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As filed with the Securities and Exchange Commission on January 7, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PEGASUS COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
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4833
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(Primary Standard Industrial Classification Code Number)
DELAWARE 51-0374669
(State or Other Jurisdiction or (I.R.S. Employer
Incorporation or Organization) Identification Number)
c/o Pegasus Communications Management Company
225 City Line Avenue
Suite 200
Bala Cynwyd, Pennsylvania 19004
(888) 438-7488
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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Ted S. Lodge, Senior Vice President, Chief Administrative Officer,
General Counsel and Secretary
c/o Pegasus Communications Management Company
225 City Line Avenue
Suite 200
Bala Cynwyd, Pennsylvania 19004
(888) 438-7488
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copy to:
Michael B. Jordan, Esq.
Drinker Biddle & Reath LLP
One Logan Square
18th & Cherry Streets
Philadelphia, Pennsylvania 19103-6996
(215) 988-2700
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
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If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
CALCULATION OF REGISTRATION FEE
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Title of Each of Proposed Proposed
Securities Amount Maximum Maximum Amount of
To Be To be Offering Price Aggregate Registration
Registered Registered Per Note Offering Price Fee(1)
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12 1/2% Series B Senior $155,000,000 100% $155,000,000 $40,920
Notes due 2007
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(1) Calculated in accordance with Rule 457 solely for the purpose of
determining the registration fee. The fee has been previously paid by wire
transfer.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall thereafter
become effective on such date as the Commission, acting pursuant to said Section
8(a) may determine.
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The information in this prospectus is not complete and may be changed. We may
not offer these securities until the registration statement is effective. This
prospectus is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Subject to completion dated January 7, 2000
Prospectus
________, 2000
[PEGASUS LOGO]
Pegasus Communications Corporation
Exchange of registered 12 1/2% Series B senior
notes due 2007 for any and all of our
unregistered outstanding
12 1/2% Series A senior notes due 2007
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o We offer to exchange new registered 12 1/2% Series B senior notes due
2007 for our outstanding 12 1/2% Series A senior notes due 2007, of
which $155.0 million in principal amount at maturity are outstanding.
o There has been no public market for the notes before the exchange
offer. We do not intend to apply for the listing of the new notes on
any national securities exchange or for quotation through the Nasdaq
National Market.
o The offer will expire at 5:00 p.m., New York City time, on __________,
2000, unless extended or earlier terminated.
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This investment involves risks. See Risk Factors beginning on page 9.
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Neither the SEC nor any state securities commission has determined
whether this prospectus is truthful or complete. Nor have they made, nor will
they make, any determination as to whether anyone should buy these securities.
Any representation to the contrary is a criminal offense.
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Prospectus Summary
This summary highlights information contained elsewhere in this
prospectus. This summary is not complete and may not contain all of the
information that you should consider before deciding to exchange your notes. We
urge you to read the entire prospectus carefully, including the SEC filings and
financial statements that we have incorporated by reference and the Risk Factors
section.
Pegasus
Pegasus Communications Corporation is:
o The largest independent distributor of DIRECTV(R) with 725,800
subscribers at November 30, 1999. We have the exclusive right
to distribute DIRECTV digital broadcast satellite services to
over 5.3 million rural households in 38 states. We distribute
DIRECTV through the Pegasus retail network, a network in
excess of 2,000 independent retailers.
o The owner or programmer of nine TV stations affiliated with
either Fox, UPN or the WB and the owner of a large cable
system in Puerto Rico serving approximately 55,000
subscribers.
o One of the fastest growing media companies in the United
States. We have increased our revenues at a compound growth
rate of 100% per annum since our inception in 1991.
We were incorporated in Delaware in May 1996. Our principal executive
office is at 225 City Line Avenue, Suite 200, Bala Cynwyd, PA 19004. Our
telephone number is (888) 438-7488.
Recent Direct Broadcast Satellite Developments
The following important events have occurred recently in the direct
broadcast satellite industry:
The National Rural Telecommunications Cooperative/DIRECTV Litigation.
On June 3, 1999, the National Rural Telecommunications Cooperative filed a
lawsuit in federal court against DIRECTV seeking a court order to enforce the
National Rural Telecommunications Cooperative's contractual rights to obtain
from DIRECTV certain premium programming formerly distributed by United States
Satellite Broadcasting Company, Inc. for exclusive distribution by the National
Rural Telecommunications Cooperative's members and affiliates in their rural
markets. The National Rural Telecommunications Cooperative also sought a
temporary restraining order preventing DIRECTV from marketing the premium
programming in such markets and requiring DIRECTV to provide the National Rural
Telecommunications Cooperative with the premium programming for exclusive
distribution in those areas. The court, in an order dated June 17, 1999, denied
the National Rural Telecommunications Cooperative a preliminary injunction on
such matters, without deciding the underlying claims. On July 22, 1999, DIRECTV
responded to the National Rural Telecommunications Cooperative's continuing
lawsuit by rejecting the National Rural Telecommunications Cooperative's claims
to exclusive distribution rights and by filing a counterclaim seeking judicial
clarification of certain provisions of DIRECTV's contract with the National
Rural Telecommunications Cooperative. In particular, DIRECTV contends in its
counterclaim that the term of DIRECTV's contract with the National Rural
Telecommunications Cooperative is measured solely by the orbital life of DBS-1,
the first DIRECTV satellite launched into orbit at the 101(degree) W orbital
location, without regard to the orbital lives of the other DIRECTV satellites at
the 101(degree) W orbital location. DIRECTV also alleges in its counterclaim
that the National Rural Telecommunications Cooperative's right of first refusal,
which is effective at the end of the term of DIRECTV's contract with the
National Rural Telecommunications Cooperative, does not provide for certain
programming and other rights comparable to those now provided under the
contract. On September 8, 1999, the court denied a motion by DIRECTV to dismiss
certain of the National Rural Telecommunications Cooperative's claims, leaving
all of the causes of action asserted by the National Rural Telecommunications
Cooperative at issue.
On September 9, 1999, the National Rural Telecommunications Cooperative
filed a response to DIRECTV's counterclaim contesting DIRECTV's interpretations
of the end of term and right of first refusal provisions. On August 26, 1999,
the National Rural Telecommunications Cooperative filed a separate lawsuit in
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federal court against DIRECTV claiming that DIRECTV had failed to provide to the
National Rural Telecommunications Cooperative its share of launch fees and other
benefits that DIRECTV and its affiliates have received relating to programming
and other services. While we are not a party to the pending litigation between
the National Rural Telecommunications Cooperative and DIRECTV, the outcome of
the litigation could have a material adverse effect on our direct broadcast
satellite business because we are an associate of the National Rural
Telecommunications Cooperative with contract rights that are affected by the
contractual relationship between the National Rural Telecommunications
Cooperative and DIRECTV. See Risk Factors - Risks of Our Direct Broadcast
Satellite Business - Satellite and Direct Broadcast Satellite Technology Could
Fail or Be Impaired and - We May Lose Our DIRECTV Rights After the Initial Term
of Our Agreements With the National Rural Telecommunications Cooperative.
The Satellite Home Viewer Improvement Act of 1999. Congress recently
enacted The Satellite Home Viewer Improvement Act of 1999. The legislation
authorizes the delivery of broadcast programming by local affiliates of the
national broadcast networks to satellite subscribers. We believe that we will
benefit from this legislation because it will allow us to reconnect certain
satellite subscribers who were disconnected from network services in 1999. We
believe that we will also benefit from DIRECTV's plan to deliver broadcast
programming by local network affiliates in the top 25 television markets -
markets that represent approximately 25% of our total addressable households or
1.25 million homes. We are still evaluating the impact of the legislation on our
business.
Relationship with W.W. Keen Butcher and Affiliated Entities. Pegasus
entered into an agreement in 1998 with W.W. Keen Butcher, the stepfather of
Marshall W. Pagon, our President and Chief Executive Officer, and Nicholas A.
Pagon, a Vice President of Pegasus, certain entities controlled by Mr. Butcher
and the owner of a minority interest in one of the entities. Under the original
agreement, Pegasus agreed to provide and maintain collateral for up to $4.0
million in principal amount of bank loans to Mr. Butcher or entities controlled
by him and the minority owner. The agreement was recently amended to increase
the amount of collateral that Pegasus will maintain for such loans to up to $8
million. Mr. Butcher and the affiliated entities must contribute the proceeds
from these bank loans to one or more entities owned by Mr. Butcher for
acquisition of television broadcast stations to be programmed by Pegasus
pursuant to local marketing agreements.
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The Exchange Offer
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The Old Notes........................ We issued $155.0 million in principal amount of our 12 1/2% Series A senior
notes due 2007 on November 19, 1999. Because we did not register the old
notes under the Securities Act, they are subject to restrictions on
transfer.
The New Notes........................ We offer $155.0 million in principal amount of our 12 1/2% Series B senior
notes due 2007 in this prospectus. We have registered the new notes under
the Securities Act, so that they will not be subject to restrictions on
transfer.
The Offer............................ We offer to exchange $1,000 principal amount of registered new notes for
each $1,000 principal amount of unregistered old notes. We will accept for
exchange any and all old notes properly tendered before the offer expires
and will then promptly issue the new notes.
Expiration Date...................... 5:00 p.m., New York City time, on __________ 2000, unless we extend the
exchange offer.
Accrued Interest on the
New Notes and
Old Notes............................ The new notes will bear interest from and including November 19, 1999, the
date of issuance of the old notes. If we accept your old notes for
exchange, you will waive the right to receive any interest accrued on the
old notes.
Conditions to this Offer............. Although we do not condition this exchange upon any minimum aggregate
principal amount of old notes being tendered, it is subject to certain
customary conditions which we explain below in The Exchange Offer--
Conditions.
Exchange Agent....................... First Union National Bank.
Procedures for Tendering
Old Notes............................ If you hold old notes and you wish to accept this offer you must complete a
letter of transmittal and deliver it to the exchange agent. You must
follow the instructions contained in that letter and this prospectus.
Special Procedures for
Beneficial Owners.................... If you are a beneficial owner whose old notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and you
wish to tender your old notes, you should contact the registered holder
promptly and instruct it to tender the notes for you.
Guaranteed Delivery
Procedures........................... If you wish to tender your old notes and you cannot deliver them, the
letter of transmittal or any other required documents before this offer
expires, you must tender your old notes according to procedures we discuss
below in The Exchange Offer-- Guaranteed Delivery Procedures. You can use
this procedure only if you tender through an eligible institution as
described in The Exchange Offer-- Procedures for Tendering.
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Withdrawal Rights.................... You may withdraw your tender of old notes at any time before the exchange
offer expires. The procedure for doing this is described in The Exchange
Offer-- Withdrawal of Tenders.
Certain United States Federal
Income Tax Consequences of the
Exchange Offer....................... We discuss certain federal income tax considerations relating to the
exchange in Material United States Federal Income Tax Consequences of the
Exchange Offer and Material United States Federal Income Tax Consequences.
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Summary of Terms of New Notes
The new notes will have identical terms to the old notes. A brief
summary follows. For a more detailed description, read Description of Notes.
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Total amount of notes offered........ $155.0 million in principal amount of 12 1/2% Series B senior notes due 2007.
Maturity............................. August 1, 2007.
Interest............................. Annual rate-- 12 1/2%
Ranking.............................. The notes will rank senior to our subordinated indebtedness and will rank
equally in right of payment with our senior indebtedness. But they will
effectively rank junior to the substantial indebtedness and trade payables of
our subsidiaries, even their subordinated indebtedness. Our subsidiaries
currently have $261.1 million of indebtedness and trade payables that will
effectively rank senior to the new notes. We describe this in more detail
under Risk Factors -- Risks of Investing in the New Notes -- These Notes are
not guaranteed which could adversely affect your investment.
Subsidiary guarantors................ None of our subsidiaries guarantee the old notes and, when issued, none of
our subsidiaries will guarantee the new notes. However, our subsidiaries
may in the future unconditionally guarantee our obligations on a senior,
unsecured basis, jointly and severally, by signing a supplemental
indenture. They are required to do this if they guarantee or incur certain
types of other indebtedness.
Optional redemption.................. Prior to August 1, 2000, we may redeem up to 35% of the notes at a
redemption price of 112.50% of the principal amount, plus accrued and
unpaid interest, with net proceeds of certain equity offerings. On or
after August 1, 2003, we may redeem some or all of the notes at any time at
the redemption prices listed in Description of Notes-- Optional Redemption.
Mandatory offer to repurchase........ Subject to certain exceptions, if we sell certain assets or experience
specific kinds of changes in control, we must offer to repurchase the
notes.
Basic covenants of the indenture..... We will issue the notes under an indenture. The indenture restricts our
ability and the ability of our subsidiaries to:
o sell assets;
o make certain payments, including dividends;
o incur indebtedness and create liens;
o sell certain preferred securities;
o engage in certain transactions with our affiliates;
o issue certain equity; and
o merge or consolidate.
See Description of Notes -- Certain Covenants for a discussion of these
restrictions.
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Market
We do not plan to list the new notes on any exchanges or with the
Nasdaq National Market. No one has made a binding agreement to make a market
for the new notes. We offer no assurance that a market for the new notes
will develop or provide meaningful liquidity for investors.
The old notes are eligible for trading in the private offerings,
resales and trading through automated linkages (PORTAL) market. Because we
did not register them under the Securities Act, they are subject to
restrictions on transfer that will not apply to the new notes. After we
complete the exchange offer, we will have no obligation to register the old
notes except under very limited circumstances.
Failure To Exchange Old Notes
If you do not tender your old notes in this exchange offer or we do not
accept them, your old notes will remain subject to existing transfer
restrictions.
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Where You Can Find More Information
We file annual, quarterly and special reports, as well as proxy
statements and other information with the SEC. You may read and copy any of the
documents we file with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, DC 20549 or at its Regional Offices located at 7 World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may obtain further
information about the operation of the Public Reference Room by calling the SEC
at 1-800-SEC-0330. These SEC filings are also available to the public over the
Internet at the SEC's web site at http://www.sec.gov, which contains reports,
proxy statements and other information regarding registrants like Pegasus that
file electronically with the SEC. Our Class A common stock is quoted on the
Nasdaq National Market and reports and other information about us may be
inspected at the Nasdaq National Market at 1735 K Street, NW, Washington, DC
20007-1500.
This prospectus is part of a registration statement on Form S-4 we have
filed with the SEC. As permitted by SEC rules, this prospectus does not contain
all of the information included in the registration statement and the
accompanying exhibits filed with the SEC. You may refer to the registration
statement and its exhibits, including the indenture covering the notes which are
the subject of this offering, for more information.
The SEC allows us to incorporate by reference into this prospectus the
information we file with the SEC. This means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus. If we
subsequently file updating or superseding information in a document that is
incorporated by reference into this prospectus, the subsequent information will
also become part of this prospectus and will supersede the earlier information.
We are incorporating by reference the following documents that we have
filed with the SEC:
o Pegasus' Annual Report on Form 10-K filed with the SEC on March
10, 1999 for the fiscal year ended December 31, 1998 and
o Pegasus' quarterly reports on Form 10-Q filed with the SEC on
November 12, 1999 for the quarter ended September 30, 1999, on
August 13, 1999 for the quarter ended June 30, 1999 and on May 14,
1999 for the quarter ended March 31, 1999.
We are also incorporating by reference into this prospectus all of our
future filings with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act until this exchange offer ends.
You may obtain a copy of any of our filings which are incorporated by
reference, at no cost, by writing to or telephoning us at the following address:
Pegasus Communications Corporation
c/o Pegasus Communications Management Company
Suite 200, 225 City Line Avenue
Bala Cynwyd, PA 19004
Attention: Vice President of Communications
Telephone: (888) 438-7488
To obtain timely delivery of this information you must request this
information no later than ___________, 2000 or five days after any extension of
this offer, whichever is later. You should rely only on the information provided
in this prospectus, in the accompanying letter of transmittal, or incorporated
by reference. We have not authorized anyone to provide you with different
information. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the cover page of the prospectus.
We are not making this offer of securities in any state or country in which the
offer or sale is not permitted.
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Risk Factors
You should carefully consider the risks described below before you
decide to exchange. They could materially and adversely affect our financial
condition and results of operation. They could impair our ability to repay the
new notes and pay interest on the notes, and you might lose all or part of your
investment.
Risks of Investing in These Notes
Our Substantial Indebtedness Could Adversely Affect Your Investment
We have now and, after the exchange offer, will continue to have a
significant amount of indebtedness. Our substantial indebtedness could have
important consequences to you. For example, it could:
o make it more difficult for us to pay our obligations under these
notes;
o increase our vulnerability to general adverse economic and
industry conditions;
o require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures, acquisitions and other activities;
o limit our flexibility in planning for, or reacting to, changes in
our business and the industries in which we operate; and
o place us at a competitive disadvantage compared to our competitors
that have less debt.
The following chart shows certain important credit statistics:
Actual as of
September 30, 1999
Total indebtedness...................... $624,874,000
Common stockholders' deficit............ ($ 13,658,000)
Debt to equity ratio.................... --
Our earnings were inadequate to cover our fixed charges and preferred
stock dividends by $94.8 million and $155.1 million for the year ended December
31, 1998 and the nine months ended September 30, 1999, respectively. Neither
total indebtedness nor stockholders' equity, as set forth above, includes the
approximately $138.4 million in outstanding Series A preferred stock or a $3.0
million minority interest in one of our subsidiaries.
We and Our Subsidiaries May Still Be Able To Incur Substantially More
Debt Which Could Exacerbate the Risks Described Above
We and our subsidiaries may be able to incur substantial additional
indebtedness in the future. If new debt is added to our and our subsidiaries'
current debt levels, the risks described above that we and they now face could
intensify. The terms of the indenture do not fully prohibit us or our
subsidiaries from doing so. Our credit facilities currently permit our
subsidiaries to borrow up to an additional $33.8 million, and all of those
borrowings would be effectively senior to the notes.
We May Not Be Able To Generate Enough Cash To Service Our Debt
Our ability to make payments on and to refinance our indebtedness,
including these notes, and to fund planned capital expenditures and other
activities will depend on our ability to generate cash in the future. This, to a
certain extent, is subject to general economic, financial, competitive,
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legislative, regulatory and other factors that are beyond our control.
Accordingly, we cannot assure you that our business will generate sufficient
cash flow to service our debt.
Based on our current level of operations and anticipated cost savings
and operating improvements, we believe our cash flow from operations, available
cash and available borrowings under our credit facilities, will be adequate to
meet our future liquidity needs for at least the next few years.
We cannot assure you that:
o our business will generate sufficient cash flow from operations,
o currently anticipated cost savings and operating improvements will
be realized on schedule, or
o future borrowings will be available to us under our credit
facilities in amounts sufficient to enable us to pay our
indebtedness, including these notes, or to fund our other liquidity
needs.
We may need to refinance all or a portion of our indebtedness,
including these notes, on or before maturity. We cannot assure you that we will
be able to refinance any of our indebtedness, including our credit facilities
and these notes, on commercially reasonable terms or at all.
These Notes Are Not Guaranteed Which Could Adversely Affect Your
Investment
Only Pegasus Communications Corporation owes payment of these notes.
None of our subsidiaries have guaranteed them, and if our business were to be
liquidated, our subsidiaries' debt would be paid first before payment is made on
the notes.
We conduct all of our business operations through subsidiaries. Our
subsidiaries have their own debt, including $85.0 million of publicly held debt
securities and bank credit facilities under which they could borrow up to an
additional $33.8 million. If our business were to be liquidated, our
subsidiaries would have to repay all this debt, plus their other liabilities
such as trade payables, before we could get anything from them to pay these
notes and our other obligations, including $215.0 million of other senior notes
that we issued in 1997 and 1998. Therefore, while these notes are not
subordinated to other debts of Pegasus Communications Corporation, they
effectively rank behind our subsidiaries' debts.
We May Have Difficulty Obtaining Cash from Our Subsidiaries To Pay
Notes Which Could Adversely Affect Your Investment
Our only source for the cash we need to pay current interest on these
notes and our other debt is the cash that our subsidiaries generate from their
operations or their borrowings. The credit facility of one of our principal
subsidiaries permits that subsidiary to distribute cash to us to pay interest on
these notes and our other senior notes, but only so long as we are not in
default under that credit facility. If we default under it, we would have no
cash to pay interest on these notes.
If a Change of Control Occurs, We May Be Unable To Refinance Our
Publicly Held Debt, Bank Debt and Preferred Stock
If certain kinds of change of control events occur, we will be required
to offer to repurchase all outstanding notes. We must offer to redeem other
publicly held debt securities and preferred stock for approximately $600.3
million, and our bank debt of approximately $147.6 million at September 30,
1999, including the Digital Television credit facility, would also come due on a
change of control. If a change of control occurs, and we are unable to finance
it, we would be in default. See Description of Notes - Repurchase at the Option
of Holders - Change of Control.
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Federal and State Courts Could Void Guarantees of These Notes and
Require Noteholders To Return Payments Received From Guarantors
None of our subsidiaries have guaranteed these notes, but they could be
required to do so in certain circumstances. If a subsidiary guarantor was found
to be insolvent, any payments made by the guarantor could be voided and would be
required to be returned.
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, a guarantee could be voided, or claims in respect of a
guarantee could be subordinated to all other debts of that guarantor if, among
other things, the guarantor, at the time it incurred the indebtedness evidenced
by its guarantee was insolvent. In addition, these laws could require that any
payment by the guarantor under its guarantee be voided and returned to the
guarantor, or to a fund for the benefit of the creditors of the guarantor.
The measures of insolvency for purposes of these fraudulent transfer
laws will vary depending upon the law applied in any proceeding to determine
whether a fraudulent transfer has occurred. Generally, however, a guarantor
would be considered insolvent if the sum of its debts were greater than the
value of all of its assets or it could not pay its debts as they become due. See
Description of Notes - Subsidiary Guarantees for a description of the
circumstances under which a subsidiary might be required to guarantee the these
notes.
Risks of Our Direct Broadcast Satellite Business
Satellite and Direct Broadcast Satellite Technology Could Fail or Be
Impaired
If any of the DIRECTV satellites is damaged or stops working partially
or completely for any of a number of reasons, DIRECTV customers would lose
programming. We would in turn likely lose customers, which could materially and
adversely affect our operations, financial performance and ability to pay these
notes.
Direct broadcast satellite technology is highly complex and is still
evolving. As with any high-tech product or system, it might not function as
expected or last through the year 2007 as currently expected. One example of
this risk occurred in July 1998. At that time, DIRECTV reported that the primary
spacecraft control processor failed on DBS-1, one of the satellites that
transmits DIRECTV programming. As it was designed to do, the satellite
automatically switched to its on-board spare processor with no interruption of
service to DIRECTV subscribers. If the backup processor on DBS-1 fails, other
satellites presently in orbit would continue to transmit DIRECTV programming,
but the service would experience an undetermined reduction in channel capacity.
See Recent Direct Broadcast Satellite Developments - The National Rural
Telecommunications Cooperative/DIRECTV Litigation and Risks of Our Direct
Broadcast Satellite Business - We May Lose Our DIRECTV Rights After the Initial
Term of Our Agreements With the National Rural Telecommunications Cooperative.
Events at DIRECTV Could Adversely Affect Us
Because we are an intermediary for DIRECTV, events at DIRECTV that we
do not control can adversely affect us. One of the most important of these is
DIRECTV's ability to provide programming that appeals to mass audiences. DIRECTV
generally does not produce its own programming; it purchases it from third
parties. DIRECTV's success -- and therefore ours -- depends in large part on
DIRECTV's ability to make good judgments about programming sources and obtain
programming on favorable terms. We have no control or influence over this.
Programming Costs May Increase, Which Could Adversely Affect Our Direct
Broadcast Satellite Business
After 2002, certain programmers could increase our DIRECTV rates. This
could cause us to either lose customers or revenues.
The law requires programming suppliers that are affiliated with cable
companies to provide programming to all multichannel distributors -- including
DIRECTV -- on nondiscriminatory terms. The rules implementing this law are
scheduled to expire in 2002. If they are not extended, these programmers could
increase DIRECTV's rates, and therefore ours. If we increase our rates, we may
lose customers. If we do not increase our rates, our revenues and financial
performance could be adversely affected.
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We May Lose Our DIRECTV Rights After the Initial Term of Our Agreements
With the National Rural Telecommunications Cooperative
We may or may not be able to continue in the DIRECTV business after the
current DIRECTV satellites are replaced. If we can continue, we cannot predict
what it will cost us to do so.
As part of a counterclaim in the litigation between the National Rural
Telecommunications Cooperative and DIRECTV, DIRECTV is seeking a declaratory
judgement that the term of the National Rural Telecommunications Cooperative's
agreement with DIRECTV is measured only by the orbital life of DBS-1, the first
DIRECTV satellite launched, and not the orbital lives of the other DIRECTV
satellites at the 101(degree) W orbital location. According to DIRECTV, DBS-1
suffered a failure of its primary control processor in July 1998 and since that
time has been operating normally using a spare control processor. If DIRECTV
were to prevail on its counterclaim, any failure of DBS-1 could have a material
adverse effect on our DIRECTV rights. While the National Rural
Telecommunications Cooperative has a right of first refusal to receive certain
services from any successor DIRECTV satellite, the scope and terms of this right
of first refusal are also being disputed in the litigation. This right is not
expressly provided for in our agreements with the National Rural
Telecommunications Cooperative.
The Effect of New Federal Satellite Television Legislation on Our
Business Is Unclear
On November 29, 1999, the President signed the Satellite Home Viewer
Improvement Act of 1999. The Act contains provisions that will be placed in over
time. In addition, the FCC will undertake rulemaking and studies in connection
with this legislation. Therefore, we cannot predict the effect of this new law
on our business at this time.
The Act resolves many of the issues involved in years of litigation
between the networks and the direct broadcast satellite industry regarding
retransmission of network programming to direct broadcast satellite subscribers.
Generally, it preserves the industry's right to retransmit distant network
programming to subscribers in "unserved" areas. It also extends through December
31, 2004 the statutory right, for a copyright royalty fee, of the industry to
retransmit independent programming - so-called superstations - to subscribers as
"distant" signals. Further, satellite carriers will be required to deliver
signals only to households that cannot clearly receive over-the-air network
signals with a rooftop antenna.
Before these amendments were enacted, we had cut-off network
programming to certain of our subscribers in connection with settlement of the
litigation referred to above. We are unsure at this time how many of these
subscribers will be eligible to receive network programming services under the
amendments.
Among other things, the Act directs the FCC to take actions to
prescribe the picture quality standard that the FCC uses to predict what
households do not receive a strong enough network broadcast signal over-the-air
and therefore are eligible to receive distant network signals. The effect on our
business of these FCC actions and other studies and rulemakings that the FCC
will undertake cannot be predicted at this time.
We Could Lose Money Because of Signal Theft
If signal theft becomes widespread, our revenues would suffer. Signal
theft has long been a problem in the cable and direct broadcast satellite
industries. DIRECTV uses encryption technology to prevent people from receiving
programming without paying for it. The technology is not foolproof, and there
have been published reports that it has been compromised.
We Could Lose Revenues if We Have Out-of-Territory Subscribers
Just as we have exclusive DIRECTV distribution rights in our
territories, we are not allowed to have customers outside our territories. The
problem is that customers are not always truthful about where they live. If it
turns out that large numbers of our subscribers are not in our territories, we
would lose substantial revenues when we disconnect them. We could also face
legal consequences for having subscribers in Canada, where DIRECTV reception is
illegal.
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Risks of Our Broadcast Television Business
Our Broadcast Operations Could Be Adversely Affected if We Fail To
Negotiate Successfully Our Network Affiliation Agreements
Our network affiliation agreements with Fox formally expired on January
30, 1999 (other than the affiliation agreement for television station WTLH,
which is scheduled to expire on December 31, 2000). Except in the case of WTLH,
we currently broadcast Fox programming under arrangements between Pegasus and
Fox which have generally conformed in practice to such affiliation agreements,
and we are in the process of negotiating new affiliation agreements. If we are
not successful in these negotiations, our broadcast operations could suffer
materially.
Fox Could Cancel Our Affiliation Agreements if It Acquires a
Significant Ownership Interest in One of Our Markets
In addition, if Fox acquires a significant ownership interest in
another station in one of our markets, it can cancel our affiliation agreement
or arrangement for that market without penalty. Fox has done this in the past to
other broadcasters.
Our Broadcast Operations Could Be Adversely Affected if the FCC
Prevents Our Local Marketing Agreement Strategy
One of our important strategies in broadcast television is to achieve
economies of scale by programming two stations in each of our markets. Because
the FCC did not allow a broadcaster to own more than one television station in
the same market, we implemented our strategy -- like other broadcasters --
through arrangements known as local marketing agreements. Under these
arrangements, we contracted to provide programming and other services to the
licensee of a separate television station in the market. We currently have local
marketing agreements for second stations in three of our markets and our only
station in another market is programmed through a local marketing agreement. We
expect to program a second station under such an agreement in one more market by
2000.
In August 1999, the FCC revised its television ownership rules to
permit, in certain circumstances, the common ownership of two stations in a
television market. The FCC also decided to treat most television local marketing
agreements as if the station providing programming owned the programmed station.
Depending on how the FCC implements its new rules, these decisions could
prohibit us from programming or acquiring additional in-market stations and
could also require us to terminate some of our existing local marketing
agreements by August 2001. Because the FCC has not yet begun to implement these
rules, and because there is no precedent from which we can judge how they will
be applied to situations such as ours, we will vigorously seek to obtain
favorable rulings from the FCC and to preserve and expand our broadcast
television strategy through the grandfathering of our existing arrangements or
outright common ownership. Unfavorable implementation decisions by the FCC,
however, could cost us significant revenues and could affect our broadcast
operations materially and adversely.
Antitrust Laws Could Limit Our Local Marketing Agreement Strategy
Apart from the FCC, federal agencies that administer the antitrust laws
have said they intend to review market concentrations in television, including
through local marketing agreements that the FCC permits. If so, these agencies
could limit partially or altogether our ability to program stations through
local marketing agreements. We cannot predict how this will affect us.
Our Inability To Control Licensees Under Our Local Marketing Agreements
Could Adversely Affect Our Broadcast Operations
Even if we can keep and expand our local marketing agreements, their
use carries the inherent risk that we do not control the other parties that
actually own the stations and hold the stations' FCC licenses. It is conceivable
that the licensee could pre-empt our programming. In an extreme case, the
licensee could cease to meet FCC qualifications and put its license in jeopardy,
in which case, we could lose the ability to program the station.
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The Planned Industry Conversion to Digital Television Could Adversely
Affect Our Broadcast Business
All commercial television stations in the United States must start
broadcasting in digital format by May 2002 and must abandon the present analog
format by 2006, though the FCC may extend these dates.
o It will be expensive to convert from the current analog format
to digital format. We cannot now determine what that cost will
be.
o The digital technology will allow us to broadcast multiple
channels, compared to only one today. We cannot predict
whether or at what cost we will be able to obtain programming
for the additional channels. Increased revenues from the
additional channels may not make up for the conversion cost
and additional programming expenses. Also, multiple channels
programmed by other stations could increase competition in our
markets.
o The FCC has generally made available much higher power
allocations to digital stations that will replace stations on
existing channels 2 through 13 than digital stations that will
replace existing channels 14 through 69. All of our existing
stations are on channels 14 through 69. This power disparity
could put us at a disadvantage to our competitors that now
operate on channels 2 through 13.
o In some cases, when we convert a station to digital
television, the signal may not be received in as large a
coverage area, or it may suffer from additional interference.
Also, because of the technical standards adopted by the FCC,
the digital signal may be subject to interference to a greater
degree than current analog transmissions. As a result, viewers
using antennas located inside their homes, as opposed to
outdoor, roof-top antennas, may not receive a reliable signal.
If viewers do not receive a high-quality, reliable signal from
our stations, they may be encouraged to seek service from our
competitors.
o The FCC is considering whether to require cable companies to
carry both the analog and the digital signals of their local
broadcasters when television stations will be broadcasting
both, during the transition period between 2002, at the
latest, and 2006. If the FCC does not require this, cable
customers in our broadcast markets may not receive our digital
signal, which could affect us unfavorably.
Risks of Our Cable Business
We Could Lose Revenues Because of Our Geographic Concentration in
Puerto Rico
All of our cable operations are in Puerto Rico. This geographic
concentration carries risks:
o Puerto Rico gets more hurricanes and other severe weather than
many other places. Because of Hurricane Georges, which struck
Puerto Rico in September 1998, we lost $1.4 million of revenue
in the fourth quarter of 1998 alone, and we spent about
$300,000 to repair the damage. Future hurricanes can be
expected and could be even worse for us.
o A local downturn in the Puerto Rico economy could cause us to
lose revenues from subscribers and advertisers. This would
affect our cable business more seriously than if we were more
geographically diversified.
The FCC's Digital Television Requirements May Prevent Us from Expanding
Our Cable Programming
The FCC's digital television rules may cause us to lose customers and
revenues. We mentioned above that the FCC is considering whether to require
cable companies to carry both the analog and digital signals of local television
stations during the transition to digital broadcasting. See Risks of Our
Broadcast Television Business --
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The Planned Industry Conversion to Digital Television Could Adversely Affect Our
Broadcast Operations. Because we have only so much channel capacity in our cable
system, this requirement could hurt our ability to expand our programming
offerings. If we cannot expand programming offerings, we may lose customers and
revenues.
We Could Become Subject to Rate Regulation Which Could Reduce Our Cable
Revenues
We may lose revenues if we become subject to rate regulation. The
government can regulate the rates cable companies charge for the lowest level of
their service. The government does not now regulate our rates since the FCC has
found that our cable systems are subject to effective competition. This means
that less than 30% of the people that could subscribe to the systems do
subscribe. But if we are successful in significantly increasing the percentage
of people that subscribe to our service, the lowest level of cable service we
offer could become subject to rate regulation. If so, we might have to reduce
our cable rates, resulting in decreased revenues.
Other Risks of Our Business
We Have a History of Substantial Losses; We Expect Them To Continue;
Losses Could Adversely Affect Our Stock Price and Access to Capital
Markets
We have never made a profit, except in 1995, when we had a $10.2
million extraordinary gain. Because of interest expense on our substantial debt
and because of high expense in amortizing goodwill from our acquisitions, we do
not expect to have net income for the foreseeable future. To the extent
investors measure our performance by net income or loss, rather than alternative
measures based on cash flow, continuing losses could adversely affect our access
to capital markets and our ability to pay the notes.
We Face Significant Competition; the Competitive Landscape Changes
Constantly
Our direct broadcast satellite business faces competition from other
current or potential multichannel programming distributors, including other
direct broadcast satellite operators, direct-to-home distributors, cable
operators, wireless cable operators, Internet and local and long-distance
telephone companies, which may be able to offer more competitive packages or
pricing than we or DIRECTV can provide. In addition, the direct broadcast
satellite industry is still evolving and recent or future competitive
developments could adversely affect us. For example, on November 30, 1998,
EchoStar, which competes with us in the sale of direct broadcast satellite
programming, announced that it had entered into an agreement with News
Corporation and MCI WorldCom providing for the transfer to EchoStar from MCI
WorldCom of the license to operate a high-powered direct broadcast satellite
business at the 110(degree) west longitude orbital location consisting of 28
frequencies and the sale of two satellites that are currently under
construction. This could adversely affect us because EchoStar could develop
greater channel capacity than DIRECTV and offer more and a wider selection of
programming than offered by DIRECTV.
Our TV stations compete for audience share, programming and advertising
revenue with other television stations in their respective markets and with
direct broadcast satellite operators, cable operators and other advertising
media. Direct broadcast satellite and cable operators in particular are
competing more aggressively than in the past for advertising revenues in our TV
stations' markets. This competition could adversely affect our stations'
revenues and performance in the future.
Our cable systems face competition from television stations, satellite
master antennae television systems, wireless cable systems, direct-to-home
distributors, direct broadcast satellite systems and open video systems.
In addition, the markets in which we operate are in a constant state of
change due to technological, economic and regulatory developments. We are unable
to predict what forms of competition will develop in the future, the extent of
such competition or its possible effects on our businesses.
Our Acquisition Strategy May Become Too Expensive Which Could Adversely
Affect Our Financial Performance
We may not be able to keep making acquisitions on attractive terms. If
we cannot continue to make acquisitions on attractive terms, our financial
performance and stock price could suffer.
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If we pay for an acquisition with our stock, the acquisition could
dilute existing stockholders, depending on its terms. If we finance an
acquisition by borrowing, this would increase our already high leverage and
interest expense.
We May Not Be Able To Get the Consents Necessary To Implement Our
Acquisition Strategy
We have been able to get the necessary consents to make acquisitions in
the past, but this could change, or become more difficult, or require us to
incur additional costs, for reasons we cannot predict. Our acquisitions normally
require third party consents that we do not control. These include the consents
of DIRECTV and the National Rural Telecommunications Cooperative for direct
broadcast satellite acquisitions, the FCC and the television networks for
broadcast TV acquisitions, and cable franchising authorities and programmers for
cable acquisitions. Some acquisitions also require the consent of our lenders.
We May Not Be Able To Integrate Acquired Companies Successfully Which
Could Affect Our Financial Performance
We could encounter difficulties integrating any given acquired business
into our operations. These difficulties can cost money and divert management's
attention from other important matters.
The Year 2000 Problem Could Adversely Affect Us
We may be adversely affected by year 2000 computer-related
malfunctions. An issue exists for all companies that rely on computers as the
year 2000 approaches. This issue involves computer programs and applications
that were written using two digits rather than four to identify the applicable
year, and could result in system failures or miscalculations. We have completed
an assessment to determine the extent of any necessary remediation, and the
anticipated costs thereof, to make our material equipment, systems and
applications year 2000 compliant. Costs in connection with any modifications to
make our systems compliant are not expected to be material. However, if such
modifications are not completed successfully or are not completed in a timely
manner, the year 2000 issue may have a material adverse impact on our
operations. Exposure could arise also from the impact of non-compliance by
certain software and/or equipment vendors and others with whom we conduct
business. We cannot estimate the potential adverse impact that may result from
non-compliance with the year 2000 issue by the software and/or equipment vendors
and others with whom we conduct business.
We May Not Be Aware of All Risks
These risks and uncertainties are not the only ones we face. Others
that we do not know about now, or that we do not now think are important, may
impair our business or our ability to pay the notes.
Forward-Looking Statements May Prove Inaccurate
This offering memorandum contains or incorporates by reference certain
statements and information that are "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. We use words such as "anticipate," "believe," "estimate," "expect,"
"intend," "project," "should" and similar expressions to identify forward
looking statements. Those statements include, among other things, the
discussions of our business strategy and expectations concerning our market
position, future operations, margins, profitability, liquidity and capital
resources, as well as statements concerning the integration of our acquisitions
and related achievement of cost savings and other synergies. We caution you that
reliance on any forward-looking statement involves risks and uncertainties, and
that although we believe that the assumptions on which our forward-looking
statements are based are reasonable, any of those assumptions could prove to be
inaccurate, and, as a result, the forward-looking statements based on those
assumptions also could be incorrect. The uncertainties in this regard include,
but are not limited to, those identified in the risk factors discussed above. In
light of these and other uncertainties, you should not conclude that we will
necessarily achieve any plans and objectives or projected financial results
referred to in any of the forward-looking statements. We do not undertake to
release the results of any revisions of these forward-looking statements to
reflect future events or circumstances.
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Ratio of Earnings to Fixed Charges
Earnings were inadequate to cover combined fixed charges and preferred
stock dividends by approximately $4.9 million, $8.1 million, $9.8 million, $29.6
million, $94.8 million and $155.1 million for the years ended December 31, 1994,
1995, 1996, 1997 and 1998, and the nine months ended September 30, 1999,
respectively. Assuming the exchange offer had occurred at the beginning of such
periods, our earnings would have been inadequate to cover our fixed charges and
preferred stock dividends by $94.3 million and $154.7 million for the year ended
December 31, 1998 and the nine months ended September 30, 1999, respectively.
For the purposes of the calculation of the ratio of earnings to fixed charges,
fixed charges consist of interest expense, amortization of deferred financing
costs and the component of operating lease expense which management believes
represents an appropriate interest factor.
Use of Proceeds
We will not receive any cash proceeds from the exchange offer. We will
retire and cannot reissue the old notes that holders surrender in exchange for
new notes.
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The Exchange Offer
Terms of the Exchange Offer
We will accept any and all old notes validly tendered and not
withdrawn before the offer expires. We will issue $1,000 principal amount of new
notes in exchange for each $1,000 principal amount of outstanding old notes. We
will exchange notes only in integral multiples of $1,000.
The form and terms of the new notes are the same as the form and terms
of the old notes except that:
o the new notes will be registered under the Securities Act and will
not bear restrictive legends; and
o holders of the new notes will not be entitled to the rights of
holders of old notes under a registration rights agreement described
below; those rights will end upon the consummation of the exchange
offer.
The new notes will evidence the same debt as the old notes. The new
notes also will be issued under the same indenture. The indenture treats both
series as a single class of debt securities.
As of December 31, 1999, all $155.0 million aggregate principal amount
at maturity of the old notes were outstanding and registered in the name of Cede
& Co., as nominee for The Depository Trust Company. Only a registered holder of
the old notes or such holder's legal representative or attorney-in-fact, as
reflected on the records of First Union National Bank under the indenture, may
participate in the exchange offer. There will be no fixed record date for
determining which registered holders of the old notes may participate in the
exchange offer.
We will accept validly tendered old notes by giving the exchange agent
oral or written notice. The exchange agent also will be the agent for the
tendering holders of old notes for receiving the new notes from us.
Resale of New Notes
We believe that holders of the new notes will be able to transfer the
new notes without complying with the registration and prospectus delivery
requirements of the Securities Act, provided that the holder is acquiring the
new notes in the ordinary course of business and is not participating in and had
no prior arrangement to participate in the notes' distribution. The preceding
restriction does not apply to broker-dealers who have purchased new notes
directly from us for resale under SEC Rule 144A or to any person that is our
affiliate. Broker-dealers who acquire new notes as the result of trading
activities must acknowledge that they will deliver a prospectus in connection
with any resale of the new notes. These statements are based on interpretations
of the SEC's staff that are subject to change.
Expiration; Extensions; Amendments
The exchange offer will expire at 5:00 p.m., New York City time on
____________, 2000 unless we extend it in our sole discretion.
To extend the exchange offer, we must notify the exchange agent and the
registered holders of the old notes by mail or other means we select before 9:00
a.m., New York City time, on the next business day after the previously
scheduled expiration date.
We may also delay or end the exchange offer by notifying the exchange
agent if the conditions to the offer described below are not satisfied. We will
notify the holders by mail or other means we select of any such delay, extension
or ending as promptly as practicable.
We may amend the exchange offer in our discretion. If the amendment is
material, we will promptly disclose the amendment in a prospectus supplement
that we will distribute to registered holders. In such a situation, we also will
extend the exchange offer for a period of five to ten business days, depending
upon the significance of the amendment.
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We will have no obligation to publish, advertise, or otherwise
communicate any public announcement, other than by making a timely release to an
appropriate news agency.
Procedures for Tendering
Only a registered holder of old notes may tender old notes in the
exchange offer. To tender, a holder must complete, sign and date the letter of
transmittal, unless such holder tenders through The Depository Trust Company's
Automated Tender Offer Program, as described below. If required by the letter of
transmittal, the holder must have the signatures on the letter of transmittal
guaranteed by one of the eligible institutions we describe below. The holder
must then deliver the letter of transmittal to the exchange agent at the address
given below. In addition, either:
o the exchange agent must receive certificates for such old notes
along with the letter of transmittal;
o the exchange agent must receive a timely confirmation of a
book-entry transfer of such old notes into the exchange agent's
account at The Depository Trust Company, before the end of the
exchange offer; or
o the holder must comply with the guaranteed delivery procedures
described below.
Holders who do not withdraw their tenders before the exchange offer
ends will have agreed with the terms and conditions discussed in this prospectus
and in the letter of transmittal.
Holders select the method of delivery of old notes and the letter of
transmittal and all other required documents to the exchange agent at their own
risk. We recommend that holders use a properly insured overnight or hand
delivery service, instead of the mails. Holders should allow sufficient time to
assure delivery to the exchange agent before the end of the offer. Holders must
not send a letter of transmittal or old notes to Pegasus. Holders may ask their
respective brokers, dealers, commercial banks, trust companies or nominees to
complete the transaction for them.
Any beneficial owner(s) whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on its behalf. If the beneficial owner wishes to
tender on such owner's own behalf, the owner must, before completing and
executing the letter of transmittal and delivering the owner's old notes, either
register ownership of the old notes in such owner's name or obtain a properly
completed bond power from the registered holder. The transfer of registered
ownership may take considerable time.
An eligible institution must guarantee signatures on a letter of
transmittal or a notice of withdrawal described below unless the old notes are
tendered:
o by a registered holder who has not completed the box entitled
"Special Delivery Instructions" on the letter of transmittal; or
o for the account of an eligible institution.
