial bank or trust
company shall be deemed to act as agents of the Dealer
Managers or as agents of the Company or its Subsidiaries, the
Dealer Managers shall not be deemed to act as agents of any
broker, dealer, commercial bank or trust company, and the
Dealer Managers shall have no liability to the Company or any
other person for any losses, claims, damages, liabilities and
expenses arising from any act or omission on the part of any
broker, dealer, commercial bank or trust company.
The Dealer Managers will provide the Company with general
capital restructuring and other advice in connection with each
Exchange Offer and related Consent Solicitation; provided,
however, that the Company shall retain its own counsel for
legal and tax advice. In connection with such advice, the
Dealer Managers will analyze the capital structure of the
Company and the Company's businesses, operations and
prospects.
2. MAILING OF OFFERING DOCUMENTS. At the commencement of the
applicable Exchange Offer, the Company shall cause to be
mailed to each registered Holder of DBS Securities and GSS
Securities a copy of the Prospectus and the related consent
and letter of transmittal, the notice of guaranteed delivery
and any other offering materials prepared expressly for use by
Holders tendering and voting with respect to DBS Securities or
GSS Securities, as applicable, pursuant to the applicable
Exchange Offer and related Consent Solicitation (the "Offering
Documents"), together with a return envelope. Thereafter, to
the extent practicable, until the expiration of each Exchange
Offer and related Consent Solicitation, the Company shall use
its best efforts to cause copies of such materials and a
return envelope to be mailed to each person who becomes a
Holder of DBS Securities or GSS Securities, as applicable.
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3. SOLICITATION OF TENDERS.
(a) The Dealer Managers agree to use their reasonable
best efforts, in accordance with their customary
practices, to solicit Holders of DBS Securities and
GSS Securities, in each case, pursuant to the
applicable Exchange Offer and related Consent
Solicitation; notwithstanding the foregoing, nothing
set forth in this Agreement shall require the Dealer
Managers to continue to render services hereunder (i)
for the period during which any restraining order
shall remain in effect with respect to an Exchange
Offer or related Consent Solicitation or with respect
to any of the transactions in connection with, or
contemplated by, such Exchange Offer or related
Consent Solicitation or this Agreement if, in the
Dealer Managers' sole judgment, they believe it
inadvisable to render services pursuant hereto, or
(ii) if the Dealer Managers' continuing so to act
would, in their sole judgment, violate any statute,
regulation or other law of the United States or any
state or other jurisdiction applicable to such
Exchange Offer or Consent Solicitation;
(b) The Dealer Managers shall not be under any liability
to the Company or its Subsidiaries for any act on the
part of any broker or dealer, commercial bank or
trust company which solicits holders, and the Dealer
Managers, and the Indemnified Persons (as defined in
Schedule A hereto), shall have no liability to the
Company, its Subsidiaries or any other person in
connection with the services rendered pursuant to
this Agreement, except for any liability for claims,
liabilities, losses, damages or expenses determined
by a court of competent jurisdiction by a final
judgment (which judgment is no longer subject to
appeal or review) to have resulted primarily from
actions taken or omitted to be taken as a result of
the Dealer Managers' or such Indemnified Person's
gross negligence or willful misconduct;
(c) The Offering Documents will be prepared or approved
by the Company; the Dealer Managers and any other
broker or dealer or any commercial bank or trust
company are authorized to use the Offering Documents
in connection with the solicitation of Holders; the
Company shall not amend or supplement the Offering
Documents or prepare or approve any related material
for use in connection with an Exchange Offer or
related Consent Solicitation without first having
submitted a copy thereof to the Dealer Managers
within a reasonable period of time prior to the use
thereof; the Dealer Managers may rely on the accuracy
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and adequacy of written materials delivered to them
by the Company without any independent investigation
or verification thereof; the Company agrees, at its
expense, to furnish to the Dealer Managers as many
copies of the Offering Documents in final form for
use by the Dealer Managers in connection with an
Exchange Offer and related Consent Solicitation as
the Dealer Managers may reasonably request;
(d) The Company agrees to furnish to the Dealer Managers
cards or lists or copies thereof showing the names
and addresses of, and the principal amount of DBS
Securities or GSS Securities, as applicable, held by
the registered Holders of the DBS Securities and GSS
Securities, respectively, as of the appropriate date,
and shall advise the Dealer Managers upon request
(but not more frequently than once each business day)
during the continuance of an Exchange Offer as to any
transfers of record of the DBS Securities or GSS
Securities, as applicable;
(e) The Company shall orally inform the Dealer Managers
upon request (but not more frequently than once each
business day) during an Exchange Offer (to be
followed by written confirmation) as to the amounts
of DBS Securities and GSS Securities, as applicable,
which have been tendered pursuant to such Exchange
Offer during the interval since its previous daily
report to the Dealer Managers pursuant to this
provision, and the names and addresses of any
registered Holders (i) who have tendered DBS
Securities or GSS Securities or (ii) who have
delivered Consents to either of the Proposed
Amendments;
(f) The Company agrees to advise the Dealer Managers
promptly of the occurrence of any event which could
cause the Company to withdraw, rescind, or modify an
Exchange Offer or related Consent Solicitation; and
(g) The Company shall arrange for the exchange agent
named in the Offering Documents relating to the
Exchange Offers and the Consent Solicitations to
cooperate with the Dealer Managers in all respects
reasonably requested by the Dealer Managers.
4. COMPENSATION AND EXPENSE REIMBURSEMENT. Fees for this
Agreement are set forth in a separate letter, dated April [ ],
2001, by and among the Company, CIBC and CSFB.
5. TERMINATION. Subject to Sections 3 and 11 hereof, the Dealer
Managers may resign and the Company may terminate the Dealer
Managers' engagement hereunder upon five days' written notice.
The Dealer Managers' engagement hereunder may be extended by
written agreement of the parties hereto. If the Dealer
Managers resign or the Company terminates the engagement of a
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Dealer Manager hereunder for any reason, however, such Dealer
Manager shall be entitled to receive all of the fees earned
and amounts payable in respect of expenses incurred pursuant
to Section 4 hereof (including the fees and expenses of Xxxxxx
& Xxxxxxx) up to and including the effective date of such
resignation or termination and the indemnity and contribution
provisions contained in Section 6 hereof, including Schedule A
hereto, shall remain in full force and effect; provided, that
if the Company terminates the engagement of a Dealer Manager
hereunder for any reason and the Company or any of its
affiliates, within 12 months of the date of such termination,
proceeds with any transaction, the terms of which do not
differ materially from the terms set forth in any Offering
Document or as recommended by such Dealer Manager prior to
such termination, such Dealer Manager also shall be entitled
to receive all of the amounts due and payable pursuant to
Sections 4(a), (b) and (c) hereof as if this Agreement were to
remain in effect with respect to such subsequent transaction.
