SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
People's Choice TV Corp.
(Name of Issuer)
Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
710847104
(CUSIP Number)
Anthony Grillo Wireless Holding LLC
Blackstone Management C/o Murray Capital
Associates II L.L.C. Management, Inc.
345 Park Avenue Attn: James B. Hoffman
New York, New York 10154 110 East 59th Street
(212) 935-2626 New York, New York 10022
(212) 588-1511
(Names, Addresses and Telephone Numbers of Persons
Authorized to Receive Notices and Communications)
Copy to:
Robert L. Friedman, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
(212) 455-2000
December 23, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule 13D, and
is filing this statement because of Rule 13d-1(e), 13d-1(f) or 13d-1(g),
check the following box: [ ]
Page 1 of 21 Pages
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CUSIP No. 710847104 13D
(1) NAME OF REPORTING PERSONS
S.S. or I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Blackstone Capital Partners II Merchant Banking Fund L.P.
I.R.S. Identification No. - 13-3805280
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) / /
(b) /x/
(3) SEC USE ONLY
(4) SOURCE OF FUNDS*
00
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
/ /
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
(7) SOLE VOTING POWER
0
(8) SHARED VOTING POWER
NUMBER OF SHARES BENE- 2,431,824
FICIALLY OWNED BY EACH
REPORTING PERSON WITH (9) SOLE DISPOSITVE POWER
0
(10) SHARED DISPOSITIVE POWER
2,431,824
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,431,824
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
/ /
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
15.0%
(14) TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 2 of 21 Pages
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CUSIP No. 710847104 13D
(1) NAME OF REPORTING PERSONS
S.S. or I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Blackstone Offshore Capital Partners II L.P.
I.R.S. Identification No. - Not Applicable
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) / /
(b) /x/
(3) SEC USE ONLY
(4) SOURCE OF FUNDS*
00
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
/ /
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
(7) SOLE VOTING POWER
0
(8) SHARED VOTING POWER
NUMBER OF SHARES BENE- 638,089
FICIALLY OWNED BY EACH
REPORTING PERSON WITH (9) SOLE DISPOSITVE POWER
0
(10) SHARED DISPOSITIVE POWER
638,089
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
638,089
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
/ /
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
4.0%
(14) TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 3 of 21 Pages
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CUSIP No. 710847104 13D
(1) NAME OF REPORTING PERSONS
S.S. or I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Blackstone Family Investment Partnership II L.P.
I.R.S. Identification No. - 13-3702088
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) / /
(b) /x/
(3) SEC USE ONLY
(4) SOURCE OF FUNDS*
00
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
/ /
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
(7) SOLE VOTING POWER
0
(8) SHARED VOTING POWER
NUMBER OF SHARES BENE- 166,213
FICIALLY OWNED BY EACH
REPORTING PERSON WITH (9) SOLE DISPOSITVE POWER
0
(10) SHARED DISPOSITIVE POWER
166,213
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
166,213
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
/ /
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
1.0%
(14) TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 21 Pages
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CUSIP No. 7010847104 13D
(1) NAME OF REPORTING PERSONS
S.S. or I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Blackstone Management Associates II L.L.C.
I.R.S. Identification No. - 13-3734135
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) / /
(b) /x/
(3) SEC USE ONLY
(4) SOURCE OF FUNDS*
00
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
/ /
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
(7) SOLE VOTING POWER
0
(8) SHARED VOTING POWER
NUMBER OF SHARES BENE- 3,236,126
FICIALLY OWNED BY EACH
REPORTING PERSON WITH (9) SOLE DISPOSITVE POWER
0
(10) SHARED DISPOSITIVE POWER
3,236,126
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,236,126
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
/ /
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
20.0%
(14) TYPE OF REPORTING PERSON*
00
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 5 of 21 Pages
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CUSIP No. 7010847104 13D
(1) NAME OF REPORTING PERSONS
S.S. or I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Wireless Holding LLC
I.R.S. Identification No. - [to be applied for]
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) / /
(b) /x/
(3) SEC USE ONLY
(4) SOURCE OF FUNDS*
00
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
/ /
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
(7) SOLE VOTING POWER
0
(8) SHARED VOTING POWER
NUMBER OF SHARES BENE- 3,236,126
FICIALLY OWNED BY EACH
REPORTING PERSON WITH (9) SOLE DISPOSITVE POWER
0
(10) SHARED DISPOSITIVE POWER
3,236,126
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,236,126
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
/ /
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
20.0%
(14) TYPE OF REPORTING PERSON*
00
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 6 of 21 Pages
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CUSIP No. 7010847104 13D
(1) NAME OF REPORTING PERSONS
S.S. or I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Murray Capital Management, Inc.
I.R.S. Identification No. - 13-3832203
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) / /
(b) /x/
(3) SEC USE ONLY
(4) SOURCE OF FUNDS*
00
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
/ /
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
(7) SOLE VOTING POWER
0
(8) SHARED VOTING POWER
NUMBER OF SHARES BENE- 3,236,126
FICIALLY OWNED BY EACH
REPORTING PERSON WITH (9) SOLE DISPOSITVE POWER
0
(10) SHARED DISPOSITIVE POWER
3,236,126
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,236,126
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
/ /
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
20.0%
(14) TYPE OF REPORTING PERSON*
C0
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 7 of 21 Pages
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In accordance with Rule 13d-2(e) under the Securities Exchange Act
of 1934, as amended, this statement on Schedule 13D (this "Schedule 13D")
amends and restates in its entirety the Statement on Schedule 13D filed
jointly by the Blackstone Entities (as defined in Item 2 below) with respect
to the Common Stock, $.01 par value, of People's Choice TV Corp. (the
"Issuer" or "PCTV").
Item 1. Security and Issuer.
This Schedule 13D relates to shares of Common Stock, $.01 par value
(the "Common Stock") of People's Choice TV Corp., a Delaware corporation. The
principal executive offices of PCTV are located at Two Corporate Drive,
Shelton, Connecticut 06484.
Item 2. Identity and Background.
This Schedule 13D is being filed jointly by Blackstone Capital
Partners II Merchant Banking Fund L.P., a Delaware limited partnership ("BCP
II"), Blackstone Offshore Capital Partners II L.P., a Cayman Islands exempted
limited partnership ("BOCP II"), Blackstone Family Investment Partnership II
L.P. a Delaware limited partnership ("BFIP II"), Blackstone Management
Associates II L.L.C., a Delaware limited liability company ("Blackstone
Management"), Wireless Holding LLC, a Delaware limited liability company
("Wireless Holding"), and Murray Capital Management, Inc., a Delaware
corporation ("Murray Capital") (the foregoing, collectively, the "Reporting
Persons").
Blackstone Management is the sole general partner of BCP II and
BFIP II and the sole investment general partner of BOCP II. Blackstone
Services (Cayman) LDC, a Cayman Islands limited duration company, is the
administrative general partner of BOCP II. Pursuant to the partnership
agreement of BOCP II, Blackstone Management has the sole power to vote
securities held by BOCP II and the sole power to dispose of securities held
by BOCP II. BCP II, BOCP II, BFIP II and Blackstone Management will
hereinafter be referred to collectively as the "Blackstone Entities." Murray
Capital is the sole managing member of Wireless Holding. Murry Capital is
unaffiliated with the Blackstone Entities.
The Principal business of BCP II, BOCP II and BFIP II (collectively,
the "BCP II Funds") consists of committing capital to facilitate corporate
restructurings, leveraged buyouts, bridge financings and other investments and
capitalizing affiliates which will engage in investment and investment banking
activities. The principal business of Blackstone Management consists of
performing the functions of, and serving as, the general partner of BCP II and
BFIP II, and the investment general partner of BOCP II. The principal business
and office address of BCP II, BFIP II and Blackstone Management is 345 Park
Avenue, New York, New York 10154. The principal business and office address of
BOCP II is c/o Blackstone Services (Cayman) LDC c/o Hemisphere Management
(Cayman) Ltd., Zephyr House, Mary Street, 5th Floor, Georgetown, Grand Cayman,
Cayman Islands.
Messrs. Peter G. Peterson and Stephen A. Schwarzman are the
founding members (the "Blackstone Founding Members") of Blackstone
Management. The other members of Blackstone Management are David A.
Stockman, Michael B. Hoffman, James J. Mossman, Arthur B. Newman, Anthony
Page 8 of 21 Pages
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Grillo, J. Tomilson Hill, Mark T. Gallogly, Glenn H. Hutchins, Howard A.
Lipson, Thomas J. Saylak, John Z. Kukral, Kenneth C. Whitney, Michael Puglisi
and Timothy R. Coleman (collectively and together with the Blackstone
Founding Members, the "Blackstone Members"). Each of the Blackstone Members
is a United States citizen. The principal occupations of each of the
Blackstone Members is serving as an executive of one or more of the
Blackstone Entities and their affiliates. The Blackstone Founding Members
are the managing members of Blackstone Management. The business address of
each of the Blackstone Members is 345 Park Avenue, New York, New York 10154.
Wireless Holding was formed to effect the transactions described in
Item 4 below and has not engaged in any activities other than those incident
to its formation and such transactions. Murray Capital is an Investment
adviser with the SEC under the Investment Advisers Act of 1940 and its
principal business is serving as an investment adviser for various investment
funds and performing related services. Marti P. Murray is the sole executive
officer and director and controlling stockholder of Murray Capital, and, except
as disclosed in this Schedule 13D, her present principal occupation is serving
as the president and secretary of Murray Capital. Ms. Murray is a United
States citizen. The business address of each of Wireless Holding, Murray
Capital and Ms. Murray is 110 East 59th Street, 24th Floor, New York, New York
10022.
During the last five years, none of the Reporting Persons has (i)
been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, Federal or state securities laws or finding any violations of
such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On October 27, 1994, BCP II, BOCP II and the Issuer entered into a
Stock Purchase Agreement (the "Stock Purchase Agreement"), filed as Exhibit 2
to the original Schedule 13D, pursuant to which PCTV agreed to sell, and BCP II
and BOCP II agreed to acquire, 500,000 shares of Convertible Cumulative
Pay-in-Kind Preferred Stock, par value $.01 per share and liquidation
preference $100 per share (the "Preferred Stock") of PCTV for an aggregate
cash purchase price of $50,000,000. The Preferred Stock is convertible at
any time after its date or dates of issuance into shares of Common Stock
(based on a conversion price of $22.50 per share, subject to anti-dilution
adjustments). The Certificate of Designations relating to the Preferred
Stock was filed as Exhibit 3 to the original Schedule 13D.
