Exhibit 10.7

 

 

STOCKHOLDERS AGREEMENT

of

PANAMSAT CORPORATION

 

dated as of August 20, 2004

 

 

 

 

 

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TABLE OF CONTENTS

Page

RECITALS

 

 

 

 

 

ARTICLE I DEFINITIONS

 

 

 

SECTION 1.1.   Certain Defined Terms

 

 

 

SECTION 1.2.   Other Definitional Provisions

 

 

 

 

 

ARTICLE II CORPORATE GOVERNANCE

 

 

 

SECTION 2.1.   Board Representation

 

 

 

SECTION 2.2.   Committees

 

 

 

SECTION 2.3.   Consent Rights

 

 

 

SECTION 2.4.   Available Financial Information

 

 

 

SECTION 2.5.   Access

 

 

 

SECTION 2.6.   Termination of Rights

 

 

 

SECTION 2.7.   Corporate Opportunities

 

 

 

SECTION 2.8.   Non-Competition

 

 

 

 

 

ARTICLE III TRANSFERS

 

 

 

SECTION 3.1.   Rights and Obligations of Transferees

 

 

 

SECTION 3.2.   Transfer Restrictions

 

 

 

SECTION 3.3.   Right of First Offer

 

 

 

SECTION 3.4.   Right of Co-Sale on Transfers by Stockholders

 

 

 

SECTION 3.5.   Drag Along Right

 

 

 

SECTION 3.6.   Void Transfers

 

 

 

 

 

ARTICLE IV EQUITY PURCHASE RIGHTS

 

 

 

SECTION 4.1.   Equity Purchase Rights

 

 

 

 

 

 

ARTICLE V MISCELLANEOUS

 

 

 

SECTION 5.1.   Stockholder Indemnification; Reimbursement of Expenses

 

 

 

SECTION 5.2.   Termination

 

 

 

SECTION 5.3.   Amendments and Waivers

 

 

 

SECTION 5.4.   Successors, Assigns and Transferees

 

 

 

SECTION 5.5.   Legend

 

 

 

SECTION 5.6.   Notices

 

 

 

SECTION 5.7.   Further Assurances

 

 

 

SECTION 5.8.   Entire Agreement

 

 

 

SECTION 5.9.   Restrictions on Other Agreements; Bylaws

 

 

 

SECTION 5.10.   Delays or Omissions

 

 

 

SECTION 5.11.   Governing Law; Jurisdiction; Waiver of Jury Trial

 

 

 

SECTION 5.12.   Severability

 

 

 

SECTION 5.13.   Enforcement

 

 

 

SECTION 5.14.   Titles and Subtitles

 

 

 

SECTION 5.15.   No Recourse

 

 

 

SECTION 5.16.   Counterparts; Facsimile Signatures

 

 

 

i

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FSS Operators

 

 

 

 

Exhibits

 

Exhibit A — Assignment and Assumption Agreement

 

 

ii

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THIS STOCKHOLDERS AGREEMENT (this “Agreement”) is entered as of August 20, 2004,
among PANAMSAT CORPORATION, a Delaware corporation (the “Company”), and each of
the Stockholders (as defined below) and each of the other parties signatory
hereto.

RECITALS

WHEREAS, the Company has entered into that certain Transaction Agreement, dated
as of April 20, 2004 (the “Transaction Agreement”), by and among Constellation,
LLC, a Delaware limited liability company (“Constellation”), the Company, The
DIRECTV Group, Inc., a Delaware corporation (“Parent”), and PAS Merger Sub,
Inc., a Delaware corporation (“Merger Sub”), pursuant to which first, Merger Sub
will merge with and into the Company; second, following such merger, the Company
will repurchase from Parent a number of shares of common stock, par value $0.01
per share, of the Company (the “Common Stock”) owned by Parent; and, third,
following such repurchase Constellation will acquire from Parent all of the
outstanding shares of Common Stock held by Parent;

WHEREAS, on May 17, 2004, Constellation entered into letter agreements (each, a
“Commitment Letter”) with Carlyle PanAmSat I, L.L.C., and Carlyle PanAmSat II,
L.L.C. (together, “Carlyle”), on the one hand, and with PEP PAS, LLC and PEOP
PAS, LLC (together, “Providence”), on the other hand, pursuant to which
Constellation assigned to each of Carlyle and Providence the right under the
Transaction Agreement to purchase from Parent $149,520,733.93 million, for a
total of $299,041,467.86 million, of the shares of the Company Common Stock, at
the same price per share to be paid by Constellation at the Stock Purchase
Closing (as defined in the Transaction Agreement);

WHEREAS, following the Stock Purchase Closing, Constellation shall beneficially
own approximately 44% of the Common Stock, and Carlyle and Providence shall each
beneficially own approximately 27% of the Common Stock (each of Constellation,
Carlyle and Providence, a “Stockholder” and together, the “Stockholders”);

WHEREAS, each of the Stockholders desires to promote the interests of the
Company and the mutual interests of Stockholders by establishing herein certain
terms and conditions upon which the shares of Common Stock will be held,
including provisions restricting the transfer of shares of Common Stock, and
providing for certain other matters.

NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual
promises hereinafter set forth, the Company and the Stockholders hereby agree as
follows:

ARTICLE I

DEFINITIONS

SECTION 1.1.        Certain Defined Terms.  As used herein, the following terms
shall have the following meanings:

“Acceptance Notice” has the meaning assigned to such term in Section 3.3(b).

 

 

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“Affiliate” means, with respect to any Person, (i) any Person directly or
indirectly controlling, controlled by or under common control with such Person,
(ii) any Person directly or indirectly owning or controlling ten percent (10%)
or more of any class of outstanding equity securities of such Person or (iii)
any officer, director, general partner or trustee of any such Person described
in clause (i) or (ii).

“beneficial owner” or “beneficially own” has the meaning given such term in Rule
13d-3 under the Exchange Act and a Person’s beneficial ownership of Common Stock
or other Voting Securities of the Company shall be calculated in accordance with
the provisions of such Rule; provided, however, that for purposes of determining
beneficial ownership, (i) a Person shall be deemed to be the beneficial owner of
any security which may be acquired by such Person, whether within sixty (60)
days or thereafter, upon the conversion, exchange or exercise of any warrants,
options, rights or other securities and (ii) no Person shall be deemed to
beneficially own any security solely as a result of such Person’s execution of
this Agreement.

“Board” means the Board of Directors of the Company.

“Business Day” means any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by law to be closed in the City of New
York.

“Bylaws” means the Bylaws of the Company, as in effect on the date hereof and as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof, the terms of the Charter and the terms of
this Agreement.

“Carlyle” has the meaning assigned to such term in the recitals.

“Carlyle Designee” means any Director designated by Carlyle pursuant to Section
2.1(a) of this Agreement.

“Carlyle Group Designee” has the meaning assigned to such term in Section
2.1(a).

“Carlyle Fund” has the meaning assigned to such term in Section 2.1(a).

“Carlyle VCOC Designee” has the meaning assigned to such term in Section 2.1(a).

“CEO Designee” has the meaning assigned to such term in Section 2.1(a).

 “Change of Control” means (i) the sale of all or substantially all of the
assets of the Company to an Unaffiliated Person; (ii) a sale resulting in more
than 50% of the voting stock of the Company being held by an Unaffiliated
Person; (iii) a merger, consolidation, recapitalization or reorganization of the
Company with or into another Unaffiliated Person; if and only if any such event
listed in clauses (i) through (iii) above results in the inability the
Stockholders, or any member or members of the respective Stockholders, to
designate or elect a majority of the Board (or the board of directors of the
resulting entity or its parent company).  For purposes of this definition, the
term “Unaffiliated Person” means any Person or Group who is not (x) any of the
Stockholders or any member of the respective Stockholders, (y) an Affiliate

 

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of any of the Stockholders or any member of the respective Stockholders, or (z)
an entity in which any of the Stockholders, or any member of the respective
Stockholders holds, directly or indirectly, a majority of the economic interests
in such entity.

“Charter” means the Restated Certificate of Incorporation of the Company, as in
effect on the date hereof and as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
the terms of this Agreement.

“Common Stock” means the common stock, par value $0.01 per share, of the Company
and any securities issued in respect thereof, or in substitution therefor, in
connection with any stock split, dividend or combination, or any
reclassification, recapitalization, merger, consolidation, exchange or other
similar reorganization.

“Company Competitor” means any Person that is primarily engaged in any business
that directly or indirectly competes with the business of the Company in (i) the
sale or lease of, or the provision of satellite services via, transponder
capacity on satellites operating in geostationary earth orbit; or (ii) the
provision of telemetry, tracking and control services for such satellites and
for other satellites operating in geostationary earth orbit.

“Competing Action” has the meaning assigned to such term in Section 2.7.

“Competing Enterprise” has the meaning assigned to such term in Section 2.7.

“Constellation” has the meaning assigned to such term in the recitals.

“Constellation Designee” means any Director designated by Constellation pursuant
to Section 2.1(a) of this Agreement.

“control” (including the terms “controlled by” and “under common control with”),
with respect to the relationship between or among two or more Persons, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee or executor, by contract or
otherwise.

“Controlled Affiliate” means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, or (ii) any Person directly or indirectly owning or controlling an
amount of shares of any class of outstanding equity securities of such Person
sufficient to (or otherwise having the right to) elect a majority of the board
of directors or similar governing body of such Person.

“Co-Sale Participant” has the meaning assigned to such term in Section 3.4(a).

“Director” means any member of the Board.

“Drag Along Notice” has the meaning assigned to such term in Section 3.5(d).

“Drag Transaction” has the meaning assigned to such term in Section 3.5(b).

 

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“Equity Purchase Shares” has the meaning assigned to such term in
Section 4.1(a).

“Equity Securities” means any and all shares of Common Stock of the Company,
securities of the Company convertible into, or exchangeable or exercisable for,
such shares, and options, warrants or other rights to acquire such shares.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“Exempt Transaction” means any acquisition or disposition (whether through
merger, consolidation or otherwise) (i) which has a purchase price (including
any assumed indebtedness and valuing any non-cash consideration at its Fair
Market Value) of less than fifty million dollars ($50,000,000) and (ii) which,
together with all other Exempt Transactions after the Stock Purchase Closing
Date, has an aggregate purchase price (including any assumed indebtedness and
valuing any non-cash consideration at its Fair Market Value), of less than two
hundred million dollars ($200,000,000); provided that no transaction described
herein with any Affiliate of any Stockholder shall constitute an Exempt
Transaction.

“Exercising Stockholder” has the meaning assigned to such term in Section
4.1(d).

“Fair Market Value” means with respect to Common Stock (i) from and after the
consummation of an IPO, the average of the closing sale prices of shares on the
stock exchange or national market on which the shares are principally trading
for a period of 30 trading days ending on the date in question, or (ii) prior to
the consummation of an IPO, the fair market value of the shares as determined in
good faith by the Board; and with respect to any other non-cash consideration,
the fair market value of such non-cash consideration as determined in good
faith  by the Board.

“FCC” means the United States Federal Communications Commission.

“First Offer Price” has the meaning assigned to such term in Section 3.3(a).

“Fully-Diluted Basis” with respect to Common Stock or Voting Securities means
the number of shares of Common Stock or Voting Securities, as the case may be,
which are issued and outstanding or owned or held, as applicable, at the date of
determination plus the number of shares of Common Stock or Voting Securities, as
the case may be, issuable pursuant to any securities (other than, in the case of
Voting Securities, other Voting Securities that the initial Voting Securities
are convertible into or exchangeable or exercisable for), warrants, rights or
options then outstanding, convertible into or exchangeable or exercisable for
(whether or not subject to contingencies or passage of time, or both), Common
Stock or Voting Securities, as the case may be.

“GAAP” means generally accepted accounting principles, as in effect in the
United States of America from time to time.

 

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“Group” has the meaning assigned to such term in Section 13(d)(3) of the
Exchange Act.

“IPO” means an offering of Common Stock pursuant to a registration statement
filed in accordance with the Securities Act.

“Issuance Notice” has the meaning assigned to such term in Section 4.1(b).

“KKR Fund” has the meaning assigned to such term in Section 2.1(a).

“KKR Group Designee” has the meaning assigned to such term in Section 2.1(a).

“KKR VCOC Designee” has the meaning assigned to such term in Section 2.1(a).

“Losses” has the meaning assigned to such term in Section 5.1.

“New Securities” means shares of Equity Securities of the Company (other than
(i) options to purchase Common Stock and shares of Common Stock issued to
employees, officers or directors pursuant to any stock options, employee stock
purchase or similar equity-based plans approved by the Board and Common Stock
issued upon exercise of such options, and (ii) Equity Securities issued in
connection with any transaction approved pursuant to clauses (xii) or (xiii)(A)
of Section 2.3(a) or any Exempt Transactions).

“Non-Purchasing Stockholder” has the meaning assigned to such term in Section
4.1(d).

“Offer Notice” has the meaning assigned to such term in Section 3.3(a).

“Offered Securities” has the meaning assigned to such term in Section 3.3(a).

“Offering Holder” has the meaning assigned to such term in Section 3.3(a).

“Original Shares” shall mean, when used in reference to any one or more
Stockholders, the shares of Common Stock sold to such Stockholders pursuant to
the Transaction Agreement or a Commitment Letter, as applicable, or any shares
or other securities which such shares of Common Stock may have been converted
into or exchanged for in connection with any exchange, reclassification,
dividend, distribution, stock split, combination, subdivision, merger, spin-off,
re-capitalization, re-organization or similar transaction.

“Parent” has the meaning assigned to such term in the recitals.

“Permitted Transferee” shall mean (i) the owners of a Stockholder’s equity
interests receiving capital stock of the Company in connection with the
liquidation of, or a distribution with respect to an equity interest in, such
Stockholder; or (ii) an Affiliate (other than any “portfolio company” described
below) of a Stockholder; provided, however, that in both cases such Transferee
shall agree in a writing in the form attached as Exhibit A hereto to be bound by
and to comply with all applicable provisions of this Agreement; provided,
further, however, that in no event shall (A) the Company or any of its
Subsidiaries, (B) any “portfolio

 

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company” (as such term is customarily used among institutional investors) of any
Stockholder or any entity controlled by any portfolio company of any Stockholder
or (C) any Company Competitor (whether or not an Affiliate of the Transferring
Stockholder) constitute a “Permitted Transferee”.