6. INDEMNITY. The Company agrees to indemnify the Indemnified
Parties (as defined in Schedule A) as set forth in Schedule A
hereto, which Schedule A is incorporated herein and made a
part hereof.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Dealer Managers that at the
commencement, and throughout the continuance, of each Exchange
Offer and related Consent Solicitation:
(a) A registration statement on Form S-4 (the
"Registration Statement") in respect of the New
Subordinated Securities, the New Senior Securities
and the Exchange Offers has been filed with the
Commission on April 11, 2001; the Registration
Statement and any post-effective amendment thereto,
each in the form heretofore delivered to the Dealer
Managers, and, excluding exhibits thereto have been
filed with the Commission in such form; no other
document with respect to such registration statement
has heretofore been filed with the Commission; and no
stop order suspending the effectiveness of the
Registration Statement or any post-effective
amendment thereto, if any, has been issued and no
proceeding for that purpose has been initiated or, to
our knowledge, threatened by the Commission (any
preliminary prospectus included in the Registration
Statement or filed with the Commission pursuant to
Rule 424(a) of the rules and regulations of the
Commission under the Act, herein called a
"Preliminary Prospectus"); the various parts of the
Registration Statement, including all exhibits,
annexes and schedules thereto and including the
information contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with this Agreement
contained in the Registration Statement at the time
such part of the registration statement became
effective, is herein collectively called the
"Registration Statement;" and such final prospectus,
in the form included in the Registration Statement at
the time it became effective or first filed pursuant
to Rule 424(b) under the Act, is herein called the
"Prospectus;"
(b) No order preventing or suspending the use of the
Preliminary Prospectus or Prospectus has been issued
by the Commission, and each Preliminary Prospectus or
Prospectus, at the time of filing thereof, conformed
in all material respects to the requirements of the
Act, and did not contain an untrue statement of a
material fact or omit to state a material fact
required to be stated therein or necessary to make
the statements therein, in the light of the
circumstances under which they were made, not
misleading or necessary to correct any material
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statement in any pre-commencement communication made
by the Company with respect to the Exchange Offers;
provided, however, that this representation and
warranty will not apply to any statements or
omissions made solely in reliance upon and in
conformity with information furnished in writing to
the Company by CIBC or CSFBC, as dealer managers and
solicitation agents, expressly for use therein;
(c) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements
to the Registration Statement or the Prospectus will
conform, in all material respects to the requirements
of the Act and the rules and regulations of the
Commission thereunder and do not and will not, as of
the applicable effective date as to the Registration
Statement and any amendment thereto, and as of the
applicable filing date as to the Prospectus and any
amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein not
misleading; provided, however, that this
representation and warranty shall not apply to any
statement or omissions made in reliance upon and in
conformity with information furnished in writing to
the Company by CIBC or CSFBC, as dealer managers and
solicitation agents, expressly for use therein;
(d) None of the Offering Documents and no other report,
filing, document, release, or communication published
or incorporated by reference in any such document in
connection with the Exchange Offers and Consent
Solicitations will contain any untrue statement of a
material fact or omit to state a material fact
required to be stated therein or necessary to make
the statements made therein, in the light of the
circumstances under which they were made, not
misleading;
(e) The Company is validly existing as a corporation in
good standing under the laws of its jurisdiction of
incorporation, has all requisite corporate power and
authority to carry on its business as it is currently
being conducted and as described in the Prospectus
and to own, lease and operate its properties, and is
duly qualified and in good standing as a foreign
corporation authorized to do business in each
jurisdiction in which the nature of its business or
its ownership or leasing of property requires such
qualification, except where the failure to be so
qualified or in good standing would not, singly or in
the aggregate, have a Material Adverse Effect (as
defined below);
(f) The Company has taken all corporate action necessary
to authorize the making and consummation of each
Exchange Offer and Consent Solicitation;
(g) Each of the Offering Documents will comply in all
material respects with all federal securities laws
and with all applicable rules or regulations of any
other governmental or regulatory authority or body,
including applicable "blue sky" or similar securities
laws;
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(h) All the outstanding shares of capital stock or other
securities evidencing equity ownership of the Company
are duly authorized and validly issued and are fully
paid, non-assessable and not subject to any
preemptive or similar rights.
(i) The Prospectus sets forth and identifies in
reasonable detail all outstanding short-term and
long-term indebtedness of the Company and its
Significant Subsidiaries (as defined below), on a
consolidated basis, prior to and after giving effect
to each Exchange Offer;
(j) The Company's "significant subsidiaries" (as defined
in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation
is in effect on the date hereof) (the "Significant
Subsidiaries") are set forth in Schedule B hereto
under the caption "Significant Subsidiaries." Each
Significant Subsidiary is validly existing as a
corporation or limited liability company, as the case
may be, in good standing under the laws of its
jurisdiction of incorporation or formation, as the
case may be, except where the failure to be in good
standing would not, singly or in the aggregate, have
a Material Adverse Effect, and has all requisite
corporate or limited liability company power to carry
on its business as it is being conducted and as
described in the Prospectus and to own, lease and
operate its properties, and is duly qualified and in
good standing as a foreign corporation or
partnership, as the case may be, authorized to do
business in each jurisdiction in which the nature of
its business or its ownership or leasing of property
requires such qualification, except where the failure
to be so qualified would not, singly or in the
aggregate, have a Material Adverse Effect. All of the
outstanding shares of capital stock and other
securities evidencing equity ownership of each of the
Significant Subsidiaries have been duly authorized
and validly issued and are fully paid and (except, in
the case of limited liability company interests, to
the extent that the provisions of the applicable
limited liability company act requiring members to
return distributions may be deemed to constitute
assessability) non-assessable and free of any
preemptive or similar rights, and are owned by the
Company, directly, or indirectly through one of the
other Significant Subsidiaries, free and clear of any
lien, adverse claim, security interest or other
encumbrance, except as are in effect under the Credit
Agreement, dated as of January 14, 2000 (the "PM&C
Credit Facility"), by and among Pegasus Media &
Communications, Inc. ("PM&C") and the several lenders
from time to time party thereto, as amended from time
to time, and the Amended and Restated Credit
Agreement, dated as of May 8, 1998 (the "Golden Sky
Credit Facility" and, together with the PM&C Credit
Facility, the "Credit Facilities"), by and among
Golden Sky Systems, Inc. and Golden Sky Holdings,
Inc. and Golden Sky DBS, Inc., as guarantors, and the
several lenders from time to time party thereto, as
amended from time to time;
(k) None of the Company or any of the Significant
Subsidiaries is (A) in violation of its charter,
bylaws, limited liability company agreement or other
organizational documents or (B) in default in the
performance of any material bond, debenture, note,
indenture, mortgage, deed of trust or other agreement
7
or instrument to which it is a party or by which it
is bound or to which any of its properties is
subject, or (C) in violation in any material respect
of any law, statute, rule, regulation, judgment or
court decree applicable to it or any of its assets or
properties, except in the case of clauses (B) and
(C), for any violation or default that would not,
singly or in the aggregate, (x) have a material
adverse effect on the assets, liabilities, business,
results of operations, condition (financial or
otherwise), cash flows, affairs or prospects of the
Company and its Significant Subsidiaries, taken as a
whole, (y) interfere with or adversely affect the
Exchange Offers or (z) in any manner draw into
question the validity of this Agreement or any of the
transactions contemplated hereby or by the Offering
Documents (any of the events set forth in clauses
(x), (y) or (z), a "Material Adverse Effect"). There
exists no condition that, with notice, the passage of
time or otherwise, would constitute a default under
any such document or instrument;
(l) On the date of consummation of each Exchange Offer,
the Amended DBS Indenture, the New Subordinated
Indenture, the Amended GSS Indenture and the New
Senior Indenture, as applicable, will have been
qualified under and will conform with the Trust
Indenture Act of 1939, as amended (the "TIA");
(m) The Exchange Offers and the issuance of the New
Subordinated Securities and the New Senior Securities
pursuant thereto and the Consent Solicitations and
the performance of this Agreement and the
consummation of the other transactions contemplated
hereby and by the Offering Documents, will not (i)
conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the
charter, by-laws, limited liability company agreement
or other organizational documents of the Company or
any of its Significant Subsidiaries or except where
such conflict or breach would not have a Material
Adverse Effect, any indenture, loan agreement,
mortgage, lease or other agreement or instrument to
which the Company or any of its Significant
Subsidiaries is a party or by which the Company or