All 500,000 shares of Preferred Stock were purchased by the BCP II
Funds in four separate installments occurring between November 9, 1994 and
March 24, 1995. The source of funds for purchases by the BCP II Funds of
shares of Preferred Stock were capital contributions by their respective
general and limited partners.
In accordance with the Certificate of Designations for the
Page 9 of 21 Pages
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Preferred Stock, the BCP II Funds have received, through the date of this
filing, in the aggregate an additional 228,128 shares of Preferred Stock as
pay-in-kind dividends on the Preferred Stock.
Item 4. Purpose of Transaction.
The Blackstone Entities originally acquired the Preferred Stock
pursuant to the Stock Purchase Agreement in order to establish a substantial
investment position in PCTV. A summary of the material terms and provisions
contained in the Stock Purchase Agreement and related agreements entered into
in connection therewith are described in Item 6 of this Schedule 13D.
Effective as of December 23, 1998, the BCP II Funds have
transferred all of their respective shares of Preferred Stock to Wireless
Holding, a newly formed Delaware limited liability company, created in order
to permit Blackstone Management to comply with the Federal Communications
Commission's cable/wireless cross-ownership rules (the "Cable/Wireless Cross-
Ownership Rules"). Prior to such transfer, in addition to its interest in
PCTV, Blackstone Management owned equity interests in certain cable
television systems with service areas that overlapped certain of PCTV's
wireless cable systems. The Cable/Wireless Cross-Ownership Rules prohibit
ownership of interests in such overlapping systems, subject to certain
limited exceptions.
In order to achieve compliance with the Cable/Wireless Cross-
Ownership Rules, Blackstone Management agreed to cause the BCP II Funds to
transfer their shares of Preferred Stock to Wireless Holding. In return for
their contribution of Preferred Stock, the BCP II Funds received limited
member interests in Wireless Holding. Murray Capital is the sole managing
member of Wireless Holding and received its managing member interest in
Wireless Holding in exchange for its agreement to perform its services in
respect thereof.
As a result of the restructuring of the BCP II Funds' investment in
the Preferred Stock, Murray Capital has sole discretion with respect to the
operations, management and administration of Wireless Holding, including,
without limitation, the right to exercise all voting and other corporate
governance rights available to holders of the Preferred Stock. The BCP II
Funds, as limited members of Wireless Holding, have retained certain investor
protections, including the right to approve the following significant actions
(collectively, the "BCP Investor Protection Rights"): (i) any transfer, sale,
exchange, conversion, liquidation or other disposition of the Preferred Stock
held by Wireless Holding; (ii) any transfer, sale, exchange, assignment or
other disposition by Murray Capital of its managing member interest in, or
the appointment of additional managing members (or limited members) of,
Wireless Holding (other than withdrawals of Murray Capital as managing member
under certain specified circumstances upon notice to the BCP II Funds); (iii)
any consent or approval required to be delivered by Wireless Holding in
connection with a bankruptcy, recapitalization, reorganization, restructuring
or other workout of PCTV; (iv) a dissolution and subsequent termination of
Wireless Holding; and (v) any change or modification to the Wireless Holding
Page 10 of 21 Pages
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Limited Liability Company Agreement, dated as of December 23, 1998 (the "LLC
Agreement"), among the BCP II Funds and Murray Capital.
As a result of such restructuring, Blackstone Management (subject
to the BCP Investor Protection Rights) no longer has the right to vote the
Preferred Stock and Blackstone Management's only interest in PCTV is an
economic one flowing from the BCP II Funds' limited member interests in
Wireless Holding, which economic interest (as calculated in accordance with
the Cable/Wireless Cross-Ownership Rules) falls below the 5%
maximum equity interest in overlapping systems currently permitted by the FCC
(the "FCC Equity Cap"). In addition, so long as they remain subject to such
FCC Equity Cap, the Blackstone Entities will not acquire additional shares of
Preferred Stock or Common Stock to the extent the acquisition of such shares
would result in Blackstone Management's economic interest in PCTV exceeding
such Cap.
Following the transfer of the Preferred Stock to Wireless Holding,
Wireless Holding has an investment position in PCTV and has generally
acquired, as a permitted transferee of the BCP II Funds, the rights granted
to each of the BCP II Funds as holders of the Preferred Stock pursuant to the
Stock Purchase Agreement and the terms of Preferred Stock as set forth in the
Certificate of Designations and the Registration Rights Agreement.
Subject to their compliance with the terms and provisions of the
LLC Agreement and the application of the FCC Equity Cap, the Reporting
Persons intend to review on a continuing basis their investment in PCTV, and
the Reporting Persons may decide to increase or decrease their investment in
PCTV depending upon the price and availability of the PCTV's securities,
subsequent developments affecting PCTV, PCTV's business and prospects, other
investment and business opportunities available to them, general stock market
and economic conditions, tax considerations and other factors.
Except as described above, at the present time, none of the
Reporting Persons has any plans or proposals that would relate to any
transaction, change or event specified in clauses (a) through (j) of
Item 4 of the Schedule 13D form.
Item 5. Interest in Securities of the Issuer.
As a result of the BCP Investor Protection Rights, BCP II, BOCP II
and BFIP II may be deemed to beneficially own 547,160, 143,570 and 37,398
shares of Preferred Stock, respectively, which are convertible, at any time
into 2,431,824, 638,089 and 166,213 shares of Common Stock, respectively.
Wireless Holding is the beneficial owner of an aggregate of 728,128 shares of
Preferred Stock, which are convertible, at any time into 3,236,126 shares of
Common Stock. Such shares of Common Stock would represent in the aggregate
approximately 20.0% of the total number of shares of Common Stock outstanding
as of November 10, 1998 (based on the number of shares outstanding on such
date as represented by the Issuer), after giving effect to the issuance of
such additional Common Stock upon the conversion of the Preferred Stock.
As a result of the BCP Investor Protection Rights, the BCP II
Page 11 of 21 Pages
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Funds, acting through Blackstone Management, its sole general partner (in the
case of BCP II and BFIP II) and its sole investment general partner (in the
case of BOCP II), may be deemed, in accordance with SEC rules and
regulations, to have shared power to vote or to direct the vote, and to
dispose or to direct the disposition of, any shares of Preferred Stock and
any shares of Common Stock received upon conversion of the Preferred Stock.
Blackstone Management may be deemed to beneficially own any shares of
Preferred Stock or Common Stock deemed to be beneficially owned by the BCP II
Funds. In addition, the Blackstone Founding Members share power to vote or
to direct the vote, and to dispose or to direct the disposition of, any
shares of Preferred Stock or Common Stock that may be deemed to be
beneficially owned by the BCP II Funds. As a result, each of the Blackstone
Founding Members may be deemed to beneficially own the shares of Preferred
Stock and Common Stock that the BCP II Funds may be deemed to beneficially
own (which beneficial ownership interest is hereby disclaimed by the
Blackstone Founding Members).
Wireless Holding, acting through Murray Capital, its sole managing
member, has shared power to vote or to direct the vote, and to dispose or to
direct the disposition of, any shares of Preferred Stock and any shares of
Common Stock received upon conversion of the Preferred Stock. Murray Capital
may be deemed to beneficially own any shares of Preferred Stock or Common Stock
deemed to be beneficially owned by Wireless Holding. In addition, Ms. Murray,
as the controlling person of Murray Capital, shares power to vote or to direct
the vote, and to dispose or to direct the disposition of, any shares of
Preferred Stock or Common Stock that may be deemed to be beneficially owned by
Wireless Holding. As a result, Ms. Murray may be deemed to beneficially own
the shares of Preferred Stock and Common Stock that Murray Capital may be
deemed to beneficially own (which beneficial ownership interest is hereby
disclaimed by Ms. Murray).
None of the Reporting Persons has beneficial ownership of, or has
engaged in any transaction during the past 60 days in, any shares of the
Preferred Stock or Common Stock, except as disclosed in this Schedule 13D.
Wireless Holding, as the registered holder of the Preferred Stock,
and Murray Capital, as managing member of Wireless Holding, have the right to
receive and the power to direct the receipt of dividends from, or the
proceeds from the sale of, the Preferred Stock which the BCP II Funds have
transferred to Wireless Holding, subject to the provisions of the LLC
Agreement (as described in Items 4 and 6 of this Schedule 13D).
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Stock Purchase Agreement and Related Agreements
The Stock Purchase Agreement and the agreements and instruments
entered into in connection therewith set forth the terms and conditions
governing the BCP II Funds' acquisition and ownership of the Preferred Stock
and related matters, including certain agreements with respect to the voting
or disposition of the Preferred Stock and Common Stock. As a permitted
Page 12 of 21 Pages
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transferee of the BCP II Funds, Wireless Holding has generally succeeded to
the rights and privileges originally granted to the BCP II Funds.
The terms of the Preferred Stock and the Stock Purchase Agreement
entitle the holders of Preferred Stock, voting as a class, to elect two
members of the Board of Directors (or, if the size of the Board of Directors
is increased, a proportionately greater number) for so long as the BCP II
Funds and certain permitted transferees own shares of Preferred Stock in
certain minimum amounts. Following conversion of the Preferred Stock, for so
long as the BCP II Funds and/or certain permitted transferees own shares of
Common Stock in certain minimum amounts, such holders of Common Stock shall
have the right to designate a like number of persons to the Board of
Directors, and the Issuer has agreed to use its best efforts to ensure that
the nominating committee of the Board of Directors nominate and recommend to
stockholders the election of such persons. Effective as of April 8, 1998,
the two representatives of the BCP II Funds previously on the Issuer's Board
of Directors have resigned therefrom, and, since that time, no nominees of
the BCP II Funds has served on the Board.
The terms of the Preferred Stock also provide that the size of the
Board of Directors of the Issuer will be automatically increased by two
members and holders of the Preferred Stock will be entitled to elect such two
members upon the occurrence of certain defaults, which right will continue
for so long as any such default continues. The Issuer has agreed to use its
best efforts to cause its Certificate of Incorporation to be amended so as to
permit the automatic increase in size of the Board of Directors upon the
occurrence of any such default.
