1
Exhibit 99.5
STOCKHOLDERS' AGREEMENT
By and Among
Golden Sky Holdings, Inc.,
and
The Investors
as defined herein and set forth
on the signature pages hereto
Dated as of November 24, 1997
2
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.........................................................3
Section 1.1. Construction of Tems............................................3
Section 1.2. Terms Not Defined...............................................3
Section 1.3. Number of Shares of Stock.......................................3
Section 1.4. Defined Terms...................................................3
ARTICLE II REPRESENTATIONS AND WARRANTIES.....................................4
Section 2.1. Representations and Warranties of the Investors.................5
Section 2.2. Representations and Warranties of the Company...................5
ARTICLE III RESTRICTIONS ON TRANSFER; RIGHT OF FIRST OFFER; CO-SALE AND
DRAG-ALONG PROVISIONS.............................................5
Section 3.1. Restrictions on Transfer........................................5
Section 3.2. Right of First Offer............................................7
Section 3.3. Co-Sale Option..................................................9
Section 3.4. Drag-Along Obligations.........................................11
Section 3.5. Prohibited Transfers...........................................12
ARTICLE IV REGISTRATION RIGHTS...............................................13
Section 4.1. Piggyback Registration Rights..................................13
Section 4.2. Demand Registration Rights.....................................14
Section 4.3. Form S-3.......................................................15
Section 4.4. Further Obligations of the Company.............................16
Section 4.5. Information about Holders......................................17
Section 4.6. Indemnification; Contribution..................................17
Section 4.7. Rule 144 Requirements..........................................20
Section 4.8. Market Stand-Off...............................................20
Section 4.9. Transfer of Registration Rights................................20
ARTICLE V ELECTION OF DIRECTORS OF THE COMPANY...............................21
Section 5.1. Voting of Shares for Election of Directors of the Company......21
Section 5.2. Committees of the Board........................................21
Section 5.3. Vacancies......................................................22
Section 5.4. Removal........................................................22
Section 5.5. No Waiver......................................................22
Section 5.6. Assignment.....................................................22
Section 5.7. Board of Directors of Subsidiary...............................23
Section 5.8. Observer Rights................................................23
Section 5.9. Term...........................................................23
ARTICLE VI MISCELLANEOUS PROVISIONS..........................................23
3
Page
Section 6.1. Survival of Representations and Covenants......................23
Section 6.2. Legend on Securities...........................................23
Section 6.3. Amendment and Waiver...........................................24
Section 6.4. Notices........................................................24
Section 6.5. Headings.......................................................29
Section 6.6. Counterparts...................................................29
Section 6.7. Remedies; Severability.........................................29
Section 6.8. Entire Agreement...............................................29
Section 6.9. Adjustments....................................................30
Section 6.10. Law Governing.................................................30
Section 6.11. Successors and Assigns........................................30
Exhibit A - Form of Joinder Agreement
Schedule 1.4 - Amended and Restated Certificate of Incorporation
4
GOLDEN SKY HOLDINGS, INC.
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement is made as of this 24th day of November,
1997 by and among Golden Sky Holdings, Inc., a Delaware corporation (the
"Company"), the investment funds identified on the signature pages hereto as the
Alta Series A Investors (the "Alta Series A Investors"), the investment funds
identified on the signature pages hereto as the Spectrum Investors (the
"Spectrum Investors"), the investment fund identified on the signature pages
hereto as the BancBoston Series A Investor (the "BancBoston Series A Investor"),
the entity identified on the signature pages hereto as the Millennial Series A
Investor (the "Millennial Series A Investor"), the entity identified on the
signature pages hereto as the Builder Series A Investor (the "Builder Series A
Investor"), the investment fund identified on the signature pages hereto as the
Norwest Investor (the "Norwest Investor"), the investment fund identified on the
signature pages hereto as the HarbourVest Investor (the "HarbourVest Investor"),
the investment funds identified on the signature pages hereto as the Alta Series
B Investors (the "Alta Series B Investors"), the investment funds identified on
the signature pages hereto as the Lion/Westpool Investors (the "Lion/Westpool
Investors"), the investment fund identified on the signature pages hereto as the
BancBoston Series B Investor (the "BancBoston Series B Investor"), the
investment fund identified on the signature pages hereto as the General Electric
Investor (the "General Electric Investor"), the investment fund identified on
the signature pages hereto as the Millennial Series B Investor (the "Millennial
Series B Investor"), the investor identified on the signature pages hereto as
the Builder Series B Investor (the "Builder Series B Investor"), the investors
identified on the signature pages hereto as the Founding Investors (the
"Founding Investors"), and the other stockholders identified on the signature
pages hereto and any other stockholder or optionholder who from time to time
becomes party to this Agreement by execution of a Joinder Agreement in
substantially the form attached hereto as Exhibit A (together, the "Other
Stockholders"). The Alta Series A Investors, the Spectrum Investors, the
BancBoston Series A Investor, the Millennial Series A Investor and the Builder
Series A Investor are herein referred to collectively as the "Series A Outside
Investors". The Norwest Investor, the HarbourVest Investor, the Alta Series B
Investors, the Lion/Westpool Investors, the BancBoston Series B Investor, the
General Electric Investor, the Millennial Series B Investor and the Builder
Series B Investor are herein referred to collectively as the "Series B Outside
Investors". The Series A Outside Investors and the Series B Outside Investors
are herein referred to collectively, where no distinction is required, as the
"Outside Investors" and individually as an "Outside Investor." The Outside
Investors and the Founding Investors are herein referred to collectively, where
no distinction is required, as the "Investors" and individually as an "Investor"
and the Founding Investors and the Other Stockholders are herein referred to
collectively, where no distinction is required, as the "Stockholders" and
individually as a "Stockholder."
W I T N E S S E T H
WHEREAS, reference is made to the Stock Purchase Agreement, dated as
of February 12, 1997, by and among, inter alia, the Company's wholly owned
subsidiary, Golden Sky Systems, Inc. ("GSS") and the Series A Outside Investors
(the "Series A Stock Purchase Agreement"), pursuant to which the Series A
Outside Investors and the Founding Investors purchased (i) 406,000 shares of
Series A Convertible Participating Preferred Stock, par value $.01 per share, of
GSS, which was by merger converted and exchanged into a like security of the
5
Company (the "Series A Convertible Preferred Stock"), which is convertible into
shares of the Company's authorized but unissued Series A Redeemable Preferred
Stock, par value $.01 per share (the "Series A Redeemable Preferred Stock"), and
shares of the Company's authorized but unissued Common Stock, par value $.01 per
share (the "Common Stock"), and (ii) 100 shares of the common stock of GSS,
which was by merger converted and exchanged into Common Stock; and
WHEREAS, reference is made to the Stock Purchase Agreement, dated as
of the date hereof, by and among, inter alia, the Company and the Investors (the
"Stock Purchase Agreement"), pursuant to which (i) the Series A Outside
Investors, subject to certain exceptions, terminated the Series A Stock Purchase
Agreement, and (ii) the Series B Outside Investors purchased 178,075 shares of
Series B Convertible Participating Preferred Stock, par value $.01 per share, of
the Company (the "Series B Convertible Preferred Stock" and, together with the
Series A Convertible Preferred Stock where no distinction is required, the
"Convertible Preferred Stock"), which is convertible into shares of the
Company's authorized but unissued Series B Redeemable Preferred Stock, par value
$.01 per share (the "Series B Redeemable Preferred Stock" and, together with the
Series A Redeemable Preferred Stock where no distinction is required, the
"Redeemable Preferred Stock"), and certain Series B Outside Investors
simultaneously converted the principal and accrued interest on certain
convertible promissory notes of the Company in the aggregate principal amount of
$10,000,000 (the "Series B Convertible Notes") into 50,367 shares of Series B
Convertible Preferred Stock; and
WHEREAS, the Company has from time to time issued other shares of its
capital stock; and
WHEREAS, GSS, the Series A Outside Investors and the Founding
Investors entered into a Stockholders' Agreement dated as of February 12, 1997
(the "Series A Stockholders' Agreement") relating to transfer, voting and other
matters arising from the ownership of preferred stock and common stock of GSS;
and
WHEREAS, pursuant to a letter agreement dated September 9, 1997, GSS
assigned, and the Company assumed, all of GSS' rights and obligations under the
Series A Stockholders' Agreement; and
WHEREAS, the effectiveness of this Agreement is a condition to the
consummation of the Stock Purchase Agreement; and
WHEREAS, the parties hereto desire to agree upon the terms upon which
their investment in the capital stock of the Company will be held, transferred
and voted.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
6
ARTICLE I DEFINITIONS
Section 1.1 Construction of Terms. As used herein, the masculine,
feminine or neuter gender, and the singular or plural number, shall be deemed to
be or to include the other genders or number, as the case may be, whenever the
context so indicates or requires.
Section 1.2. Terms Not Defined. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Stock Purchase
Agreement.
Section 1.3. Number of Shares of Stock. Whenever any provision of this
Agreement calls for any calculation based on a number of Shares held by a
Stockholder or Outside Investor, the number of Shares deemed to be held by that
Stockholder or Outside Investor shall be the total number of Shares of Common
Stock then owned by the Stockholder or Outside Investor, plus the total number
of Shares of Common Stock issuable upon conversion of any Convertible Preferred
Stock or other convertible securities or exercise of any options, warrants or
subscription rights then owned by the Stockholder or Outside Investor.
Section 1.4. Defined Terms. The following capitalized terms, as used
in this Agreement, shall have the meanings set forth below.
An "Affiliate" of any Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with the first mentioned Person. A Person shall be deemed
to control another Person if such first Person possesses directly or indirectly
the power to direct, or cause the direction of, the management and policies of
the second Person, whether through the ownership of voting securities, by
contract or otherwise.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, par value $.01 per share, of
the Company, and any other common equity securities now or hereafter issued by
the Company (but not including the Preferred Stock), and any other shares of
stock issued or issuable with respect thereto (whether by way of a stock
dividend or stock split or in exchange for or upon conversion of such shares or
otherwise in connection with a combination of shares, recapitalization, merger,
consolidation or other corporate reorganization).