The following are eligible institutions:
o a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial bank
or trust company having an office or correspondent in the United
States, or
o an eligible guarantor institution within the meaning of SEC Rule
17Ad-15 which is a member of one of the recognized signature
guarantee programs identified in the letter of transmittal.
If a person other than the registered holder of any old notes signs the
letter of transmittal, such old notes must be endorsed or accompanied by a
properly completed bond power, signed by such registered holder as such
registered holder's name appears on the notes.
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If a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity is signing the letter of transmittal or any old notes or bond powers,
such person should so indicate when signing. Unless we waive this requirement,
such persons should submit evidence of their authority with the letter of
transmittal.
The exchange agent and The Depository Trust Company have confirmed that
any financial institution that is a participant in The Depository Trust
Company's system may tender old notes through The Depository Trust Company's
Automated Tender Offer Program.
We will determine all questions as to the validity, form, eligibility,
including time of receipt, acceptance and withdrawal of tendered old notes. Our
determination will be final and binding. We may reject any and all old notes not
properly tendered or any old notes our acceptance of which would, in the opinion
of our counsel, be unlawful. We also reserve the right to waive any defects,
irregularities or conditions of tender as to particular old notes.
Our interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, will be final and
binding. A holder must cure any defects or irregularities in connection with
tenders of old notes within such time as we shall determine. Although we intend
to notify holders of such defects or irregularities, no one will incur any
liability for failure to notify. A tender will not be effective until the holder
has cured or we have waived any defects or irregularities.
While we have no present plan to acquire or file a registration
statement for any old notes which holders do not tender in this exchange offer,
we reserve the right to purchase or make offers for any old notes that remain
outstanding after the offer expires or after we terminate it. We may do this in
the open market, in privately negotiated transactions or otherwise. The terms of
any such purchases or offers could differ from the terms of this exchange offer.
By tendering, each holder will represent to us, among other things,
that the holder:
o is acquiring the new notes in the ordinary course of business;
o has no arrangement or understanding with any person to participate
in the distribution of new notes;
o acknowledges and agrees that any broker-dealer registered under the
Exchange Act or participating in the exchange offer for the purposes
of distributing the new notes must comply with the registration and
prospectus delivery requirements of the Securities Act in a
secondary resale transaction of the new notes acquired by such
person and cannot rely on the position of the staff of the SEC set
forth in certain no-action letters;
o understands that a secondary resale transaction described above and
any resales of new notes it obtains in exchange for old notes it
acquires directly from us should be covered by an effective
registration statement containing the selling securityholder
information required by Item 507 or Item 508, as applicable, of SEC
Regulation S-K; and
o is not our affiliate, as defined in SEC Rule 405.
If the holder is a broker-dealer that will receive new notes for its
own account in exchange for old notes that were acquired as a result of
market-making activities or other trading activities, the holder is required to
acknowledge in the letter of transmittal that it will deliver a prospectus in
connection with any resale of such new notes. However, by so acknowledging and
by delivering a prospectus, the holder will not admit that it is an underwriter
within the meaning of the Securities Act.
Return of Old Notes
If we reject any tendered old notes or if holders withdraw old notes or
submit them for a greater principal amount than the holders desire to exchange,
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we will return old notes without expense to the tendering holder as promptly as
practicable. If the holder tenders by book-entry transfer into the exchange
agent's account at The Depository Trust Company, such old notes will be credited
to an account maintained with The Depository Trust Company.
Book-Entry Transfer
The exchange agent will request to establish an account for the old
notes at The Depository Trust Company. Any financial institution that is a
participant in The Depository Trust Company's system may make book-entry
delivery of old notes by causing the depositary to transfer such old notes into
the exchange agent's account at The Depository Trust Company. Although holders
may deliver old notes through book-entry transfer, holders must transmit, and
the exchange agent must receive, the letter of transmittal, with any required
signature guarantees and any other required documents at the address given below
on or before the end of this offer or under the guaranteed delivery procedures
described below.
Guaranteed Delivery Procedures
Holders who wish to tender their old notes and whose old notes are not
immediately available or who cannot deliver their old notes, the letter of
transmittal or any other required documents to the exchange agent before the end
of the exchange offer, may effect a tender if:
o the holder tenders through an eligible institution.
o before the end of the exchange offer, the exchange agent receives
from such eligible institution a properly completed and duly
executed notice of guaranteed delivery substantially in the form
provided by us. This form must set forth the name and address of the
holder, the certificate number(s) of such old notes and the
principal amount of old notes tendered. This form must further state
that a tender is being made and guaranteeing that, within five
business days after the expiration of this offer, an eligible
institution will deposit the letter of transmittal together with the
certificate(s) representing the old notes in proper form for
transfer or a book-entry confirmation, as the case may be, and any
other documents required by the letter of transmittal with the
exchange agent.
o the exchange agent receives within five business days of the end of
the offer such properly executed letter of transmittal or facsimile
thereof, and as the certificate(s) representing all tendered old
notes in proper form for transfer and all other documents required
by the letter of transmittal.
Upon request, the exchange agent will send a notice of guaranteed
delivery to holders who wish to tender their old notes according to the
guaranteed delivery procedures.
Withdrawal of Tenders
Except as this prospectus otherwise provides, holders may withdraw
tenders of old notes at any time before the exchange offer ends.
For the withdrawal to be effective, the exchange agent must receive a
written or facsimile transmission notice of withdrawal at its address set forth
below before the ending of the offer. The notice of withdrawal must:
o specify the name of the person who deposited the old notes to be
withdrawn;
o identify the old notes to be withdrawn including the certificate
number or numbers and principal amount of such old notes; and
o be signed by the holder in the same manner as the original signature
on the letter of transmittal by which such old notes were tendered
including any required signature guarantees.
We will determine all questions as to the validity, form and
eligibility, including time of receipt, of such notices. We will deem notes
withdrawn not to have been validly tendered for purposes of the exchange offer.
No new notes will be issued with respect to withdrawn tenders unless the old
notes so withdrawn are validly retendered.
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Properly withdrawn old notes may be retendered by following one of the
procedures described above at any time before the offer ends.
Conditions
If the exchange offer violates applicable law, rule or regulation or an
applicable interpretation of the staff of the SEC, we will not accept for
exchange any old notes and may end the exchange offer before we accept any old
notes. If we determine that any of these violations may be present, we can
extend or amend the exchange offer and attempt to cure the problem. See The
Exchange Offer -- Expiration; Extensions; Amendments above for a discussion of
the relevant procedures.
Registration Rights Agreement
Exchange Offer
When we issued the old notes on November 19, 1999, we entered into a
registration rights agreement, the main purpose of which was to require us to
make and complete this exchange offer. If we have not caused the registration
statement of which this prospectus is a part to become effective by March 18,
2000, we will have to pay liquidated damages as described below until we have
done so.
Shelf Registration
We are making this exchange offer according to procedures that the SEC
has approved in various no action letters. Those procedures have some
exceptions, and it is possible that the SEC may change them. In certain
instances, we must file a shelf registration statement to cover resales of the
old notes by the holders who satisfy certain conditions. For example, we must
file a shelf registration if we cannot consummate this exchange offer because it
is or becomes illegal or against public policy or if any holder of transfer
restricted securities notifies us within the specified time period that:
o SEC policy or law prevents the holder from participating in the
exchange offer; or
o it may not resell the new notes acquired by it in the exchange offer
to the public without delivering a prospectus and this prospectus is
not legally available for such resales; or
o it is a broker-dealer and owns notes acquired directly from us or
our affiliate.
We are also obligated to use our best efforts to cause the SEC to
declare the shelf registration effective as promptly as possible. For this
purpose, transfer restricted securities means each old note until the earliest
to occur of:
o the date on which such note has been exchanged by a person other
than a broker-dealer for a new note in the exchange offer;
o following the exchange by a broker-dealer in the exchange offer of
an old note for a new note, the date on which such new note is sold
to a purchaser who receives from such broker-dealer on or before the
date of such sale a copy of this prospectus, as it may be amended or
supplemented;
o the date on which such note has been effectively registered under
the Securities Act and disposed of in accordance with the shelf
registration statement; or
o the date on which such note is distributed to the public under SEC
Rule 144.
Liquidated Damages
The registration rights requires us to pay liquidated damages to the
holders of transfer restricted securities if any of the following happen:
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o We do not complete this exchange offer by March 18, 2000, unless we
are prohibited by law or SEC policy.
o We do not file the shelf registration statement described in the
preceding section by the time required, or it does not become
effective by the time required.
o This prospectus or the prospectus contained in the shelf
registration statement, if we are required to file it, ceases to be
usable to sell notes during the periods specified in the
registration rights agreement.
During the first 90-day period immediately following the occurrence of
one of these events, the liquidated damages will be $.05 per week per $1,000
aggregate principal amount of transfer restricted notes. The amount of the
liquidated damages will increase by an additional $.05 per week per $1,000
aggregate principal amount of transfer restricted notes with respect to each
subsequent 90-day period until we have cured all of the events described above.
There is a maximum amount of liquidated damages of $.30 per week per $1,000
aggregate principal amount of notes.
We will require holders of notes to make certain representations to
participate in the exchange offer. We will also require the holders to deliver
information for the shelf registration statement and to provide comments on the
shelf registration statement within the time periods set forth in the
registration rights agreement to have their old notes included in the shelf
registration statement and benefit from the provisions regarding liquidated
damages.
Termination of Registration Rights
All rights under the registration rights agreement including
registration rights of holders of the old notes eligible to participate in the
exchange offer will end upon consummation of the exchange offer except with
respect to our continuing obligations:
o to indemnify the holders, including any broker-dealers, and certain
parties related to the holders against certain liabilities,
including liabilities under the Securities Act;
o to provide, upon the request of any holder of transfer-restricted
securities, the information required by SEC Rule 144A(d)(4) to
permit resales of such old notes under SEC Rule 144A;
o to use our best efforts to keep this registration statement
effective to the extent necessary to ensure that it is available for
resales of transfer-restricted securities by broker-dealers for a
period of one year from the date on the cover of this prospectus;
and
o to provide copies of the latest version of the prospectus to
broker-dealers upon their request for a period of one year from the
date on the cover of this prospectus.
Exchange Agent
We have appointed First Union National Bank as exchange agent.
Questions and requests for assistance, requests for additional copies of this
prospectus or of the letter of transmittal and requests for notice of guaranteed
delivery should be directed to First Union National Bank as follows:
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<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Hand/Overnight Express: By Facsimile:
First Union National Bank First Union National Bank (704) 590-7628
1525 West W.T. Harris Blvd., 3C3 1525 West W.T. Harris Blvd., 3C3 To confirm receipt:
Charlotte, NC 28288 Charlotte, NC 28262 (704) 590-7408
Attention: Michael Klotz Attention: Michael Klotz
</TABLE>
Fees and Expenses/Accounting Treatment
We will bear the expenses of soliciting tenders. We are making the
principal solicitation by mail; however, we may make additional solicitation by
telegraph, telephone or in person by officers and our regular employees and our
affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. However, we will pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses.
We will pay the cash expenses we incur from the exchange offer. The
expenses are estimated in the aggregate to be approximately $115,000. Such
expenses include registration fees, fees and expenses of the exchange agent and
the indenture trustee, accounting and legal fees and printing costs, among
others. We will amortize the expenses over the term of the new notes.
We will pay all transfer taxes, if any, applicable to the exchange of
old notes. If, however, a transfer tax is imposed for any reason other than the
exchange of the old note, then the amount of any such transfer taxes, whether
imposed on the registered holder or any other persons, will be payable by the
tendering holder. If the tendering holder does not submit satisfactory evidence
of payment of such taxes or exemption therefrom with the letter of transmittal,
we will bill the taxes directly to such tendering holder.
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Material United States Federal Income Tax Consequences of the Exchange
Offer
It is the opinion of Drinker Biddle & Reath LLP, counsel to Pegasus,
that the material federal income tax consequences to persons whose old notes are
exchanged for new notes in the exchange offer are as follows, subject to the
limitations and qualifications set forth below.
The new notes should not be considered to differ materially either in
kind or in extent from the old notes. Therefore, the exchange of the new notes
for the old notes should not be treated as an exchange for federal income tax
purposes under Section 1001 of the Internal Revenue Code, and Treasury
Regulation Section 1.1001-3. As a result, no material federal income tax
consequences should result to persons exchanging old notes for new notes
If, however, the exchange of old notes for new notes were treated as a
taxable event, that transaction should constitute a recapitalization for federal
income tax purposes, and note owners would not recognize any gain or loss upon
such exchange.
The foregoing opinion is based upon the current provisions of the
Internal Revenue Code, applicable Treasury Regulations promulgated thereunder,
judicial authority and administrative rulings and practice. There can be no
assurance that the Internal Revenue Service will not take a contrary view.
Pegasus has not sought and will not seek a ruling from the Internal Revenue
Service. Legislative, judicial or administrative changes or interpretations may
be forthcoming that could alter or modify these statements or conclusions. Any
such changes or interpretations may or may not be retroactive and could affect
the tax consequences to holders. Certain note owners, including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
foreign corporations and individuals who are not citizens or residents of the
United States, may be subject to special rules we have not discussed in this
prospectus. As a result, each owner of old notes should consult his or her own
tax advisor with respect to the particular tax consequences of exchanging his or
her old notes for new notes, including the applicability and effect of any
federal, state, local and foreign tax laws.
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Description of Notes
You can find the definition of certain terms used in this description
under the subheading --Certain Definitions. In this Description of Notes
section, the word "Pegasus" refers only to Pegasus Communications Corporation
and not to any of its subsidiaries.
Pegasus issued the old notes under an indenture between itself and
First Union National Bank, as trustee. The terms of the notes include those
stated in the indenture and those made part of the indenture by reference to the
Trust Indenture Act of 1939.
The following description is a summary of the material provisions of
the indenture. It does not restate the indenture in its entirety. We urge you to
read the indenture because it, and not this description, define your rights as
holders of these notes to get a copy of the indenture, refer above to the
caption Where You Can Find More Information.
Brief Description of the Notes and Possible Guarantees
The notes will rank senior in right of payment to all subordinated
indebtedness of Pegasus and will rank equally in right of payment with all
senior indebtedness of Pegasus.
Substantially all operations of Pegasus are conducted through its
subsidiaries and, therefore, Pegasus is dependent upon the cash flow of its
subsidiaries to meet its obligations, including its obligations under the notes.
On the date of issuance of the notes, none of Pegasus' subsidiaries will
guarantee the notes. However, Pegasus' subsidiaries may be required to
unconditionally guarantee notes on a senior unsecured basis in the cases
described below under the subheading - Subsidiary Guarantees. If this happens,
any right of Pegasus to receive assets of any of its subsidiaries that do not
guarantee the notes will be effectively subordinated to the claims of that
subsidiary's creditors, including trade creditors.
Principal, Maturity and Interest
The total principal amount of the notes will be a maximum of $155.0
million. Pegasus will issue the notes in denominations and integral multiples of
$1,000. The notes will mature on August 1, 2007.
Interest on these notes will accrue at the rate of 12 1/2% per annum
and will be payable semi-annually in arrears on August 1 and February 1,
commencing on February 1, 2000, to holders of record on the immediately
preceding July 15 and January 15, respectively.
Interest on the notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Methods of Receiving Payments on the Notes
If a holder gives wire instructions to Pegasus, Pegasus will wire all
principal, premium, interest and liquidated damages, if any, in accordance with
the holder's instructions. All other payments of principal, premium, interest
and liquidated damages, if any, on the notes will be payable at the office or
agency of Pegasus maintained for such purpose within the City and State of New
York. At the option of Pegasus, payment of interest and liquidated damages, if
any, may be made by check mailed to the holders of the notes. Until otherwise
designated by Pegasus, Pegasus' office or agency in New York will be the office
of the trustee maintained for such purpose.
Optional Redemption
Until August 1, 2000, Pegasus may, on any one or more occasions, use
the net proceeds of one or more public equity offerings to redeem up to 35% of
the aggregate principal amount of the notes at a redemption price of 112.500% of
the principal amount of the notes redeemed, plus accrued and unpaid interest and
liquidated damages, to the date of redemption. Pegasus may only do this if:
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o after any such redemption, the aggregate principal amount of the
notes outstanding (excluding notes held by Pegasus and its
subsidiaries) equals at least 65% of the notes issued in the
exchange offer; and
o each redemption occurs within 90 days of the date of closing of the
related equity offering.
Except as described in the preceding paragraph, the notes will not be
redeemable at Pegasus' option prior to August 1, 2003. The notes may be
redeemed, in whole or in part, at the option of Pegasus on or after August 1,
2003, at the redemption prices specified below, together with accrued and unpaid
interest and any liquidated damages, to the date of redemption, upon not less
than 30 nor more than 60 days' notice, if redeemed during the twelve-month
period beginning on August 1 of the years indicated below:
<TABLE>
<CAPTION>
Redemption
Year Price (as % of Principal Amount)
---- --------------------------------
<S> <C> <C>
2003............................................................ 106.250%
2004............................................................ 104.167%
2005............................................................ 102.083%
2006 and thereafter............................................. 100.000%
</TABLE>
Selection and Notice
If less than all of the notes are to be redeemed at any time, the
trustee will select notes for redemption as follows:
o if the notes are listed, in compliance with the requirements of the
principal national securities exchange on which the notes are
listed; or
o if the notes are not so listed, on a pro rata basis, by lot or by
such method as the trustee shall deem fair and appropriate.
No notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each holder of notes to be redeemed at its
registered address. Notices of redemption may not be conditional.
If any note is to be redeemed in part only, the notice of redemption
that relates to that note shall state the portion of the principal amount that
is to be redeemed. A new note in principal amount equal to the unredeemed
portion will be issued in the name of the holder upon cancellation of the
original note. Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest ceases to accrue on notes
or portions of them called for redemption.
Mandatory Redemption
Pegasus is not required to make mandatory redemption or sinking fund
payments with respect to the notes.
Repurchase at the Option of Holders
Change of Control
If a change of control of Pegasus occurs, each holder of notes will
have the right to require Pegasus to repurchase all or any part equal to $1,000
or an integral multiple thereof of such holder's notes in connection with the
change of control offer. In a change of control offer, Pegasus will offer a
change of control payment in cash equal to 101% of the aggregate principal
amount of notes purchased plus accrued and unpaid interest and liquidated
damages, if any, to the date of purchase. Within ten days following any change
of control, Pegasus will mail a notice to each holder describing the transaction
or transactions that constitute the change of control and offering to repurchase
notes under the procedures required by the indenture and described in the
notice. Pegasus will comply with the requirements of SEC Rule 14e-1 and any
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other applicable securities laws and regulations in connection with the
repurchase of the notes as a result of a change of control.
On the change of control payment date, Pegasus will:
(1) accept for payment all notes or portions thereof properly
tendered under the change of control offer;
(2) deposit with the paying agent, an amount equal to the change
of control payment in respect of all notes or portions
thereof so tendered; and
(3) deliver or cause to be delivered to First Union National Bank
the notes so accepted together with an officers' certificate
stating the aggregate principal amount of notes or portions
being purchased by Pegasus.
The paying agent will promptly mail to each holder of notes so tendered
the change of control payment for such notes, and First Union National Bank will
promptly authenticate and mail or cause to be transferred by book entry to each
holder a new note equal in principal amount to any unpurchased portion of the
notes surrendered. Pegasus will publicly announce the results of the change of
control offer on or as soon as practicable after the change of control payment
date.
The provisions described above will be applicable whether or not any
other provisions of the indenture are applicable. Except as described above with
respect to a change of control, the indenture does not contain provisions that
permit the holders of the notes to require that Pegasus repurchase or redeem the
notes in the event of a takeover, recapitalization or similar transaction.
The definition of "change of control" includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of all or substantially
all of the assets of Pegasus and its restricted subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, it is uncertain whether a holder of notes has
the ability to require Pegasus to repurchase such notes as a result of a sale,
lease, transfer, conveyance or other disposition of less than all of the assets
of Pegasus and its restricted subsidiaries taken as a whole to another person or
group.
The publicly held debt securities and bank credit facilities of
Pegasus' subsidiaries restrict them from paying dividends or making other
distributions to Pegasus. Thus, if a change of control occurs, Pegasus could
seek the consent of its subsidiaries' lenders to provide funds to Pegasus for
the purchase of the notes or could attempt to refinance the borrowings that
contain such restrictions. If Pegasus does not obtain such a consent or repay
such borrowings, it will likely not have the financial resources to purchase the
notes, and its subsidiaries will be restricted in paying dividends to Pegasus
for the purpose of such purchase. In any event, we cannot assure you that
Pegasus' subsidiaries will have the resources available to make any such
dividend or distribution. In addition, any future credit agreements or other
agreements relating to indebtedness to which Pegasus becomes a party may
prohibit it from purchasing any notes before their maturity, and may also
provide that certain change of control events with respect to Pegasus would
constitute a default under these agreements. If a change of control occurs at a
time when Pegasus is prohibited from purchasing notes, it could seek the consent
of its lenders to the purchase of notes or could attempt to refinance the
borrowings that contain such prohibition. If Pegasus does not obtain such a
consent or repay such borrowings, it will remain prohibited from purchasing the
notes. If this happens, Pegasus' failure to purchase tendered notes would
constitute an event of default under the indenture.
Pegasus will not be required to make a change of control offer if a
change of control occurs if a third party makes the change of control offer
according to the requirements contained in the indenture and purchases all notes
validly tendered and not withdrawn under such change of control offer.
Asset Sales
Pegasus will not, and will not permit any of its restricted
subsidiaries to, consummate an asset sale unless:
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(1) Pegasus or the restricted subsidiary, as the case may be, receives
consideration at the time of such asset sale at least equal to the
fair market value of the assets or equity interests issued or sold
or otherwise disposed of ;
(2) the fair market value is determined by Pegasus' board of directors
and evidenced by a resolution set forth in an officer's certificate;
and
(3) at least 85% of the consideration received by Pegasus or the
restricted subsidiary is in the form of cash. For purpose of this
provision, each of the following shall be treated as cash:
(a) any liabilities as shown on Pegasus' or the restricted
subsidiary's most recent balance sheet or in the notes thereto,
other than liabilities that are by their terms subordinated to
the notes or any guarantees of the notes that are assumed by the
transferee of any such assets; and
(b) any securities, notes or other obligations received by Pegasus
or the restricted subsidiary from a transferee that are
contemporaneously converted by Pegasus or the restricted
subsidiary into cash to the extent of the cash received.
However, Pegasus and its restricted subsidiaries may engage in asset
swaps which shall not constitute asset sales for purposes of this covenant.
Pegasus may do this if, immediately after giving effect to the asset swap,
Pegasus would be permitted to incur at least $1.00 of additional indebtedness
under the indebtedness to adjusted operating cash flow ratio set forth in the
first paragraph of the covenant described under the caption Certain Covenants --
Incurrence of Indebtedness and Issuance of Preferred Stock.
Within 180 days after the receipt of any net proceeds from an asset
sale, Pegasus or the applicable restricted subsidiary may apply the net proceeds
to:
(1) permanently reduce indebtedness outstanding under any bank facility
and to permanently reduce the commitments thereunder by a
corresponding amount;
(2) permanently reduce indebtedness of any of Pegasus' restricted
subsidiaries; or
(3) the acquisition by Pegasus or any of its restricted subsidiaries of
another business, the making of a capital expenditure or the
acquisition of other long-term assets, in each case, in a permitted
business. However, if Pegasus or the restricted subsidiary enters
into a legally binding agreement with an entity that is not an
affiliate of Pegasus to reinvest the net proceeds in accordance with
this clause within 180 days after the receipt of the proceeds, the
provisions of this covenant will be satisfied so long as the binding
agreement is consummated within one year after the receipt of the
net proceeds.
If a legally binding agreement to reinvest the net proceeds is terminated, then
Pegasus may, within 360 days of the asset sale, apply the net proceeds as
provided in clauses (1), (2) or (3) of this paragraph without regard to the
condition contained in clause (3) of this paragraph. Pending the final
application of any such net proceeds, Pegasus or the applicable restricted
subsidiary may temporarily reduce indebtedness under any bank facility or
otherwise invest the net proceeds in any manner that is not prohibited by the
indenture. A reduction of indebtedness under any bank facility is not permanent
for purposes of clause (1) of this paragraph if an amount equal to the amount of
such reduction is reborrowed and used to make an acquisition described in clause
(3) of this paragraph within the time period specified in this covenant.
Any net proceeds from asset sales that are not applied or invested as
provided above will be deemed to constitute excess proceeds. Within five days of
each date on which the aggregate amount of excess proceeds exceeds $10 million,
Pegasus will be required to make an offer to all holders of notes and the
holders of the other Pegasus debt that ranks equally in right of payment to the
notes, to the extent required by the terms thereof to purchase the maximum
principal amount of notes and the other Pegasus debt that ranks equally in right
of payment to the notes that may be purchased out of the excess proceeds.
Pegasus will make this offer at a price in cash in an amount equal to 100% of
the principal amount of the notes and debt plus, in each case, accrued and
unpaid interest and liquidated damages, if any, to the date of purchase, in
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accordance with the procedures set forth in the applicable indenture or the
agreements governing the other Pegasus debt that ranks equally in right of
payment to the notes. However, Pegasus may only purchase the other Pegasus debt
that ranks equally in right of payment to the notes in an asset sale offer that
was issued under an indenture having a provision substantially similar to the
asset sale offer provision contained in the indenture.
To the extent that the aggregate amount of notes and the other Pegasus
debt that ranks equally in right of payment to the notes tendered under an asset
sale offer is less than the excess proceeds, Pegasus may use any remaining
excess proceeds for general corporate purposes. If the aggregate principal
amount of notes and the other Pegasus debt that ranks equally in right of
payment to the notes surrendered exceeds the amount of excess proceeds, First
Union National Bank shall select the notes and the other Pegasus debt that ranks
equally in right of payment to the notes to be purchased on a pro rata basis,
based upon the principal amount thereof surrendered in such asset sale offer.
Upon completion of the offer to purchase, the amount of excess proceeds shall be
reset at zero.
Certain Covenants
Restricted Payments
Pegasus will not, and will not permit any of its restricted
subsidiaries to:
(A) declare or pay any dividend or make any other payment or
distribution on account of Pegasus' equity interests,
including, without limitation, any payment in connection with
any merger or consolidation involving Pegasus;
(B) declare or pay any dividend or make any payment or
distribution on account of any qualified subsidiary stock;
(C) make any payment or distribution, other than compensation paid
to, or reimbursement of expenses of, employees in the ordinary
course of business, to or for the benefit of the direct or
indirect holders of Pegasus' equity interests or the direct or
indirect holders of any qualified subsidiary stock in their
capacities as such, other than dividends or distributions
payable in equity interests, other than disqualified stock, or
additional shares of such qualified subsidiary stock;
(D) purchase, redeem or otherwise acquire or retire for value any
equity interests of Pegasus or any direct or indirect parent
of Pegasus other than the equity interests owned by Pegasus or
any of its restricted subsidiaries;
(E) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any
indebtedness that is subordinated to the notes, except a
payment of interest or principal at stated maturity;
(F) forgive any loan or advance to or other obligation of any
affiliate of Pegasus other than a loan or advance to or other
obligations of a wholly-owned restricted subsidiary of Pegasus
which at the time it was made was not a restricted payment; or
(G) make any restricted investment.
The above payments and other actions described in clauses (A) through
(G) above are considered restricted payments under the indenture unless, at the
time of and immediately after the restricted payment is made:
(1) no default or event of default has occurred and is continuing
or would occur as a consequence of the action; and
(2) Pegasus would be permitted to incur $1.00 of additional
indebtedness under the indebtedness to adjusted operating cash
flow ratio described in the first paragraph of the covenant
described under the caption Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock; and
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(3) the restricted payment, together with the aggregate of all
other restricted payments made by Pegasus and its restricted
subsidiaries after the closing date, excluding restricted
payments permitted by clauses (2) and (3) below, is less than
the sum of, without duplication, an amount equal to:
a. the cumulative operating cash flow for the
period from the beginning of the first full
month commencing after the closing date to
the end of Pegasus' most recently ended
fiscal quarter for which internal financial
statements are available at the time of the
restricted payment, less
b. 1.4 times Pegasus' cumulative total interest
expense for the basket period, plus
c. 100% of the aggregate net cash proceeds and,
in the case of proceeds consisting of assets
constituting or used in a permitted
business, 100% of the fair market value of
the aggregate net proceeds other than cash,
received since the closing date by Pegasus
as capital contributions to Pegasus other
than from a subsidiary or from the sale by
Pegasus other than to a subsidiary of its
equity interests, other than disqualified
stock, plus
d. to the extent that any restricted investment
that was made after the closing date is sold
for cash or otherwise liquidated or repaid
for cash, the net proceeds received by
Pegasus or a wholly-owned restricted
subsidiary upon the sale, liquidation or
repayment of such restricted investment,
plus
e. to the extent that any unrestricted
subsidiary is designated by Pegasus as a
restricted subsidiary, an amount equal to
the fair market value of such investment at
the time of such designation, plus
f. 100% of any cash dividends and other cash
distributions received by Pegasus from an
unrestricted subsidiary, plus
g. $2.5 million.
The preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration, if at the date of declaration the payment would
have complied with the provisions of the indenture;
(2) the redemption, repurchase, retirement or other acquisition of
any equity interests or subordinated indebtedness of Pegasus
in exchange for, or out of the net proceeds of, the
substantially concurrent sale, other than to a subsidiary of
Pegasus of other equity interests of Pegasus other than any
disqualified stock. The amount of any net proceeds that are
used for any redemption, repurchase, retirement or other
acquisition of this type shall be excluded from clause (3)(c)
of the paragraph above;
(3) the defeasance, redemption or repurchase of indebtedness with
the proceeds of a substantially concurrent issuance of
permitted refinancing debt in accordance with the provisions
of the covenant described under the caption Certain Covenants
-- Incurrence of Indebtedness and Issuance of Preferred Stock;
(4) the payment by Pegasus of advances under the split dollar
agreement in an amount not to exceed $250,000 in any
four-quarter period;
(5) the repurchase or redemption from employees of Pegasus and its
subsidiaries, other than Marshall W. Pagon, of capital stock
of Pegasus in an amount not to exceed an aggregate of $5.0
million since the date of the indenture;
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(6) the payment of dividends on the Series A preferred stock in
accordance with the terms of the stock as in effect on the
settlement date. However, cash dividends may not be paid on
the Series A preferred stock under this clause before July 1,
2002;
(7) the issuance of subordinated exchange notes in exchange for
shares of the Series A preferred stock, if the issuance is
permitted by the covenant described below under the caption
Certain Covenants -- Incurrence of Indebtedness and Issuance
of Preferred Stock;
(8) cash payments made in lieu of the issuance of subordinated
exchange notes having a face amount less than $1,000 and any
cash payments representing accrued and unpaid dividends in
respect of Series A preferred stock, not to exceed $100,000 in
the aggregate in any fiscal year, if Pegasus elects to issue
subordinated exchange notes in exchange for Series A preferred
stock; and
(9) cash payments made in lieu of the issuance of additional
subordinated exchange notes having a face amount less than
$1,000 and any cash payments representing accrued and unpaid
interest in respect thereof, not to exceed $100,000 in the
aggregate in any fiscal year.
The amount of all restricted payments other than cash shall be the fair
market value on the date of the restricted payment of the asset(s) or securities
proposed to be transferred or issued by Pegasus or the applicable restricted
subsidiary, net of any liabilities proposed to be assumed by the transferee and
novated under a written agreement releasing Pegasus and its subsidiaries. Not
later than the date of making any restricted payment, Pegasus shall deliver to
First Union National Bank an officers' certificate stating that the restricted
payment is permitted. The officers' certificate will also set forth the basis
upon which the calculations required by this covenant were computed, which
calculations may be based upon Pegasus' latest available financial statements.
The board of directors may designate any restricted subsidiary to be an
unrestricted subsidiary if the designation would not cause a default or an event
of default under the indenture. For purposes of making this determination, all
outstanding investments by Pegasus and its restricted subsidiaries in the
subsidiary so designated shall be deemed to be restricted payments at the time
of the designation, valued as set forth below, and shall reduce the amount
available for restricted payments under the first paragraph of this covenant.
All outstanding investments shall be deemed to constitute investments in an
amount equal to the fair market value of the investments at the time of the
designation. The designation shall only be permitted if the restricted payment
would be permitted at the time and if the restricted subsidiary would otherwise
meet the definition of an unrestricted subsidiary.
Incurrence of Indebtedness and Issuance of Preferred Stock
Pegasus will not, and will not permit any of its subsidiaries to
create, incur, issue, assume, guarantee or otherwise become liable, contingently
or otherwise, for any indebtedness, including acquired debt. Pegasus also shall
not, and shall not permit any subsidiary guarantor to, issue any disqualified
stock and shall not permit any of its restricted subsidiaries that are not
subsidiary guarantors to issue any shares of preferred stock other than
qualified subsidiary stock. However, Pegasus or a restricted subsidiary may
incur indebtedness, including acquired debt, or issue shares of preferred stock
including disqualified stock if:
o Pegasus' indebtedness to adjusted operating cash flow
ratio as of the date on which the indebtedness is incurred
or the preferred stock or disqualified stock is issued
would have been 7.0 to 1 or less, calculated as if the
additional indebtedness had been incurred, or the
disqualified stock or preferred stock had been issued, as
of the date of the calculation; and
o no default or event of default would occur as a result.
Pegasus will not, and will not permit any subsidiary guarantor to incur
any indebtedness that is contractually subordinated to any other indebtedness of
Pegasus or of the subsidiary guarantor, unless the indebtedness is also
contractually subordinated to the notes or the subsidiary guarantee of the
subsidiary guarantor on substantially identical terms. However, no indebtedness
will be deemed to be contractually subordinated to any other indebtedness solely
by virtue of being unsecured.
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The preceding provisions do not apply to the following, which is
permitted debt:
(1) the incurrence by Pegasus' unrestricted subsidiaries of
non-recourse debt or the issuance by unrestricted subsidiaries
of preferred stock. However, if any such indebtedness of an
unrestricted subsidiary ceases to be non-recourse debt or any
preferred stock becomes preferred stock other than qualified
subsidiary stock of a restricted subsidiary, these events
shall be deemed to constitute an incurrence of indebtedness
by, or an issuance of preferred stock other than qualified
subsidiary stock of a restricted subsidiary of Pegasus;
(2) Pegasus' or any of its restricted subsidiaries' incurring
indebtedness under one or more bank facilities if the
aggregate principal amount at any time outstanding incurred
under this clause does not exceed $50 million;
(3) Pegasus' and its restricted subsidiaries' incurrence of the
existing indebtedness;
(4) Pegasus' incurrence of indebtedness under the subordinated
exchange notes to pay interest on outstanding subordinated
exchange notes;
(5) indebtedness under the notes and the subsidiary guarantees;
(6) Pegasus or any of its wholly-owned restricted subsidiaries
incurring intercompany indebtedness. However:
(a) if Pegasus or a subsidiary guarantor is the obligor
on the indebtedness, the indebtedness is expressly
subordinated to the prior payment in full in cash of
all obligations with respect to the notes or the
subsidiary guarantee of the subsidiary guarantor; and
(b) any subsequent issuance or transfer of equity
interests that result in any indebtedness being held
by a person other than Pegasus or a wholly-owned
restricted subsidiary of Pegasus shall be deemed to
constitute an incurrence of indebtedness by Pegasus
or the restricted subsidiary; and
(c) any sale or other transfer of indebtedness to a
person that is not either Pegasus or a wholly-owned
restricted subsidiary of Pegasus shall be deemed, to
constitute an incurrence of such indebtedness by
Pegasus or the restricted subsidiary;
(7) Pegasus or any of its restricted subsidiaries incurring
indebtedness represented by capital lease obligations,
mortgage financings or purchase money obligations, in each
case incurred for the purpose of financing all or any part of
the purchase price or cost of construction or improvement of
property used in the business of Pegasus or a restricted
subsidiary, in an aggregate principal amount not to exceed
$7.5 million at any time outstanding. This includes all
permitted refinancing debt incurred under clause (8) below to
refund, replace or refinance any indebtedness incurred under
this clause;
(8) Pegasus or any of its restricted subsidiaries incurring
permitted refinancing debt in exchange for, or the net
proceeds of which are used to extend, refinance, renew,
replace, defease or refund, indebtedness other than
intercompany indebtedness permitted by the indenture;
(9) Pegasus or any restricted subsidiaries incurring indebtedness
in addition to indebtedness permitted by any other clause of
this paragraph in an aggregate principal amount at any time
outstanding, including all permitted refinancing debt incurred
under clause (8) above to refund, replace or refinance any
indebtedness incurred under this clause, not to exceed $7.5
million; and
(10) Pegasus' or any restricted subsidiary's guarantee of
indebtedness of Pegasus or a subsidiary of Pegasus that
another provision of this covenant permits.
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For purposes of determining compliance with this covenant, if an item
of indebtedness meets the criteria of more than one of the categories of
permitted debt described in clauses (1) through (10) above, or if the first
paragraph of this covenant permits it to be incurred and it also meets the
criteria of one or more of the categories of permitted debt described in clauses
(1) through (10) above, Pegasus shall, in its sole discretion, classify the item
of indebtedness in any manner that complies with this covenant. It may also from
time to time reclassify the item of indebtedness in any manner in which the item
could be incurred at the time of the reclassification. For purposes of this
paragraph, indebtedness includes disqualified stock and preferred stock of
subsidiaries. Accrual of interest and the accretion of accreted value will not
be deemed to be an incurrence of indebtedness for purposes of this covenant.
Limitation of Certain Subsidiary Indebtedness and Preferred Stock
Pegasus will not, and will not permit any of its restricted
subsidiaries to incur any indebtedness other than eligible indebtedness. It will
also not permit any issuance of disqualified stock. However, any restricted
subsidiary that is a subsidiary guarantor may incur indebtedness whether or not
the indebtedness is eligible indebtedness or issue disqualified stock if it is
permitted under the covenant described above under the caption Certain Covenants
- -- Incurrence of Indebtedness and Issuance of Preferred Stock. However, Pegasus
will not permit any of its restricted subsidiaries to incur any indebtedness
represented by senior secured bonds or other senior secured securities, unless
the subsidiary is a subsidiary guarantor and its subsidiary guarantee is secured
on an equal and ratable basis with the other senior secured bonds or senior
secured securities.
Liens
Pegasus will not, and will not permit any of its restricted
subsidiaries to create, incur, assume or allow any lien on any asset now owned
or later acquired, or any income or profits from the asset, or assign or convey
any right to receive income from the asset, except liens permitted under the
indenture.
Dividend and Other Payment Restrictions Affecting Subsidiaries
Pegasus will not, and will not permit any of its restricted
subsidiaries to create or otherwise cause or allow any encumbrance or
restriction on the ability of any restricted subsidiary to:
(1) pay dividends or make any other distributions to Pegasus or
any of its restricted subsidiaries on its capital stock or
with respect to any other interest or participation in, or
measured by, its profits, or pay any indebtedness owed to
Pegasus or any of its restricted subsidiaries;
(2) make loans or advances to Pegasus or any of its restricted
subsidiaries; or
(3) transfer any of its properties or assets to Pegasus or any of
its restricted subsidiaries.
However, the restrictions above will not apply to encumbrances or
restrictions existing under or by reason of:
(1) the terms of any indebtedness permitted by the indenture to be
incurred by any subsidiary of Pegasus if the indebtedness
permits the payment of cash dividends to Pegasus in an amount
sufficient to enable Pegasus to make payments of:
(a) interest required to be paid in respect of the notes;
(b) interest required to be paid in respect of the 1997
notes and the 1998 notes; and
(c) after July 1, 2002, dividends required to be paid in
respect of the Series A preferred stock and interest
required to be paid in respect of the subordinated
exchange notes, if issued, in each case, in
accordance with the terms of each except during the
continuance of a default or event of default under
the other indebtedness;
(2) existing indebtedness or the Pegasus Media & Communications,
Inc. credit facility;
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(3) the indenture, the notes, the subsidiary guarantees, the 1997
indenture, the 1997 notes and the 1997 notes subsidiary
guarantees, the 1998 indenture , the 1998 notes and the 1998
notes subsidiary guarantees;
(4) applicable law;
(5) any instrument governing indebtedness or capital stock of a
person acquired by Pegasus or any of its restricted
subsidiaries as in effect at the time of the acquisition
except if the indebtedness was incurred in connection with or
in contemplation of the acquisition, and the encumbrance or
restriction is not applicable to any person, properties or
assets, other than the acquired person and its subsidiaries,
or their property or assets so acquired;
(6) customary non-assignment provisions in leases and other
contracts entered into in the ordinary course of business and
consistent with past practices; or
(7) any agreement for the sale of any subsidiary or its assets
that restricts distributions by that subsidiary pending its
sale.
Merger, Consolidation or Sale of Assets
Pegasus will not consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another
corporation, person or entity unless:
(1) Pegasus is the surviving corporation or the entity or the
person formed by or surviving the consolidation or merger, if
other than Pegasus, or to which the sale, assignment,
transfer, lease, conveyance or other disposition shall have
been made is a corporation organized or existing under the
laws of the United States, any state thereof or the District
of Columbia;
(2) the entity or person formed by or surviving the consolidation
or merger, if other than Pegasus, or the entity or person to
which the sale, assignment, transfer, lease, conveyance or
other disposition shall have been made assumes all the
obligations of Pegasus under the notes, the indenture and the
registration rights agreement under a supplemental indenture
in a form reasonably satisfactory to First Union National
Bank;
(3) immediately after the transaction no default or event of
default exists;
(4) Pegasus is able to incur at least $1.00 of additional
indebtedness under the indebtedness to adjusted operating cash
flow ratio set forth in the first paragraph of the covenant
described under the caption Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock. This also
applies to any entity or person formed by or surviving the
consolidation or merger or to which the sale was made; and
(5) each subsidiary guarantor, unless it is the other party to the
transactions described above, shall have by supplemental
indenture confirmed that its subsidiary guarantee shall apply
to such person's obligations under the indenture, the notes
and the Registration Rights Agreement.
Transactions with Affiliates
Pegasus will not, and will not permit any of its restricted
subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make any contract, agreement, understanding, loan, advance or guarantee with,
or for the benefit of, any affiliate unless:
(1) the affiliate transaction is on terms as favorable to Pegasus
or the relevant restricted subsidiary as those that would have
been obtained in a comparable transaction by Pegasus or the
restricted subsidiary with an unrelated person, and
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(2) Pegasus delivers to First Union National Bank with respect to
the affiliate transaction or series of related affiliate
transactions involving aggregate consideration in excess of:
(a) $1.0 million, a resolution of the board of directors set
forth in an officers' certificate certifying that the
affiliate transaction complies with clause (1) above and
that the affiliate transaction has been approved by a
majority of the disinterested members of the board of
directors and a majority of the independent directors;
and
(b) $5.0 million, an opinion as to the fairness to Pegasus or
the restricted subsidiary of the affiliate transaction
from a financial point of view issued by an investment
banking firm of national standing. However, Pegasus shall
not, and shall not permit any of its restricted
subsidiaries to, engage in any affiliate transaction
involving aggregate consideration in excess of $1.0
million at any time that there is not at least one
independent director on Pegasus' board of directors.
The following will not be affiliate transactions and not subject to the
restrictions just described:
o any employment agreement entered into by Pegasus or any
of its restricted subsidiaries in the ordinary course of
business and consistent with the past practice;
o transactions between or among Pegasus and/or its
restricted subsidiaries;
o the payment of any dividend on, or the issuance of
additional subordinated exchange notes in exchange for,
the Series A preferred stock, if the dividends are paid
on a pro rata basis and the additional subordinated
exchange notes are issued in accordance with the
certificate of designation; and
o transactions permitted by the provisions of the covenant
described under the caption Certain Covenants --
Restricted Payments.
Limitation on Issuances and Sales of Capital Stock of Wholly-Owned
Restricted Subsidiaries
Pegasus will not, and will not permit any wholly-owned restricted
subsidiary to, transfer, convey, sell or otherwise dispose of any capital stock
of any wholly-owned restricted subsidiary to any person other than Pegasus or a
wholly-owned restricted subsidiary unless:
(1) the transfer, conveyance, sale, lease or other disposition is
of all the capital stock of such wholly-owned restricted
subsidiary; and
(2) the cash net proceeds from the transfer, conveyance, sale,
lease or other disposition are applied in accordance with the
covenant described under the caption Repurchase at the Option
of Holders -- Asset Sales.
In addition, Pegasus shall not permit any wholly-owned restricted
subsidiary to issue any of its equity interests other than, if necessary, shares
of its capital stock constituting directors' qualifying shares to any person
other than to Pegasus or a wholly-owned restricted subsidiary.