The Preferred Stock is entitled to vote as a single class with the
Common Stock on all matters submitted to a vote of the stockholders. Each
share of Preferred Stock is entitled to the number of votes equal to the
number of shares of Common Stock that could be obtained upon conversion at
the then applicable conversion price. Approval of two-thirds of the
outstanding shares of Preferred Stock are required to approve (i) certain
amendments to the Certificate of Incorporation or Certificate of
Designations, (ii) the issuance or reclassification of junior or parity
securities, (iii) certain consolidations and mergers or the sale or disposal
of substantially all of the assets of the Issuer, unless, among other things,
following any such transaction (x) the Preferred Stock (or any securities
exchanged therefor) continues to have the same rights and preferences and has
the same priority in the surviving person's capital structure as it had prior
to such transaction and (y) the surviving person has an indebtedness to
EBITDA ratio (as defined in the Certificate of Designations) which is less
than the Issuer's prior to the transaction and, unless such person has a
market capitalization of at least $1 billion, is less than 6 to 1, and (iv)
the sale or other disposal of properties or assets exceeding 25% of the
economic value of the Issuer. The provisions of clause (iii)(y) and (iv)
above will no longer be of any effect if the BCP II Funds and certain
permitted transferees do not own Preferred Stocks and/or Common Stock in
certain minimum amounts.
The terms of the Stock Purchase Agreement provide that the
Page 13 of 21 Pages
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affirmative vote of two-thirds of the Board of Directors of the Issuer is
required to approve a sale of the Issuer, certain divestitures and
acquisitions, any amendment to the Issuer's Certificate of Incorporation, the
entry into a line of business other than the telecommunications business and
certain other transactions. Such obligation terminates if the BCP II Funds
and certain permitted transferees do not own Preferred Stock and/or Common
Stock in certain minimum amounts.
Dividends on the Preferred Stock (and interest on unpaid dividends)
accrue at an annual rate of 9 7/8% and are payable quarterly. Upon the
occurrence of certain defaults such rate will increase to 12% and will
continue for so long as any such default continues. Dividends on shares of
the Preferred Stock in respect of each dividend period ending prior to the
fifth anniversary of the date of issuance of such shares of Preferred Stock
(and interest on unpaid dividends) will be paid in additional shares of
Preferred Stock. Holders of Preferred Stock will acquire additional shares
of Preferred Stock (and thus have the right to acquire additional shares of
Common Stock) as a result of such stock dividends.
The Preferred Stock may not be redeemed by the Issuer prior to the
fifth anniversary of the date of the first issuance of Preferred Stock.
Thereafter, the Issuer may redeem all of the Preferred Stock at a price per
share equal to 106% of the liquidation preference plus 106% of the sum of
accrued and unpaid dividends and interest on unpaid dividends. The Issuer
may at its option redeem the Preferred Stock for cash or shares of Common
Stock.
The Preferred Stock is also redeemable upon a change in control of
the Issuer, at a redemption price per share equal to the higher of (i) 106%
of the per share liquidation preference plus accrued and unpaid dividends and
interest on unpaid dividends to the date of redemption and (ii) the sum of
(x) accrued and unpaid cash dividends to the date of redemption and (y) value
of Consideration that could be obtained upon conversion of the Preferred Stock
(and any related accrued but unpaid dividends payable in shares of Preferred
Stock) into Common Stock and participating in the change of control
transaction.
The Preferred Stock will be redeemed on the tenth anniversary of
the date of the first issuance of shares of Preferred Stock, at an aggregate
redemption price equal to 100% of the liquidation preference per share, plus
an amount in cash equal to all accrued and unpaid dividends and interest on
unpaid dividends outstanding to the redemption date.
A Registration Rights Agreement among the Issuer and the BCP II
Funds, the form of which was filed as Exhibit 4 to the original Schedule 13D,
provides holders of the Preferred Stock and Common Stock issued upon
conversion thereof with certain registration rights under federal and state
securities laws.
The above descriptions of the Stock Purchase Agreement and related
matters set forth in this Item and in Items 4 and 5 are summaries, and are
qualified in their entity by reference to the complete text of such
Page 14 of 21 Pages
<PAGE>
<PAGE>
documents, which are contained as Exhibits to the original Schedule 13D and
incorporated herein by reference.
Wireless Holding LLC Agreement
The LLC Agreement sets forth the agreement of the BCP II Funds and
Murray Capital with respect to the Preferred Stock, the Common Stock and
related matters, including certain agreements with respect to the voting or
disposition of the Preferred Stock and Common Stock.
Pursuant to the LLC Agreement, Wireless Holding has a five-year
term, with two one-year renewal options available to the BCP II Funds, as
limited members. Murray Capital has sole discretion with respect to the
operations, management and administration of Wireless Holding, including,
without limitation, the right to exercise all voting and other corporate
governance rights available to holders of the Preferred Stock, except that
the BCP II Funds, as limited members of Wireless Holding, have retained the
BCP Investor Protection Rights (as described above in Item 4).
The BCP II Funds have transferred all of their Preferred Stock to
Wireless Holding. Murray Capital, as managing member, will not make any
contribution to Wireless Holding (other than its services). The BCP II Funds
will receive 100% of Wireless Holding's distributions up to an amount equal
to the value of their contributed Preferred Stock (calculated based on the
30-day average closing prices of Common Stock prior to the date of
contribution of such Preferred Stock), plus any other contributions made by
them to pay Wireless Holding's expenses. Thereafter, Wireless Holding's
distributions will be allocated to the BCP II Funds, on the one hand, and
Murray Capital, as managing member, on the other hand, on a 90%-10% basis,
subject to any reduction in Murray Capital's distributions resulting from an
issuance of additional Preferred Stock directly to Murray Capital (as
described below).
If, as a result of additional issuances of Preferred Stock by PCTV
(whether as a pay-in-kind dividend or otherwise), Blackstone Management's
indirect interest in PCTV would exceed the FCC Equity Cap, then such
additional shares of Preferred Stock will be issued directly to Murray
Capital (rather than to Wireless Holding) and Murray Capital's 10%
distribution right will be reduced by the value of the issuance of such
additional shares of Preferred Stock.
The BCP II Funds may not transfer their respective interest in
Wireless Holding, except to their affiliates. Murray Capital, as managing
member, may not transfer its interest in Wireless Holding without the consent
of the BCP II Funds.
All reasonable out-of-pocket costs and expenses of Murray Capital
in connection with the formation, administration and operation of Wireless
Holding will be reimbursed by Wireless Holding (and the BCP II Funds will be
obligated to pay any such expenses if Wireless Holding has insufficient
funds). Murray Capital is being fully indemnified (primarily by Wireless
Page 15 of 21 Pages
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<PAGE>
Holding and secondarily by the BCP II Funds) against all losses or
liabilities relating to its activities as managing member, except for those
resulting from its gross negligence or willful misconduct.
The above descriptions of the LLC Agreement and related matters set
forth in this Item and in Items 4 and 5 are summaries, and are qualified in
their entirety by reference to the complete text of such agreement, which is
contained in Exhibit 6 attached hereto and incorporated herein by reference.
Item 7. Material to be Filed as Exhibits.
The Index of Exhibits attached to this Schedule 13D is hereby
incorporated by reference in its entirety.
Page 16 of 21 Pages
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<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, each of the undersigned certifies that the information set forth in
this statement is true, complete and correct.
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.
By:/s/ Anthony Grillo
--------------------------
Name: Anthony Grillo
Title: Authorized Person
BLACKSTONE OFFSHORE CAPITAL
PARTNERS II L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.
By:/s/ Anthony Grillo
---------------------------
Name: Anthony Grillo
Title: Authorized Person
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.
By:/s/ Anthony Grillo
---------------------------
Name: Anthony Grillo
Title: Authorized Person
BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.
By:/s/ Anthony Grillo
---------------------------
Name: Anthony Grillo
Title: Authorized Person
WIRELESS HOLDING L.L.C.
By:/s/ Marti P. Murray
---------------------------
Name: Marti P. Murray
Title: Authorized Person
Page 17 of 21 Pages
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<PAGE>
MURRAY CAPITAL MANAGEMENT, INC.
By:/s/ Marti P. Murray
-----------------------------
Name: Marti P. Murray
Title: President and Secretary
Dated: December 30, 1998
Page 18 of 21 Pages
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<PAGE>
INDEX OF EXHIBITS
Number Description
Exhibit 1 Joint Filing Agreement
Exhibit 2 Stock Purchase Agreement, dated October 27, 1994 (filed
with original Schedule 13D)
Exhibit 3 Certificate of Designations of Convertible Cumulative
Pay-In-Kind Preferred Stock 1994 (filed with original
Schedule 13D)
Exhibit 4 Form of Registration Rights Agreement (filed with
original Schedule 13D)
Exhibit 5 Stockholders' Agreement, dated October 27, 1994 (filed
with original Schedule 13D)
Exhibit 6 Wireless Holding LLC Agreement, dated December 23, 1998
Page 19 of 21 Pages
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<PAGE>
EXHIBIT 1
JOINT FILING AGREEMENT
We, the signatories of the statement on Schedule 13D to which this
Agreement is attached, hereby agree that such statement is, and any
amendments thereto filed by any of us will be, filed on behalf of each of us.
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.
By:/s/ Anthony Grillo
--------------------------------
Name: Anthony Grillo
Title: Authorized Person
BLACKSTONE OFFSHORE CAPITAL
PARTNERS II L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.
By:/s/ Anthony Grillo
--------------------------------
Name: Anthony Grillo
Title: Authorized Person
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.
By:/s/ Anthony Grillo
--------------------------------
Name: Anthony Grillo
Title: Authorized Person
BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.
By:/s/ Anthony Grillo
--------------------------------
Name: Anthony Grillo
Title: Authorized Person
Page 20 of 21 Pages
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<PAGE>
WIRELESS HOLDING L.L.C.
By:/s/ Marti P. Murray
---------------------------------
Name: Marti P. Murray
Title: Authorized Person
MURRAY CAPITAL MANAGEMENT, INC.