“Person” means any individual, corporation, limited liability company, limited
or general partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivisions
thereof or any Group comprised of two or more of the foregoing.

“Pro Rata Portion” means:

(I)            FOR THE PURPOSES OF ARTICLE IV, WITH RESPECT TO ANY STOCKHOLDER,
ON ANY ISSUANCE DATE FOR NEW SECURITIES, THE NUMBER OR AMOUNT OF NEW SECURITIES
EQUAL TO THE PRODUCT OF (I) THE TOTAL NUMBER OR AMOUNT OF NEW SECURITIES TO BE
ISSUED BY THE COMPANY ON SUCH DATE AND (II) THE FRACTION DETERMINED BY DIVIDING
(A) THE NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED BY SUCH STOCKHOLDER
AND ITS AFFILIATES IMMEDIATELY PRIOR TO SUCH ISSUANCE BY (B) THE TOTAL NUMBER OF
SHARES OF COMMON STOCK OUTSTANDING ON SUCH DATE IMMEDIATELY PRIOR TO SUCH
ISSUANCE ON A FULLY-DILUTED BASIS;

(II)           FOR THE PURPOSES OF SECTION 3.3, WITH RESPECT TO ANY ROFO
RECIPIENT, WITH RESPECT TO ANY PROPOSED TRANSFER OF OFFERED SECURITIES, ON THE
APPLICABLE TRANSFER DATE, THE NUMBER OR AMOUNT OF OFFERED SECURITIES EQUAL TO
THE PRODUCT OF (I) THE TOTAL NUMBER OR AMOUNT OF OFFERED SECURITIES TO BE
OFFERED TO THE ROFO RECIPIENTS AND (II) THE FRACTION DETERMINED BY DIVIDING (A)
THE NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED BY SUCH ROFO RECIPIENT
AND ITS AFFILIATES BY (B) THE TOTAL NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OWNED BY ALL OF THE ROFO RECIPIENTS AND THEIR AFFILIATES AS OF SUCH
DATE; PROVIDED, HOWEVER, THAT FOR THE PURPOSE OF DETERMINING THE PRO RATA
PORTION OF THE SECTION 3.3 NON-ELECTING SHARES REFERRED TO IN THE THIRD SENTENCE
OF SECTION 3.3(C), (1) THE REFERENCE TO “OFFERED SECURITIES” IN CLAUSE (I) OF
THIS SUBSECTION SHALL BE A REFERENCE TO “SECTION 3.3 NON-ELECTING SHARES” AND
(2) THE TOTAL NUMBER OF SHARES OF COMMON STOCK REFERRED TO IN CLAUSE (B) OF THIS
SUBSECTION (II) SHALL NOT INCLUDE THE COMMON STOCK OF THE HOLDER OF THE SECTION
3.3 NON-ELECTING SHARES; AND

(III)          SUBJECT TO ANY CO-SALE RIGHTS OF ANY MANAGEMENT STOCKHOLDER SET
FORTH IN ANY SALE PARTICIPATION AGREEMENT, FOR THE PURPOSES OF SECTION 3.4, WITH
RESPECT TO ANY CO-SALE PARTICIPANT, WITH RESPECT TO ANY PROPOSED TRANSFER OF
TRANSFERRED SECURITIES, ON THE APPLICABLE TRANSFER DATE, THE NUMBER OR AMOUNT OF
TRANSFERRED SECURITIES EQUAL TO THE PRODUCT OF (I) THE TOTAL NUMBER OR AMOUNT OF
TRANSFERRED SECURITIES TO BE TRANSFERRED TO THE PROPOSED TRANSFEREE AND (II) THE
FRACTION DETERMINED BY DIVIDING (A) THE NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OWNED BY SUCH CO-SALE PARTICIPANT AND ITS AFFILIATES BY (B) THE
TOTAL NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED BY ALL OF THE
STOCKHOLDERS AND THEIR AFFILIATES AS OF SUCH DATE; PROVIDED, HOWEVER, THAT FOR
THE PURPOSE OF DETERMINING THE PRO RATA PORTION OF THE SECTION 3.4 NON-ELECTING
SHARES REFERRED TO IN THE FIFTH SENTENCE OF SECTION 3.4(A), (1) THE REFERENCE TO
“TRANSFERRED SECURITIES” IN CLAUSE (I) OF THIS SUBSECTION SHALL BE A REFERENCE
TO “SECTION 3.4 NON-ELECTING SHARES” AND (2) THE TOTAL NUMBER OF SHARES OF
COMMON STOCK REFERRED TO IN

 

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CLAUSE (B) OF THIS SUBSECTION (III) SHALL NOT INCLUDE THE COMMON STOCK OF THE
TRANSFERRING STOCKHOLDER OR THE HOLDER OF THE SECTION 3.4 NON-ELECTING SHARES.

“Pro Rata Repurchase” has the meaning assigned to such term in clause (iv) of
Section 2.3(a).

“Providence” has the meaning assigned to such term in the recitals.

“Providence Designee” means any Director designated by Providence pursuant to
Section 2.1 of this Agreement.

“Providence VCOC Designee” has the meaning assigned to such term in Section
2.1(a).

“Registration Rights Agreement” means the Registration Rights Agreement, dated
as of the date hereof, among the Company and each of the Stockholders.

“Repurchase” has the meaning assigned to such term in Section 2.3(a)(iv).

“Required Directors” has the meaning assigned to such term in Section 2.3.

“Reserved Employee Shares” shall mean (i) shares of Common Stock reserved for
issuance upon the exercise of options outstanding as of the Stock Purchase
Closing Date under the PanAmSat 1997 Long-Term Incentive Plan, as amended, and
shares of Common Stock to be issued upon exercise of such options (as
appropriately adjusted for any stock dividends, combinations, splits or the
like) and (ii) additional options to purchase Common Stock (and shares of Common
Stock issuable upon the exercise thereof) to employees, officers, directors or
consultants pursuant to any stock option, employee stock purchase or similar
equity-based plans approved by the Board of Directors (as appropriately adjusted
for any subsequent stock dividends, combinations, splits or the like), including
the 2004 Stock Option Plan for Key Employees of PanAmSat Corporation and its
Subsidiaries.

“ROFO Recipients” has the meaning assigned to such term in Section 3.3(a).

“Section 3.3 Non-Electing Shares” has the meaning assigned to such term in
Section 3.3(c).

“Section 3.4 Non-Electing Shares” has the meaning assigned to such term in
Section 3.4(a).

“Section 3.5 Transferring Stockholder(s)” has the meaning assigned to such term
in Section 3.5(a).

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Selling Stockholders” has the meaning assigned to such term in Section 3.5(a).

 

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“Stockholder” has the meaning set forth in the recitals.

“Stockholder Designees” has the meaning assigned to such term in Section 2.1(a).

“Stockholder Indemnitee” has the meaning assigned to such term in Section 5.1.

“Stock Purchase Closing” means the closing of the purchase of the shares of
Parent by the Stockholders pursuant to the Transaction Agreement.

“Stock Purchase Closing Date” means August 20, 2004.

“Subsidiary” means (i) any corporation of which a majority of the securities
entitled to vote generally in the election of directors thereof, at the time as
of which any determination is being made, are owned by another entity, either
directly or indirectly, and (ii) any joint venture, general or limited
partnership, limited liability company or other legal entity in which an entity
is the record or beneficial owner, directly or indirectly, of a majority of the
voting interests or the general partner.

“Tax Separation Agreement” means the Tax Separation Agreement, dated April 20,
2004, by and between Parent and the Company.

“Transaction Agreement” has the meaning assigned to such term in the recitals.

“Transition Services Agreement” means the Transition Services Agreement, dated
April 20, 2004, by and between Parent, the Company and DIRECTV Operations, LLC,
a California limited liability corporation.

“Transfer” means, directly or indirectly, to sell, transfer, assign, pledge,
encumber, hypothecate or similarly dispose of, either voluntarily or
involuntarily, or to enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, assignment, pledge,
encumbrance, hypothecation or similar disposition of, any shares of Equity
Securities beneficially owned by a Person or any interest in any shares of
Equity Securities beneficially owned by a Person.

“Transferee” means any Person to whom any Stockholder or any Transferee thereof
Transfers Equity Securities of the Company in accordance with the terms hereof.

“Transfer Notice” has the meaning assigned to such term in Section 3.4(a).

“Transferred Securities” has the meaning assigned to such term in Section
3.4(a).

“Transferring Stockholder” has the meaning assigned to such term in Section
3.4(a).

“VCOC Funds” has the meaning assigned to such term in Section 2.1(a).

“Voting Securities” means, at any time, shares of any class of Equity Securities
of the Company, which are then entitled to vote generally in the election of
Directors.

 

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SECTION 1.2.        Other Definitional Provisions.  (a)  The words “hereof,”
“herein” and “hereunder” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Article and Section references are to this Agreement unless
otherwise specified.

(B)  THE MEANINGS GIVEN TO TERMS DEFINED HEREIN SHALL BE EQUALLY APPLICABLE TO
BOTH THE SINGULAR AND PLURAL FORMS OF SUCH TERMS.

ARTICLE II

CORPORATE GOVERNANCE

SECTION 2.1.        Board Representation.  (a)  Effective as of the Stock
Purchase Closing and, subject to Section 2.1(g) and Section 2.6, for so long as
this Section 2.1 remains in effect, the Board shall be comprised of nine (9)
Directors of whom:

(I)            THREE (3) SHALL BE DESIGNEES OF CONSTELLATION (SUCH PERSONS, THE
“CONSTELLATION DESIGNEES”);

(II)           ONE (1) SHALL BE A DESIGNEE (SUCH PERSON, THE “KKR VCOC
DESIGNEE”, AND TOGETHER WITH THE CONSTELLATION DESIGNEES, THE “KKR GROUP
DESIGNEES”) OF THE KKR MILLENNIUM FUND L.P. (THE “KKR FUND”);

(III)          ONE (1) SHALL BE A DESIGNEE OF CARLYLE (SUCH PERSON, THE “CARLYLE
DESIGNEE”);

(IV)          ONE (1) SHALL BE A DESIGNEE (SUCH PERSON, THE “CARLYLE VCOC
DESIGNEE”, AND TOGETHER WITH THE CARLYLE DESIGNEE, THE “CARLYLE GROUP
DESIGNEES”) OF CARLYLE PARTNERS III-TELECOMMUNICATIONS, L.P. (THE “CARLYLE
FUND”);

(V)           ONE (1) SHALL BE A DESIGNEE OF PROVIDENCE (SUCH PERSON, THE
“PROVIDENCE DESIGNEE”);

(VI)          ONE (1) SHALL BE A DESIGNEE (SUCH PERSON, THE “PROVIDENCE VCOC
DESIGNEE”, AND TOGETHER WITH THE PROVIDENCE DESIGNEE, THE “PROVIDENCE GROUP
DESIGNEES”) OF PROVIDENCE EQUITY PARTNERS IV, L.P. (THE “PROVIDENCE FUND”, AND
TOGETHER WITH THE CARLYLE FUND AND THE KKR FUND, THE “VCOC FUNDS”) (AS USED
HEREIN, THE CONSTELLATION DESIGNEES, THE KKR VCOC DESIGNEE, THE CARLYLE
DESIGNEE, THE CARLYLE VCOC DESIGNEE, THE PROVIDENCE DESIGNEE AND THE PROVIDENCE
VCOC DESIGNEE SHALL COLLECTIVELY BE REFERRED TO AS THE “STOCKHOLDER DESIGNEES”);

(VII)         ONE (1) DESIGNEE SHALL BE THE CHIEF EXECUTIVE OFFICER OF THE
COMPANY IN OFFICE FROM TIME TO TIME (THE “CEO DESIGNEE”), WHO SHALL INITIALLY BE
JOSEPH R. WRIGHT, JR.

(B)  A DESIGNEE OF THE STOCKHOLDER (TOGETHER WITH ITS AFFILIATES) HOLDING THE
GREATEST NUMBER OF SHARES OF COMMON STOCK SHALL BE DESIGNATED AS THE CHAIRMAN OF
THE BOARD,

 

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AND THE OTHER STOCKHOLDERS HEREBY AGREE TO TAKE ANY AND ALL ACTIONS NECESSARY TO
CAUSE THE CHAIRMAN OF THE BOARD DESIGNATED PRIOR TO SUCH TIME TO RESIGN AND
TERMINATE HIS OR HER POSITION AS CHAIRMAN OF THE BOARD.   THE STOCKHOLDERS AGREE
THAT AS OF THE STOCK PURCHASE CLOSING DATE GEORGE M.C. FISHER SHALL BE
DESIGNATED AS CHAIRMAN OF THE BOARD.

(C)  THE COMPANY SHALL TAKE SUCH ACTION AS MAY BE REQUIRED UNDER APPLICABLE LAW
TO CAUSE THE BOARD TO CONSIST OF THE NUMBER OF DIRECTORS SPECIFIED IN CLAUSE
(A).

(D)  THE COMPANY AGREES TO INCLUDE IN THE SLATE OF NOMINEES RECOMMENDED BY THE
BOARD THE STOCKHOLDER DESIGNEES AND THE CEO DESIGNEE AND TO USE ITS BEST EFFORTS
TO CAUSE THE ELECTION OF EACH SUCH DESIGNEE TO THE BOARD, INCLUDING NOMINATING
SUCH INDIVIDUALS TO BE ELECTED AS DIRECTORS AS PROVIDED HEREIN.

(E)  IN THE EVENT THAT A VACANCY IS CREATED AT ANY TIME BY THE DEATH,
DISABILITY, RETIREMENT, RESIGNATION OR REMOVAL (WITH OR WITHOUT CAUSE) OF ANY
DIRECTOR DESIGNATED PURSUANT TO CLAUSE (I), (II), (III), (IV), (V) OR (VI) OF
SECTION 2.1(A), THE REMAINING DIRECTORS AND THE COMPANY SHALL CAUSE THE VACANCY
CREATED THEREBY TO BE FILLED BY A NEW DESIGNEE OF THE STOCKHOLDER OR VCOC FUND,
AS THE CASE MAY BE, WHO DESIGNATED SUCH DIRECTOR AS SOON AS POSSIBLE, WHO IS
DESIGNATED IN THE MANNER SPECIFIED IN THIS SECTION 2.1, AND THE COMPANY HEREBY
AGREES TO TAKE, AT ANY TIME AND FROM TIME TO TIME, ALL ACTIONS NECESSARY TO
ACCOMPLISH THE SAME.