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder.
"Independent Third Party" means any Person who, together with its
Affiliates, immediately prior to the contemplated transaction, does not own in
excess of 10% of the Company's Common Stock on a fully-diluted basis, who is not
controlling, controlled by or under common control with any such 10% owner of
the Company's Common Stock and who is not the spouse or descendent (by birth or
adoption) of any such 10% owner of the Company's Common Stock.
"Person" means an individual, a corporation, an association, a
partnership, an estate, a trust, and any other entity or organization,
7
governmental or otherwise.
"Preferred Stock" means the Convertible Preferred Stock and the
Redeemable Preferred Stock, each issued or to be issued in accordance with and
subject to the terms of the Amended and Restated Certificate of Incorporation of
the Company substantially in the form attached hereto as Schedule 1.4 (the
"Charter"), together with any other shares issued or issuable with respect
thereto (whether by way of a stock dividend, stock split or in exchange for or
in replacement or upon conversion of such shares or otherwise in connection with
a combination of shares, recapitalization, merger, consolidation or other
corporate reorganization) and the "Series A Preferred Stock" and the "Series B
Preferred Stock," respectively, shall have a corresponding meaning.
"Qualified Public Offering" means the first underwritten public
offering pursuant to an effective registration statement under the Securities
Act, covering the offer and sale of Common Stock to the public in which the
proceeds received by the Company, net of underwriting discounts and commissions,
equal or exceed $35 million and the shares are offered to the public at a price
per share of no less than (i) $300.00 in the case of holders of Series A
Preferred Stock and (ii) $600.00 in the case of holders of Series B Preferred
Stock (such dollar amounts as appropriately adjusted for any stock split,
combination, reorganization, recapitalization, reclassification, stock
distribution, stock dividend or similar event).
"Sale of the Company" means the sale of the Company to an Independent
Third Party or affiliated group of Independent Third Parties pursuant to which
such party or parties acquire (i) capital stock of the Company possessing the
voting power to elect a majority of the Board (whether by merger, consolidation
or sale or transfer of the Company's capital stock); or (ii) all or
substantially all of the Company's assets determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations promulgated thereunder.
"Shares" means the shares of Common Stock, Preferred Stock and any
other equity securities now or hereafter issued by the Company, together with
any options or warrants thereon and any other shares of stock issued or issuable
with respect thereto (whether by way of a stock dividend, stock split or in
exchange for or upon conversion of such shares or otherwise in connection with a
combination of shares, recapitalization, merger, consolidation or other
corporate reorganization).
"Transfer" means any direct or indirect transfer, donation, sale,
assignment, pledge, hypothecation, grant of a security interest in or other
disposal or attempted disposal of all or any portion of a security or of any
rights (including, without limitation, any economic interest therein, whether by
means of a participation, swap transaction or otherwise). "Transferred" means
the accomplishment of a Transfer, and "Transferee" means the recipient of a
Transfer.
ARTICLE II REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the Investors. Each of
the Investors, individually and not jointly, hereby represents, warrants and
covenants to the Company as follows: (a) such Investor has full authority and
power under its charter, by-laws, governing partnership agreement or comparable
8
document to enter into this Agreement; (b) this Agreement constitutes the valid
and binding obligation of such Investor; and (c) the execution, delivery and
performance by such Investor of this Agreement: (i) does not and will not
violate any laws, rules or regulations of the United States or any state or
other jurisdiction applicable to such Investor, or require such Investor to
obtain any approval, consent or waiver of, or to make any filing with, any
Person that has not been obtained or made; and (ii) does not and will not result
in a breach of, constitute a default under, accelerate any obligation under or
give rise to a right of termination of any indenture or loan or credit agreement
or any other agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which such Investor is a party or by which the property of
such Investor is bound or affected, or result in the creation or imposition of
any mortgage, pledge, lien, security interest or other charge or encumbrance on
any of the assets or properties of such Investor.
Section 2.2. Representations and Warranties of the Company. The
Company hereby represents, warrants and covenants to the Investors as follows:
(a) the Company has full corporate authority and power to enter into this
Agreement; (b) this Agreement constitutes the valid and binding obligation of
the Company enforceable against it in accordance with its terms; and (c) the
execution, delivery and performance by the Company of this Agreement: (i) does
not and will not violate any laws, rules or regulations of the United States or
any state or other jurisdiction applicable to the Company, or require the
Company to obtain any approval, consent or waiver of, or to make any filing
with, any Person that has not been obtained or made; and (ii) does not and will
not result in a breach of, constitute a default under, accelerate any obligation
under or give rise to a right of termination of any indenture or loan or credit
agreement or any other material agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which the Company is a party or by which
the property of the Company is bound or affected, or result in the creation or
imposition of any mortgage, pledge, lien, security interest or other charge or
encumbrance on any of the assets or properties of the Company or any of its
subsidiaries.
ARTICLE III RESTRICTIONS ON TRANSFER; RIGHT OF FIRST OFFER;
CO-SALE AND DRAG-ALONG PROVISIONS
The following provisions of this Article III shall terminate
immediately upon the closing of a Qualified Public Offering (provided such
termination shall be effective only in respect of each series of Preferred Stock
as to which an offering constitutes a Qualified Public Offering) or a Sale of
the Company.
Section 3.1. Restrictions on Transfer. No Transfers of any Shares
shall be made except in accordance with all applicable provisions of the
Securities Act and any relevant state securities law. Each Founding Investor
also agrees that, prior to the third anniversary of the date of this Agreement,
he will not, without the prior written consent of fifty-eight percent in
interest of each of the Series A and Series B Outside Investors, Transfer all or
any portion of the Shares now owned or hereafter acquired by him, except in
connection with, and strictly in compliance with the conditions of, Section
3.1(b), (c) or (d) below. Any Outside Investor may transfer its rights under the
foregoing sentence to any Transferee of its Shares, in which event such
Transferee shall be deemed to be an Outside Investor of the applicable series
9
for purposes of such sentence. In addition, each Stockholder and Outside
Investor agrees that he or it will not, without the prior written consent of
fifty-eight percent in interest of each of the Series A and Series B Outside
Investors, Transfer all or any portion of the Shares now owned or hereafter
acquired by him or it, except in connection with, and strictly in compliance
with the conditions of, any of the following:
(a) Transfers effected pursuant to Sections 3.2, 3.3 and 3.4, in
each case made in accordance with the procedures set forth therein;
(b) Transfers by any Stockholder to his or her spouse or children
or to a trust of which he is the settlor and a trustee for the benefit of
his or her spouse or children, provided that any such trust does not
require or permit distribution of such Shares during the term of this
Agreement, and provided further that the Transferee shall have executed and
delivered a Joinder Agreement in the form attached hereto as Exhibit A;
(c) Transfers upon the death of any Stockholder to his or her
heirs, executors or administrators or to a trust under his or her will or
Transfers between such Stockholder and his or her guardian or conservator,
provided that the Transferee shall have executed and delivered a Joinder
Agreement in the form attached hereto as Exhibit A;
(d) Transfers pursuant to a public offering of the Company's
Common Stock registered under the Securities Act;
(e) With respect to any of the Outside Investors, a Transfer to
any other Investor or to a partner or Affiliate of such Outside Investor
(other than the Company) or to any other investment fund or other entity
for which such Outside Investor and/or one or more partners or Affiliates
thereof, directly or indirectly through one or more intermediaries, serve
as general partner or manager or in a like capacity, provided that the
Transferee shall have executed and delivered a Joinder Agreement in the
form attached hereto as Exhibit A; or
(f) In the event that BancBoston Ventures Inc. or Norwest Equity
Partners V or their respective Permitted Transferees (each an "SBIC
Investor") reasonably determines that it has a Regulatory Problem (as
defined below), each such SBIC Investor shall have the right to (i)
Transfer its Shares to a non-Affiliate of the Company and the other
Investors or Stockholders, provided that the Transferee shall have executed
and delivered a Joinder Agreement in the form attached hereto as Exhibit A,
or (ii) exchange its Shares for non-voting securities in the Company with
the same economic rights, and the Company shall take all such actions as
are reasonably requested by such SBIC Investor in order to (a) effectuate
and facilitate any such Transfer or (b) permit such SBIC Investor to
exchange for all or any portion of its Shares on a share-for-share basis
for shares of non-voting securities of the Company, which non-voting
securities shall be identical in all respects to the Shares exchanged for
it, except that such exchanged securities shall be non-voting and shall be
convertible into voting securities on such terms as are reasonably
10
requested by such SBIC Investor, in light of regulatory considerations then
prevailing and do not alter the economic interests of the parties hereto.
For purposes of this Agreement, a "Regulatory Problem" means any set of
facts or circumstances wherein it has been asserted by any governmental
authority, including by the United States Small Business Administration
(the "SBA"), and any successor agency satisfactory to the Company
performing the functions thereof (or, based on written advice of counsel
satisfactory to the Company, such SBIC Investor reasonably believes that
there is a substantial risk of such assertion), that, pursuant to the Small
Business Act of 1958, as amended, and the regulations issued by the SBA
thereunder, codified at Title 13 of the Code of Federal Regulations, Parts
107 and 121 (the "SBIC Regulations"), or pursuant to the Bank Holding
Company Act, as amended, and the regulations issued thereunder, such SBIC
Investor is not entitled to hold all or a portion of the Shares held by it.
Any permitted Transferee described in the preceding clauses (a), (b), (c),
(e) or (f) shall be referred to herein as a "Permitted Transferee."
Anything to the contrary in this Agreement notwithstanding, Permitted
Transferees shall take any Shares so Transferred subject to all provisions
of this Agreement as if such Shares were still held by the Transferring
Stockholder or Outside Investor, whether or not they so agree with the
Transferring Stockholder or Outside Investor and/or the Company.