any of its Significant Subsidiaries or their
respective property is bound, (ii) violate or
conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or
any governmental body or agency having jurisdiction
over the Company, any of its Significant Subsidiaries
or its property, (iii) result in the imposition or
creation of (or the obligation to create or impose) a
lien under, any agreement or instrument to which the
Company or any of its Significant Subsidiaries is a
party or by which the Company or any of its
Significant Subsidiaries or their respective property
is bound, except where such imposition or creation
would not have a Material Adverse Effect or (iv)
result in the termination, suspension or revocation
of any Authorization (as defined below) of the
Company or any of its Significant Subsidiaries or
result in any other impairment of the rights of the
holder of any such Authorization which would have a
Material Adverse Effect. No consent, approval,
authorization or order of, or filing, registration,
qualification, license or permit of or with, any
court or governmental agency, body or administrative
agency or authority is required for the Exchange
Offers and the issuance of the New Subordinated
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Securities and the New Senior Securities pursuant to
the Exchange Offers and the Consent Solicitations,
performance of this Agreement and the consummation of
the other transactions contemplated hereby and by the
Offering Documents, except (A) such as have been
obtained and made and (B) such as are disclosed in
the Prospectus. Except as described above, no
consents or waivers from any other person are
required for the execution, delivery and performance
by the Company and its Significant Subsidiaries, as
applicable, of this Agreement or the consummation of
the transactions contemplated hereby, other than (A)
such as have been obtained and made and (B) such as
are disclosed in the Prospectus;
(n) Each of this Agreement, the Amended DBS Indenture,
New Subordinated Indenture, Amended GSS Indenture and
New Senior Indenture has been duly and validly
authorized and when executed and delivered by the
applicable parties, will constitute a legal, valid
and binding agreement of the applicable parties,
enforceable against the applicable parties in
accordance with its terms except as such
enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors'
rights generally (including laws relating to
fraudulent transfers or conveyances), by general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in
equity or at law) and, as to rights and limitations
of indemnification and contribution, by federal and
state securities laws and principles of public
policy;
(o) The New Subordinated Securities and the New Senior
Securities have been duly authorized, and, on the
date of the consummation of the applicable Exchange
Offer, will have been validly executed and delivered
by the Company. When the New Subordinated Securities
and the New Senior Securities have been issued,
executed and authenticated in accordance with the
provisions of the Amended DBS Indenture, New
Subordinated Indenture, the Amended GSS Indenture and
the New Senior Indenture, as applicable, and
delivered to and exchanged for by the Holders in
accordance with the terms of the applicable Exchange
Offer, the New Subordinated Securities and the New
Senior Securities will be entitled to the benefits of
the Amended DBS Indenture, New Subordinated
Indenture, Amended GSS Indenture and the New Senior
Indenture, as applicable, and the New Subordinated
Securities and the New Senior Securities will be
valid and binding obligations of the Company,
enforceable in accordance with their terms except as
such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors'
rights generally (including laws relating to
fraudulent transfers or conveyances) and by general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in
equity or at law);
(p) There is (i) except as otherwise disclosed in the
Prospectus no action, suit, proceeding or
investigation before or by any court, arbitrator or
governmental agency, body or official, domestic or
foreign, now pending or, to the best knowledge of the
Company and its Significant Subsidiaries, threatened
9
or contemplated to which the Company or any
Significant Subsidiary is or may be a party or to
which the business or property of the Company or any
Significant Subsidiary is subject, (ii) except as
otherwise disclosed in the Prospectus, no statute,
rule, regulation or order that has been enacted,
adopted or issued by any governmental agency or that
has been proposed by any governmental body, (iii) no
injunction, restraining order or order of any nature
by a federal or state court or foreign court of
competent jurisdiction to which the Company or any
Significant Subsidiary is or may be subject or to
which the business, assets, or property of the
Company or any Significant Subsidiary is or may be
subject, issued that, in the case of clauses (i),
(ii) and (iii) above, might, singly or in the
aggregate, result in a Material Adverse Effect;
(q) There is (i) no significant unfair labor practice
complaint pending or, to the best knowledge of the
Company and the Significant Subsidiaries, threatened
against the Company or any Significant Subsidiary
before the National Labor Relations Board, any state
or local labor relations board or any foreign labor
relations board, and no significant grievance or
significant arbitration proceeding arising out of or
under any collective bargaining agreement is so
pending or, to the best knowledge of the Company and
the Significant Subsidiaries, threatened against the
Company or any Significant Subsidiary, (ii) no
significant strike, labor dispute, slowdown or
stoppage pending against the Company or any
Significant Subsidiary nor, to the best knowledge of
the Company and its Significant Subsidiaries,
threatened against the Company or any Significant
Subsidiary and (iii) no union representation question
existing with respect to the employees of the Company
or any Significant Subsidiary. To the best knowledge
of the Company and its Significant Subsidiaries, no
union organizing activities are taking place. None of
the Company or any Significant Subsidiary has
violated (A) any federal, state or local law,
statute, rule or regulation or foreign law, statute,
rule or regulation relating to discrimination in
hiring, promotion or pay of employees, (B) any
applicable wage or hour laws, (C) any provision of
the Employee Retirement Income Security Act of 1974,
as amended, or the rules and regulations thereunder
or (D) analogous foreign laws, statutes, rules and
regulations, which in the case of clause (A), (B),
(C) or (D) above might, singly or in the aggregate,
result in a Material Adverse Effect;
(r) In the ordinary course of its business, the Company
and each Significant Subsidiary conducts periodic
reviews of the effect of Environmental Laws (as
defined below) and the disposal of hazardous or toxic
substances, wastes, pollutants and contaminants on
the business, assets, operations and properties of
the Company and each Significant Subsidiary, in the
course of which it identifies and evaluates
associated costs and liabilities (including, without
limitation, all material capital and operating
expenditures required for clean-up, closure of
properties and compliance with Environmental Laws,
all permits, licenses and approvals, all related
constraints on operating activities and all potential
liabilities to third parties). On the basis of such
reviews the Company has reasonably concluded that
such associated costs and liabilities would not,
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singly or in the aggregate, have a Material Adverse
Effect. None of the Company or any Significant
Subsidiary has violated any environmental, safety or
similar law or regulation applicable to it or its
business or property relating to the protection of
human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), lacks any
permit, license or other approval required of it
under applicable Environmental Laws or is violating
any term or condition of such permit, license or
approval which might, singly or in the aggregate,
have a Material Adverse Effect;
(s) All tax returns required to be filed by the Company
and each Significant Subsidiary, in all
jurisdictions, have been so filed, except to the
extent such failure to file would not singly, or in
the aggregate, have a Material Adverse Effect. All
taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due or
claimed to be due from such entities or that are due
and payable have been paid, other than those being
contested in good faith and for which adequate
reserves have been provided or those currently
payable without penalty or interest. There are no
material proposed additional tax assessments against
the Company or any Significant Subsidiary or the
assets or property of the Company or any Significant
Subsidiary;
(t) The Company and each Significant Subsidiary has (i)
good and marketable title to all of the properties
and assets necessary for the operation of its
business as described in the Prospectus as owned by
it, free and clear of all liens, charges,
encumbrances and restrictions, except such as (A) are
described in the Prospectus, (B) are in effect under
the Credit Facilities, or (C) would not, singly or in
the aggregate, have a Material Adverse Effect, (ii)
peaceful and undisturbed possession under all leases
to which it is party as lessee except such as would
not, singly or in the aggregate, have a Material
Adverse Effect, (iii) all licenses, certificates,
permits, authorizations, approvals, franchises and
other rights from, and will have made all
declarations and filings with, all federal, state and
local authorities, all self-regulatory authorities
and all courts or governmental agencies, bodies or
administrative agencies or authorities (each an
"Authorization") necessary to engage in the business
conducted by it in the manner described in the
Prospectus, except where failure to hold such
Authorizations would not, singly or in the aggregate,
have a Material Adverse Effect and (iv) no reason to
believe that any governmental body or agency is
considering limiting, suspending or revoking any such
Authorization. Except where the failure to be in full
force and effect would not, singly or in the
aggregate, have a Material Adverse Effect, all such
Authorizations are valid and in full force and
effect. The Company and each Significant Subsidiary
is in compliance in all material respects with the
terms and conditions of all such Authorizations and
with the rules and regulations of the regulatory
authorities having jurisdiction with respect thereto.