(F)  EACH OF THE STOCKHOLDERS AGREES TO VOTE, OR ACT BY WRITTEN CONSENT WITH
RESPECT TO, ANY VOTING SECURITIES BENEFICIALLY OWNED BY IT, AT EACH ANNUAL OR
SPECIAL MEETING OF STOCKHOLDERS OF THE COMPANY AT WHICH DIRECTORS ARE TO BE
ELECTED OR TO TAKE ALL ACTIONS BY WRITTEN CONSENT IN LIEU OF ANY SUCH MEETING AS
ARE NECESSARY, TO CAUSE THE STOCKHOLDER DESIGNEES AND THE CEO DESIGNEE TO BE
ELECTED TO THE BOARD AS PROVIDED IN THIS SECTION 2.1.  EACH OF THE STOCKHOLDERS
AGREES TO USE ITS COMMERCIALLY REASONABLE EFFORTS TO CAUSE THE ELECTION OF EACH
SUCH DESIGNEE TO THE BOARD, INCLUDING NOMINATING SUCH INDIVIDUALS TO BE ELECTED
AS MEMBERS OF THE BOARD.  IN THE EVENT THAT A VACANCY IS CREATED AT ANY TIME BY
THE DEATH, DISABILITY, RETIREMENT, RESIGNATION OR REMOVAL (WITH OR WITHOUT
CAUSE) OF ANY DIRECTOR DESIGNATED PURSUANT TO CLAUSE (I), (II), (III), (IV), (V)
OR (VI) OF SECTION 2.1(A) AND THE REMAINING DIRECTORS PURSUANT TO SECTION 2.1(E)
HAVE NOT CAUSED THE VACANCY CREATED THEREBY TO BE FILLED BY A NEW DESIGNEE OF
THE APPLICABLE STOCKHOLDER OR VCOC FUND, THEN IN SUCH CASE EACH STOCKHOLDER OR
VCOC FUND HEREBY AGREES TO TAKE, AT ANY TIME AND FROM TIME TO TIME, ALL ACTIONS
NECESSARY TO FILL SUCH VACANCY AS PROVIDED IN SECTION 2.1(E).  UPON THE WRITTEN
REQUEST OF ANY STOCKHOLDER OR ANY OF THE VCOC FUNDS, EACH OTHER STOCKHOLDER
SHALL VOTE, OR ACT BY WRITTEN CONSENT WITH RESPECT TO, ALL VOTING SECURITIES
BENEFICIALLY OWNED BY HIM OR IT AND OTHERWISE TAKE OR CAUSE TO BE TAKEN ALL
ACTIONS NECESSARY TO REMOVE ANY DIRECTOR DESIGNATED BY SUCH STOCKHOLDER OR VCOC
FUNDS AND TO ELECT ANY REPLACEMENT DIRECTOR DESIGNATED BY SUCH STOCKHOLDER OR
VCOC FUND.  UNLESS ANY STOCKHOLDER OR ANY OF THE VCOC FUNDS SHALL OTHERWISE
REQUEST IN WRITING, NO OTHER STOCKHOLDER SHALL TAKE ANY ACTION TO CAUSE THE
REMOVAL OF ANY DIRECTORS DESIGNATED BY SUCH STOCKHOLDER OR VCOC FUND.

(G)  IN THE EVENT A STOCKHOLDER OR VCOC FUND SHALL CEASE TO HAVE THE RIGHT TO
DESIGNATE A DIRECTOR IN ACCORDANCE WITH SECTION 2.6, SUCH STOCKHOLDER OR VCOC
FUND SHALL CAUSE THE DESIGNEE OF SUCH STOCKHOLDER OR VCOC FUND, AS THE CASE MAY
BE, TO RESIGN AND THE DIRECTORS REMAINING IN OFFICE SHALL DECREASE THE SIZE OF
THE BOARD TO ELIMINATE SUCH VACANCY AND NO CONSENT UNDER SECTION 2.3(A) SHALL BE
REQUIRED IN CONNECTION WITH SUCH DECREASE.

 

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(H)  THE COMPANY SHALL REIMBURSE EACH STOCKHOLDER DESIGNEE FOR THEIR REASONABLE
OUT-OF-POCKET EXPENSES INCURRED BY THEM FOR THE PURPOSE OF ATTENDING MEETINGS OF
THE BOARD OR COMMITTEES THEREOF.

(I)  IN THE EVENT THAT ANY STOCKHOLDER OR VCOC FUND SHALL HAVE A DESIGNEE OR
AFFILIATE SERVING ON THE BOARD OF DIRECTORS OF ANY SUBSIDIARY, EACH OF THE OTHER
STOCKHOLDERS OR VCOC FUNDS, AS THE CASE MAY BE, SHALL HAVE THE RIGHT TO EQUAL
REPRESENTATION ON SUCH BOARD OF DIRECTORS IN PROPORTION TO SUCH OTHER
STOCKHOLDER’S OR VCOC FUND’S REPRESENTATION ON THE BOARD SO LONG AS SUCH OTHER
STOCKHOLDERS OR VCOC FUNDS, AS THE CASE MAY BE, CONTINUE TO HAVE THE RIGHT
DESCRIBED IN SECTION 2.1(A) TO APPOINT DESIGNEES TO THE BOARD.

(J)  THE RIGHTS OF THE STOCKHOLDERS AND VCOC FUNDS PURSUANT TO THIS SECTION 2.1
ARE PERSONAL TO THE STOCKHOLDERS AND THE VCOC FUNDS AND SHALL NOT BE EXERCISED
BY ANY TRANSFEREE OTHER THAN A PERMITTED TRANSFEREE DESCRIBED IN CLAUSE (II) OF
THE DEFINITION THEREOF.

SECTION 2.2.        Committees.  So long as a Stockholder or its affiliated VCOC
Fund has the right to designate at least one (1) Director pursuant to Section
2.1, the Company shall cause each executive committee, compensation committee,
audit committee or other significant committee of the Board (including, without
limitation, any committee performing the functions usually reserved for the
committees described above) to include at least one (1) of each such
Stockholder’s or affiliated VCOC Fund’s designees; provided that the composition
of each such committee shall reflect the relative number of Stockholder
Designees for each Stockholder and its affiliated VCOC Fund.

SECTION 2.3.        Consent Rights.  (a)  In addition to any vote or consent of
the Board or the stockholders of the Company required by law or the Charter, and
notwithstanding anything in this Agreement to the contrary but subject to
Section 2.6, the Company shall not take (or, to the extent applicable, permit
any Subsidiary to take) any of the following actions, or enter into any
arrangement or contract to do any of the following actions, without (A) in the
case of clauses (i)-(viii) below, the consent in writing at least one KKR Group
Designee and either one Carlyle Group Designee or one Providence Group Designee,
or (B) in the case of clauses (ix)-(xv) below, the consent in writing of at
least one KKR Group Designee, one Carlyle Group Designee and one Providence
Group Designee (the applicable consent being the consent of the “Required
Directors”), which shall be necessary for authorizing, effecting or validating
such transactions:

(I)            THE SELECTION, TERMINATION OR REMOVAL OF THE CHIEF EXECUTIVE
OFFICER OF THE COMPANY;

(II)           THE INCURRENCE OF INDEBTEDNESS FOR BORROWED MONEY (INCLUDING
THROUGH CAPITAL LEASES, THE ISSUANCE OF DEBT SECURITIES OR THE GUARANTEE OF
INDEBTEDNESS OF ANOTHER PERSON) OTHER THAN (1) THE INCURRENCE OF TRADE PAYABLES
ARISING IN THE ORDINARY COURSE OF OPERATING THE BUSINESS OR (2) THE ISSUANCE OF
DEBT SECURITIES REFERRED TO IN CLAUSE (2) OF SECTION 2.3(A)(III);

(III)          ANY AUTHORIZATION, CREATION (BY WAY OF RECLASSIFICATION, MERGER,
CONSOLIDATION OR OTHERWISE) OR ISSUANCE OF ANY SECURITIES OF THE COMPANY, OTHER
THAN (1)

 

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THE ISSUANCE OF RESERVED EMPLOYEE SHARES THAT HAVE BEEN RESERVED AS OF THE DATE
HEREOF OR THAT ARE APPROVED AFTER THE DATE HEREOF IN ACCORDANCE WITH SECTION
2.3(A)(VII), OR (2) (A) THE ISSUANCE OF ANY SECURITIES AS CONSIDERATION IN, OR
IN CONNECTION WITH, A TRANSACTION APPROVED PURSUANT TO SECTIONS 2.3(A) (XII) OR
(XIII) OR (B) ANY DEBT SECURITIES OR UP TO $25 MILLION OF EQUITY SECURITIES, IN
EACH CASE ISSUED AS CONSIDERATION IN AN EXEMPT TRANSACTION;

(IV)          ANY REDEMPTION, ACQUISITION OR OTHER PURCHASE OF ANY SHARES OF
COMMON STOCK (A “REPURCHASE”) PRO RATA FROM ALL STOCKHOLDERS (A “PRO RATA
REPURCHASE”);

(V)           ANY PAYMENT OR DECLARATION OF ANY DIVIDEND OR OTHER DISTRIBUTION
ON ANY SHARES OF COMMON STOCK;

(VI)          THE CREATION OF ANY NON-WHOLLY OWNED SUBSIDIARIES, OR THE TRANSFER
OR ANY SALE OR OTHER DISPOSITION OF A SUBSIDIARY’S SECURITIES TO ANY PERSON
OTHER THAN THE COMPANY OR A WHOLLY OWNED SUBSIDIARY OF THE COMPANY (OTHER THAN
ANY PLEDGE OF SUCH SUBSIDIARY’S STOCK PURSUANT TO A FINANCING APPROVED BY THE
BOARD);

(VII)         THE CREATION OR AMENDMENT OF ANY STOCK OPTION, EMPLOYEE STOCK
PURCHASE OR SIMILAR EQUITY-BASED COMPENSATION PLAN FOR MANAGEMENT OR EMPLOYEES,
OR ANY INCREASE IN THE NUMBER OF RESERVED EMPLOYEE SHARES;

(VIII)        ANY AMENDMENT, MODIFICATION OR WAIVER OF ANY PROVISION CONTAINED
IN THE TRANSACTION AGREEMENT, THE TAX SEPARATION AGREEMENT, OR THE TRANSITION
SERVICES AGREEMENT;

(IX)           ANY TRANSACTION BY THE COMPANY OR ANY SUBSIDIARY WITH OR
INVOLVING ANY AFFILIATE OF THE COMPANY OR ANY AFFILIATE OF ANY STOCKHOLDER OF
THE COMPANY THAT BENEFICIALLY OWNS IN EXCESS OF TEN PERCENT (10%) OF THE VOTING
POWER OF THE COMPANY OTHER THAN ANY TRANSACTION BETWEEN THE COMPANY OR A
WHOLLY-OWNED SUBSIDIARY OF THE COMPANY, ON THE ONE HAND, AND ANOTHER
WHOLLY-OWNED SUBSIDIARY, ON THE OTHER HAND;

(X)            ANY AMENDMENT, REPEAL OR ALTERATION OF THE CHARTER OR THE BYLAWS,
WHETHER BY OR IN CONNECTION WITH A MERGER OR CONSOLIDATION OR OTHERWISE;

(XI)           ANY INCREASE OR DECREASE IN THE SIZE OF THE BOARD, COMMITTEES OF
THE BOARD, AND BOARDS AND COMMITTEES OF SUBSIDIARIES OF THE COMPANY;

(XII)          ANY (A) ACQUISITION BY THE COMPANY OR ANY SUBSIDIARY OF THE
STOCK, EQUITY INTERESTS OR ASSETS OF ANY PERSON, OR THE ACQUIRING BY THE COMPANY
OR ANY SUBSIDIARY BY ANY OTHER MANNER OF ANY BUSINESS, PROPERTIES, ASSETS, OR
PERSONS, IN ONE TRANSACTION OR A SERIES OF RELATED TRANSACTIONS, OR (B)
DISPOSITION OF ASSETS OF THE COMPANY OR ANY SUBSIDIARY OR THE CAPITAL STOCK OR
OTHER EQUITY INTERESTS OF ANY SUBSIDIARY, OTHER THAN, IN EITHER CASE, AN EXEMPT
TRANSACTION;

(XIII)         ANY (A) MERGER OR CONSOLIDATION WITH OR INTO ANY OTHER PERSON, OR
ANY ACQUISITION OF ANOTHER PERSON, WHETHER IN A SINGLE TRANSACTION OR A SERIES
OF RELATED TRANSACTIONS, OTHER THAN ANY EXEMPT TRANSACTION, (B) PROPOSED
TRANSACTION OR SERIES OF

 

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RELATED TRANSACTIONS INVOLVING A CHANGE OF CONTROL OF THE COMPANY OR (C)
PROPOSED TRANSFER BY A STOCKHOLDER EXCEPT TO A PERMITTED TRANSFEREE OR A
TRANSFER IN ACCORDANCE WITH SECTION 3.2 HEREOF;

(XIV)        ANY PLAN OF LIQUIDATION, DISSOLUTION OR WINDING-UP OF THE COMPANY;

(XV)         ANY REPURCHASE OTHER THAN (A) A PRO RATA REPURCHASE OR (B) A
REPURCHASE FROM AN EMPLOYEE IN CONNECTION WITH SUCH EMPLOYEE’S TERMINATION OF
EMPLOYMENT WITH THE COMPANY OR ANY SUBSIDIARY.

(B)  IN CONNECTION WITH ANY VOTE OR ACTION BY WRITTEN CONSENT OF THE
STOCKHOLDERS OF THE COMPANY RELATING TO ANY MATTER REQUIRING CONSENT AS
SPECIFIED IN SECTION 2.3(A), EACH STOCKHOLDER AGREES, WITH RESPECT TO ANY VOTING
SECURITIES BENEFICIALLY OWNED BY SUCH STOCKHOLDER WITH RESPECT TO WHICH HE OR IT
HAS THE POWER TO VOTE, (I) TO VOTE AGAINST (AND NOT ACT BY WRITTEN CONSENT TO
APPROVE) SUCH MATTER IF SUCH MATTER HAS NOT BEEN CONSENTED TO BY THE REQUIRED
DIRECTORS IN ACCORDANCE WITH SECTION 2.3(A) AND (II) TO TAKE OR CAUSE TO BE
TAKEN, UPON THE WRITTEN REQUEST OF A STOCKHOLDER, ALL OTHER REASONABLE ACTIONS,
AT THE EXPENSE OF THE COMPANY, REQUIRED, TO THE EXTENT PERMITTED BY LAW, TO
PREVENT THE TAKING OF ANY ACTION BY THE COMPANY WITH RESPECT TO A MATTER UNLESS
SUCH MATTER HAS BEEN CONSENTED TO BY THE REQUIRED DIRECTORS IN ACCORDANCE WITH
SECTION 2.3(A).