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Subsidiary Guarantees
Pegasus will not permit any restricted subsidiary to guarantee the
payment of any of its indebtedness or any indebtedness of any subsidiary
guarantor unless:
(1) the restricted subsidiary which is not a subsidiary guarantor
simultaneously executes and delivers a supplemental indenture
providing for a guarantee of payment of the notes;
(2) if the guaranteed debt is by its express terms subordinated in
right of payment to the notes or the subsidiary guarantee of
the obligor, the guarantee of the subsidiary guarantor with
respect to the guaranteed debt shall be subordinated in right
of payment to the subsidiary guarantor's subsidiary guarantee
with respect to the notes substantially to the same extent as
the guaranteed debt is subordinated to the notes or the
subsidiary guarantee of the obligor;
(3) the restricted subsidiary waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any
rights of reimbursement, indemnity or subrogation or any other
rights against Pegasus or any other restricted subsidiary as a
result of any payment by the restricted subsidiary under its
subsidiary guarantee; and
(4) the restricted subsidiary shall deliver to First Union
National Bank an opinion of counsel to the effect that the
subsidiary guarantee of the notes:
(A) has been duly executed and authorized; and
(B) constitutes a valid, binding and enforceable
obligation of the restricted subsidiary, except as
enforcement of it may be limited by bankruptcy,
insolvency or similar laws including, all laws
relating to fraudulent transfers and except insofar
as enforcement is subject to general principles of
equity.
No subsidiary guarantor may consolidate with or merge with or into
another corporation, person or entity whether or not affiliated with the
subsidiary guarantor unless:
(1) subject to the provisions of the following paragraph, the
person formed by or surviving the consolidation or merger, if
other than the subsidiary guarantor, assumes all the
obligations of the subsidiary guarantor under a supplemental
indenture under the notes, the indenture and the registration
rights agreement;
(2) immediately after the transaction, no default or event of
default exists; and
(3) Pegasus would be permitted to incur $1.00 of additional
indebtedness under the indebtedness to adjusted operating cash
flow ratio described in the first paragraph of the covenant
described above under the caption Certain Covenants --
Incurrence of Indebtedness and Issuance of Preferred Stock.
If a sale or other disposition of all of the assets or capital stock of
any subsidiary guarantor, by way of merger, consolidation or otherwise occurs,
then the subsidiary guarantor or the corporation acquiring the property, will be
released and relieved of any obligation under its subsidiary guarantee; provided
that the net proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of the indenture.
Any subsidiary guarantor that is designated as an unrestricted
subsidiary under the indenture will be released and relieved of its obligations
under its subsidiary guarantee for so long as the subsidiary is so designated.
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No Amendment to Subordination Provisions
Without the consent of each holder of notes outstanding, Pegasus will
not amend, modify or alter the subordinated exchange note indenture in any way
that will:
(1) increase the rate of or change the time for payment of
interest on any subordinated exchange notes;
(2) increase the principal of, advance the final maturity date of
or shorten the weighted average life to maturity of any
subordinated exchange notes;
(3) alter the redemption provisions or the price or terms at which
Pegasus is required to offer to purchase the subordinated
exchange notes in a manner that would be adverse to any holder
of notes; or
(4) amend the subordination provisions of the subordinated
exchange note indenture.
Reports
Whether or not required by the SEC, so long as any notes are
outstanding, Pegasus will furnish to the holders of notes within the time
periods specified in the SEC's rules and regulations:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms
10-Q and 10-K if Pegasus were required to file such forms,
including the section entitled Management's Discussion and
Analysis of Financial Condition and Results of Operations and,
with respect to the annual information only, a report thereon
by Pegasus' certified independent accountants; and
(2) all current reports that would be required to be filed with
the SEC on Form 8-K if Pegasus were required to file such
reports, in each case.
In addition, whether or not required by the SEC, Pegasus will file a
copy of all such information and reports with the SEC for public availability
within the time periods set forth in the SEC's rules and regulations unless the
SEC rejects the filing. Pegasus will also make this information available to
securities analysts and prospective investors upon request.
In addition to the financial information required by the Exchange Act,
each such quarterly and annual report shall to contain summarized financial
information, as defined in SEC Rule 1-02(aa)(1) of Regulation S-X, showing
adjusted operating cash flow for Pegasus and its restricted subsidiaries, on a
consolidated basis. Pegasus' adjusted operating cash flow will be calculated in
a manner consistent with the manner described under the definition of adjusted
operating cash flow in this prospectus. Pegasus may include summarized financial
information in the footnotes to audited consolidated financial statements or its
unaudited quarterly financial statements. The statements will be as of the same
dates and for the same periods as the consolidated financial statements of
Pegasus and its subsidiaries required under the Exchange Act. In addition,
Pegasus has agreed that, for so long as any notes remain outstanding, it will
furnish to the holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered under SEC Rule
144A(d)(4).
Events of Default and Remedies
Each of the following constitutes an event of default under the
indenture:
(1) default for 30 days in the payment of interest and liquidated
damages, if any, on the notes when due;
(2) default in payment when due of the principal of or premium, on
the notes;
(3) failure by Pegasus or any subsidiary to comply with the
provisions described under the captions:
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o Repurchase at the Option of Holders-- Change of Control,
o Repurchase at the Option of Holders-- Asset Sales,
o Certain Covenants -- Restricted Payments,
o Certain Covenants-- Incurrence of Indebtedness and
Issuance of Preferred Stock, or
o Certain Covenants-- Merger, Consolidation or Sale of
Assets;
(4) failure by Pegasus or any subsidiary for 60 days after notice
to comply with any of its other agreements in the indenture or
the notes;
(5) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by Pegasus or
any of its restricted subsidiaries or the payment of which is
guaranteed by Pegasus or any of its restricted subsidiaries,
whether the indebtedness or guarantee now exists, or shall be
later created, and the default:
(a) is caused by a failure to pay principal of or
premium, if any, or interest on the indebtedness
before the expiration of the grace period provided in
the indebtedness on the date of the default; or
(b) results in the acceleration of the indebtedness
before its express maturity and, in each case, the
principal amount of the indebtedness, together with
the principal amount of any other indebtedness under
which there has been a payment default or the
maturity of which has been so accelerated, aggregates
$5.0 million or more;
(6) failure by Pegasus or any restricted subsidiary that would be
a significant subsidiary to pay final judgments aggregating in
excess of $5.0 million, which are not paid, discharged or
stayed for a period of 60 days;
(7) certain events of bankruptcy or insolvency with respect to
Pegasus or any restricted subsidiary that would constitute a
significant subsidiary or any group of restricted subsidiaries
that, taken together, would constitute a significant
subsidiary; and
(8) the termination of any subsidiary guarantee for any reason not
permitted by the indenture, or the denial by any subsidiary
guarantor or any person acting on behalf of any subsidiary
guarantor of such subsidiary guarantor's obligations under its
respective subsidiary guarantee.
If any event of default occurs and is continuing, First Union National
Bank or the holders of at least 25% in principal amount of the then outstanding
notes may declare all the notes to be due and payable immediately. Upon such
declaration, the principal of, premium, if any, and accrued and unpaid interest
and liquidated damages, on the notes shall be due and payable immediately.
However, in the case of an event of default arising from certain events
of bankruptcy or insolvency with respect to Pegasus, any restricted subsidiary
that would constitute a significant subsidiary or any group of restricted
subsidiaries that, taken together, would constitute a significant subsidiary,
all outstanding notes will become due and payable without further action or
notice. Holders of the notes may not enforce the indenture or the notes except
as provided in the indenture. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding notes may direct First
Union National Bank in its exercise of any trust or power. First Union National
Bank may withhold from holders of the notes notice of any continuing default or
event of default, except a default or event of default relating to the payment
of principal or interest or liquidated damages, if any, if it determines that
withholding notice is in their interest.
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In the case of any event of default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of Pegasus with the
intention of avoiding payment of the premium that Pegasus would have had to pay
if it then had elected to redeem the notes under the optional redemption
provisions of the indenture, Pegasus will have to pay an equivalent premium to
the extent lawful upon the acceleration of the notes. If an event of default
occurs before August 1, 2003 by reason of any willful action or inaction taken
or not taken by or on behalf of Pegasus with the intention of avoiding the
prohibition on redemption of the notes before August 1, 2003, then the premium
specified in the indenture shall also become immediately due and payable to the
extent permitted by law upon the acceleration of the notes.
The holders of a majority in aggregate principal amount of the notes
then outstanding by notice to First Union National Bank may on behalf of the
holders of all of the notes waive any existing default or event of default and
its consequences under the indenture. However, they may not waive a continuing
default or event of default in the payment of principal, interest or premium or
liquidated damages, if any, on the notes.
Pegasus must deliver to First Union National Bank annually a statement
regarding compliance with the indenture. As soon as it becomes aware of any
default or event of default, Pegasus must deliver to First Union National Bank a
statement specifying the default or event of default.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of Pegasus
or any subsidiary guarantor, shall have any liability for any obligations of
Pegasus or the subsidiary guarantors under the notes, the subsidiary guarantees
or the indenture or for any claim based on these obligations or their creation.
Each holder of notes by accepting a note waives and releases these persons from
all liability for these obligations. The waiver and release are part of the
consideration for issuance of the notes. The waiver may not be effective to
waive liabilities under the federal securities laws, and it is the view of the
SEC that this waiver is against public policy.
Legal Defeasance and Covenant Defeasance
Pegasus may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding notes and have each
subsidiary guarantor's obligation discharged with respect to its subsidiary
guarantee, which is known as legal defeasance, except for:
(1) the rights of holders of outstanding notes to receive payments
in respect of the principal of, premium, if any, and interest
and liquidated damages, if any, on such notes when such
payments are due from the trust referred to below;
(2) Pegasus' obligations with respect to the notes concerning
issuing temporary notes, registration of the notes, mutilated,
destroyed, lost or stolen notes and the maintenance of an
office or agency for payment and to hold money for security
payments held in trust;
(3) the rights, powers, trusts, duties and immunities of First
Union National Bank, and Pegasus' obligations to First Union;
and
(4) the legal defeasance provisions of the indenture.
In addition, Pegasus may, at its option and at any time, elect to have
its obligations and each subsidiary guarantor's obligation released with respect
to certain covenants that are described in the section of the indenture entitled
Covenant Defeasance and thereafter any omission to comply with such obligations
shall not constitute a default or event of default with respect to the notes. If
covenant defeasance occurs, certain events, not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events, described under
Events of Default will no longer constitute an event of default with respect to
the notes.
To exercise either legal defeasance or covenant defeasance:
(1) Pegasus must irrevocably deposit with First Union National
Bank, in trust, for the benefit of the holders of the notes,
cash and/or government securities sufficient to pay the
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principal of, interest and premium and liquidated damages, if
any, on the outstanding notes. Pegasus must also specify
whether the notes are being defeased to maturity or to a
particular redemption date and make payment accordingly;
(2) in the case of legal defeasance, Pegasus shall have delivered
to First Union National Bank an opinion of counsel in the
United States reasonably acceptable to First Union National
Bank confirming that:
(A) Pegasus has received from, or the Internal Revenue
Service has published a ruling; or
(B) since the date of the indenture, there has been a
change in the applicable federal income tax law, in
either case to the effect that, and based thereon
such opinion of counsel shall confirm that, the
holders of the outstanding notes will not recognize
income, gain or loss for federal income tax purposes
as a result of such legal defeasance and will be
subject to federal income tax on the same amounts, in
the same manner and at the same times as would have
been the case if such legal defeasance had not
occurred;
(3) in the case of covenant defeasance, Pegasus shall have
delivered to First Union National Bank an opinion of counsel
reasonably acceptable to First Union National Bank confirming
that the holders of the outstanding notes will not recognize
income, gain or loss for federal income tax purposes as a
result of such covenant defeasance and will be subject to
federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such covenant
defeasance had not occurred;
(4) no default or event of default shall have occurred and be
continuing on the date of such deposit other than a default or
event of default resulting from the borrowing of funds to be
applied to such deposit or insofar as events of default from
bankruptcy or insolvency events are concerned, at any time in
the period ending on the 91st day after the date of deposit or
greater period of time in which any such deposit of trust
funds may remain subject to bankruptcy or insolvency laws
insofar as those apply to the deposit by Pegasus;
(5) the legal defeasance or covenant defeasance will not result in
a breach or violation of, or constitute a default under any
material agreement or instrument other than the indenture to
which Pegasus or any of its subsidiaries is a party or by
which Pegasus or any of its subsidiaries is bound;
(6) Pegasus must have delivered to First Union National Bank an
opinion of counsel to the effect that, as of the date of such
opinion, the trust funds will not be subject to rights of
holders of indebtedness other than the notes. The opinion must
state that, assuming no intervening bankruptcy of Pegasus
between the date of deposit and the 91st day following the
deposit and assuming no holder of notes is an insider of
Pegasus, after the 91st day following the deposit, the trust
funds will not be subject to the effects of any applicable
bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally under any applicable
United States or state law;
(7) Pegasus must deliver to First Union National Bank an officers'
certificate stating that the deposit was not made by Pegasus
with the intent of preferring the holders of notes over the
other creditors of Pegasus with the intent of defeating,
hindering, delaying or defrauding creditors of Pegasus or
others; and
(8) Pegasus must deliver to First Union National Bank an officers'
certificate and an opinion of counsel, each stating that all
conditions precedent relating to the legal defeasance or the
covenant defeasance have been complied with.
Transfer and Exchange
A holder may transfer or exchange notes in accordance with the
indenture. The registrar and First Union National Bank may require a holder,
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among other things, to furnish appropriate endorsements and transfer documents
and Pegasus may require a holder to pay any taxes and fees required by law or
permitted by the indenture. Pegasus is not required to transfer or exchange any
note selected for redemption. Also, Pegasus is not required to transfer or
exchange any note for a period of 15 days before a selection of notes to be
redeemed.
The registered holder of a note will be treated as the owner of it for
all purposes.
Amendment, Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the
indenture, the notes or the subsidiary guarantees may be amended or supplemented
with the consent of the holders of at least a majority in principal amount of
the notes then outstanding, including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes. Any
existing default or compliance with any provision of the indenture or the notes
may be waived with the consent of the holders of a majority in principal amount
of the then outstanding notes, including, without limitation, consents obtained
in connection with a purchase of, or tender offer or exchange offer for, notes.
Without the consent of each holder affected, an amendment or waiver may
not with respect to any notes held by a non-consenting holder:
(1) reduce the principal amount of notes whose holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any
note or alter the provisions with respect to the redemption of
the notes, other than provisions relating to the covenants
described above under the caption Repurchase at the Option of
Holders;
(3) reduce the rate of or change the time for payment of interest
on any note;
(4) waive a default or event of default in the payment of
principal of or interest or premium or liquidated damages, if
any, on the notes, except a rescission of acceleration of the
notes by the holders of a majority in aggregate principal
amount of the notes and a waiver of the payment default that
resulted from such acceleration;
(5) make any note payable in money other than that stated in the
notes;
(6) make any change in the provisions of the indenture relating to
waivers of past defaults or the rights of holders of notes to
receive payments of principal of or interest or premium or
liquidated damages, if any, on the notes;
(7) waive a redemption payment with respect to any note other than
a payment required by one of the covenants described above
under the caption Repurchase at the Option of Holders;
(8) make any change in the foregoing amendment and waiver
provisions; or
(9) except as provided under the caption Legal Defeasance and
Covenant Defeasance or in accordance with the terms of the
indenture or any subsidiary guarantee, release a subsidiary
guarantor from its obligations under its subsidiary guarantee
or make any change in a subsidiary guarantee that would
adversely affect the holders of the notes.
However, Pegasus, a subsidiary guarantor with respect to a subsidiary
guarantee or the indenture to which it is a party, and First Union National Bank
may amend or supplement the indenture, the notes or the subsidiary guarantees
without the consent of any holder of notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place
of certificated notes;
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(3) to provide for the assumption of Pegasus' or any subsidiary
guarantor's obligations to holders of notes in the case of a
merger or consolidation;
(4) to make any change that would provide any additional rights or
benefits to the holders of notes or that does not adversely
affect the legal rights under the indenture of any such
holder; or
(5) to comply with requirements of the SEC to maintain the
qualification of the indenture under the Trust Indenture Act
or to allow any subsidiary guarantor to guarantee the notes.
Concerning First Union National Bank
If First Union National Bank becomes a creditor of Pegasus, the
indenture limits its right to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or
otherwise. First Union National Bank will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue or
resign.
The holders of a majority in principal amount of the then outstanding
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to First Union National Bank,
subject to certain exceptions. The indenture provides that in case an event of
default shall occur, which shall not be cured, First Union National Bank will be
required, in the exercise of its power, to use the degree of care of a prudent
man in the conduct of his own affairs. Subject to such provisions, First Union
National Bank will be under no obligation to exercise any of its rights or
powers under the indenture at the request of any holder of notes, unless such
holder shall have offered to First Union National Bank security and indemnity
satisfactory to it against any loss, liability or expense.
Book-Entry, Delivery and Form
Depository Procedures
The following description of the operations and procedures of The
Depository Trust Company, Euroclear and Cedel are provided solely as a matter of
convenience. These operations and procedures are solely within the control of
the respective settlement systems and are subject to changes by them from time
to time. Pegasus takes no responsibility for these operations and procedures and
urges investors to contact the system or their participants directly to discuss
these matters.
The Depository Trust Company has advised Pegasus that The Depository
Trust Company is a limited-purpose trust company created to hold securities for
its participating organizations, and to facilitate the clearance and settlement
of transactions in those securities between participants through electronic
book-entry changes in accounts of its participants. The participants include
securities brokers and dealers, including the initial purchasers, banks, trust
companies, clearing corporations and certain other organizations. Access to The
Depository Trust Company's system is also available to other indirect
participants such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant. Persons who are
not participants may beneficially own securities held by or on behalf of The
Depository Trust Company only through the participants or indirect participants.
The ownership interests in, and transfers of ownership interests in, each
security held by or on behalf of The Depository Trust Company are recorded on
the records of the participants and indirect participants.
The Depository Trust Company has also advised Pegasus that, under
procedures established by it:
o upon deposit of the global notes, The Depository Trust Company
will credit the accounts of participants designated by the
initial purchasers with portions of the principal amount of
the global notes; and
o ownership of the interests in the global notes will be shown
on, and the transfer of ownership thereof will be effected
only through, records maintained by The Depository Trust
Company, for the participants or by the participants and the
indirect participants for other owners of beneficial interest
in the global notes.
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Except as described below, owners of interest in the global notes will
not have notes registered in their names, will not receive physical delivery of
notes in certificated form and will not be considered the registered owners or
holders thereof under the indenture for any purpose.
Payments in respect of the principal of, and premium, if any,
liquidated damages, if any, and interest on a global note registered in the name
of The Depository Trust Company or its nominee will be payable to The Depository
Trust Company in its capacity as the registered holder under the indenture.
Under the terms of the indenture, Pegasus and First Union National Bank will
treat the persons in whose names the notes, including the global notes, are
registered as the owners of the notes for the purpose of receiving these
payments and for any and all other purposes whatsoever. Consequently, neither
Pegasus, First Union National Bank nor any agent of Pegasus or First Union
National Bank has or will have any responsibility or liability for:
o any aspect of The Depository Trust Company's records or any
participant's or indirect participant's records relating to or
payments made on account of beneficial ownership interest in
the global notes, or for maintaining, supervising or reviewing
any of The Depository Trust Company's records or any
participant's or indirect participant's records relating to
the beneficial ownership interests in the global notes; or
o any other matter relating to the actions and practices of The
Depository Trust Company or any of its participants or
indirect participants. The Depository Trust Company has
advised Pegasus that its current practice, upon receipt of any
payment in respect of securities such as the notes, including
principal and interest, is to credit the accounts of the
relevant participants with the payment on the payment date, in
amounts proportionate to their respective holdings in the
principal amount of beneficial interest in the relevant
security as shown on the records of The Depository Trust
Company unless The Depository Trust Company has reason to
believe it will not receive payment on such payment date.
Payments by the participants and the indirect participants to the
beneficial owners of notes will be governed by standing instructions and
customary practices and will be the responsibility of the participants or the
indirect participants. Payments will not be the responsibility of The Depository
Trust Company, First Union National Bank or Pegasus. Neither Pegasus nor First
Union National Bank will be liable for any delay by The Depository Trust Company
or any of its participants in identifying the beneficial owners of the notes.
Pegasus and First Union National Bank may conclusively rely on and will be
protected in relying on instructions from The Depository Trust Company or its
nominee for all purposes.
Except for trades involving only Euroclear and Cedel participants,
interests in the global notes are expected to be eligible to trade in The
Depository Trust Company's Same-Day Funds Settlement System. Therefore,
secondary market trading activity in such interests will settle in immediately
available funds, subject in all cases to the rules and procedures of The
Depository Trust Company and its participants. See Same Day Settlement and
Payment.
Transfers between participants in The Depository Trust Company will be
made in accordance with The Depository Trust Company's procedures, and will be
settled in same day funds. Transfers between participants in Euroclear and Cedel
will be made in the ordinary way in accordance with their respective rules and
operating procedures.
Cross-market transfers between the participants in The Depository Trust
Company, on the one hand, and Euroclear or Cedel participants, on the other
hand, will be made through The Depository Trust Company in accordance with its
rules on behalf of Euroclear or Cedel, as the case may be. However, these
cross-market transactions will require delivery of instructions to Euroclear or
Cedel, as the case may be, by the counterparty in the system in accordance with
the rules and procedures and within the established deadlines, according to
Brussels time, of the system. Euroclear or Cedel, as the case may be, will
deliver instructions to its respective depositary to take action to make final
settlement on its behalf by delivering or receiving interests in the relevant
global note in The Depository Trust Company. Payment will be made or received in
accordance with normal procedures for same-day funds settlement applicable to
The Depository Trust Company. Euroclear participants and Cedel participants may
not deliver instructions directly to the depositories for Euroclear or Cedel.
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The Depository Trust Company has advised Pegasus that it will take any
action permitted to be taken by a holder of notes only at the direction of one
or more participants to whose account The Depository Trust Company has credited
the interests in the global notes. Moreover, The Depository Trust Company will
take action only in respect of the portion of the aggregate principal amount of
the notes as to which the participant has or given direction. However, if there
is an event of default under the notes, The Depository Trust Company reserves
the right to exchange the global notes for legended notes in certificated form,
and to distribute such notes to its participants.
The Depository Trust Company, Euroclear and Cedel have agreed to the
foregoing procedures to facilitate transfers of interests in the global notes
among participants in The Depository Trust Company, Euroclear and Cedel.
However, they are under no obligation to perform or to continue to perform these
procedures, and they may be discontinued at any time. Neither Pegasus nor First
Union National Bank nor any of their respective agents will have any
responsibility for the performance by The Depository Trust Company, Euroclear or
Cedel or their participants or indirect participants of their obligations under
the rules and procedures governing their operations.
Exchange of Book-Entry Notes for Certificated Notes
A global note is exchangeable for certificated notes if:
(1) The Depository Trust Company notifies Pegasus that it is
unwilling or unable to continue as depositary for the global
notes and Pegasus thereupon fails to appoint a successor
depositary, or
(2) The Depository Trust Company has ceased to be a clearing
agency registered under the Exchange Act;
(3) Pegasus, at its option, notifies First Union National Bank in
writing that it elects to cause the issuance of the
certificated notes, or
(4) there shall have occurred and be continuing a default or event
of default with respect to the notes.
In addition, beneficial interests in a global note may be exchanged for
certificated notes upon request but only upon prior written notice given to
First Union National Bank by or on behalf of The Depository Trust Company in
accordance with the indenture. In all cases, certificated notes delivered in
exchange for any global note or beneficial interests therein will be registered
in the names, and issued in any approved denominations, requested by or on
behalf of the depositary in accordance with its customary procedures and will
bear the applicable restrictive legend referred to in Notice to Investors,
unless Pegasus determines otherwise in compliance with applicable law.
Same Day Settlement and Payment
Payments in respect of the notes represented by the global notes,
including principal, premium, if any, interest and liquidated damages, if any,
will be made by wire transfer of immediately available funds to the accounts
specified by the global note holder. With respect to notes in certificated form,
Pegasus will make all payments of principal, premium, if any, interest and
liquidated damages, if any, by wire transfer of immediately available funds to
the accounts specified by the holders thereof or, if no such account is
specified, by mailing a check to each such holder's registered address. The
notes represented by the global notes are expected to trade on The Depository
Trust Company's Same-Day Funds Settlement System, and any permitted secondary
market trading activity in the notes will, therefore, be required by the
depositary to be settled in immediately available funds. Pegasus expects that
secondary trading in any certificated notes will also be settled in immediately
available funds.
Because of time zone differences, the securities account of a Euroclear
or Cedel participant purchasing an interest in a global note from a participant
in The Depository Trust Company will be credited, and any such crediting will be
reported to the relevant Euroclear or Cedel participant, during the securities
settlement processing day immediately following the settlement date of The
Depository Trust Company. The Depository Trust Company has advised Pegasus that
cash received in Euroclear or Cedel as a result of sales of interests in a
global note by or through a Euroclear or Cedel participant to a participant in
The Depository Trust Company will be received with value on the settlement date
of The Depository Trust Company but will be available in the relevant Euroclear
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or Cedel cash account only as of the business day for Euroclear or Cedel
following The Depository Trust Company's settlement date.
Certain Definitions
Set forth below are certain defined terms used in the indenture and in
the section Description of Notes. You should consult the indenture for full
definitions of all these terms.
1997 Indenture means the indenture, dated as of October 21, 1997,
between Pegasus and First Union National Bank, as trustee, governing the terms
of the 1997 notes.
1997 Notes means Pegasus' 9 5/8% senior notes due 2005.
1997 Notes Subsidiary Guarantees means the guarantees of Pegasus'
payment obligations under the 1997 indenture and the 1997 notes, if and when
executed by the subsidiaries of Pegasus under the provisions of the 1997
indenture.
1998 Indenture means the indenture dated November 30, 1998, between
Pegasus and First Union National Bank, as trustee, governing the terms of the
1998 notes.
1998 Notes means Pegasus' 9 3/4% senior notes due 2006.
1998 Notes Subsidiary Guarantees means the guarantees of Pegasus'
payment obligations under the 1998 indenture and the 1998 notes, if and when
executed by the Subsidiaries of Pegasus pursuant to the provisions of the 1998
indenture.
Acquired Debt means, with respect to any specified person:
(1) Indebtedness of any other person existing at the time such
other person is merged with or into or became a subsidiary of
such specified person, including, without limitation,
indebtedness incurred in connection with, or in contemplation
of, such other person merging with or into or becoming a
subsidiary of such specified person; and
(2) Indebtedness secured by a lien encumbering any asset acquired
by such specified person.
Adjusted Operating Cash Flow means, for the four most recent fiscal
quarters for which internal financial statements are available, operating cash
flow of the person and its restricted subsidiaries less direct broadcast
satellite cash flow for the most recent four-quarter period plus direct
broadcast satellite cash flow for the most recent quarterly period, multiplied
by four.
Affiliate of any specified person means any other person controlling or
controlled by or under common control with the specified person. For purposes of
this definition, control, including the correlative terms "controlling,"
"controlled by" and "under common control with," as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such person,
whether through the ownership of voting securities, by agreement or otherwise.
However, beneficial ownership of 10% or more of the voting securities of a
person shall be deemed to be control.
Asset Sale means:
(1) the sale, lease, conveyance or other disposition of any assets
other than in the ordinary course of business consistent with
past practices. However, the sale, lease, conveyance or other
disposition of all or substantially all of the assets of
Pegasus and its subsidiaries taken as a whole will be governed
by the provisions described above under the caption Repurchase
at the Option of Holders -- Change of Control and/or the
provisions described above under the caption Certain Covenants
-- Merger, Consolidation or Sale of Assets and not by the
provision of the asset sale covenant; and
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(2) the issue or sale by Pegasus or any of its restricted
subsidiaries of equity interests of any of Pegasus' restricted
subsidiaries, in the case of either clause (1) or (2), whether
in a single transaction or a series of related transactions
that have a fair market value in excess of $1.0 million or for
net proceeds in excess of $1.0 million.
The following transactions will not be deemed to be asset sales:
(1) a transfer of assets by Pegasus to a wholly owned restricted
subsidiary of Pegasus or by a wholly-owned restricted
subsidiary of Pegasus to Pegasus or to another wholly owned
restricted subsidiary of Pegasus;
(2) an issuance of equity interests by a wholly-owned restricted
subsidiary of Pegasus to Pegasus or to another wholly-owned
restricted subsidiary of Pegasus; and
(3) a restricted payment that is permitted by the provisions of
the covenant described above under the caption Certain
Covenants -- Restricted Payments.
Asset Swap means an exchange of assets by Pegasus or a restricted
subsidiary of Pegasus for:
(1) one or more permitted businesses;
(2) a controlling equity interest in any person whose assets
consist primarily of one or more permitted businesses; and/or
(3) long-term assets that are used in a permitted business in a
like-kind exchange under Section 1031 of the Internal Revenue
Code or any similar or successor provision of the Internal
Revenue Code.
Bank Facilities means, with respect to Pegasus or any of its restricted
subsidiaries, one or more debt facilities or commercial paper facilities with
banks or other institutional lenders providing for revolving credit loans, term
loans, receivables financing, including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
Capital Lease Obligation means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with generally accepted accounting principles.
Capital Stock means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other
equivalents, however designated, of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests whether general or
limited; and
(4) any other interest or participation that confers on a person
the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing person.
Cash Equivalents means:
(1) United States dollars;
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(2) securities issued or directly and fully guaranteed or insured
by the United States government or any agency or
instrumentality thereof having maturities of not more than six
months from the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic
commercial bank having capital and surplus in excess of $500.0
million and a Thompson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days
or on demand for underlying securities of the types described
in clauses (2) and (3) above entered into with any financial
institution meeting the qualifications specified in clause (3)
above;
(5) commercial paper having the highest rating at acquisition
obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within six months
after the date of acquisition; and
(6) money market funds at least 95% of the assets of which
constitute cash equivalents of the kinds described in clauses
(1) through (5) of this definition.
Certificate of Designation means the certificate of designation,
preferences and relative, participating, optional and other special rights of
preferred stock and qualifications, limitations and restrictions thereof of 12
3/4% Series A cumulative exchangeable preferred stock of Pegasus.
Change of Control means the occurrence of any of the following:
(1) the sale, lease, transfer, conveyance or other disposition,
other than by way of merger or consolidation, in one or a
series of related transactions, of all or substantially all of
the assets of Pegasus and its restricted subsidiaries taken as
a whole to any person as that term is used in Section 13(d)(3)
of the Exchange Act other than the principal or his related
parties;
(2) the adoption of a plan relating to the liquidation or
dissolution of Pegasus;
(3) the consummation of any transaction, including, without
limitation, any merger or consolidation the result of which is
that:
(A) any person, as defined below, becomes the beneficial
owner, as that term is defined in SEC Rules 13d-3 and
13d-5, of more of the voting stock of Pegasus,
measured by voting power rather than number of
shares, than is at the time beneficially owned by
Marshall W. Pagon and his related parties in the
aggregate. For purposes of this definition, a person
is deemed to own all securities that the person has a
right to acquire, whether immediately or at some
later time or upon the happening of an event
(B) Marshall W. Pagon and his related parties
collectively cease to beneficially own, as defined
above, voting stock of Pegasus having at least 30% of
the combined voting power of all classes of voting
stock of Pegasus then outstanding; or
(C) Marshall W. Pagon and his affiliates acquire, in the
aggregate, beneficial ownership as defined above of
more than 66 2/3% of the shares of Class A common
stock at the time outstanding; or
(D) the first day on which a majority of the members of
the board of directors of Pegasus are not continuing
directors.
Closing Date means November 19, 1999, the original date of issuance of
the notes.
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Consolidated Net Income means, with respect to any person for any
period, the aggregate of the net income of such person and its restricted
subsidiaries for such period, on a consolidated basis, determined in accordance
with generally accepted accounting principles, provided that:
(1) the net income, but not loss, of any person that is not a
subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount
of dividends or distributions paid in cash to the referent
person or a wholly-owned restricted subsidiary thereof;
(2) the net income of any person acquired in a pooling of
interests transaction for any period before the date of such
acquisition shall be excluded;
(3) the cumulative effect of a change in accounting principles
shall be excluded; and
(4) the net income of any unrestricted subsidiary shall be
excluded, whether or not distributed to Pegasus or one of its
subsidiaries.
Continuing Directors means, as of any date of determination, any member
of the board of directors of Pegasus who was a member of the board of directors
on the closing date or was nominated for election or elected to the board of
directors with the approval of a majority of the continuing directors who were
members of the board at the time of the nomination or election.
Cumulative Operating Cash Flow means, as of any date of determination,
operating cash flow for Pegasus and its restricted subsidiaries for the period,
taken as one accounting period, from the beginning of the first full month
commencing after the closing date to the end of the most recently ended fiscal
quarter for which internal financial statements are available at the date of
determination, plus all cash dividends received by Pegasus or a wholly-owned
restricted subsidiary of Pegasus from any unrestricted subsidiary of Pegasus or
wholly-owned restricted subsidiary of Pegasus to the extent that such dividends
are not included in the calculation of permitted restricted payments under
subparagraph (3) of the second paragraph of the covenant described under the
caption Certain Covenants -- Restricted Payments by virtue of clause (3) of such
subparagraph.
Cumulative Total Interest Expense means, with respect to Pegasus and
its restricted subsidiaries, as of any date of determination, total interest
expense for the period, taken as one accounting period, from the beginning of
the first full fiscal month commencing after the closing date to the end of the
most recently ended fiscal quarter for which internal financial statements are
available at such date of determination.
Digital Television Services Credit Facility means the Second Amended
and Restated Credit Agreement, dated as of July 30, 1997, by and among Digital
Television Services, LLC, CIBC Oppenheimer Corp., as arranger, Morgan Guaranty
Trust Company of New York, as syndication agent, Fleet National Bank, as
documentation agent, and Canadian Imperial Bank of Commerce, as administrative
agent, as amended through the closing date.
Direct Broadcast Satellite Cash Flow means income from operations
before depreciation, amortization and non-cash incentive compensation to the
extent deducted in arriving at income from operations for the satellite segment
determined on a basis consistent with the segment data contained in Pegasus'
consolidated audited financial statements.
Disqualified Stock means any capital stock that, by its terms or by the
terms of any security into which it is convertible or for which it is
exchangeable, or upon the happening of any event, matures or is mandatorily
redeemable, under a sinking fund obligation or otherwise, or is redeemable at
the option of the holder thereof, in whole or in part, on or before the date
that is 91 days after the date on which the notes mature unless, in any such
case, the issuer's obligation to pay, purchase or redeem such capital stock is
expressly conditioned on its ability to do so in compliance with the provisions
of the covenant described under the caption Certain Covenants -- Restricted
Payments.
Eligible Indebtedness means any indebtedness other than indebtedness in
the form of, or represented by, bonds or other securities or any guarantee
thereof and indebtedness which is, or may be, quoted, listed or ordinarily
purchased and sold on any stock exchange, automated trading system or
over-the-counter or other securities market, including, without prejudice to the
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generality of the foregoing, the market for securities eligible for resale under
SEC Rule 144A.
Equity Interests means capital stock and all warrants, options or other
rights to acquire capital stock, but excluding any debt security that is
convertible into, or exchangeable for, capital stock.
Existing Credit Facilities means the Digital Television Services credit
facility and the Pegasus Media & Communications, Inc. credit facility.
Existing Indebtedness means all indebtedness of Pegasus and its
subsidiaries other than indebtedness under the existing credit facilities in
existence on the closing date, until such amounts are repaid.
Fair Market Value means, with respect to assets or aggregate net
proceeds having a fair market value
(a) of less than $5.0 million, the fair market value of such
assets or proceeds determined in good faith by the board of
directors of Pegasus including a majority of the independent
directors thereof and evidenced by a board resolution; and
(b) equal to or in excess of $5.0 million, the fair market value
of such assets or proceeds as determined by an investment
banking firm of national standing.
However, the fair market value of the assets purchased in an
arm's-length transaction by an affiliate of Pegasus, other than a subsidiary,
from a third party that is not also an affiliate of Pegasus or such purchaser
and contributed to Pegasus within five business days of the consummation of the
acquisition of the assets by the affiliate shall be deemed to be the aggregate
consideration paid by the affiliate, which may include the fair market value of
any non-cash consideration to the extent that the valuation requirements of this
definition are complied with as to any such non-cash consideration.
GAAP means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the closing date.
Global Notes means one or more notes in registered, global form without
interest coupons representing the notes that are being exchanged in this
offering, and which have been registered with The Depository Trust Company or
its nominee.
Government Securities means direct obligations of, or obligations
guaranteed by, the United States for the payment of which guarantee or
obligations the full faith and credit of the United States is pledged.
Guarantee means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner, including, without limitation, co-borrowing
arrangements, letters of credit and reimbursement agreements in respect thereof,
of all or any part of any indebtedness.
Hedging Obligations means, with respect to any person, the obligations
of such person under interest rate swap agreements, interest rate cap agreements
and interest rate collar agreements and other agreements or arrangements
designed to protect such person against fluctuations in interest rates.
Indebtedness means, with respect to any person, any indebtedness of
such person, whether or not contingent:
o in respect of borrowed money; or
o evidenced by bonds, notes, debentures or similar instruments,
or letters of credit or reimbursement agreements in respect of
these instruments; or
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o representing any capital lease obligations or the balance deferred
and unpaid of the purchase price of any property; or
o representing any hedging obligations.
However, indebtedness does not include any balance that constitutes an accrued
expense or trade payable, if and to the extent any of the foregoing
indebtedness, other than letters of credit and hedging obligations, would appear
as a liability upon a balance sheet of the person prepared in accordance with
generally accepted accounting principles. It also does not include indebtedness
of others secured by a lien on any asset of the person whether or not the
indebtedness is assumed by the person and, to the extent not otherwise included,
the guarantee by the person of any indebtedness of any other person. The amount
of indebtedness of any person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date. However, the amount outstanding at
any time of any indebtedness issued with original issue discount is the full
amount of the indebtedness less the remaining unamortized portion of the
original issue discount of such indebtedness at the time as determined in
conformity with generally accepted accounting principles. The amount of any
indebtedness outstanding as of any date shall be:
o the accreted value thereof, in the case of any indebtedness issued
with original issue discount; and
o the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other
indebtedness.
Indebtedness to Adjusted Operating Cash Flow Ratio means, as of any
date of determination, the ratio of:
(a) the aggregate principal amount of all outstanding
indebtedness of a person and its restricted subsidiaries as of the date on a
consolidated basis, plus the aggregate liquidation preference of all outstanding
preferred stock of the restricted subsidiaries of the person as of the date
excluding qualified subsidiary stock and any such preferred stock held by the
person or a wholly-owned restricted subsidiary of the person, plus the aggregate
liquidation preference or redemption amount of all disqualified stock of the
person excluding any disqualified stock held by the person or a wholly-owned
restricted subsidiary of the person as of the date of determination to
(b) adjusted operating cash flow of the person and its
restricted subsidiaries for the most recent four-quarter period for which
internal financial statements are available determined on a pro forma basis
after giving effect to all acquisitions and dispositions of assets, disregarding
clause (3) of the definition of "consolidated net income," including, without
limitation, asset swaps made by the person and its restricted subsidiaries since
the beginning of such four-quarter period through the date of determination as
if the acquisitions and dispositions had occurred at the beginning of the
four-quarter period.
Independent Director means a member of the board of directors who is
neither an officer nor an employee of Pegasus or any of its affiliates.
Investments means, with respect to any person, all investments by the
person in other persons and their affiliates in the forms of
o direct or indirect loans, including guarantees of indebtedness or
other obligations,
o advances or capital contributions, excluding commission, travel and
similar advances to officers and employees made in the ordinary
course of business,
o purchases or other acquisitions for consideration of indebtedness,
o equity interests or other securities, and
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o all other items that are or would be classified as investments on a
balance sheet prepared in accordance with generally accepted
accounting principles.
However, an acquisition of assets, equity interests or other securities
by Pegasus for consideration consisting of common equity securities, or
preferred stock which is not disqualified stock, of Pegasus shall not be deemed
to be an investment.
Lien means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of the asset,
whether or not filed, recorded or otherwise perfected under applicable law. It
also means any conditional sale or other title retention agreement, any lease in
the nature of such a sale or agreement, any option or other agreement to sell or
give a security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code or equivalent statutes of any
jurisdiction.
Net Income means, with respect to any person, the net income or loss of
the person, determined in accordance with generally accepted accounting
principles and before any reduction in respect of preferred stock dividends,
excluding, however:
(1) any gain, but not loss, together with any related provision for
taxes on the gain, but not loss, realized in connection with any
asset sale, including, without limitation, dispositions under sale
and leaseback transactions, or the disposition of any securities by
the person or any of its restricted subsidiaries or the
extinguishment of any indebtedness of the person or any of its
restricted subsidiaries; and
(2) any extraordinary or nonrecurring gain but not loss, together with
any related provision for taxes on such extraordinary or
nonrecurring gain but not loss.
Net Proceeds means the aggregate cash proceeds received by Pegasus or
any of its restricted subsidiaries in respect of any asset sale, including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any asset sale, net of the direct costs
relating to the asset sale. Direct costs include without limitation,
o legal, accounting, investment banking fees, and sales commissions
and any relocation expenses incurred as a result thereof,
o taxes paid or payable as a result thereof after taking into account
any available tax credits or deductions and any tax sharing
arrangements,
o amounts required to be applied to the repayment of indebtedness in
connection with the asset sale, and
o any reserve for adjustment in respect of the sale price of the
asset or assets established in accordance with generally accepted
accounting principles.
Non-Cash Incentive Compensation means incentive compensation paid to
any officer of Pegasus or any of its subsidiaries in the form of Class A common
stock of Pegasus or options to purchase Class A common stock of Pegasus under
the Pegasus restricted stock plan and the Pegasus 1996 stock option plan.
Non-Recourse Debt means indebtedness:
(1) as to which neither Pegasus nor any of its restricted subsidiaries:
(a) provides credit support of any kind, including any
undertaking, agreement or instrument that would
constitute indebtedness;
(b) is liable, as a guarantor or otherwise; or
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(c) constitutes the lender; and
(2) no default with respect to which, including any rights that the
holders of the indebtedness may have to take enforcement action
against an unrestricted subsidiary, would permit upon notice, lapse
of time or both any holder of any other indebtedness of Pegasus or
any of its restricted subsidiaries to declare a default on the
other indebtedness or cause the payment thereof to be accelerated
or payable before its stated maturity; and
(3) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of Pegasus or any
of its restricted subsidiaries.
Obligations means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any indebtedness.
Operating Cash Flow means, with respect to any person for any period,
the consolidated net income of the person for such period, plus:
(1) extraordinary net losses and net losses on sales of assets outside
the ordinary course of business during the period, to the extent
the losses were deducted in computing such consolidated net income,
plus
(2) provision for taxes based on income or profits, to the extent such
provision for taxes was included in computing such consolidated net
income, and any provision for taxes used in computing the net
losses under clause (1) above, plus
(3) consolidated interest expense of the person and its subsidiaries
for the period, whether paid or accrued and whether or not
capitalized, including, without limitation
o amortization of original issue discount,
o non-cash interest payments,
o the interest component of any deferred payment
obligations,
o the interest component of all payments associated with
capital lease obligations,
o commissions, discounts and other fees and charges incurred
in respect of letter of credit or bankers' acceptance
financings, and
o net payments if any under hedging obligations, to the
extent that any expense was deducted in computing the
consolidated net income, plus
(4) depreciation, amortization, including amortization of goodwill
and other intangibles but excluding amortization of prepaid
cash expenses that were paid in a prior period and other
non-cash charges, excluding any non-cash charge to the extent
that it represents an accrual of or reserve for cash charges
in any future period or amortization of a prepaid cash expense
that was paid in a prior period, of the person and its
subsidiaries for the period to the extent that the
depreciation, amortization and other non-cash charges were
deducted in computing the consolidated net income, plus
(5) non-cash incentive compensation to the extent the compensation
expense was deducted in computing the consolidated net income
and to the extent not included in clause (4) of this
definition; and
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less all non-cash income for the period, excluding any non-cash income to the
extent it represents an accrual of cash income in any future period or
amortization of cash income received in a prior period.
Other Debt that Ranks Equally in Right of Payment to the Notes means
senior indebtedness of Pegasus or any subsidiary guarantor permitted by the
covenant described under the caption Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock, which is equal in right of payment
with the notes or any subsidiary guarantee.
Pegasus Media & Communications, Inc. Credit Facility means the credit
agreement, dated as of December 10, 1997, by and among Pegasus Media &
Communications, Inc., the several lenders from time to time party thereto and
Bankers Trust Company, as agent for the lenders, as amended through November 30,
1998.
Pegasus Media & Communications, Inc. Notes means Pegasus Media &
Communications, Inc.'s 12 1/2% Series B senior subordinated notes due 2005.
Pegasus Satellite Television of Virginia, Inc. Preferred Stock means
the Series A preferred stock, par value $1.00 per share, of Pegasus Satellite
Television of Virginia, Inc.