All material leases to which the Company and each
Significant Subsidiary is a party are valid and
binding and no material default by the Company or any
such Significant Subsidiary has occurred and is
continuing thereunder and no material defaults by the
landlord are existing under any such lease;
11
(u) The Company and each Significant Subsidiary owns or
has valid and enforceable licenses to use all
material patents, patent rights, licenses,
inventions, copyrights, know-how (including, without
limitation, trade secrets and other unpatented and/or
unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and
trade names (collectively, the "Intellectual
Property") employed by it in connection with the
businesses operated by it as described in the
Prospectus, and none of the Company or any
Significant Subsidiary has received any notice of
infringement of or conflict with asserted rights of
others with respect to any of the foregoing. To the
best knowledge of the Company, the use of the
Intellectual Property in connection with the business
and operations of the Company and the Significant
Subsidiaries does not infringe on the rights of any
person;
(v) The Company and each Significant Subsidiary maintains
insurance covering its properties, operations,
personnel and businesses, except where the failure to
do so would not, singly or in the aggregate, have a
Material Adverse Effect. Such insurance insures
against such losses and risks as are adequate in
accordance with customary industry practice to
protect the Company and each of the Significant
Subsidiaries and their businesses. None of the
Company or any Significant Subsidiary has received
notice from any insurer or agent of such insurer that
substantial capital improvements or other
expenditures will have to be made in order to
continue such insurance. All such insurance is
outstanding and duly in force on the date hereof;
(w) The accountants who have certified or shall certify
the financial statements included as part of the
Prospectus (the "Accountants"), are independent
accountants within the meaning of the Act. The
historical consolidated financial statements and
schedules of the Company and the Significant
Subsidiaries and the historical financial statements
and schedules of each of the entities and businesses
acquired or to be acquired by the Company and the
Significant Subsidiaries and included in the
Prospectus comply as to form in all material respects
with the requirements applicable to registration
statements on Form S-4 under the Act and present
fairly the consolidated financial position and
results of operations of the Company and the
Significant Subsidiaries and the financial position
and results of operations of each of the entities and
businesses acquired or to be acquired by the Company
and the Significant Subsidiaries and included in the
Prospectus at the respective dates and for the
respective periods indicated. Such financial
statements have been prepared in accordance with
generally accepted accounting principles applied on a
consistent basis throughout the periods presented.
The other historical financial and statistical
information and data included in the Prospectus are
accurately presented in all material respects and
prepared on a basis consistent with the financial
statements included in the Prospectus and the books
and records of the Company, the Significant
Subsidiaries or the entities or businesses acquired
or to be acquired by the Company and the Significant
Subsidiaries included in the Prospectus;
12
(x) No relationship, direct or indirect, exists between
or among the Company or any Significant Subsidiary on
the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company
or any Significant Subsidiary on the other hand,
which is required to be described in a registration
statement on Form S-4 and which is not so described;
(y) No "nationally recognized statistical rating
organization" as such term is defined for purposes of
Rule 436(g)(2) under the Act (i) has imposed (or has
informed the Company that it is considering imposing)
any condition (financial or otherwise) on the
Company's retaining any rating assigned to the
Company, any securities of the Company or (ii) has
indicated to the Company that it is considering (a)
the downgrading, suspension, or withdrawal of, or any
review for a possible change that does not indicate
the direction of the possible change in, any rating
so assigned or (b) any change in the outlook for any
rating of the Company or any securities of the
Company; provided, that this representation and
warranty will not be deemed to be breached by reason
of any action taken with respect to the DBS
Securities or GSS Securities by any rating
organization after the date hereof solely because of
the Proposed Amendments or the reorganization;
(z) Since the respective dates as of which information is
given in the Prospectus, other than as set forth in
the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this
Agreement), (i) there has not occurred any material
adverse change or any development involving a
prospective material adverse change in the condition,
financial or otherwise, or the earnings, business,
management or operations of the Company and its
Significant Subsidiaries, (ii) there has not been any
material adverse change or any development involving
a prospective material adverse change in the capital
stock or in the long-term debt of the Company or any
of its Significant Subsidiaries and (iii) none of the
Company or any of its Significant Subsidiaries has
incurred any material liability or obligation, direct
or contingent;
(aa) The Company is not and, after giving effect to each
Exchange Offer and the exchange of the New
Subordinated Securities for the DBS Securities and
the New Senior Securities for the GSS Securities,
will not be, an "investment company," as such term is
defined in the Investment Company Act of 1940, as
amended;
(bb) Each certificate signed by any officer of the Company
and delivered to the Dealer Managers or counsel for
the Dealer Managers shall be deemed to be a
representation and warranty to the Dealer Managers as
to the matters covered thereby; and
13
(cc) The Company has made or will make appropriate
arrangements with The Depository Trust Company and
any other "qualified" registered securities
depository to allow for the book-entry transfer of
tendered DBS Securities and GSS Securities between
depository participants and the exchange agent.
8. ADDITIONAL OBLIGATIONS OF THE COMPANY. The Company will
furnish to the Dealer Managers, without charge, two signed
copies of the Registration Statement and any post-effective
amendments thereto, including all of the documents
incorporated by reference therein and all financial statements
and schedules.
(a) The Company will use its best efforts to cause the
Registration Statement and any post-effective
amendments thereto to become effective as promptly as
practicable. The Company will prepare and file, as
required, any and all necessary amendments or
supplements to any of the Offering Documents, will
promptly furnish to the Dealer Managers true and
complete copies of each such amendment and supplement
within a reasonable period of time prior to the
filing thereof and will use its reasonable best
efforts to cause the same to become effective as
promptly as practicable.
(b) The Company shall advise the Dealer Managers promptly
of (i) the time when the Registration Statement has
become effective and when any post-effective
amendment thereto becomes effective, (ii) the
occurrence of any event which could cause the Company
to withdraw, rescind, terminate or modify an Exchange
Offer or would permit the Company to exercise any
right not to accept DBS Securities and GSS Securities
tendered under the applicable Exchange Offer, (iii)
the occurrence of any event, or the discovery of any
fact, the occurrence or existence of which it
believes would require the making of any change in
any of the Offering Documents then being used or
would cause any representation or warranty contained
in this Agreement to be untrue or in-accurate in any
material respect, (iv) any proposal or requirement to
make, amend or supplement any filing required by the
Securities Act, the Exchange Act or "blue sky" or
other state securities laws in connection with an
Exchange Offer or to make any filing in connection
with an Exchange Offer pursuant to any other
applicable law, rule or regulation, (v) the issuance
by the Commission or any other federal, state, local
or foreign governmental or regulatory authorities or
any court (each an "Other Agency" and collectively,
the "Other Agencies") of any comment or order or the
taking of any other action concerning the Exchange
Offers (and, if in writing, will furnish the Dealer
Managers with a copy thereof), (vi) any material
developments in connection with an Exchange Offer,
including, without limitation, the commencement of
any lawsuit concerning an Exchange Offer and (vii)
any other information relating to an Exchange Offer,
the Offering Documents or this Agreement which the
Dealer Mangers may from time to time reasonably
request. If at any time the Commission shall issue
any order suspending the effectiveness of the
Registration Statement or any state securities
commission or other regulatory authority shall issue
an order suspending the qualification of the New
Subordinated Securities or New Senior Securities
under state securities or "blue sky" laws, the
Company shall make every reasonable effort to obtain
the withdrawal of such order at the earliest
practicable time.
14
(c) Prior to the issuance of the New Subordinated
Securities and New Senior Securities, as applicable,
the Company shall obtain the registration or
qualification thereof under the securities or "blue
sky" laws of such jurisdictions as may be required
for the consummation of the applicable Exchange Offer
and shall furnish the Dealer Managers with
preliminary and final forms of "blue sky" memoranda
evidencing such registration and qualification.
(d) Prior to the consummation of an Exchange Offer, the
Company shall furnish to the Dealer Managers, as soon
as they have been prepared by the Company, a copy of
any consolidated financial statements of the Company
and its consolidated subsidiaries for any period
subsequent to the period covered by the financial
statements appearing in the Registration Statement
and the Prospectus.