By:/s/ Marti P. Murray
---------------------------------
Name: Marti P. Murray
Title: President and Secretary
Dated: December 30, 1998
Page 21 of 21 Pages<PAGE>
<PAGE>
EXHIBIT 6
WIRELESS HOLDING LLC
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of December 23, 1998
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<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Terms Generally . . . . . . . . . . . . . . . . . . . 5
ARTICLE II GENERAL PROVISIONS . . . . . . . . . . 5
SECTION 2.1 Formation . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.2 Members . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.3 Name . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.4 Term . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.5 Purpose; Powers . . . . . . . . . . . . . . . . . . . 6
SECTION 2.6 Place of Business . . . . . . . . . . . . . . . . . . 7
ARTICLE III
MANAGEMENT AND OPERATION OF THE COMPANY . . . . . . . . 7
SECTION 3.1 Management . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.2 Certain Duties and Obligations of the Members . . . . 8
SECTION 3.3 Limitation on Liability; Indemnity . . . . . . . . . . 8
ARTICLE IV
CAPITAL CONTRIBUTIONS; DISTRIBUTIONS . . . . . . 9
SECTION 4.1 Capital Contributions . . . . . . . . . . . . . . . . 9
SECTION 4.2 Distributions Generally . . . . . . . . . . . . . . . 10
SECTION 4.3 Reimbursement of Expenses . . . . . . . . . . . . . . 11
ARTICLE V
BOOKS AND REPORTS; TAX MATTERS; CAPITAL ACCOUNTS;
ALLOCATIONS . . . . . . . . . . . . . . 12
SECTION 5.1 General Accounting Matters. . . . . . . . . . . . . . 12
SECTION 5.2 Certain Tax Matters . . . . . . . . . . . . . . . . . 12
SECTION 5.3 Capital Accounts . . . . . . . . . . . . . . . . . . 13
SECTION 5.4 Allocations . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI
DISSOLUTION . . . . . . . . . . . . . . . 15
SECTION 6.1 Dissolution . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.2 Winding-up . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.3 Final Distribution . . . . . . . . . . . . . . . . . 16
ARTICLE VII
TRANSFER OF MEMBER'S INTERESTS . . . . . . . . . . 16
SECTION 7.1 Restrictions on Transfer of Company Interests . . . . 16
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SECTION 7.2 Other Transfer Provisions . . . . . . . . . . . . . . 16
ARTICLE VIII
MISCELLANEOUS . . . . . . . . . . . . . . 18
SECTION 8.1 Equitable Relief . . . . . . . . . . . . . . . . . . 18
SECTION 8.2 Governing Law . . . . . . . . . . . . . . . . . . . . 18
SECTION 8.3 Successors and Assigns . . . . . . . . . . . . . . . 18
SECTION 8.4 Access; Confidentiality . . . . . . . . . . . . . . . 18
SECTION 8.5 Notices . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8.6 Counterparts . . . . . . . . . . . . . . . . . . . . 19
SECTION 8.7 Entire Agreement . . . . . . . . . . . . . . . . . . 19
SECTION 8.8 Amendments . . . . . . . . . . . . . . . . . . . . . 19
SECTION 8.9 Section Titles . . . . . . . . . . . . . . . . . . . 19
SECTION 8.10 Representations and Warranties . . . . . . . . . . . 19
Schedule A Name, Address and Sharing Percentage of Members
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT, dated as of December 23,
1998, by and among (i) MURRAY CAPITAL MANAGEMENT, INC., a Delaware
corporation (the "Managing Member"), (ii) BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P., a Delaware limited partnership ("BCP II"); (iii)
BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P., a Cayman Islands exempted
limited partnership ("BCP Offshore"); and (iv) BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P., a Delaware limited partnership ("BFIP II" and, together
with BCP II and BCP Offshore, the "Limited Members").
Preliminary Statement
The Members are executing this Limited Liability Company Agreement
(this "Agreement") for the purpose of forming Wireless Holding LLC (the
"Company") pursuant to the provisions of the Act (as defined below).
Agreement
Accordingly, in consideration of the mutual promises and agreements
herein made and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Unless the context otherwise requires,
the following terms shall have the following meanings for purposes of this
Agreement:
"Act" means the Delaware Limited Liability Company Act, 6 Del. C.
Sections 18-101, et seq., as it may be amended from time to time, and
any successor to such statute.
"Affiliate" with respect to any person means (i) any other person
who controls, is controlled by or is under common control with such
person, (ii) any director, officer, partner or employee of such person
or any person specified in clause (i) above or (iii) any immediate
family member of any person specified in clause (i) or (ii) above. As
used in this definition, "control" (including its correlative meanings,
"controlled by" and "under common control with") shall mean possession,
directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Agreement" means this Limited Liability Company Agreement, as
it may be amended, supplemented, modified or restated from time to time.
<PAGE>
<PAGE>
"Blackstone Divestment Portion" has the meaning set forth in
Section 4.2(e).
"Blackstone Management" means Blackstone Management Associates II,
L.L.C., a Delaware limited liability company.
"Capital Account" has the meaning set forth in Section 5.3.
"Capital Contribution" means the amount of money and/or the agreed
upon fair market value of the PCTV Preferred Stock contributed to the
Company by the Limited Members and other property contributed to the
Company by a Member or its predecessor in interest on the date of
contribution and shall include (i) the contributions of such Member made
pursuant to Section 4.1 and (ii) such Member's payments made to third
party creditors of the Company with respect to Company obligations to
the extent such Member is required by this Agreement to make such
additional Capital Contributions, unless and until reimbursed by the
Company.
"Capital Proceeds" means the cash or other consideration received
by the Company (including interest on installment sales when received)
as a result of (i) any sale, exchange, abandonment, foreclosure,
insurance award, condemnation, easement sale or other similar
transaction relating to any property of the Company, (ii) any financing
or refinancing relating to any property of the Company, (iii) Capital
Contributions to the Company upon admission of new members, (iv) any
other transaction which, in accordance with GAAP, would be treated as a
capital event, in each case less any such cash which is applied to (A)
the payment of transaction costs and expenses, (B) the repayment of debt
of the Company which is required under the terms of any indebtedness of
the Company, (C) the repair, restoration or other improvement of Company
Assets which is required under any contractual obligation of the
Company, and (D) the establishment of reserves in accordance with GAAP.
"Carrying Value" means, with respect to any Company Asset, the
asset's adjusted basis for federal income tax purposes, except that the
Carrying Values of all Company Assets shall be adjusted to equal their
respective fair market values, in accordance with the rules set forth in
Regulations Section 1.704-1(b)(2)(iv)(f), except as otherwise provided
herein, as of: (a) the date of the acquisition of any additional
Interest by any new or existing Member in exchange for more than a de
minimis Capital Contribution, other than pursuant to the initial
formation of the Company; (b) the date of the distribution of more than
a de minimis amount of Company Assets to a Member; (c) the date an
Interest is relinquished to the Company; or (d) the date of the
termination of the Company under Section 708(b)(i)(B) of the Code;
provided, however, that adjustments pursuant to clauses (a), (b) and (c)
above shall be made only if such adjustments are deemed necessary or
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<PAGE>
appropriate by the Managing Member to reflect the relative economic
interests of the Members. The Carrying Value of any Company Asset
distributed to any Member shall be adjusted immediately prior to such
distribution to equal its fair market value and depreciation shall be
calculated by reference to Carrying Value, instead of tax basis once
Carrying Value differs from tax basis. The carrying value of any asset
contributed (or deemed contributed under Regulations Section
1.704-1(b)(1)(iv)) by a Member to the Company will be the fair market
value of the asset at the date of its contribution thereto.
"Certificate" has the meaning set forth in Section 2.1.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute. Any reference herein to a
particular provision of the Code shall mean, where appropriate, the
corresponding provision in any successor statute.
"Company" means Wireless Holding LLC, a Delaware limited liability
company.
"Company Assets" means all right, title and interest of the Company
in and to all or any portion of the assets of the Company and any
property acquired in exchange therefor or in connection therewith.
"Dissolution Event" means any event which would cause a dissolution
of the Company pursuant to Section 18-801 of the Act.
"Expense Account" has the meaning set forth in Section 4.3(b).
"FCC" means the Federal Communications Commission.
"FCC Equity" means equity ownership interest as defined in 47 CFR
Section 21.912, Note 1(A).
"Fiscal Period" means each fiscal quarter or such other period as
may be established by the Managing Member.
"Fiscal Year" means the calendar year ending on December 31 of each
year.
"Initial Capital Contribution" means the contributions made by the
Limited Members pursuant to Section 4.1.
"Interests" means a Member's share of the profits and losses of the
Company and a Member's right to receive distributions of Company Assets.
"Limited Members" means BCP II, BCP Offshore and BFIP II, or any
Affiliate of the foregoing who replaces any of the foregoing as a member
hereunder.
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<PAGE>
"Liquidator" has the meaning set forth in Section 6.2.
"Managing Member" means Murray Capital Management, Inc, or any duly
appointed successor thereto.
"Managing Member Issuance" has the meaning set forth in Section
4.2(e).
"Members" means the Managing Member, the Limited Members and any
other person admitted to the Company as an additional or substitute
member of the Company in accordance with the provisions of this
Agreement, until such time as such person ceases to be a member of
the Company as provided herein.
"Member Consent" means the approval in writing of a matter by both
the Managing Member and the Limited Members.
"Net Income (Loss)" for any Fiscal Period means the taxable income
or loss of the Company for such period as determined in accordance with
the accounting method used by the Company for federal income tax
purposes with the following adjustments; (i) any income of the Company
that is exempt from federal income taxation and not otherwise taken into
account in computing Net Income (Loss) shall be added to such taxable
income or loss; (ii) if the Carrying Value of any asset differs from its
adjusted tax basis for federal income tax purposes, any depreciation,
amortization or gain resulting from a disposition of such asset shall be
calculated with reference to such Carrying Value; (iii) upon an
adjustment to the Carrying Value of any asset, pursuant to the
definition of Carrying Value, the amount of the adjustment shall be
included as gain or loss in computing such taxable income or loss; and
(iv) any expenditures of the Company not deductible in computing taxable
income or loss, not properly capitalizable and not otherwise taken into
account in computing Net Income (Loss) pursuant to this definition shall
be treated as deductible items.
"Non-Capital Proceeds" means (i) any cash or other consideration
received by the Company other than Capital Proceeds less (ii) any such
cash that is applied to the establishment of reserves in accordance with
GAAP and to expenses of the Company.
