AMENDMENT NO. 1
TO
RIGHTS AGREEMENT
THIS AMENDMENT NO. 1 TO RIGHTS AGREEMENT (this "Amendment") is
entered into as of December 20, 2002, between XM SATELLITE RADIO HOLDINGS INC.,
a Delaware corporation (the "Company"), and EQUISERVE TRUST COMPANY, N.A. (the
"Rights Agent").
WHEREAS, the Company and the Rights Agent are party to a Rights
Agreement, dated as of August 2, 2002 (the "Rights Agreement");
WHEREAS, in accordance with Section 27 of the Rights Agreement,
the Company and the Rights Agent desire to amend the Rights Agreement on the
terms and conditions hereinafter set forth; and
WHEREAS, for purposes of this Amendment, capitalized terms not
otherwise defined herein shall have the respective meanings set forth in the
Rights Agreement, as amended by this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. Amendments to Section 1.
(a) Section 1(a) of the Rights Agreement, relating to the
definition of the term "Acquiring Person," is amended to read in its entirety as
follows:
"Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates
and Associates (as such terms are hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the shares of Class A
Common Stock then outstanding, but shall not include (i) the
Company, (ii) any Subsidiary of the Company, or (iii) any
employee benefit plan of the Company or any Subsidiary of the
Company, or any Person holding shares of Class A Common Stock for
or pursuant to the terms of any such plan to the extent, and only
to the extent, of such shares so held. Notwithstanding the
foregoing, neither Hughes Electronics Corporation (together with
its Affiliates and Associates, "Hughes") nor General Motors
Corporation (together with its Affiliates and Associates,
including OnStar Corporation, "GM;" GM and Hughes, together with
their respective Affiliates and Associates, are each referred to
sometimes hereinafter as a "Qualified Exempt Person"), shall be
deemed an "Acquiring Person"; provided however,
that if after August 2, 2002, in the case of Hughes (the "Hughes
Exemption Date"), or after the Debt Refinancing Date, in the case
of GM, any Qualified Exempt Person shall become at any time the
Beneficial Owner of additional shares of Class A Common Stock
such that the beneficial ownership of such Qualified Exempt
Person shall represent two percent (2%) or more of the total
number of shares of Class A Common Stock then outstanding than
such Qualified Exempt Person's beneficial ownership represented
as of the Hughes Exemption Date, in the case of Hughes, or the
Debt Refinancing Date, in the case of GM, then such Qualified
Exempt Person shall be deemed an "Acquiring Person" hereunder as
to all of the shares of Class A Common Stock then beneficially
owned by it and its Affiliates and Associates. For purposes of
the above calculations, in determining whether GM constitutes an
"Acquiring Person", it shall be understood that shares of Class A
Common Stock issued or issuable to GM (i) as payment of interest
accrued on the New GM Notes, (ii) as payment of interest accrued
under the GM Credit Facility, (iii) upon conversion of the New GM
Notes, (iv) upon exercise of the GM Warrant, (v) as payment of
subscriber bounty payments under the GM Distribution Agreement or
in satisfaction of the Company's obligations under any other
contract with GM, (vi) in connection with the issuance and sale
on or prior to the Debt Refinancing Date to General Motors
Corporation or any of its Affiliates and Associates of additional
shares of Class A Common Stock or securities convertible into or
exercisable for Class A Common Stock, or (vii) in connection with
any agreement prepared to document any of the issuances or
potential issuances described in clauses (i) through (vi) above
and the transactions and arrangements contemplated thereby,
regardless of when such interest accrues, such New GM Notes are
converted, such GM Warrant is exercised, such subscriber bounty
payments or other contractual obligations become payable, such
shares of Class A Common Stock are sold, or the securities
convertible or exercisable for shares of Class A Common Stock are
converted into or exercised for shares of Class A Common Stock,
shall be deemed to have been outstanding and beneficially owned
by GM as of the Debt Refinancing Date. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the
result of an acquisition of shares of Class A Common Stock by the
Company which, by reducing the number of shares of Class A Common
Stock outstanding, increases the proportionate number of shares
of Class A Common Stock beneficially owned by such Person to 15%
or more of the shares of Class A Common Stock then outstanding
(or in the case of a Qualified Exempt Person, increases the
proportionate number of shares of Class A Common Stock
beneficially owned as of the date hereof by an additional 2%);
provided, however, that if a Person shall become the Beneficial
Owner of 15% or more of
-2-
the Class A Common Stock then outstanding (or in the case of a
Qualified Exempt Person, increases the proportionate number of
shares of Class A Common Stock beneficially owned as of the date
hereof by an additional 2%) by reason of share purchases by the
Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional shares of Class A
Common Stock, then such Person shall be deemed to be an
"Acquiring Person" if such Person is then the Beneficial Owner of
15% or more of the Class A Common Stock then outstanding.
Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would
otherwise be an "Acquiring Person", as defined pursuant to the
foregoing provisions of this paragraph (a), has become such
inadvertently, without any intention of changing or influencing
control of the Company, and such Person divests as promptly as
practicable a sufficient number of shares of Class A Common Stock
so that such Person would no longer be an "Acquiring Person,"
then such Person shall not be deemed an "Acquiring Person" for
any purposes of this Agreement unless and until such Person shall
again become an "Acquiring Person"; provided, that, to the extent
the parties (the "Members") to the Shareholders' Agreement (as
defined herein) could be deemed a "group" (as such term is used
in Rule 13d-5 of the general Rules and Regulations under the
Exchange Act (as defined herein)), no Member shall be deemed an
"Acquiring Person" for any purpose of this Agreement unless and
until such Member becomes the Beneficial Owner of 15% or more of
the shares of Class A Common Stock then outstanding without
including the number of shares Beneficially Owned by the other
Members.
(b) Section 1 of the Rights Agreement is amended by
adding the following additional definitions at the end thereof:
(ii) "Debt Refinancing Date" shall mean the closing date of
the transactions contemplated by that certain Note Purchase
Agreement proposed to be entered into as of December 20, 2002 by
and among XM Satellite Radio Inc., the Company and OnStar
Corporation, an Affiliate of General Motors Corporation
("OnStar").
(jj) "GM Distribution Agreement" shall mean the Second Amended
and Restated Distribution Agreement, expected to be dated as of
the Debt Refinancing Date, by and among the Company, XM Satellite
Radio Inc. and OnStar.
(kk) "New GM Notes" shall mean the 10% Senior Secured Discount
Convertible Notes issuable to OnStar in connection with the
transactions expected to be closing on the Debt Refinancing Date.
-3-
(ll) "GM Warrant" shall mean the warrant to purchase
10,000,000 shares of Class A Common Stock issuable to General
Motors Corporation in connection with the transactions expected
to be closing on the Debt Refinancing Date.
(mm) "GM Credit Facility" shall mean the Credit Agreement,
expected to be dated as of the Debt Refinancing Date, between XM
Satellite Radio Inc. and General Motors Corporation.
2. Amendments to Section 21.
Section 21 is hereby amended by adding the following sentence
after the end of the first sentence:
"In the event the transfer agency relationship in effect between
the Company and the Rights Agent terminates, the Rights Agent
will be deemed to resign automatically on the effective date of
such termination; and any required notice will be sent by the
Company."
3. Addition of Section 35.
A new Section 35 is added to read as follows:
"Notwithstanding anything to the contrary contained herein, the
Rights Agent shall not be liable for any delays or failures in
performance resulting from acts beyond its reasonable control
including, without limitation, acts of God, terrorist acts,
shortage of supply, breakdowns or malfunctions, interruptions or
malfunction of computer facilities, or loss of data due to power
failures or mechanical difficulties with information storage or
retrieval systems, labor difficulties, war, or civil unrest.
4. Benefits. Nothing in the Rights Agreement, as amended by
this Amendment, shall be construed to give to any Person other than the Company,
the Rights Agent and the registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the Common Stock) any
legal or equitable right, remedy or claim under the Rights Agreement, as amended
by this Amendment; but the Rights Agreement, as amended by this Amendment, shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
5. Descriptive Headings. Descriptive headings of the several
Sections of this Amendment are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
-4-
6. Governing Law. This Amendment shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such State.
7. Other Terms Unchanged. The Rights Agreement, as amended
by this Amendment, shall remain and continue in full force and effect and is in
all respects agreed to, ratified and confirmed hereby. Any reference to the
Rights Agreement after the date first set forth above shall be deemed to be a
reference to the Rights Agreement, as amended by this Amendment.
8. Counterparts. This Amendment may be executed in any
number of counterparts. It shall not be necessary that the signature of or on
behalf of each party appears on each counterpart, but it shall be sufficient
that the signature of or on behalf of each party appears on one or more of the
counterparts. All counterparts shall collectively constitute a single agreement.
It shall not be necessary in any proof of this Amendment to produce or account
for more than a number of counterparts containing the respective signatures of
or on behalf of all of the parties.
9. Severability. If any term, provision, covenant or
restriction of this Amendment is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Amendment shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
[Signature Pages Follow]
-5-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and attested, all as of the day and year first above
written.
Attest: XM SATELLITE RADIO HOLDINGS INC.
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
Attest: EQUISERVE TRUST COMPANY, N.A.
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
-6-