(e) The Company will fully comply in a timely manner with
the applicable provisions of Rule 424 under the
Securities Act.
9. COVENANTS OF THE COMPANY AND CONDITIONS OF OBLIGATIONS. The
obligation of the Dealer Managers to render services pursuant
to this Agreement shall at all times be subject, in their sole
discretion, to the following conditions, which the Company
covenants to effect:
(a) The Prospectus will have been either (i) filed with
the Commission pursuant to Rule 424(b) within the
applicable time period prescribed for such filing by
the rules and regulations under the Act in accordance
with this Agreement or (ii) included in the
Registration Statement; no stop order suspending the
effectiveness of the Registration Statement or any
part thereof will have been issued and no proceeding
for that purpose will have been initiated or
threatened by the Commission; and all requests for
additional information on the part of the Commission
will have been complied with to the Dealer Managers'
reasonable satisfaction.
(b) The Company shall at all times during the Exchange
Offers and Consent Solicitations have performed all
of its obligations hereunder theretofore to be
performed in all material respects;
(c) All representations, warranties and other statements
of the Company contained in this Agreement are now,
and at all times during the continuance and at the
consummation of the Exchange Offers and the Consent
Solicitations shall be, true and correct in all
material respects;
15
(d) On the date of closing of each Exchange Offer,
Drinker Xxxxxx & Xxxxx LLP shall deliver to the
Dealer Managers an affirmative customary opinion
substantially in the form of Exhibit I;
(e) On the date of closing of each Exchange Offer, the
Dealer Managers shall have received a letter dated
the closing of each such Exchange Offer, in form and
substance satisfactory to the Dealer Managers, from
each of PricewaterhouseCoopers LLP and KPMG LLP,
independent public accountants, containing the
information and statements of the type ordinarily
included in accountants' "comfort letters" to the
Dealer Managers with respect to the financial
statements and certain financial information
contained in the Prospectus;
(f) On the date of closing of each Exchange Offer, the
Dealer Managers shall have received a certificate
dated the date of the closing of each such Exchange
Offer, signed by a vice president and the Chief
Financial Officer of the Company, confirming the
matters set forth in Sections 9(c) and 9(h) and
stating that the Company has complied with all the
agreements and satisfied all of the conditions herein
contained and required to be complied with or
satisfied on or prior to the closing of each such
Exchange Offer;
(g) On the date of closing of each Exchange Offer, the
Company and the trustees shall have executed the New
Subordinated Indenture and the New Senior Indenture
and the Dealer Managers shall have received copies
thereof, each duly executed by the Company and the
trustees.
(h) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal
of, nor shall any notice have been given of any
potential or intended downgrading, suspension or
withdrawal of, or of any review (or of any potential
or intended review) for a possible change that does
not indicate the direction of the possible change in,
any rating of the Company or any securities of the
Company (including, without limitation, the placing
of any of the foregoing ratings on credit watch with
negative or developing implications or under review
with an uncertain direction) by any "nationally
recognized statistical rating organization" as such
term is defined for purposes of Rule 436(g)(2) under
the Act, (ii) there shall not have occurred any
change, nor shall any notice have been given of any
potential or intended change, in the outlook for any
rating of the Company or any securities of the
Company by any such rating organization and (iii) no
such rating organization shall have given notice that
it has assigned (or is considering assigning) a lower
rating to the New Subordinated Securities or the New
Senior Securities than that on which the New
Subordinated Securities or the New Senior Securities
were offered for exchange, except, in each case, for
actions taken with respect to the DBS Securities or
GSS Securities solely because of the Proposed
Amendments;
(i) On or after the commencement of the Exchange Offers
and prior to the expiration of either Exchange Offer,
there shall not have occurred any of the following:
(i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange;
(ii) a suspension or material limitation in trading
in the Company's securities on The Nasdaq National
16
Market; (iii) a general moratorium on commercial
banking activities declared by either Federal or New
York State authorities; (iv) the outbreak or
escalation of hostilities involving the United States
or the declaration by the United States of a national
emergency or war, if the effect of any such event
specified in this clause (iv) in the judgment of the
Dealer Managers makes it impracticable or inadvisable
to proceed with such Exchange Offer on the terms and
in the manner contemplated in the Offering Documents;
or (v) the occurrence of a material adverse change in
the existing financial, political or economic
conditions in the United States or elsewhere which,
in the judgment of the Dealer Managers would
materially and adversely affect the financial markets
or the success of such Exchange Offer;
(j) No stop order, restraining order or injunction shall
have been issued by the Commission or any court and
no litigation shall have been commenced or threatened
before the Commission or any court with respect to
(i) the making or the consummation of any Exchange
Offer, including the issuance of the New Subordinated
Securities to be exchanged for the DBS Securities and
the New Senior Securities to be exchanged for the GSS
Securities; (ii) the execution, delivery or
performance by the Company of this Agreement; (iii)
the delivery or the acceptance thereof of the
Consents to each of the Proposed Amendments or (iv)
any of the transactions in connection with, or
contemplated by, the Offering Documents which the
Dealer Managers or their legal counsel in good faith
believe makes it inadvisable for the Dealer Managers
to continue to render services pursuant hereto and it
shall not have otherwise become unlawful under any
law or regulation, federal, state or local, for the
Dealer Managers so to act, or continue so to act, as
the case may be; and
In addition, the Company shall have delivered to the Dealer
Managers such additional documents, certificates and opinions
as the Dealer Managers may reasonably request.
10. REFERENCE TO THE DEALER MANAGERS. The Company agrees that any
reference to the Dealer Managers or any of their affiliates in
any Offering Document, or any other release or communication
to any party outside the Company, is subject to the Dealer
Managers' prior written approval. If a Dealer Manager resigns
or is terminated prior to the dissemination of any Offering
Document or any other release or communication, no reference
shall be made therein to such Dealer Manager without such
Dealer Manager's prior written permission.
11. ACCESS TO INFORMATION. In connection with the Dealer Managers'
activities hereunder, the Company agrees to furnish each
Dealer Manager with all information concerning the Company
that each Dealer Manager reasonably deems appropriate and
agrees to provide each Dealer Manager with reasonable access
to the Company's officers, directors, accountants, counsel,
consultants and other appropriate agents and representatives.
The Company acknowledges that the Dealer Managers may rely
upon the completeness and accuracy of information and data
furnished to them by the Company's officers, directors,
employees, agents and representatives without an independent
verification of such information and data or an appraisal of
the Company's assets.
17
12. AGREEMENT OF DEALER MANAGERS. The Dealer Managers agree to
assist the Company in ascertaining the name and state of
residence of every beneficial holder of the GSS Securities and
DBS Securities in order to assist "blue sky" counsel with the
"blue sky" memoranda required pursuant to this Agreement.
13. SURVIVAL OF CERTAIN PROVISIONS. The indemnity and contribution
agreements contained in Section 6 of this Agreement (including
Schedule A hereto), the representations and warranties and
covenants of the Company made pursuant to Sections 7 and 9,
respectively, of this Agreement, this Section 13 and, subject
to the third sentence of Section 5, the compensation and
expense reimbursement provisions contained in Sections 4 and 5
of this Agreement, shall remain operative and in full force
and effect regardless of (a) any investigation made by or on
behalf of the Dealer Managers or by or on behalf of any
Indemnified Person (as defined in Schedule A hereto), (b)
consummation of the Exchange Offers or the Consent
Solicitations, or (c) any termination or expiration of this
Agreement, and shall be binding upon, and shall inure to the
benefit of, any successors, assigns, heirs and personal
representatives of the Company, the Dealer Managers, the
Indemnified Persons and any such person.