Section 3.2. Right of First Offer. In the event that any of the
Stockholders or Outside Investors, including any of their Permitted Transferees,
desires to Transfer all or any portion of the Shares held by such Stockholder or
Outside Investor in a transaction not expressly permitted under Section 3.1(b),
(c), (d), (e) or (f), such Stockholder or Outside Investor (a "Transferring
Party") may, subject to the provisions of Section 3.3 hereof, Transfer such
Shares pursuant to and in accordance with the following provisions of this
Section 3.2:
(a) Such Transferring Party shall deliver written notice (the
"Offer Notice") of its desire to Transfer such Shares held by such
Stockholder or Outside Investor to each of the Company and the Outside
Investors (a "Transaction Offer") and shall otherwise comply with the
provisions of this Section 3.2 and, if applicable, Section 3.3. The Offer
Notice shall specify (i) the number of Shares of the Transferring Party
subject to the Transaction Offer (the "Offered Shares"), (ii) the
consideration per Share to be paid for the Offered Shares, and (iii) all
other material terms and conditions of the Transaction Offer.
(b) The Company and the Outside Investors shall have the right
(the "Right of First Offer") to offer to collectively purchase all, but not
less than all, of the Offered Shares for the consideration per share and on
the terms and conditions specified in the Offer Notice in the order of
priority described below. In the event that the price set forth in the
Offer Notice is stated in consideration other than cash or cash
equivalents, the Board of Directors of the Company may determine the fair
market value of such consideration, reasonably and in good faith, and the
parties may exercise their Right of First Offer by payment of such fair
market value in cash or cash equivalents.
(i) The Company shall have the initial right to offer to
purchase the Offered Shares. To exercise its Right of First Offer, the
Company shall, within twenty (20) days of receipt of such written
notice, communicate in writing such election to the Transferring Party
11
(with copies to the Outside Investors). Such written election to
purchase shall constitute a valid, legally binding and enforceable
agreement for the sale and purchase of such number of Offered Shares.
(ii) In the event the Company does not exercise its Right of
First Offer with respect to all of the Offered Shares, the
Transferring Party shall notify the Outside Investors in writing of
such fact. The Outside Investors shall then have the right to offer to
purchase all, but not less than all, of the available Offered Shares
which are not being purchased by the Company. In the event an Outside
Investor elects to exercise its Right of First Offer, such Outside
Investor shall, within twenty (20) days of receipt of such written
notice, communicate in writing such election to the Transferring Party
stating the maximum number of the available Offered Shares it desires
to purchase. Such written election to purchase shall constitute a
valid, legally binding and enforceable agreement for the sale and
purchase of the Offered Shares to the extent of the number of Offered
Shares allocated to such Outside Investor in accordance with this
Section 3.2. Each Outside Investor shall have the right to offer to
purchase up to that number of available Offered Shares as shall be
equal to the product obtained by multiplying (i) the total number of
available Offered Shares by (ii) a fraction, the numerator of which is
the total number of shares of Common Stock owned by such Outside
Investor on the date of the Offer Notice on an as converted basis
(including for this purpose any shares of Common Stock that may be
received upon conversion of the Convertible Preferred Stock), and the
denominator of which is the total number of shares of Common Stock
then held by all Outside Investors (other than the Transferring Party)
on the date of the Offer Notice on an as converted basis, subject to
increase as hereinafter provided. The number of Offered Shares that
each Outside Investor is entitled to purchase under this Section 3.2
shall be referred to as its "Pro Rata Fraction." Each Outside Investor
shall have the right to transfer its right to any Pro Rata Fraction or
part thereof with respect to any proposed Transaction Offer to any
Affiliate. In the event an Outside Investor does not wish to purchase
or to transfer its right to purchase its Pro Rata Fraction, then any
Outside Investors who so elect shall have the right to purchase, on a
pro rata basis with any other Outside Investors who so elect, any Pro
Rata Fraction not purchased by an Outside Investor or its Affiliates.
Upon the expiration of the twenty (20) day period during
which the Outside Investors have a right to exercise their Right of
First Offer in accordance with this Section 3.2, the number of Offered
Shares to be purchased by each Outside Investor and Affiliate shall be
determined as follows: (x) there shall first be allocated to each
Outside Investor and Affiliate electing to purchase a number of
Offered Shares equal to the lesser of (A) the number of Offered Shares
as to which such Outside Investor accepted the Transaction Offer or
(B) such Outside Investor's Pro Rata Fraction, and (y) the balance, if
any, not allocated under clause (x) above, shall be allocated to those
Outside Investors and Affiliates who accepted the Transaction Offer as
to a number of Offered Shares which exceeded their respective Pro Rata
Fractions, in each case on a pro rata basis in proportion to the
amount of such excess.
12
(c) The closing of any such purchase of Offered Shares by the
Company and/or the Outside Investors pursuant to this Section 3.2 shall
take place within thirty (30) days after the expiration of the period
during which the parties have a right to exercise their Right of First
Offer in accordance with this Section 3.2, at the place and on the date
specified by three-fourths in interest of the Persons exercising their
Right of First Offer.
(d) In the event that the Company and the Outside Investors do
not elect to purchase all of the Offered Shares, the Transferring Party may
sell the Offered Shares to a non-Affiliate (the "Offeror") on no materially
better terms and conditions (from the standpoint of the Offeror) than those
set forth in the Offer Notice, subject to the restrictions set forth in the
provisions of Section 3.3. If the Transferring Party's transfer to an
Offeror is not consummated in accordance with the terms of the Transaction
Offer within the later of (i) one hundred twenty (120) days after the
expiration of the Right of First Offer and the Co-Sale Option set forth in
Section 3.3, if applicable, and (ii) the satisfaction of all governmental
approval or filing requirements, the Transaction Offer shall be deemed to
lapse, and any Transfers of Offered Shares pursuant to such Transaction
Offer shall be deemed to be in violation of the provisions of this
Agreement unless the Company and the Outside Investors are once again
afforded the Right of First Offer provided for herein with respect to such
Transaction Offer.
Section 3.3. Co-Sale Option. In the event that any Transferring Party
complies with the provisions of Section 3.2 above, and the Right of First Offer
is not exercised with respect to all of the Offered Shares, such Transferring
Party may Transfer such available Offered Shares only pursuant to and in
accordance with the following provisions of this Section 3.3:
(a) Each of the Outside Investors shall have the right to
participate in the Transaction Offer on the terms and conditions herein
stated. The class of Shares with which the Outside Investors shall have the
right to participate in the Transaction Offer shall be determined in
accordance with the following: (a) if the Transferring Party elects to
Transfer Convertible Preferred Stock of either series then the Outside
Investors shall have the right to participate in the Transaction Offer with
Convertible Preferred Stock of either series; (b) if the Transferring Party
elects to Transfer Redeemable Preferred Stock of either series then the
Outside Investors shall have the right to participate in the Transaction
Offer with Redeemable Preferred Stock of either series; and (c) if the
Transferring Party elects to Transfer Common Stock then the Outside
Investors shall have the right to participate in the Transaction Offer with
Common Stock. The right to participate shall be exercisable upon written
notice (the "Acceptance Notice") to the Transferring Party within the later
of (i) thirty (30) days after delivery to the Outside Investor of the Offer
Notice and (ii) ten (10) days after the Transferring Party notifies the
Outside Investors that the Right of First Offer has not been exercised with
respect to all of the Offered Shares (the "Co-Sale Option"). The Acceptance
Notice shall indicate the maximum number of Shares such Outside Investor
wishes to sell, including the number of Shares it would sell if one or more
other Outside Investors do not elect to participate in the sale on the
terms and conditions stated in the Offer Notice, except that any Outside
Investor who holds Preferred Stock shall be permitted to sell to the
relevant purchaser Shares of Common Stock acquired upon conversion thereof
or, at its election, an option to acquire such Common Stock when it
receives the same upon such conversion at the election of such Outside
Investor or as otherwise provided in the Charter with the same effect as if
Common Stock were being conveyed. In the event that different classes or
13
series of Shares become the subject of the same Transaction Offer, the
prices of such respective classes or series of Shares shall be mutually
agreed upon among all parties to such Transaction Offer to appropriately
reflect the conversion, redemption and exercise rights attaching to, as
well as the relative preferences and priorities of, the different classes
or series of shares. If the parties cannot mutually agree upon such pricing
prior to the date upon which the Transaction Offer is due to be
consummated, the Transaction Offer shall be deemed to lapse and any
Transfers of Shares pursuant to such Transaction Offer shall be deemed to
be in violation of the provisions of this Agreement unless the Transferring
Party once again complies with the provisions of Section 3.2 and this
Section 3.3 hereof with respect to such Transaction Offer.
(b) Each of the Outside Investors shall have the right to sell a
portion of its Shares pursuant to the Transaction Offer which is equal to
or less than the product obtained by multiplying (i) the total number of
Shares subject to the Transaction Offer by (ii) a fraction, the numerator
of which is the total number of shares of Common Stock owned by such
Outside Investor on the date of the Offer Notice on an as converted basis
(including any Common Stock issuable upon exercise of the Convertible
Preferred Stock or other convertible securities or exercise of any options,
warrants or subscription rights then owned by the Outside Investor), and
the denominator of which is the total number of shares of Common Stock then
held by all Outside Investors and Stockholders on the date of the Offer
Notice on an as converted basis. To the extent one or more Outside
Investors elect not to sell, or fail to exercise their right to sell, the
full amount of such Shares which they are entitled to sell pursuant to this
Section 3.3, the other Outside Investors' rights to sell Shares shall be
increased proportionately and the other Outside Investors shall have an
additional five (5) days from the date upon which they are notified (by the
Transferring Party pursuant to Section 3.3(c) below) of such election or
failure to exercise in which to increase the number of Shares to be sold by
them hereunder by notice to that effect to the Transferring Party.