SECTION 2.4.        Available Financial Information.  (a)  The Company will
deliver, or will cause to be delivered, the following to each Stockholder until
such time as such Stockholder and its Affiliates shall cease to own any shares
of Common Stock on an as-converted basis:

(I)            AS SOON AS AVAILABLE AFTER THE END OF EACH MONTH AND IN ANY EVENT
WITHIN THIRTY (30) DAYS THEREAFTER, A CONSOLIDATED BALANCE SHEET OF THE COMPANY
AND ITS SUBSIDIARIES AS OF THE END OF SUCH MONTH AND CONSOLIDATED STATEMENTS OF
OPERATIONS, INCOME, CASH FLOWS, RETAINED EARNINGS AND STOCKHOLDERS’ EQUITY OF
THE COMPANY AND ITS SUBSIDIARIES, FOR EACH MONTH AND FOR THE CURRENT FISCAL YEAR
OF THE COMPANY TO DATE, PREPARED IN ACCORDANCE WITH GAAP (SUBJECT TO NORMAL
YEAR-END AUDIT ADJUSTMENTS AND THE ABSENCE OF NOTES THERETO) AND CERTIFIED BY
THE PRINCIPAL FINANCIAL OR ACCOUNTING OFFICER OF THE COMPANY, TOGETHER WITH A
COMPARISON OF SUCH STATEMENTS TO THE CORRESPONDING PERIODS OF THE PRIOR FISCAL
YEAR AND TO THE COMPANY’S BUSINESS PLAN THEN IN EFFECT AND APPROVED BY THE
BOARD;

(II)           AN ANNUAL BUDGET, A BUSINESS PLAN AND FINANCIAL FORECASTS FOR THE
COMPANY FOR THE NEXT FISCAL YEAR OF THE COMPANY, NO LATER THAN THIRTY (30) DAYS
BEFORE THE BEGINNING OF THE COMPANY’S NEXT FISCAL YEAR, IN SUCH MANNER AND FORM
AS APPROVED BY THE BOARD, WHICH SHALL INCLUDE AT LEAST A PROJECTION OF INCOME
AND A PROJECTED CASH FLOW STATEMENT FOR EACH FISCAL QUARTER IN SUCH FISCAL YEAR
AND A PROJECTED BALANCE SHEET AS OF THE END OF EACH FISCAL QUARTER IN SUCH
FISCAL YEAR, IN EACH CASE PREPARED IN REASONABLE DETAIL, WITH APPROPRIATE
PRESENTATION AND DISCUSSION OF THE PRINCIPAL ASSUMPTIONS UPON WHICH SUCH BUDGETS
AND PROJECTIONS ARE BASED, WHICH SHALL BE ACCOMPANIED BY THE STATEMENT OF THE
CHIEF EXECUTIVE OFFICER OR CHIEF FINANCIAL OFFICER OR EQUIVALENT OFFICER OF THE
COMPANY TO THE EFFECT THAT SUCH BUDGET AND PROJECTIONS ARE BASED ON REASONABLE
AND GOOD FAITH

 

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ESTIMATES AND ASSUMPTIONS MADE BY THE MANAGEMENT OF THE COMPANY FOR THE
RESPECTIVE PERIODS COVERED THEREBY; IT BEING RECOGNIZED BY SUCH HOLDERS THAT
SUCH BUDGETS AND PROJECTIONS AS TO FUTURE EVENTS ARE NOT TO BE VIEWED AS FACTS
AND THAT ACTUAL RESULTS DURING THE PERIOD OR PERIODS COVERED BY THEM MAY DIFFER
FROM THE PROJECTED RESULTS.  ANY MATERIAL CHANGES IN SUCH BUSINESS PLAN SHALL BE
DELIVERED TO THE STOCKHOLDERS AS PROMPTLY AS PRACTICABLE AFTER SUCH CHANGES HAVE
BEEN APPROVED BY THE BOARD;

(III)          AS SOON AS AVAILABLE AFTER THE END OF EACH FISCAL YEAR OF THE
COMPANY, AND IN ANY EVENT WITHIN NINETY (90)  DAYS THEREAFTER, (A) THE ANNUAL
FINANCIAL STATEMENTS REQUIRED TO BE FILED BY THE COMPANY PURSUANT TO THE
EXCHANGE ACT OR (B) A CONSOLIDATED BALANCE SHEET OF THE COMPANY AND ITS
SUBSIDIARIES AS OF THE END OF SUCH FISCAL YEAR, AND CONSOLIDATED STATEMENTS OF
INCOME, RETAINED EARNINGS AND CASH FLOWS OF THE COMPANY AND ITS SUBSIDIARIES FOR
SUCH YEAR, IN EACH CASE PREPARED IN ACCORDANCE WITH GAAP AND SETTING FORTH IN
EACH CASE IN COMPARATIVE FORM THE FIGURES FOR THE PREVIOUS FISCAL YEAR, ALL IN
REASONABLE DETAIL AND ACCOMPANIED BY THE OPINION OF INDEPENDENT PUBLIC
ACCOUNTANTS OF RECOGNIZED NATIONAL STANDING SELECTED BY THE COMPANY, AND A
COMPANY-PREPARED COMPARISON TO THE COMPANY’S BUSINESS PLAN FOR SUCH YEAR AS
APPROVED BY THE BOARD; AND

(IV)          AS SOON AS AVAILABLE AFTER THE END OF THE FIRST, SECOND AND THIRD
QUARTERLY ACCOUNTING PERIODS IN EACH FISCAL YEAR OF THE COMPANY, AND IN ANY
EVENT WITHIN FORTY-FIVE (45) DAYS THEREAFTER, (A) THE QUARTERLY FINANCIAL
STATEMENTS REQUIRED TO BE FILED BY THE COMPANY PURSUANT TO THE EXCHANGE ACT OR
(B) A CONSOLIDATED BALANCE SHEET OF THE COMPANY AND ITS SUBSIDIARIES AS OF THE
END OF EACH SUCH QUARTERLY PERIOD, AND CONSOLIDATED STATEMENTS OF INCOME,
RETAINED EARNINGS AND CASH FLOWS OF THE COMPANY AND ITS SUBSIDIARIES FOR SUCH
PERIOD AND FOR THE CURRENT FISCAL YEAR TO DATE, IN EACH CASE PREPARED IN
ACCORDANCE WITH GAAP (SUBJECT TO NORMAL YEAR-END AUDIT ADJUSTMENTS AND THE
ABSENCE OF NOTES THERETO) AND SETTING FORTH IN COMPARATIVE FORM THE FIGURES FOR
THE CORRESPONDING PERIODS OF THE PREVIOUS FISCAL YEAR AND TO THE COMPANY’S
BUSINESS PLAN THEN IN EFFECT AS APPROVED BY THE BOARD, ALL IN REASONABLE DETAIL
AND CERTIFIED BY THE PRINCIPAL FINANCIAL OR ACCOUNTING OFFICER OF THE COMPANY.

(B)  OTHER INFORMATION.  THE COMPANY COVENANTS AND AGREES TO DELIVER TO EACH
STOCKHOLDER UNTIL SUCH TIME AS SUCH STOCKHOLDER SHALL CEASE TO OWN ANY SHARES OF
COMMON STOCK, WITH REASONABLE PROMPTNESS, SUCH OTHER INFORMATION AND DATA
(INCLUDING SUCH INFORMATION AND REPORTS MADE AVAILABLE TO ANY LENDER OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES UNDER ANY CREDIT AGREEMENT OR OTHERWISE) WITH
RESPECT TO THE COMPANY AND EACH OF ITS SUBSIDIARIES AS FROM TIME TO TIME MAY BE
REASONABLY REQUESTED BY ANY SUCH HOLDER.

SECTION 2.5.        Access.  The Company shall, and shall cause its
Subsidiaries, officers, directors, employees, auditors and other agents to,
until such time as such Stockholder shall cease to own any shares of Common
Stock, (a) afford the officers, employees, auditors and other agents of such
Stockholder or affiliated VCOC Fund (as the case may be), during normal business
hours and upon reasonable notice reasonable access at all reasonable times to
its officers, employees, auditors, legal counsel, properties, offices, plants
and other facilities and to all books and records, and (b) afford such
Stockholder or affiliated VCOC Fund the opportunity to discuss the Company’s
affairs, finances and accounts with the Company’s officers from time to time as
each such Stockholder or VCOC Fund may reasonably request.

 

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SECTION 2.6.         TERMINATION OF RIGHTS.  (A)  NOTWITHSTANDING SECTION 2.3,
AT SUCH TIME AS ANY STOCKHOLDER, TOGETHER WITH ITS AFFILIATES, SHALL CEASE TO
OWN A NUMBER OF SHARES OF COMMON STOCK EQUAL TO AT LEAST TEN PERCENT (10%) OF
THE OUTSTANDING SHARES OF COMMON STOCK, THE CONSENT OF THE DIRECTORS DESIGNATED
BY SUCH STOCKHOLDER OR AFFILIATED VCOC FUND SHALL NOT BE REQUIRED FOR
AUTHORIZING, EFFECTING OR VALIDATING THE TRANSACTIONS SPECIFIED IN SECTION 2.3
(IT BEING UNDERSTOOD THAT THE LOSS OF CONSENT RIGHTS BY ANY DIRECTORS DESIGNATED
BY ANY STOCKHOLDER OR AFFILIATED VCOC FUND SHALL IN NO WAY AFFECT THE CONSENT
RIGHTS OF ANY DIRECTORS DESIGNATED BY ANY OTHER STOCKHOLDER OR AFFILIATED VCOC
FUND SET FORTH IN SECTION 2.3);

(B)  NOTWITHSTANDING SECTION 2.1, AT SUCH TIME AS ANY STOCKHOLDER, TOGETHER WITH
ITS AFFILIATES, SHALL CEASE TO OWN A NUMBER OF SHARES OF COMMON STOCK EQUAL TO
AT LEAST FIFTEEN PERCENT (15%) OF SUCH STOCKHOLDER’S ORIGINAL SHARES, SUCH
STOCKHOLDER AND ITS AFFILIATES (INCLUDING ITS AFFILIATED VCOC FUND) SHALL CEASE
TO HAVE THE RIGHT TO DESIGNATE ANY DIRECTORS PURSUANT TO SECTION 2.1 AND ANY
RIGHTS OR OBLIGATIONS PURSUANT TO SECTIONS 2.2 AND 2.7 (OTHER THAN THE
OBLIGATION SET FORTH IN THE LAST SENTENCE OF SECTION 2.7 TO KEEP CONFIDENTIAL
ANY INFORMATION REGARDING ANY COMPANY OPPORTUNITY, WHICH SHALL CONTINUE FOR
PERIOD OF TWO YEARS THEREAFTER);

(C)  NOTWITHSTANDING SECTION 2.1, AT SUCH TIME AS CARLYLE (TOGETHER WITH ITS
AFFILIATES) OR PROVIDENCE (TOGETHER WITH ITS AFFILIATES), SHALL CEASE TO OWN A
NUMBER OF SHARES OF COMMON STOCK EQUAL TO AT LEAST FIFTY PERCENT (50%) OF ITS
RESPECTIVE ORIGINAL SHARES, CARLYLE OR PROVIDENCE (TOGETHER WITH THEIR
AFFILIATED VCOC FUNDS), AS APPLICABLE, SHALL CEASE TO HAVE THE RIGHT TO
DESIGNATE MORE THAN ONE (1) DIRECTOR PURSUANT TO SECTION 2.1; AND

(D)  NOTWITHSTANDING SECTION 2.1, AT SUCH TIME AS CONSTELLATION (TOGETHER WITH
ITS AFFILIATES) SHALL CEASE TO OWN A NUMBER OF SHARES OF COMMON STOCK EQUAL TO
AT LEAST (I) SEVENTY FIVE PERCENT (75%) OF ITS ORIGINAL SHARES, CONSTELLATION
(TOGETHER WITH ITS AFFILIATED VCOC FUND) SHALL CEASE TO HAVE THE RIGHT TO
DESIGNATE MORE THAN THREE (3) DIRECTORS PURSUANT TO SECTION 2.1; (II) FIFTY
PERCENT (50%) OF ITS ORIGINAL SHARES, CONSTELLATION (TOGETHER WITH ITS
AFFILIATED VCOC FUND) SHALL CEASE TO HAVE THE RIGHT TO DESIGNATE MORE THAN TWO
(2) DIRECTORS PURSUANT TO SECTION 2.1; AND (III) TWENTY-FIVE PERCENT (25%) OF
ITS ORIGINAL SHARES, CONSTELLATION (TOGETHER WITH ITS AFFILIATED VCOC FUND)
SHALL CEASE TO HAVE THE RIGHT TO DESIGNATE MORE THAN ONE (1) DIRECTOR PURSUANT
TO SECTION 2.1.