Permitted Businesses means:
(1) any media or communications business, including but not
limited to, any broadcast television station, cable franchise
or other business in the television broadcasting, cable or
direct-to-home satellite television industries; and
(2) any business reasonably related or ancillary to any of the
foregoing businesses.
Permitted Investments means:
(1) any investments in Pegasus or in a wholly-owned restricted
subsidiary of Pegasus;
(2) any investments in cash equivalents;
(3) Investments by Pegasus or any restricted subsidiary of Pegasus
in a person, if as a result of the investment:
o the person becomes a wholly-owned restricted
subsidiary of Pegasus or
o such person is merged, consolidated or
amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is
liquidated into, Pegasus or a wholly-owned
restricted subsidiary of Pegasus;
(4) Investments made as a result of the receipt of non-cash
consideration from an asset sale that was made under and in
compliance with the provisions of the covenant described under
the caption Repurchase at the Option of Holders -- Asset
Sales; and
(5) other investments made since the date of the indenture
measured as of the time made and without giving effect to
subsequent changes in value that do not exceed an amount equal
to $15.0 million plus, to the extent any such investments are
sold for cash or are otherwise liquidated or repaid for cash,
any gains less any losses realized on the disposition of such
investments.
Permitted Liens means:
(1) Liens securing term loans, revolving borrowings, letters of
credit or other obligations under any bank facility;
(2) Liens securing eligible indebtedness of a subsidiary that was
permitted to be incurred under the indenture;
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(3) Liens on property of a person existing at the time the person
is merged into or consolidated with Pegasus or any subsidiary
of Pegasus, if such liens were not created in contemplation of
the merger or consolidation and do not extend to any assets
other than those of the person merged into or consolidated
with Pegasus or any restricted subsidiary of Pegasus;
(4) Liens on property existing at the time of acquisition thereof
by Pegasus or any subsidiary of Pegasus, if the liens were not
created in contemplation of the acquisition;
(5) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations
of a like nature incurred in the ordinary course of business;
(6) Liens existing on the closing date;
(7) Liens to secure indebtedness represented by capital lease
obligations, mortgage financings or purchase money obligations
permitted by clause (7) of the third paragraph of the covenant
described under the caption Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock, covering only
the assets acquired with such indebtedness;
(8) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and
diligently concluded; provided that any reserve or other
appropriate provision as shall be required in conformity with
generally accepted accounting principles shall have been made
therefor;
(9) Liens incurred in the ordinary course of business of Pegasus
or any subsidiary of Pegasus with respect to obligations that
do not exceed $1.5 million at any one time outstanding;
(10) Liens on deposits or cash equivalents made under legally
binding agreements or non-binding letters of intent to acquire
assets, or the capital stock of persons owning such assets, in
an amount not to exceed 10% of the purchase price of such
assets or capital stock, if the assets to be acquired or the
capital stock of persons owning the assets will be owned by
Pegasus or a restricted subsidiary of Pegasus upon
consummation of the contemplated acquisition;
(11) Liens encumbering deposits or cash equivalents made to secure
obligations of Pegasus to repurchase capital stock of Pegasus
pledged to secure obligations of employees of Pegasus in an
aggregate amount not to exceed $5.0 million at any time
outstanding; and
(12) Liens on assets of or equity interests in unrestricted
subsidiaries that secure non-recourse debt of unrestricted
subsidiaries.
Permitted Refinancing Debt means any indebtedness of Pegasus or any of
its restricted subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund other
indebtedness of Pegasus or any of its restricted subsidiaries, if:
(1) the principal amount or accreted value, if applicable, of such
permitted refinancing debt does not exceed the principal
amount of or accreted value, if applicable; plus
o accrued interest on, the indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded; plus
o the amount of reasonable expenses incurred in connection
therewith; and
o the amount of any premium required to be paid in
connection with the refinancing under the terms of the
refinancing or deemed by Pegasus or the restricted
subsidiary necessary to be paid to effectuate the
refinancing;
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(2) the permitted refinancing debt has a final maturity date not
earlier than the final maturity date of, and has a weighted
average life to maturity equal to or greater than the weighted
average life to maturity of, the indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded;
(3) if the indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of
payment to the notes, the permitted refinancing debt has a
final maturity date later than the final maturity date of the
notes, and is subordinated in right of payment to the notes on
terms at least as favorable to the holders of notes as those
contained in the documentation governing the indebtedness
being extended, refinanced, renewed, replaced, defeased or
refunded;
(4) the indebtedness is incurred either by Pegasus or by the
restricted subsidiary who is the obligor on the indebtedness
being extended, refinanced, renewed, replaced, defeased or
refunded; and
(5) if the permitted refinancing debt is incurred by a restricted
subsidiary that is not a subsidiary guarantor, such permitted
refinancing debt constitutes eligible indebtedness.
Qualified Subsidiary Stock means capital stock of a subsidiary of
Pegasus which by its terms:
(1) does not mature, or is not mandatorily redeemable, under a
sinking fund obligation or otherwise, and is not redeemable at
the option of a holder, in whole or in part, before December
1, 2007, in each case, whether automatically or upon the
happening of any event, unless, in any such case, the issuer's
obligation to pay, purchase or redeem such capital stock is
expressly conditioned on its ability to do so in compliance
with the provisions of the covenant described under the
caption Certain Covenants - Restricted Payments;
(2) is automatically exchangeable into shares of capital stock of
Pegasus that is not disqualified stock on the earlier to occur
of (a) the date of an event of default and (b) December 1,
2005;
(3) has no voting or remedial rights; and
(4) does not permit the payment of cash dividends before December
1, 2006, unless the issuer's ability to pay cash dividends is
expressly conditioned on its ability to do so in compliance
with the provisions of the covenant described under the
caption Certain Covenants -- Restricted Payments. However, for
all purposes under the indenture, qualified subsidiary stock
shall be deemed to include the Pegasus Satellite Television of
Virginia, Inc. preferred stock.
Related Party with respect to Marshall W. Pagon means:
(1) any immediate family member of Marshall W. Pagon or
(2) any trust, corporation, partnership or other entity,
more than 50% of the voting equity interests of which
are owned and controlled by Marshall W. Pagon and/or
other persons referred to above in clause (1).
For purposes of this definition:
o Control has the meaning specified in the definition of
"affiliate" contained under the caption Certain Definitions.
In addition, Marshall W. Pagon's estate shall be deemed to be
a related party until such time as the estate is distributed
in accordance with Marshall W. Pagon's will or applicable
state law; and
o Immediate Family Member means spouse, parent, step-parent,
child, sibling or step-sibling.
Restricted Investment means an investment other than a permitted
investment.
Restricted Subsidiary of a person means any subsidiary of the person
that is not an unrestricted subsidiary.
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Satellite Segment means the business involved in the marketing of video
and audio programming and data information services through transmission media
consisting of space-based satellite broadcasting services, the assets related to
the conduct of this business held by Pegasus and its restricted subsidiaries on
the closing date, plus all other assets acquired by Pegasus or any of its
restricted subsidiaries that are directly related to this business. Satellite
segment does not include the terrestrial television broadcasting business and
related assets and the cable television business and related assets. However,
any assets acquired by Pegasus or any of its restricted subsidiaries after the
closing date that are not directly related to the Satellite segment, as
described above, shall not be included for purposes of this definition.
Series A Preferred Stock means Pegasus' 12 3/4% Series A cumulative
exchangeable preferred stock.
Significant Subsidiary means any subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
under the Securities Act, as such regulation is in effect on the closing date.
Split Dollar Agreement means the split dollar agreement between Pegasus
and Nicholas A. Pagon, Holly T. Pagon and Michael B. Jordan, as trustees of an
insurance trust established by Marshall W. Pagon, as in effect on the closing
date.
Stated Maturity means, with respect to any interest or principal on any
series of indebtedness, the date on which the payment of interest or principal
was scheduled to be paid in the original documentation governing the
indebtedness, and shall not include any contingent obligations to repay, redeem
or repurchase any interest or principal before the date originally scheduled for
the payment thereof.
Subordinated Exchange Note Indenture means the indenture filed as an
exhibit to the certificate of designation which would govern the subordinated
exchange notes, if issued, as the same may be amended, but without giving effect
to any amendment that materially alters the economic terms of the indenture.
Subordinated Exchange Notes means Pegasus' 12 3/4% senior subordinated
exchange notes due 2007 issuable under the subordinated exchange note indenture
in exchange for Pegasus' Series A preferred stock.
Subsidiary means, with respect to any person:
(1) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of capital
stock entitled to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled by the
person or one or more of the other subsidiaries of that person
or a combination thereof; and
(2) any partnership
(a) the sole general partner or the managing general partner
of which is such person or a subsidiary of such person, or
(b) the only general partners of which are such person or of
one or more subsidiaries of such person, or any combination
thereof.
Subsidiary Guarantor means any restricted subsidiary that shall have
guaranteed, under a supplemental indenture and the requirements of the
indenture, the payment of all principal of, and interest and premium, if any,
on, the notes and all other amounts payable under the notes or the indenture,
which guarantee shall be equal or senior to all indebtedness of such restricted
subsidiary.
Total Interest Expense means, with respect to any person for any
period, the sum of:
(1) the consolidated interest expense of the person and its
restricted subsidiaries for the period, whether paid or
accrued, including, without limitation, amortization of
original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the
interest component of all payments associated with capital
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lease obligations, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments, if any, under hedging
obligations; and
(2) the consolidated interest expense of such person and its
restricted subsidiaries that was capitalized during the
period, to the extent such amounts are not included in clause
(1) of this definition; and
(3) any interest expense for such period on indebtedness of
another person that is guaranteed by the person or one of its
restricted subsidiaries or secured by a lien on assets other
than equity interests in unrestricted subsidiaries securing
indebtedness of unrestricted subsidiaries of the person or one
of its restricted subsidiaries whether or not the guarantee or
lien is called upon; and
(4) all cash dividend payments during such period on any series of
preferred stock of a restricted subsidiary of the person.
Unrestricted Subsidiary means any subsidiary that is designated by the
board of directors as an unrestricted subsidiary under a board resolution, but
only if the subsidiary:
(1) has no indebtedness other than non-recourse debt;
(2) is not party to any agreement, contract, arrangement or
understanding with Pegasus or any restricted subsidiary of
Pegasus unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to Pegasus
or such restricted subsidiary than those that might be
obtained at the time from persons who are not affiliates of
Pegasus;
(3) is a person with respect to which neither Pegasus nor any of
its restricted subsidiaries has any direct or indirect
obligation to:
o subscribe for additional equity interests or
o maintain or preserve such person's financial
condition or to cause such person to achieve any
specified levels of operating results;
(4) has not guaranteed or otherwise provided credit support for
any indebtedness of Pegasus or any of its restricted
subsidiaries; and
(5) has at least one executive officer that is not a director or
executive officer of Pegasus or any of its restricted
subsidiaries. Pegasus shall evidence any such designation made
by the board of directors at a time when any notes are
outstanding by filing with First Union National Bank a
certified copy of the board resolution giving effect to the
designation and an officers' certificate certifying that the
designation complied with the foregoing conditions and was
permitted by the provisions of the covenant described under
the caption Certain Covenants - Restricted Payments.
If, at any time, any unrestricted subsidiary would fail to meet the
foregoing requirements as an unrestricted subsidiary, it shall thereafter cease
to be an unrestricted subsidiary for purposes of the indenture and any
indebtedness of the subsidiary shall be deemed to be incurred by a restricted
subsidiary of Pegasus as of that date. If the indebtedness is not permitted to
be incurred as of that date under the provisions of the covenant described under
the caption Certain Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock. Pegasus shall be in default of the covenant. If an unrestricted
subsidiary ceases to meet the requirement set forth in clause (5) of this
definition, the unrestricted subsidiary shall have 60 days to meet the
requirement before the unrestricted subsidiary shall cease to be an unrestricted
subsidiary.
The board of directors of Pegasus may at any time designate any
unrestricted subsidiary to be a restricted subsidiary. However, the designation
shall be deemed to be an incurrence of indebtedness by a restricted subsidiary
of Pegasus of any outstanding indebtedness of the unrestricted subsidiary and
the designation shall be permitted only if:
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o the indebtedness is permitted under the covenant described
under the caption Certain Covenants-- Incurrence of
Indebtedness and Issuance of Preferred Stock; and
o no default or event of default would be in existence following
the designation.
Voting Stock means with respect to any specified person, capital stock
with voting power, under ordinary circumstances and without regard to the
occurrence of any contingency, to elect the directors or other managers or
trustees of the person.
Weighted Average Life to Maturity means, when applied to any
indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying
(a) the amount of each then remaining
installment, sinking fund, serial maturity
or other required payments of principal,
including payment at final maturity, by
(b) the number of years calculated to the
nearest one-twelfth that will elapse between
that date and the making of the payment, by
(2) the then outstanding principal amount of such indebtedness.
Wholly-Owned Restricted Subsidiary of any person means a restricted
subsidiary of such person all of the outstanding capital stock other than
qualified subsidiary stock or other ownership interests of which other than
directors' qualifying shares shall at the time be owned by the person and/or by
one or more wholly-owned restricted subsidiaries of the person.
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Material United States Federal Income Tax Consequences
The following is a general discussion of the material U.S. federal
income and estate tax consequences of the acquisition, ownership and disposition
of notes by an initial beneficial owner of notes that, for U.S. federal income
tax purposes, is not a U.S. person. This discussion is based upon the U.S.
federal tax law now in effect, which is subject to change, possibly
retroactively. For purposes of this discussion, a U.S. person means a citizen or
resident of the U.S., a corporation, partnership or other entity created or
organized in the U.S. or under the laws of the U.S. or of any political
subdivision thereof, an estate whose income is includible in gross income for
U.S. federal income tax purposes regardless of its source or a trust, if a U.S.
court is able to exercise primary supervision over the administration of the
trust and one or more U.S. fiduciaries have the authority to control all
substantial decisions of the trust. The tax treatment of the owners of the notes
may vary depending upon their particular situations. U.S. persons acquiring the
notes are subject to different rules from those discussed below. In addition,
certain other note owners, including insurance companies, tax exempt
organizations, financial institutions and broker-dealers, may be subject to
special rules not discussed below. Prospective investors are urged to consult
their tax advisors regarding the U.S. federal tax consequences of acquiring,
owning and disposing of notes, as well as any tax consequences that may arise
under the laws of any foreign, state, local or other taxing jurisdiction. New
final regulations dealing with withholding tax on income paid to foreign persons
and related matters were recently issued by the Treasury Department. In general,
the new withholding regulations do not significantly alter the substantive
withholding and information reporting requirements, but unify current
certification procedures and forms and clarify reliance standards. The new
withholding regulations are generally currently effective for payments made
after December 31, 1999, subject to certain transition rules. The new
withholding regulations are quite complex. Non-U.S. holders are strongly urged
to consult their own tax advisors with respect to the new withholding
regulations.
Interest
Interest we pay to a non-U.S. holder will not be subject to U.S.
federal income or withholding tax if the interest is not effectively connected
with the conduct of a trade or business within the U.S. by such non-U.S. holder
(or, if different, the non-U.S. beneficial owner of the rate) and the non-U.S.
holder and, if different, the non-U.S. beneficial owner:
o does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of
Pegasus;
o is not a controlled foreign corporation with respect to
which Pegasus is a related person within the meaning of
Section 864(d)(4) of the Internal Revenue Code; and
o certifies, under penalties of perjury, that the beneficial
owner is not a U.S. person and provides the owner's name
and address. The current regulations provide that the
statement must be received no later than the calendar year
in which the payment is made. The new withholding
regulations require the statement to be made on Form W-8
or approved substitute before payment. Certain special
procedures are provided in the new withholding regulations
for payments through qualified intermediaries or to
entities that are classified as partnerships for U.S.
federal income tax purposes.
Gain on Disposition
A non-U.S. note owner will generally not be subject to U.S. federal income tax
on gain recognized on a sale, redemption or other disposition of a note unless:
o the gain is effectively connected with the conduct of a
trade or business within the U.S. by the non-U.S. owner or
o in the case of a non-U.S. owner who is a nonresident alien
individual and holds the note as a capital asset, such
person is present in the U.S. for 183 or more days in the
taxable year and certain other requirements are met.
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Federal Estate Taxes
If interest on the notes is exempt from withholding of U.S. federal
income tax under the rules described above, the notes will not be included in
the estate of a deceased non-U.S. owner for U.S. federal estate tax purposes.
Information Reporting and Backup Withholding
In the case of payments of interest to non-U.S. holders, Treasury
regulations provide that the 31% backup withholding tax and certain information
reporting will not apply to such payments with respect to which either the
requisite certification, as described above, has been received or an exemption
has otherwise been established, if neither we nor our payment agent has actual
knowledge that the owner is a U.S. person or that the conditions of any other
exemption are not in fact satisfied. Information reporting and backup
withholding requirements will apply to the gross proceeds paid to a non-U.S.
holder on the disposition of the notes by or through a U.S. office of a U.S. or
foreign broker, unless the owner certifies to the broker under penalties of
perjury as to his name, address and status as a foreign person or the owner
otherwise establishes an exemption. Information reporting requirements, but not
backup withholding, will also apply to a payment of the proceeds of a
disposition of the notes by or through a foreign office of a U.S. broker or
foreign brokers with certain types of relationships to the U.S. unless the
broker has documentary evidence in its file that the owner of the notes is not a
U.S. person, and the broker has no actual knowledge to the contrary, or the
owner establishes an exception. Neither information reporting nor backup
withholding generally will apply to a payment of the proceeds of a disposition
of the notes by or through a foreign office of a foreign broker not subject to
the preceding sentence.
The new withholding regulations provide that to the extent a non-U.S.
holder certifies on Form W-8 or a permitted substitute form as to the owner's
status as a foreign person, the backup withholding provisions and the
information reporting provisions will generally not apply. If a non-U.S. holder
fails to provide such certification, it may be subject to certain information
reporting and the 31% backup withholding tax.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the non-U.S.
owner's U.S. federal income tax liability, provided that the required
information is furnished to the Internal Revenue Service.
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Plan of Distribution
Each broker-dealer that receives new notes for its own account under
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of the new notes. A broker-dealer may use this
prospectus, as it may be amended or supplemented, in connection with the resales
of new notes received in exchange for old notes where the old notes were
acquired as a result of market-making activities or other trading activities. We
have agreed that for a period of one year after the date on the cover of this
prospectus, we will make this prospectus, as amended or supplemented, available
to any broker-dealer that requests such documents in the letter of transmittal
for use in connection with any such resale.
New notes received by broker-dealers for their own account under the
exchange offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the new notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any new notes. Any broker-dealer that resells new notes that were
received by it for its own account under the exchange offer and any broker or
dealer that participates in a distribution of new notes may be deemed to be an
underwriter within the meaning of the Securities Act and any profit on any
resale of new notes and any commissions or concessions received by any persons
may be deemed to be underwriting compensation under the Securities Act. The
letter of transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an underwriter within the meaning of the Securities Act.
We have agreed to pay expenses incurred with the exchange offer and the
performance of our other obligations under a registration rights agreement. We
have also agreed to indemnify the holders, including any broker-dealers, and
certain parties related to the holders against certain liabilities, including
liabilities under the Securities Act.
By accepting this exchange offer, each broker-dealer that receives the
new notes under the exchange offer agrees that, after receiving notice from us
of any event that makes any statement in this prospectus untrue in any material
respect or which requires us to make any change in this prospectus to make the
statements therein not misleading, the broker will not use this prospectus until
we have amended or supplemented it to correct the misstatement or omission and
have furnished copies of the amended or supplemented prospectus to the
broker-dealer.
-62-
<PAGE>
Legal Matters
Drinker Biddle & Reath LLP, counsel for Pegasus, has passed upon the
validity of the new notes. Michael B. Jordan, a partner of Drinker Biddle &
Reath LLP, is an Assistant Secretary of Pegasus.
Experts
The financial statements as of December 31, 1998 and 1997 and for each
of the three years in the period ended December 31, 1998 incorporated by
reference in this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
-63-
<PAGE>
================================================================================
We have not authorized any dealer, salesperson or any other person to give any
information or represent anything not contained in this offering memorandum. You
must not rely on any unauthorized information. This offering memorandum does not
offer to sell or buy any notes in any jurisdiction where it is unlawful.
----------------------
Table of Contents
Prospectus Summary..............................2
Where You Can Find More
Information.....................................8
Risk Factors....................................9
Ratio of Earnings to Fixed Charges.............17
Use of Proceeds................................17
The Exchange Offer ............................18
Material United State Federal Income Tax
Consequences of the Exchange Offer.............25
Description of Notes...........................26
Material United States Federal
Income Tax Consequences.....................60
Plan of Distribution...........................62
Legal Matters..................................63
Experts........................................63
================================================================================
================================================================================
Pegasus Communications Corporation
Exchange of Registered
12 1/2% Series B senior notes due 2007
for any and all outstanding
12 1/2% Series A senior notes due 2007
----------------------------------------
PROSPECTUS
_________, 2000
================================================================================
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Registrant's Amended and Restated Certificate of
Incorporation provides that a director of the Registrant shall have no personal
liability to the Registrant or to its stockholders for monetary damages for
breach of fiduciary duty as a director except to the extent that Section
102(b)(7) (or any successor provision) of the Delaware General Corporation Law,
as amended from time to time, expressly provides that the liability of a
director may not be eliminated or limited.
Article 6 of the Registrant's By-Laws provides that any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director or officer of the Registrant, or is or was serving while a
director of office of the Registrant at the request of the Registrant as a
director, officer, employee, agent, fiduciary or other representative of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, shall be indemnified by the Registrant against expenses (including
attorneys' fees), judgments, fines, excise taxes and amounts paid in settlement
actually and reasonably against expenses (including attorneys' fees), judgments,
fines, excise taxes and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding to
the full extent permissible under Delaware law. Article 6 also provides that any
person who is claiming indemnification under the Registrant's By-Laws is
entitled to advances from the Registrant for the payment of expenses incurred by
such person in the manner and to the full extent permitted under Delaware law.
The Registrant maintains directors' and officers' liability
insurance.
Item 21. Exhibits and Financial Statement Schedules.
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- ------- -----------------------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation (incorporated by reference herein to Exhibit
3.1 to Pegasus' Form 10-Q dated August 13, 1999).
3.2 Bylaws (incorporated by reference herein to Exhibit 3.2 to Pegasus' registration statement on
Form S-3 (File No. 333-70949)).
4.1* Indenture, dated as of November 19, 1999, by and between Pegasus and First Union National Bank,
as Trustee, relating to the 12 1/2% Senior Notes due 2007.
4.2* Form of Note (included in Exhibit 4.1).
5.1* Opinion of Drinker Biddle & Reath LLP.
8.1* Opinion of Drinker Biddle & Reath LLP concerning tax matters.
10.1* Registration Rights Agreement, dated as of November 19, 1999, among Pegasus Communications Corporation
and the Holders of its 12 1/2% Series A Senior Notes due 2007.
21 Subsidiaries of registrant (incorporated by reference herein to Exhibit 21.1 to Pegasus'
registration statement on Form S-3 (File No. 333-70949)).
23.1* Consent of Drinker Biddle & Reath LLP (included in Exhibits 5.1 and 8.1).
23.2* Consent of PricewaterhouseCoopers LLP.
24.1* Powers of Attorney (included on Signatures and Powers of Attorney).
25.1* Form T-1, Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of
First Union National Bank as Trustee.
99.1* Form of Letter of Transmittal and related documents to be used in conjunction with the Exchange
Offer.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Filed herewith.
<PAGE>
Item 22. Undertakings.
The registrant undertakes that:
(1) It will respond to requests for information that is incorporated by
reference into the prospectus within one business day of receipt of such
request, and it will send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed after the effective date of the registration statement through the date of
responding to the request.
(2) It will supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
(3) For purposes of determining the liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities and Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that is has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Bala Cynwyd, Commonwealth of Pennsylvania, on
January 7, 2000.
PEGASUS COMMUNICATIONS CORPORATION
By: /s/ Ted S. Lodge
-------------------------
Ted S. Lodge
Senior Vice President
Date: January 7, 2000
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby constitutes and appoints Marshall W. Pagon, Robert N. Verdecchio and Ted
S. Lodge as his or her attorneys-in-fact and agents, with full power of
substitution for him or her in any and all capacities, to sign any or all
amendments or post-effective amendments to the Registration Statement, or any
Registration Statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to
file the same, with exhibits thereto and other documents in connection therewith
or in connection with the registration of the Notes under the Securities
Exchange Act of 1934, as amended, with the Securities and Exchange Commission,
granting unto each of such attorneys-in-fact the agents full power and authority
to do and perform each and every act and thing requisite and necessary in
connection with such matters and hereby ratifying and confirming all that each
of such attorneys-in-fact and agents or his or her substitutes may do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Marshall W. Pagon President, Chief Executive Officer, January 7, 2000
- ---------------------------------------------- Chairman of the Board and Director
Marshall W. Pagon
(Principal Executive Officer)
/s/ M. Kasin Smith
- ----------------------------------------------
M. Kasin Smith Vice President and Acting Chief January 7, 2000
(Principal Financial and Accounting Officer) Financial Officer
/s/ Robert N. Verdecchio Director January 7, 2000
- ----------------------------------------------
Robert N. Verdecchio
/s/ James J. McEntee, III Director January 7, 2000
- ----------------------------------------------
James J. McEntee, III
/s/ Mary C. Metzger Director January 7, 2000
- ----------------------------------------------
Mary C. Metzger
/s/ Donald W. Weber Director January 7, 2000
- ----------------------------------------------
Donald W. Weber
/s/ Michael C. Brooks Director January 7, 2000
- ----------------------------------------------
Michael C. Brooks
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Harry F. Hopper, III Director January 7, 2000
- ----------------------------------------------
Harry F. Hopper, III
/s/ Willaim P. Phoenix Director January 7, 2000
- ----------------------------------------------
William P. Phoenix
/s/ Riordon B. Smith Director January 7, 2000
- ----------------------------------------------
Riordon B. Smith
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- ------- -----------------------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation (incorporated by reference herein to Exhibit
3.1 to Pegasus' Form 10-Q dated August 13, 1999).
3.2 Bylaws (incorporated by reference herein to Exhibit 3.2 to Pegasus' registration statement on
Form S-3 (File No. 333-70949)).
4.1* Indenture, dated as of November 19, 1999, by and between Pegasus and First Union National Bank,
as Trustee, relating to the 12 1/2% Senior Notes due 2007.
4.2* Form of Note (included in Exhibit 4.1).
5.1* Opinion of Drinker Biddle & Reath LLP.
8.1* Opinion of Drinker Biddle & Reath LLP concerning tax matters.
10.1* Registration Rights Agreement, dated as of November 19, 1999, among Pegasus Communications Corporation
and the Holders of its 12 1/2% Series A Senior Notes due 2007.
21 Subsidiaries of registrant (incorporated by reference herein to Exhibit 21.1 to Pegasus'
registration statement on Form S-3 (File No. 333-70949)).
23.1* Consent of Drinker Biddle & Reath LLP (included in Exhibits 5.1 and 8.1).
23.2* Consent of PricewaterhouseCoopers LLP.
24.1* Powers of Attorney (included on Signatures and Powers of Attorney).
25.1* Form T-1, Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of
First Union National Bank as Trustee.
99.1* Form of Letter of Transmittal and related documents to be used in conjunction with the Exchange
Offer.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Filed herewith.
<PAGE>
- --------------------------------------------------------------------------------
PEGASUS COMMUNICATION CORPORATION
12 1/2% SENIOR NOTES DUE 2007
---------------------
INDENTURE
Dated as of November 19, 1999
---------------------
---------------------
FIRST UNION NATIONAL BANK
as Trustee
---------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE..............................................................1
Section 1.01 Definitions.................................................................................1
Section 1.02 Other Definitions..........................................................................19
Section 1.03 Incorporation by Reference of Trust Indenture Act..........................................19
Section 1.04 Rules of Construction......................................................................20
ARTICLE 2 THE NOTES..............................................................................................20
Section 2.01 Form and Dating............................................................................20
Section 2.02 Execution and Authentication...............................................................21
Section 2.03 Registrar and Paying Agent.................................................................22
Section 2.04 Paying Agent to Hold Money in Trust........................................................22
Section 2.05 Holder Lists...............................................................................22
Section 2.06 Transfer and Exchange......................................................................23
Section 2.07 Replacement Notes..........................................................................36
Section 2.08 Outstanding Notes..........................................................................36
Section 2.09 Treasury Notes.............................................................................36
Section 2.10 Temporary Notes............................................................................37
Section 2.11 Cancellation...............................................................................37
Section 2.12 Defaulted Interest.........................................................................37
ARTICLE 3 REDEMPTION AND PREPAYMENT..............................................................................38
Section 3.01 Notices to Trustee.........................................................................38
Section 3.02 Selection of Notes to Be Redeemed..........................................................38
Section 3.03 Notice of Redemption.......................................................................38
Section 3.04 Effect of Notice of Redemption.............................................................39
Section 3.05 Deposit of Redemption or Purchase Price....................................................39
Section 3.06 Notes Redeemed or Purchased in Part........................................................40
Section 3.07 Optional Redemption........................................................................40
Section 3.08 Mandatory Redemption.......................................................................41
Section 3.09 Offer to Purchase by Application of Excess Proceeds........................................41
ARTICLE 4 COVENANTS..............................................................................................43
Section 4.01 Payment of Notes...........................................................................43
Section 4.02 Maintenance of Office or Agency............................................................44
Section 4.03 Reports....................................................................................44
Section 4.04 Compliance Certificate.....................................................................45
Section 4.05 Taxes......................................................................................46
Section 4.06 Stay, Extension and Usury Laws.............................................................46
Section 4.07 Restricted Payments........................................................................46
Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries............................49
Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock.................................49
Section 4.10 Asset Sales................................................................................51
Section 4.11 Transactions with Affiliates...............................................................53
Section 4.12 Liens......................................................................................54
Section 4.13 Limitation of Certain Subsidiary Indebtedness and Preferred Stock.........................54
Section 4.14 Continued Existence........................................................................54
Section 4.15 Offer to Repurchase Upon Change of Control.................................................54
Section 4.16 Limitation on Issuances and Sales of Capital Stock of Wholly Owned
Restricted Subsidiaries....................................................................56
Section 4.17 Limitation on Issuance of Subsidiary Guarantee.............................................56
Section 4.18 No amendment of subordination provisions...................................................57
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 5 SUCCESSORS.............................................................................................58
Section 5.01 Merger, Consolidation, or Sale of Assets...................................................58
Section 5.02 Successor Corporation Substituted..........................................................58
ARTICLE 6 DEFAULTS AND REMEDIES..................................................................................58
Section 6.01 Events of default..........................................................................58
Section 6.02 Acceleration...............................................................................61
Section 6.03 Other Remedies.............................................................................61
Section 6.04 Waiver of Past Defaults....................................................................62
Section 6.05 Control by Majority........................................................................62
Section 6.06 Limitation on Suits........................................................................62
Section 6.07 Rights of Holders of Notes to Receive Payment..............................................63
Section 6.08 Collection Suit by Trustee.................................................................63
Section 6.09 Trustee May File Proofs of Claim...........................................................63
Section 6.10 Priorities.................................................................................64
Section 6.11 Undertaking for Costs......................................................................64
ARTICLE 7 TRUSTEE................................................................................................64
Section 7.01 Duties of Trustee..........................................................................65
Section 7.02 Rights of Trustee..........................................................................66
Section 7.03 Individual Rights of Trustee...............................................................66
Section 7.04 Trustee's Disclaimer.......................................................................66
Section 7.05 Notice of Defaults.........................................................................66
Section 7.06 Reports by Trustee to Holders of the Notes.................................................67
Section 7.07 Compensation and Indemnity.................................................................67
Section 7.08 Replacement of Trustee.....................................................................68
Section 7.09 Successor Trustee by Merger, etc...........................................................69
Section 7.10 Eligibility; Disqualification..............................................................69
Section 7.11 Preferential Collection of Claims Against Company..........................................69
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE...............................................................69
Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance...................................69
Section 8.02 Legal Defeasance and Discharge.............................................................70
Section 8.03 Covenant Defeasance........................................................................70
Section 8.04 Conditions to Legal or Covenant Defeasance.................................................71
Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other
Miscellaneous Provisions...................................................................72
Section 8.06 Repayment to Company.......................................................................73
Section 8.07 Reinstatement..............................................................................73
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER.......................................................................73
Section 9.01 Without Consent of Holders of Notes........................................................73
Section 9.02 With Consent of Holders of Notes...........................................................74
Section 9.03 Compliance with Trust Indenture Act........................................................76
Section 9.04 Revocation and Effect of Consents..........................................................76
Section 9.05 Notation on or Exchange of Notes...........................................................76
Section 9.06 Trustee to Sign Amendments, etc............................................................76
ARTICLE 10 MISCELLANEOUS.........................................................................................77
Section 10.01 Trust Indenture Act Controls...............................................................77
Section 10.02 Notices....................................................................................77
Section 10.03 Communication by Holders of Notes with Other Holders of Notes..............................78
Section 10.04 Certificate and Opinion as to Conditions Precedent.........................................78
Section 10.05 Statements Required in Certificate or Opinion..............................................79
Section 10.06 Rules by Trustee and Agents................................................................79
Section 10.07 No Personal Liability of Directors, Officers, Employees and Stockholders...................79
Section 10.08 Governing Law..............................................................................80
Section 10.09 No Adverse Interpretation of Other Agreements..............................................80
Section 10.10 Successors.................................................................................80
Section 10.11 Severability...............................................................................80
Section 10.12 Counterpart Originals......................................................................80
Section 10.13 Table of Contents, Headings, etc...........................................................80
</TABLE>
3
<PAGE>
INDENTURE dated as of November 19, 1999 between Pegasus
Communications Corporation, a Delaware corporation (the "Company"), and First
Union National Bank, a national banking association, as Trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit
of each other and for the equal and ratable benefit of the Holders of the 12
1/2% Series A Senior Notes due 2007 (the "Series A Notes") and the 12 1/2%
Series B Senior Notes due 2007 (the "Series B Notes" and, together with the
Series A Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means a Global Note in the form of Exhibit
A hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"1997 Indenture" means the indenture, dated as of October 21,
1997, between the Company and First Union National Bank, as trustee, governing
the terms of the 1997 Notes.
"1997 Notes" means the Company's 9 5/8% Senior Notes due 2005.
"1997 Notes Subsidiary Guarantees" means the guarantees of the
Company's payment obligations under the 1997 Indenture and the 1997 Notes, if
and when executed by the Subsidiaries of the Company pursuant to the provisions
of the 1997 Indenture.
"1998 Indenture" means the indenture, dated as of November 30,
1998, between the Company and First Union National Bank, as trustee, governing
the terms of the 1998 Notes.
"1998 Notes" means the Company's 9 3/4% Senior Notes due 2006.
"1998 Notes Subsidiary Guarantees" means the guarantees of
the Company's payment obligations under the 1998 Indenture and the 1998 Notes,
if and when executed by the Subsidiaries of the Company pursuant to the
provisions of the 1998 Indenture.
"Accredited Investor" means "accredited investor" as defined
in Rule 501(a)(1), (2), (3), (5), (6), (7), or (8).
"Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien
encumbering any assets acquired by such specified Person.
1
<PAGE>
"Adjusted Operating Cash Flow" means, for the four most recent
fiscal quarters for which internal financial statements are available, Operating
Cash Flow of such Person and its Restricted Subsidiaries less DBS Cash Flow for
the most recent four-quarter period plus DBS Cash Flow for the most recent
quarterly period, multiplied by four.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided, however, that beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"AI Global Note" means the Global Note in the form of Exhibit
A hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Accredited Investors.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of a sale and
leaseback) other than in the ordinary course of business consistent with past
practices (provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Subsidiaries taken as
a whole will be governed by the provisions described in Section 4.15 hereof
and/or the provisions described in Section 5.01 hereof and not by the provisions
of Section 4.10 hereof and (ii) the issue or sale by the Company or any of its
Restricted Subsidiaries of Equity Interests of any of the Company's Restricted
Subsidiaries, in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $1.0 million or (b) for net proceeds in excess of $1.0
million. Notwithstanding the foregoing, the following transactions will not be
deemed to be Asset Sales: (i) a transfer of assets by the Company to a Wholly
Owned Restricted Subsidiary of the Company or by a Wholly Owned Restricted
Subsidiary of the Company to the Company or to another Wholly Owned Restricted
Subsidiary of the Company, (ii) an issuance of Equity Interests by a Wholly
Owned Restricted Subsidiary of the Company to the Company or to another Wholly
Owned Restricted Subsidiary of the Company and (iii) a Restricted Payment that
is permitted by the provisions of Section 4.07 hereof.
2
<PAGE>
"Asset Swap" means an exchange of assets by the Company or a
Restricted Subsidiary of the Company for (i) one or more Permitted Businesses,
(ii) a controlling equity interest in any Person whose assets consist primarily
of one or more Permitted Businesses and/or (iii) long-term assets that are used
in a Permitted Business in a like-kind exchange pursuant to Section 1031 of the
Code or any similar or successor provision of the Code.
"Bank Facilities" means, with respect to the Company or any
of its Restricted Subsidiaries, one or more debt facilities or commercial paper
facilities with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Board" or "Board of Directors" means the Board of Directors
of the Company or any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the full faith
and credit of the United States government or any agency or instrumentality
thereof having maturities of not more than six months from the date of
acquisition, (iii) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500.0 million and a Thompson Bank Watch Rating of "B" or
better, (iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above, (v) commercial paper having the highest rating obtainable
from either Moody's Investors Service, Inc. or Standard & Poor's Corporation
and, in each case, maturing within six months after the date of acquisition and
(vi) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (i) through (v) of this
definition.
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"Cedel" means Cedel Bank, SA.
"Certificate of Designation" means the Certificate of
Designation, Preferences and Relative, Participating, Optional and Other Special
Rights of Preferred Stock and Qualifications, Limitations and Restrictions
Thereof of 12 3/4% Series A Cumulative Exchangeable Preferred Stock of Pegasus
Communications Corporation.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole to any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than the Principal or his Related
Parties, (ii) the adoption of a plan relating to the liquidation or dissolution
of the Company, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that (A) any
"person" (as defined above) becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time, upon the happening of an event or
otherwise), directly or indirectly, of more of the Voting Stock of the Company
(measured by voting power rather than number of shares) than is at the time
beneficially owned (as defined above) by the Principal and his Related Parties
in the aggregate, (B) the Principal and his Related Parties collectively cease
to beneficially own (as defined above) Voting Stock of the Company having at
least 30% of the combined voting power of all classes of Voting Stock of the
Company then outstanding or (C) the Principal and his Affiliates acquire, in the
aggregate, beneficial ownership (as defined above) of more than 66 2/3% of the
shares of Class A Common Stock at the time outstanding or (iv) the first day on
which a majority of the members of the Board of Directors of the Company are not
Continuing Directors.
"Class A Common Stock" means the Company's Class A Common
Stock, par value $.01 per share.
"Closing Date" means the original date of issuance of the
Notes.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Pegasus Communications Corporation, a Delaware
corporation and any and all successors thereto.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that (i) the Net Income (but not loss) of any
Person that is not a Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, (iii) the cumulative effect of a change in accounting principles
shall be excluded and (iv) the Net Income of any Unrestricted Subsidiary shall
be excluded, whether or not distributed to the Company or one of its
Subsidiaries.
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"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Closing Date or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 10.02 hereof or such other address
as to which the Trustee may give notice to the Company.
"Cumulative Operating Cash Flow" means, as of any date of
determination, Operating Cash Flow for the Company and its Restricted
Subsidiaries for the period (taken as one accounting period) from the beginning
of the first full month commencing after November 30, 1998 to the end of the
most recently ended fiscal quarter for which internal financial statements are
available at such date of determination, plus all cash dividends received by the
Company or a Wholly Owned Restricted Subsidiary of the Company from any
Unrestricted Subsidiary of the Company or Wholly Owned Restricted Subsidiary of
the Company to the extent that such dividends are not included in the
calculation of permitted Restricted Payments under paragraph (C) of Section 4.07
(a) by virtue of clause (iii) of such paragraph.
"Cumulative Total Interest Expense" means, with respect to the
Company and its Restricted Subsidiaries, as of any date of determination, Total
Interest Expense for the period (taken as one accounting period) from the
beginning of the first full fiscal month commencing after November 30, 1998 to
the end of the most recently ended fiscal quarter for which internal financial
statements are available at such date of determination.
"Custodian" means the Trustee, as custodian with respect to
the Notes in global form, or any successor entity thereto.
"DBS Cash Flow" means income from operations (before
depreciation, amortization and Non-Cash Incentive Compensation to the extent
deducted in arriving at income from operations) for the Satellite Segment
determined on a basis consistent with the segment data contained in the
Company's consolidated audited financial statements.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 2.06 hereof, in
the form of Exhibit A hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Note" attached thereto.
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<PAGE>
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the Holder thereof, in whole or in part, on or prior
to the date that is 91 days after the date on which the Notes mature unless, in
any such case, the issuer's obligation to pay, purchase or redeem such Capital
Stock is expressly conditioned on its ability to do so in compliance with the
provisions in Section 4.07 hereof, except that Pegasus' Series A Preferred Stock
shall not be deemed to be Disqualified Stock under this Indenture.
"DTS Credit Facility" means the Second Amended and Restated
Credit Agreement, dated as of July 30, 1997, by and among Digital Television
Services, LLC, CIBC Wood Gundy Securities Corp., as arranger, Morgan Guaranty
Trust Company of New York, as syndication agent, Fleet National Bank, as
documentation agent, and Canadian Imperial Bank of Commerce, as administrative
agent, as amended through the Closing Date.
"Eligible Indebtedness" means any Indebtedness other than (i)
Indebtedness in the form of, or represented by, bonds or other securities or any
guarantee thereof and (ii) Indebtedness which is, or may be, quoted, listed or
ordinarily purchased and sold on any stock exchange, automated trading system or
over-the-counter or other securities market (including, without prejudice to the
generality of the foregoing, the market for securities eligible for resale
pursuant to Rule 144A under the Securities Act).
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set
forth in the Registration Rights Agreement.
"Existing Credit Facilities" means the DTS Credit Facility and
the PM&C Credit Facility.
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"Existing Indebtedness" means all Indebtedness of the Company
and its Subsidiaries (other than Indebtedness under the Existing Credit
Facilities) in existence on the Closing Date, until such amounts are repaid.
"fair market value" means, with respect to assets or aggregate
net proceeds having a fair market value (a) of less than $5.0 million, the fair
market value of such assets or proceeds determined in good faith by the Board of
Directors of the Company (including a majority of the Independent Directors
thereof) and evidenced by a board resolution and (b) equal to or in excess of
$5.0 million, the fair market value of such assets or proceeds as determined by
an investment banking firm of national standing; provided that the fair market
value of the assets purchased in an arm's-length transaction by an Affiliate of
the Company (other than a Subsidiary) from a third party that is not also an
Affiliate of the Company or such purchaser and contributed to the Company within
five Business Days of the consummation of the acquisition of such assets by such
Affiliate shall be deemed to be the aggregate consideration paid by such
Affiliate (which may include the fair market value of any non-cash consideration
to the extent that the valuation requirements of this definition are complied
with as to any such non-cash consideration).
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the Closing Date.
"Global Notes" means, individually and collectively, each of
the Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Sections 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend which is required to be
placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America, and the payment for
which the United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, co-borrowing
arrangements, letters of credit and reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
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<PAGE>
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing any Capital Lease Obligations or the balance
deferred and unpaid of the purchase price of any property or representing any
Hedging Obligations, except any such balance that constitutes an accrued expense
or trade payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging Obligations) would appear as a liability upon
a balance sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether or
not such indebtedness is assumed by such Person) and, to the extent not
otherwise included, the guarantee by such Person of any indebtedness of any
other Person. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date; provided
that the amount outstanding at any time of any Indebtedness issued with original
issue discount is the full amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP. The amount of any Indebtedness
outstanding as of any date shall be (i) the accreted value thereof, in the case
of any Indebtedness issued with original issue discount and (ii) the principal
amount thereof, together with any interest thereon that is more than 30 days
past due, in the case of any other Indebtedness.
"Indebtedness to Adjusted Operating Cash Flow Ratio" means, as
of any date of determination, the ratio of (a) the aggregate principal amount of
all outstanding Indebtedness of a Person and its Restricted Subsidiaries as of
such date on a consolidated basis, plus the aggregate liquidation preference of
all outstanding preferred stock of the Restricted Subsidiaries of such Person as
of such date (excluding Qualified Subsidiary Stock and any such preferred stock
held by such Person or a Wholly Owned Restricted Subsidiary of such Person),
plus the aggregate liquidation preference or redemption amount of all
Disqualified Stock of such Person (excluding any Disqualified Stock held by such
Person or a Wholly Owned Restricted Subsidiary of such Person) as of such date
to (b) Adjusted Operating Cash Flow of such Person and its Restricted
Subsidiaries for the most recent four-quarter period for which internal
financial statements are available determined on a pro forma basis after giving
effect to all acquisitions and dispositions of assets (notwithstanding clause
(iii) of the definition of "Consolidated Net Income") (including, without
limitation, Asset Swaps) made by such Person and its Restricted Subsidiaries
since the beginning of such four-quarter period through such date as if such
acquisitions and dispositions had occurred at the beginning of such four-quarter
period.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Independent Director" means a member of the Board of
Directors who is neither an officer nor an employee of the Company or any of its
Affiliates.