(c) Within ten (10) days after the date by which the Outside
Investors were first required to notify the Transferring Party of their
intent to participate, the Transferring Party shall notify each
participating Outside Investor of the number of Shares held by such Outside
Investor that will be included in the sale; whether, and if so, to what
extent any Outside Investor elected not to sell or failed to exercise the
rights to sell; the extent to which such participating Outside Investor may
elect to increase the number of Shares to be sold by it under Section
3.3(b) above; the period within which such participating Outside Investor
is required to notify the Transferring Party of its election to increase
such numbers of Shares to be sold by it; and the date on which the
Transaction Offer will be consummated, which shall be no later than the
later of (i) thirty (30) days after the date by which the Outside Investors
were required to notify the Transferring Party of their intent to
participate and (ii) the satisfaction of any governmental approval or
filing requirements, if any.
(d) Each of the participating Outside Investors may effect its
participation in any Transaction Offer hereunder by delivery to the
Offeror, or to the Transferring Party for delivery to the Offeror, of one
14
or more instruments or certificates, properly endorsed for transfer,
representing the Shares it elects to sell therein. At the time of
consummation of the Transaction Offer, the Offeror shall remit directly to
each Outside Investor that portion of the sale proceeds to which each
Outside Investor is entitled by reason of its participation therein (less
any adjustments due to the conversion of any convertible securities or the
exercise of any exercisable securities).
(e) In the event that the Transaction Offer is not consummated
within the period required by subsection (c) hereof or the Offeror fails
timely to remit to each Outside Investor its portion of the sale proceeds,
the Transaction Offer shall be deemed to lapse, and any Transfers of Shares
pursuant to such Transaction Offer shall be deemed to be in violation of
the provisions of this Agreement unless the Transferring Party once again
complies with the provisions of Section 3.2 and this Section 3.3 hereof
with respect to such Transaction Offer.
Section 3.4. Drag-Along Obligations.
(a) In the event that fifty-eight percent in interest of each of
the Series A and Series B Outside Investors (the "Electing Investors")
determine to sell or otherwise dispose of all or substantially all of the
assets of the Company or all or substantially all of the capital stock of
the Company owned by all of the Outside Investors to any non-Affiliate(s)
of the Company or of any of the Outside Investors, or to cause the Company
to merge with or into or consolidate with any non-Affiliate(s) of the
Company or of any of the Outside Investors (in each case, the "Buyer") in a
bona fide negotiated transaction (an "Acquisition"), each of the
Stockholders and other Outside Investors, including any of their respective
Permitted Transferees (collectively, the "Non-Investor Stockholders"),
shall be obligated to and shall upon the written request of the Electing
Investors: (i) sell, transfer and deliver, or cause to be sold, transferred
and delivered, to the Buyer, his, her or its Shares (including for this
purpose all of such Non-Investor Stockholder's Shares that presently or as
a result of any such transaction may be acquired upon the exercise of
options (following the payment of the exercise price therefore)) on
substantially the same terms applicable to the Electing Investors (with
appropriate adjustments to reflect the conversion of convertible
securities, the redemption of redeemable securities and the exercise of
exercisable securities as well as the relative preferences and priorities
of the Preferred Stock); and (ii) execute and deliver such instruments of
conveyance and transfer and take such other action, including voting such
Shares in favor of any Acquisition proposed by the Electing Investors and
executing any purchase agreements, merger agreements, indemnity agreements,
escrow agreements or related documents that are also executed by the
Electing Investors or as the Buyer may reasonably require in order to carry
out the terms and provisions of this Section 3.4.
(b) In the event that the Outside Investors do not exercise their
"drag-along" rights in Section 3.4(a) above with respect to an Acquisition
to a Buyer, each Founding Investor shall have the right, exercisable by the
delivery of written notice to the Company and each of the Outside Investors
at least twenty (20) days prior to the date proposed for the closing of the
Acquisition, to require the Outside Investors to include such Founding
Investor's Shares in the Acquisition on the same terms as the Outside
Investors' Shares (with appropriate adjustments to reflect the conversion
15
of convertible securities, the redemption of redeemable securities and the
exercise of exercisable securities as well as the relative priorities and
preferences of the Preferred Stock and the terms of any options issued by
the Company).
(c) Not less than thirty (30) days prior to the date proposed for
the closing of any Acquisition, the Outside Investors shall give written
notice to each Non-Investor Stockholder, setting forth in reasonable detail
the name or names of the Buyer, the terms and conditions of the
Acquisition, including the purchase price, and the proposed closing date.
In furtherance of the provisions of this Section 3.4, each of the
Non-Investor Stockholders hereby (i) irrevocably appoints Alta
Communications, Inc. as its agent and attorney-in-fact (the "Agent") (with
full power of substitution) to execute all agreements, instruments and
certificates and take all actions necessary or desirable to effectuate any
Acquisition hereunder; and (ii) grants to the Agent a proxy (which shall be
deemed to be coupled with an interest and irrevocable) to vote the Shares
held by such Non-Investor Stockholder and exercise any consent rights
applicable thereto in favor of any Acquisition hereunder; provided,
however, that the Outside Investors shall not exercise such
powers-of-attorney or proxies with respect to any Non-Investor Stockholder
unless such Non-Investor Stockholders are in breach of their obligations
under this Section 3.4.
Section 3.5. Prohibited Transfers. If any Transfer is made or attempted
contrary to the provisions of this Agreement, such purported Transfer shall be
void ab initio; the Company, the Outside Investors and the Other Stockholders
shall have, in addition to any other legal or equitable remedies which they may
have, the right to enforce the provisions of this Agreement by actions for
specific performance (to the extent permitted by law); and the Company shall
have the right to refuse to recognize any Transferee as one of its stockholders
for any purpose. Without limitation to the foregoing, each of the Outside
Investors and Stockholders further agrees that the provisions of Section 6.7
shall apply in the event of any violation or threatened violation of this
Agreement.
ARTICLE IV REGISTRATION RIGHTS
The Company's obligation to register shares of Common Stock under this
Article IV shall terminate seven (7) years following the closing by the Company
of its first underwritten public offering pursuant to a registration statement
under the Securities Act (an "IPO") or, with respect to shares held by
particular Investors who hold less than two percent (2%) of the then outstanding
Common Stock of the Company and commencing on the first anniversary of any IPO,
whenever all such shares can be legally transferred in any consecutive three (3)
month period under Rule 144 of the Securities Act as reasonably determined by
the Company and communicated to such Investors in writing; provided that, in all
circumstances, Section 4.7 shall remain in effect for seven years following the
closing of the IPO.
Section 4.1. Piggyback Registration Rights. If at any time or times
after the date hereof, the Company shall determine to register any shares of its
Common Stock or securities convertible into or exchangeable or exercisable for
shares of Common Stock under the Securities Act (whether in connection with a
public offering of securities by the Company (a "primary offering"), a public
offering of securities by stockholders (a "secondary offering"), or both, but
not in connection with a registration statement on Form S-4 or S-8 or any
16
substitute form that is adopted by the Commission, a registration statement
filed in connection with an exchange offer of securities solely to the Company's
existing securityholders or a registration effected pursuant to Sections 4.2 or
4.3 hereof), the Company will promptly give written notice thereof to the
Investors. In connection with any such registration, if within thirty (30) days
after their receipt of such notice any Investor requests the inclusion in such
registration of some or all of the Common Stock owned by such Investor, or into
which any Shares held by such Investor are convertible or exchangeable (the
"Registrable Shares"), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Shares which all such
Investors so request; provided, however, that if the Company is advised in
writing in good faith by the managing underwriter of the Company's securities
being offered in a public offering pursuant to such registration statement that
the amount to be sold by persons other than the Company (collectively, "Selling
Stockholders") is greater than the amount which can be offered without adversely
affecting the offering, the Company may reduce the amount offered for the
accounts of Selling Stockholders (including such holders of shares of
Registrable Shares) to a number deemed satisfactory by such managing
underwriter; provided that the shares to be excluded shall be determined in the
following order of priority: (i) securities held by any Persons not having any
such contractual, incidental registration rights shall be excluded first, (ii)
securities held by any Persons having contractual, incidental registration
rights pursuant to an agreement other than this Agreement shall be excluded
second, and (iii) Registrable Shares sought to be included by the Investors
shall be excluded last and any reduction in such number shall be determined on a
pro rata basis (based upon the aggregate number of Registrable Shares held by
such holders); and provided further, however, that if such registration is other
than the IPO, the managing underwriter may (subject to the allocation priority
set forth above) limit the number of Registrable Shares to be included in the
registration and underwriting to not less than forty percent (40%) of the
securities included therein (based on aggregate market values). The Company
shall advise all Investors promptly after such determination by the managing
underwriter, and the number of shares of Registrable Shares that may be included
in the registration and underwriting of the offering shall be allocated among
all Investors in proportion, as nearly as practicable, to their respective
holdings of Registrable Shares. If the Company includes in such registration any
Registrable Shares to be offered by it, all expenses of the registration and
offering and the reasonable fees and expenses of one independent counsel for all
of the Investors as a group shall be borne by the Company, except that the
Investors shall bear underwriting and selling commissions attributable to their
Registrable Shares being registered and transfer taxes on Shares being sold by
such Investors.