"Organizational Expenses" means all reasonable third-party costs
and expenses pertaining to the formation and organization of the Company
and the registration, qualification or exemption of the Company under
any applicable federal, state or foreign laws, including fees of counsel
to the Company and the Members.
"PCTV" means People's Choice TV Corp., a Delaware corporation.
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<PAGE>
"PCTV Common Stock" means the Common Stock, par value $.01 per
share, of PCTV.
"PCTV Preferred Stock" means PCTV's 9.875% Convertible Cumulative
Pay-In-Kind Preferred Stock, par value $.01 per share and liquidation
preference $100 per share.
"Proceeds" means the collective reference to Capital Proceeds and
Non-Capital Proceeds.
"Regulations" means the regulations promulgated under the Code.
"Removal Payment" has the meaning set forth in Section 7.2(c).
"Return of Investment Amount" means, with respect to each Limited
Member, the product of (i) the average closing price of PCTV Common
Stock on the National Association of Securities Dealers Automated
Quotation System over the 30-day period prior to the date hereof and
(ii) the number of shares of PCTV Common Stock that such Limited
Member's PCTV Preferred Stock is convertible into (assuming full
conversion of such Limited Member's PCTV Preferred Stock on the date
hereof), plus any adjustment to the Return of Investment Amount as
provided for in Sections 4.3 (a) and (b) of this Agreement.
"Sharing Percentage" means the percentage interest of a Member as
set forth on Schedule A hereto, as amended from time to time in
accordance herewith.
"Stock Sale" has the meaning set forth in Section 7.2(c).
"Tax Matters Member" has the meaning set forth in Section 5.2.
"Termination Date" has the meaning set forth in Section 2.4.
"Transfer" has the meaning set forth in Section 7.1.
SECTION 1.2 Terms Generally. The definitions in Section 1.1 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The term "person" includes
individuals, partnerships, joint ventures, corporations, trusts, governments
(or agencies or political subdivisions thereof) and other associations and
entities. Unless the context requires otherwise, the words "include",
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". The term "hereunder" shall mean this entire Agreement
as a whole unless reference to a specific section of this Agreement is made.
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<PAGE>
<PAGE>
ARTICLE II
GENERAL PROVISIONS
SECTION 2.1 Formation. The Company is hereby formed under the
provisions of the Act. The Managing Member is hereby designated as an
authorized person, within the meaning of the Act, to execute, deliver and
file the certificate of formation of the Company and any amendments and/or
restatements thereof (collectively, the "Certificate") and any other
certificates necessary for the Company to qualify to do business in a
jurisdiction in which the Company may wish to conduct business. The
execution by the Managing Member of any of the foregoing certificates (and
any amendments and/or restatements thereof) shall be sufficient.
SECTION 2.2 Members. Schedule A hereto contains the name, address
and Sharing Percentage of each Member as of the date of this Agreement.
Schedule A shall be revised from time to time to reflect transfer or
assignment of Interests in the Company in accordance with the terms of this
Agreement and other modifications to or changes in the information set forth
therein.
SECTION 2.3 Name. The Company shall conduct its activities under
the name of Wireless Holding LLC.
SECTION 2.4 Term. The term of the Company shall commence on the
date of filing the Certificate in accordance with the Act and shall continue
until October 14, 2003, which period may be extended for up to two additional
one-year periods from such anniversary in the sole discretion of the Limited
Members on 90 days' prior written notice to the Managing Member (the
"Termination Date"), unless sooner dissolved, wound up and terminated in
accordance with Article VI.
SECTION 2.5 Purpose; Powers. (a) The purpose of the Company
shall be (i) to own the PCTV Preferred Stock, and (ii) to do all things
necessary or incidental to the foregoing (but subject to the restrictions in
Section 2.5(c)).
(b) In furtherance of its purposes (but subject to the
restrictions in Section 2.5(c)), the Company shall have all powers necessary,
suitable or convenient for the accomplishment of its purposes, alone or with
others, including the following:
(i) to receive, hold and otherwise exercise all rights, powers,
privileges and other incidents of ownership or possession with respect
to the PCTV Preferred Stock held by the Company, including, but not
limited to, (A) exercising all voting and other corporate governance
rights available to holders of the PCTV Preferred Stock, (B) converting
the PCTV Preferred Stock to PCTV Common Stock, (C) receiving and
investing any cash dividends declared and paid by PCTV in respect of the
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<PAGE>
PCTV Preferred Stock owned from time to time by the Company or any other
cash or cash equivalent owned by the Company from time to time in
money-market or other liquid, highly rated short-term investments, and
(D) receiving any additional shares of PCTV Preferred Stock or PCTV
Common Stock issued by PCTV as stock dividends in respect of the PCTV
Preferred Stock held by the Company;
(ii) to open, maintain and close bank accounts and draw checks and
other orders for the payment of moneys;
(iii) to engage accountants, custodians, attorneys and other
advisors as may be necessary or advisable for the due and proper
administration of the Company Assets, and to compensate them as may be
reasonably necessary or advisable;
(iv) to enter into, make and perform all contracts, agreements and
other undertakings as may be necessary or advisable or incident to
carrying out its purposes; and
(v) to distribute, subject to the terms of this Agreement, at any
time and from time to time to Members cash or investments or other
property of the Company, or any combination thereof.
(c) Notwithstanding anything to the contrary herein, the Company
shall not at any time (i) incur any indebtedness (whether by direct
borrowings or by the provision of a guarantee), (ii) place any liens or
encumbrances on the Company Assets, (iii) make any loans or advances to any
person or (iv) engage in any other activities other than as expressly
permitted in this Agreement (and activities incidental thereto).
SECTION 2.6 Place of Business. The Company shall maintain a
registered office at The Corporation Trust Company, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801, or such other office within
the State of Delaware as directed by the Managing Member. The Company shall
maintain an office and principal place of business at 110 East 59th Street,
24th Floor, New York, New York 10022 or at such other place as may from time
to time be determined by the Managing Member as its principal place of
business. The name and address of the Company's registered agent as of the
date of this Agreement is The Corporation Trust Company, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801.
ARTICLE III
MANAGEMENT AND OPERATION OF THE COMPANY
SECTION 3.1 Management. (a) Except for matters that are subject
to a Member Consent pursuant to Sections 3.1(b), 5.2, 6.1(a), 6.2, 7.1(b),
7.2(b), 7.2(c) and 8.8, the management, control and operation of the Company
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<PAGE>
shall be vested exclusively in the Managing Member, and the Managing Member
shall have all powers necessary and convenient for the purposes of the
Company, subject to the provisions of Section 2.5, on behalf and in the name
of the Company. Except for matters that are subject to a Member Consent
pursuant to Sections 3.1(b), 5.2, 6.1(a), 6.2, 7.1(b), 7.2(b), 7.2(c) and
8.8, no Limited Member shall have the right to, and no Limited Member shall,
take part in the management or affairs of the Company, nor in any event shall
any Limited Member have the power to act or bind the Company in any way. A
Member shall not be obligated to abstain from voting on any matter (or vote
in any particular manner) because of any interest (or conflict of interest)
of such Member (or any Affiliate thereof) in such matter.
(b) The Managing Member and the Limited Members agree that except
pursuant to a Member Consent, during the existence of the Company:
(i) the Company shall not transfer, sell, exchange, convert,
liquidate, or otherwise dispose of the PCTV Preferred Stock held by the
Company, except to the extent required by Section 4.2(e);
(ii) the Managing Member shall not (A) transfer, sell,
exchange, assign or otherwise dispose of its Interest in the Company or
(B) appoint additional managing members of the Company, provided that
the Managing Member may withdraw as provided in Article VII;
(iii) the Company shall not deliver any consent or
approval required to be delivered by the Company in connection with a
bankruptcy, recapitalization, reorganization, restructuring or other
workout of PCTV;
(iv) the Company shall not be dissolved and subsequently
terminated pursuant to Article VI hereof; or
(v) this Agreement (including any exhibits and schedules
hereto) shall not be amended or modified in any way.
Any action approved by a Member Consent shall be taken on behalf of the
Company by the Managing Member.
SECTION 3.2 Certain Duties and Obligations of the Members. (a)
Subject to the terms of this Agreement, the Members shall take all action
which may be reasonably necessary or appropriate (i) for the formation and
continuation of the Company as a limited liability company under the laws of
the State of Delaware and (ii) for the development, maintenance, preservation
and operation of the business of the Company in accordance with the
provisions of this Agreement and applicable laws and regulations. The
Members shall take all action which is necessary to form or qualify the
Company to conduct the business in which the Company is engaged under the
laws of any jurisdiction in which the Company is doing business and to
continue in effect such formation or qualification. No Member shall take any
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action so as to cause the Company to be classified for Federal income tax
purposes as an association taxable as a corporation and not as a partnership.
(b) No Member shall take, or cause to be taken, any action that
would result in any Members having any personal liability for the obligations
of the Company.
SECTION 3.3 Limitation on Liability; Indemnity. (a) No Member
shall be liable, responsible or accountable in damages or otherwise to the
Company or to any other Member for (i) any act performed within the scope of
the authority conferred on the Members by this Agreement except for the gross
negligence or willful misconduct of such Member in carrying out the
obligations of such Member hereunder, (ii) such Member's failure or refusal
to perform any act, except those expressly required by or pursuant to the
terms of this Agreement, (iii) such Member's performance of, or failure to
perform, any act on the reasonable reliance on advice of legal counsel to the
Company or (iv) the negligence, dishonesty or bad faith of any accountant,
custodian, attorney or other legal advisor of the Company selected, engaged
or retained in good faith.
(b) In any threatened, pending or completed action, suit or
proceeding, each Member shall be fully protected and indemnified and held
harmless by the Company against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, proceedings, costs, expenses
and disbursements of any kind or nature whatsoever (including, without
limitation, reasonable attorneys' fees, costs of investigation, fines,
judgments and amounts paid in settlement, actually incurred by any such
Member in connection with such action, suit or proceeding) by virtue of its
status as a Member or with respect to any action or omission taken or
suffered in good faith, other than liabilities and losses resulting from the
gross negligence or willful misconduct of such Member; provided, however,
that if the Company does not have the assets or liquidity to indemnify the
Managing Member under this Section 3.3, the Limited Members shall do so in
accordance with Section 4.3.