8
<PAGE>
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including guarantees of Indebtedness or other
obligations), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities by
the Company for consideration consisting of common equity securities, or
preferred stock which is not Disqualified Stock, of the Company shall not be
deemed to be an Investment.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of Notes for use by such Holders
in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions) or
(b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries, and (ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting, investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness in connection with such Asset Sale and any reserve
for adjustment in respect of the sale price of such asset or assets established
in accordance with GAAP.
9
<PAGE>
"Non-Cash Incentive Compensation" means incentive
compensation paid to any officer of the Company or any of its Subsidiaries in
the form of Class A Common Stock of the Company or options to purchase Class A
Common Stock of the Company pursuant to the Pegasus Restricted Stock Plan and
the Pegasus 1996 Stock Option Plan.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any of its Restricted Subsidiaries (a) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise) or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Offering Memorandum" means the Offering Memorandum, dated
October 5, 1999, relating to the Offering.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary, any Assistant Secretary, any Vice-President or
any Assistant Vice President of such Person.
"Officers' Certificate" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 10.05 hereof.
10
<PAGE>
"Operating Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period, (A) plus
(i) extraordinary net losses and net losses on sales of assets outside the
ordinary course of business during such period, to the extent such losses were
deducted in computing such Consolidated Net Income, plus (ii) provision for
taxes based on income or profits, to the extent such provision for taxes was
included in computing such Consolidated Net Income, and any provision for taxes
utilized in computing the net losses under clause (i) hereof, plus (iii)
consolidated interest expense of such Person and its Subsidiaries for such
period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income, plus (iv) depreciation, amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and
other non-cash charges (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of such
Person and its Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash charges were deducted in computing
such Consolidated Net Income, plus (v) Non-Cash Incentive Compensation to the
extent such compensation expense was deducted in computing such Consolidated Net
Income and to the extent not included in clause (iv) of this definition and (B)
less all non-cash income for such period (excluding any such non-cash income to
the extent it represents an accrual of cash income in any future period or
amortization of cash income received in a prior period).
"Opinion of Counsel" means an opinion from legal counsel who
is not unsatisfactory to the Trustee, that meets the requirements of Section
10.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Pari Passu Debt" means senior Indebtedness of the Company or
any Subsidiary Guarantor permitted by Section 4.09 hereof, which is pari passu
in right of payment with the Notes or any Subsidiary Guarantee.
"Participant" means, with respect to the Depositary, Euroclear
or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Pegasus 1996 Stock Option Plan" means the Pegasus
Communications 1996 Stock Option Plan, approved by the Company's stockholders
and adopted by the Company in September 1996.
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<PAGE>
"Pegasus Restricted Stock Plan" means the Pegasus Restricted
Stock Plan, approved by the Company's stockholders and adopted by the Company in
September 1996.
"Permitted Businesses" means (i) any media or communications
business, including but not limited to, any broadcast television station, cable
franchise or other business in the television broadcasting, cable or
direct-to-home satellite television industries and (ii) any business reasonably
related or ancillary to any of the foregoing businesses.
"Permitted Investments" means (a) any Investments in the
Company or in a Wholly Owned Restricted Subsidiary of the Company; (b) any
Investments in Cash Equivalents; (c) Investments by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment (i) such Person becomes a Wholly Owned Restricted Subsidiary of the
Company or (ii) such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is liquidated
into, the Company or a Wholly Owned Restricted Subsidiary of the Company; (d)
Investments made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof;
and (e) other Investments made since the date of this Indenture (measured as of
the time made and without giving effect to subsequent changes in value) that do
not exceed an amount equal to $15.0 million plus, to the extent any such
Investments are sold for cash or are otherwise liquidated or repaid for cash,
any gains less any losses realized on the disposition of such Investments.
"Permitted Liens" means (i) Liens securing term loans,
revolving borrowings, letters of credit or other Obligations under any Bank
Facility; (ii) Liens securing Eligible Indebtedness of a Subsidiary that was
permitted to be incurred under this Indenture, (iii) Liens on property of a
Person existing at the time such Person is merged into or consolidated with the
Company or any Restricted Subsidiary of the Company; provided that such Liens
were not created in contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or consolidated
with the Company or any Restricted Subsidiary of the Company; (iv) Liens on
property existing at the time of acquisition thereof by the Company or any
Restricted Subsidiary of the Company; provided that such Liens were not created
in contemplation of such acquisition; (v) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (vi)
Liens existing on the Closing Date; (vii) Liens to secure Indebtedness
represented by Capital Lease Obligations, mortgage financings or purchase money
obligations permitted by clause (vii) of Section 4.09(b) hereof, covering only
the assets acquired with such Indebtedness; (viii) Liens for taxes, assessments
or governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded; provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor; (ix)
Liens incurred in the ordinary course of business of the Company or any
Restricted Subsidiary of the Company with respect to obligations that do not
exceed $1.5 million at any one time outstanding; (x) Liens on deposits or Cash
Equivalents made pursuant to legally binding agreements or non-binding letters
of intent to acquire assets (or the Capital Stock of Persons owning such
assets), in an amount not to exceed 10% of the purchase price of such assets or
Capital Stock; provided that the assets to be acquired (or the Capital Stock of
Persons owning such assets) will be owned by the Company or a Restricted
Subsidiary of the Company upon consummation of the contemplated acquisition;
(xi) Liens encumbering deposits or Cash Equivalents made to secure obligations
of the Company to repurchase Capital Stock of the Company pledged to secure
obligations of employees of the Company in an aggregate amount not to exceed
$5.0 million at any time outstanding and (xii) Liens on assets of or Equity
Interests in Unrestricted Subsidiaries that secure Non-Recourse Debt of
Unrestricted Subsidiaries.
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"Permitted Refinancing Debt" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that (i) the principal amount of (or accreted value, if applicable)
such Permitted Refinancing Debt does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus (a) the
amount of reasonable expenses incurred in connection therewith and (b) the
amount of any premium required to be paid in connection with such refinancing
pursuant to the terms of such refinancing or deemed by the Company or such
Restricted Subsidiary necessary to be paid in order to effectuate such
refinancing); (ii) such Permitted Refinancing Debt has a final maturity date not
earlier than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Debt has a final maturity date later than the final
maturity date of the Notes, and is subordinated in right of payment to the Notes
on terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; and (v) if
such Permitted Refinancing Debt is incurred by a Restricted Subsidiary that is
not a Subsidiary Guarantor, such Permitted Refinancing Debt constitutes Eligible
Indebtedness.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"PM&C" means Pegasus Media & Communications, Inc., a Delaware
corporation and a direct Subsidiary of the Company.
"PM&C Credit Facility" means the Credit Agreement, dated as of
December 10, 1997, by and among PM&C, the several lenders from time to time
party thereto and Bankers Trust Company, as agent for such lenders, as amended
through the Closing Date.
"Principal" means Marshall W. Pagon.
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"Private Placement Legend" means the legend set forth in
Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"PSTV Preferred Stock" means the Series A Preferred Stock, par
value $1.00 per share, of Pegasus Satellite Television of Virginia, Inc.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Qualified Subsidiary Stock" means Capital Stock of a
Subsidiary of the Company which by its terms (a) does not mature, or is not
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, and
is not redeemable at the option of the Holder thereof, in whole or in part,
prior to December 1, 2007 (in each case, whether automatically or upon the
happening of any event) (unless, in any such case, the issuer's obligation to
pay, purchase or redeem such Capital Stock is expressly conditioned on its
ability to do so in compliance with Section 4.07 hereof), (b) is automatically
exchangeable into shares of Capital Stock of the Company that is not
Disqualified Stock upon the earlier to occur of (i) the occurrence of an Event
of Default and (ii) December 1, 2005, (c) has no voting or remedial rights and
(d) does not permit the payment of cash dividends prior to December 1, 2006
(unless, in the case of this clause (d), the issuer's ability to pay cash
dividends is expressly conditioned on its ability to do so in compliance with
Section 4.07 hereof). Notwithstanding the foregoing, for all purposes under this
Indenture, "Qualified Subsidiary Stock" shall be deemed to include the PSTV
Preferred Stock.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of November 19, 1999, between the Company and the holders of
the Series A Notes, as such agreement may be amended, modified or supplemented
from time to time.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Regulation S Global Note" means a Global Note bearing the
Private Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Related Party" with respect to the Principal means (A) any
immediate family member of the Principal or (B) any trust, corporation,
partnership or other entity, more than 50% of the voting equity interests of
which are owned directly or indirectly by, and which is controlled by, the
Principal and/or such other Persons referred to in the immediately preceding
clause (A). For purposes of this definition, (i) "immediate family member" means
spouse, parent, step-parent, child, sibling or step-sibling and (ii) "control"
has the meaning specified in the definition of "Affiliate" contained herein. In
addition, the Principal's estate shall be deemed to be a Related Party until
such time as such estate is distributed in accordance with the Principal's will
or applicable state law.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the Corporate Trust Administration department of the
Trustee (or any successor group of the Trustee) or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
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"Restricted Definitive Note" means a Definitive Note bearing
the Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the
Private Placement Legend.
"Restricted Investment" means any Investment other than a
Permitted Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of
the referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities
Act.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"Rule 501(a)" means Rule 501(a)(1), (2), (3), (5), (6), (7) or
(8) promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities
Act.
"Rule 904" means Rule 904 promulgated under the Securities
Act.
"Satellite Segment" means the business involved in the
marketing of video and audio programming and data information services through
transmission media consisting of space-based satellite broadcasting services,
the assets related to the conduct of such business held by the Company and its
Restricted Subsidiaries on the Closing Date, plus all other assets acquired by
the Company or any of its Restricted Subsidiaries that are directly related to
such business (excluding, without limitation, the terrestrial television
broadcasting business and the assets related thereto and the cable television
business and the assets related thereto); provided that any assets acquired by
the Company or any of its Restricted Subsidiaries after the Closing Date that
are not directly related to such business shall not be included for purposes of
this definition.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" means the Company's 12 3/4% Series
A Cumulative Exchangeable Preferred Stock.
"Series A Notes" has the meaning assigned to it in the
preamble to this Indenture.
"Series B Notes" has the meaning assigned to it in the
preamble to this Indenture.
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"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Split Dollar Agreement" means the Split Dollar Agreement
between the Company and Nicholas A. Pagon, Holly T. Pagon and Michael B. Jordan,
as trustees of an insurance trust established by Marshall W. Pagon, as in effect
on the Closing Date.
"Stated Maturity" means, with respect to any interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Exchange Note Indenture" means the Indenture
filed as an exhibit to the Certificate of Designation which would govern the
Subordinated Exchange Notes, if issued, as the same may be amended, but without
giving effect to any amendment that materially alters the economic terms
thereof.
"Subordinated Exchange Notes" means the Company's 12 3/4%
Senior Subordinated Exchange Notes due 2007 issuable pursuant to the
Subordinated Exchange Note Indenture in exchange for the Company's Series A
Preferred Stock.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries (of such Person or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such a Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof.)
"Subsidiary Guarantee" means the Subsidiary Guarantee by each
Subsidiary Guarantor of the Company's payment obligations under this Indenture
and the Notes, executed pursuant to the provisions of this Indenture.
"Subsidiary Guarantor" means any Restricted Subsidiary that
shall have guaranteed, pursuant to a supplemental indenture and the requirements
therefor set forth in this Indenture, the payment of all principal of, and
interest and premium, if any, on, the Notes and all other amounts payable under
the Notes or this Indenture, which guarantee shall be pari passu with or senior
to all Indebtedness of such Restricted Subsidiary.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb as amended) as in effect on the date on which this Indenture is
qualified under the TIA.
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"Total Interest Expense" means, with respect to any Person for
any period, the sum of (i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations) and (ii) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such period,
to the extent such amounts are not included in clause (i) of this definition,
and (iii) any interest expense for such period on Indebtedness of another Person
that is guaranteed by such Person or one of its Restricted Subsidiaries or
secured by a Lien on assets (other than Equity Interests in Unrestricted
Subsidiaries securing Indebtedness of Unrestricted Subsidiaries) of such Person
or one of its Restricted Subsidiaries (whether or not such guarantee or Lien is
called upon) and (iv) all cash dividend payments during such period on any
series of preferred stock of a Restricted Subsidiary of such Person.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent Global Note in
the form of Exhibit A attached hereto that bears the Global Note Legend and that
has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive
Notes that do not bear and are not required to bear the Private Placement
Legend.
"Unrestricted Subsidiary" means any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution; but only to the extent that such Subsidiary (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries; and (e) has at least one
executive officer that is not a director or executive officer of the Company or
any of its Restricted Subsidiaries. Any such designation made by the Board of
Directors at a time when any Notes are outstanding shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions and was permitted by
Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to
meet the foregoing requirements as an Unrestricted Subsidiary, it shall
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thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture
and any Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted Subsidiary of the Company as of such date (and, if such Indebtedness
is not permitted to be incurred as of such date under Section 4.09 hereof
(treating such Subsidiary as a Restricted Subsidiary for such purpose for the
period relevant to such covenant), the Company shall be in default of such
covenant); provided, however, that in the event an Unrestricted Subsidiary
ceases to meet the requirement set forth in clause (e) of this definition, such
Unrestricted Subsidiary shall have 60 days to meet such requirement before such
Unrestricted Subsidiary shall cease to be an Unrestricted Subsidiary. The Board
of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall be permitted only if (i) such Indebtedness is permitted under
Section 4.09 hereof (treating such Subsidiary as a Restricted Subsidiary for
such purpose for the period relevant to such covenant) and (ii) no Default or
Event of Default would be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o)
under the Securities Act.
"Voting Stock" means with respect to any specified Person,
Capital Stock with voting power, under ordinary circumstances and without regard
to the occurrence of any contingency, to elect the directors or other managers
or trustees of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock (other
than Qualified Subsidiary Stock) or other ownership interests of which (other
than directors' qualifying shares) shall at the time be owned by such Person
and/or by one or more Wholly Owned Restricted Subsidiaries of such Person.
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SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
- ---- -------
"Affiliate Transaction"..............................................4.11
"Asset Sale Offer"...................................................4.10
"Basket Period"......................................................4.07
"Change of Control Offer"............................................4.15
"Change of Control Payment"..........................................4.15
"Change of Control Payment Date".....................................4.15
"Covenant Defeasance"................................................8.03
"custodian"..........................................................6.01
"DTC"................................................................2.03
"Event of Default"...................................................6.01
"Excess Proceeds"....................................................4.10
"incur"..............................................................4.09
"Legal Defeasance"...................................................8.02
"Notice of Default"..................................................6.01
"Offer Amount".......................................................3.09
"Offer Period........................................................3.09
"outstanding"........................................................8.02
"Paying Agent".......................................................2.03
"Payment Default"....................................................6.01
"Purchase Date"......................................................3.09
"Registrar"..........................................................2.03
"Restricted Payments"................................................4.07
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes and the Subsidiary
Guarantees;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture Trustee" or "institutional Trustee" means the
Trustee;
"obligor" on the Notes means the Company and any successor
obligor upon the Notes.
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All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and transactions;
and
(6) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement of successor sections or
rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
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(c) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in Global Notes that are held by Participants through
Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by an Officer (an "Authentication Order"), authenticate Notes for original issue
up to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
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SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Custodian with respect to the Global
Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, or interest on the
Notes, and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA ss.312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss.312(a).
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SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, by the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. All Global Notes will be exchanged by the
Company for Definitive Notes if (i) the Company delivers to the Trustee notice
from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary, (ii)
the Company in its sole discretion determines that the Global Notes (in whole
but not in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee or (iii) there shall have occurred and be
continuing a Default or Event of Default with respect to the Notes. Upon the
occurrence of any of the preceding events in (i), (ii) or (iii) above,
Definitive Notes shall be issued in such names and denominations as the
Depositary shall instruct the Trustee. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or
2.10 hereof, shall be authenticated and delivered in the form of, and shall be,
a Global Note. A Global Note may not be exchanged for another Note other than as
provided in this Section 2.06(a), however, beneficial interests in a Global Note
may be transferred and exchanged as provided in Section 2.06(b),(c) or (f)
hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred
to Persons who take delivery thereof in the form of a beneficial
interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend;
provided, however, that prior to the expiration of the Restricted
Period, transfers of beneficial interests in the Regulation S Global
Note may not be made to a U.S. Person or for the account or benefit of
a U.S. Person. Beneficial interests in any Unrestricted Global Note may
be transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders
or instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above,
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the transferor of such beneficial interest must deliver to the
Registrar either (A) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Note in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be credited
with such increase or (B) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary
to the Registrar containing information regarding the Person in whose
name such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above. Upon consummation of an Exchange
Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained
in the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all of
the requirements for transfer or exchange of beneficial interests in
Global Notes contained in this Indenture and the Notes or otherwise
applicable under the Securities Act, the Trustee shall adjust the
principal amount of the relevant Global Note(s) pursuant to Section
2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form
of a beneficial interest in the 144A Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form
of a beneficial interest in the Regulation S Global Note, then
the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2)
thereof; and
(C) if the transferee will take delivery in the form
of a beneficial interest in the AI Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications and certificates and
Opinion of Counsel required by item (3) thereof, if
applicable.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted
Global Note. A beneficial interest in any Restricted Global Note may be
exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note if the exchange or transfer complies with the requirements of
Section 2.06(b)(ii) above and:
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(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Series B Notes or (3)
a Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Note proposes to exchange such
beneficial interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
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Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial interest in
a Restricted Global Note proposes to exchange such beneficial interest
for a Restricted Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a
Restricted Definitive Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred
to a Non-U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred
to an Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred
to the Company or any of its Subsidiaries, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c)
thereof,
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the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c) shall be registered in
such name or names and in such authorized denomination or denominations
as the holder of such beneficial interest shall instruct the Registrar
through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes
to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear
the Private Placement Legend and shall be subject to all restrictions
on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the
case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating
in the distribution of the Series B Notes or (3) a Person who
is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Definitive Note that does not bear the
Private Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b) thereof;
or
(2) if the holder of such beneficial
interest in a Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
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and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest
in an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Note or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive
Note, then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant
to Section 2.06(h) hereof, and the Company shall execute and the
Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant
to this Section 2.06(c)(iii) shall be registered in such name or names
and in such authorized denomination or denominations as the holder of
such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Notes
to a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
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(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule
144, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being
transferred to an Accredited Investor in reliance on an
exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B
hereto, including the certifications, certificates and Opinion
of Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Note, in the case
of clause (B) above, the 144A Global Note, in the case of clause (c)
above, the Regulation S Global Note, and in all other cases, the AI
Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Series B Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
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(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes
proposes to exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (1)(c) thereof;
or
(2) if the Holder of such Definitive Notes
proposes to transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note at any time. Upon receipt of a request for
such an exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
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(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof in the form
of a Restricted Definitive Note if the Registrar receives the
following:
(A) if the transfer will be made pursuant to Rule
144A, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item
(1) thereof;
(B) if the transfer will be made pursuant to Rule 903
or Rule 904, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in
item (2) thereof; and
(C) if the transfer will be made pursuant to any
other exemption from the registration requirements of the
Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person
or Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Series B Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
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(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted
Definitive Notes proposes to exchange such Notes for an Unrestricted
Definitive Note, a certificate from such Holder in the form of Exhibit
C hereto, including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted
Definitive Notes proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request to register
such a transfer, the Registrar shall register the Unrestricted
Definitive Notes pursuant to the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Series B
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
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(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below,
each Global Note and each Definitive Note (and all Notes
issued in exchange therefor or substitution thereof) shall
bear the legend in substantially the following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE ACT) OR (B) IT IS AN ACCREDITED
INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), (5), (6), (7) OR (8)
UNDER THE ACT) OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO PEGASUS OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, (C) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE ACT, (D) INSIDE THE UNITED STATES
TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR
HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (E) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
ACT, (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE ACT (IF AVAILABLE) OR (G) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE ACT AND (3) AGREES THAT IT WILL
GIVE TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS NOTE PURSUANT TO CLAUSES (D), (F) AND (G) ABOVE, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND PEGASUS
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS ANY OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE
REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE ACT.
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(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f)
to this Section 2.06 (and all Notes issued in exchange
therefor or substitution thereof) shall not bear the Private
Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF
THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT
IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL
NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
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(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15
and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such registration
of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and ending
at the close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed in
part or (c) to register the transfer of or to exchange a Note between a
record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and
none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a registration of transfer or exchange may be
submitted by facsimile.
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SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Note
if the Trustee's requirements are met. If required by the Trustee or the
Company, an indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and the Company to protect the Company, the Trustee,
any Agent and any authenticating agent from any loss that any of them may suffer
if a Note is replaced. The Company may charge for its expenses in replacing a
Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Note effected
by the Trustee in accordance with the provisions hereof, and those described in
this Section as not outstanding. Except as set forth in Section 2.09 hereof, a
Note does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
shall be so disregarded.
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SECTION 2.10. TEMPORARY NOTES.
Until certificates representing Notes are ready for delivery,
the Company may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
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ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company is required to make an offer to purchase Notes
pursuant to the provisions of Section 3.09 hereof, it shall furnish to the
Trustee an Officers' Certificate setting forth (i) the Section of this Indenture
pursuant to which the purchase shall occur, (ii) the purchase date, (iii) the
principal amount of Notes to be purchased, (iv) the purchase price and (v) a
statement to the effect that a Change of Control has occurred and the conditions
set forth in Section 3.09 hereof have been satisfied, as applicable.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time,
the Trustee shall select the Notes to be redeemed among the Holders of the Notes
in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not so
listed, to be redeemed among the Holders of Notes on a pro rata basis, by lot or
by such method as the Trustee deems fair and appropriate; provided that no Notes
of $1,000 or less shall be redeemed in part. In the event of partial redemption
by lot, the particular Notes to be redeemed shall be selected, unless otherwise
provided herein, not less than 30 nor more than 60 days prior to the redemption
date by the Trustee from the outstanding Notes not previously called for
redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption shall become due
on the redemption date. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption. Except as provided in
this Section 3.02, provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall
state:
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(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 30 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION OR PURCHASE PRICE.
One Business Day prior to 10:00 a.m. Eastern Time on the
redemption date, the Company shall deposit with the Trustee or with the Paying
Agent money in immediately available funds sufficient to pay the redemption or
purchase price of and accrued interest, if any, on all Notes to be redeemed or
purchased on that date. The Trustee or the Paying Agent shall promptly return to
the Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the amounts necessary to pay the redemption or purchase
price of, and accrued interest on, all Notes to be redeemed or purchased.
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If Notes called for redemption or tendered in a Change of
Control Offer are paid or if the Company has deposited with the Trustee or
Paying Agent money sufficient to pay the redemption or purchase price of, and
unpaid and accrued interest, if any, on all Notes to be redeemed or purchased,
on and after the applicable redemption or purchase date, interest, if any,
ceases to accrue on the Notes or the portions of Notes called for redemption or
tendered and not withdrawn in a Change of Control Offer (regardless of whether
certificates for such Notes are actually surrendered). If a Note is redeemed or
purchased on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest, if any, shall be
paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption or subject to a
Change of Control Offer shall not be so paid upon surrender for redemption or
purchase because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
or purchase date until such principal is paid, and to the extent lawful on any
interest not paid on such unpaid principal, in each case, at the rate provided
in the Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED OR PURCHASED IN PART.
Upon surrender of a Note that is redeemed or purchased in
part, the Company shall issue and, upon the Company's written request, the
Trustee shall authenticate for the Holder at the expense of the Company a new
Note equal in principal amount to the unredeemed or unpurchased portion of the
Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) The Notes shall not be redeemable at the Company's option prior to
August 1, 2003. The Notes may be redeemed, in whole or in part, at the option of
the Company on or after August 1, 2003, at the redemption prices specified below
(expressed as percentages of the principal amount thereof), in each case,
together with accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of redemption, upon not less than 30 nor more than 60 days
notice, if redeemed during the twelve-month period beginning on August 1 of the
years indicated below:
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Redemption
Year Price
---- ----------
2003 106.250%
2004 104.167%
2005 102.083%
2006 and thereafter 100.000%
(b) Notwithstanding the foregoing, between the date hereof and prior to
August 1, 2000, the Company may, on any one or more occasions, use the net
proceeds of one or more offerings of its Capital Stock to redeem up to 35% of
the aggregate principal amount of the Notes at a redemption price of 112.500% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of redemption; provided that, after any such
redemption, the aggregate principal amount of the Notes outstanding (excluding
Notes held by the Company and its subsidiaries) must equal at least 65% of the
Notes issued hereunder; and provided further, that any such redemption shall
occur within 90 days of the date of closing of such offering of Capital Stock of
the Company.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption
or sinking fund payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
(a) In the event that, pursuant to Section 4.10 hereof, the Company
shall be required to commence an Asset Sale Offer, it shall follow the
procedures specified below with respect to the Holders of Notes.
(b) The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
(c) The Company shall comply with any tender offer rules under the
Exchange Act which may then be applicable, including Rule 14e-1, in connection
with any offer required to be made by the Company to repurchase the Notes as a
result of an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section 3.09,
the Company shall comply with the applicable securities laws or regulations and
shall not be deemed to have breached its obligations hereunder by virtue
thereof.
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(d) If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
(e) Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders, with
a copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(i) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the Asset
Sale Offer shall remain open;
(ii) the Offer Amount, the purchase price and the Purchase
Date and, if any Restricted Subsidiary is required to and does make an
offer to holders of its Indebtedness pursuant to a requirement similar
to that contained in Section 4.10 and this Section, the notice shall
state that fact, that the Offer Amount will be reduced by the amount of
Indebtedness required to be purchased pursuant to such other offer, and
that the amount of such reduction will not be known until the
expiration of such other offer, which shall not be later than the
expiration of the Offer Period;
(iii) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(iv) that, unless the Company defaults in making such payment,
any Note accepted for payment pursuant to the Asset Sale Offer shall
cease to accrue interest after the Purchase Date;
(v) that Holders electing to have a Note purchased pursuant to
an Asset Sale Offer may only elect to have all of such Note purchased
and may not elect to have only a portion of such Note purchased;
(vi) that Holders electing to have a Note purchased pursuant
to any Asset Sale Offer shall be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Note completed, or transfer by book-entry transfer, to the
Company, a depositary, if appointed by the Company, or a Paying Agent
at the address specified in the notice at least three days before the
Purchase Date;
(vii) that Holders shall be entitled to withdraw their
election if the Company, the Depositary or the Paying Agent, as the
case may be, receives, not later than the expiration of the Offer
Period, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Note the
Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
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(viii) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company shall
select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only
Notes in denominations of $1,000, or integral multiples thereof, shall
be purchased, other than in the case of Holders whose Notes were
purchased in whole); and
(ix) that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry
transfer).
(f) On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder of Notes
an amount equal to the purchase price of the Notes tendered by such Holder of
Notes and accepted by the Company for purchase, and the Company shall promptly
issue a new Note and the Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Note to such Holder of Notes in a
principal amount equal to any unpurchased portion of the Note surrendered. Any
Note not so accepted shall be promptly mailed or delivered by the Company to the
Holder of Notes thereof. The Company shall publicly announce the results of the
Asset Sale Offer on the Purchase Date.
(g) Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof. No repurchase of Notes under this Section
3.09 shall be deemed to be a redemption of Notes.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
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The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages (without regard to any applicable grace period)
at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-Registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company
were required to file such Forms, including "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants and (ii) all current reports that would be required to
be filed with the SEC on Form 8-K if the Company were required to file such
reports, in each case within the time periods specified in the SEC's rules and
regulations. In addition, following consummation of the Exchange Offer
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contemplated by the Registration Rights Agreement, whether or not required by
the rules and regulations of the SEC, the Company shall file a copy of all such
information and reports with the SEC for public availability within the time
periods set forth in the SEC's rules and regulations (unless the SEC will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. In addition to the financial information
required by the Exchange Act, each such quarterly and annual report shall be
required to contain "summarized financial information" (as defined in Rule
1-02(aa)(1) of Regulation S-X under the Exchange Act) showing Adjusted Operating
Cash Flow for the Company and its Restricted Subsidiaries, on a consolidated
basis, where Adjusted Operating Cash Flow for the Company is calculated in a
manner consistent with the manner described under the definition of "Adjusted
Operating Cash Flow" contained herein. The summarized financial information
required pursuant to the preceding sentence may, at the election of the Company,
be included in the footnotes to audited consolidated financial statements or
unaudited quarterly financial statements of the Company and shall be as of the
same dates and for the same periods as the consolidated financial statements of
the Company and its Subsidiaries required pursuant to the Exchange Act.
(b) In addition, the Company has agreed that, for so long as any Notes
remain outstanding, it will furnish to the holders and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to rule 144A(d)(4) under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest on the Notes is prohibited
or if such event has occurred, a description of the event and what action the
Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
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(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer of the Company becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company) or on account of any Qualified Subsidiary
Stock or make any payment or distribution (other than compensation paid to, or
reimbursement of expenses of, employees in the ordinary course of business) to
or for the benefit of the direct or indirect holders of the Company's Equity
Interests or the direct or indirect holders of any Qualified Subsidiary Stock in
their capacities as such (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or additional
shares of such Qualified Subsidiary Stock); (ii) purchase, redeem or otherwise
acquire or retire for value any Equity Interests of the Company or any direct or
indirect parent of the Company (other than any such Equity Interests owned by
the Company or any of its Restricted Subsidiaries); (iii) make any payment on or
with respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Notes, except a payment of
interest or principal at Stated Maturity; (iv) forgive any loan or advance to or
other obligation of any Affiliate of the Company (other than a loan or advance
to or other obligations of a Wholly Owned Restricted Subsidiary of the Company)
which at the time it was made was not a Restricted Payment; or (v) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (v) above being collectively referred to as "Restricted Payments"),
unless, at the time of and immediately after giving effect to such Restricted
Payment:
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(A) no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence
thereof; and
(B) the Company would be permitted to incur $1.00 of
additional Indebtedness pursuant to the Indebtedness to
Adjusted Operating Cash Flow Ratio described in Section
4.09(a) hereof; and
(C) such Restricted Payment, together with the
aggregate of all other Restricted Payments made by the Company
and its Restricted Subsidiaries after November 30, 1998
(excluding Restricted Payments permitted by clauses (2) and
(3) of Section 4.07(b)), is less than the sum of, without
duplication, (i) an amount equal to the Cumulative Operating
Cash Flow for the period (taken as one accounting period) from
the beginning of the first full month commencing after
November 30, 1998 to the end of the Company's most recently
ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (the
"Basket Period") less 1.4 times the Company's Cumulative Total
Interest Expense for the Basket Period, plus (ii) 100% of the
aggregate net cash proceeds and, in the case of proceeds
consisting of assets constituting or used in a Permitted
Business 100% of the fair market value of the aggregate net
proceeds other than cash, received since November 30, 1998 (1)
by the Company as capital contributions to the Company (other
than from a Subsidiary) or (2) from the sale by the Company
(other than to a Subsidiary) of its Equity Interests (other
than Disqualified Stock), plus (iii) to the extent that any
Restricted Investment that was made after November 30, 1998 is
sold for cash or otherwise liquidated or repaid for cash, the
Net Proceeds received by the Company or a Wholly Owned
Restricted Subsidiary of the Company upon the sale,
liquidation or repayment of such Restricted Investment, plus
(iv) to the extent that any Unrestricted Subsidiary is
designated by the Company as a Restricted Subsidiary, an
amount equal to the fair market value of such Investment at
the time of such designation, plus (v) 100% of any cash
dividends and other cash distributions received by the Company
from an Unrestricted Subsidiary, plus (vi) $2.5 million.
(b) The foregoing provisions shall not prohibit (1) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (2) the redemption, repurchase, retirement or other acquisition of
any Equity Interests or subordinated Indebtedness of the Company in exchange
for, or out of the net proceeds of, the substantially concurrent sale (other
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than to a Subsidiary of the Company) of other Equity Interests of the Company
(other than any Disqualified Stock); provided that the amount of any such net
proceeds that are utilized for any such redemption, repurchase, retirement or
other acquisition shall be excluded from clause (C)(ii) of the preceding
paragraph; (3) the defeasance, redemption or repurchase of Indebtedness with the
proceeds of a substantially concurrent issuance of Permitted Refinancing Debt in
accordance with the provisions of Section 4.09 hereof; (4) the payment by the
Company of advances under the Split Dollar Agreement in an amount not to exceed
$250,000 in any four-quarter period; (5) the repurchase or redemption from
employees of the Company and its Subsidiaries (other than the Principal) of
Capital Stock of the Company in an amount not to exceed an aggregate of $5.0
million since the date of this Indenture; (6) the payment of dividends on the
Series A Preferred Stock in accordance with the terms thereof as in effect on
the Closing Date; provided, however, that cash dividends may not be paid on the
Series A Preferred Stock pursuant to this clause (6) prior to July 1, 2002; (7)
the issuance of Subordinated Notes in exchange for shares of the Series A
Preferred Stock; provided that such issuance is permitted by Section 4.09
hereof; (8) in the event that the Company elects to issue Subordinated Notes in
exchange for Series A Preferred Stock, cash payments made in lieu of the
issuance of Subordinated Notes having a face amount less than $1,000 and any
cash payments representing accrued and unpaid dividends in respect thereof, not
to exceed $100,000 in the aggregate in any fiscal year; and (9) cash payments
made in lieu of the issuance of additional Subordinated Notes having a face
amount less than $1,000 and any cash payments representing accrued and unpaid
interest in respect thereof, not to exceed $100,000 in the aggregate in any
fiscal year.
(c) The amount of all Restricted Payments (other than cash) shall be
the fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or the applicable
Restricted Subsidiary, as the case may be, net of any liabilities proposed to be
assumed by the transferee and novated pursuant to a written agreement releasing
the Company and its Subsidiaries. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this covenant were computed,
which calculations may be based upon the Company's latest available financial
statements.
(d) The Board of Directors may designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if such designation would not cause a Default or
an Event of Default. For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries in the Subsidiary so
designated shall be deemed to be Restricted Payments at the time of such
designation (valued as set forth below) and shall reduce the amount available
for Restricted Payments under Section 4.07(a) hereof. All such outstanding
Investments shall be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation. Such
designation shall only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary would otherwise meet
the definition of an Unrestricted Subsidiary.
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SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any Indebtedness owed to the Company or any
of its Restricted Subsidiaries, (ii) make loans or advances to the Company or
any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (a) the terms of any
Indebtedness permitted by this Indenture to be incurred by any Subsidiary of the
Company; provided, that, any such Indebtedness permits the payment of cash
dividends to the Company in an amount sufficient to enable the Company to make
payments of (A) interest required to be paid in respect of the Notes, (B)
interest required to be paid in respect of the 1997 Notes, (C) interest required
to be paid o the 1998 Notes and (D) after July 1, 2002, dividends required to be
paid in respect of the Series A Preferred Stock and interest required to be paid
in respect of the Notes, if issued, in each case, in accordance with the terms
thereof (except during the continuance of a default or event of default under
such other Indebtedness), (b) Existing Indebtedness or the PM&C Credit Facility,
each as in effect on the Closing Date, (c) this Indenture, the Notes, the
Subsidiary Guarantees, the 1997 Indenture, the 1997 Notes and the 1997 Notes
Subsidiary Guarantees, the 1998 Indenture, the 1998 Notes and the 1998 Notes
Subsidiary Guarantees, (d) applicable law, (e) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in contemplation
of such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person and its
Subsidiaries, or the property or assets of the Person and its Subsidiaries, so
acquired, (f) by reason of customary non-assignment provisions in leases and
other contracts entered into in the ordinary course of business and consistent
with past practices or (g) any agreement for the sale of any Subsidiary or its
assets that restricts distributions by that Subsidiary pending its sale.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
(a) The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and shall
not, and shall not permit any Subsidiary Guarantor to, issue any Disqualified
Stock and shall not permit any of its Restricted Subsidiaries that are not
Subsidiary Guarantors to issue any shares of preferred stock (other than
Qualified Subsidiary Stock); provided, however, that the Company or any
Restricted Subsidiary may incur Indebtedness (including Acquired Debt) or issue
shares of preferred stock (including Disqualified Stock) if, in each case, (1)
the Company's Indebtedness to Adjusted Operating Cash Flow Ratio as of the date
on which such Indebtedness is incurred or such preferred stock or Disqualified
Stock is issued would have been 7.0 to 1 or less, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock or
preferred stock had been issued, as the case may be, as of the date of such
calculation and (2) no Default or Event of Default would occur as a consequence
thereof.
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The Company shall not, and shall not permit any Subsidiary
Guarantor to, incur any Indebtedness that is contractually subordinated to any
other Indebtedness of the Company or of such Subsidiary Guarantor, as the case
may be, unless such Indebtedness is also contractually subordinated to the Notes
or the Subsidiary Guarantee of such Subsidiary Guarantor, as the case may be, on
substantially identical terms; provided, however, that no Indebtedness shall be
deemed to be contractually subordinated to any other Indebtedness solely by
virtue of being unsecured.
(b) The foregoing provisions shall not apply to (collectively,
"Permitted Debt"):
(i) the incurrence by the Company's Unrestricted Subsidiaries
of Non-Recourse Debt or the issuance by such Unrestricted Subsidiaries
of preferred stock; provided, however, that if any such Indebtedness
ceases to be Non-Recourse Debt of an Unrestricted Subsidiary or any
such preferred stock becomes preferred stock (other than Qualified
Subsidiary Stock) of a Restricted Subsidiary, as the case may be, such
event shall be deemed to constitute an incurrence of Indebtedness by,
or an issuance of preferred stock (other than Qualified Subsidiary
Stock) of, as the case may be, a Restricted Subsidiary of the Company;
(ii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness pursuant to one or more Bank Facilities if
the aggregate principal amount at any time outstanding incurred
pursuant to this clause (ii) does not exceed $50.0 million;
(iii) the incurrence by the Company and its Restricted
Subsidiaries of the Existing Indebtedness;
(iv) the incurrence by the Company of Indebtedness under the
Subordinated Exchange Notes to pay interest on outstanding Subordinated
Notes;
(v) Indebtedness under the Notes and the Subsidiary
Guarantees;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company
and any of its Wholly Owned Restricted Subsidiaries; provided, however,
that (1) if the Company or a Subsidiary Guarantor is the obligor on
such Indebtedness, such Indebtedness is expressly subordinated to the
prior payment in full in cash of all obligations with respect to the
Notes or the Subsidiary Guarantee of such Subsidiary Guarantor, as the
case may be, and (2)(A) any subsequent issuance or transfer of Equity
Interests that result in any such Indebtedness being held by a Person
other than the Company or a Wholly Owned Restricted Subsidiary of the
Company and (B) any sale or other transfer of such Indebtedness to a
Person that is not either the Company or a Wholly Owned Restricted
Subsidiary of the Company shall be deemed, in each case, to constitute
an incurrence of such Indebtedness by the Company or such Restricted
Subsidiary, as the case may be;
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(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount not to exceed $7.5 million at any time outstanding,
including all Permitted Refinancing Debt incurred pursuant to clause
(viii) below to refund, replace or refinance any Indebtedness incurred
pursuant to this clause (vii);
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Debt in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace,
defease or refund, Indebtedness (other than intercompany Indebtedness)
that was permitted by this Indenture to be incurred;
(ix) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness (in addition to Indebtedness permitted by
any other clause of this paragraph) in an aggregate principal amount at
any time outstanding, including all Permitted Refinancing Debt incurred
pursuant to clause (viii) above to refund, replace or refinance any
Indebtedness incurred pursuant to this clause (ix), not to exceed $7.5
million; and
(x) the guarantee by the Company or any Restricted Subsidiary
of the Company of Indebtedness of the Company or a Subsidiary of the
Company that was permitted to be incurred by another provision of this
Section 4.09.
For purposes of determining compliance with this Section 4.09,
in the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Debt described in clauses (i) through (x) above or
is permitted to be incurred pursuant to Section 4.09(a) hereof and also meets
the criteria of one or more of the categories of Permitted Debt described in
clauses (i) through (x) above, the Company shall, in its sole discretion,
classify such item of Indebtedness in any manner that complies with this Section
4.09 and may from time to time reclassify such item of Indebtedness in any
manner in which such item could be incurred at the time of such
reclassification. For purposes of this paragraph, "Indebtedness" includes
Disqualified Stock and preferred stock of Subsidiaries. Accrual of interest and
the accretion of accreted value will not be deemed to be an incurrence of
Indebtedness for purposes of this Section 4.09.
SECTION 4.10. ASSET SALES.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair value (evidenced by a resolution of
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the Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) of the assets or Equity Interests issued or sold or otherwise disposed
of and (ii) at least 85% of the consideration therefor received by the Company
or such Restricted Subsidiary is in the form of cash; provided that the amount
of (x) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet or in notes thereto), of the Company or
any Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Notes or any guarantee thereof) that are assumed by the
transferee of any such assets and (y) any securities, notes or other obligations
received by the Company or any such Restricted Subsidiary from such transferee
that are contemporaneously (subject to ordinary settlement periods) converted by
the Company or such Restricted Subsidiary into cash (to the extent of the cash
received), shall be deemed to be cash for purposes of this provision.
(b) Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries may engage in Asset Swaps (which shall not be deemed to be Asset
Sales for purposes of this Section 4.10); provided that, immediately after
giving effect to such Asset Swap, the Company would be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Indebtedness to Adjusted
Operating Cash Flow Ratio set forth in Section 4.09(a) hereof.
(c) Within 180 days after the receipt of any Net Proceeds from an Asset
Sale, the Company or the applicable Restricted Subsidiary may, at its option,
apply such Net Proceeds (i) to permanently reduce Indebtedness outstanding
pursuant to any Bank Facility (and to permanently reduce the commitments
thereunder by a corresponding amount), (ii) to permanently reduce Indebtedness
of any of the Company's Restricted Subsidiaries or (iii) to the acquisition by
the Company or any of its Restricted Subsidiaries of another business, the
making of a capital expenditure or the acquisition of other long-term assets, in
each case, in a Permitted Business; provided, however, that if the Company or
any Restricted Subsidiary enters into a legally binding agreement with an entity
that is not an Affiliate of the Company to reinvest such Net Proceeds in
accordance with this clause (iii) within 180 days after the receipt thereof, the
provisions of this Section 4.10 will be satisfied so long as such binding
agreement is consummated within one year after the receipt of such Net Proceeds.
If any such legally binding agreement to reinvest such Net Proceeds is
terminated, then the Company may, within 360 days of such Asset Sale, apply such
Net Proceeds as provided in clauses (i), (ii) or (iii) above (without regard to
the proviso contained in clause (iii) above). Pending the final application of
any such Net Proceeds, the Company or the applicable Restricted Subsidiary may
temporarily reduce Indebtedness pursuant to any Bank Facility or otherwise
invest such Net Proceeds in any manner that is not prohibited by this Indenture.
A reduction of Indebtedness pursuant to any Bank Facility is not "permanent" for
purposes of clause (i) of this Section 4.10(c) if an amount equal to the amount
of such reduction is reborrowed and used to make an acquisition described in
clause (iii) of this Section 4.10(c) within the time period specified in this
Section 4.10. Any Net Proceeds from Asset Sales that are not applied or invested
as provided in the first sentence of this Section 4.10(c) will be deemed to
constitute "Excess Proceeds."
(d) Within five days of each date on which the aggregate amount of
Excess Proceeds exceeds $10.0 million, the Company will be required to make an
offer to all Holders of Notes and the Holders of Pari Passu Debt, to the extent
required by the terms thereof (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes and Pari Passu Debt that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus, in each case, accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase, in accordance with the
procedures set forth in Section 3.09 or the agreements governing Pari Passu
Debt, as applicable; provided, however, that the Company may only purchase Pari
Passu Debt in an Asset Sale Offer that was issued pursuant to an indenture
having a provision substantially similar to this Section 4.10.
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(e) To the extent that the aggregate amount of Notes and Pari Passu
Debt tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
the Company may use any remaining Excess Proceeds for general corporate
purposes.
(f) If the aggregate principal amount of Notes and Pari Passu Debt
surrendered exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and Pari Passu Debt to be purchased on a pro rata basis, based upon the
principal amount thereof surrendered in such Asset Sale Offer.