SECTION 2.7.        Corporate Opportunities.  Each Stockholder and VCOC Fund
shall cause its Stockholder Designees to recuse themselves from all
deliberations of the Board, and the Company shall have no obligation to provide
to such Stockholder Designees any information, regarding any acquisition,
disposition, investment or similar transaction that the Company elects to pursue
(a “Company Opportunity”) if such Stockholder or its Affiliates is competing
with or is otherwise adverse to the Company with respect to such Company
Opportunity.  If (1) any Stockholder or its Affiliates consummates the
transaction that at anytime constituted a Company Opportunity or (2) any
Affiliate (other than a Controlled Affiliate who is prohibited from taking the
following actions pursuant to Section 2.8) of a Stockholder acquires, makes an
investment in or otherwise agrees to manage or operate any Person listed on
Exhibit B hereto (in either case, a “Competing Enterprise”), such Stockholder
and VCOC Fund shall cause its Stockholder Designees to recuse themselves from
all future deliberations of the Board relating to, and the Company shall have no
obligation to provide to such Stockholder Designees any information regarding,
that portion of the Company’s business as competes or would reasonably

 

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be expected to compete with the Competing Enterprise (a “Competing Action”). 
The consent of the Directors designated by such Stockholder or affiliated VCOC
Fund shall not be required for authorizing, effecting or validating any
transactions specified in Section 2.3 in connection with such Company
Opportunity or Competing Actions.  Solely for purposes of illustration, if an
Affiliate of a Stockholder who is not bound by Section 2.8 were to acquire a
Person listed on Exhibit B who operated in a certain geographic location, such
Stockholder and VCOC Fund shall cause its Stockholder Designees to recuse
themselves from all deliberations of the Board relating to the Company’s
investment or operations in such geographic location and if the Company were
considering an acquisition in such location, no consent of the Directors
designated by such Stockholder or affiliated VCOC Fund would be required in
connection with such acquisition.  In addition, each Stockholder and VCOC Fund
shall, and shall cause its Stockholder Designees to, keep confidential any
information regarding any Company Opportunity, including the existence of such
potential acquisition, disposition, investment or similar transaction, that such
Stockholder, VCOC Fund or Stockholder Designee learns about as a result of its
participation in the Board; provided, however, that the obligation to keep such
information confidential shall not apply to information which (i) becomes
generally available to the public, (ii) is already in the possession of such
Stockholder, VCOC Fund or Stockholder Designee prior to learning such
information as a result of participation on the Board or being a Stockholder,
(iii) becomes properly available to such Stockholder, VCOC Fund or Stockholder
Designee on a non-confidential basis from a source other than the Company or
(iv) is required to be disclosed by applicable law, regulation, governmental
order or which is otherwise requested by subpoena, interrogatory or other
discovery request.

SECTION 2.8.        Non-Competition.  For so long (i) as a Stockholder or its
affiliated VCOC Fund has the right to designate a Director pursuant to Section
2.1(a) or (ii) the consent of the Directors designated by such Stockholder or
its affiliated VCOC Fund is required for authorizing, effecting or validating
the transactions specified in Section 2.3, such Stockholder and its Controlled
Affiliates (including its affiliated VCOC Fund) will be prohibited from owning,
managing, operating, controlling or participating in the ownership, management,
operation or control of any person listed on Exhibit B hereto.

ARTICLE III

TRANSFERS

SECTION 3.1.        Rights and Obligations of Transferees.  (a)  Except with the
prior written consent of the Required Directors pursuant to clause (xiii) of
Section 2.3(a) (and if no Stockholder is entitled to designate any Directors
pursuant to Section 2.1 then the prior written consent of a majority of the
Board), no Transferee of any Stockholder, except a Permitted Transferee
described in clause (ii) of the definition thereof, shall be entitled to any
rights under this Agreement other than the right of co-sale set forth in Section
3.4.  A Permitted Transferee described in clause (ii) of the definition thereof
shall be permitted to exercise all rights of the transferring Stockholder under
this Agreement with respect to the shares of Common Stock Transferred.

 

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(B)  SUBJECT TO THE LAST SENTENCE OF THIS SECTION 3.1(B), PRIOR TO THE
CONSUMMATION OF A TRANSFER BY ANY STOCKHOLDER OR ANY TRANSFEREE, AS A CONDITION
THERETO, THE APPLICABLE TRANSFEREE OR SUBSEQUENT TRANSFEREE SHALL AGREE IN
WRITING IN THE FORM ATTACHED AS EXHIBIT A HERETO TO ASSUME ALL OF THE
OBLIGATIONS IN THIS AGREEMENT APPLICABLE TO THE TRANSFERRING STOCKHOLDER WITH
RESPECT TO THE EQUITY SECURITIES SO TRANSFERRED.  NOTWITHSTANDING THE FOREGOING,
A TRANSFEREE OF EQUITY SECURITIES SHALL NOT BE BOUND BY ANY OF THE TERMS AND
CONDITIONS OF THIS AGREEMENT IF THE APPLICABLE TRANSFER IS PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO RULE
144 OF THE SECURITIES ACT.

SECTION 3.2         TRANSFER RESTRICTIONS.  (A)  UNTIL THE FIFTH ANNIVERSARY OF
THE STOCK PURCHASE CLOSING DATE, EACH STOCKHOLDER HEREBY AGREES THAT SUCH
STOCKHOLDER SHALL NOT TRANSFER ANY OF ITS EQUITY SECURITIES AT ANY TIME OTHER
THAN (I) TRANSFERS OF ITS EQUITY SECURITIES TO ITS PERMITTED TRANSFEREES, (II)
FOLLOWING AN IPO, TRANSFERS PURSUANT TO THE REGISTRATION RIGHTS AGREEMENT, (III)
PURSUANT TO SECTIONS 3.4, AND (IV) WITH THE PRIOR WRITTEN CONSENT OF THE
REQUIRED DIRECTORS PURSUANT TO CLAUSE (XIII) OF SECTION 2.3(A) (AND IF NO
STOCKHOLDER IS ENTITLED TO DESIGNATE ANY DIRECTORS PURSUANT TO SECTION 2.1 THEN
THE PRIOR WRITTEN CONSENT OF A MAJORITY OF THE BOARD).

(B)  FOLLOWING THE FIFTH ANNIVERSARY OF THE STOCK PURCHASE CLOSING DATE, SO LONG
AS THE COMPANY HAS NOT COMPLETED AN IPO, AND, SUBJECT TO COMPLIANCE WITH SECTION
3.3 AND 3.4, EACH STOCKHOLDER MAY FREELY TRANSFER ITS EQUITY SECURITIES WITHOUT
RESTRICTION.

(C)  FOLLOWING THE FIFTH ANNIVERSARY OF THE STOCK PURCHASE CLOSING DATE, IF THE
COMPANY HAS COMPLETED AN IPO, EACH STOCKHOLDER MAY FREELY TRANSFER ITS EQUITY
SECURITIES WITHOUT RESTRICTION SUBJECT TO COMPLIANCE WITH APPLICABLE SECURITIES
LAWS.

(D)  EACH STOCKHOLDER SHALL AS PROMPTLY AS PRACTICABLE PROVIDE THE STOCKHOLDERS
WITH WRITTEN NOTICE OF ANY TRANSFER MADE IN ACCORDANCE WITH SECTION 3.2(A) OR
(B).

SECTION 3.3         Right of First Offer.  Following the fifth anniversary of
the Stock Purchase Closing Date, so long as the Company has not completed an
IPO, no Stockholder shall Transfer any of its Equity Securities other than to a
Permitted Transferee or a sale by a Co-Sale Participant pursuant to Section 3.4
except as set forth below:

(A)  PRIOR TO ANY TRANSFER OF EQUITY SECURITIES BY A STOCKHOLDER (THE “OFFERING
HOLDER”), THE OFFERING HOLDER SHALL DELIVER TO THE COMPANY AND EACH OTHER
STOCKHOLDER THAT IS NOT AN AFFILIATE OF THE OFFERING HOLDER (COLLECTIVELY,
EXCLUDING THE COMPANY, THE “ROFO RECIPIENTS”) WRITTEN NOTICE (THE “OFFER
NOTICE”), STATING SUCH OFFER HOLDER’S INTENTION TO EFFECT SUCH A TRANSFER, THE
NUMBER OF EQUITY SECURITIES SUBJECT TO SUCH TRANSFER (THE “OFFERED SECURITIES”),
THE PRICE THE OFFERING HOLDER PROPOSES TO BE PAID FOR THE OFFERED SECURITIES
(THE “FIRST OFFER PRICE”), AND THE OTHER MATERIAL TERMS AND CONDITIONS OF THE
PROPOSED TRANSFER.  THE OFFER NOTICE MAY REQUIRE THAT THE CONSUMMATION OF ANY
SALE OF THE OFFERED SECURITIES TO THE COMPANY OR THE ROFO RECIPIENTS OCCUR ON A
DATE THAT IS NO LESS THAN 30 DAYS, AND NO LATER THAN 60 DAYS AFTER THE DATE OF
THE OFFER NOTICE (OR, IF FCC APPROVAL OR CONSENT IS REQUIRED IN CONNECTION WITH
THE PROPOSED TRANSFER, NO LATER THAN THE EARLIER OF 30 DAYS AFTER SUCH APPROVAL
OR CONSENT HAS BEEN OBTAINED AND SIX MONTHS AFTER THE DATE OF THE OFFER NOTICE).

 

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(B)  UPON RECEIPT OF THE OFFER NOTICE, THE COMPANY WILL HAVE AN IRREVOCABLE
NON-TRANSFERABLE OPTION TO PURCHASE ALL OR A PORTION OF THE OFFERED SECURITIES
AT THE FIRST OFFER PRICE AND OTHERWISE ON THE TERMS AND CONDITIONS DESCRIBED IN
THE OFFER NOTICE (THE “FIRST OFFER”).  THE COMPANY SHALL, WITHIN 15 DAYS FROM
RECEIPT OF THE OFFER NOTICE, INDICATE WHETHER OR NOT IT HAS ACCEPTED THE FIRST
OFFER BY SENDING IRREVOCABLE WRITTEN NOTICE OF ANY SUCH ACCEPTANCE TO THE
OFFERING HOLDER AND THE ROFO RECIPIENTS INDICATING THE NUMBER OF OFFERED SHARES
TO BE PURCHASED (THE “ACCEPTANCE NOTICE”), AND THE COMPANY SHALL THEN BE
OBLIGATED TO PURCHASE SUCH NUMBER OF OFFERED SECURITIES ON THE TERMS AND
CONDITIONS SET FORTH IN THE OFFER NOTICE.  IN THE EVENT THE COMPANY ELECTS NOT
TO PURCHASE ANY OR ALL OF THE OFFERED SECURITIES, THE ROFO RECIPIENTS SHALL HAVE
THE OPTION TO PURCHASE AT THE FIRST OFFER PRICE ALL, BUT NOT LESS THAN ALL, OF
THE OFFERED SECURITIES WITH RESPECT TO WHICH THE COMPANY HAS NOT EXERCISED ITS
OPTION, AND EACH OF THE ROFO RECIPIENTS SHALL, WITHIN 15 DAYS FROM RECEIPT OF
THE COMPANY’S ACCEPTANCE NOTICE, INDICATE TO THE OFFERING HOLDER AND THE COMPANY
IF IT HAS ACCEPTED THE FIRST OFFER AND, IF SO, THE NUMBER OF OFFERED SECURITIES
TO BE PURCHASED BY SENDING IRREVOCABLE WRITTEN NOTICE OF SUCH ACCEPTANCE TO THE
OFFERING HOLDER AND THE COMPANY, AND SUCH ROFO RECIPIENT SHALL THEN BE OBLIGATED
TO PURCHASE SUCH NUMBER OF OFFERED SECURITIES ON THE TERMS AND CONDITIONS SET
FORTH IN THE OFFER NOTICE.

(C)  NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION 3.3, THE ROFO
RECIPIENTS SHALL NOT BE PERMITTED TO PURCHASE LESS THAN ALL OF THE OFFERED
SECURITIES WITHOUT THE CONSENT OF THE OFFERING HOLDER.  THE NUMBER OF SHARES
THAT EACH ROFO RECIPIENT SHALL BE ENTITLED TO PURCHASE UPON THE EXERCISE OF THE
RIGHT OF FIRST OFFER SHALL BE EQUAL TO SUCH ROFO RECIPIENT’S PRO RATA PORTION OF
THE OFFERED SECURITIES OTHER THAN THOSE AS TO WHICH THE COMPANY HAS EXERCISED
ITS OPTION.  IN THE EVENT ANY ROFO RECIPIENT ELECTS TO PURCHASE LESS THAN ALL OF
ITS PRO RATA PORTION (SUCH REMAINING SECURITIES, THE “SECTION 3.3 NON-ELECTING
SHARES), THE COMPANY SHALL NOTIFY THE OTHER ROFO RECIPIENTS AS TO THE AGGREGATE
NUMBER OF SECTION 3.3 NON-ELECTING SHARES, AND EACH SUCH OTHER ROFO RECIPIENT
SHALL BE ENTITLED TO PURCHASE ITS PRO RATA PORTION OF THE SECTION 3.3
NON-ELECTING SHARES BY PROVIDING WRITTEN NOTICE THAT SUCH ROFO RECIPIENT HAS
ELECTED TO PURCHASE ALL (BUT NOT LESS THAN ALL) OF ITS PRO RATA PORTION OF THE
SECTION 3.3 NON-ELECTING SHARES WITHIN 5 DAYS OF RECEIPT OF SUCH NOTICE, AND
SUCH ROFO RECIPIENT SHALL THEN BE OBLIGATED TO PURCHASE SUCH ROFO RECIPIENT’S
PRO RATA PORTION OF THE SECTION 3.3 NON-ELECTING SHARES; PROVIDED, HOWEVER, THAT
FOR THE PURPOSES OF THIS SECTION 3.3(C), IN COMPUTING A ROFO RECIPIENT’S PRO
RATA PORTION OF THE SECTION 3.3 NON-ELECTING SHARES, THE ROFO RECIPIENT THAT
FAILED TO ELECT TO PURCHASE SUCH SECTION 3.3 NON-ELECTING SHARES SHALL NOT BE
CONSIDERED TO HOLD  ANY SHARES OF COMMON STOCK.

(D)  IF NEITHER THE COMPANY NOR THE ROFO RECIPIENTS (IN THE AGGREGATE) ELECT TO
PURCHASE ALL OF THE OFFERED SECURITIES PURSUANT TO THIS SECTION 3.3, THEN THE
APPLICABLE OFFERING HOLDER SHALL BE FREE FOR A PERIOD OF SIX MONTHS FROM THE
DATE ACCEPTANCE NOTICES FROM THE ROFO RECIPIENTS WERE DUE TO BE RECEIVED BY THE
APPLICABLE OFFERING HOLDER TO ENTER INTO DEFINITIVE AGREEMENTS TO TRANSFER THE
OFFERED SECURITIES AS TO WHICH SUCH OPTIONS ARE NOT EXERCISED TO A TRANSFEREE
FOR CONSIDERATION HAVING A VALUE NOT LESS THAN 90% OF THE FIRST OFFER PRICE AND
TO TRANSFER THE OFFERED SECURITIES PURSUANT TO SUCH DEFINITIVE AGREEMENTS;
PROVIDED THAT ANY SUCH DEFINITIVE AGREEMENT PROVIDES FOR THE CONSUMMATION OF
SUCH TRANSFER TO TAKE PLACE WITHIN SIX MONTHS (OR IN THE ABSENCE OF FCC APPROVAL
AT THE END OF SUCH SIX MONTHS, NINE MONTHS) FROM THE DATE OF SUCH DEFINITIVE
AGREEMENT AND IS OTHERWISE ON TERMS NOT MORE FAVORABLE TO THE TRANSFEREE IN ANY
MATERIAL RESPECT THAN WERE CONTAINED IN THE OFFER NOTICE.