SECTION 3.4 Other Activities Permitted. Except as expressly
provided hereunder, this Agreement shall not be construed in any manner to
preclude any Member or any of its Affiliates from engaging in any activity
whatsoever permitted by applicable law (whether or not such activity might
compete, or constitute a conflict of interest, with the Company), including,
without limitation, the provision of financial or investment advisory
services to any person, managing investments or receiving compensation or
profit from any of the foregoing.
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ARTICLE IV
CAPITAL CONTRIBUTIONS; DISTRIBUTIONS; EXPENSES OF MANAGING MEMBER
SECTION 4.1 Capital Contributions. (a) The Members shall make
initial Capital Contributions (the "Initial Capital Contributions") to the
Company as follows:
(i) on the date hereof, each Limited Member shall make a Capital
Contribution of the number of shares of PCTV Preferred Stock set forth
opposite such Limited Member's name on Schedule A hereto; and
(ii) the Managing Member shall not be required to make any
Capital Contributions.
(b) No Member shall be required to make a Capital Contribution
except as provided in this Article IV. No Member shall have any obligation
to restore any negative balance in the Member's Capital Account upon
liquidation of the Company. No Member shall be entitled to withdraw all or
any part of its Capital Contributions except as expressly provided in this
Agreement. No interest shall be payable by the Company on the Capital
Contributions of any Member except as otherwise provided herein.
SECTION 4.2 Distributions Generally. (a) Distributions shall be
made in such amounts and at such times as determined by the Managing Member
from time to time, in accordance with the provisions of this Section 4.2.
Capital Proceeds (other than distributions of Capital Proceeds in connection
with the sale of all of the Company Assets) shall be distributed as soon as
practicable but in any event within 45 days after the date that such Proceeds
are received by the Company. Non-Capital Proceeds shall be distributed at
such times and intervals as determined by the Managing Member, but in no
event later than 30 days after the end of each calendar quarter.
(b) Distribution of Proceeds shall be made to the Members in the
following order of priority:
(i) First, 100% to the Limited Members until the Limited Members
have received cumulative Proceeds in an amount equal to the Return of
Investment Amount; and
(ii) Thereafter, 90% to the Limited Members and 10% to the
Managing Member (subject, in the case of any distribution to the
Managing Member, to any reduction thereof required as a result of any
Managing Member Issuance).
(c) (i) Amounts payable to the Limited Members in the aggregate
under this Section shall be paid to each Limited Member based on such Limited
Member's Sharing Percentage. (ii) In the event of a Managing Member
Issuance, the Company shall also distribute to the Managing Member an amount
of money equal to that needed by the Managing Member to pay actual taxes on
the income allocated to the Managing Member under Section 5.4(d) of this
Agreement and any other actual taxes resulting from the Managing Member
Issuance and the payment of money pursuant to this clause (ii). To the
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extent the Company does not have sufficient money to make the distribution
described in clause (ii) above, the Limited Members will make Capital
Contributions of money to the Company so that the Company can make such
distribution. Any distributions otherwise payable to the Managing Member
pursuant to Section 4.2(b) hereof (whether as part of a liquidation or
otherwise) shall be reduced by the value of any money paid to the Managing
Member pursuant to clause (ii) above.
(d) Notwithstanding any provisions to the contrary contained in
this Agreement, the Company shall not make a distribution if such
distribution would violate the Act.
(e) If any shares of PCTV Preferred Stock or PCTV Common Stock that
would otherwise be issued by PCTV to the Company as stock dividends in
respect of the PCTV Preferred Stock held by the Company would result in
Blackstone Management (through its indirect interests in the Company) owning
5% or more of the FCC Equity of PCTV (the portion of such dividend which
would cause such excess, the "Blackstone Divestment Portion"), then the
Managing Member shall arrange with PCTV for the Blackstone Divestment Portion
to be issued directly from PCTV to the Managing Member (a "Managing Member
Issuance") to the extent required to ensure that Blackstone Management's
indirect FCC Equity interest is less than the level at which Blackstone
Management would be deemed by the FCC to have an attributable interest in
PCTV (i.e. under current FCC rules, to the extent required to ensure that
Blackstone Management's indirect FCC Equity interest is less than 5%) . Any
distributions otherwise payable to the Managing Member pursuant to Section
4.2(b) hereof (whether as part of a liquidation or otherwise) shall be
reduced by the value of any PCTV Preferred Stock or PCTV Common Stock
received by the Managing Member pursuant to a Managing Member Issuance
(valued as of the date of issuance) by calculating (i) (in the case of a
Managing Member Issuance of PCTV Preferred Stock) the number of shares of
PCTV Common Stock such PCTV Preferred Stock is convertible into (assuming
full conversion on the date of the Managing Member Issuance) and (ii) the
closing price of PCTV Common Automated Quotation System on the date of the
Managing Member Issuance. Any PCTV Preferred Stock or PCTV Common Stock
received by the Managing Member pursuant to a Managing Member Issuance shall
be retained by the Managing Member notwithstanding any resignation or
termination of the Managing Member pursuant to Section 7.2(c) hereof. In the
event that a Blackstone Divestment Portion is issued directly from PCTV to
the Company, (x) the Blackstone Divestment Portion shall be treated for all
purposes to be issued to the Managing Member and the Company shall as soon as
practicable assign such Blackstone Divestment Portion to the Managing Member
and (y) the Managing Member shall not be deemed to have violated this Section
4.2(e).
SECTION 4.3 Reimbursement of Expenses; Funding of Expense Account.
(a) All reasonable out-of-pocket costs and expenses incurred by the Managing
Member in connection with the formation, administration and operation of the
Company shall be paid by the Company from its available funds as they are
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incurred by the Managing Member. To the extent that the Company has
insufficient funds (in the Expense Account or otherwise) available to (i)
make any of the foregoing payments of costs, expenses or (ii) indemnify the
Managing Member pursuant to this Agreement, the Limited Members will
contribute sufficient funds to the Company to make, or shall directly make,
such payments, and such amounts will be added to the Return of Investment
Amount for all purposes hereunder.
(b) Simultaneous with the execution of this Agreement, the Limited
Members shall contribute $5,000 to a Company bank account (the "Expense
Account") from which funds may be drawn from time to time by the Managing
Member for such purposes without prior approval or consent of the Limited
Members. All funds in the Expense Account shall be invested in money market
investments and all proceeds of such investments shall be retained in the
Expense Account. If, at the end of any calendar quarter, the amount of funds
on deposit in the Expense Account is less than $5,000, then, upon the written
request of the Managing Member, the Limited Members shall deposit or cause to
be deposited (based on their respective Sharing Percentage) in the Expense
Account additional funds to cause the amount on deposit therein to equal not
less than $5,000. The initial $5,000 contribution to the Expense Fund and
all additional funds deposited in the Expense Fund shall be added to the
Return of Investment Amount for all purposes hereunder.
ARTICLE V
BOOKS AND REPORTS; TAX MATTERS; CAPITAL ACCOUNTS; ALLOCATIONS
SECTION 5.1 General Accounting Matters. (a) Allocations of Net
Income (Loss) pursuant to Section 5.4 shall be made by or under the direction
of the Managing Member.
(b) Each Member shall be supplied with the Company information
necessary to enable such Member to prepare in a timely manner its federal,
state and local income tax returns and such other financial or other
statements and reports.
(c) The Managing Member shall keep or cause to be kept books and
records pertaining to the Company's business showing all of its assets and
liabilities, receipts and disbursements, realized profits and losses,
Members' Capital Accounts and all transactions entered into by the Company.
Such books and records of the Company shall be kept at the office of the
Company and the Members and their representatives shall at all reasonable
times have free access thereto for the purpose of inspecting or copying the
same. The Company's books of account shall be kept on an accrual basis or as
otherwise determined by the Managing Member and otherwise in accordance with
generally accepted accounting principles, except that for income tax purposes
such books shall be kept in accordance with applicable tax accounting
principles.
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SECTION 5.2 Certain Tax Matters. The taxable year of the Company
shall be the same as its Fiscal Year. The Tax Matters Member shall cause to
be prepared all federal, state and local tax returns of the Company for each
year for which such returns are required to be filed and shall cause such
returns to be timely filed. The Tax Matters Member shall determine the
appropriate treatment of each item of income, gain, loss, deduction and
credit of the Company and the accounting methods and conventions under the
tax laws of the United States, the several states and other relevant
jurisdictions as to the treatment of any such item or any other method or
procedure related to the preparation of such tax returns. The Tax Matters
Member shall make the election provided for in Section 754 of the Code, if
requested by any other Member. The Tax Matters Member shall also make the
election to amortize Organizational Expenses pursuant to Code Section 709 and
the regulations promulgated thereunder. In addition, the Tax Matters Member
may cause the Company to make or refrain from making any and all other
elections permitted by the tax laws of the United States, the several states
and other relevant jurisdictions, if approved by the other Members. The "tax
matters partner" for purposes of Section 6231(a)(7) of the Code (the "Tax
Matters Member") shall be the Managing Member. The Tax Matters Member shall
have all of the rights, duties, powers and obligations provided for in
Sections 6221 through 6232 of the Code with respect to the Company provided,
however, that the following provisions shall apply with respect to the Tax
Matters Member:
(a) The Tax Matters Member shall include in each Company return
sufficient information to entitle each eligible Member and any indirect
partner (at its request) to notice from the Internal Revenue Service
pursuant to Section 6223(a) of the Code.
(b) Each Member reserves the right to participate in an audit
proceeding.
(c) Each Member reserves the right to enter into a separate
settlement agreement with the Internal Revenue Service. A Member who
enters into a settlement agreement with the Internal Revenue Service
concerning a company item shall notify the Tax Matters Member of its
terms within 10 days of such agreement, and the Tax Matters Member shall
notify the other Members of the terms of such agreement within 10 days
after receiving such notice. The Tax Matters Member shall notify each
other Member of the terms of any settlement offer received by it within
10 days of receiving such offer.
(d) Each Member reserves the right to file an administrative
adjustment request under Section 6227 of the Code. Any Member filing an
administrative adjustment request shall notify the Tax Matters Member of
its contents within 10 days after filing such request. The Tax Matters
Member shall notify each Member of the contents of such request within
10 days of the receipt of such notice.
