Dish Network 1997 Annual Report Download - page 72

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
8. Stockholders’ Equity (Deficit) – Continued
F–25
31, 1997, the aggregate liquidation preference for all outstanding shares was $19.6 million. Each share of Series A
Preferred Stock is entitled to receive dividends equal to 8% per annum of the initial liquidation preference for such
share. Each share of Series A Preferred Stock automatically converts into shares of Class A Common Stock in the
event they are transferred to any person other than certain permitted transferees. Each share of Series A Preferred
Stock is entitled to the equivalent of ten votes for each share of Class A Common Stock into which it is convertible.
Except as otherwise required by law, holders of Series A Preferred Stock vote together with the holders of Class A
and Class B Common Stock as a single class.
Series C Cumulative Convertible Preferred Stock
In November 1997, EchoStar offered and sold (the “ Series C Preferred Offering” ) 2.3 million shares of 6 3/4%
Series C Cumulative Convertible Preferred Stock (the “ Series C Preferred Stock” ). The Series C Preferred Offering,
after exercise by the underwriters of their 15% over-allotment option, resulted in net proceeds to EchoStar of
approximately $97 million. Simultaneous with the closing of the Series C Preferred Offering, the purchasers of the
Series C Preferred Stock placed approximately $15 million into an account (the “ Deposit Account” ). EchoStar
recorded proceeds from the Series C Preferred Offering net of the amount placed in the Deposit Account. Between the
date of issuance and November 2, 1999 (the date dividends begin to accrue), EchoStar is accreting the proceeds from
the Series C Preferred Offering to the face amount of the Series C Preferred Stock issued ($115 million.) The Deposit
Account will provide a quarterly cash payment of approximately $0.844 per share of Series C Preferred Stock (the
“ Quarterly Return Amount” ), commencing February 1, 1998 and continuing until November 1, 1999. After that date,
dividends on the Series C Preferred Stock will begin to accrue. EchoStar may, prior to the date on which any Quarterly
Return Amount would otherwise be payable, deliver a notice instructing the deposit agent: ( i) to purchase from
EchoStar, for transfer to each holder of Series C Preferred Stock, in lieu of the Quarterly Return Amount, that number
of whole shares of Class A Common Stock determined by dividing the Quarterly Return Amount by 95% of the market
value of the Class A Common Stock as of the date of such notice; or (ii) defer delivery of the Quarterly Return Amount
to holders of Series C Preferred Stock on such quarterly payment date until the next quarterly payment date or any
subsequent payment date. However, no later than November 1, 1999 (the “Deposit Expiration Date” ), any amounts
remaining in the Deposit Account, as of such date, including amounts which have previously been deferred, will be ( i)
paid to the holders of Series C Preferred Stock; or (ii) at EchoStar’s option, used to purchase from EchoStar for
delivery to each holder of Series C Preferred Stock that number of whole shares of Class A Common Stock determined
by dividing the balance remaining in the Deposit Account by 95% of the market value of the shares of Class A
Common Stock as of the date of EchoStar’s notice.
Each share of Series C Preferred Stock has a liquidation preference of $50 per share . Dividends on the
Series C Preferred Stock will accrue from November 2, 1999, and holders of the Series C Preferred Stock will be
entitled to receive cumulative dividends at an annual rate of 6 3/4% of the liquidation preference, payable quarterly in
arrears commencing February 1, 2000 . Dividends may, at the option of EchoStar, be paid in cash, by delivery of
fully paid and nonassessable shares of Class A Common Stock, or a combination thereof . Each share of Series C
Preferred Stock is convertible at any time, unless previously redeemed, at the option of the holder thereof, into
approximately 2.05 shares of Class A Common Stock, subject to adjustment upon the occurrence of certain events .
The Series C Preferred Stock is redeemable at any time on or after November 1, 2000, in whole or in part, at the
option of EchoStar, in cash, by delivery of fully paid and nonassessable shares of Class A Common Stock, or a
combination thereof, initially at a price of $51.929 per share and thereafter at prices declining to $50.000 per share
on or after November 1, 2004, plus in each case all accumulated and unpaid dividends to the redemption date.