Section 4.2. Demand Registration Rights. If on any four (4) occasions
(which occasions shall in no event be less than six months apart from each
other) after the earlier of (i) February 12, 1999 or (ii) six (6) months after
the closing of the IPO, holders of an aggregate of at least twenty percent (20%)
of the Registrable Shares (excluding any shares of Series B Preferred Stock or
any shares of Common Stock issued upon conversion of such Series B Preferred
Stock) held collectively by the Series A Outside Investors and the Founding
Investors or their respective Transferees (the "Series A Registrable Shares") or
holders of an aggregate of at least twenty percent (20%) of the Registrable
Shares (excluding any shares of Series A Preferred Stock or any shares of Common
Stock issued upon conversion of such Series A Preferred Stock) held by the
17
Series B Outside Investors or their respective Transferees (the "Series B
Registrable Shares") (or in the case of the IPO, holders of an aggregate of at
least fifty-eight percent of the Series A or Series B Convertible Preferred
Shares prior to conversion of such Shares of such series or holders of an
aggregate of at least fifty-one percent (51%) of the Series A or Series B
Registrable Shares following any such conversion) shall notify the Company in
writing that it or they intend to offer or cause to be offered for public sale
all or any portion of its or their Registrable Shares, the Company will notify
all of the Investors of its receipt of such notification from such Investor(s);
provided, however, that the holders of the Series A Registrable Shares and
Convertible Preferred Shares (as applicable), and the holders of the Series B
Registrable Shares and Convertible Preferred Shares (as applicable),
respectively, shall be entitled to exercise such rights on no more than two (2)
occasions. If within thirty (30) days after their receipt of such notice any
Investor requests the inclusion of some or all of the Registrable Shares owned
by such Investor in such registration, the Company will use its best efforts to
cause such Registrable Shares so requested (including the Registrable Shares
held by the Investor(s) giving the initial notice of intent to register
hereunder) to be registered under the Securities Act in accordance with the
terms of this Section 4.2; provided, however, that unless such registration
becomes effective, the Investors of the applicable series shall be entitled to
require an additional registration pursuant to this Section 4.2; and, provided
further that if the managing underwriter of the offering determines in good
faith that a limitation on the number of shares to be underwritten is required,
the shares to be excluded shall be determined in the following order of
priority: (i) shares held by any Persons not having any such contractual, demand
registration rights shall be excluded first, (ii) shares held by any Persons
having contractual, demand registration rights pursuant to an agreement other
than this Agreement shall be excluded second, (iii) shares registered for the
benefit of the Company shall be excluded third, and (iv) Registrable Shares
sought to be included by the Investors shall be excluded last and any reduction
in such number shall be determined on a pro rata basis (based upon the aggregate
number of Registrable Shares held by such holders).
All expenses of such registrations and offerings and the reasonable
fees and expenses of one independent counsel for all of the Investors as a group
shall be borne by the Company. The Company may postpone the filing of any
registration statement required hereunder for a reasonable period of time, not
to exceed 90 days during any twelve month period, if the Company determines in
good faith that such filing would require the disclosure of a material
transaction or other matter and the Company determines reasonably and in good
faith that such disclosure would have a material adverse effect on the Company
or otherwise would not be in the best interest of the Company. The Company shall
not be required to cause a registration statement requested pursuant to this
Section 4.2 to become effective prior to 180 days following the effective date
of a Registration Statement initiated by the Company and relating to the
Company's IPO (or 90 days with respect to any subsequent underwritten public
offering), if the request for registration has been received by the Company
18
subsequent to the giving of written notice by the Company, made in good faith,
to the Investors to the effect that the Company is commencing to prepare a
Company-initiated Registration Statement (other than a registration effected
solely to implement an employee benefit plan or a transaction to which Rule 145
or any other similar rule of the Commission under the Securities Act is
applicable); provided, however, that the Company shall use its best efforts to
achieve such effectiveness promptly following such period if the request
pursuant to this Section 4.2 has been made prior to the expiration of such
period. If so requested by any Investor in connection with a registration under
this paragraph, the Company shall take such steps as are required to register
the Investors' Registrable Shares for sale on a delayed or continuous basis
under Rule 415, and also take such steps as are required to keep any
registration effective until all of the Investors' Registrable Shares registered
thereunder are sold. Notwithstanding the foregoing, the Company shall have no
obligation to keep any registration effective more than 120 days after the
initial date of effectiveness of such registration.
Section 4.3. Form S-3. If the Company becomes eligible to use Form S-3
under the Securities Act or a comparable successor form for secondary offerings
by its shareholders, (a) the Company shall use its best efforts to continue to
qualify at all times for registration of its capital stock on Form S-3 or such
successor form, and (b) holders of an aggregate of not less than ten percent
(10%) of the Series A or Series B Registrable Shares shall have the right to
request and have effected one (1) registration of Shares having an aggregate
proposed offering price of not less than $5,000,000 on Form S-3 or such
successor form (such requests shall be in writing and shall state the number of
Shares to be disposed of and the intended method of disposition of such Shares
by such Investor(s)) within any consecutive twelve (12) month period. The
Company will notify all of the holders of Registrable Shares of its receipt of
such notification from such holders. If within thirty (30) days after their
receipt of such notice any Investor requests the inclusion of some or all of the
Registrable Shares owned by such Investor in such registration, the Company will
use its best efforts to cause such Registrable Shares so requested (including
the Registrable Shares held by the Investor(s) giving the initial notice of
intent to register hereunder) to be registered on Form S-3 or such successor
form to the extent requested by such Investor(s). If so requested by such
Investor(s) in connection with a registration under this Section 4.3, the
Company shall take such steps as are required to register such Investor's
Registrable Shares for sale on a delayed or continuous basis under Rule 415, and
to keep such registration effective until all of such Investor's Registrable
Shares registered thereunder are sold. Notwithstanding the foregoing, the
Company shall have no obligation to keep any registration effective more than
180 days after the initial date of effectiveness of such registration. All
expenses incurred in connection with a registration requested pursuant to this
Section 4.3 and the reasonable fees and expenses of one independent counsel for
all of the Investors as a group shall be borne by the Company. The Company may
postpone the filing of any Registration Statement required hereunder for a
reasonable period of time, not to exceed 90 days, if the Company determines in
good faith that such filing would require the disclosure of a material
transaction or other factor and the Company determines reasonably and in good
faith that such disclosure would have a material adverse effect on the Company.
The Company shall not be required to cause a Registration Statement requested
pursuant to this Section 4.3 to become effective prior to 180 days following the
effective date of a Registration Statement initiated by the Investors pursuant
to Section 4.2 or by the Company and relating to the Company's IPO (or 90 days
with respect to any subsequent underwritten public offering), if the request for
registration has been received by the Company subsequent to the giving of
written notice by the Company, made in good faith, to the Investors to the
effect that the Company is commencing to prepare a Company-initiated
Registration Statement (other than a registration effected solely to implement
an employee benefit plan or a transaction to which Rule 145 or any other similar
rule of the Commission under the Securities Act is applicable); provided,
however, that the Company shall use its best efforts to achieve such
effectiveness promptly following such period if the request pursuant to this
Section 4.3 has been made prior to the expiration of such period.
Section 4.4. Further Obligations of the Company. Whenever, under the
provisions of Sections 4.1, 4.2 or 4.3 of this Agreement, the Company is
19
required to register any Registrable Shares, it agrees that it shall also do the
following:
(a) Use its best efforts to diligently prepare and file with the
Commission a registration statement and such amendments, post-effective
amendments and supplements to said registration statement and the
prospectus used in connection therewith as may be necessary to keep said
registration statement effective and to comply with the provisions of the
Securities Act with respect to the sale of securities covered by said
registration statement for the period necessary to complete the proposed
public offering;
(b) Furnish to each selling Investor such copies of each
preliminary and final prospectus and such other documents as such Investor
may reasonably request to facilitate the public offering of its Registrable
Shares;
(c) Enter into any customary underwriting agreement required by
the proposed underwriter for the selling Investors, if any;
(d) Use its commercially reasonable efforts to register or
qualify the securities covered by said registration statement under the
securities or "blue-sky" laws of such jurisdictions as any selling
Investors may reasonably request, provided that the Company shall not be
required to register or qualify the securities in any jurisdictions which
require it to qualify to do business or subject itself to general service
of process therein;
(e) Immediately notify each selling Investor, at any time when a
prospectus relating to his Registrable Shares is required to be delivered
under the Securities Act, of the happening of any event as a result of
which such prospectus contains an untrue statement of a material fact or
omits any material fact necessary to make the statements therein not
misleading, and, at the request of any such selling Investor, prepare a
supplement or amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Shares, such prospectus will not
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(f) Cause all such Registrable Shares to be listed on or included
in each securities exchange or quotation system on which similar securities
issued by the Company are then listed;
(g) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make generally available to its
stockholders, in each case as soon as practicable, but not later than 30
days after the close of the period covered thereby an earnings statement of
the Company which will satisfy the provisions of Section 11(a) of the
Securities Act;
(h) The Company shall cooperate with each Investor and each
underwriter participating in the disposition of Registrable Shares and
their respective counsel in connection with (i) any filings required to be
made with the National Association of Securities Dealers, Inc. and (ii) any
20
due diligence investigation reasonably requested by the selling Investors
and the underwriters in connection with a public offering of Registrable
Shares;
(i) The Company shall, during the period when the Prospectus is
required to be delivered under the Securities Act, promptly file all
documents required to be filed with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act;
(j) The Company shall appoint a transfer agent and registrar for
all Registrable Shares covered by a Registration Statement not later than
the effective date of such Registration Statement; and
(k) In connection with an underwritten offering, the Company will
participate, to the extent reasonably requested by the managing underwriter
for the offering or the Investors, in efforts to sell the securities under
the offering (including without limitation, participating in "road show"
meetings with prospective investors) that would be customary in a primary
offering of equity securities of the Company.
Section 4.5. Information about Holders. Each holder of Registrable
Shares shall (a) furnish to the Company such information regarding such holder
(including a statement as to whether such holder believes or has reason to
believe that the Company is in default under any of its agreements with such
holder) and the distribution proposed by such holder as the Company may request
in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement, and (b) with respect
to any underwritten public offering, enter into any customary underwriting
agreement required by the proposed underwriter for the selling Investors, if
any.
Section 4.6. Indemnification; Contribution.