 

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(E)  IF NEITHER THE COMPANY NOR THE ROFO RECIPIENTS (IN THE AGGREGATE) EXERCISE
THEIR RESPECTIVE OPTIONS TO PURCHASE ALL OF THE OFFERED SECURITIES AT THE FIRST
OFFER PRICE AND THE APPLICABLE OFFERING HOLDER HAS NOT ENTERED INTO A DEFINITIVE
AGREEMENT DESCRIBED IN SECTION 3.3(D) WITHIN SIX MONTHS FROM THE DATE ACCEPTANCE
NOTICES FROM THE ROFO RECIPIENTS WERE DUE TO BE RECEIVED BY THE APPLICABLE
OFFERING HOLDER, OR THE OFFERING HOLDER HAS ENTERED INTO SUCH AN AGREEMENT BUT
HAS NOT CONSUMMATED THE SALE OF SUCH SECURITIES WITHIN SIX MONTHS (OR IN THE
ABSENCE OF FCC APPROVAL AT THE END OF SUCH SIX MONTHS, NINE MONTHS) FROM THE
DATE OF SUCH DEFINITIVE AGREEMENT, THEN THE PROVISIONS OF THIS SECTION 3.3 SHALL
AGAIN APPLY, AND SUCH OFFERING HOLDER SHALL NOT TRANSFER OR OFFER TO TRANSFER
SUCH EQUITY SECURITIES WITHOUT AGAIN COMPLYING WITH THIS SECTION 3.3.

(F)  UPON EXERCISE BY THE COMPANY AND/OR THE ROFO RECIPIENTS, AS THE CASE MAY
BE, OF THEIR RESPECTIVE RIGHTS OF FIRST OFFER UNDER THIS SECTION 3.3, THE
COMPANY AND/OR THE ROFO RECIPIENTS, AS THE CASE MAY BE, AND THE APPLICABLE
OFFERING HOLDER SHALL BE LEGALLY OBLIGATED TO CONSUMMATE THE PURCHASE
CONTEMPLATED THEREBY AND SHALL USE THEIR COMMERCIALLY REASONABLE EFFORTS TO
SECURE ANY GOVERNMENTAL AUTHORIZATION REQUIRED, TO COMPLY AS SOON AS REASONABLY
PRACTICABLE WITH ALL APPLICABLE LAWS AND TO TAKE ALL SUCH OTHER ACTIONS AND TO
EXECUTE SUCH ADDITIONAL DOCUMENTS AS ARE REASONABLY NECESSARY OR APPROPRIATE IN
CONNECTION THEREWITH AND TO CONSUMMATE THE PURCHASE OF THE OFFERED SECURITIES AS
PROMPTLY AS PRACTICABLE.

SECTION 3.4.        Right of Co-Sale on Transfers by Stockholders.  (a)  In the
event of a proposed Transfer of Equity Securities by a Stockholder or any of its
Affiliates (a “Transferring Stockholder”), each Stockholder (other than the
Transferring Stockholder) shall have the right to participate in the Transfer in
the manner set forth in this Section 3.4.  Prior to any such Transfer, the
Transferring Stockholder shall deliver to the Company prompt written notice (the
“Transfer Notice”), which the Company will forward to the Stockholders and each
Affiliate of such Stockholders that has been Transferred Equity Securities
(other than the Transferring Stockholder, the “Co-Sale Participants”), which
notice shall state (i) the name of the proposed Transferee, (ii) the number of
Equity Securities proposed to be Transferred (the “Transferred Securities”),
(iii) the proposed purchase price therefor, including a description of any
non-cash consideration sufficiently detailed to permit the determination of the
Fair Market Value thereof, and (iv) the other material terms and conditions of
the proposed Transfer, including the proposed Transfer date (which date may not
be less than thirty-five (35) days after delivery of the Transfer Notice).  Such
notice shall be accompanied by a written offer from the proposed Transferee to
purchase the Transferred Securities.  Each Co-Sale Participant may Transfer to
the proposed Transferee identified in the Transfer Notice their Pro Rata Portion
of the Transferred Securities by giving written notice to the Company (who shall
forward such notice to the other Co-Sale Participants within five (5) days) and
to the Transferring Stockholder within the thirty (30) day period after the
delivery of the Transfer Notice, which notice shall state that such Co-Sale
Participant elects to exercise its rights of co-sale under this Section 3.4 and
shall state the maximum number of shares sought to be Transferred.  In the event
any such Co-Sale Participant elects to exercise its co-sale rights with respect
to less than all of its Pro Rata Portion (such remaining securities, the
“Section 3.4 Non-Electing Shares”), each such other Co-Sale Participant shall be
entitled to sell its Pro Rata Portion of the Section 3.4 Non-Electing Shares. 
Each Co-Sale Participant shall be deemed to have waived its right of co-sale
hereunder if it either fails to give notice within the prescribed time period or
if such Co-Sale Participant purchases Equity Securities in exercising its right
of first offer pursuant to Section 3.3.  The

 

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proposed Transferee of Transferred Securities will not be obligated to purchase
a number of Equity Securities exceeding that set forth in the Transfer Notice
and in the event such Transferee elects to purchase less than all of the
additional Equity Securities sought to be Transferred by the Co-Sale
Participants, the number of Equity Securities to be Transferred by the
Transferring Stockholder and each such Co-Sale Participant shall be reduced on a
pro rata basis.  If, following the exercise of the co-sale rights provided for
in this Section 3.4, the proposed Transferee purchases a number a Equity
Securities greater than the number of Equity Securities proposed to be purchased
in the Transfer Notice, each Co-Sale Participant shall have the right to sell to
the proposed Transferee such Sale Participant’s Pro Rata Portion of such
additional Equity Securities.

(B)  EACH CO-SALE PARTICIPANT, IN EXERCISING ITS RIGHT OF CO-SALE HEREUNDER, MAY
PARTICIPATE IN THE TRANSFER BY DELIVERING TO THE TRANSFERRING STOCKHOLDER AT THE
CLOSING OF THE TRANSFER OF THE TRANSFERRING STOCKHOLDER’S TRANSFERRED SECURITIES
TO THE TRANSFEREE CERTIFICATES REPRESENTING THE TRANSFERRED SECURITIES TO BE
TRANSFERRED BY SUCH HOLDER, DULY ENDORSED FOR TRANSFER OR ACCOMPANIED BY STOCK
POWERS DULY EXECUTED, IN EITHER CASE EXECUTED IN BLANK OR IN FAVOR OF THE
APPLICABLE PURCHASER AGAINST PAYMENT OF THE AGGREGATE PURCHASE PRICE THEREFOR BY
WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS.

(C)  THE FOLLOWING TRANSFERS OF EQUITY SECURITIES BY ANY STOCKHOLDER OR ITS
AFFILIATES SHALL NOT BE SUBJECT TO THE CO-SALE RIGHTS PROVIDED BY THIS SECTION
3.4:  (A) TRANSFERS TO PERMITTED TRANSFEREES OF SUCH STOCKHOLDER (OR PERMITTED
TRANSFEREES OF SUCH PERMITTED TRANSFEREES), (B) PRIOR TO FIFTH ANNIVERSARY OF
THE STOCK PURCHASE CLOSING DATE AND FOLLOWING AN IPO, TRANSFERS PURSUANT TO THE
REGISTRATION RIGHTS AGREEMENT AND (C) TRANSFERS FOLLOWING THE FIFTH ANNIVERSARY
OF THE STOCK PURCHASE CLOSING DATE, IF THE COMPANY HAS PREVIOUSLY CONSUMMATED AN
IPO OR TRANSFERS FOLLOWING AN IPO CONSUMMATED THEREAFTER.

SECTION 3.5.        Drag Along Right.  (a)  If one or more Stockholders desire
to Transfer at least 50.01% of the Voting Securities of the Company and, solely
for so long as Section 2.3(c)(xiii) requires such approval, such Transfer has
been approved by the Required Directors pursuant to Section 2.3(c)(xiii), then
if requested by the Stockholder(s) Transferring such Voting Securities (the
“Section 3.5 Transferring Stockholder(s)”), such other Stockholder (together
with its Affiliates) (a “Selling Stockholder”) shall be required to sell all of
the Equity Securities held by it (it being understood that the termination of
the rights of any Stockholder under Section 2.3 shall not affect the obligations
of such Stockholder under this Section 3.5).

(B)  THE CONSIDERATION TO BE RECEIVED BY A SELLING STOCKHOLDER SHALL BE THE SAME
FORM AND AMOUNT OF CONSIDERATION PER SHARE TO BE RECEIVED BY THE SECTION 3.5
TRANSFERRING STOCKHOLDER(S), AND THE TERMS AND CONDITIONS OF SUCH SALE SHALL BE
THE SAME AS THOSE UPON WHICH THE SECTION 3.5 TRANSFERRING STOCKHOLDER(S) SELLS
ITS EQUITY SECURITIES.  IN CONNECTION WITH THE TRANSACTION CONTEMPLATED BY
SECTION 3.5(A) (THE “DRAG TRANSACTION”), THE SELLING STOCKHOLDER WILL AGREE TO
MAKE OR AGREE TO THE SAME CUSTOMARY REPRESENTATIONS, COVENANTS, INDEMNITIES AND
AGREEMENTS AS THE SECTION 3.5 TRANSFERRING STOCKHOLDER(S) SO LONG AS THEY ARE
MADE SEVERALLY AND NOT JOINTLY AND THE LIABILITIES THEREUNDER ARE BORNE ON A PRO
RATA BASIS BASED ON THE CONSIDERATION TO BE RECEIVED BY EACH STOCKHOLDER;
PROVIDED, HOWEVER, THAT ANY GENERAL INDEMNITY GIVEN BY THE TRANSFERRING
STOCKHOLDER(S), APPLICABLE TO LIABILITIES NOT SPECIFIC TO THE SECTION 3.5

 

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TRANSFERRING STOCKHOLDER(S), TO THE PURCHASER IN CONNECTION WITH SUCH SALE SHALL
BE APPORTIONED AMONG THE SELLING STOCKHOLDERS ACCORDING TO THE CONSIDERATION
RECEIVED BY EACH SELLING STOCKHOLDER AND SHALL NOT EXCEED SUCH SELLING
STOCKHOLDER’S PROCEEDS FROM THE SALE; PROVIDED, FURTHER, THAT ANY REPRESENTATION
MADE BY A SELLING STOCKHOLDER SHALL RELATE ONLY TO SUCH SELLING STOCKHOLDER AND
ITS EQUITY SECURITIES.

(C)  THE FEES AND EXPENSES, OTHER THAN THOSE PAYABLE TO ANY STOCKHOLDER OR ANY
OF THEIR RESPECTIVE AFFILIATES, INCURRED IN CONNECTION WITH A SALE UNDER THIS
SECTION 3.5 AND FOR THE BENEFIT OF ALL STOCKHOLDERS (IT BEING UNDERSTOOD THAT
COSTS INCURRED BY OR ON BEHALF OF A STOCKHOLDER FOR HIS, HER OR ITS SOLE BENEFIT
WILL NOT BE CONSIDERED TO BE FOR THE BENEFIT OF ALL STOCKHOLDERS), TO THE EXTENT
NOT PAID OR REIMBURSED BY THE COMPANY OR THE TRANSFEREE OR ACQUIRING PERSON,
SHALL BE SHARED BY ALL THE STOCKHOLDERS ON A PRO RATA BASIS, BASED ON THE
CONSIDERATION RECEIVED BY EACH STOCKHOLDER; PROVIDED THAT NO STOCKHOLDER SHALL
BE OBLIGATED TO MAKE ANY OUT-OF-POCKET EXPENDITURE PRIOR TO THE CONSUMMATION OF
THE TRANSACTION CONSUMMATED PURSUANT TO THIS SECTION 3.5 (EXCLUDING MODEST
EXPENDITURES FOR POSTAGE, COPIES, ETC.).

(D)  THE SECTION 3.5 TRANSFERRING STOCKHOLDER(S) SHALL PROVIDE WRITTEN NOTICE
(THE “DRAG ALONG NOTICE”) TO EACH OTHER SELLING STOCKHOLDER OF ANY PROPOSED DRAG
TRANSACTION AS SOON AS PRACTICABLE FOLLOWING ITS EXERCISE OF THE RIGHTS PROVIDED
IN SECTION 3.5(A).  THE DRAG ALONG NOTICE SHALL SET FORTH THE CONSIDERATION TO
BE PAID BY THE PURCHASER FOR THE SECURITIES AND THE MATERIAL TERMS OF THE DRAG
TRANSACTION.

(E)  IF ANY HOLDERS OF EQUITY SECURITIES OF ANY CLASS ARE GIVEN AN OPTION AS TO
THE FORM AND AMOUNT OF CONSIDERATION TO BE RECEIVED, ALL HOLDERS OF EQUITY
SECURITIES OF SUCH CLASS WILL BE GIVEN THE SAME OPTION.

(F)  AT LEAST TEN (10) BUSINESS DAYS PRIOR TO THE CONSUMMATION OF THE SALE, EACH
SELLING STOCKHOLDER SHALL DELIVER TO THE COMPANY TO HOLD IN ESCROW PENDING
TRANSFER OF THE CONSIDERATION THEREFOR, THE DULY ENDORSED CERTIFICATE OR
CERTIFICATES REPRESENTING THE EQUITY SECURITIES HELD BY SUCH SELLING STOCKHOLDER
TO BE SOLD, AND A STOCK POWER AND LIMITED POWER-OF-ATTORNEY AUTHORIZING THE
COMPANY TO TAKE ALL ACTIONS NECESSARY TO SELL OR OTHERWISE DISPOSE OF SUCH
SECURITIES.  IN THE EVENT THAT A SELLING STOCKHOLDER SHOULD FAIL TO DELIVER THE
EQUITY SECURITIES, THE COMPANY SHALL CAUSE THE BOOKS AND RECORDS OF THE COMPANY
TO SHOW THAT SUCH EQUITY SECURITIES ARE BOUND BY THE PROVISIONS OF THIS SECTION
3.5 AND THAT SUCH SECURITIES MAY ONLY BE TRANSFERRED TO THE PURCHASER IN SUCH
DRAG TRANSACTION.