14. NOTICES. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and shall be mailed or
delivered (a) to the Company, c/o Pegasus Communications
Management Company, 000 Xxxx Xxxx Xxxxxx, Xxxxx 000, Xxxx
Xxxxxx, XX 00000, Attention: Chief Financial Officer; (b) to
the Dealer Managers at (i) CIBC World Markets Corp., 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx
Xxxxxx; and (ii) Credit Suisse First Boston Corporation,
Eleven Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Transactions Advisory Group; and (c) in the case of any notice
given to a Dealer Manager, with a copy to Xxxxxx & Xxxxxxx,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X.
Xxxxx, Esq.; and (d) in the case of any notice given to the
Company, with a copy to Drinker Xxxxxx & Xxxxx LLP, One Xxxxx
Square, 00xx xxx Xxxxxx Xxxxxxx, Xxxxxxxxxxxx, XX 00000-0000,
Attention: Xxxxxxx X. Xxxxxx, Esq.
15. CONSTRUCTION. This Agreement, including the schedules and
exhibits hereto, incorporates the entire understanding of the
parties and supersedes all previous agreements, and shall be
governed by, and construed in accordance with, the laws of the
State of New York as applied to contracts made and performed
in such State.
16. SEVERABILITY. Any determination that any provision of this
Agreement may be, or is, unenforceable shall not affect the
enforceability of the remainder of this Agreement.
17. HEADINGS. The section headings in this Agreement have been
inserted as a matter of convenience of reference and are not
to be deemed to be part of this Agreement.
18
18. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which shall constitute but one and the
same instrument.
19. THIRD PARTY BENEFICIARIES. This Agreement has been and is made
solely for the benefit of the Company, CIBC, CSFBC and the
other Indemnified Persons referred to in Section 6 and
Schedule A hereto and their respective successors, heirs,
personal representatives and assigns, and no other person
shall acquire or have any right under or by virtue of this
Agreement.
20. ADVERTISEMENTS. The Company agrees that the Dealer Managers
shall have the right to place advertisements in financial and
other newspapers and journals at their own expense describing
their services to the Company hereunder; provided, that (i)
the Dealer Managers shall have submitted a copy of any such
proposed advertisement to the Company for its prior approval,
which approval shall not be unreasonably withheld or delayed
and (ii) the publication of such advertisements shall comply
with applicable law, including, without limitation, any
federal or state securities laws.
21. MODIFICATION. This Agreement may not be modified or amended
except in writing, duly executed by the parties hereto.
22. NO RIGHTS IN SHAREHOLDERS, ETC. The Company recognizes that
each Dealer Manager has been retained only by the Company, and
that the engagement of each such Dealer Manager is not deemed
to be on behalf of and is not intended to confer rights upon
any shareholder, owner or partner of the Company or any other
person not a party hereto as against each such Dealer Manager
or any of either such Dealer Manager's respective affiliates
or the respective directors, officers, agents, employees or
representatives. Unless otherwise expressly agreed, no one
other than the Company is authorized to rely upon the
engagement of the Dealer Managers hereunder or any statements,
advice, opinions or conduct by the Dealer Managers.
23. FURTHER AGREEMENTS. This Agreement does not constitute any
agreement, express or implied, on the part of the Dealer
Managers or any commitment by the Dealer Managers to
underwrite, purchase, place, or cause the placement of any
securities or indebtedness or to advise the Company in
connection with any sale of any of its business or assets or
in connection with any merger, consolidation or similar
transaction. Any such commitment by either Dealer Manager
shall be at such Dealer Manager's option and would be subject
to, among other things, the satisfactory completion by such
Dealer Manager of an appropriate due diligence investigation
of the Company and the execution by such Dealer Manager and
the Company of a customary agreement acceptable to such Dealer
Manager and its counsel. Any such agreement would include,
among other things, customary representations, warranties,
opinions and compensation arrangements acceptable to either
such Dealer Managers and its counsel.
19
If the foregoing terms correctly set forth our agreement,
please confirm this by signing and returning to the Dealer Managers a duplicate
copy of this letter. Thereupon, this letter, as signed in counterpart, shall
constitute our agreement on the subject matter herein.
CIBC WORLD MARKETS CORP.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
CREDIT SUISSE FIRST BOSTON CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Confirmed and agreed to as of the date first above written:
PEGASUS SATELLITE COMMUNICATIONS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
20
SCHEDULE A
This Schedule A is a part of and is incorporated into that
certain Dealer Manager and Consent Solicitation Agreement (together, the
"Agreement"), dated April [ ], 2001, among the Company, CIBC World Markets Corp.
("CIBC") and Credit Suisse First Boston Corporation ("CSFBC"). Capitalized terms
used herein without definition shall have the meanings ascribed to them in such
Dealer Manager and Consent Solicitation Agreement.
The Company agrees to indemnify and hold harmless each of the
Dealer Managers and their affiliates and their respective officers, directors,
partners, employees, representatives and agents, and any other persons
controlling such Dealer Manager or any of its affiliates within the meaning of
Section 15 of the Act, or Section 20 of the Securities Exchange Act of 1934, as
amended, and each of its respective officers, directors, partners, employees,
representatives and agents (each Dealer Manager and each such other person or
entity being referred to as an "Indemnified Person"), to the fullest extent
lawful, from and against all claims, liabilities, losses, damages, and expenses
(including without limitation and as incurred, reimbursement of all costs of
investigating, preparing, pursuing, or defending any such claim or action,
including the fees and expenses of counsel to the Indemnified Persons, whether
or not arising out of pending litigation or other action or proceeding or
threatened litigation or threatened other action or proceeding), directly or
indirectly related to, or arising out of, or in connection with (i) actions
taken or omitted to be taken by the Company, its affiliates, employees,
directors, officers, partners, representatives, or agents in connection with any
transaction contemplated by this Agreement; (ii) actions taken or omitted to be
taken by any Indemnified Person pursuant to the terms of, or in connection with
services rendered pursuant to, this Agreement, provided, however, that, in the
case of this subsection (ii), the Company shall not be responsible for any
claim, liability, loss, damage or expense arising primarily out of or based
primarily upon the willful misconduct or gross negligence (as determined by the
final judgment of a court of competent jurisdiction, no longer subject to appeal
or review) of such Indemnified Person; and (iii) any untrue statement or alleged
untrue statement of a material fact contained in any Offering Document or any
omission or alleged omission to state a material fact necessary to make the
statements therein, in the light of the circumstances under which it was made,
not misleading, except, in the case of this subsection (iii), with respect to
any statements or omissions made solely in reliance upon and in conformity with
information furnished in writing to the Company by a Dealer Manager expressly
for use in such Offering Document. The Company shall notify the Dealer Managers
and any Indemnified Person against whom there is instituted, threatened, or
asserted any litigation, proceeding or claim promptly of such institution,
threat or assertion, which involves the Company (and as to which the Company has
notice) in connection with the matters addressed by this Agreement.
If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any Indemnified Person in
respect of which indemnity may be sought from the Company hereunder, such
Indemnified Person promptly shall notify the Company in writing; provided, that
the failure of any Indemnified Person to give such notice shall not relieve the
Company of its obligations pursuant to this Agreement, unless it shall have been
determined by a court of competent jurisdiction, by a final judgment not subject
to appeal or review, that such failure shall have resulted in a material adverse
effect upon the Company. Such Indemnified Person shall have the right to employ
counsel in any such action and the reasonable fees and expenses of such counsel
shall be paid by the Company. The Company shall not, in connection with any one
A-1
such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for all such Indemnified Persons, which firm shall be designated in writing by
such Indemnified Person. The Company shall have the right to employ separate
counsel in, and to participate in the defense of, any action or proceeding with
respect to which it has no right to assume the defense, but the fees and
expenses of such counsel shall be at the expense of the Company.