(a) Incident to any registration statement referred to in this
Article IV, and subject to applicable law, the Company will indemnify and
hold harmless each underwriter or Investor who offers or sells any such
Registrable Shares in connection with such registration statement (a
"Selling Stockholder") (and in each case its partners (including partners
of partners and stockholders of any such partners) and directors, officers,
employees and agents of any of them) and each person who controls any of
them within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act (a "Controlling Person"), from and against any and all
losses, claims, damages, expenses and liabilities, joint or several
(including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they, or any of them, may
become subject under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities arise out of or are based on
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement (including any related preliminary
or definitive prospectus, or any amendment or supplement to such
registration statement or prospectus), (ii) any omission or alleged
21
omission to state in such document a material fact required to be stated in
it or necessary to make the statements in it not misleading, or (iii) any
violation by the Company of the Securities Act, any state securities or
"blue sky" laws or any rule or regulation thereunder in connection with
such registration; provided, however, that the Company will not be liable
to the extent that such loss, claim, damage, expense or liability arises
from and is based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with
information furnished in writing to the Company by such underwriter,
Selling Stockholder or Controlling Person expressly for use in such
registration statement or any willful or knowing violation of applicable
securities laws. With respect to such untrue statement or omission or
alleged untrue statement or omission in the information furnished in
writing to the Company by such Selling Stockholder expressly for use in
such registration statement, such Selling Stockholder will indemnify and
hold harmless each underwriter, the Company (including its directors,
officers, employees and agents), each Investor (including its partners
(including partners of partners and stockholders of such partners) and
directors, officers, employees and agents of any of them) so registered,
and each person who controls any of them within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, from and against
any and all losses, claims, damages, expenses and liabilities, joint or
several, to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise to the same extent provided in the
immediately preceding sentence. In no event, however, shall the liability
of a Selling Stockholder for indemnification under this Section 4.6(a) in
its capacity as such (and not in its capacity as an officer or director of
the Company) exceed the lesser of (i) that proportion of the total of such
losses, claims, damages or liabilities indemnified against equal to the
proportion of the total securities sold under such registration statement
which is being sold by such Selling Stockholder or (ii) the proceeds
received by such Selling Stockholder from its sale of Registrable Shares
under such registration statement.
(b) If the indemnification provided for in Section 4.6(a) above
for any reason is held by a court of competent jurisdiction to be
unavailable to an indemnified party in respect of any losses, claims,
damages, expenses or liabilities referred to therein, then each
indemnifying party under this Section 4.6, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, expenses or liabilities (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company, the indemnified
party, the other Selling Stockholders and the underwriters from the
offering of the Registrable Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company, the other
Selling Stockholders and the underwriters in connection with the statements
or omissions which resulted in such losses, claims, damages, expenses or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company, the Selling Stockholders and the
underwriters shall be deemed to be in the same respective proportions that
22
the net proceeds from the offering (before deducting expenses) received by
the Company and the Selling Stockholders and the underwriting discount
received by the underwriters, in each case as set forth in the table on the
cover page of the applicable prospectus, bear to the aggregate public
offering price of the Registrable Shares. The relative fault of the
Company, the Selling Stockholders and the underwriters shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, the Selling
Stockholders or the underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Selling Stockholders, and the underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 4.6(b) were determined by pro rata or per capita allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. In no
event, however, shall a Selling Stockholder or any related indemnified
party be required to contribute any amount under this Section 4.6(b) in
excess of the lesser of (i) that proportion of the total of such losses,
claims, damages or liabilities indemnified against equal to the proportion
of the total Registrable Shares sold under such registration statement
which are being sold by such Selling Stockholder or (ii) the proceeds
received by such Selling Stockholder from its sale of Registrable Shares
under such registration statement. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not found
guilty of such fraudulent misrepresentation.
(c) The amount paid by an indemnifying party or payable to an
indemnified party as a result of the losses, claims, damages and
liabilities referred to in this Section 4.6 shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim, payable as the same
are incurred. The indemnification and contribution provided for in this
Section 4.6 will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified parties or any
officer, director, employee, agent or controlling person of the indemnified
parties.
(d) Any person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification, but the failure to do so shall
not relieve the indemnifying party from any liability, except to the extent
it is actually prejudiced by the failure or delay in giving such notice,
and (ii) unless in such indemnified party's reasonable judgment a conflict
of interest between such indemnified and indemnifying parties may exist
with respect to such claim, permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party will
not be subject to any liability for any settlement made by the indemnified
party without its consent (but such consent will not be unreasonably
23
withheld). No indemnifying party shall, without the prior written consent
of the indemnified parties (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, suit or proceeding
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding. An
indemnifying party who is not entitled to, or elects not to, assume the
defense of a claim will not be obligated to pay the fees and expenses of
more than one counsel for all parties indemnified by such indemnifying
party with respect to such claim, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such claim.
Section 4.7. Rule 144 Requirements. If the Company becomes subject to
the reporting requirements of either Section 13 or 15(d) of the Exchange Act,
the Company will use its best efforts thereafter to file with the Commission
such information as is specified under either of said Sections for so long as
any of the Investors hold any Registrable Shares; and in such event, the Company
shall use its best efforts to take all action as may be required as a condition
to the availability of Rule 144 under the Securities Act (or any successor or
similar exemptive rules hereafter in effect). The Company shall furnish to any
holder of Registrable Shares upon request a written statement executed by the
Company as to the steps it has taken to comply with the current public
information requirement of Rule 144 or such successor rules.
Section 4.8. Market Stand-Off. Each Investor agrees, if requested by
the Company and an underwriter of Registrable Shares of the Company, not to sell
or otherwise transfer or dispose of any Shares held by it for such period, not
to exceed 180 days following the effective date of any registration statement of
the Company filed under the Securities Act with respect to an IPO (or 90 days
with respect to any subsequent underwritten public offering following the IPO)
as the Company or such underwriter shall specify reasonably and in good faith.
Section 4.9. Transfer of Registration Rights. Subject to Section 6.11,
the registration rights and related obligations under this Article IV of the
Investors with respect to their Registrable Shares may be assigned to any
Transferee of Registrable Shares held by them, and upon such Transfer, the
relevant Transferee shall be deemed to be included within the definition of an
Investor.
ARTICLE V ELECTION OF DIRECTORS OF THE COMPANY
Section 5.1. Voting of Shares for Election of Directors of the
Company. With respect to each election or removal of members of the Board of
Directors of the Company (including, without limitation, any replacement
members), whether at an annual or special meeting of stockholders (which special
meeting may be called, solely for purposes specified under this Section 5.1, by
20% in interest of the Investors) or by written consent of stockholders, each of
the parties to this Agreement (including all Stockholders and Permitted
Transferees) agrees to vote his, her or its Shares (and any Shares over which
he, she or it exercises voting control) and to take such other action as may be
necessary to fix the number of Directors of the Company at seven (7) and to
elect as Directors of the Company and to keep in office as such, the persons
selected as follows: (a) two (2) persons designated by a majority in interest of
the Founding Investors; (b) one (1) person designated by the Alta Series A
Investors or any Transferee of a majority of the shares of Series A Preferred
Stock issued to the Alta Series A Investors under the Series A Stock Purchase
Agreement or the Company's Amended and Restated Certificate of Incorporation;
(c) one (1) person designated by the Spectrum Investors or any Transferee of a
majority of the shares of Series A Preferred Stock issued to the Spectrum
Investors under the Series A Stock Purchase Agreement or the Company's Amended
and Restated Certificate of Incorporation; (d) one (1) person designated by the
24
BancBoston Series A Investor or any Transferee of a majority of the shares of
Series A Preferred Stock issued to the BancBoston Series A Investor under the
Series A Stock Purchase Agreement or the Company's Amended and Restated
Certificate of Incorporation; (e) one (1) person designated by the Norwest
Investor or any Transferee of a majority of the shares of Series B Preferred
Stock issued to the Norwest Investor under the Stock Purchase Agreement, upon
conversion of the Series B Convertible Notes or under the Company's Amended and
Restated Certificate of Incorporation; and (f) one (1) person designated by the
HarbourVest Investor or any Transferee of a majority of the shares of Series B
Preferred Stock issued to the HarbourVest Investor under the Stock Purchase
Agreement, upon conversion of the Series B Convertible Notes or under the
Company's Amended and Restated Certificate of Incorporation; provided, however,
that if any person designated by any of the Outside Investors is not an
Affiliate of an Outside Investor, such person shall be reasonably acceptable to
a majority in interest of the Founding Investors. Each of the Outside Investors,
the Stockholders and/or their Permitted Transferees, if any, further agrees to
vote his, her or its Shares (and any Shares over which he, she or it exercises
voting control) for the removal of any such designee upon the request of the
parties designating such designee, and for the election of a substitute designee
nominated by such parties upon request therefor.
Section 5.2. Committees of the Board. The Company and each of the
Outside Investors and Stockholders (including all Permitted Transferees) further
agrees to cause the Board of Directors to establish: (a) a Compensation
Committee (which shall be charged with exclusive authority over all compensation
and employment matters) and an Audit Committee (which shall be charged with
reviewing the Company's financial statements and accounting practices),
consisting in each case of six (6) Directors, five (5) of whom shall be the
directors designated by the specified Outside Investors pursuant to Section 5.1
above and one (1) of whom shall be designated by the Founding Investors; and (b)
an Executive Committee (which shall be charged with such matters as shall be
approved by at least five of the seven members of the Company's Board of
Directors (including at least two Series A Outside Investor Representatives (as
defined in the Stock Purchase Agreement) and at least one Series B Outside
Investor Representative (as defined in the Stock Purchase Agreement)) consisting
of one director designated by agreement among the Alta Series A Investors, the
Spectrum Investors and the BancBoston Series A Investor (or, in each case, any
Transferee of a majority of the shares of Series A Preferred Stock issued to
such Investor or Investors under the Series A Stock Purchase Agreement or the
Company's Amended and Restated Certificate of Incorporation); one director
designated by agreement between the Norwest Investor and the HarbourVest
Investor (or, in each case, any Transferee of a majority of the shares of Series
B Preferred Shares issued to such Investor under the Stock Purchase Agreement or
the Company's Amended and Restated Certificate of Incorporation); and two
management designees. Except for the foregoing committees or as otherwise
contemplated by this Agreement, the Company shall not permit the Board of
Directors to create any other committees or to delegate its authority to any
other Persons or groups.