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(e) Each Member reserves the right to file a petition for judicial
review and to participate in a judicial proceeding under Section 6226
and 6228 of the Code. If the Tax Matters Member files a petition for
judicial review or an appeal under Section 6226 of the Code, it shall
notify each Member of such petition or appeal within 10 days of such
filing. Any other Member filing a petition for judicial review or any
appeal under Sections 6226 or 6228 of the Code shall notify the Tax
Matters Member of such petition or appeal on or before the date of
filing. The Tax Matters Member shall notify each Member of such filing
within 10 days of receipt of such notice from the filing partner.
(f) All terms used in this Section that are defined in Section
6231(a) of the Code shall have the meanings set forth therein.
SECTION 5.3 Capital Accounts. There shall be established for each
Member on the books of the Company as of the date hereof, a capital account
(each being a "Capital Account"). The Capital Account of the Limited Members
shall, on the date of this Agreement, be equal to such Limited Member's
Return of Investment Amount (such amount to be allocated to each of the
Limited Members based on such Limited Member's Sharing Percentage) and the
Capital Account of the Managing Member shall, on the date of this Agreement,
be equal to $0. Each Capital Contribution shall be credited to the Capital
Account of such Member on the date such contribution of capital is paid to
the Company. In addition, each Member's Capital Account shall be (a)
credited with (i) such Member's allocable share of any Net Income of the
Company, and (ii) the amount of any Company liabilities that are assumed by
the Member or secured by any Company property distributed to the Member, (b)
debited with (i) distributions to such Member of cash or the fair market
value of other property, (ii) such Member's allocable share of Net Loss of
the Company and expenditures of the Company described or treated under
Section 704(b) as described in Section 705(a)(2)(B) of the Code, and (iii)
the amount of any liabilities of the Member assumed by the Company or which
are secured by any property contributed by the Member to the Company and (c)
otherwise maintained in accordance with the provisions of the Code. Any
other item which is required to be reflected in a Member's Capital Account
under Section 704(b) of the Code or otherwise under this Agreement shall be
so reflected. Capital Accounts shall be appropriately adjusted to reflect
transfers of part (but not all) of a Member's interest in the Company.
Interest shall not be payable on Capital Account balances. Notwithstanding
anything to the contrary contained in this Agreement, the Company shall
maintain the Capital Accounts of the Members in accordance with the
principles and requirements set forth in section 704(b) lations section
1.704-1(b)(2)(iv).
SECTION 5.4 Allocations. (a) After giving effect to Section
5.4(d), Net Income (Loss) of the Company shall be allocated among the Members
so as to produce Capital Accounts for the Members (assuming that Company
Assets that are not subject to a disposition are sold for an amount equal to
their Carrying Value) such that if an amount of cash equal to such positive
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Capital Account balances were distributed in accordance with such positive
Capital Account balances, such distribution would be in the amounts, sequence
and priority set forth in Section 4.2, and to the extent Net Loss exceeds the
positive Capital Account balances of the Members, the excess shall be
allocated first, to those Members with positive adjusted Capital Account
balances, in proportion to, and to the extent of, such Adjusted Capital
Account Balances, and thereafter, in accordance with Sharing Percentages.
(b) Notwithstanding anything herein to the contrary, if any
Member unexpectedly receives any adjustments, allocations or distributions
described in paragraphs (b)(2)(ii)(d)(4), (5) or (6) of Section 1.704-1 of
the regulations under the Code, there shall be specially allocated to such
Member such items of Company income and gain, at such times and in such
amounts as will eliminate as quickly as possible that portion of any deficit
in its Capital Account caused or increased by such adjustments, allocations
or distributions. To the extent permitted by the Code and the regulations
thereunder, any special allocations of items of income or gain pursuant to
this Section 5.4(b) shall be taken into account in computing subsequent
allocations of Net Income (Loss) pursuant to this Section 5.4 so that the net
amount of any items so allocated and the subsequent allocations of Net Income
(Loss) to the Members pursuant to this Section 5.4 shall, to the extent
possible, be equal to the net amounts that would have been allocated to each
such Member pursuant to the provisions of this Section 5.4 if such unexpected
adjustments, allocations or distributions had not occurred. The provisions
of this Section 5.4(b) are intended to be a "qualified income offset," within
the meaning of Treasury regulation section 1.704 - 1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
(c) All items of income, gain, loss, deduction and credit of the
Company shall be allocated among the Members for federal, state and local
income tax purposes consistent with the manner that the corresponding
constituent items of Net Income (Loss) shall be allocated among the Members
pursuant to this Agreement, except as may otherwise be provided herein or by
the Code. To the extent Treasury Regulations promulgated pursuant to
Subchapter K of the Code (including under Sections 704(b) and (c) of the
Code) require allocations for tax purposes that differ from the foregoing
allocations, the Tax Matters Member shall determine the manner in which such
tax allocations shall be made so as to comply more fully with such Treasury
Regulations or other applicable law and, at the same time to the extent
reasonably possible, preserve the economic relationships among the Members as
set forth in this Agreement. If the Carrying Value of a Company Asset
exceeds its tax basis, the Company shall use the traditional method with
curative allocations within the meaning of Treasury regulation section 1.704-
3(c).
(d) Prior to any allocations pursuant to Section 5.4(a), (i) any
income attributable to receipt of such portion (other than income
attributable to a basis reduction in other stock of PCTV held by the Company)
shall be specially allocated to the Managing Member, and (ii) additional
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gross income items shall be allocated to the Managing Member to the extent
necessary so that income allocated pursuant to this clause (ii) equals the
cash distribution pursuant to Section 4.2(c)(ii) of this Agreement.
ARTICLE VI
DISSOLUTION
SECTION 6.1 Dissolution. The Company shall be dissolved and
subsequently terminated upon the occurrence of the first of the following
events:
(a) an election pursuant to a Member Consent to dissolve and
subsequently terminate the Company;
(b) the Termination Date;
(c) if, after conferring with counsel and giving the Managing
Member five business days' written notice, the Limited Members
reasonably conclude that Blackstone Management's indirect equity
ownership in the Company is violative of the FCC's cross-ownership
rules then in effect; or
(d) the occurrence of a Dissolution Event, except the Company
shall not be dissolved upon the occurrence of a Dissolution Event that
terminates the continued membership of a Member in the Company if (i) at
the time of the occurrence of such event there are at least two Members
of the Company, or (ii) within 90 days after the occurrence of such
Dissolution Event, all remaining Members agree in writing to continue
the business of the Company.
SECTION 6.2 Winding-up. When the Company is dissolved, the
business and property of the Company shall be wound up and liquidated
pursuant to a Member Consent or, in the event of a Dissolution Event, by such
liquidating trustee as may be approved by a Member Consent (the remaining
Members or such liquidating trustee, as the case may be, being hereinafter
referred to as the "Liquidator"). The Liquidator shall use its best efforts
to reduce to cash and cash equivalent items such assets of the Company as the
Liquidator shall deem it advisable to sell, subject to obtaining fair value
for such assets and any tax or other legal considerations.
SECTION 6.3 Final Distribution. Within 90 calendar days after the
effective date of dissolution of the Company, the Company Assets shall be
distributed in the following manner and order:
(a) to the payment of the expenses of the winding-up, liquidation
and dissolution of the Company;
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(b) to pay all creditors of the Company, other than Members,
either by the payment thereof or the making of reasonable provision
therefor;
(c) to establish reserves, in amounts established by the Managing
Member or such Liquidator, to meet other liabilities of the Company; and
(d) the remaining assets of the Company shall be applied and
distributed in accordance with Section 4.2(b).
ARTICLE VII
TRANSFER OF MEMBER'S INTERESTS
SECTION 7.1 Restrictions on Transfer of Company Interests. (a)
No Member may, directly or indirectly, assign, sell, exchange, transfer,
pledge, hypothecate or otherwise dispose of all or any part of its interest
in the Company (any assignment, sale, exchange, transfer, pledge,
hypothecation or other disposition of an interest in the Company being herein
collectively called a "Transfer") to any person, other than in accordance
with paragraph (b) and (c) below.
(b) Any Transfer by the Managing Member shall require a Member
Consent.
(c) The Limited Members may Transfer their interest in the Company
to their Affiliates.
SECTION 7.2 Other Transfer Provisions. (a) Any purported
Transfer by a Member of all or any part of its interest in the Company in
violation of this Article VII shall be null and void and of no force or
effect.
(b) Except as provided in this Article VII, no Member shall have
the right to withdraw from the Company prior to its termination and no
additional Member may be admitted to the Company unless approved pursuant to
a Member Consent. Notwithstanding any provision of this Agreement to the
contrary, a Member may not Transfer all or any part of its interest in the
Company if such Transfer would jeopardize the status of the Company as a
partnership for federal income tax purposes, or would violate, or would cause
the Company to violate, any applicable law or regulation, including any
applicable federal or state securities laws.
(c) Notwithstanding the foregoing, (i) the Managing Member may
resign as a Member and withdraw from the Company without approval pursuant to
a Member Consent in the following circumstances: (A) if the Limited Members
materially breach any of their obligations under this Agreement and such
breach has not been cured within 15 days of the date on which the Limited
Members receive written notice thereof from the Managing Member, or (B)
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following the Managing Member's delivery of written notice of resignation to
the Limited Members upon the earlier to occur of (x) 90 days following the
Limited Members' receipt of such resignation or (y) the appointment of and
acceptance by a successor Managing Member and (ii) the Limited Members may
remove the Managing Member if the Managing Member materially breaches any of
its obligations under this Agreement (as determined by an independent third
party chosen in good faith by the Limited Members) and such breach has not
been cured within 15 days of the date on which the Managing Member receives
written notice thereof from the Limited Members. The Managing Member hereby
agrees to take all reasonable and necessary actions to assist the successor
in succeeding to the Managing Member's responsibilities hereunder. If the
Managing Member is removed pursuant to Section 7.2(c)(ii), the Limited
Members shall, within 30 days of such removal, pay the Managing Member $100,000
in immediately available funds (the "Removal Payment"). If, within one year
of the Managing Member's removal pursuant to Section 7.2(c)(ii), the Company
sells, exchanges or otherwise disposes of all or a portion of its PCTV
Preferred Stock (a "Stock Sale") and as a result of such Stock Sale the
Managing Member, if not for its removal, would have received distributions
pursuant to this Agreement in excess of the Removal Payment, then the Company
shall, within 30 days of such Stock Sale, pay the Managing Member such excess
amount in immediately available funds.