(g) Upon completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make any contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to
the Holders (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $1.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and a majority of the
Independent Directors and (b) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $5.0 million, an opinion as to the fairness to the Company or such
Restricted Subsidiary of such Affiliate Transaction from a financial point of
view issued by an investment banking firm of national standing; provided that
the Company shall not, and shall not permit any of its Restricted Subsidiaries
to, engage in any Affiliate Transaction involving aggregate consideration in
excess of $1.0 million at any time that there is not at least one Independent
Director on the Company's Board of Directors; and provided further that (w) any
employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Company or such Restricted Subsidiary, (x) transactions between
or among the Company and/or its Restricted Subsidiaries, (y) the payment of any
dividend on, or the issuance of additional Subordinated Notes in exchange for,
the Series A Preferred Stock, provided that such dividends are paid on a pro
rata basis and the additional Subordinated Notes are issued in accordance with
the Certificate of Designation, and (z) transactions permitted by Section 4.07
hereof, in each case, shall not be deemed Affiliate Transactions.
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SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly create, incur, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom, except Permitted Liens.
SECTION 4.13. LIMITATION OF CERTAIN SUBSIDIARY INDEBTEDNESS AND PREFERRED
STOCK.
Notwithstanding any other provision of this Indenture to the
contrary, the Company will not permit any of its Restricted Subsidiaries to
incur any Indebtedness (other than Eligible Indebtedness) or to issue any
Disqualified Stock; provided that any Restricted Subsidiary that is a Subsidiary
Guarantor may incur Indebtedness (whether or not such Indebtedness is Eligible
Indebtedness) or issue Disqualified Stock if such incurrence or issuance is
permitted under Section 4.09 hereof, provide further that notwithstanding the
immediately preceding proviso, in no event shall the Company permit any of its
Restricted Subsidiaries to incur any Indebtedness represented by senior secured
bonds or other senior secured securities, unless such Subsidiary is a Subsidiary
Guarantor and its Subsidiary Guarantee is secured on an equal and ratable basis
with other such other senior secured bonds or other senior secured securities.
SECTION 4.14. CONTINUED EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each of its Restricted Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Restricted Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and any of its Restrictive
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Restricted Subsidiaries, if the Board of Directors
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Restricted Subsidiaries, taken as
a whole, and that the loss thereof is not adverse in any material respect to the
Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Notes
shall have the right to require the Company to repurchase all or any part (but
not, in the case of any Holder requiring the Company to purchase less than all
of the Notes held by such Holder, any Note in principal amount less than $1,000)
of such Holder's Notes pursuant to the offer described below (the "Change of
Control Offer") at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and liquidated
damages, if any, thereon to the date of purchase (the "Change of Control
payment").
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(b) Within ten days following any Change of Control, the Company shall
mail a notice to each Holder, with a copy to the Trustee, stating: (1) a
description of the transaction or transactions that constitute the Change of
Control; (2) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Notes tendered shall be accepted for payment; (3) the
purchase price and the purchase date, which shall be no later than 30 Business
Days from the date such notice is mailed (the "Change of Control Payment Date");
(4) that any Note not tendered shall continue to accrue interest; (5) that,
unless the Company defaults in the payment of the Change of Control Payment, all
Notes accepted for payment pursuant to the Change of Control Offer shall cease
to accrue interest after the Change of Control Payment Date; (6) that Holders
electing to have any Notes purchased pursuant to a Change of Control Offer shall
be required to surrender the Notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date; (7) that Holders
shall be entitled to withdraw their election if the Paying Agent receives, not
later than the close of business on the second Business Day preceding the Change
of Control Payment Date, a telegram, telex, facsimile, transmission or letter
setting forth the name of the Holder, the principal amount of Notes delivered
for purchase, and a statement that such Holder is withdrawing his election to
have the Notes purchased; and (8) that Holders whose Notes are being purchased
only in part shall be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion must be
equal to $1,000 in principal amount or an integral multiple thereof. The Company
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
(c) On or prior to 10:00 a.m. Eastern Time on the Change of Control
Payment Date, the Company shall, to the extent lawful, (1) accept for payment
all Notes or portions thereof properly tendered pursuant to the Change of
Control Offer, (2) deposit with the Paying Agent an amount equal to the Change
of Control Payment in respect of all Notes or portions thereof so tendered and
(3) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate principal amount of
Notes or portions thereof being purchased by the Company. The Paying Agent will
promptly mail to each Holder of Notes so tendered the Change of Control Payment
for such Notes, and the Trustee will promptly authenticate and mail (or cause to
be transferred by book entry) to each Holder a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered, if any. The Company
will publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment Date.
(d) The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Section 4.15 and purchases all Notes validly tendered and not
withdrawn under such Change of Control Offer.
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SECTION 4.16. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY
OWNED RESTRICTED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Wholly
Owned Restricted Subsidiary of the Company to, transfer, convey, sell or
otherwise dispose of any Capital Stock of any Wholly Owned Restricted Subsidiary
of the Company to any Person (other than the Company or a Wholly Owned
Restricted Subsidiary of the Company), unless (a) such transfer, conveyance,
sale, lease or other disposition is of all the Capital Stock of such Wholly
Owned Restricted Subsidiary and (b) the cash Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
Section 4.10 hereof and (ii) shall not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company.
SECTION 4.17. LIMITATION ON ISSUANCE OF SUBSIDIARY GUARANTEES
(a) The Company shall not permit any Restricted Subsidiary to guarantee
the payment of any Indebtedness of the Company or any Indebtedness of any
Subsidiary Guarantor (in each case, the "Guaranteed Debt;" the Company or the
Subsidiary Guarantor that is primarily liable on the Guaranteed Debt being the
"Obligor") unless (i) if such Restricted Subsidiary is not a Subsidiary
Guarantor, such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to this Indenture in form attached hereto as Exhibit E
providing for a guarantee (a "Subsidiary Guarantee") of payment of the Notes by
such Restricted Subsidiary, (ii) if the Guaranteed Debt is by its express terms
subordinated in right of payment to the Notes or the Subsidiary Guarantee of
such Obligor, any such guarantee of such Subsidiary Guarantor with respect to
the Guaranteed Debt shall be subordinated in right of payment to such Subsidiary
Guarantor's Subsidiary Guarantee with respect to the Notes substantially to the
same extent as the Guaranteed Debt is subordinated to the Notes or the
Subsidiary Guarantee of such Obligor, (iii) such Restricted Subsidiary waives
and will not in any manner whatsoever claim or take the benefit or advantage of,
any rights of reimbursement indemnity or subrogation or any other rights against
the Company or any other Restricted Subsidiary as a result of any payment by
such Restricted Subsidiary under its Subsidiary Guarantee and (iv) such
Restricted Subsidiary shall deliver to the Trustee an opinion of counsel to the
effect that (A) such Subsidiary Guarantee of the Notes has been duly executed
and authorized and (B) such Subsidiary Guarantee of the Notes constitutes a
valid, binding and enforceable obligation of such Restricted Subsidiary, except
insofar as enforcement thereof may be limited by bankruptcy, insolvency or
similar laws (including, without limitation, all laws relating to fraudulent
transfers) and except insofar as enforcement thereof is subject to general
principles of equity.
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(b) No Subsidiary Guarantor may consolidate with or merge with or into
(whether or not such Subsidiary Guarantor is the surviving Person), another
corporation, Person or entity whether or not affiliated with such Subsidiary
Guarantor unless (i) subject to the provisions of Section 4.17(c) hereof, the
Person formed by or surviving any such consolidation or merger (if other than
such Subsidiary Guarantor) assumes all the obligations of such Subsidiary
Guarantor pursuant to a supplemental indenture in the form attached hereto as
Exhibit E, under the Notes, the Indenture and the Registration Rights Agreement;
(ii) immediately after giving effect to such transaction no Default or Event of
Default exists; and (iii) the Company would be permitted to incur $1.00 of
additional Indebtedness pursuant to the Indebtedness to Adjusted Operating Cash
Flow Ratio described in Section 4.09(a) hereof.
(c) In the event of a sale or other disposition of all of the assets of
any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a
sale or other disposition of all of the capital stock of any Subsidiary
Guarantor, then such Subsidiary Guarantor (in the event of a sale or other
disposition, by way of such a merger, consolidation or otherwise, of all the
capital stock of such Subsidiary Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all of the assets of
such Subsidiary Guarantor) will be released and relieved of any obligation under
its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other
disposition shall be applied in accordance with Section 4.10 hereof.
(d) Any Subsidiary Guarantor that is designated as an Unrestricted
Subsidiary in accordance with the terms of this Indenture will be released and
relieved of its obligations under its Subsidiary Guarantee for so long as such
Subsidiary is so designated.
SECTION 4.18. NO AMENDMENT OF SUBORDINATION PROVISIONS.
Without the consent of each Holder of Notes outstanding, the
Company shall not amend, modify or alter the Subordinated Exchange Note
Indenture in any way that will (i) increase the rate of or change the time for
payment of interest on any Subordinated Exchange Notes, (ii) increase the
principal of, advance the final maturity date of or shorten the Weighted Average
Life to Maturity of any Subordinated Exchange Notes, (iii) alter the redemption
provisions or the price or terms at which the Company is required to offer to
purchase such Subordinated Exchange Notes in a manner that would be adverse to
any Holder of Notes or (iv) amend the provisions of Article 10 of the
Subordinated Exchange Note Indenture (which relate to subordination).
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
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properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the Obligations of the
Company under the Notes, this Indenture and the Registration Rights Agreement
pursuant to a supplemental indenture in a form reasonably satisfactory to the
Trustee; (iii) immediately after such transaction no Default or Event of Default
exists; (iv) the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Indebtedness to Adjusted Operating Cash Flow Ratio
set forth in Section 4.09(a) hereof and (v) each Subsidiary Guarantor, if any,
unless it is the other party to the transactions described above, shall have by
supplemental indenture confirmed that its Subsidiary Guarantee shall apply to
such Person's obligations under the Indenture, the Notes and the Registration
Rights Agreement.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the same
effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT
An "Event of Default" occurs if:
(a) the Company Defaults in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes and such Default
continues for a period of 30 days;
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(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption or otherwise;
(c) the Company fails to comply with any of the provisions of section
4.07, 4.09, 4.10, 4.15 or 5.01 hereof;
(d) the Company or any Subsidiary fails to observe or perform any other
covenant, representation, warranty or other agreement in this Indenture, the
Notes for 60 days after notice to comply;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (on the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or
is created after the date of this Indenture, which default (i) is caused by a
failure to pay principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such Indebtedness on the
date of such default (a "Payment Default") or (ii) results in the acceleration
of such Indebtedness prior to its express maturity and, in each case, the
principal amount of such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $5.0 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any Restricted Subsidiary that would be a Significant Subsidiary and such
judgment or judgments remain unpaid, undischarged, or unstayed for a period of
60 days, provided that the aggregate of all such undischarged judgments exceeds
$5.0 million;
(g) the Company or any of its Restricted Subsidiaries or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
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(i) is for relief against the Company or any of its Restricted
Subsidiaries or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary
case;
(ii) appoints a custodian of the Company or any of its
Restricted Subsidiaries or any group of Restricted Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary or for all
or substantially all of the property of the Company or any of its
Restricted Subsidiaries or any group of Restricted Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Restricted Subsidiaries or any group of Restricted Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days;
or
(i) the termination of any Subsidiary Guarantee for any reason not
permitted by this Indenture, or the denial by any Subsidiary Guarantor or any
Person acting on behalf of any Subsidiary Guarantor of such Subsidiary
Guarantor's obligations under its respective Subsidiary Guarantee.
The term "custodian" as used in this Article VI means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
An Event of Default shall not be deemed to have occurred under
clause (c), (e) or (f) until the Trustee shall have received at the Corporate
Trust Office of the Trustee written notice from the Company or any of the
Holders or unless a Responsible Officer shall have actual knowledge of such
Event of Default. A Default under clause (e) is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in principal
amount of the then outstanding Notes notify the Company and the Trustee, of the
Default and the Company does not cure the Default within 60 days after receipt
of the notice. The notice must specify the Default, demand that it be remedied
and state that the notice is a "Notice of Default."
In the case of any Event of Default pursuant to the provisions
of this Section 6.01 occurring by reason of any action (or inaction) willfully
taken (or not taken) by or on behalf of the Company with the intention of
avoiding payment of the premium that the Company would have had to pay if the
Company then had elected to redeem the Notes pursuant to Section 3.07 hereof, an
equivalent premium shall also become and be immediately due and payable to the
extent permitted by law upon the acceleration of the Notes, anything in this
Indenture or in the Notes to the contrary notwithstanding; provided that the
Trustee shall not be under any duty to collect such premium on behalf of the
Holders until such time as Holders of at least 10% in principal amount of the
then outstanding Notes so notify the Trustee. If an Event of Default occurs
prior to August 1, 2003 by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to August 1, 2003, then the premium
payable for purposes of this paragraph for the twelve month period beginning on
August 1 of the years set forth below shall be as set forth in the following
table expressed as a percentage of the amount that would otherwise be due but
for the provisions of this sentence, plus accrued interest, if any, to the date
of payment:
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Year Percentage
- ---- ----------
1999........................................................... 114.582%
2000........................................................... 112.499%
2001........................................................... 110.416%
2002........................................................... 108.333%
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default
specified in clause (g) or (h) of Section 6.01 hereof) occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Upon any such declaration, the principal of, premium, if any, and accrued and
unpaid interest and Liquidated Damages, if any, on the Notes shall become due
and payable immediately. Notwithstanding the foregoing, if an Event of Default
specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to the
Company, any of its Restricted Subsidiaries that would constitute a Significant
Subsidiary, or any group of Restricted Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary, all outstanding Notes shall be due
and payable immediately without further action or notice. Holders of the Notes
may not enforce this Indenture or the Notes except as provided in this
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest or Liquidated Damages, if any)
if it determines that withholding notice is in their interest.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal
amount of the then outstanding Notes by notice to the Trustee may on behalf of
the Holders of all of the Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase) (provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
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SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium, if any,
and interest on the Note, on or after the respective due dates expressed in the
Note (including in connection with an offer to purchase), or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as Trustee of an express trust against the Company for the whole
amount of principal of, premium, if any, and interest remaining unpaid on the
Notes and interest on overdue principal and, to the extent lawful, interest and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), its creditors or its property and
shall be entitled and empowered to collect, receive and distribute any money or
other property payable or deliverable on any such claims and any custodian in
any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
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SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium, if any, and interest, ratably, without preference
or priority of any kind, according to the amounts due and payable on the Notes
for principal, premium, if any, and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of its own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
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(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proven that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holders shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
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(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to the Company or upon the Company's direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if a Responsible Officer of the Trustee has actual knowledge of such Default or
Event of Default, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, or interest on, any
Note, the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Notes.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c). A copy of each report at the time of its
mailing to the Holders of Notes shall be mailed to the Company and filed with
the SEC and each stock exchange on which the Notes are listed in accordance with
TIA ss. 313(d). The Company shall promptly notify the Trustee when the Notes are
listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as the
Company and Trustee have separately agreed. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture against the Company
(including this Section 7.07) and defending itself against any claim (whether
asserted by the Company or any Holder or any other person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
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When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss.
313(b)(2) to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of a majority in principal amount of the then outstanding Notes may
remove the Trustee by so notifying the Trustee and the Company in writing. The
Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) Section 7.01. to the extent
indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8.
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SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding Notes
on the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all of its other
Obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest and Liquidated Damages, if any,
on such Notes when such payments are due, (b) the Company's obligations with
respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder, and the
Company's obligations in connection therewith and (d) this Article 8. Subject to
compliance with this Article 8, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section 8.03
hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Sections 3.09, 4.07, 4.08,
4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and 5.01 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the "outstanding"
Notes, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby. In addition, upon the Company's exercise under
Section 8.01 hereof of the option applicable to this Section 8.03, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(d) through 6.01(f) hereof shall not constitute Events of Default.
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SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, interest and premium
and Liquidated Damages, if any, on the outstanding Notes on the stated maturity
or on the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit) or insofar
as Sections 6.01(g) or (h) hereof are concerned, at any time in the period
ending on the 91st day after the date of deposit (or greater period of time in
which any such deposit of trust funds may remain subject to bankruptcy or
insolvency laws insofar as those apply to the deposit by the Company);
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that, as of the date of such opinion, (i) the trust funds
will not be subject to the rights of holders of Indebtedness other than the
Notes and (ii) assuming no intervening bankruptcy of the Company between the
date of deposit and the 91st day (or greater period of time in which any such
deposit of trust funds may remain subject to bankruptcy or insolvency laws
insofar as those apply to the deposit by the Company) following the deposit and
assuming no Holder of Notes is an insider of the Company, after the 91st day (or
later date until which any such deposit of trust funds may remain subject to
bankruptcy or insolvency laws insofar as those apply to the deposit by the
Company) following the deposit, the trust funds will not be subject to the
effects of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally under any applicable United States or
state law;
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(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
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SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium
or interest or Liquidated Damages, if any, on any Note and remaining unclaimed
for two years after such principal, and premium, if any, or interest has become
due and payable shall be paid to the Company on its request or (if then held by
the Company) shall be discharged from such trust; and the Holder of such Note
shall thereafter, as a secured creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with Section
8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the obligations of the Company under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee
or Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company
makes any payment of principal of, premium or interest or Liquidated Damages, if
any, on any Note following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, a
Subsidiary Guarantor (with respect to a Subsidiary Guarantee or the Indenture to
which it is a party) and the Trustee may amend or supplement this Indenture, the
Notes or the Subsidiary Guarantees without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
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(c) to provide for the assumption of the Company's or any Subsidiary
Guarantor's obligations to Holders of Notes in the case of a merger or
consolidation pursuant to Article 5 hereof, as applicable;
(d) to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights hereunder of any such Holder; or
(e) to comply with the requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA or to allow any
Subsidiary Guarantor to guarantee the Notes.
Upon the request of the Company accompanied by a resolution of
the Board of Directors of the Company or a Subsidiary Guarantor, as applicable,
authorizing the execution of any such amended or supplemental Indenture, and
upon receipt by the Trustee of the documents described in Section 7.02 hereof,
the Trustee shall join with the Company or such Subsidiary Guarantor in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture or Subsidiary
Guarantee that affects its own rights, duties or immunities under this Indenture
or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company, a
Subsidiary Guarantor (with respect to a Subsidiary Guarantee or the Indenture to
which it is a party) and the Trustee may amend or supplement this Indenture, the
Notes or the Subsidiary Guarantees may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Notes), and, subject
to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default
(other than a Default or Event of Default in the payment of the principal of,
premium or interest or Liquidated Damages, if any, on the Notes) or compliance
with any provision of this Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for the Notes). Any amendment to the
provisions of Article 10 hereof including the related definitions will require
the consent of the Holders of at least 75% in aggregate principal amount of the
Notes then outstanding if such amendment would adversely affect the rights of
Holders of Notes.
Upon the request of the Company accompanied by a resolution of
the Board of Directors of the Company or a Subsidiary Guarantor, as applicable,
authorizing the execution of any such amended or supplemental Indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of
the documents described in Section 7.02 hereof, the Trustee shall join with the
Company or such Subsidiary Guarantor in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental Indenture.
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It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver may not (with respect to any Notes
held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes (other than
provisions relating to Sections 3.09, 4.10 and 4.15 hereof);
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of
or interest or premium or Liquidated Damages, if any, on the Notes (except a
rescission of acceleration of the Notes by the Holders of a majority in
aggregate principal amount of the Notes and a waiver of the payment default that
resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or interest or premium or Liquidated Damages, if any, on the
Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by the provisions of Section 3.09, 4.10 or 4.15 hereof);
(h) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions; or
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(i) except as provided in Article 8 hereof or otherwise in accordance
with the terms of this Indenture or any Subsidiary Guarantee, release a
Subsidiary Guarantor from its obligations under its Subsidiary Guarantee or make
any change in a Subsidiary Guarantee that would adversely affect the Holders of
the Notes.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in an amended or supplemental Indenture that complies with
the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Notes, even if notation of the consent
is not made on any Notes. However, any such Holder of a Note or subsequent
Holder of a Note may revoke the consent as to its Notes if the Trustee receives
written notice of revocation before the date the waiver, supplement or amendment
becomes effective. An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Notes thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall authenticate
new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or to issue new Notes
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until its Board
of Directors approves it. If it does, the Trustee may, but need not, sign it. In
signing or refusing to sign such amendment or supplemental Indenture, the
Trustee shall be entitled to receive and, subject to Section 7.01 hereof, shall
be fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel as conclusive evidence that such amendment or supplemental Indenture is
authorized or permitted by this Indenture, that it is not inconsistent herewith,
and that it will be valid and binding upon the Company in accordance with its
terms.
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ARTICLE 10.
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA ss.318(c), the imposed duties shall
control.
SECTION 10.02. NOTICES.
Any notice or communication by the Company or the Trustee to
the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company:
Pegasus Communications Corporation
c/o Pegasus Communications Management Company
225 City Lane Avenue, Suite 200
Bala Cynwyd, PA 19004
Telecopier No.: (610) 934-7121
Attention: Marshall W. Pagon
With a copy to:
Drinker Biddle & Reath LLP
One Logan Square
Eighteenth & Cherry Streets
Philadelphia, PA 19103
Telecopier No.: (215) 988-2757
Attention: Michael B. Jordan, Esq.
If to the Trustee:
First Union National Bank
230 S. Tryon Street
Charlotte, NC 28288-1153
Telecopier No.: (704) 374-6114
Attention: Client Service Group
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With a copy to:
First Union National Bank
123 South Broad Street
PA 1249
Philadelphia, PA 19109
Telecopier No.: (215) 985-7290
Attention: Corporate Trust Administration
The Company or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA ss. 313(c), to the extent required by the
TIA. Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 10.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
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(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 10.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 10.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 10.06 RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
SECTION 10.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Notes, this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
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SECTION 10.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE AND THE NOTES.
SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 10.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes
shall bind its respective successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 10.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 10.12 COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 10.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties have executed this Indenture
as of the date first written above.
Very truly yours,
PEGASUS COMMUNICATIONS CORPORATION
By: /s/ Ted S. Lodge
----------------------------------
Name: Ted S. Lodge
Title: Senior Vice President
FIRST UNION NATIONAL BANK
By: /s/ Alan G. Finn
-----------------------------
Name: Alan G. Finn
Title: Vice President
i
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EXHIBIT A
(Face of Note)
12 1/2% Senior Notes due 2007
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
CUSIP:
No: $______________
Pegasus Communications Corporation
promises to pay to ______________ or registered assigns, the principal sum of
______________
Dollars on August 1, 2007.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
Dated: November ___, 1999
<PAGE>
PEGASUS COMMUNICATIONS CORPORATION
By:______________________________
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
FIRST UNION NATIONAL BANK,
as Trustee
By: __________________________________
Authorized Officer
<PAGE>
(Back of Note)
12 1/2% [Series A] [Series B] Senior Notes due 2007
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Pegasus Communications Corporation, a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at 12 1/2% per annum from November 19, 1999 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on February 1 and August 1 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be February 1, 2000. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the January 15 or July
15 next preceding the Interest Payment Date, even if such Notes are canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Notes will be payable as to principal, premium and Liquidated Damages, if
any, and interest at the office or agency of the Company maintained for such
purpose within or without the City and State of New York, or, at the option of
the Company, payment of interest and Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest, premium and Liquidated
Damages on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, First Union National Bank,
the Trustee under the Indenture, will act as Paying Agent and Registrar. The
<PAGE>
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as
of November 19, 1999 (the "Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code ss.ss. 77aaa-77bbbb) (the "TIA"). The Notes are subject to all such
terms, and Holders are referred to the Indenture and the TIA for a statement of
such terms. The Notes are general obligations of the Company limited to
$155,000,000 in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) The Notes will not be redeemable at the Company's option prior to
August 1, 2003. The Notes may be redeemed, in whole or in part, at the option of
the Company on or after August 1, 2003, at the redemption prices specified below
(expressed as percentages of the principal amount thereof), in each case,
together with accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of redemption, upon not less than 30 nor more than 60 days'
notice, if redeemed during the twelve-month period beginning on August 1 of the
years indicated below:
Redemption
Year Price
---- -----
2003 106.250%
2004 104.167%
2005 102.083%
2006 and thereafter 100.000%
(b) Notwithstanding the foregoing, prior to August 1, 2000, the Company
may, on any one or more occasions, use the net proceeds of one or more offerings
of its Capital Stock to redeem up to 35% of the aggregate principal amount of
the Notes at a redemption price of 112.500% the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, to the date of
redemption; provided that, after any such redemption, the aggregate principal
amount of the Notes outstanding (excluding Notes held by the Company and its
Subsidiaries) must equal at least 65% of the Notes issued under the Indenture;
and provided further, that any such redemption shall occur within 90 days of the
date of closing of such offering of Capital Stock of the Company.
6. MANDATORY REDEMPTION. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
<PAGE>
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control the Company shall be
obligated to make an offer (a "Change in Control Offer") to each Holder of Notes
to repurchase all or any part (equal to $1,000 or an integral multiple thereof)
of such Holder's Notes at an offer price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase (the "Change of Control
Payment"). Within ten days following any Change of Control, the Company shall
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes pursuant to
the procedures required by the Indenture and described in such notice.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sale, within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company shall commence an offer to all
Holders of Notes and the holders of Pari Passu Debt, to the extent required by
the terms thereof (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes and Pari Passu Debt that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus, in each case, accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase, in accordance with the procedures set
forth in the Indenture or the agreements governing Pari Passu Debt, as
applicable; provided, however, that the Company may only purchase Pari Passu
Debt in an Asset Sale Offer that was issued pursuant to an indenture having a
provision substantially similar to the Asset Sale Offer provision contained in
the Indenture. If the aggregate principal amount of Notes and Pari Passu Debt
surrendered exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and Pari Passu Debt to be purchased on a pro rata basis, based upon the
principal amount thereof surrendered in such Asset Sale Offer. Holders of Notes
that are the subject of an offer to purchase will receive an Asset Sale Offer
from the Company prior to any related purchase date and may elect to have such
Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of Redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in all appropriate denominations. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company need not transfer or exchange any Note selected for redemption,
except for the unredeemed portion of any Note being redeemed in part. Also, it
need not transfer or exchange any Note for a period of 15 Business Days before a
<PAGE>
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Notes or the Subsidiary Guarantees may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the then outstanding Notes, and any existing default or compliance
with any provision of the Indenture, the Notes or the Subsidiary Guarantees may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes. Without the consent of any Holder of a Note, the
Indenture, the Notes or the Subsidiary Guarantees may be amended or supplemented
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's or any Subsidiary Guarantor's obligations to Holders
of the Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the TIA or to allow any
Subsidiary Guarantor to guarantee the Notes.
12. DEFAULTS AND REMEDIES. Each of the following constitutes an Event
of Default: (i) default by the Company in the payment of interest and Liquidated
Damages, if any, on the Notes when the same becomes due and payable and the
Default continues for a period of 30 days; (ii) default by the Company in the
payment of the principal of or premium, if any, on the Notes when the same
becomes due and payable at maturity, upon redemption or otherwise; (3) failure
by the Company or any Subsidiary to comply with Sections 4.07, 4.09, 4.10, 4.15,
or 5.01 of the Indenture; (4) failure by the Company or any Subsidiary for 60
days after notice to comply with any of its other agreements in the Indenture or
the Notes; (5) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or
shall be created hereafter, which default (a) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the date of such
default (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $5.0 million or more; (6) a final
judgment or final judgments for the payment of money are entered by a court or
courts of competent jurisdiction against the Company or any Restricted
Subsidiary that would be a Significant Subsidiary and such judgment or judgments
remain unpaid, undischarged or unstayed for a period of 60 days, provided that
the aggregate of all such undischarged judgments exceeds $5.0 million; (7)
certain events of bankruptcy or insolvency with respect to the Company, any
Restricted Subsidiary that would constitute a Significant Subsidiary or any
group of Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary and (8) the termination of any Subsidiary Guarantee for
any reason not permitted by the Indenture, or the denial by any Subsidiary
Guarantor or any Person acting on behalf of any Subsidiary Guarantor of such
Subsidiary Guarantor's obligations under its respective Subsidiary Guarantee. If
any Event of Default occurs and is continuing, the Trustee or the Holders of at
<PAGE>
least 25% in principal amount of the then outstanding Notes may declare all the
Notes to be due and payable immediately. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency with respect to the Company, any Restricted Subsidiary that would
constitute a Significant Subsidiary or any group of Restricted Subsidiaries
that, taken together, would constitute a Significant Subsidiary, all outstanding
Notes will become due and payable without further action or notice. Holders of
the Notes may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest or Liquidated Damages, if any)
if it determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of principal,
interest or premium or Liquidated Damages, if any, on the Notes. The Company is
required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required upon becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.
13. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder of the Company or any Subsidiary Guarantor as such,
shall have any liability for any obligations of the Company or the Subsidiary
Guarantors under the Notes, the Subsidiary Guarantees or the Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
<PAGE>
17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
Pegasus Communications Corporation
c/o Pegasus Communications Management Company
225 City Line Avenue
Suite 200
Bala Cynwyd, PA 19004
Attention: Chief Financial Officer
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date: ________________
Your Signature:___________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
Date:___________________ Your Signature:___________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:________________________
Signature Guarantee:___________________________
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE (1)
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Amount of Principal Amount of
decrease in Amount of increase this Global Note Signature of
Principal Amount in Principal following such authorized officer
of this Global Amount of decrease (or of Trustee or
Date of Exchange Note this Global Note increase) Note Custodian
- ---------------- ---------------- ------------------ ---------------- ------------------
</TABLE>
- ------
(1) This should be included only if the Note is issued in global form.
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Pegasus Communications Corporation
c/o Pegasus Communications Management Company
225 City Line Avenue
Suite 200
Bala Cynwyd, PA 19004
First Union National Bank
230 S. Tryon Street
Charlotte, NC 28288-1153
Re: 12 1/2% Senior Notes due 2007
Reference is hereby made to the Indenture, dated as of November 19,
1999 (the "Indenture"), between Pegasus Communications Corporation, as issuer
(the "Company"), and First Union National Bank, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. |_| Check if Transferee will take delivery of a beneficial interest in the
144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
<PAGE>
2. |_| Check if Transferee will take delivery of a beneficial interest in the
Regulation S Global Note or a Definitive Note pursuant to Regulation S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act, (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act, and (iv) if the
proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person. Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.
3. |_| Check and complete if Transferee will take delivery of a beneficial
interest in the AI Global Note or a Definitive Note pursuant to any provision of
the Securities Act other than Rule 144A or Regulation S. The Transfer is being
effected in compliance with the transfer restrictions applicable to beneficial
interests in Restricted Global Notes and Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) |_| such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) |_| such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) |_| such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) |_| such Transfer is being effected to an Accredited Investor and
pursuant to an exemption from the registration requirements of the Securities
Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby
further certifies that it has not engaged in any general solicitation within the
<PAGE>
meaning of Regulation D under the Securities Act and the Transfer complies with
the transfer restrictions applicable to beneficial interests in a Restricted
Global Note or Restricted Definitive Notes and the requirements of the exemption
claimed, which certification is supported by (1) a certificate executed by the
Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer is
in respect of a principal amount of Notes at the time of transfer of less than
$250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a
copy of which the Transferor has attached to this certification), to the effect
that such Transfer is in compliance with the Securities Act. Upon consummation
of the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the AI Global Note and/or the Definitive Notes and in the Indenture and the
Securities Act.
4. |_| Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) |_| Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) |_| Check if Transfer is Pursuant to Regulation S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) |_| Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
<PAGE>
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
___________________________
[Insert Name of Transferor]
By:________________________
Name:
Title:
Dated:____________, ________
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP ), or
(ii) |_| Regulation S Global Note (CUSIP ), or
(iii) |_| AI Global Note (CUSIP ); or
(b) |_| a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP ), or
(ii) |_| Regulation S Global Note (CUSIP ), or
(iii) |_| AI Global Note (CUSIP ); or
(iv) |_| Unrestricted Global Note (CUSIP ); or
(b) |_| a Restricted Definitive Note; or
(c) |_| an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
(CUSIP______________)
Pegasus Communications Corporation
c/o Pegasus Communications Management Company
225 City Line Avenue
Suite 200
Bala Cynwyd, PA 19004
First Union National Bank
230 S. Tryon Street
Charlotte, NC 28288-1153
Re: 12 1/2% Senior Notes due 2007
Reference is hereby made to the Indenture, dated as of November 19,
1999 (the "Indenture"), between Pegasus Communications Corporation, as issuer
(the "Company"), and First Union National Bank, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
____________, (the "Owner") owns and proposes to exchange the Note[s]
or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
<PAGE>
(b) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) |_| Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) |_| Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted
Global Notes for Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes.
(a) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
<PAGE>
(b) |_| Check if Exchange is from Restricted Definitive Note to
beneficial interest in a Restricted Global Note. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] |_| 144A Global Note, |_| Regulation S Global Note, |_| AI Global
Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
___________________________________
[Insert Name of Owner]
By: _______________________________
Name:
Title:
Dated: ________________, ____
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING ACCREDITED INVESTOR
Pegasus Communications Corporation
c/o Pegasus Communications Management Company
225 City Line Avenue
Suite 200
Bala Cynwyd, PA 19004
First Union National Bank
230 S. Tryon Street
Charlotte, NC 28288-1153
Re: 12 1/2% Senior Notes due 2007
Reference is hereby made to the Indenture, dated as of November 19,
1999 (the "Indenture"), between Pegasus Communications Corporation, as issuer
(the "Company"), and First Union National Bank, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) |_| a beneficial interest in a Global Note, or
(b) |_| a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (c) an "accredited investor" (as defined below)
that, prior to such transfer, furnishes (or has furnished on its behalf by a
U.S. broker-dealer) to you and to the Company a signed letter substantially in
the form of this letter and an Opinion of Counsel in form reasonably acceptable
<PAGE>
to the Company to the effect that such transfer is in compliance with the
Securities Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the provisions of Rule
144(k) under the Securities Act or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing the Definitive Note or beneficial interest in a Global Note
from us in a transaction meeting the requirements of clauses (A) through (E) of
this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein acquired
by us must be effected through one of the Placement Agents.
4. We are an "accredited investor" (as defined in Rule 501(a)(1),
(2), (3), (5), (6), (7) or (8) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an "accredited investor") as to each of which we exercise sole investment
discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
____________________________________
[Insert Name of Accredited Investor]
By: ________________________________
Name:
Title:
Dated: __________________, ____
<PAGE>
EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE TO BE
DELIVERED BY SUBSIDIARY GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of
____________________, between _____________________ (the "Subsidiary
Guarantor"), a subsidiary of Pegasus Communications Corporation (or its
successor), a company incorporated under the laws of the State of Delaware (the
"Company"), and First Union National Bank, as trustee under the indenture
referred to below (the "Trustee").
W I T N E S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of November 19, 1999,
providing for the issuance of an aggregate principal amount of $155,000,000 of
12 1/2% Senior Notes due 2007 (the "Notes");
WHEREAS, Section 4.17 of the Indenture provides that, under certain
circumstances, the Company is required to cause the Subsidiary Guarantor to
execute and deliver to the Trustee a Subsidiary Guarantee on the terms and
conditions set forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal
and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. INDENTURE PROVISION PURSUANT TO WHICH GUARANTEE IS GIVEN. This
Supplemental Indenture is being executed and delivered pursuant to Section 4.17
of the Indenture.
3. AGREEMENTS TO GUARANTEE. The Subsidiary Guarantor hereby agrees as
follows:
(a) The Subsidiary Guarantor, jointly and severally with all other
Subsidiary Guarantors, if any, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, regardless of the validity and enforceability of the
Indenture, the Notes and the obligations of the Company under the Indenture and
the Notes, that:
<PAGE>
(i) the principal of, premium, if any, and interest on the Notes
shall be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of, premium, if
any, and interest on the Notes, to the extent lawful, and all other obligations
of the Company to the Holders or the Trustee thereunder shall be promptly paid
in full, all in accordance with the terms thereof; and
(ii) in case of any extension of time for payment or renewal of
any Notes or any of such other obligations, that the same shall be promptly paid
in full when due in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise.
Notwithstanding the foregoing, in the event that this Subsidiary
Guarantee would constitute or result in a violation of any applicable fraudulent
conveyance or similar law of any relevant jurisdiction, the liability of the
Subsidiary Guarantor under this Supplemental Indenture and its Subsidiary
Guarantee shall be limited to such amount as will not, after giving effect
thereto, and to all other liabilities of the Subsidiary Guarantor, result in
such amount constituting a fraudulent transfer or conveyance.
4. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES.
(a) To evidence its Subsidiary Guarantee set forth in this
Supplemental Indenture, the Subsidiary Guarantor hereby agrees that a notation
of such Subsidiary Guarantee substantially in the form of Annex A hereto shall
be endorsed by an officer of such Subsidiary Guarantor on each Note
authenticated and delivered by the Trustee after the date hereof.
(b) Notwithstanding the foregoing, the Subsidiary Guarantor hereby
agrees that its Subsidiary Guarantee set forth herein shall remain in full force
and effect notwithstanding any failure to endorse on each Note a notation of
such Subsidiary Guarantee.
(c) If an officer whose signature is on this Supplemental Indenture
or on the Subsidiary Guarantee no longer holds that office at the time the
Trustee authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
(d) The delivery of the Note by the Trustee, after the
authentication thereof under the Indenture, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Supplemental Indenture on behalf of the
Subsidiary Guarantor.
(e) The Subsidiary Guarantor hereby agrees that its obligations
hereof shall be unconditional, regardless of the validity, regularity or
enforceability of the Notes or the Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
(f) The Subsidiary Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
<PAGE>
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that its
Subsidiary Guarantee made pursuant to this Supplemental Indenture will not be
discharged except by complete performance of the obligations contained in the
Notes and the Indenture or pursuant to Section 5(b) of this Supplemental
Indenture.
(g) If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Supplemental Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then, and in every such
case, subject to any determination in such proceeding, the Subsidiary Guarantor,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereof and thereafter all rights and remedies of the
Subsidiary Guarantor, the Trustee and the Holders shall continue as though no
such proceeding had been instituted.
(h) The Subsidiary Guarantor hereby waives and will not in any
manner whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Subsidiary Guarantor as a result of any payment by such Subsidiary
Guarantor under its Subsidiary Guarantee. The Subsidiary Guarantor further
agrees that, as between the Subsidiary Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand:
(i) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six of the Indenture for the purposes of the
Subsidiary Guarantee made pursuant to this Supplemental Indenture,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby; and
(ii) in the event of any declaration of acceleration of such
obligations as provided in Article Six, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Subsidiary Guarantor for
the purpose of the Subsidiary Guarantee made pursuant to this Supplemental
Indenture.
(i) The Subsidiary Guarantor shall have the right to seek
contribution from any other non-paying Subsidiary Guarantor, if any, so long as
the exercise of such right does not impair the rights of the Holders under the
Subsidiary Guarantee made pursuant to this Supplemental Indenture.
(j) The Subsidiary Guarantor covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of the Indenture or this Subsidiary
Guarantee; and the Subsidiary Guarantor (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
<PAGE>
5. SUBSIDIARY GUARANTOR MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) Except as set forth in Articles Four and Five of the Indenture,
nothing contained in the Indenture, this Supplemental Indenture or in the Notes
shall prevent any consolidation or merger of the Subsidiary Guarantor with or
into the Company or any other Subsidiary Guarantor or shall prevent any
transfer, sale or conveyance of the property of the Subsidiary Guarantor as an
entirety or substantially as an entirety, to the Company or any other Subsidiary
Guarantor.
(b) Except as set forth in Article Four and Five of the Indenture,
upon the sale or disposition of all of the assets of any Subsidiary Guarantor,
by way of merger, consolidation or otherwise, or a sale or other disposition of
all of the capital stock of any Subsidiary Guarantor, then such Subsidiary
Guarantor (in the even of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all the capital stock of such Subsidiary
Guarantor) or the corporation acquiring the property (in the event of a sale or
other disposition of all of the assets of such Subsidiary Guarantor) will be
released and relieved of any obligation under its Subsidiary Guarantee; provided
that the Net Proceeds of such sale or other disposition are applied in
accordance with Section 4.10 of the Indenture. Except with respect to
transactions set forth in the preceding sentence, the Company and the Subsidiary
Guarantor covenant and agree that upon any such merger, consolidation or sale of
assets, the performance of all covenants and conditions of this Supplemental
Indenture to be performed by such Subsidiary Guarantor shall be expressly
assumed by supplemental indenture satisfactory in form to the Trustee, by the
corporation formed by such consolidation, or into which the Subsidiary Guarantor
shall have merged, or by the corporation which shall have acquired such
property. Upon receipt of an Officers' Certificate of the Company or the
Subsidiary Guarantor, as the case may be, to the effect that the Company or such
Subsidiary Guarantor has complied with the first sentence of this Section 5(b),
the Trustee shall execute any documents reasonably requested by the Company or
the Subsidiary Guarantor, at the cost of the Company or such Subsidiary
Guarantor, as the case may be, in order to evidence the release of such
Subsidiary Guarantor from its obligations under its Guarantee endorsed on the
Notes and under the Indenture and this Supplemental Indenture.
6. RELEASES UPON RELEASE OF GUARANTEE OF GUARANTEED INDEBTEDNESS.
Concurrently with the release or discharge of the Subsidiary Guarantor's
guarantee of the payment of [describe indebtedness the guarantee of which gave
rise to the delivery of this Supplemental Indenture] ("Guaranteed Debt") (other
than a release or discharge by or as a result of payment under such guarantee of
Guaranteed Indebtedness), the Subsidiary Guarantor shall be automatically and
unconditionally released and relieved of its obligations under this Supplemental
Indenture and its Subsidiary Guarantee made pursuant to Section 4 of this
Supplemental Indenture. Upon delivery by the Company to the Trustee of an
Officer's Certificate to the effect that such release or discharge has occurred,
the Trustee shall execute any documents reasonably required in order to evidence
the release of the Subsidiary Guarantor from its obligations under this
Supplemental Indenture and its Subsidiary Guarantee made pursuant hereto;
provided such documents shall not affect or impair the rights of the Trustee and
Paying Agent under Section 7.07 of the Indenture.
<PAGE>
7. NEW YORK LAW TO GOVERN. The internal law of the State of New York
shall govern and be used to construe this Supplemental Indenture.
8. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not effect the construction hereof.
[Signatures on following page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
Dated:________________, __________ [Subsidiary Guarantor]
By:_______________________________
Name:
Title:
Dated:________________, __________
as Trustee
By:_______________________________
Name:
Title:
<PAGE>
ANNEX A TO SUPPLEMENTAL INDENTURE
FORM OF NOTATION OF SUBSIDIARY GUARANTEE ON NOTE
Each Subsidiary Guarantor (as defined in the Indenture) has jointly and
severally unconditionally guaranteed (a) the due and punctual payment of the
principal of, premium, if any, and interest on the Notes, whether at stated
maturity or an Interest Payment Date, by acceleration, call for redemption or
otherwise, (b) the due and punctual payment of interest on the overdue principal
and premium of, and interest, to the extent lawful, on the Notes and (c) that in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, the same will be promptly paid in full when due in accordance
with the terms of the extension of renewal, whether at stated maturity, by
acceleration or otherwise.
Notwithstanding the foregoing, in the event that the Subsidiary
Guarantee would constitute or result in a violation of any applicable fraudulent
conveyance or similar law of any relevant jurisdiction, the liability of the
Subsidiary Guarantor under its Subsidiary Guarantee shall be limited to such
amount as will not, after giving effect thereto, and to all other liabilities of
the Subsidiary Guarantor, result in such amount constituting a fraudulent
transfer or conveyance.
The Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which the
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual or facsimile signature of one of its authorized
officers.
Dated:_______________________________ [Subsidiary Guarantor]
By:________________________________
Name:
Title:
<PAGE>
Exhibit 5.1
Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, Pennsylvania 19103
January 7, 2000
Pegasus Communications Corporation
225 City Line Avenue
Suite 200
Bala Cynwyd, Pennsylvania 19004
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
As counsel to Pegasus Communications Corporation, a Delaware
corporation (the "Company"), we have assisted in the preparation and filing of
the Company's Registration Statement on Form S-4 (the "Registration Statement"),
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Securities Act"), relating to $155,000,000 in principal
amount of the Company's 12 1/2% Series B Senior Notes due 2007 (the "New
Notes"), to be issued by the Company in exchange for $155,000,000 in principal
amount of the Company's 12 1/2% Series A Senior Notes due 2007 (the "Old
Notes"). The New Notes will be issued pursuant to the Indenture dated as of
November 19, 1999 ("Indenture"), between the Company and First Union National
Bank, as Trustee, which has been filed as an exhibit to the Registration
Statement.
In this connection, we have examined the originals or copies,
certified or otherwise identified to our satisfaction, of the Certificate of
Incorporation and By-laws of the Company, as amended, minutes and resolutions of
the Company's Board of Directors and such other documents and corporate records
relating to the Company and the issuance of the New Notes as we have deemed
appropriate. We express no opinion concerning the laws of any jurisdiction other
than the federal law of the United States, the laws of the Commonwealth of
Pennsylvania and the Delaware General Corporation Law, and we express no opinion
on the "blue sky" or securities law of any jurisdiction. In that connection, we
note that the Indenture provides that it is governed by the laws of the State of
New York. We are not familiar with those laws and express no opinion about them.