(G)  UPON THE CONSUMMATION OF THE DRAG TRANSACTION, THE ACQUIRING PERSON SHALL
REMIT DIRECTLY TO THE SELLING STOCKHOLDER, BY WIRE TRANSFER IF AVAILABLE AND IF
REQUESTED BY THE SELLING STOCKHOLDER, THE CONSIDERATION FOR THE SECURITIES SOLD
PURSUANT THERETO.

SECTION 3.6.        Void Transfers.  Any Transfer or attempted Transfer of
Equity Securities in violation of any provision of this Agreement shall be void.

 

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ARTICLE IV

EQUITY PURCHASE RIGHTS

SECTION 4.1.        Equity Purchase Rights.  (a)  The Company hereby grants to
each Stockholder (and such Stockholder’s Affiliates that are Transferred Equity
Securities) the right to purchase its Pro Rata Portion of all or any part of New
Securities that the Company may, from time to time, propose to sell or issue. 
The number or amount of New Securities which the Stockholders may purchase
pursuant to this Section 4.1(a) shall be referred to as the “Equity Purchase
Shares.”  The equity purchase right provided in this Section 4.1(a) shall apply
at the time of issuance of any right, warrant or option or convertible or
exchangeable security and not to the conversion, exchange or exercise thereof.

(B)  THE COMPANY SHALL GIVE WRITTEN NOTICE OF A PROPOSED ISSUANCE OR SALE
DESCRIBED IN SECTION 4.1(A) TO THE STOCKHOLDERS WITHIN FIVE (5) BUSINESS DAYS
FOLLOWING ANY MEETING OF THE BOARD AT WHICH ANY SUCH ISSUANCE OR SALE IS
APPROVED AND AT LEAST FIFTEEN (15) DAYS PRIOR TO THE PROPOSED ISSUANCE OR SALE. 
SUCH NOTICE (THE “ISSUANCE NOTICE”) SHALL SET FORTH THE MATERIAL TERMS AND
CONDITIONS OF SUCH PROPOSED TRANSACTION, INCLUDING THE NAME OF ANY PROPOSED
PURCHASER(S), THE PROPOSED MANNER OF DISPOSITION, THE NUMBER OR AMOUNT AND
DESCRIPTION OF THE SHARES PROPOSED TO BE ISSUED, THE PROPOSED ISSUANCE DATE AND
THE PROPOSED PURCHASE PRICE PER SHARE, INCLUDING A DESCRIPTION OF ANY NON-CASH
CONSIDERATION SUFFICIENTLY DETAILED TO PERMIT THE DETERMINATION OF THE FAIR
MARKET VALUE THEREOF.  SUCH NOTICE SHALL ALSO BE ACCOMPANIED BY ANY WRITTEN
OFFER FROM THE PROSPECTIVE PURCHASER TO PURCHASE SUCH NEW SECURITIES.

(C)  AT ANY TIME DURING THE 15-DAY PERIOD FOLLOWING THE RECEIPT OF AN ISSUANCE
NOTICE, THE STOCKHOLDERS SHALL HAVE THE RIGHT TO ELECT IRREVOCABLY TO PURCHASE
ITS PRO RATA PORTION OF THE NUMBER OF THE EQUITY PURCHASE SHARES AT THE PURCHASE
PRICE SET FORTH IN THE ISSUANCE NOTICE (PROVIDED THAT, IN THE EVENT ANY PORTION
OF THE PURCHASE PRICE PER SHARE TO BE PAID BY THE PROPOSED PURCHASER IS TO BE
PAID IN NON-CASH CONSIDERATION, THE VALUE OF ANY SUCH NON-CASH CONSIDERATION PER
SHARE SHALL BE THE FAIR MARKET VALUE THEREOF) AND UPON THE OTHER TERMS AND
CONDITIONS SPECIFIED IN THE ISSUANCE NOTICE BY DELIVERING A WRITTEN NOTICE TO
THE COMPANY.  EXCEPT AS PROVIDED IN THE FOLLOWING SENTENCE, SUCH PURCHASE SHALL
BE CONSUMMATED CONCURRENTLY WITH THE CONSUMMATION OF THE ISSUANCE OR SALE
DESCRIBED IN THE ISSUANCE NOTICE.  THE CLOSING OF ANY PURCHASE BY ANY
STOCKHOLDER MAY BE EXTENDED BEYOND THE CLOSING OF THE TRANSACTION DESCRIBED IN
THE ISSUANCE NOTICE TO THE EXTENT NECESSARY TO (I) OBTAIN REQUIRED GOVERNMENTAL
APPROVALS AND OTHER REQUIRED APPROVALS AND THE COMPANY AND THE STOCKHOLDERS
SHALL USE THEIR RESPECTIVE COMMERCIALLY REASONABLE EFFORTS TO OBTAIN SUCH
APPROVALS AND (II) PERMIT THE STOCKHOLDERS OR THEIR AFFILIATES TO COMPLETE THEIR
INTERNAL CAPITAL CALL PROCESS; PROVIDED THAT THE EXTENSION PURSUANT TO THIS
CLAUSE (II) SHALL NOT EXCEED 30 DAYS.

(D)  EACH STOCKHOLDER EXERCISING ITS RIGHT TO PURCHASE ITS RESPECTIVE PORTION OF
THE EQUITY PURCHASE SHARES IN FULL (AN “EXERCISING STOCKHOLDER”) SHALL HAVE A
RIGHT OF OVER-ALLOTMENT SUCH THAT IF ANY OTHER STOCKHOLDER OR AFFILIATE OF ANY
STOCKHOLDER FAILS TO EXERCISE ITS RIGHT HEREUNDER TO PURCHASE ITS FULL PRO RATA
PORTION OF NEW SECURITIES (A “NON-PURCHASING STOCKHOLDER”), SUCH EXERCISING
STOCKHOLDER MAY PURCHASE ITS PRO RATA PORTION OF SUCH SECURITIES BY GIVING
WRITTEN NOTICE TO THE COMPANY WITHIN TEN (10) DAYS FROM THE DATE THAT THE
COMPANY

 

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PROVIDES WRITTEN NOTICE OF THE AMOUNT OF NEW SECURITIES AS TO WHICH SUCH
NON-PURCHASING STOCKHOLDERS HAVE FAILED TO EXERCISE THEIR EQUITY PURCHASE RIGHTS
HEREUNDER.

(E)  IF ANY STOCKHOLDER OR EXERCISING STOCKHOLDER FAILS TO EXERCISE FULLY THE
EQUITY PURCHASE RIGHT WITHIN THE PERIODS DESCRIBED ABOVE AND AFTER EXPIRATION OF
THE 10-DAY PERIOD FOR EXERCISE OF THE OVER-ALLOTMENT PROVISIONS PURSUANT TO
SECTION 4.1(D) ABOVE, THE COMPANY SHALL BE FREE TO COMPLETE THE PROPOSED
ISSUANCE OR SALE OF THE NEW SECURITIES DESCRIBED IN THE ISSUANCE NOTICE WITH
RESPECT TO WHICH EXERCISING STOCKHOLDERS FAILED TO EXERCISE THE OPTION SET FORTH
IN THIS SECTION 4.1 ON TERMS NO LESS FAVORABLE TO THE COMPANY THAN THOSE SET
FORTH IN THE ISSUANCE NOTICE (EXCEPT THAT THE AMOUNT OF SECURITIES TO BE ISSUED
OR SOLD BY THE COMPANY MAY BE REDUCED); PROVIDED THAT (X) SUCH ISSUANCE OR SALE
IS CLOSED WITHIN NINETY (90) DAYS AFTER THE EXPIRATION OF THE 10-DAY PERIOD
DESCRIBED IN SECTION 4.1(D) AND (Y) THE PRICE AT WHICH THE NEW SECURITIES ARE
TRANSFERRED MUST BE EQUAL TO OR HIGHER THAN THE PURCHASE PRICE DESCRIBED IN THE
ISSUANCE NOTICE.  SUCH PERIODS WITHIN WHICH SUCH ISSUANCE OR SALE MUST BE CLOSED
SHALL BE EXTENDED TO THE EXTENT NECESSARY TO OBTAIN REQUIRED GOVERNMENTAL
APPROVALS AND OTHER REQUIRED APPROVALS AND THE COMPANY SHALL USE ITS
COMMERCIALLY REASONABLE EFFORTS TO OBTAIN SUCH APPROVALS.  IN THE EVENT THAT THE
COMPANY HAS NOT SOLD SUCH NEW SECURITIES WITHIN SAID 90-DAY PERIOD, THE COMPANY
SHALL NOT THEREAFTER ISSUE OR SELL ANY NEW SECURITIES, WITHOUT FIRST AGAIN
OFFERING SUCH SECURITIES TO THE STOCKHOLDERS IN THE MANNER PROVIDED IN THIS
SECTION 4.1.

ARTICLE V

MISCELLANEOUS

SECTION 5.1.        Stockholder Indemnification; Reimbursement of Expenses.

The Company agrees to indemnify and hold harmless each Stockholder, their
respective directors, members, managers and officers and their Affiliates (the
Stockholders, and the respective directors, officers, partners, members,
managers, Affiliates and controlling persons thereof, each, an “Stockholder
Indemnitee”) from and against any and all liability, including, without
limitation, all obligations, costs, fines, claims, actions, injuries, demands,
suits, judgments, proceedings, investigations, arbitrations (including
stockholder claims, actions, injuries, demands, suits, judgments, proceedings,
investigations or arbitrations) and reasonable expenses, including reasonable
accountant’s and reasonable attorney’s fees and expenses (together the
“Losses”), incurred by such Stockholder Indemnitee before or after the date of
this Agreement and arising out of, resulting from, or relating to (i) such
Stockholder Indemnitee’s purchase and/or ownership of any Equity Securities,
(ii) the transactions contemplated by the Transaction Agreement (including the
agreements described therein), and any other purchase agreements pursuant to
which any Stockholder Indemnitee purchased securities of the Company and all
agreements contemplated thereby, or (iii) any litigation to which any
Stockholder Indemnitee is made a party in its capacity as a stockholder or owner
of securities (or a partner, director, officer, member, manager, Affiliate or
controlling person of any Stockholder Indemnitee) of the Company; provided that
the foregoing indemnification rights in this Section 5.1 shall not be available
to the extent that (a) any such Losses are incurred as a result of such
Stockholder Indemnitee’s willful misconduct or gross negligence; (b) any such
Losses are incurred as a result of non-compliance by such Stockholder Indemnitee
with any laws or

 

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regulations applicable to any of them; (c) any such Losses are incurred as a
result of non-compliance by such Stockholder Indemnitee with its obligations
under any of the agreements or instruments referenced above or any other
agreements or instruments to which such Stockholder Indemnitee is or becomes a
party or otherwise becomes bound; or (d) subject to the rights of contribution
provided for below, to the extent indemnification for any Losses would violate
any applicable law, regulation or public policy.  For purposes of this Section
5.1, none of the circumstances described in the limitations contained in the
proviso in the immediately preceding sentence shall be deemed to apply absent a
final non-appealable judgment of a court of competent jurisdiction to such
effect, in which case to the extent any such limitation is so determined to
apply to any Stockholder Indemnitee as to any previously advanced indemnity
payments made by the Company under this Section 5.1, then such payments shall be
promptly repaid by such Stockholder Indemnitee to the Company.  The rights of
any Stockholder Indemnitee to indemnification hereunder will be in addition to
any other rights any such party may have under any other agreement or instrument
referenced above or any other agreement or instrument to which such Stockholder
Indemnitee is or becomes a party or is or otherwise becomes a beneficiary or
under law or regulation.  In the event of any payment of indemnification
pursuant to this Section 5.1, so long as any Stockholder Indemnitee is fully
indemnified for all Losses, the Company will be subrogated to the extent of such
payment to all of the related rights of recovery of the Stockholder Indemnitee
to which such payment is made against all other Persons.  Such Stockholder
Indemnitee shall execute all papers reasonably required to evidence such
rights.  The Company will be entitled at its election to participate in the
defense of any third party claim upon which indemnification is due pursuant to
this Section 5.1 or to assume the defense thereof, with counsel reasonably
satisfactory to such Stockholder Indemnitee unless, in the reasonable judgment
of the Stockholder Indemnitee, a conflict of interest between the Company and
such Stockholder Indemnitee may exist, in which case such Stockholder Indemnitee
shall have the right to assume its own defense and the Company shall be liable
for all reasonable expenses therefor.  Except as set forth above, should the
Company assume such defense all further defense costs of the Stockholder
Indemnitee in respect of such third party claim shall be for the sole account of
such party and not subject to indemnification hereunder.  The Company will not
without the prior written consent of the Stockholder Indemnitee effect any
settlement of any threatened or pending third party claim in which such
Stockholder Indemnitee is or could have been a party and be entitled to
indemnification hereunder unless such settlement solely involves the payment of
money and includes an unconditional release of such Stockholder Indemnitee from
all liability and claims that are the subject matter of such claim.  If the
indemnification provided for above is unavailable in respect of any Losses, then
the Company, in lieu of indemnifying an Stockholder Indemnitee, shall contribute
to the amount paid or payable by such Stockholder Indemnitee in such proportion
as is appropriate to reflect the relative fault of the Company and such
Stockholder Indemnitee in connection with the actions which resulted in such
Losses, as well as any other equitable considerations.

The Company agrees to pay or reimburse (i) the Stockholders for (A) all
reasonable costs and expenses (including reasonable attorneys fees, charges,
disbursement and expenses) incurred in connection with any amendment,
supplement, modification or waiver of or to any of the terms or provisions of
this Agreement, the Transaction Agreement or any related agreements and (B) in
connection with any stamp, transfer, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this

 

24

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Agreement, the Transaction Agreement or any related agreements; and (ii) each
Stockholder for all costs and expenses of such Stockholder (including reasonable
attorneys fees, charges, disbursement and expenses) incurred in connection with
(1) the consent to any departure by the Company or any of its Subsidiaries from
the terms of any provision of this Agreement, the Transaction Agreement or any
related agreements and (2) the enforcement or exercise by such Stockholder of
any right granted to it or provided for hereunder.