(d) Concurrently with the admission of any substitute or
additional Member, the Members shall forthwith cause any necessary papers to
be filed and recorded and notice to be given wherever and to the extent
required showing the substitution of a transferee as a substitute Member in
place of the Member transferring its interest, or the admission of an
additional Member, all at the expense, including payment of any professional
and filing fees incurred, of such substituted or additional Member. The
admission of any person as a substitute or additional Member shall be
conditioned upon such person's written acceptance and adoption of all the
terms and provisions of this Agreement.
(e) If any interest in the Company is Transferred during any
accounting period in compliance with the provisions of this Article VII, each
item of income, gain, loss, expense, deduction and credit and all other items
attributable to such interest for such period shall be divided and allocated
between the transferor and the transferee by taking into account their
varying interests during such period in accordance with Section 706(d) of the
Code, using any conventions permitted by law and selected by the Tax Matters
Member. All distributions on or before the date of such Transfer shall be
made to the transferor, and all distributions thereafter shall be made to the
transferee. Solely for purposes of making such are a Transfer on the date
that the Tax Matters Member receives notice of the Transfer which complies
with this Article VII from the Member transferring its interest.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Equitable Relief. The Members hereby confirm that
damages at law may be an inadequate remedy for a breach or threatened breach
of this Agreement and agree that, in the event of a breach or threatened
breach of any provision hereof, the respective rights and obligations
hereunder shall be enforceable by specific performance, injunction or other
equitable remedy, but, nothing herein contained is intended to, nor shall it,
limit or affect any right or rights at law or by statute or otherwise of a
Member aggrieved as against the other for a breach or threatened breach of
any provision hereof, it being the intention by this Section 8.1 to make
clear the agreement of the Members that the respective rights and obligations
of the Members hereunder shall be enforceable in equity as well as at law or
otherwise and that the mention herein of any particular remedy shall not
preclude a Member from any other remedy it or he might have, either in law or
in equity.
SECTION 8.2 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware. In
particular, the Company is formed pursuant to the Act, and the rights and
liabilities of the Members shall be as provided therein, except as herein
otherwise expressly provided.
SECTION 8.3 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, their
respective successors and assigns.
SECTION 8.4 Access; Confidentiality. By executing this Agreement,
each Member expressly agrees, at all times during the term of the Company and
thereafter and whether or not at the time a Member of the Company (i) not to
issue any press release or advertisement or take any similar action
concerning the Company's business or affairs without the consent of the
Limited Members which shall not be unreasonably withheld, (ii) not to
publicize detailed financial information concerning the Company and (iii) not
to disclose the Company's affairs generally without using reasonable efforts
to consult with the other Members prior to such disclosure; provided,
however, the foregoing shall not restrict any Member from disclosing
information concerning such Member's investment in the Company to its
officers, directors, employees, agents, legal counsel, accountants, other
professional advisors, limited partners, members and Affiliates, or to
prospective or existing investors of such Member or its Affiliates or to
prospective or existing lenders to such Member or its Affiliates. The
provisions of this Section 8.5 shall survive the termination of the Company.
SECTION 8.5 Notices. Whenever notice is required or permitted by
this Agreement to be given, such notice need not be in writing unless
otherwise required herein or requested by the receiving Member. If in
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writing, such notice shall be given to any Member at its address or facsimile
number shown in the Company's books and records (including Schedule A
hereto). Each such notice shall be effective (i) if given by facsimile, upon
oral confirmation of receipt, (ii) if given by mail, on the fourth day after
deposit in the mails (certified or registered return receipt requested)
addressed as aforesaid and (iii) if given by any other means, when delivered
to and receipted for at the address of such Member specified as aforesaid.
SECTION 8.6 Counterparts. This Agreement may be executed in any
number of counterparts, all of which together shall constitute a single
instrument.
SECTION 8.7 Entire Agreement. This Agreement embodies the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter hereof.
SECTION 8.8 Amendments. Any amendment to this Agreement shall be
effective only if such amendment is evidenced by a written instrument duly
executed and delivered pursuant to a Member Consent; provided, however, no
such amendment shall be effective or binding against a Member unless executed
by such Member if such amendment materially and adversely affects such Member
in a specific manner separate and distinct from the amendment's treatment of
other Members.
SECTION 8.9 Section Titles. Section titles are for descriptive
purposes only and shall not control or alter the meaning of this Agreement as
set forth in the text hereof.
SECTION 8.10 Representations and Warranties of Each Member. Each
Member represents and warrants to each other Member and to the Company (and,
in the case of Section 8.10(e), each Limited Member represents and warrants
to the Company and the Managing Member) that:
(a) in the case of Members that are not natural persons, such
Member is duly formed and validly existing under the laws of the
jurisdiction of its organization with full power and authority to
conduct its business to the extent contemplated in this Agreement;
(b) this Agreement has been duly authorized, executed and
delivered by such Member and constitutes the valid and legally binding
agreement of such Member enforceable in accordance with its terms
against such Member except as enforceability hereof may be limited by
bankruptcy, insolvency, moratorium and other similar laws relating to
creditors' rights generally and by general equitable principles;
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(c) except as would not have a material adverse effect, the
execution and delivery of this Agreement by such Member and the
performance of its duties and obligations hereunder will not result in a
breach of any of the terms, conditions or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, credit agreement,
note or other evidence of indebtedness, or any lease or other agreement,
or any license, permit, franchise or certificate, to which such Member
is a party or by which it is bound or to which its properties are
subject, or require any authorization or approval under or pursuant to
any of the foregoing, or violate any statute, regulation, law, order,
writ, injunction, judgment or decree to which such Member is subject,
which default or violation would materially adversely affect such
Member's ability to carry out its obligations under this Agreement;
(d) there is no litigation, investigation or other proceeding
pending or, to the knowledge of such Member, threatened against such
Member or any of its Affiliates which, if adversely determined, would
materially adversely affect such Member's ability to carry out its
obligations under this Agreement;
(e) The Limited Members represent, warrant and covenant to
Managing Member that (i) as of the date hereof, each of the Limited
Members owns, beneficially and of record, the number of shares of PCTV
Preferred Stock set forth opposite such Limited Member's name on
Schedule A hereto, free and clear of all security interests, liens,
claims, pledges, agreements, limitations in voting rights, charges or
other encumbrances of any nature whatsoever and (ii) they are adequately
capitalized, and will remain adequately capitalized during the term of
this Agreement, to satisfy the indemnification obligations contained in
Section 3.3 hereof and the reimbursement and funding obligations
contained in Section 4.3.
SECTION 8.11 Acknowledgement of Certain Regulatory Considerations.
The Members acknowledge that they are forming the Company in order to allow
Blackstone Management, which manages the Limited Members, to achieve
compliance with the cross-ownership rules of the FCC. Therefore,
notwithstanding anything to the contrary in this Agreement, the Limited
Members covenant and agree that they shall not take any action or do anything
which could cause the Company, the Limited Members or Blackstone Management
to be in violation of the FCC's cross-ownership rules by virtue of the
Company's ownership of the PCTV Preferred Stock. Subject to Section 3.1(b),
the Limited Members further covenant and agree that the Managing Member shall
have all power, authority and independence to take all actions without the
consent of the Limited Members that are necessary or appropriate to ensure
that the Company's ownership of the PCTV Preferred Stock shall comply with
FCC cross-ownership rules. The Managing member shall not be liable,
responsible or accountable in damages or otherwise to the Company or to any
other Member for, and the Company and the Limited Members shall fully protect
and indemnify the Managing Member from all liabilities, obligations, losses,
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damages, penalties, actions, judgments, suits, proceedings, costs, expenses
and disbursements of any kind or nature whatsoever (including, without
limitation, reasonable attorneys fees, costs of investigation, fines,
judgments and amounts paid in settlement, actually incurred by the Managing
Member in connection with such action, suit or proceeding) by virtue of any
act performed by the Managing Member in good faith in connection with the
Managing Member's obligations under this Section 8.11 (other than liabilities
and losses resulting from the gross negligence or willful misconduct of the
Managing Member) and from and with respect to any breach by the Limited
Members of their obligations under this Section 8.11, including without
limitation, any and all regulatory proceedings of the FCC.
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IN WITNESS WHEREOF, the parties have executed this Limited
Liability Company Agreement as of the day and year first above written.
MURRAY CAPITAL MANAGEMENT, INC.
By: /s/ Marti P. Murray
------------------------------
Name: Marti P. Murray
Title: President and Secretary
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
By: Blackstone Management
Associates II L.L.C.
By: /s/ Anthony Grillo
--------------------------
Name: Anthony Grillo
Title: Authorized Person
BLACKSTONE OFFSHORE CAPITAL
PARTNERS II L.P.
By: Blackstone Management
Associates II L.L.C.
By: /s/ Anthony Grillo
---------------------------
Name: Anthony Grillo
Title: Authorized Person
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: Blackstone Management
Associates II L.L.C.
By: /s/ Anthony Grillo
--------------------------
Name: Anthony Grillo
Title: Authorized Person
Dated: December 23, 1998
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<TABLE>
<CAPTION>
SCHEDULE A
MEMBERS OF THE COMPANY
Sharing
Percentage
# of shares of as of Initial Initial Return
PCTV Preferred Capital of Investment
<S> <C> <C> <C> <C>
Members Address Stock Contribution Amount
Murray Capital c/o Murray Capital
Management, Inc. Management, Inc.
110 East 59th Street, 24th Floor
New York, New York 10022 . . . . 0 N/A N/A
Blackstone Capital c/o The Blackstone Group L.P. 345
Partners II Merchant Park Avenue
Banking Fund L.P. New York, New York 10154 . . . . 547,160.39 75.14% $1,060,275.27
Blackstone Offshore c/o The Blackstone Group L.P. 345
Capital Partners II Park Avenue
L.P. New York, New York 10154 . . . . 143,570.12 19.72% $278,206.80
Blackstone Family c/o The Blackstone Group L.P. 345
Investment Park Avenue
Partnership II L.P. New York, New York 10154 . . . . 37,397.88 5.14% $72,468.87
Totals . . . . . . . . . . . . . . . . . . . . . . . . 728,128.39 100% $1,410,950.94
</TABLE>
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