With your permission, we have assumed, solely for purposes of this Opinion, that
the Indenture will be governed by the laws of the Commonwealth of Pennsylvania
notwithstanding its express terms. We express no opinion about what law will
actually govern the Indenture.
In all examinations of documents, instruments and other
papers, we have assumed the genuineness of all signatures on original and
certified documents and the conformity with original and certified documents of
all copies submitted to us as conformed, photostatic or other copies. As to
matters of fact that have not been independently established, we have relied
upon representations of officers of the Company.
On the basis of the foregoing, it is our opinion that the New
Notes have been validly authorized for issuance and, upon execution of the New
Notes by the Company, authentication of the New Notes by the Trustee and
issuance and delivery of the New Notes in the manner provided in the Indenture
and the Registration Statement (including the exchange of the Old Notes for the
New Notes as set forth in the Registration Statement), the New Notes will be
legally issued and constitute binding obligations of the Company, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other laws affecting the rights of creditors generally and
subject to general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
<PAGE>
We hereby consent to the reference to our firm under the
caption "Legal Matters" in the Prospectus included in the Registration Statement
and to the filing of this opinion as an exhibit to the Registration Statement.
This does not constitute a consent under Section 7 of the Securities Act as we
have not certified any part of the Registration Statement and do not otherwise
come within the categories of persons whose consent is required under Section 7
or the rules and regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ DRINKER BIDDLE & REATH LLP
---------------------------------
DRINKER BIDDLE & REATH LLP
<PAGE>
Exhibit 8.1
Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, Pennsylvania 19103
January 7, 2000
Pegasus Communications Corporation
225 City Line Avenue
Suite 200
Bala Cynwyd, Pennsylvania 19004
Ladies and Gentlemen:
As counsel to Pegasus Communications Corporation, a Delaware
corporation (the "Company"), we have assisted in the preparation and filing of
the Company's Registration Statement on Form S-4 (the "Registration Statement"),
filed on the date hereof with the Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "Securities Act"), relating to
$155,000,000 in principal amount of the Company's 12 1/2% Series B Senior Notes
due 2007.
In our opinion, the statements in the Prospectus contained in the
Registration Statement (the "Prospectus") under the captions "Material United
States Federal Income Tax Consequences of the Exchange Offer" and "Material
United States Federal Income Tax Consequences," to the extent they constitute
matters of law or legal conclusions, are accurate in all material respects.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and we consent to the reference of our name under the
captions "Material United States Federal Income Tax Consequences of the Exchange
Offer" and "Legal Matters" in the Prospectus. By so doing, we do not concede
that we come within the category of persons under Section 7 of the Securities
Act or under the rules and regulations of the SEC issued thereunder.
Very truly yours,
/s/ DRINKER BIDDLE & REATH LLP
------------------------------
DRINKER BIDDLE & REATH LLP
<PAGE>
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of November 19, 1999
between
PEGASUS COMMUNICATIONS CORPORATION
and
THE HOLDERS OF ITS
12 1/2% SERIES A SENIOR NOTES DUE 2007
================================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and
entered into as of November 19, 1999 between Pegasus Communications Corporation,
a Delaware corporation (the "Company"), and those holders of the 12 1/2% Series
A Senior Notes due 2007 of the Company (the "Series A Notes"), who accept the
Parent-Subsidiary Exchange (as hereafter defined), in connection with the
Company's offer to exchange (the "Parent-Subsidiary Exchange") its Series A
Notes for each $1,000 principal amount of outstanding 12 1/2% Series B Senior
Subordinated Notes due 2007 (the "DTS Notes") of Digital Television Services,
Inc. ("DTS"), a wholly owned subsidiary of the Company.
This Agreement is made pursuant to the Parent-Subsidiary Exchange,
commenced on October 5, 1999, by the Company to the qualified holders of the
outstanding DTS Notes. In order to induce the qualified holders of the DTS Notes
to exchange the DTS Notes held by such holders for the Series A Notes, the
Company has agreed to provide the registration rights set forth in this
Agreement. Pursuant to the terms of the Exchange Offer, by tendering the DTS
Notes in the Parent-Subsidiary Exchange, each participating qualified holder
will be deemed to have signed this Agreement. Capitalized terms used herein and
not otherwise defined shall have the meaning assigned to them in the Indenture,
dated as of the Settlement Date, between the Company and First Union National
Bank, as trustee (the Trustee"), relating to the Series A Notes and the Series B
Notes (the "Indenture").
The parties hereby agree as follows:
Section 1. DEFINITIONS
Terms used but not defined herein shall have the meaning given to such
terms in the Indenture. As used in this Agreement, the following capitalized
terms shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (ii) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (iii) the delivery by the Company
to the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes that were
tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Notes, each Interest
Payment Date.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of the
Series B Notes pursuant to a Registration Statement pursuant to which the
Company offers the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
<PAGE>
by such Holders for Series B Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated as of November 19, 1999, between the
Company and the Trustee pursuant to which the Notes are to be issued, as such
Indenture is amended or supplemented from time to time in accordance with the
terms thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series A Notes and the Series B Notes.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Prospectus: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date relating to
Notes, each Person who is a Holder of Notes on the record date with respect to
the Interest Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company
relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, which is filed pursuant to the provisions of
this Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Series B Notes: The Company's 12 1/2% Series B Senior Notes due 2007 to
be issued pursuant to the Indenture in the Exchange Offer.
Settlement Date: The date of this Agreement.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
2
<PAGE>
Transfer Restricted Securities: Each Note, until the earliest to occur
of (a) the date on which such Note is exchanged by a person other than a
Broker-Dealer for a Series B Note in the Exchange Offer, (b) following the
exchange by a Broker-Dealer in the Exchange Offer of a Series A Note for a
Series B Note, the date on which such Series B Note is sold to a purchaser who
receives from such Broker-Dealer on or prior to the date of such sale a copy of
the Prospectus contained in the Exchange Offer Registration Statement, (c) the
date on which such Note has been effectively registered under the Act and
disposed of in accordance with a Shelf Registration Statement or (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the Act.
Trustee: As defined in the preamble hereto.
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
Section 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to be
a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities.
Section 3. REGISTERED EXCHANGE OFFER
(a) The Company shall (i) cause to be filed with the Commission as soon
as practicable after the Settlement Date, but in no event later than 60 days
after the Settlement Date, a Registration Statement under the Act relating to
the Series B Notes and the Exchange Offer, (ii) use its reasonable best efforts
to cause such Registration Statement to become effective at the earliest
possible time, but in no event later than 120 days after the Settlement Date,
(iii) in connection with the foregoing, file (A) all pre-effective amendments to
such Registration Statement as may be necessary in order to cause such
Registration Statement to become effective and (B) if applicable, a
post-effective amendment to such Registration Statement pursuant to Rule 430A
under the Act, (iv) cause all necessary filings in connection with the
registration and qualification of the Series B Notes to be made under the Blue
Sky laws of such jurisdictions within the United States as are necessary to
permit Consummation of the Exchange Offer and (v) unless the Exchange Offer
shall not be permissible under applicable law or Commission policy (after the
procedures set forth in Section 6(a) below have been complied with), commence
the Exchange Offer and use its reasonable best efforts to issue on or prior to
30 business days after the date on which the Exchange Offer Registration
Statement was declared effective by the Commission, Series B Notes in exchange
for all Series A Notes properly tendered prior thereto in accordance with the
terms of the Exchange Offer. The Exchange Offer shall be on the appropriate form
permitting registration of the Series B Notes to be offered in exchange for the
Transfer Restricted Securities and to permit resales of Notes held by
Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall cause the Exchange Offer Registration Statement
to be effective continuously and shall keep the Exchange Offer open for a period
of not less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; provided, however, that in no
event shall such period be less than 20 business days. The Company shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws. No securities other than the Notes shall be included in the Exchange Offer
Registration Statement.
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(c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Series A Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company), may exchange such
Series A Notes pursuant to the Exchange Offer; however, such Broker-Dealer may
be deemed to be an "underwriter" within the meaning of the Act and must,
therefore, deliver a prospectus meeting the requirements of the Act in
connection with any resales of the Series B Notes received by such Broker-Dealer
in the Exchange Offer, which prospectus delivery requirement may be satisfied by
the delivery by such Broker-Dealer of the Prospectus contained in the Exchange
Offer Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such resales by Broker-Dealers
that the Commission may require in order to permit such resales pursuant
thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer
or disclose the amount of Notes held by any such Broker-Dealer except to the
extent required by the Commission as a result of a change in policy after the
date of this Agreement.
The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for resales of Notes acquired by Broker-Dealers for
their own accounts as a result of market-making activities or other trading
activities, and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of one year from the date on which the
Exchange Offer Registration Statement is declared effective.
The Company shall provide sufficient copies of the latest version of
such Prospectus to Broker-Dealers promptly upon request at any time, subject to
Section 6(c)(i) hereof, during such one-year period in order to facilitate such
resales.
Section 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement or to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or Commission
policy (after the procedures set forth in Section 6(a) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities notifies the
Company within 20 business days after the Consummation of the Exchange Offer (A)
that such Holder is prohibited by applicable law or Commission policy from
participating in the Exchange Offer, or (B) that such Holder may not resell the
Series B Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not legally available for such resales by such Holder
or (C) that such Holder is a Broker-Dealer and owns Series A Notes acquired
directly from the Company or an affiliate of the Company, then the Company
shall:
(x) cause to be filed a shelf registration statement pursuant to
Rule 415 under the Act, which may be an amendment to the Exchange Offer
Registration Statement (in either event, the "Shelf Registration
Statement") on or prior to the earliest to occur of (1) the 90th day
after the date on which the Company determines that it is not required
to file the Exchange Offer Registration Statement, (2) the 90th day
after the date on which the Company receives notice from a Holder of
Transfer Restricted Securities as contemplated by clause (ii) above,
and (3) the 150th day after the Settlement Date (such earliest date
being the "Shelf Filing Deadline"), which Shelf Registration Statement
shall provide for resales of all Transfer Restricted Securities the
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Holders of which shall have provided the information required pursuant
to Section 4(b) hereof; and
(y) use its reasonable best efforts to cause such Shelf
Registration Statement to be declared effective by the Commission on or
before the 60th day after the Shelf Filing Deadline.
The Company shall use its best efforts to keep such Shelf Registration Statement
continuously effective, supplemented and amended as required by the provisions
of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for resales of Notes by the Holders of Transfer Restricted Securities
entitled to the benefit of this Section 4(a), and to ensure that it conforms
with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of at
least three years (as extended pursuant to Section 6(c)(i)) following the
Settlement Date or such shorter period that will terminate when all Transfer
Restricted Securities covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to liquidated damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading.
Section 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement is
not filed with the Commission on or prior to the date specified for such filing
in this Agreement, (ii) any of such Registration Statements has not been
declared effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) subject to the provisions of Section 6(c)(i) below, the Shelf
Registration Statement or the Exchange Offer Registration Statement is declared
effective but thereafter ceases to be effective or legally available for use in
connection with resales of Transfer Restricted Securities during the periods
specified in this Agreement without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself immediately declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the Company agrees to
pay liquidated damages to each Holder of Transfer Restricted Securities with
respect to the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 of
aggregate principal amount of Series A Notes held by such Holder for each week
or portion thereof that the Registration Default continues. The amount of the
liquidated damages shall increase by an additional $.05 per week per $1,000 of
aggregate principal amount of Series A Notes with respect to each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of liquidated damages of $.30 per week per $1,000 of aggregate principal
amount of Series A Notes. All accrued liquidated damages shall be paid by the
Company on each Damages Payment Date to the holder of the Global Notes by wire
transfer of immediately available funds or by federal funds check and to holders
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of Certificated Notes by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all Registration Defaults relating to any
particular Transfer Restricted Securities, the accrual of liquidated damages
with respect to such Transfer Restricted Securities will cease.
All obligations of the Company set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such Security shall have
been satisfied in full.
Section 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company shall comply with all of the provisions of Section
6(c) below, shall use its best efforts to effect such exchange and to permit the
sale of Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof, and shall comply with all of
the following provisions:
(i) If in the reasonable opinion of counsel to the Company there is
a question as to whether the Exchange Offer is permitted by applicable
law, the Company hereby agrees to seek a no-action letter or other
favorable decision from the Commission allowing the Company to
Consummate an Exchange Offer for such Series A Notes. The Company
hereby agrees to pursue the issuance of such a decision to the
Commission staff level but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. The
Company hereby agrees, however, to (A) participate in telephonic
conferences with the Commission, (B) deliver to the Commission staff an
analysis prepared by counsel to the Company setting forth the legal
bases, if any, upon which such counsel has concluded that such an
Exchange Offer should be permitted and (C) diligently pursue a
resolution (which need not be favorable) by the Commission staff of
such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the Consummation thereof, a written representation to the
Company (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the
effect that (A) it is not an affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the
Series B Notes to be issued in the Exchange Offer and (C) it is
acquiring the Series B Notes in its ordinary course of business. In
addition, all such Holders of Transfer Restricted Securities shall
otherwise cooperate in the Company's preparations for the Exchange
Offer. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on
the date of this Agreement rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and
Exxon Capital Holdings Corporation (available May 13, l988), as
interpreted in the Commission's letter to Shearman & Sterling dated
July 2, 1993, and similar no-action letters (including any no-action
letter obtained pursuant to clause (i) above), and (2) must comply with
the registration and prospectus delivery requirements of the Act in
connection with a secondary resale transaction and that such a
secondary resale transaction should be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
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S-K if the resales are of Series B Notes obtained by such Holder in
exchange for Series A Notes acquired by such Holder directly from the
Company.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the Exchange
Offer in reliance on the position of the Commission enunciated in Exxon
Capital Holdings Corporation (available May 13, 1988), Morgan Stanley
and Co., Inc. (available June 5, 1991) and, if applicable, any
no-action letter obtained pursuant to clause (i) above and (B)
including a representation that the Company has not entered into any
arrangement or understanding with any Person to distribute the Series B
Notes to be received in the Exchange Offer and that, to the best of the
Company's information and belief, each Holder participating in the
Exchange Offer is acquiring the Series B Notes in its ordinary course
of business and has no arrangement or understanding with any Person to
participate in the distribution of the Series B Notes received in the
Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof, and pursuant
thereto the Company will as expeditiously as possible prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof.
(c) General Provisions. In connection with any Registration Statement
and any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Exchange
Offer Registration Statement and the related Prospectus to the extent that the
same are required to permit resales of Notes by Broker-Dealers), the Company
shall:
(i) use its reasonable best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements (including, if required by the Act or any regulation
thereunder, financial statements of any of its subsidiaries) for the
period specified in Section 3 or 4 of this Agreement, as applicable;
upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and legally
available for use in connection with the resale of Transfer Restricted
Securities during the period required by this Agreement, the Company
shall file promptly an appropriate amendment to such Registration
Statement, in the case of clause (A), correcting any such misstatement
or omission, and, in the case of either clause (A) or (B), use its
reasonable best efforts to cause such amendment to be declared
effective and such Registration Statement and the related Prospectus to
become usable for their intended purpose(s) as soon as practicable
thereafter. Notwithstanding the foregoing, if the Board of Directors of
the Company determines in good faith that it is in the best interests
of the Company not to disclose the existence of or facts surrounding
any proposed or pending material corporate transaction involving the
Company, the Company may allow the Shelf Registration Statement or the
Exchange Offer Registration Statement to fail to be effective and
usable as a result of such nondisclosure for up to 90 days during the
three year period of effectiveness required by Section 4 hereof, but in
no event for any period in excess of 45 consecutive days, provided,
that in the event the Exchange Offer is Consummated, the Company shall
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not allow the Exchange Offer Registration Statement to fail to be
effective and usable for a period in excess of 30 days during the one
year period of effectiveness required by Section 3(c) hereof;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as applicable, or
such shorter period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been sold; cause
the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Act, and to comply fully with the applicable provisions of
Rules 424 and 430A under the Act in a timely manner; and comply with
the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening
of any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or
that requires the making of any additions to or changes in the
Registration Statement or the Prospectus in order to make the
statements therein not misleading, including, without limitation, under
circumstances described in Section 6(c)(i) above. If at any time the
Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification
or exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Company shall use its
reasonable best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), if any, before filing with the Commission, copies of
any Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review of such Holders and underwriter(s), if any, for a
period of at least five business days, and the Company will not file
any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including
all such documents incorporated by reference) to which selling Holders
holding at least 20% in the aggregate principal amount of the
outstanding Transfer Restricted Securities covered by such Registration
Statement or the underwriter(s), if any, shall reasonably object within
five business days after the receipt thereof. A selling Holder or
underwriter, if any, shall be deemed to have reasonably objected to
such filing if such Registration Statement, amendment, Prospectus or
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supplement, as applicable, as proposed to be filed, contains a material
misstatement or omission;
(v) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or accountant
retained by such selling Holders or any of the underwriter(s), all
financial and other records, pertinent corporate documents and
properties of the Company and each of its subsidiaries and cause the
Company's and each of its subsidiary's officers, directors and
employees to supply all information reasonably requested by any such
Holder, underwriter, attorney or accountant in connection with such
Registration Statement subsequent to the filing thereof and prior to
its effectiveness;
(vi) if requested by any selling Holders or the underwriter(s), if
any, promptly incorporate in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with respect to the
principal amount of Transfer Restricted Securities being sold to such
underwriter(s), the purchase price being paid therefor and any other
terms of the offering of the Transfer Restricted Securities to be sold
in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(vii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate
principal amount of Notes covered thereby or the underwriter(s), if
any;
(viii) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference), subject to any confidentiality agreements;
(ix) deliver to each selling Holder and each of the underwriter(s),
if any, without charge, as many copies of the Prospectus (including
each preliminary prospectus) and any amendment or supplement thereto as
such Persons reasonably may request; the Company hereby consents to the
use of the Prospectus and any amendment or supplement thereto by each
of the selling Holders and each of the underwriter(s), if any, in
connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto;
(x) enter into, and cause each of its subsidiaries to enter into,
such agreements (including an underwriting agreement), and make, and
cause each of its subsidiaries to make, such representations and
warranties, and take all such other actions in connection therewith in
order to expedite or facilitate the disposition of the Transfer
Restricted Securities pursuant to any Registration Statement
contemplated by this Agreement, all to such extent as may be reasonably
requested by any Holder of Transfer Restricted Securities or
underwriter in connection with any sale or resale pursuant to any
Registration Statement contemplated by this Agreement; and whether or
not an underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, the Company shall use its
best efforts to:
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(A) furnish to each selling Holder and each underwriter, if
any, in such substance and scope as they may request and as are
customarily made by issuers to underwriters in primary underwritten
offerings, upon the date of the Consummation of the Exchange Offer
and, if applicable, the effectiveness of the Shelf Registration
Statement:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed by (y) the
Chief Executive Officer and (z) the Chief Financial Officer of
the Company, confirming, as of the date thereof, the matters
set forth in paragraph (e) of Section 8 of that certain Dealer
Manager Agreement (the "Dealer Manager Agreement"), dated
October 5, 1999 by and among the Company, Donaldson Lufkin &
Jenrette Securities Corporation and CIBC World Markets Corp.
and such other matters as such parties may reasonably request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Company, covering the matters set forth in paragraph (c) of
Section 8 of the Dealer Manager Agreement and such other matter
as such parties may reasonably request, and in any event
including a statement to the effect that such counsel has
participated in conferences with officers and other
representatives of the Company and representatives of the
independent public accountants for the Company in connection
with the preparation of such Registration Statement and the
related Prospectus and have considered the matters required to
be stated therein and the statements contained therein,
although such counsel has not independently verified the
accuracy, completeness or fairness of such statements; and that
such counsel advises that, on the basis of the foregoing
(relying as to materiality to a large extent upon facts
provided to such counsel by officers and other representatives
of the Company and without independent check or verification),
such counsel does not believe that the applicable Registration
Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective, and, in the
case of the Exchange Offer Registration Statement, as of the
date of Consummation, contained an untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the
opinion dated the date of Consummation of the Exchange Offer,
as of the date of Consummation, contained an untrue statement
of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may state further
that such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness
of the financial and statistical statements, notes and
schedules and other financial data included in any Registration
Statement contemplated by this Agreement or the related
Prospectus; and
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(3) a customary comfort letter, dated as of the date of
Consummation of the Exchange Offer or the date of effectiveness
of the Shelf Registration Statement, as the case may be, from
the Company's independent accountants, in the customary form
and covering matters of the type customarily covered in comfort
letters by underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 8(d) of the Dealer
Manager Agreement, without exception; provided, however, that
if such registration is not an Underwritten Registration and
the customary comfort letter referred to above cannot be
delivered, the Company shall use its reasonable best efforts to
cause its independent accountants to deliver the highest level
of comfort permitted to be given by such accountants under the
then applicable standards of the American Institute of
Certified Public Accountants with respect to such registration
statement;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the
Company pursuant to this clause (xi), if any.
If at any time the representations and warranties of the Company or
any of its subsidiaries contemplated in clause (A)(l) above cease to be
true and correct, the Company shall so advise the underwriter(s), if
any, and each selling Holder promptly and, if requested by such
Persons, shall confirm such advice in writing;
(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with, and cause each of its subsidiaries to
cooperate with, the selling Holders, the underwriter(s), if any, and
their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions as the selling
Holders or underwriter(s) may request and do any and all other acts or
things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
Shelf Registration Statement; provided, however, that neither the
Company nor any of its subsidiaries shall be required to register or
qualify as a foreign corporation where it is not now so qualified or to
take any action that would subject it to the service of process in
suits or to taxation, other than as to matters and transactions
relating to the Registration Statement, in any jurisdiction where it is
not now so subject;
(xii) shall issue, upon the request of any Holder of Series A Notes
covered by the Shelf Registration Statement, Series B Notes, having an
aggregate principal amount equal to the aggregate principal amount of
Series A Notes surrendered to the Company by such Holder in exchange
therefor or being sold by such Holder; such Series B Notes to be
registered in the name of such Holder or in the name of the
purchaser(s) of such Notes, as the case may be; in return, the Series A
Notes held by such Holder shall be surrendered to the Company for
cancellation;
(xiii) cooperate with, and cause each of its subsidiaries to
cooperate with, the selling Holders and the underwriter(s), if any, to
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facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing
any restrictive legends; and enable such Transfer Restricted Securities
to be in such denominations and registered in such names as the Holders
or the underwriter(s), if any, may request at least two business days
prior to any sale of Transfer Restricted Securities made by such
underwriter(s);
(xiv) use its reasonable best efforts to cause the Transfer
Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof
or the underwriter(s), if any, to consummate the disposition of such
Transfer Restricted Securities, subject to the proviso contained in
clause (xii) above;
(xv) subject to Section 6(c)(i), if any fact or event contemplated
by clause (c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to
the purchasers of Transfer Restricted Securities, the Prospectus will
not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(xvi) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the Registration Statement and
provide the Trustee under the Indenture with printed certificates for
the Transfer Restricted Securities which are in a form eligible for
deposit with the Depository Trust Company;
(xvii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter")
that is required to be retained in accordance with the rules and
regulations of the NASD, and use its reasonable best efforts to cause
such Registration Statement to become effective and approved by such
governmental agencies or authorities as may be necessary to enable the
Holders selling Transfer Restricted Securities to consummate the
disposition of such Transfer Restricted Securities;
(xviii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) for the twelve-month period (A) commencing
at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm or best efforts
Underwritten Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration
Statement;
(xix) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement, and, in connection therewith, cooperate with the
Trustee and the Holders of Notes to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use its
reasonable best efforts to cause the Trustee to execute, all documents
that may be required to effect such changes and all other forms and
documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner;
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<PAGE>
(xx) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on
which similar securities issued by the Company are then listed if
requested by the Holders of a majority in aggregate principal amount of
Series A Notes or the managing underwriter(s), if any; and
(xxi) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13
and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof,
or until it is advised in writing (the "Advice") by the Company that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If so
directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof or
shall have received the Advice.
Section 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's or any of its subsidiary's
performance of or compliance with this Agreement will be borne by the Company
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses (including
filings made by any Holder with the NASD (and, if applicable, the fees and
expenses of any "qualified independent underwriter" and its counsel that may be
required by the rules and regulations of the NASD)); (ii) all fees and expenses
of compliance with federal securities and state Blue Sky or securities laws;
(iii) all expenses of printing (including printing certificates for the Series B
Notes to be issued in the Exchange Offer and printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Company, its subsidiaries and, subject to Section 7(b) below,
the Holders of Transfer Restricted Securities; (v) all application and filing
fees in connection with listing Notes on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company and its subsidiaries (including the expenses of any special audit and
comfort letters required by or incident to such performance).
The Company will, in any event, bear its and each of its subsidiaries'
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expenses
of any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company.
(b) In connection with any Shelf Registration Statement required by
this Agreement, the Company will reimburse the Holders of Transfer Restricted
Securities being registered pursuant to the Shelf Registration Statement for the
reasonable fees and disbursements of not more than one counsel chosen by the
Holders of a majority in principal amount of the Transfer Restricted Securities;
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<PAGE>
provided, however, that in no event shall the aggregate amount payable by the
Company pursuant to this Section 7(b) exceed $25,000.
Section 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each Holder,
(ii) each person, if any, who controls any Holder within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Holder"),
against any losses, claims, damages or liabilities to which such Underwriter or
such controlling person may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as any such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(1) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or
the Prospectus or any amendment or supplement thereto or (B)
any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon
written information furnished by or on behalf of the Company
filed in any jurisdiction in order to qualify the Securities
under the securities or "Blue Sky" laws thereof or filed with
the Commission or any securities association or securities
exchange (each an "Application"); or
(2) the omission or alleged omission to state in (A) the
Registration Statement or any amendment thereto or any
Application, a material fact required to be stated therein or
necessary to make the statements therein not misleading or (B)
in any Prospectus or any amendment or supplement thereto, a
material fact required to be stated therein or necessary to
make the statement therein, in the light of the circumstances
under which they were made, not misleading;
and will reimburse, as incurred, each Indemnified Holder for any legal or other
expenses reasonably incurred by such Indemnified Holder in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to an Indemnified
Holder to the extent that any such loss, claim, damage or liability arises out
of or is based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement or any amendment thereto,
any Prospectus or any amendment or supplement thereto, or any Application in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Indemnified Holder specifically for use therein.
This indemnity agreement will be in addition to any liability that the
Company may otherwise have to the Indemnified Holders. The Company will not,
without the prior written consent of the Indemnified Holders, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification by the
Indemnified Holders may be sought hereunder (whether or not any Indemnified
Holder is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of all
Indemnified Holders from all liability arising out of such claim, action, suit
or proceeding.
(b) Each Holder of Transfer Restricted Securities will severally and
not jointly indemnify and hold harmless the Company, its directors, officers who
signed the Registration Statement and each person, if any, who controls the
14
<PAGE>
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become subject
under the Securities Act, the Exchange Act, or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment thereto,
any Prospectus or any amendment or supplement thereto or any Application, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement was made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Holders of
Transfer Restricted Securities specifically for use therein; and, subject to the
limitation set forth immediately preceding this clause, will reimburse, as
incurred, any legal or other expenses reasonably incurred by the Company or any
such director, officer or controlling person in connection with investigating or
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action in respect thereof. This indemnity
agreement will be in addition to any liability that the Holders of Transfer
Restricted Securities may otherwise have to the indemnified parties. The Holders
of Transfer Restricted Securities will not, without the prior written consent of
the Company, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification by the Company may be sought hereunder (whether or not the
Company or any person who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act is a party to such
claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of the Company and each such
controlling person from all liability arising out of such claim, action, suit or
proceeding or otherwise with the consent of the Company.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability that it may have to any indemnified party except to the extent that
such omission results in the forfeiture by the indemnifying party of substantial
rights and defenses. In case any such action is brought against any indemnified
party, and such indemnified party notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the named
parties in any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties that are different from or additional to
those available to any such indemnifying party, then the indemnifying parties
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses, other than reasonable and documented
out-of-pocket costs of investigation, subsequently incurred by such indemnified
party in connection with the defense thereof, unless (i) the indemnified party
shall have employed separate counsel in accordance with the proviso to the
immediately preceding sentence (it being understood, however, that in connection
with such action the indemnifying party shall not be liable for the expenses of
more than one separate counsel (in addition to local counsel) in any one action
or separate but substantially similar actions in the same jurisdiction arising
out of the same general allegations or circumstances, designated by the
Indemnified Holders in the case of paragraph (a) of this Section 8 or the
Company in the case of paragraph (b) of this Section 8, representing the
indemnified parties under such paragraph (a) or paragraph (b), as the case may
be, who are parties to such action or actions); (ii) the indemnifying party has
15
<PAGE>
authorized in writing the employment of counsel for the indemnified party at the
expense of the indemnifying parties; or (iii) the indemnifying party shall have
failed to assume the defense or retain counsel reasonably satisfactory to the
indemnified party. After such notice from the indemnifying parties to such
indemnified party (so long as the indemnified party shall have informed the
indemnifying parties of such action in accordance with this Section 8 on a
timely basis prior to the indemnified party seeking indemnification hereunder),
the indemnifying parties will not be liable under this Section 8 for the costs
and expenses of any settlement of such action effected by such indemnified party
without the consent of the indemnifying party, unless such indemnified party
waived its rights under this Section 8, in which case the indemnified party may
effect such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient to
hold harmless an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the Company on the
one hand and the Holders from their sale of Transfer Restricted Securities on
the other or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the Company on the one hand and the Holders on the other in
connection with the actions, statements or omissions or alleged actions,
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative fault of the parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand, or the Holders on the other, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Holders agree that it would not be equitable
if the amount of such contribution were determined by pro rata or per capita
allocation (even if the Company on the one hand and the Holders on the other
hand were treated as one entity for such purpose) or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of this paragraph (d). Notwithstanding any other
provision of this paragraph (d), the Holders shall not be obligated to make
contributions hereunder that in the aggregate exceed the dollar amount of
proceeds received by such Holder upon sale of Transfer Restricted Securities
under this Agreement, less the aggregate amount of any damages that the Holders
have otherwise been required to pay by reason of the untrue or alleged untrue
statements, and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who
controls any of the Holders within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as the Holders, and each director of the Company, each officer of the Company
who signed the Registration Statement and each person, if any, who controls any
of the Company within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, shall have the same rights to contribution as the
Company.
16
<PAGE>
Section 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
from such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A.
Section 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
The Company shall not be required to participate in an Underwritten
Registration unless Holders of at least $10,000,000 in aggregate principal
amount of Transfer Restricted Securities so request, nor shall the Company be
required to participate in more than two Underwritten Registrations; provided
that, this paragraph in no way alters the Company's other obligations with
respect to this Agreement.
Section 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, however, that such investment bankers and managers must
be reasonably satisfactory to the Company.
Section 12. MISCELLANEOUS
(a) Remedies. The Company agrees that monetary damages (including the
liquidated damages contemplated hereby) would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. The Company will not take any
action, or permit any change to occur, with respect to the Notes that would
materially and adversely affect the ability of the Holders to Consummate any
Exchange Offer.
17
<PAGE>
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given, unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company:
Pegasus Communications Corporation
225 City Line Avenue, Suite 200
Bala Cynwyd, PA 19004
Telecopier No.: (610) 934-7121
Attention: Ted S. Lodge, Esq.
with a copy to:
Drinker Biddle & Reath LLP
One Logan Square
Eighteenth & Cherry Streets
Philadelphia, PA 19103
Telecopier No.: (215) 988-2757
Attention: Michael B. Jordan, Esq.
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt acknowledged, if telecopied; and on the next
business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
18
<PAGE>
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
19
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PEGASUS COMMUNICATIONS CORPORATION
By: /s/ Ted S. Lodge
-------------------------------
Name: Ted S. Lodge
Title: Senior Vice President
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of Pegasus Communication Corporation of our report dated February 12,
1999, relating to the financial statements and financial statement schedules
which appears in Pegasus Communications Corporation's Annual Report on Form 10-K
for the year ended December 31, 1998. We also consent to references to us under
the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Philadelphia, PA
January 7, 2000
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
FIRST UNION NATIONAL BANK
(Exact Name of Trustee as Specified in its Charter)
22-1147033
(I.R.S. Employer Identification No.)
301 SOUTH COLLEGE STREET, CHARLOTTE, NORTH CAROLINA
(Address of Principal Executive Offices)
28288-0630
(Zip Code)
FIRST UNION NATIONAL BANK
123 SOUTH BROAD STREET
PHILADELPHIA, PA 19109
ATTENTION: CORPORATE TRUST ADMINISTRATION
(215) 985-6000
(Name, address and telephone number of Agent for Service)
PEGASUS COMMUNICATIONS CORPORATION
(Exact Name of Obligor as Specified in its Charter)
DELAWARE
(State or other jurisdiction of Incorporation or Organization)
51-0374669
(I.R.S. Employer Identification No.)
225 CITY LINE AVENUE, SUITE 200, BALA CYNWYD, PA
(Address of Principal Executive Offices)
19004
(Zip Code)
12-1/2% SENIOR NOTES DUE 2007
Application relates to all securities registered pursuant
to the delayed offering registration statement
(Title of Indenture Securities)
<PAGE>
1. General information.
Furnish the following information as to the trustee:
a) Name and address of each examining or supervisory authority to which it is
subject:
Comptroller of the Currency
United States Department of the Treasury
Washington, D.C. 20219
Federal Reserve Bank
Richmond, Virginia 23219
Federal Deposit Insurance Corporation
Washington, D.C. 20429
b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3. Voting securities of the trustee.
Furnish the following information as to each class of voting securities of
the trustee:
Not applicable - see answer to Item 13.
4. Trusteeships under other indentures.
If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following information:
Not applicable - see answer to Item 13.
5. Interlocking directorates and similar relationships with the obligor or
underwriters.
If the trustee or any of the directors or executive officers of the trustee
is a director, officer, partner, employee, appointee, or representative of the
obligor or of any underwriter for the obligor, identify each such person having
any such connection and state the nature of each such connection.
Not applicable - see answer to Item 13.
6. Voting securities of the trustee owned by the obligor or its officials.
Furnish the following information as to the voting securities of the trustee
owned beneficially by the obligor and each director, partner, and executive
officer of the obligor:
Not applicable - see answer to Item 13.
7. Voting securities of the trustee owned by underwriters or their officials.
Furnish the following information as to the voting securities of the trustee
owned beneficially by each underwriter for the obligor and each director,
partner, and executive officer of each such underwriter:
Not applicable - see answer to Item 13.
8. Securities of the obligor owned or held by the trustee.
Furnish the following information as to securities of the obligor owned
beneficially or held as collateral security for obligations in default by the
trustee:
<PAGE>
Not applicable - see answer to Item 13.
9. Securities of underwriters owned or held by the trustee.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor, furnish
the following information as to each class of securities of such underwriter any
of which are so owned or held by the trustee:
Not applicable - see answer to Item 13.
10. Ownership or holdings by the trustee of voting securities of certain
affiliates or security holders of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge of
the trustee (1) owns 10 percent or more of the voting stock of the obligor or
(2) is an affiliate, other than a subsidiary, of the obligor, furnish the
following information as to the voting securities of such person:
Not applicable - see answer to Item 13.
11. Ownership or holdings by the trustee of any securities of a person owning 50
percent or more of the voting securities of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of the
trustee, owns 50 percent or more of the voting securities of the obligor,
furnish the following information as to each class of securities of such person
any of which are so owned or held by the trustee:
Not applicable - see answer to Item 13.
12. Indebtedness of the obligor to the trustee.
Except as noted in the instructions, if the obligor is indebted to the
trustee, furnish the following information:
Not applicable - see answer to Item 13.
13. Defaults by the obligor.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.
None.
(b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.
None.
14. Affiliations with the underwriters.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not applicable - see answer to Item 13.
15. Foreign trustee.
<PAGE>
Identify the order or rule pursuant to which the trustee is authorized to
act as sole trustee under indentures qualified or to be qualified under the Act.
Not applicable - trustee is a national banking association organized under
the laws of the United States.
16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
___ 1. Copy of Articles of Association of the trustee as now in effect.*
___ 2. Copy of the Certificate of the Comptroller of the Currency dated March
4, 1998, evidencing the authority of the trustee to transact business.**
___ 3. Copy of the Certification of Fiduciary Powers of the trustee by the
Office of the Comptroller of the Currency dated April 7, 1999.***
___ 4. Copy of existing by-laws of the trustee.*
___ 5. Copy of each indenture referred to in Item 4, if the obligor is in
default.
-Not Applicable.
_X_ 6. Consent of the trustee required by Section 321(b) of the Act.
_X_ 7. Copy of report of condition of the trustee at the close of business on
September 30, 1998, published pursuant to the requirements of its supervising
authority.
___ 8. Copy of any order pursuant to which the foreign trustee is authorized to
act as sole trustee under indentures qualified or to be qualified under the Act.
- Not Applicable
___ 9. Consent to service of process required of foreign trustees pursuant to
Rule 10a-4 under the Act.
- Not Applicable
- ---------------------
*Previously filed with the Securities and Exchange Commission on
March 16, 1998 as an Exhibit to Form T-1 in connection with Registration
Statement Number 333-47985, ** and filed with the Securities and Exchange
Commission on July 15, 1998 as an Exhibit to Form T-1 in connection with
Registration Statement Number 333-59145, and incorporated herein by reference,
*** and filed with the Securities and Exchange Commission on May 20, 1999 in
connection with Registration Statement Number 333-78927 and incorporated herein
by reference.
<PAGE>
NOTE
The trustee disclaims responsibility for the accuracy or completeness of
information contained in this Statement of Eligibility and Qualification not
known to the trustee and not obtainable by it through reasonable investigation
and as to which information it has obtained from the obligor and has had to rely
or will obtain from the principal underwriters and will have to rely.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, First Union National Bank, a national banking association organized and
existing under the laws of the United States of America, has duly caused this
Statement of Eligibility and Qualification to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Philadelphia and
Commonwealth of Pennsylvania, on the 16th day of December 1999
FIRST UNION NATIONAL BANK
By: s/Alan G. Finn
-------------------------------------
Alan G. Finn
Vice President
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939, and in connection with the proposed issue of Pegasus Communications
Corporation, Debt Securities, First Union National Bank, hereby consents that
reports of examinations by Federal, State, Territorial or District authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon request therefor.
FIRST UNION NATIONAL BANK
By: s/Alan G. Finn
-------------------------------------
Alan G. Finn
Vice President
Philadelphia, Pennsylvania
December 16, 1999
<PAGE>
EXHIBIT 7
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the First Union National
Bank, Charlotte, North Carolina, at the close of business on September 30, 1998
published in response to call made by Comptroller of the Currency, under title
12, United States Code, Section 161. Charter Number 22693 Comptroller of the
Currency.
Statement of Resources and Liabilities
ASSETS
Thousand of Dollars
-------------------
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin.......... 8,946,000
Interest-bearing balances................................... 266,000
Securities.................................................... /////////
Hold-to-maturity securities................................. 1,644,000
Available-for-sale securities............................... 47,356,000
Federal funds sold and securities purchases to resell......... 2,856,000
Loans and lease financing receivables:
Loan and leases, net of unearned income.... .......132,839,000
LESS: Allowance for loan and lease losses............1,743,000
LESS: Allocated transfer risk reserve....................... 0
Loans and leases, net of unearned income, allowance,
and reserve................................................... 131,096,000
Assets held in trading accounts............................... 8,333,000
Premises and fixed assets (including capitalized leases)...... 3,070,000
Other real estate owned....................................... 134,000
Investment in unconsolidated subsidiaries and associated /////////
companies..................................................... 262,000
Customer's liability to this bank on acceptances outstanding.. 807,000
Intangible assets............................................. 5,115,000
Other assets.................................................. 10,789,000
Total assets.................................................. 220,674,000
LIABILITIES
Deposits:
In domestic offices......................................... 129,621,000
Noninterest-bearing........... .................21,341,000
Interest-bearing...............................108,280,000
In foreign offices, Edge and Agreement subsidiaries,
and IBFs.................................................... 9,838,000
Noninterest-bearing................................466,000
Interest-bearing.................................9,372,000
Federal funds purchased and securities sold under agreements to
repurchase ................................................... 23,796,000
Demand notes issued to the U.S. Treasury...................... 782,000
Trading liabilities........................................... 4,984,000
Other borrowed money:......................................... /////////
With original maturity of one year or less................ 14,643,000
With original maturity of more than one year thru 3 yrs... 5,639,000
With a maturity of more than three years.................. 2,872,000
Not applicable ............................................... ////////
Bank's liability on acceptances executed and outstanding...... 807,000
Subordinated notes and debentures............................. 4,269,000
Other liabilities............................................. 6,515,000
Total liabilities............................................. 203,766,000
Not applicable................................................ ///////////
<PAGE>
EQUITY CAPITAL
Perpetual preferred stock and related surplus................. 161,000
Common Stock.................................................. 455,000
Surplus....................................................... 13,306,000
Undivided profits and capital reserves........................ 3,553,000
Net unrealized holding gains (losses) on available-for-sale... /////////
securities................................................... (562.000)
Cumulative foreign currency translation adjustments........... (5,000)
Total equity capital.......................................... 16,908,000
Total liabilities and equity capital.......................... 220,674,000
<PAGE>
LETTER OF TRANSMITTAL
To Exchange Notes
With Respect to the Outstanding
12 1/2% Series A Senior Notes due August 1, 2007
($155,000,000 Aggregate Principal Amount Outstanding)
of
PEGASUS COMMUNICATIONS CORPORATION
Pursuant to the Prospectus dated [________ __, 1999]
by
PEGASUS COMMUNICATIONS CORPORATION
================================================================================
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
[____________], 2000, UNLESS FURTHER EXTENDED (THE "EXPIRATION DATE"). HOLDERS
OF NOTES MUST TENDER THEIR NOTES PRIOR TO THE EXPIRATION DATE IN ORDER TO
RECEIVE THE NEW NOTES (AS DEFINED HEREIN). TENDERS MAY BE WITHDRAWN AT ANY TIME
PRIOR TO THE EXPIRATION DATE, BUT NOT THEREAFTER (EXCEPT UNDER CERTAIN LIMITED
CIRCUMSTANCES DESCRIBED MORE FULLY IN THE PROSPECTUS). THE CONSUMMATION OF THE
EXCHANGE OFFER IS CONDITIONED UPON THE SATISFACTION OF CERTAIN CONDITIONS
DESCRIBED IN THE PROSPECTUS.
================================================================================
The Exchange Agent is:
First Union National Bank
<TABLE>
<CAPTION>
By Mail: By Hand/Overnight Express: By Facsimile:
<S> <C> <C> <C>
First Union National Bank First Union National Bank (704) 590-7628
1525 West W.T. Harris Blvd., 3C3 1525 West W.T. Harris Blvd., 3C3
Charlotte, NC 28288 Charlotte, NC 28262 To confirm receipt:
Attention: Michael Klotz Attention: Michael Klotz
Telephone: (704) 590-7408 Telephone: (704) 590-7408 (704) 590-7408
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
<PAGE>
The undersigned acknowledges receipt of the Prospectus dated [________
__, ____] (the "Prospectus"), of Pegasus Communications Corporation (the
"Company"), and this Letter of Transmittal (the "Letter of Transmittal"), which
together with the Prospectus constitutes the Company's offer (the "Exchange
Offer") to exchange $1,000 principal amount of its 12 1/2% Series B Senior Notes
due August 1, 2007 (the "New Notes") for each $1,000 principal amount of its
outstanding 12 1/2% Series A Senior Notes due August 1, 2007 (the "Old Notes").
Capitalized terms used but not defined herein have the meaning given to them in
the Prospectus.
The undersigned hereby tenders the Old Notes described in the box
entitled "Description of Old Notes" below pursuant to the terms and conditions
described in the Prospectus and this Letter of Transmittal. The undersigned is
the registered owner of all the Old Notes and the undersigned represents that it
has received from each beneficial owner of Old Notes ("Beneficial Owners") a
duly completed and executed form of "Instruction to Registered Holder from
Beneficial Owner" accompanying this Letter of Transmittal, instructing the
undersigned to take the action described in this Letter of Transmittal.
This Letter of Transmittal is to be used only by a holder of Old Notes
(i) if certificates representing Old Notes are to be forwarded herewith or (ii)
if delivery of Old Notes is to be made by book-entry transfer to the exchange
agent's account at The Depository Trust Company ("Depositary"), pursuant to the
procedures set forth in the section of the Prospectus entitled "The Exchange
Offer--Procedures for Tendering." If delivery of the Old Notes is to be made by
book-entry transfer to the account maintained by the exchange agent (the
"Exchange Agent") at the Depositary, this Letter of Transmittal need not be
manually executed; provided, however, that tenders of the Old Notes must be
effected in accordance with the procedures mandated by the Depositary's
Automated Tender Offer Program and the procedures set forth in the Prospectus
under the caption "The Exchange Offer--Book-Entry Transfer."