Section 5.3. Vacancies. Each of the Outside Investors, Stockholders
and/or their Permitted Transferees, if any, agrees to vote his, her or its
Shares (and any Shares over which he, she or it exercises voting control), to
the extent required by Section 5.1, in such manner as shall be necessary or
appropriate so as to ensure that any vacancy occurring for any reason in the
Board of Directors of the Company held by designees of parties hereto shall be
25
filled only by an individual who (a) is nominated directly or indirectly by the
party or parties that nominated directly or indirectly the director whose
departure created the vacancy, and that remains entitled at the time such
vacancy is filled to nominate directly or indirectly and have elected the
director who had held such directorship before such vacancy arose and (b) causes
the requirements described in Section 5.1 relating to the composition of the
Company's Board of Directors to be satisfied.
Section 5.4. Removal. The removal from the Board of Directors (with or
without cause) of any representative designated hereunder by an Outside Investor
or the Founding Investors shall be at such Outside Investor's or the Founding
Investors' request, respectively, but only upon such written request and under
no other circumstances (in the case of any Outside Investor, determined by such
Outside Investor, and in the case of the Founding Investors, determined by the
vote of a majority in interest of the Founding Investors).
Section 5.5. No Waiver. Any failure by any of the parties hereto to
fully exercise their rights to designate one or more Directors under this
Article V at any time shall not be construed to waive or limit their rights to
designate such Director(s) hereunder at any time thereafter.
Section 5.6. Assignment. Each of the Outside Investors and
Stockholders agrees, as a condition to any transfer of its shares, to cause the
transferee to agree to the provisions of this Article V, whereupon such
transferee shall be subject to the provisions hereof.
Section 5.7. Board of Directors of Subsidiary. Each of the Outside
Investors and Stockholders agrees, with respect to the composition, election,
removal and other considerations with respect to the Board of Directors of the
Company's subsidiaries, to cause the Company to vote, and the Company hereby
agrees to vote, its shares of capital stock of such subsidiary in a manner
consistent with and identical to the provisions set forth above in this Article
V.
Section 5.8. Observer Rights. For so long as any Outside Investor does
not have a representative serving on the Board of Directors pursuant to Section
5.1 hereof or such representative is unable to attend a meeting of the Board of
Directors or any of its committees, such Investor (or an Affiliate thereof)
shall be entitled to notice of and to have one representative (an "Observer")
attend, at its own expense, such meetings of the Board of Directors or any of
its committees; provided, however, that any such Observer (i) shall not be
entitled to participate in the discussions, deliberations or voting of the Board
of Directors or such committees and (ii) shall be excluded from any meetings or
deliberations if the Board of Directors reasonably determines that the inclusion
of such Observer might compromise or waive the attorney-client privilege for any
material matters discussed therein.
Section 5.9. Term. This Article V shall remain in effect until the
closing of a Qualified Public Offering (provided such termination of
effectiveness shall apply only in respect of each series of Preferred Stock as
to which an offering constitutes a Qualified Public Offering) or the Sale of the
Company or, if sooner, the latest date after the date hereof permitted by law.
ARTICLE VI MISCELLANEOUS PROVISIONS
Section 6.1. Survival of Representations and Covenants. Each of the
parties hereto agrees that each representation, warranty, covenant and agreement
made by each of them in this Agreement or in any certificate, instrument or
other document delivered pursuant to this Agreement is material, shall be deemed
26
to have been relied upon by the other parties and shall remain operative and in
full force and effect after the date hereof regardless of any investigation.
This Agreement shall not be construed so as to confer any right or benefit upon
any Person other than the parties hereto and their respective successors and
permitted assigns to the extent contemplated herein.
Section 6.2. Legend on Securities. The Company, the Outside Investors
and the Stockholders acknowledge and agree that the following legend shall be
typed on each certificate evidencing any of the securities subject to this
Agreement held at any time by any of the Outside Investors, Stockholders or
their Permitted Transferees:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT PURSUANT TO (1) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT OR
(2) AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO THE
DISPOSITION OF SECURITIES. THESE SECURITIES ARE ALSO SUBJECT TO THE PROVISIONS
OF A CERTAIN STOCKHOLDERS' AGREEMENT, DATED AS OF NOVEMBER 24, 1997, INCLUDING
CERTAIN RESTRICTIONS ON TRANSFER SET FORTH THEREIN. A COMPLETE AND CORRECT COPY
OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Section 6.3. Amendment and Waiver. Any party may waive any provision
hereof intended for its benefit in writing. No failure or delay on the part of
any party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof. The remedies provided for herein are cumulative and
are not exclusive of any remedies that may be available to any party hereto at
law or in equity or otherwise. This Agreement may be amended with the prior
written consent of the Company, a majority in interest of the Founding Investors
and fifty-eight percent in interest of each of the Series A Outside Investors
and the Series B Outside Investors; provided, however, that any amendment which
directly, materially and adversely affects any right specifically granted to a
particular Series A Outside Investor, Series B Outside Investor or Stockholder
in a manner different than other Series A Outside Investors, Series B Outside
Investors or Stockholders, respectively, shall not be effective unless such
Person has consented to that amendment. All actions by the Company hereunder
shall be taken by or upon the direction of a majority of the Directors
designated, from time to time, pursuant to Article V hereof.
Section 6.4. Notices. All notices and other communications provided
for herein shall be in writing and shall be deemed to have been duly given,
delivered and received (a) if delivered personally or (b) if sent by telex or
facsimile, registered or certified mail (return receipt requested) postage
prepaid, or by courier guaranteeing next day delivery, in each case to the party
to whom it is directed at the following addresses (or at such other address for
any party as shall be specified by notice given in accordance with the
provisions hereof, provided that notices of a change of address shall be
27
effective only upon receipt thereof). Notices delivered personally shall be
effective on the day so delivered, notices sent by registered or certified mail
shall be effective three days after mailing, notices sent by telex shall be
effective when answered back, notices sent by facsimile shall be effective when
receipt is acknowledged, and notices sent by courier guaranteeing next day
delivery shall be effective on the earlier of the second business day after
timely delivery to the courier or the day of actual delivery by the courier:
(a) if to the Company:
Golden Sky Holdings, Inc.
605 W. 47th Street
Suite 300
Kansas City, Missouri 64112
Facsimile: (816) 753-5595
Attention: Rodney A. Weary, President
with a copy to:
Reboul, MacMurray, Hewitt,
Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Facsimile: (212) 841-5725
Attention: Karen C. Wiedemann, Esq.
and to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Facsimile: (617) 523-1231
Attention: John J. Egan, Esq.
28
(b) if to the Founding Investors:
Rodney A. Weary
c/o Golden Sky Systems, Inc.
605 W. 47th Street
Suite 300
Kansas City, Missouri 64112
Facsimile: (816) 753-5595
with a copy to:
Reboul, MacMurray, Hewitt,
Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Facsimile: (212) 841-5725
Attention: Karen C. Wiedemann, Esq.
(c) if to the Alta Series A Investors or the Alta Series B Investors:
Alta Subordinated Debt
Partners III, L.P.
Alta Communications VI, L.P.
Alta-Comm S by S, LLC
c/o Alta Communications, Inc.
One Post Office Square
Boston, Massachusetts 02109
Facsimile: (617) 482-1944
Attention: Robert F. Benbow
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Facsimile: (617) 523-1231
Attention: John J. Egan, Esq.
(d) if to the Spectrum Investors:
Spectrum Equity Investors, L.P.
125 High Street, Suite 2600
Boston, Massachusetts 02110
Facsimile: (617) 464-4601
Attention: William P. Collatos
29
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Facsimile: (617) 523-1231
Attention: John J. Egan, Esq.
if to the Lion/Westpool Investors:
Lion Investments Limited
Carlton House
33 Robert Adam Street
London W1M 5AH
United Kingdom
Attention: Iain MacPhail
(e) if to the BancBoston Series A Investor or the BancBoston Series B
Investor:
BancBoston Ventures, Inc.
175 Federal Street, 10th Floor
Boston, Massachusetts 02110
Facsimile: (617) 434-1153
Attention: William O. Charman
with a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Facsimile: (617) 951-7050
Attention: Winthrop G. Minot, Esq.
(f) if to the Millennial Series A Investor or the Millennial Series B
Investor:
The Millennial Fund
c/o The Centennial Funds
1428 15th Street
Denver, Colorado 80202
Facsimile: (303) 405-7575
Attention: G. Jackson Tankersley, Jr.
30
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Facsimile: (617) 523-1231
Attention: John J. Egan, Esq.
(g) if to the Builder Series A Investor or the Builder Series B
Investor:
Builder Investment Partnership
Five Peidmont Center, Suite 700
Atlanta, Georgia 30305
Facsimile: (404) 237-3168
Attention: Allen A. Builder
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Facsimile: (617) 523-1231
Attention: John J. Egan, Esq.
(h) if to the Norwest Investor:
Norwest Equity Partners V
c/o Norwest Venture Capital Management, Inc.
2800 Piper Jaffray Tower
222 South Ninth Street
Minneapolis, MN 55402
Facsimile: (612) 667-1660
Attention: Erik Torgerson
with a copy to:
Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-3901
Facsimile: (612) 336-3026
Attention: David B. Miller
31
(i) if to the HarbourVest Investor:
Hancock Venture Partners V - Direct Fund L.P.
c/o HarbourVest Partners, LLC
One Financial Center
44th Floor
Boston, MA 02111
Facsimile: (617) 350-0305
Attention: Bill Johnston
with a copy to:
Debevoise & Plimpton
875 3rd Avenue
New York, NY 10022
Facsimile: (212) 909-6836
Attention: David Schwarz
(j) if to the General Electric Investor:
GE Capital Services
Structured Finance Group
120 Long Ridge Road
3rd Floor
Stamford, CT 06927
Attention: Peter Foley
(k) if to Other Stockholders:
The address set forth in the Joinder Agreement
executed by any such Other Stockholder at the time
he/she becomes an Other Stockholder.