If the indemnification provided for herein is finally
determined by a court of competent jurisdiction to be unavailable to an
Indemnified Person under the first paragraph of this Schedule A in respect of
any claims, liabilities, losses, damages or expenses referred to therein, then
the Company, in lieu of indemnifying such Indemnified Person, shall contribute
to the amount paid or payable by such Indemnified Person as a result of such
claims, liabilities, losses, damages or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by the Dealer Managers on the other, from the services rendered
pursuant to this Agreement, or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above, but also the
relative fault of the Company on the one hand and the Indemnified Person on the
other, as well as any other relevant equitable considerations. The relative
benefits to the Company on the one hand and to the Dealer Managers on the other
hand with respect to the Exchange Offers shall be deemed to be in the same
proportion as (a) the total value of the securities proposed to be offered by
the Company in connection with the Exchange Offers bears to (b) the fees paid to
the Dealer Managers with respect to the Exchange Offers. The relative fault of
the Company on the one hand and such Indemnified Person on the other with
respect to the Exchange Offers shall be determined by reference to, among other
things, whether any untrue or alleged untrue statement of material fact or the
omission or alleged omission to state a material fact related to information
supplied by the Company or by such Indemnified Person and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. Notwithstanding the provisions of this Agreement,
the Indemnified Persons, in the aggregate, shall not be required to contribute
any amount in excess of the amount of fees actually received by the Dealer
Managers pursuant to Section 4 of this Agreement in connection with the Exchange
Offers that gave rise to such liability. The Company and the Dealer Managers
agree that it would not be just and equitable if contribution pursuant to this
paragraph were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to above. The Company also agrees that no Indemnified Person shall have
any liability to the Company for or in connection with this Agreement and the
engagement of the Dealer Managers hereunder, except for such claims,
liabilities, losses, damages, or expenses incurred by the Company to the extent
they are determined by a court of competent jurisdiction by a final judgment, no
longer subject to appeal or review, to have resulted from such Indemnified
Person's willful misconduct or gross negligence.
The indemnity and contribution obligations of the Company set
forth herein shall be in addition to any liability or obligation the Company may
otherwise have to any Indemnified Person.
A-2
SCHEDULE B
SIGNIFICANT SUBSIDIARIES OF PEGASUS SATELLITE COMMUNICATIONS, INC.
Golden Sky DBS, Inc.
Golden Sky Holdings, Inc.
Golden Sky Systems, Inc.
Pegasus Broadband Communications, Inc.
Pegasus Broadcast Television, Inc.
Pegasus Guard Band, LLC
Pegasus Media & Communications, Inc.
Pegasus Satellite Development Corporation
Pegasus Satellite Television, Inc.
PST Holdings, Inc.
B-1
EXHIBIT I
May [ ], 2001
CIBC WORLD MARKETS CORP.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Ladies and Gentlemen:
We have acted as counsel to Pegasus Satellite Communications,
Inc., a Delaware corporation (the "Company"), and its direct and indirect
subsidiaries (each a "Subsidiary" and, collectively, the "Subsidiaries") in
connection with the execution and delivery of the Dealer Manager and Consent
Solicitation Agreement dated as of April [ ], 2001 (the "Agreement"), among the
Company and you as the Dealer Managers, and in connection with the consummation
of the transactions contemplated thereby and by each Exchange Offer and related
Consent Solicitation. This opinion is being delivered to you pursuant to Section
9(d) of the Agreement, and all capitalized terms used herein have the meanings
assigned to them in the Agreement unless otherwise defined herein.
In that capacity, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the Agreement,
Offering Documents, such corporate records and other agreements, documents and
instruments, and such certificates or comparable documents of public officials
and officers and representatives of the Company and the Subsidiaries, and have
made such inquiries of such officers and representatives and have considered
such matters of law, as we have deemed appropriate as the basis for the opinions
hereinafter set forth.
In all cases, we have assumed the genuineness of signatures,
the authenticity of documents submitted as originals, the conformity to
authentic original documents of documents submitted to us as copies and the
accuracy and completeness of all corporate records and other information made
available to us by the Company and the Subsidiaries. We have further assumed
that the Agreement has been duly authorized, executed and delivered by, and is
the legal, valid and binding obligation of, all parties thereto other than the
Company.
As to questions of fact material to this opinion, we have
relied upon the accuracy of the representations and warranties made by the
parties in the Agreement and of certificates and other comparable documents of
officers and representatives of the Company and the Subsidiaries, upon
statements made to us in discussions with the Company's management and upon
certificates of public officials. Except as otherwise expressly indicated, we
have not undertaken any independent investigation of factual matters.
CIBC WORLD MARKETS CORP.
CREDIT SUISSE FIRST BOSTON CORPORATION
May [ ], 2001
Page 2
Based on the foregoing, and subject to the qualifications,
limitations and assumptions stated herein, we are of the following opinion:
1. The Company is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, and has all
requisite corporate power and authority to carry on its business as, to our
knowledge, it is being conducted and as described in the Prospectus and to own,
lease and operate its properties known to us.
2. Each of the Significant Subsidiaries is validly existing as
a corporation or limited liability company, as the case may be, in good standing
under the laws of its jurisdiction of incorporation or formation, as the case
may be, except where the failure to be in good standing would not, singly or in
the aggregate, have a Material Adverse Effect, and has all requisite corporate
or limited liability company power and authority to carry on its business as, to
our knowledge, it is being conducted and as described in the Prospectus and to
own, lease and operate its properties known to us, and is duly qualified and in
good standing as a foreign corporation or partnership, as the case may be,
authorized to do business in each jurisdiction set forth on Schedule I to this
opinion. All of the outstanding shares of capital stock and other securities
evidencing equity ownership of each of the Significant Subsidiaries have been
duly authorized and validly issued and are fully paid and (except, in the case
of liability company interests, to the extent that the provisions of the
applicable limited liability company act requiring members to return
distributions may be deemed to constitute assessability) nonassessable and free
of any preemptive or similar rights, and are owned by the Company directly or
indirectly through one of the other Significant Subsidiaries, free and clear of
any lien, adverse claim, security interest or other encumbrance known to us,
except as are in effect under the Credit Facilities.
3. To the best of our knowledge, none of the Company or any of
the Significant Subsidiaries is in violation of its charter, bylaws limited
liability company agreement or other organizational documents or is in default
in the performance of the PM&C Credit Facility, the Golden Sky Credit Facility,
the indenture governing Pegasus Media & Communications, Inc.'s $85.0 million in
aggregate principal amount of its 12 1/2% senior subordinated notes due 2005,
the indenture governing the Company's $115.0 million in aggregate principal of
its 9N% senior notes due 2005, the indenture governing the Company's $100.0
million in aggregate principal of 9 3/4% senior notes due 2006, the indenture
governing the Company's $155.0 million in aggregate principal amount of its
12 1/2% Series A senior subordinated notes due 2007, the DBS Indenture or the
GSS Indenture (other than any financial covenants included in any of such
documents, as to which we express no opinion).
4. Each Exchange Offer, the Amended DBS Indenture, the New
Subordinated Indenture, the Amended GSS Indenture and the New Senior Indenture,
as applicable, has been qualified under and conforms with the Trust Indenture
Act of 1939, as amended (the "TIA").
5. Each Exchange Offer and the issuance of the New
Subordinated Securities and the New Senior Securities pursuant to the applicable
Exchange Offer and related Consent Solicitation do not, and the performance of
the Agreement and the consummation of the other transactions contemplated by the
Agreement and the Offering Documents, will not violate, conflict with or
CIBC WORLD MARKETS CORP.