The undersigned hereby represents and warrants that the information set
forth in the box entitled "Beneficial Owner(s)" is true and correct.
Any Beneficial Owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder of Old Notes promptly and
instruct such registered holder to tender on behalf of the Beneficial Owner. If
such Beneficial Owner wishes to tender on its own behalf, such Beneficial Owner
must, before completing and executing this Letter of Transmittal and delivering
its Old Notes, either make appropriate arrangements to register ownership of the
Old Notes in such Beneficial Owner's name or obtain a properly completed bond
power from the registered holder of Old Notes. The transfer of record ownership
may take considerable time.
To properly complete this Letter of Transmittal, a holder of Old Notes
must (i) complete the box entitled "Description of Old Notes," (ii) if
appropriate, check and complete the boxes relating to book-entry transfer,
guaranteed delivery, Special Issuance Instructions and Special Delivery
Instructions, (iii) sign the Letter of Transmittal by completing the box
entitled "Sign Here" and (iv) complete the Substitute Form W-9. Each holder of
Old Notes should carefully read the detailed instructions below before
completing the Letter of Transmittal.
Holders of Old Notes who desire to tender their Old Notes for exchange
and (i) whose Old Notes are not immediately available, (ii) who cannot deliver
their Old Notes and all other documents required hereby to the Exchange Agent on
or before the Expiration Date or (iii) who are unable to complete the procedure
for book-entry transfer on a timely basis, must tender the Old Notes pursuant to
the guaranteed delivery procedures set forth in the section of the Prospectus
entitled "The Exchange Offer--Guaranteed Delivery Procedures." See Instruction
2.
Holders of Old Notes who wish to tender their Old Notes for exchange
must, at a minimum, complete columns (1) through (3) in the box below entitled
"Description of Old Notes" and sign the box below entitled "Sign Here." If only
those columns are completed, such holder of Old Notes will have tendered for
exchange all Old Notes listed in column (3) below. If the holder of Old Notes
wishes to tender for exchange less than all of such Old Notes, column (4) must
be completed in full. In such case, such holder of Old Notes should refer to
Instruction 5.
-2-
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================
DESCRIPTION OF OLD NOTES
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(1) (2) (3) (4)
Principal
Amount
Tendered
For
Exchange
(only if
different
amount
Old Note from
Certificate column
Number(s)(1) (3)) (must
Name(s) and Address(es) of Registered (Attach be in
Holder(s) of Old Note(s), exactly as name(s) signed List Aggregate integral
appear(s) on Old Note Certificate(s) if Principal multiples
(Please fill in, if blank) necessary) Amount of $1,000)(2)
- ----------------------------------------------------------- ----------------- ----------------- -----------------
- ----------------------------------------------------------- ----------------- ----------------- -----------------
- ----------------------------------------------------------- ----------------- ----------------- -----------------
- ----------------------------------------------------------- ----------------- ----------------- -----------------
- ----------------------------------------------------------- ----------------- ----------------- -----------------
- ----------------------------------------------------------- ----------------- ----------------- -----------------
Total Principal Amount
of Old Notes Tendered:
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
1. Column (2) need not be completed by holders of Old Notes tendering Old
Notes in exchange by book-entry transfer. Please check the appropriate box
below and provide the requested information.
2. Column (4) need not be completed by holders of Old Notes who wish to tender
for exchange the principal amount of Old Notes listed in Column (3).
Completion of column (4) will indicate that the holder of Old Notes wishes
to tender for exchange only the principal amount of Old Notes indicated in
column (4).
================================================================================
[ ] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
DEPOSITARY AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS
(AS HEREINAFTER DEFINED) ONLY):
Name of Tendering Institution:__________________________________________________
Account Number:_________________________________________________________________
Transaction Code Number:________________________________________________________
-3-
<PAGE>
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE
FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name of Registered Holder of Old Note(s):_______________________________________
Date of Execution of Notice of Guaranteed Delivery:_____________________________
Window Ticket Number (if available):____________________________________________
Name of Eligible Institution that Guaranteed Delivery:__________________________
Account Number (if delivered by book-entry transfer):___________________________
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL
COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:___________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
Number of copies requested: ____________________________________________________
-4-
<PAGE>
========================================================
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 6, 7 and 8)
To be completed ONLY (i) if the New Notes issued
in exchange for Old Notes, certificates for Old Notes
in a principal amount not exchanged for New Notes or
Old Notes (if any) not tendered for exchange, are to
be issued in the name of someone other than the
undersigned, or (ii) if Old Notes tendered by
book-entry transfer which are not exchanged are to be
returned by credit to an account maintained at the
Depositary.
Issue to:
Name____________________________________________________
(Please Print)
Address_________________________________________________
________________________________________________________
________________________________________________________
(Include Zip Code)
________________________________________________________
(Tax Identification or Social Security No.)
Credit Old Notes not exchanged and delivered by
book-entry transfer to the Depositary account set
forth below:
________________________________________________________
(Account Number)
========================================================
<PAGE>
======================================================
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 6, 7 and 8)
To be completed ONLY if the New Notes issued in
exchange for Old Notes or certificates for Old Notes
in a principal amount not exchanged for New Notes or
Old Notes (if any) not tendered for exchange, are to
be mailed or delivered to someone other than the
undersigned, or to the undersigned at an address
other than the address shown below the undersigned's
signature.
Mail or delivered to:
Name________________________________________________
(Please Print)
Address_____________________________________________
____________________________________________________
____________________________________________________
(Include Zip Code)
____________________________________________________
(Tax Identification or Social Security No.)
======================================================
-5-
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================
BENEFICIAL OWNER(S)
- --------------------------------------------------------------------------------------------------------------------
State of Principal Residence of Each Principal Amount of Old Notes
Beneficial Owner of Old Notes Held for Account of Beneficial Owner(s)
- ----------------------------------------------------------- --------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------- --------------------------------------------------------
- ----------------------------------------------------------- --------------------------------------------------------
- ----------------------------------------------------------- --------------------------------------------------------
- ----------------------------------------------------------- --------------------------------------------------------
- ----------------------------------------------------------- --------------------------------------------------------
====================================================================================================================
</TABLE>
If delivery of Old Notes is to be made by book-entry transfer to the
account maintained by the Exchange Agent at the Depositary, then tenders of Old
Notes must be effected in accordance with the procedures mandated by the
Depositary's Automated Tender Offer Program and the procedures set forth in the
Prospectus under the caption "The Exchange Offer--Book-Entry Transfer."
-6-
<PAGE>
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Pursuant to the offer by Pegasus Communications Corporation (the
"Company"), upon the terms and subject to the conditions set forth in the
Prospectus dated [________ __, ____] (the "Prospectus") and this Letter of
Transmittal (the "Letter of Transmittal"), which together with the Prospectus
constitutes the Company's offer (the "Exchange Offer") to exchange $1,000
principal amount of its 12 1/2% Series B Senior Notes due August 1, 2007 (the
"New Notes") for each $1,000 principal amount of its outstanding 12 1/2% Series
A Senior Notes due August 1, 2007 (the "Old Notes"). The undersigned hereby
tenders to First Union National Bank for exchange the Old Notes indicated above.
By executing this Letter of Transmittal and subject to and effective
upon acceptance for exchange of the Old Notes tendered for exchange herewith,
the undersigned will have irrevocably sold, assigned, transferred and exchanged,
to the Company, all right, title and interest in, to and under all of the Old
Notes tendered for exchange hereby, and hereby appoints the Exchange Agent as
the true and lawful agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as agent of the Company) of such holder of Old Notes
with respect to such Old Notes, with full power of substitution to (i) deliver
certificates representing such Old Notes, or transfer ownership of such Old
Notes on the account books maintained by the Depositary (together, in any such
case, with all accompanying evidences of transfer and authenticity), to the
Company, (ii) present and deliver such Old Notes for transfer on the books of
the Company and (iii) receive all benefits and otherwise exercise all rights and
incidents of beneficial ownership with respect to such Old Notes, all in
accordance with the terms of the Exchange Offer. The power of attorney granted
in this paragraph shall be deemed to be irrevocable and coupled with an
interest.
The undersigned hereby represents and warrants that (i) the undersigned
is the owner of the Old Notes tendered for exchange hereby; (ii) has a net long
position within the meaning of Rule 14e-4 under the Securities Exchange Act as
amended ("Rule 14e-4") equal to or greater than the principal amount of Old
Notes tendered hereby; (iii) the tender of such Old Notes complies with Rule
14e-4 (to the extent that Rule 14e-4 is applicable to such exchange); (iv) the
undersigned has full power and authority to tender, exchange, assign and
transfer the Old Notes and (v) that when such Old Notes are accepted for
exchange by the Company, the Company will acquire good and marketable title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claims. The undersigned will, upon receipt, execute
and deliver any additional documents deemed by the Exchange Agent or the Company
to be necessary or desirable to complete the exchange, assignment and transfer
of the Old Notes tendered for exchange hereby.
The undersigned hereby further represents to the Company that (i) the
New Notes to be acquired by the undersigned in exchange for the Old Notes
tendered hereby and any Beneficial Owner(s) of such Old Notes in connection with
the Exchange Offer will be acquired by the undersigned and such Beneficial
Owner(s) in the ordinary course of business of the undersigned, (ii) the
undersigned (if not a broker-dealer referred to in the last sentence of this
paragraph) are not participating and do not intend to participate in the
distribution of the New Notes, (iii) the undersigned have no arrangement or
understanding with any person to participate in the distribution of the New
Notes, (iv) the undersigned and each Beneficial Owner acknowledge and agree that
any person participating in the Exchange Offer for the purpose of distributing
the New Notes must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction of the New Notes acquired by such person and cannot rely on the
position of the staff of the SEC set forth in certain no-action letters, (v) the
undersigned and each Beneficial Owner understand that a secondary resale
transaction described in clause (iv) above should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 or Item 508, as applicable, of Regulation S-K of the SEC
and (vi) neither the undersigned nor any Beneficial Owner is an "affiliate" of
the Company, as defined under Rule 405 under the Securities Act. If the
undersigned is a broker-dealer that will receive New Notes for its own account
in exchange for Old Notes that were acquired as a result of market making
activities or other trading activities, it acknowledges that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New Notes received in respect of such Old Notes pursuant to the
Exchange Offer; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
<PAGE>
For purposes of the Exchange Offer, the Company will be deemed to have
accepted for exchange, and to have exchanged, validly tendered Old Notes, if, as
and when the Company gives oral or written notice thereof to the Exchange Agent.
Tenders of Old Notes for exchange may be withdrawn at any time before 5:00 p.m.,
New York City time, on the Expiration Date. See "The Exchange Offer--Withdrawal
of Tenders" in the Prospectus. Any Old Notes tendered by the undersigned and
rejected for exchange will be returned to the undersigned at the address set
forth above unless otherwise indicated in the box above entitled "Special
Delivery Instructions."
The undersigned acknowledges that the Company's acceptance of Old Notes
validly tendered for exchange pursuant to any one of the procedures described in
the section of the Prospectus entitled "The Exchange Offer" and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.
Unless otherwise indicated in the box entitled "Special Issuance
Instructions," please return any Old Notes not tendered for exchange in the
name(s) of the undersigned. Similarly, unless otherwise indicated in the box
entitled "Special Delivery Instructions," please mail any certificates for Old
Notes not tendered or exchanged (and accompanying documents, as appropriate) to
the undersigned at the address shown below the undersigned's signature(s). If
both "Special Issuance Instructions" and "Special Delivery Instructions" are
completed, please issue the certificates representing the New Notes issued in
exchange for the Old Notes accepted for exchange in the name(s) of, and return
any Old Notes not tendered for exchange or not exchanged to, the person(s) so
indicated. The undersigned recognizes that the Company has no obligation
pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name of the holder of Old
Note(s) thereof if the Company rejects for exchange any of the Old Notes so
tendered for exchange or if such transfer would not be in compliance with any
transfer restrictions applicable to such Old Note(s).
In order to validly tender Old Notes for exchange, holders of Old Notes
must complete, execute, and deliver this Letter of Transmittal.
Except as stated in the Prospectus, all authority herein conferred or
agreed to be conferred shall survive the death or incapacity of the undersigned,
and any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
otherwise stated in the Prospectus, this tender for exchange of Old Notes is
irrevocable.
-2-
<PAGE>
================================================================================
SIGN HERE
X___________________________________________
Signature(s) of Owner(s)
Dated: ____________________________, 2000
Must be signed by the registered holder(s) of Old Notes exactly as name(s)
appear(s) on certificate(s) representing the Old Notes or on a security position
listing or by person(s) authorized to become registered Old Note holder(s) by
certificates and documents transmitted herewith. If signature is by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, please
provide the following information. (See Instruction 6).
Name(s):_______________________________________
_______________________________________________
(Please Print)
Capacity (full title):__________________________
_______________________________________________
Address:________________________________________
_______________________________________________
(Include Zip Code)
Principal place of business (if different from address listed above):
_______________________________________________
_______________________________________________
(Include Zip Code)
Area Code and Telephone No.: (___) ____________
Tax Identification or Social Security Number(s):
_______________________________________________
Please complete Substitute Form W-9
GUARANTEE OF SIGNATURE(S)
(Signature(s) must be guaranteed if required by Instruction 1)
Authorized Signature:_________________________
Dated:________________________________________
Name and Title:_______________________________
(Please Print)
Name of Firm:_________________________________
================================================================================
-3-
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by an institution
which is a member of a registered national securities exchange or a member of
the National Association of Securities Dealers, Inc. or is a commercial bank or
trust company having an office or correspondence in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934 which is a member of one of the following
recognized Signature Guarantee Programs (an "Eligible Institution"):
a. The Securities Transfer Agents Medallion Program (STAMP)
b. The New York Stock Exchange Medallion Signature Program (MSP)
c. The Stock Exchange Medallion Program (SEMP)
Signatures on this Letter of Transmittal need not be guaranteed (i) if this
Letter of Transmittal is signed by the registered holder(s) of the Old Notes
tendered herewith and such registered holder(s) have not completed the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (ii) if such Old Notes are
tendered for the account of an Eligible Institution. In all other cases, all
signatures must be guaranteed by an Eligible Institution.
2. Delivery of this Letter of Transmittal and Old Notes; Guaranteed
Delivery Procedure. This Letter of Transmittal is to be completed by holders of
Old Notes (i) if certificates are to be forwarded herewith or (ii) if tenders
are to be made pursuant to the procedures for tender by book-entry transfer or
guaranteed delivery set forth in the section of the Prospectus entitled "The
Exchange Offer." Certificates for all physically tendered Old Notes or any
confirmation of a book-entry transfer (a "Book-Entry Confirmation"), as well as
a properly completed and duly executed copy of this Letter of Transmittal or
facsimile hereof, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at its address set forth on
the cover of this Letter of Transmittal before 5:00 p.m., New York City time, on
the Expiration Date. Holders of Old Notes who elect to tender Old Notes and (i)
whose Old Notes are not immediately available, (ii) who cannot deliver the Old
Notes or other required documents to the Exchange Agent before 5:00 p.m., New
York City time on the Expiration Date or (iii) who are unable to complete the
procedure for book-entry transfer on a timely basis, may have such tender
effected if (a) such tender is made by or through an Eligible Institution; and
(b) before 5:00 p.m., New York City time, on the Expiration Date, the Exchange
Agent has received from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile hereof) and Notice of Guaranteed
Delivery (by telegram, telex, facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of such Old Notes, the
certificate numbers(s) of such Old Notes and the principal amount of Old Notes
tendered for exchange, stating that tender is being made thereby and
guaranteeing that, within three (3) New York Stock Exchange trading days after
the Expiration Date, the certificates representing such Old Notes (or a
Book-Entry Confirmation), in proper form for transfer, and any other documents
required by this Letter of Transmittal, will be deposited by such Eligible
Institution with the Exchange Agent; and (c) certificates for all tendered Old
Notes, or a Book-Entry Confirmation, together with a copy of the previously
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by this Letter of Transmittal are received by the Exchange Agent within
three (3) New York Stock Exchange trading days after the Expiration Date.
The method of delivery of Old Notes, this Letter of Transmittal and all
other required documents is at the election and risk of the tendering holder of
Old Notes. Except as otherwise provided below, the delivery will be deemed made
only when actually received or confirmed by the Exchange Agent. If delivery is
by mail, registered mail with return receipt requested, properly insured, is
recommended. Neither this Letter of Transmittal nor any Old Notes should be sent
to the company or First Union National Bank.
-4-
<PAGE>
No alternative, conditional or contingent tenders will be accepted. All
tendering holders of Old Notes, by execution of this Letter of Transmittal (or
facsimile hereof, if applicable), waive any right to receive notice of the
acceptance of their Old Notes for exchange.
3. Inadequate Space. If the space provided in the box entitled
"Description of Old Notes" above is inadequate, the certificate numbers and
principal amounts of the Old Notes being tendered should be listed on a separate
signed schedule affixed hereto.
4. Withdrawals. A tender of Old Notes may be withdrawn at any time
before 5:00 p.m., New York City time, on the Expiration Date by delivery of
written notice of withdrawal to the Exchange Agent at the address set forth on
the cover of this Letter of Transmittal. To be effective, a notice of withdrawal
of Old Notes must (i) specify the name of the person who tendered the Old Notes
to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn
(including the certificate number or numbers and aggregate principal amount of
such Old Notes), (iii) be signed by the holder of Old Notes in the same manner
as the original signature on the Letter of Transmittal by which such Old Notes
were tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the applicable transfer agent register
the transfer of such Old Notes into the name of the person withdrawing the
tender. Withdrawals of tenders of Old Notes may not be rescinded, and any Old
Notes withdrawn will thereafter be deemed not validly tendered for purposes of
the Exchange Offer and no New Notes will be issued with respect thereto unless
the Old Notes so withdrawn are validly retendered. Properly withdrawn Old Notes
may be retendered by following one of the procedures described in the section of
the Prospectus entitled "The Exchange Offer--Procedures for Tendering" at any
time before 5:00 p.m., New York City time, on the Expiration Date.
5. Partial Tenders. (Not applicable to holders of Old Notes who tender
Old Notes by book-entry transfer). Tenders of Old Notes will be accepted only in
integral multiples of $1,000 principal amount. If a tender for exchange is to be
made with respect to less than the entire principal amount of any Old Notes,
fill in the principal amount of Old Notes which are tendered for exchange in
column (4) of the box entitled "Description of Old Notes," as more fully
described in the footnotes thereto. In case of a partial tender for exchange, a
new certificate, in fully registered form, for the remainder of the principal
amount of the Old Notes, will be sent to the holders of Old Notes unless
otherwise indicated in the appropriate box on this Letter of Transmittal as
promptly as practicable after the expiration or termination of the Exchange
Offer.
6. Signatures on this Letter of Transmittal, Powers of Attorney and
Endorsements.
(a) The signature(s) of the holder of Old Notes on this Letter of
Transmittal must correspond with the name(s) as written on the face of the Old
Notes without alternation, enlargement or any change whatsoever.
(b) If tendered Old Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
(c) If any tendered Old Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter of Transmittal and any necessary or required
documents as there are different registrations or certificates.
(d) When this Letter of Transmittal is signed by the holder of the Old
Notes listed and transmitted hereby, no endorsements of Old Notes or separate
powers of attorney are required. If, however, Old Notes not tendered or
rejected, are to be issued or returned in the name of a person other than the
holder of Old Notes, then the Old Notes transmitted hereby must be endorsed or
accompanied by appropriate powers of attorney in a form satisfactory to the
Company, in either case signed exactly as the name(s) of the holder of Old Notes
appear(s) on the Old Notes. Signatures on such Old Notes or powers of attorney
must be guaranteed by an Eligible Institution (unless signed by an Eligible
Institution).
(e) If this Letter of Transmittal or Old Notes or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Company of their authority so to act must be submitted.
-5-
<PAGE>
(f) If this Letter of Transmittal is signed by a person other than the
registered holder of Old Notes listed, the Old Notes must be endorsed or
accompanied by appropriate powers of attorney, in either case signed exactly as
the name(s) of the registered holder of Old Notes appear(s) on the certificates.
Signatures on such Old Notes or powers of attorney must be guaranteed by an
Eligible Institution (unless signed by an Eligible Institution).
7. Transfer Taxes. Holders tendering pursuant to the Exchange Offer
will not be obligated to pay brokerage commissions or fees to pay transfer taxes
with respect to their exchange under the Exchange Offer unless the box entitled
"Special Issuance Instructions" in this Letter of Transmittal has been
completed, or unless the securities to be received upon exchange are to be
issued to any person other than the holder of the Old Notes tendered for
exchange. The Company will pay all other charges or expenses in connection with
the Exchange Offer. If holders tender Old Notes for exchange and the Exchange
Offer is not consummated, certificates representing the Old Notes will be
returned to the holders at the Company's expense.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the certificate(s) specified in this Letter
of Transmittal.
8. Special Issuance and Delivery Instructions. If the New Notes are to
be issued, or if any Old Notes not tendered for exchange are to be issued or
sent to someone other than the holder of Old Notes or to an address or other
than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. Holders of Old Notes tendering Old Notes by book-entry
transfer may request that Old Notes rejected be credited to such account
maintained at the Depositary as such holder of Old Notes may designate.
9. Irregularities. All questions as to the form of documents and the
validity, eligibility (including time or receipt), acceptance and withdrawal of
Old Notes will be determined by the Company, in its sole discretion, whose
determination shall be final and binding. The Company reserves the absolute
right to reject any or all tenders for exchange of any particular Old Notes that
are not in proper form, or the acceptance of which would, in the opinion of the
Company or its counsel, be unlawful. The Company reserves the absolute right to
waive any defect, irregularity or condition of tender for exchange with regard
to any particular Old Notes. The Company's interpretation of the term of, and
conditions to, the Exchange Offer (including the instructions herein) will be
final and binding. Unless waived, any defects or irregularities in connection
with the Exchange Offer must be cured within such time as the Company shall
determine. Neither the Company, the Exchange Agent nor any other person shall be
under any duty to give notice of any defects or irregularities in Old Notes
tendered for exchange, nor shall any of them incur any liability for failure to
give such notice. A tender of Old Notes will not be deemed to have been made
until all defects and irregularities with respect to such tender have been cured
or waived. Any Old Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date.
10. Waiver of Conditions. The Company reserves the absolute right to
waive, amend or modify certain of the specified conditions as described under
"The Exchange Offer--Conditions" in the Prospectus in the case of any Old
Notes tendered (except as otherwise provided in the Prospectus).
11. Mutilated, Lost, Stolen or Destroyed Old Notes. If a holder of Old
Notes desires to tender Old Notes pursuant to the Exchange Offer, but any of
such Old Notes has been mutilated, lost, stolen or destroyed, such holder of Old
Notes should write to or telephone First Union National Bank at the address
listed below, concerning the procedures for obtaining replacement certificates
for such Old Notes, arranging for indemnification or any other matter that
requires handling by First Union National Bank:
-6-
<PAGE>
First Union National Bank
123 South Broad Street
PA 1249
Philadelphia, Pennsylvania 19109
Attention: Corporate Trust Administration
(215) 985-7207
12. Requests for Information or Additional Copies. Requests for
information or for additional copies of the Prospectus and this Letter of
Transmittal may be directed to the Exchange Agent at the address or telephone
number set forth on the cover of this Letter of Transmittal.
IMPORTANT: This Letter of Transmittal (or a facsimile thereof, if
applicable) together with certificates, or confirmation of book-entry or the
Notice of Guaranteed Delivery, and all other required documents must be received
by the Exchange Agent before 5:00 p.m., New York City time, on the Expiration
Date.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a holder of Old Notes whose
tendered Old Notes are accepted for exchange may be subject to backup
withholding unless the holder provides the Company (as payer), through the
Exchange Agent, with either (i) such holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 attached hereto, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such holder of Old Notes is
awaiting a TIN) and that (A) the holder of Old Notes has not been notified by
the Internal Revenue Service that he or she is subject to backup withholding as
a result of a failure to report all interest or dividends or (B) the Internal
Revenue Service has notified the holder of Old Notes that he or she is no longer
subject to backup withholding; or (ii) an adequate basis for exemption from
backup withholding. If such holder of Old Notes is an individual, the TIN is
such holder's social security number. If the Exchange Agent is not provided with
the correct taxpayer identification number, the holder of Old Notes may be
subject to certain penalties imposed by the Internal Revenue Service.
Certain holders of Old Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. Exempt holders of Old Notes should indicate their exempt
status on Substitute Form W-9. A foreign individual may qualify as an exempt
recipient by submitting to the Exchange Agent a properly completed Internal
Revenue Service Form W-8 (which the Exchange Agent will provide upon request)
signed under penalty of perjury, attesting to the holder's exempt status. See
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 (the "Guidelines") for additional instructions.
If backup withholding applies, the Company is required to withhold 31%
of any payment made to the holder of Old Notes or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
The holder of Old Notes is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the record
owner of the Old Notes. If the Old Notes are held in more than one name or are
not held in the name of the actual owner, consult the enclosed Guidelines for
additional guidance regarding which number to report.
-7-
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================
PAYER'S NAME:
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
SUBSTITUTE
Form W-9 __________________________________
Social Security Number
Department of the Treasury Part 1 - PLEASE PROVIDE YOUR
Internal Revenue Service TIN IN THE BOX AT RIGHT AND OR
CERTIFY BY SIGNING AND DATING
Payer's Request for Taxpayer BELOW __________________________________
Identification Number (TIN) Employer Identification Number
- --------------------------------------------------------------------------------------------------------------------
Part 2 - Certifications - Under Penalties of Perjury, I certify that:
(1) The number shown on this form is my current taxpayer identification
number (or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject
to backup withholding as a result of a failure to report all interest
or dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
Certification Instruction - You must cross out item (2) in Part 2 above if you
have been notified by the IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you are subject to backup withholding you receive
another notification from the IRS stating that you are no longer subject to
backup withholding, do not cross out item (2).
Part 3 - Awaiting TIN [ ]
- -------------------------------------------------------------------------------------------------------------------
NAME ______________________________________________________________________________________________________________
(Please Print)
ADDRESS ___________________________________________________________________________________________________________
CITY _______________________________________________ STATE______________________________ ZIP CODE ___________
SIGNATURE _____________________________________________________________ DATE _______________________________
====================================================================================================================
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECK THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
================================================================================
PAYOR'S NAME: FIRST UNION NATIONAL BANK
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver such an application in the near future. I understand that if I do not
provide a taxpayer identification number with sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide such
a number.
SIGNATURE _____________________________________________ DATE ___________________
================================================================================
-8-
<PAGE>
INSTRUCTION TO REGISTERED HOLDER
FROM BENEFICIAL OWNER
OF
12 1/2% SERIES A SENIOR NOTES DUE AUGUST 1, 2007
OF
PEGASUS COMMUNICATIONS CORPORATION
The undersigned hereby acknowledges receipt of the Prospectus dated
[________ __, ____] (the "Prospectus") of Pegasus Communications Corporation, a
Delaware corporation (the "Company") and the accompanying Letter of Transmittal
(the "Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer"). Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder, as to the action to be
taken by you relating to the Exchange Offer with respect to the outstanding 12
1/2% Series A Senior Notes due August 1, 2007 (the "Old Notes") held by you for
the account of the undersigned.
The aggregate face amount of the Old Notes held by you for the account
of the undersigned is (fill in amount):
$__________ of the Old Notes.
With respect to the Exchange Offer, the undersigned hereby instructs
you (check appropriate box):
[ ] To TENDER the following Old Notes held by your for the account of
the undersigned (insert principal amount of Old Notes to be tendered, if any):
$__________ of the Old Notes.
[ ] NOT to TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by you
for the account of the undersigned, it is understood that you are authorized (a)
to make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representations and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
Beneficial Owner of the Old Notes, including but not limited to the
representations that (i) the undersigned's principal residence is in the state
of (fill in state) ____________________, (ii) the undersigned is acquiring the
12 1/2% Series B Senior Notes due August 1, 2007 (the "New Notes") in the
ordinary course of business of the undersigned, (iii) the undersigned is not
participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of New Notes,
(iv) the undersigned acknowledges that any person participating in the Exchange
Offer for the purpose of distributing the New Notes must comply with the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended, in connection with any resale transaction of the New Notes acquired
by such person and cannot rely on the position of the Staff of the Securities
and Exchange Commission set forth in certain no-action letters (See the section
of the Prospectus entitled "The Exchange Offer -- Resale of the New Notes"), (v)
the undersigned understands that a secondary resale transaction described in
clause (iv) above should be covered by an effective registration statement
containing the selling securityholder information required by Item 507 or Item
508, if applicable, of Regulation S-K of the Commission, (vi) the undersigned is
not an "affiliate," as defined in Rule 405 under the Securities Act, of the
Company, (vii) if the undersigned is not a broker-dealer, that it is not engaged
in, and does not intend to engage in, a distribution of New Notes; and (viii) if
the undersigned is a broker-dealer that will receive New Notes for its own
account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes received in respect of such Old
Notes pursuant to the Exchange Offer; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act; (b) to agree, on
behalf of the undersigned, as set forth in the Letter of Transmittal; and (c) to
take such other action as necessary under the Prospectus or the Letter of
Transmittal to effect the valid tender of Old Notes.
-9-
<PAGE>
SIGN HERE
Name of Beneficial Owner(s):____________________________________________________
________________________________________________________________________________
Signature(s):___________________________________________________________________
________________________________________________________________________________
Name(s) (please print):_________________________________________________________
________________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
Principal place of Business (if different from address listed above):___________
________________________________________________________________________________
Telephone Number(s):____________________________________________________________
Taxpayer Identification or Social Security Number(s):___________________________
Date:___________________________________________________________________________
-10-
<PAGE>
NOTICE OF GUARANTEED DELIVERY
To Tender with Respect to
12 1/2% Series A Senior Notes due August 1, 2007
of
PEGASUS COMMUNICATIONS CORPORATION
CUSIP Nos.
705904 AG 5
705904 AH 3
U70532 AC 7
Pursuant to the Prospectus dated [________ __, ____]
By
PEGASUS COMMUNICATIONS CORPORATION
This Notice of Guaranteed Delivery or a form substantially equivalent
hereto must be used to accept the Exchange Offer for the outstanding 12 1/2%
Series A Senior Notes due August 1, 2007 (the "Old Notes") of Pegasus
Communications Corporation ("Pegasus") if (a) certificates representing the Old
Notes are not immediately available or (b) time will not permit the Old Notes
and all other required documents to reach the exchange agent on or prior to the
Expiration Date (defined below). This form may be delivered by an Eligible
Institution by mail or hand delivery or transmitted, via facsimile to the
exchange agent as set forth below. All capitalized terms used herein but not
defined herein shall have the meanings ascribed to them in the Prospectus dated
[________ __, ____] (as the same may be amended or supplemented from time to
time, the "Prospectus") of Pegasus.
The Exchange Offer is not being made to (nor will the surrender of Old
Notes be accepted from or on behalf of) holders of Old Notes in any jurisdiction
in which the making or acceptance of the Exchange Offer would not be in
compliance with the laws of such jurisdiction.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
[____________], 2000, UNLESS FURTHER EXTENDED (THE "EXPIRATION DATE"). HOLDERS
OF NOTES MUST TENDER THEIR NOTES PRIOR TO THE EXPIRATION DATE IN ORDER TO
RECEIVE THE NEW NOTES (AS DEFINED HEREIN). TENDERS MAY BE WITHDRAWN AT ANY TIME
PRIOR TO THE EXPIRATION DATE, BUT NOT THEREAFTER (EXCEPT UNDER CERTAIN LIMITED
CIRCUMSTANCES DESCRIBED MORE FULLY IN THE PROSPECTUS). THE CONSUMMATION OF THE
EXCHANGE OFFER IS CONDITIONED UPON THE SATISFACTION OF CERTAIN CONDITIONS
DESCRIBED IN THE PROSPECTUS.
- --------------------------------------------------------------------------------
<PAGE>
The exchange agent for the Exchange Offer is:
First Union National Bank
<TABLE>
<CAPTION>
<S> <C> <C> <C>
By Mail: By Hand/Overnight Express: By Facsimile:
First Union National Bank First Union National Bank (704) 590-7628
1525 West W.T. Harris Blvd., 3C3 1525 West W.T. Harris Blvd., 3C3
Charlotte, NC 28288 Charlotte, NC 28262 To confirm receipt:
Attention: Michael Klotz Attention: Michael Klotz
Telephone: (704) 590-7408 Telephone: (704) 590-7408 (704) 590-7408
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION VIA FACSIMILE TO A FACSIMILE NUMBER OTHER THAN THE
ONE LISTED ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on
the Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
-2-
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to Pegasus, upon the terms and subject
to the conditions set forth in the Prospectus, receipt of which is hereby
acknowledged, the principal amount of Old Notes set forth below, pursuant to the
guaranteed delivery procedures set forth in the Prospectus under the heading
"The Exchange Offer--Procedures for Tendering--Guaranteed Delivery Procedures."
Subject to and effective upon acceptance for purchase of the Old Notes
tendered herewith, the undersigned hereby sells, assigns and transfers to or
upon the order of Pegasus all right, title and interest in and to, and any and
all claims in respect of or arising or having arisen as a result of the
undersigned's status as a holder of, all Old Notes tendered hereby. In the event
of a termination of the Exchange Offer, the Old Notes tendered pursuant thereto
will be returned to the tendering noteholder promptly.
The undersigned hereby represents and warrants that the undersigned
accepts the terms and conditions of the Prospectus and the Letter of
Transmittal, has full power and authority to tender sell, assign and transfer
the Old Notes tendered hereby and that Pegasus will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim. The undersigned will,
upon request, execute and deliver any additional documents deemed by the
exchange agent or Pegasus to be necessary or desirable to complete the sale,
assignment and transfer of the Old Notes tendered.
All authority herein conferred or agreed to be conferred by this Notice
of Guaranteed Delivery shall survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
-3-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE
<S> <C>
Signature(s) of Registered Holder(s) Address(es): ______________________________
or Authorized Signatory:
____________________________________ ____________________________________________
____________________________________ ____________________________________________
Name(s) of Registered Holder(s): Area Code and Telephone No.:
____________________________________ ____________________________________________
____________________________________
Principal Amount of Notes Tendered and as to
which Consents are given
____________________________________
Certificate No(s) of Notes (if available): If Notes will be delivered by a
book-entry transfer, check
trust company:
_________________________________ [ ] The Depository Trust Company
_________________________________
Transaction Code No: _______________________
Depository Account No: _____________________
- --------------------------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE>
- --------------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Old Notes exactly as their name(s) appear(s) on the Old Notes or by
person(s) authorized to become registered holder(s) by endorsements and
documents transmitted with this Notice of Guaranteed Delivery. If signature is
by a trustee, guardian, attorney-in-fact, officer of a corporation, executor,
administrator, agent or other representative, such person must provide the
following information:
Please print name(s) and address(es)
Name(s):
________________________________________________________________________________
________________________________________________________________________________
Capacity:
________________________________________________________________________________
________________________________________________________________________________
Address(es):
________________________________________________________________________________
________________________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE (Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc. or a commercial bank
or trust company having an office or a correspondent in the United States or
another "Eligible Guarantor Institution" as defined in rule 17Ad-15 under the
Securities Act of 1934, as amended, hereby guarantees that, within two business
days from the date of this Notice of Guaranteed Delivery, a properly completed
and validly executed Letter of Transmittal (or a facsimile thereof), together
with Old Notes tendered hereby in proper form for transfer (of confirmation of
the book-entry transfer of such Old Notes into the exchange agent's account at a
Book-Entry Transfer Facility, pursuant to the procedures for book-entry transfer
set forth in the Prospectus under the caption "The Exchange Offer--Procedures
for Tendering--Guaranteed Delivery Procedures") and all other required documents
will be deposited by the undersigned with the exchange agent at one of its
addresses set forth above.
Name of Firm: __________________________ _________________________________
Authorized Signature
Address: _______________________________ Name: ______________________________
_________________________________________ Title: _____________________________
Area Code and
Telephone No: _______________________ Date: ______________________________
DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES MUST BE MADE
PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND VALIDLY EXECUTED
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
- --------------------------------------------------------------------------------
-5-
<PAGE>
LETTER TO DTC PARTICIPANTS
PEGASUS COMMUNICATIONS CORPORATION
Exchange Offer with Respect to Its Outstanding
12 1/2% Series A Senior Notes due August 1, 2007
Pursuant to the Prospectus dated as of [________ __, ____]
CUSIP Nos.
705904 AG 5
705904 AH 3
U70532 AC 7
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
[____________], 2000, UNLESS FURTHER EXTENDED (THE "EXPIRATION DATE"). HOLDERS
OF NOTES MUST TENDER THEIR NOTES PRIOR TO THE EXPIRATION DATE IN ORDER TO
RECEIVE THE NEW NOTES (AS DEFINED HEREIN). TENDERS MAY BE WITHDRAWN AT ANY TIME
PRIOR TO THE EXPIRATION DATE, BUT NOT THEREAFTER (EXCEPT UNDER CERTAIN LIMITED
CIRCUMSTANCES DESCRIBED MORE FULLY IN THE PROSPECTUS). THE CONSUMMATION OF THE
EXCHANGE OFFER IS CONDITIONED UPON THE SATISFACTION OF CERTAIN CONDITIONS
DESCRIBED IN THE PROSPECTUS.
- --------------------------------------------------------------------------------
[________ __, ____]
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Pegasus Communications Corporation, a
Delaware corporation (the "Company" or "Pegasus"), to act as dealer managers in
connection with its offer to exchange for all of the outstanding debt securities
listed above (the "Old Notes") Pegasus' 12 1/2% Series B Senior Notes due August
1, 2007 (the "New Notes") upon the terms and subject to the conditions set forth
in the Prospectus dated [________ __, ____] and in the accompanying Letter of
Transmittal (the "Letter of Transmittal" and, together with the Prospectus, the
"Offering Materials") (such offer is referred to as the "Exchange Offer"). The
Offering Materials more fully describe the Exchange Offer.
The consideration for each $1,000 in principal amount at maturity of
Old Notes tendered and accepted for payment pursuant to the Exchange Offer shall
be $1,000 principal amount of New Notes. This consideration will be paid to
holders who tender their Old Notes before the Expiration Date.
Enclosed herewith are copies of the following documents:
1. The Prospectus;
2. The Letter of Transmittal for your use and for the information of
your clients; and
<PAGE>
3. A form of letter which may be sent to your clients for whose account
you hold Old Notes in your name or in the name of a nominee, with space provided
for obtaining such clients' instructions with regard to the Exchange Offer.
DTC participants will be able to execute tenders through the DTC
Automated Tender Offer Program.
In order to take advantage of the Exchange Offer, a duly executed and
properly completed Letter of Transmittal and any required signature guarantees
should be sent to the exchange agent, and certificates representing the tendered
Old Notes (or confirmation of book-entry transfer) should be delivered to the
exchange agent, all in accordance with the instructions set forth in the
Offering Materials.
The Company will not pay any fees or commissions to any broker or
dealer or other person for soliciting tenders of Old Notes. You will be
reimbursed for customary mailing and handling expenses incurred by you in
forwarding the enclosed materials to your clients.
Any questions or requests for assistance may be directed to us as
dealer managers at the addresses and telephone numbers set forth on the back
cover of the Prospectus. Requests for additional copies of the Prospectus, the
Letter of Transmittal and the other tender offer materials may be directed to
the exchange agent or to brokers, dealers, commercial banks or trust companies.
Very truly yours,
[Donaldson, Lufkin & Jenrette] [___________________]
_______________________________
Nothing contained herein or in the enclosed documents shall constitute
you or any other person as the agent of the dealer managers or the exchange
agent or authorize you or any other person to give any information or make any
representation on behalf of any of them with respect to the Exchange Offer not
contained in the Offering Materials.
-2-
<PAGE>
LETTER TO BENEFICIAL HOLDERS
PEGASUS COMMUNICATIONS CORPORATION
Exchange Offer with Respect to Its Outstanding
12 1/2% Series A Senior Notes due August 1, 2007
Pursuant to the Prospectus dated as of [________ __, ____]
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
[____________], 2000, UNLESS FURTHER EXTENDED (THE "EXPIRATION DATE"). HOLDERS
OF NOTES MUST TENDER THEIR NOTES PRIOR TO THE EXPIRATION DATE IN ORDER TO
RECEIVE THE NEW NOTES (AS DEFINED HEREIN). TENDERS MAY BE WITHDRAWN AT ANY TIME
PRIOR TO THE EXPIRATION DATE, BUT NOT THEREAFTER (EXCEPT UNDER CERTAIN LIMITED
CIRCUMSTANCES DESCRIBED MORE FULLY IN THE PROSPECTUS). THE CONSUMMATION OF THE
EXCHANGE OFFER IS CONDITIONED UPON THE SATISFACTION OF CERTAIN CONDITIONS
DESCRIBED IN THE PROSPECTUS.
- --------------------------------------------------------------------------------
[________ __, ____]
To Our Clients:
Enclosed for your consideration is the Prospectus dated [________ __,
____] and the accompanying Letter of Transmittal dated [_________ __, ____] (the
"Letter of Transmittal" and, together with the Prospectus, the "Offering
Materials") relating to the offer by Pegasus Communications Corporation, a
Delaware corporation (the "Company" or "Pegasus"), to exchange for all of the
outstanding debt securities listed above (the "Old Notes") Pegasus' 12 1/2%
Series B Senior Notes due August 1, 2007 (the "New Notes") upon the terms and
subject to the conditions set forth in the Offering Materials (such offer is
referred to as the "Exchange Offer"). The Offering Materials more fully describe
the Exchange Offer.
The purpose of the Exchange Offer is to fulfill the obligations of the
Company, with respect to a Registration Rights Agreement executed in connection
with the issuance of the Old Notes.
The consideration for each $1,000 in principal amount at maturity of
Old Notes tendered and accepted for payment pursuant to the Exchange Offer shall
be $1,000 in principal amount of New Notes. This consideration will be paid to
holders who tender their Old Notes before the Expiration Date.
We are the holder of Old Notes held for your account. A tender of such
Notes can be made only by us as the holder pursuant to your instructions. The
enclosed Letter of Transmittal is furnished to you for your information only and
cannot be used to tender your Old Notes. We request instructions as to whether
you wish to tender any or all of the Old Notes held by us for your account,
pursuant to the terms and subject to the conditions set forth in the Prospectus.
Notes properly tendered may be withdrawn at any time prior to the Expiration
Date.
We urge you to read carefully the enclosed Letter of Transmittal in
conjunction with the Prospectus before instructing us to tender your Notes.
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Your attention is directed to the following:
1. Subject to the terms and conditions of the Exchange Offer, you
will receive $1,000 in principal amount of New Notes for each
$1,000 in principal amount at maturity of Old Notes exchanged and
accepted for payment on the third business day following the
Expiration Date, or as soon as possible thereafter.
2. The Exchange Offer will expire on the Expiration Date, which is
5:00 p.m., New York City time, on [ ], 2000, unless extended or
earlier terminated.
3. If you desire to tender any Old Notes pursuant to the Exchange
Offer, we must receive your instructions in ample time to permit
us to effect a tender of such Old Notes on your behalf prior to
the Expiration Date.
4. The Company's obligation to accept properly tendered and not
withdrawn Old Notes for purchase pursuant to the Exchange Offer is
subject to certain conditions. See ["The Exchange
Offer--Conditions"] in the Prospectus.
5. Tenders of Old Notes may only be withdrawn prior to the Expiration
Date.
6. Any transfer taxes will be borne by the Company except as
otherwise provided in Instruction 7 of the Letter of Transmittal.
If you wish to tender any or all of the Old Notes held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form attached hereto. An envelope to return your
instructions to us is enclosed. If you authorize the tender of your Old Notes
pursuant to the Exchange Offer, all such Old Notes will be tendered unless
otherwise specified on the instruction form. Your instructions should be
forwarded to us in ample time to permit us to submit a tender on your behalf by
the Expiration Date. The specimen Letter of Transmittal is furnished to you for
your information only and cannot be used by you to tender Old Notes held by us
for your account.
The Company is not aware of any jurisdiction in which the making of the
Exchange Offer or the tender of Old Notes in connection therewith would not be
in compliance with the laws of such jurisdiction. If the Company becomes aware
of any jurisdiction in which the making of the Exchange Offer would not be in
compliance with such laws, the Company will make a good faith effort to comply
with any such laws or seek to have such laws declared inapplicable to the
Exchange Offer. If, after such good faith effort, the Company cannot comply with
any such laws, the Exchange Offer will not be made to (nor will tenders be
accepted from or on behalf of) Holder(s) residing in such jurisdiction.
IMPORTANT: The Letter of Transmittal (or a facsimile thereof), together
with the Old Notes and all other required documents, or an agent's message,
together with a confirmation of book-entry transfer of Old Notes, must be
received by the exchange agent prior to the Expiration Date with respect to
holders wishing to tender their Old Notes in exchange for New Notes.
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