Section 6.5. Headings. The Article and Section headings used or
contained in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
Section 6.6. Counterparts. This Agreement may be executed in one or
more counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same agreement.
Section 6.7. Remedies; Severability. It is specifically understood and
agreed that any breach of the provisions of this Agreement by any Person subject
hereto will result in irreparable injury to the other parties hereto, that the
remedy at law alone will be an inadequate remedy for such breach, and that, in
addition to any other legal or equitable remedies which they may have, such
other parties may enforce their respective rights by actions for specific
performance (to the extent permitted by law) and the Company may refuse to
32
recognize any unauthorized Transferee as one of its stockholders for any
purpose, including, without limitation, for purposes of dividend and voting
rights, until the relevant party or parties have complied with all applicable
provisions of this Agreement.
In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
Section 6.8. Entire Agreement. This Agreement, together with the Stock
Purchase Agreement and the Series A Stock Purchase Agreement (as defined in, and
to the extent not terminated by, the Stock Purchase Agreement) and the other
agreements specifically contemplated hereby and thereby, is intended by the
parties as a final expression of their agreement and intended to be complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. This Agreement and
the Stock Purchase Agreement (and the Series A Stock Purchase Agreement to the
extent not terminated by the Stock Purchase Agreement) and other agreements
contemplated hereby and thereby (including the exhibits hereto and thereto)
supersede all prior agreements and understandings between the parties with
respect to such subject matter. Without limiting the generality of the
foregoing, the parties hereto which were also parties to the Series A
Stockholders' Agreement hereby terminate such agreement, which agreement shall
be of no further force and effect.
Section 6.9. Adjustments. All references to share prices and amounts
herein shall be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations and similar changes affecting the capital stock of the
Company.
Section 6.10. Law Governing. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of New York
(without giving effect to principles of conflicts of law), except that any
Delaware corporate law matters relating to the Company shall be construed and
enforced in accordance with and governed by the Delaware General Corporation Law
(without giving effect to principles of conflicts of law). Each party also
waives trial by jury in any action relating to this Agreement.
Section 6.11. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
parties hereto, but may not be assigned by any Stockholder without the prior
written consent of fifty-eight percent in interest of each of the Series A
Outside Investors and the Outside Investors, and without such prior written
consent any attempted transfer shall be null and void.
[Remainder of Page Intentionally Left Blank]
33
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
GOLDEN SKY HOLDINGS, INC.
By: /s/ Rodney A. Weary
-------------------------
Name: Rodney A. Weary
Title: Chief Executive Officer
ALTA SERIES A INVESTORS AND
ALTA SERIES B INVESTORS:
ALTA SUBORDINATED DEBT
PARTNERS III, L.P.
By: Alta Subordinated Debt
Management III, L.P.
By: /s/ Eileen McCarthy
--------------------------
Name: Eileen McCarthy
Title: General Partner
ALTA COMMUNICATIONS VI, L.P.
By: Alta Communications VI Management
Partners, L.P.
By: /s/ Eileen McCarthy
--------------------------
Name: Eileen McCarthy
Title: General Partner
34
ALTA-COMM S BY S, LLC
By: /s/ Eileen McCarthy
--------------------------
Name: Eileen McCarthy
Title: Member
SPECTRUM INVESTORS:
SPECTRUM EQUITY INVESTORS L.P.
By: Spectrum Equity Associates L.P.,
General Partner
By: /s/ William P. Collatos
--------------------------
Name: William P. Collatos
Title: General Partner
SPECTRUM EQUITY
INVESTORS II, L.P.
By: Spectrum Equity Associates II, L.P.,
General Partner
By: /s/ William P. Collatos
--------------------------
Name: William P. Collatos
Title: General Partner
LION/WESTPOOL INVESTORS:
LION INVESTMENTS LIMITED
By: /s/ Patrick Raynor
--------------------------
Name: Patrick
Title: Director
35
WESTPOOL INVESTMENT TRUST
By: /s/ Patrick Raynor
--------------------------
Name: Patrick
Title: Director
WEBER FAMILY TRUST dated 1/6/89
By: /s/ E.M. Weber
--------------------------
Name: E.M. Weber
Title: Trustee
BANCBOSTON VENTURES INC.
By: /s/ William O. Charman
--------------------------
Name: William O. Charman
Title: Vice President
36
MILLENNIAL SERIES A INVESTOR AND
MILLENIAL SERIES B INVESTOR:
THE MILLENNIAL FUND
By: /s/ Jack Tankersley, Jr.
--------------------------
Name: G. Jackson Tankersley, Jr.
BUILDER SERIES A INVESTOR AND
BUILDER SERIES B INVESTOR:
BUILDER INVESTMENT
PARTNERSHIP
By: /s/ Allen A. Builder
--------------------------
Name: Allen A. Builder
Title: General Partner
NORWEST EQUITY PARTNERS V, A
MINNESOTA LIMITED PARTNERSHIP
By: Itasca Partners V, L.L.P.
General Partner
By: /s/ Eric Torgerson
--------------------------
Name: Eric Torgerson
Title: Partner
37
HANCOCK VENTURE PARTNERS
V-DIRECT FUND L.P.
By: HVP V-Direct Associates, LLC
By: HarbourVest Partners, LLC
By: /s/ WIlliam A. Johnson
--------------------------
Name: William A. Johnson
Title: Partner
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Molly S. Fergusson
--------------------------
Name: Molly S. Fergusson
Title: Manager, Operations
FOUNDING INVESTORS:
Rodney A. Weary Revocable Trust Dated
10/25/95
By: /s/ Rodney A. Weary
--------------------------
Name: Rodney A. Weary
Title: Trustee
F.G. Weary III Revocable Trust
By: /s/ F.G. Weary
--------------------------
Name: F.G. Weary
Title: Trustee
38
Sarah Weary Revocable Trust
By: /s/ Sarah Weary
--------------------------
Name: Sarah Weary
Title: Trsutee
/s/ Robert B. Liepold
-----------------------------
Robert B. Liepold
/s/ Ron D. Foster
-----------------------------
Ron D. Foster
/s/ Jo Ellen Linn
-----------------------------
Jo Ellen Linn
/s/ Robert Weaver
-----------------------------
Robert Weaver
/s/ Donald Tucker
-----------------------------
Donald Tucker
/s/ Barbara Tucker
-----------------------------
Barbara Tucker
/s/ Robert H. Weaver
-----------------------------
Robert H. Weaver
/s/ Jeff K. Ramsey
-----------------------------
Jeff K. Ramsey
/s/ Rebecca D. Ramsey
-----------------------------
Rebecca D. Ramsey
39
A Delaware Trust
By: /s/ Arthur B. Ramsey
--------------------------
Arthur B. Ramsey, Trustee
Ramsey Trust Dated 12/14/95
By: /s/ Arthur B. Ramsey
--------------------------
Arthur Ramsey, Trustee
By: /s/ Lyle Ramsey
--------------------------
Lyle Ramsey, Trustee
/s/ Paul Spurgeon
-----------------------------
Paul Spurgeon
/s/ Andy O'Pry, Sr.
-----------------------------
Andy O'Pry, Sr.
/s/ Jane O'Pry
-----------------------------
Jane O'Pry
/s/ Robert H. Weisert
-----------------------------
Robert Weisert
/s/ T.P. Dewhirst
-----------------------------
Tim Dewhirst
/s/ Richard A. Nerby
-----------------------------
Rick Nerby
/s/ John M. Burros
-----------------------------
Michael Burros
/s/ Shawn M. Richardson
-----------------------------
Shawn Richardson
/s/ Jacob Osborne
-----------------------------
Jacob Osborne
40
/s/ Clinton Noren
-----------------------------
Clint Noren
/s/ Sandra Noren
-----------------------------
Sandra Noren
/s/ Andy O'Pry, Jr.
-----------------------------
Andy O'Pry, Jr.
/s/ Cory Duffy
-----------------------------
Cory Duffy
/s/ Eric Norgate
-----------------------------
Eric Norgate
/s/ Harold Poulsen
------------------------------------
Harold Poulsen
/s/ Carmen Poulsen
------------------------------------
Carmen Poulsen
41
/s/ J. Mark Poulsen
------------------------------------
J. Mark Poulsen
/s/ Randy Robertson
------------------------------------
Randy Robertson
/s/ Mark Robertson
------------------------------------
Mark Robertson
/s/ Shirley Fjield
------------------------------------
Shirley Fjield
/s/ Jack S. Ramirez
------------------------------------
Jack S. Ramirez
DAVID GARLAND O'PRY
IRREVOCABLE TRUST
By: /s/ Andrew W. O'Pry. Sr.
---------------------------
Name:Andrew W. O'Pry. Sr.
Title: Trustee
/s/ J.W. Braman
-----------------------------------
J.W. Braman
/s/ D.H. Braman
-----------------------------------
D.H. Braman
KATE O'CONNOR TRUST FOR
THOMAS EDWARD BRAMAN
By: /s/ Kate O' Connor
---------------------------
Name: Kate O' Connor
Title: Trustee
42
EXHIBIT A
Form of Joinder Agreement
The undersigned hereby agrees, effective as of the date hereof, to
become a party to that certain Stockholders' Agreement (the "Agreement") dated
as of November __, 1997 by and among Golden Sky Holdings, Inc. (the "Company")
and the parties named therein and for all purposes of the Agreement, the
undersigned shall be included within the term ["Investor"] ["Other Stockholder"]
and ["Stockholder"] (each as defined in the Agreement). As of the date hereof
the undersigned makes each of the representations and warranties set forth in
Section 2.1 of the Agreement. The address and facsimile number to which notices
may be sent to the undersigned is as follows:___________________________________
Facsimile No.____________________.
------------------------------
[NAME OF UNDERSIGNED]