CREDIT SUISSE FIRST BOSTON CORPORATION
May [ ], 2001
Page 3
constitute a breach of any of the terms or provisions of, or a default under (or
an event that with notice or the lapse of time, or both, would constitute a
default), or (except as contemplated in the second and third sentences of this
paragraph) require consent under, or result in the imposition of a lien or
encumbrance on any properties of the Company or any Significant Subsidiary, or
an acceleration of any indebtedness of the Company or any Significant Subsidiary
pursuant to, (i) the charter, bylaws, limited liability company agreement or
other organizational documents of the Company or any Significant Subsidiary,
(ii) any material bond, debenture, note, indenture, mortgage, deed of trust or
other agreement or instrument known to us relating to borrowed money to which
the Company or any Significant Subsidiary is a party or by which any of them or
their property is bound, (iii) any statute, rule or regulation known to us
applicable to the Company or any Significant Subsidiary or their assets or
properties or (iv) any judgment, order or decree known to us of any court or
governmental agency, body or administrative agency or authority having
jurisdiction over the Company, any Significant Subsidiary or their respective
assets or properties. No consent, approval, authorization or order of, or
filing, registration, qualification, license or permit of or with, any
regulatory agency or body, administrative agency, or other governmental agency
is required for each Exchange Offer and the issuance of the New Subordinated
Securities and the New Senior Securities pursuant to the applicable Exchange
Offer and related Consent Solicitation and the performance of the Agreement and
the consummation of the other transactions contemplated by the Agreement and the
Offering Documents, except (A) such as have been obtained or made (or, will be
obtained or made) under the Securities Act, the Trust Indenture Act and state
securities or Blue Sky laws and regulations, (B) such as may be required by the
National Association of Securities Dealers, Inc. and the Federal Communications
Commission, and (C) such as are disclosed in the Prospectus. To the best of our
knowledge, except as described above, no consents or waivers from any other
person are required for the execution, delivery and performance by the Company
and its Significant Subsidiaries, as applicable, of this Agreement or the
consummation of the transactions contemplated hereby and thereby, other than (A)
such as have been obtained and made and (B) such as are disclosed in the
Prospectus.
6. The Company is not and will not be as a result of the
exchange by the Company of DBS Securities for New Subordinated Securities or GSS
Securities for New Senior Securities (i) an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, or (ii) a "holding company" or a "subsidiary" or an
"affiliate" of a holding company within the meaning of the Public Utility
Holding Company Act of 1935.
7. The statements in the Prospectus under the captions Risk
Factors, Description of the Pegasus Satellite Senior Notes, Description of the
Pegasus Satellite Senior Subordinates Discount Notes, Description of Certain
Indebtedness and Certain Federal Income Tax Considerations, insofar as they are
descriptions of contracts, agreements or other legal documents or laws,
regulations or statutes, are accurate in all material respects and present
fairly the information required to be shown.
8. To the best of our knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending to which
the Company or any of its Significant Subsidiaries is a party or of which any
property or assets of the Company or any of its Significant Subsidiaries is the
subject which, if determined adversely to the Company or any of its Significant
Subsidiaries, might, singly or in the aggregate, have a Material Adverse Effect;
and, to the best of our knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
CIBC WORLD MARKETS CORP.
CREDIT SUISSE FIRST BOSTON CORPORATION
May [ ], 2001
Page 4
9. The Company has taken all corporate action necessary to
authorize the making and consummation of each Exchange Offer and related Consent
Solicitation.
10. Each of the Offering Documents complies as to form in all
material respects with all federal securities laws and with all applicable rules
or regulations of any other governmental or regulatory authority or body, and no
consent or approval of, or filing with, any governmental or regulatory authority
or body is required in connection with the commencement or consummation of each
Exchange Offer or related Consent Solicitation, other than those consents or
approvals which have been obtained or any filing which has been made prior to
the commencement or consummation, as the case may be, of each Exchange Offer and
related Consent Solicitation. The terms of each Exchange Offer as described in
the Prospectus comply with Rule 14e-1 under the Exchange Act.
11. All the outstanding shares of capital stock or other
securities evidencing equity ownership of the Company are duly authorized and
validly issued and are fully paid, non-assessable. There are no preemptive or
other rights to subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any of the outstanding shares of capital stock pursuant
to the Company's charter or by-laws or any agreement or other instrument (except
as set forth in the Registration Statement and the Prospectus) known to such
counsel.
12. The New Subordinated Securities and the New Senior
Securities have been duly authorized, validly executed and delivered by the
Company. When the New Subordinated Securities and the New Senior Securities have
been issued, executed and authenticated in accordance with the provisions of the
Amended DBS Indenture, New Subordinated Indenture, the Amended GSS Indenture and
the New Senior Indenture, as applicable, and delivered to and exchanged for the
applicable GSS Securities and DBS Securities by the Holders validly tendering in
accordance with the terms of the applicable Exchange Offer, the New Subordinated
Securities and the New Senior Securities will be entitled to the benefits of the
Amended DBS Indenture, New Subordinated Indenture, Amended GSS Indenture and the
New Senior Indenture, as applicable, and the New Subordinated Securities and the
New Senior Securities will be valid and binding obligations of the Company,
enforceable in accordance with their terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally (including laws
relating to fraudulent transfers or conveyances) and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
13. Each of the Agreement, the Amended DBS Indenture, New
Subordinated Indenture, Amended GSS Indenture and New Senior Indenture has been
duly and validly authorized and when executed and delivered by the applicable
parties, will constitute a legal, valid and binding agreement of the applicable
parties, enforceable against the applicable parties in accordance with its terms
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally (including laws relating to fraudulent transfers or
conveyances), by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and, as to
rights and limitations of indemnification and contribution, by federal and state
securities laws and principles of public policy.
CIBC WORLD MARKETS CORP.
CREDIT SUISSE FIRST BOSTON CORPORATION
May [ ], 2001
Page 5
14. The Registration Statement is effective under the
Securities Act and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or threatened.
15. The Registration Statement and the Prospectus and each
amendment or supplement thereto (apart from the financial statements, notes and
other financial data and schedules thereto contained therein, as to which such
counsel has not been requested to express an opinion) comply in all material
respects with the Securities Act, and the other Offering Documents and each
amendment or supplement thereto comply in all material respects with the
applicable requirements of the Securities Act and the Exchange Act.
We have participated in conferences with officers and other
representatives of the Company and the Significant Subsidiaries and
representatives of the independent public accountants of the Company and
representatives of the Dealer Managers at which the contents of the Prospectus
and related matters were discussed and, although we have not undertaken to
investigate or verify independently, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Prospectus, on the basis of the foregoing (relying as to materiality to a large
extent upon the opinions of officers and other representatives of the Company
and the Subsidiaries), we do not believe that the Prospectus (except as to
financial statements, including the notes thereto, and supporting schedules and
other financial and accounting data included therein or omitted therefrom, as to
which we express no belief), as of its date or the Closing Date, contained an
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
We express no opinion concerning the laws of any jurisdiction
other than the law of the Commonwealth of Pennsylvania, the federal law of the
United States of America and the General Corporation Law and Limited Liability
Company Act of the State of Delaware. Further, we express no opinion concerning
any law or regulation administered by the Federal Communications Commission or
otherwise regulating the broadcast or satellite television businesses.
We advise you that Xxxxxxx X. Xxxxxx, a partner in our firm,
is an assistant secretary of the Company and the Significant Subsidiaries.
Yours very truly,
Schedule I
Golden Sky DBS, Inc.
--------------------
Delaware, Missouri
Golden Sky Holdings, Inc.
-------------------------
Delaware, Missouri
Golden Sky Systems, Inc.
------------------------
Alabama, Arizona, California, Colorado, Delaware, Georgia, Idaho, Iowa,
Kansas, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, North
Carolina, North Dakota, Oklahoma, Oregon, Tennessee, Texas, Wisconsin, Wyoming
Pegasus Broadband Communications, Inc.
--------------------------------------
Delaware
Pegasus Broadcast Television, Inc.
----------------------------------
Florida, Georgia, Mississippi, Pennsylvania, Tennessee
Pegasus Guard Band, LLC
-----------------------
Delaware
Pegasus Media & Communications, Inc.
------------------------------------
Delaware
Pegasus Satellite Development Corporation
-----------------------------------------
Delaware
Pegasus Satellite Television, Inc.
----------------------------------
Alabama, Delaware, Minnesota, North Dakota, South Carolina, Texas,
Wisconsin
PST Holdings, Inc.
------------------
Delaware
I-1