SECTION 5.2.        Termination.  Subject to the early termination of any
provision as a result of an amendment to this Agreement agreed to by the Company
and the Stockholders as provided under Section 5.8, (i) the provisions of
Article II shall, with respect to each Stockholder, terminate as provided in the
applicable Section of Article II or, if not so provided, as provided in Section
2.6, (ii) the provisions of Section 3.3 and Article IV shall terminate upon the
consummation of an IPO, (iii) the provisions of Sections 2.4, 2.5, 3.2 and 3.4
shall terminate as provided therein and (iv) Sections 3.1, 3.6 and 5.1 of this
Agreement shall not terminate.  Nothing herein shall relieve any party from any
liability for the breach of any of the agreements set forth in this Agreement.

SECTION 5.3.        Amendments and Waivers.  Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this Agreement
shall be effective without the approval of the Company and each Stockholder;
provided, that any Stockholder may waive (in writing) the benefit of any
provision of this Agreement with respect to itself for any purpose.  The failure
of any party to enforce any of the provisions of this Agreement shall in no way
be construed as a waiver of such provisions and shall not affect the right of
such party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.  Each of Constellation, Carlyle and Providence hereby
agrees not to consent to amend this Agreement in order to modify or eliminate
the right of its affiliated VCOC Fund to appoint a Stockholder Designee without
the consent of such affiliated VCOC Fund.

SECTION 5.4.        Successors, Assigns and Transferees.  This Agreement shall
bind and inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.  Stockholders may assign
their respective rights and obligations hereunder to any Transferees only to the
extent expressly provided herein.

SECTION 5.5.        Legend.  (a)  All certificates representing the Equity
Securities held by each Stockholder shall bear a legend substantially in the
following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS
AGREEMENT (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY).  NO
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH
THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT AND (A) PURSUANT TO A REGISTRATION
STATEMENT EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B)
PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER.  THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE
PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT.

 

 

25

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(B)  UPON THE SALE OF ANY EQUITY SECURITIES PURSUANT TO (I) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO RULE 144 UNDER
THE SECURITIES ACT OR (II) ANOTHER EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OR UPON THE TERMINATION OF THIS AGREEMENT, THE CERTIFICATES
REPRESENTING SUCH EQUITY SECURITIES SHALL BE REPLACED, AT THE EXPENSE OF THE
COMPANY, WITH CERTIFICATES OR INSTRUMENTS NOT BEARING THE LEGENDS REQUIRED BY
THIS SECTION 5.5; PROVIDED THAT THE COMPANY MAY CONDITION SUCH REPLACEMENT OF
CERTIFICATES UNDER CLAUSE (II) UPON THE RECEIPT OF AN OPINION OF SECURITIES
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

SECTION 5.6.        Notices.  All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given:
(a) upon personal delivery to the party to be notified; (b) when sent by
confirmed facsimile if sent during normal business hours of the recipient, if
not, then on the next Business Day, provided that a copy of such notice is also
sent via nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt; (c) five (5) days after having been sent
by registered or certified mail, return receipt requested, postage prepaid; or
(d) one (1) Business Day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. 
All communications shall be sent to such party’s address as set forth below or
at such other address as the party shall have furnished to each other party in
writing in accordance with this provision:

 

If to the Company

 

PanAmSat Corporation

20 Westport Road

Wilton, Connecticut  06897

Attention:  James W. Cuminale

Telecopy  :203-210-8684

 

 

with a copy to:

 (which shall not

constitute notice)

 

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

 

 

 

Attention

 

Gary I. Horowitz

Marni J. Lerner

 

 

 

Telecopy:

(212) 455-2502

 

 

 

 

 

 

 

If to Constellation or KKR Fund:

 

Constellation, LLC

c/o Kohlberg Kravis & Roberts & Co.

9 West 57th Street

New York, New York  10019

Attention: Alex Navab

Telecopy: (212) 750-0003

 

 

 

 

 

with a copy to: (which shall not constitute notice)

 

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York  10017

Attention:Gary I. Horowitz

                Marni J. Lerner

Telecopy:(212) 455-2502

 

26

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If to Carlyle or the Carlyle Fund:

 

Carlyle PanAmSat I, L.L.C.

Carlyle PanAmSat II, L.L.C.

1001 Pennsylvania Avenue, N.W.

Suite 220

South Washington, D.C.  20004

Attention: Bruce E. Rosenblum

Telecopy:(202) 347-9250

 

 

with a copy to:

 (which shall not

constitute notice)

 

Latham & Watkins LLP

555 Eleventh Street, NW

 Suite 1000

Washington, D.C.  20004-1304

Attention: Daniel T. Lennon

Telecopy: (202) 637-2201

 

 

 

 

 

If to Providence or the

Providence Fund:

 

PEP PAS, LLC

PEOP PAS, LLC

50 Kennedy Plaza

18th Floor

Providence, RI  02903

Attention: Paul Salem

Telecopy: (401) 751-1709

 

 

 

 

 

with a copy to:

 (which shall not

constitute notice)

 

Latham & Watkins LLP

555 Eleventh Street, NW

Suite 1000

Washington, D.C.  20004-1304

Attention: Daniel T. Lennon

Telecopy: (202) 637-2201

 

 

 

 

SECTION 5.7.        Further Assurances.  At any time or from time to time after
the date hereof, the parties agree to cooperate with each other, and at the
request of any other party, to execute and deliver any further instruments or
documents and to take all such further action as the other party may reasonably
request in order to evidence or effectuate the consummation of the transactions
contemplated hereby and to otherwise carry out the intent of the parties
hereunder.

SECTION 5.8         Entire Agreement.  Except as otherwise expressly set forth
herein, this Agreement together with the Registration Rights Agreement embodies
the complete agreement and understanding among the parties hereto with respect
to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, that may have related to the subject matter hereof in any way.

SECTION 5.9.        Restrictions on Other Agreements; Bylaws.  (a)  Following
the date hereof, no Stockholder or any of its, her or his Permitted Transferees
shall enter into or agree to be bound by any stockholder agreements or
arrangements of any kind with any Person with respect to any Equity Securities
except pursuant to the agreements specifically

 

27

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contemplated by the Transaction Agreement and the Registration Rights Agreement
or expressly permitted hereunder.

(B)  THE PROVISIONS OF THIS AGREEMENT SHALL BE CONTROLLING IF ANY SUCH
PROVISIONS OR THE OPERATION THEREOF CONFLICT WITH THE PROVISIONS OF THE
COMPANY’S BY-LAWS.  EACH OF THE PARTIES COVENANTS AND AGREES TO VOTE THEIR
EQUITY SECURITIES AND TO TAKE ANY OTHER ACTION REASONABLY REQUESTED BY THE
COMPANY OR ANY STOCKHOLDER TO AMEND THE COMPANY’S BY-LAWS SO AS TO AVOID ANY
CONFLICT WITH THE PROVISIONS HEREOF.

SECTION 5.10.      Delays or Omissions.  It is agreed that no delay or omission
to exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring.  It is
further agreed that any waiver, permit, consent or approval of any kind or
character on the part of any party hereto of any breach, default or
noncompliance under this Agreement or any waiver on such party’s part of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing.  All
remedies, either under this Agreement, by law, or otherwise afforded to any
party, shall be cumulative and not alternative.

SECTION 5.11.      Governing Law; Jurisdiction; Waiver of Jury Trial.  This
Agreement shall be governed in all respects by the laws of the State of
Delaware.  No suit, action or proceeding with respect to this Agreement may be
brought in any court or before any similar authority other than in a court of
competent jurisdiction in the State of New York, and the parties hereto hereby
submit to the exclusive jurisdiction of such courts for the purpose of such
suit, proceeding or judgment.  Each party hereto hereby irrevocably waives any
right it may have had to bring such an action in any other court, domestic or
foreign, or before any similar domestic or foreign authority.  Each of the
parties hereto hereby irrevocably and unconditionally waives trial by jury in
any legal action or proceeding in relation to this Agreement and for any
counterclaim therein.

SECTION 5.12.      Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

SECTION 5.13.      Enforcement.  Each party hereto acknowledges that money
damages would not be an adequate remedy in the event that any of the covenants
or agreements in this Agreement are not performed in accordance with its terms,
and it is therefore agreed that in addition to and without limiting any other
remedy or right it may have, the non-breaching party will have the right to an
injunction, temporary restraining order or other equitable relief in any court
of competent jurisdiction enjoining any such breach and enforcing specifically
the terms and provisions hereof.

 

28

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SECTION 5.14.      Titles and Subtitles.  The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.

SECTION 5.15.      No Recourse.  Notwithstanding anything that may be expressed
or implied in this Agreement, the Company and each Stockholder covenant, agree
and acknowledge that no recourse under this Agreement or any documents or
instruments delivered in connection with this Agreement shall be had against any
current or future director, officer, employee, general or limited partner or
member of any Stockholder or of any Affiliate or assignee thereof, whether by
the enforcement of any assessment or by any legal or equitable proceeding, or by
virtue of any statute, regulation or other applicable law, it being expressly
agreed and acknowledged that no personal liability whatsoever shall attach to,
be imposed on or otherwise be incurred by any current or future officer, agent
or employee of any Stockholder or any current or future member of any
Stockholder or any current or future director, officer, employee, partner or
member of any Stockholder or of any Affiliate or assignee thereof, as such for
any obligation of any Stockholder under this Agreement or any documents or
instruments delivered in connection with this Agreement for any claim based on,
in respect of or by reason of such obligations or their creation.

SECTION 5.16.      Counterparts; Facsimile Signatures.  This Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which together shall constitute one instrument.  This Agreement may be
executed by facsimile signature(s).

 

 

[Rest of page intentionally left blank]

 

29

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IN WITNESS WHEREOF, the parties hereto have executed this Stockholders Agreement
as of the date set forth in the first paragraph hereof.

 

PANAMSAT CORPORATION

 

 

 

 

By:

/s/ James W. Cuminale

 

 

Name:

James W. Cuminale

 

 

Title:

Executive Vice President

 

 

 

and General Counsel

 

 

 

 

CONSTELLATION, LLC

 

 

 

 

By:

/s/ Alexander Navab

 

 

Name: Alexander Navab

 

 

Title:   President

 

 

 

 

CARLYLE PANAMSAT I, LLC

 

 

 

 

By:

/s/ Bruce Rosenblum

 

 

Name:  Bruce Rosenblum

 

 

Title:     Managing Director

 

 

 

 

CARLYLE PANAMSAT II, LLC

 

 

 

 

By:

/s/ Bruce Rosenblum

 

 

Name: Bruce Rosenblum

 

 

Title:   Managing Director

 

 

 

 

PEP PAS, LLC

 

 

 

 

By:

/s/ Paul Salem

 

 

Name: Paul Salem

 

 

Title:

 

 

 

 

PEOP PAS, LLC

 

 

 

 

By:

/s/ Paul Salem

 

 

Name: Paul Salem

 

 

Title:

 

 

 

 

Signature Page to PanAmSat Stockholders Agreement

 

 

 

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CARLYLE PARTNERS III-

 

TELECOMMUNICATIONS, L.P.

 

 

 

 

By:

TC Group III, L.P.

 

 

its General Partner

 

 

 

 

By:

TC Group III, L.L.C.

 

 

its General Partner

 

 

 

 

By:

TCG Group, L.L.C.

 

 

its Managing Member

 

 

 

 

By:

TCG Holdings, L.L.C.

 

 

its Managing Member

 

 

 

 

By:

/s/ Bruce Rosenblum

 

 

Name: Bruce Rosenblum

 

 

Title:  Managing Director

 

 

 

 

PROVIDENCE EQUITY PARTNERS IV, L.P.

 

 

 

 

By:

/s/ Paul Salem

 

 

Name:  Paul  Salem

 

 

Title:

 

 

 

 

KKR MILLENNIUM FUND L.P.

 

 

 

 

By:

KKR ASSOCIATES MILLENNIUM L.P.

 

 

its General Partner

 

 

 

 

By:

KKR MILLENNIUM GP LLC

 

 

its General Partner

 

 

 

 

By:

/s/ Alexander Navab

 

 

Name: Alexander Navab

 

 

Title:   Member

 

 

 

 

 

 

 

 

Signature Page to PanAmSat Stockholders Agreement

 

 

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Exhibit A

Assignment and Assumption Agreement

Pursuant to the Stockholders Agreement, dated as of ____ __, 2004 (the
“Stockholders Agreement”), among PanAmSat Corporation, a Delaware corporation
(the “Company”), and each of the stockholders of the Company whose name appears
on the signature pages listed therein (each, a “Stockholder” and collectively,
the “Stockholders”), _________, (the “Transferor”) hereby assigns to the
undersigned the rights that may be assigned thereunder with respect to the
Equity Securities so Transferred, and the undersigned hereby agrees that, having
acquired Equity Securities as permitted by the terms of the Stockholders
Agreement, the undersigned shall assume the obligations of the Transferor under
the Stockholders Agreement with respect to the Equity Securities so Transferred.
Capitalized terms used but not defined herein shall have the meanings assigned
to them in the Stockholders Agreement.

Listed below is information regarding the Equity Securities:

Number of Shares of

Common Stock

 

 

___________________

 

 

 

IN WITNESS WHEREOF, the undersigned has executed this Assumption Agreement as of
__________ ___, 20__.

 

 

 

[NAME OF TRANSFEREE]

 

 

 

 

 

 

 

 

Name:

 

 

Title:

 

Acknowledged by:

PANAMSAT CORPORATION

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

 

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Exhibit B

 

FSS Operators

 

1.               SES Global and its subsidiaries (Asiasat, Nahuelsat, Star One,
NordicSat, etc.)

2.               Intelsat and its subsidiaries

3.               Eutelsat and its subsidiaries (Hispasat, Hispamar, Amazonas)

4.               JSAT

5.               Telesat Canada

6.               Space Communications Corp. (SCC — Japan)

7.               Loral Orion

8.               Singtel Optus Australia

9.               Satmex

10.         Measat/Binariang (Malaysia)

11.         EuropeStar

12.         New Skies

 

Value Added Providers (Resellers, Service Providers, TT&C and Teleports)

 

1.               HNS

2.               Vyvx

3.               Globecast

4.               Ascent Media

5.               Space Connection

6.               Microspace

 

G2 Competitors

 

1.  Artel

2.  Arrowhead Global Solutions

3.  Spacelink

4.  Comtech

5.  Marshall Communications

6.  Lyman Brothers

7.  AIS

8.  Connaly

9  Stratos

 

 

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