Exhibit 10.2
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XM SATELLITE RADIO HOLDINGS INC.
XM SATELLITE RADIO INC.
Up to $366,300,000 Principal Amount at Maturity of
10% Senior Secured Discount Convertible Notes due 2009
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NOTE PURCHASE AGREEMENT
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Dated as of December 21, 2002
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TABLE OF CONTENTS
1. DEFINITIONS.................................................................................................1
2. PURCHASE AND SALE OF THE NOTES; CLOSING....................................................................19
3. INTEREST AND REPAYMENT.....................................................................................20
3.1. Interest on the Notes.............................................................................20
3.2. Interest after Maturity...........................................................................20
3.3. Payments and Computations.........................................................................20
3.4. Payment at Maturity or Upon Conversion............................................................21
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF XM...........................................................21
4.1. Incorporation, Standing, etc......................................................................21
4.2. Subsidiaries......................................................................................21
4.3. SEC Reports.......................................................................................22
4.4. Qualification.....................................................................................22
4.5. Authorization of Agreement and Notes..............................................................22
4.6. Absence of Defaults and Conflicts.................................................................23
4.7. Absence of Proceedings............................................................................23
4.8. Possession of Licenses and Permits................................................................23
4.9. No Violations of Laws.............................................................................24
4.10. Internal Accounting Controls......................................................................24
4.11. Tax Returns and Payments..........................................................................24
4.12. Indebtedness......................................................................................24
4.13. Title to Properties; Liens........................................................................24
4.14. Patents, Trademarks, Authorizations, etc..........................................................24
4.15. Governmental Consents.............................................................................25
4.16. Restrictions......................................................................................25
4.17. Capitalization....................................................................................25
4.18. Seniority of Notes................................................................................25
4.19. Material Events...................................................................................25
4.20. Financial Statements..............................................................................26
4.21. No Undisclosed Fees...............................................................................26
4.22. No Transactions with Affiliates...................................................................26
4.23. Registration Rights...............................................................................27
4.24. Private Placement.................................................................................27
4.25. Acknowledgement Regarding Investors' Purchases of Notes...........................................27
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS............................................................27
5.1. Risks of Investment...............................................................................27
5.2. Investment Experience.............................................................................27
5.3. Ability to Bear Risk..............................................................................28
5.4. Receipt and Review of Documentation...............................................................28
5.5. Acquisition for Own Account.......................................................................28
5.6. No Public Market; Rule 144........................................................................28
5.7. Organization, Good Standing, Corporate Authority..................................................28
5.8. Due Authorization.................................................................................28
5.9. Qualified Institutional Buyer, Accredited Investor................................................29
5.10. Acknowledgement Regarding Investors' Purchases of Notes...........................................29
5.11 No Net Short Positions............................................................................29
6. RESTRICTIONS ON TRANSFER...................................................................................29
7. COVENANTS..................................................................................................30
7.1. Payment of Notes and Maintenance of Office........................................................30
7.2. Reports...........................................................................................30
7.3. Taxes.............................................................................................30
7.4. Stay, Extension and Usury Laws....................................................................30
7.5 Restricted Payments...............................................................................31
7.6. Dividend and Other Payment Restrictions Affecting Material Subsidiaries...........................32
7.7. Incurrence of Indebtedness and Issuance of Preferred Stock........................................33
7.8. Asset Sales.......................................................................................35
7.9. Transactions with Affiliates......................................................................37
7.10. Liens.............................................................................................38
7.11. Corporate Existence...............................................................................38
7.12. Offer to Repurchase Upon Change of Control........................................................38
7.13. Limitation on Sale and Leaseback Transactions.....................................................39
7.14. Limitation on Issuances and Sales of Equity Interests of Material Subsidiaries....................39
7.15. Insurance.........................................................................................40
7.16. Merger, Consolidation, or Sale of Assets..........................................................41
7.17. Certain Trading Limitations.......................................................................41
7.18 Payments for Consent..............................................................................42
7.19. Hart-Scott-Rodino.................................................................................42
7.20. Voting Agreement..................................................................................42
7.21. Pledges of Securities.............................................................................42
7.22. Securities Law Disclosure; Publicity..............................................................43
7.23. Reimbursement.....................................................................................43
7.24. Avoidance of Conflicts............................................................................43
8. DEFAULTS AND REMEDIES......................................................................................43
8.1. Events of Default.................................................................................43
8.2. Acceleration......................................................................................45
8.3. Other Remedies....................................................................................45
8.4. Waiver of Past Defaults...........................................................................46
8.5. Control by Majority...............................................................................46
8.6. Rights of Holders of Notes to Receive Payment.....................................................46
9. CONVERSION PROVISIONS......................................................................................46
9.1. Conversion at Option of Holders...................................................................46
9.2. Conversion at Option of Obligors..................................................................47
9.3. Issuance of Certificates..........................................................................47
9.4. No Fractional Shares..............................................................................48
9.5. Merger of Holdings................................................................................48
9.6. Reclassification of Class A Common Stock..........................................................48
9.7. Reservation of Class A Common Stock...............................................................49
9.8. Taxes.............................................................................................49
9.9. No Rights or Liabilities as Stockholders..........................................................50
9.10. Limitation on Conversion..........................................................................50
10. REGISTRATION, TRANSFER AND SUBSTITUTION OF NOTES...........................................................50
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10.1. Note Register.....................................................................................50
10.2. Transfer and Conversion of Notes..................................................................50
10.3. Replacement of Notes..............................................................................51
11. GUARANTEES.................................................................................................51
11.1. Execution and Delivery of Agreement Guarantees....................................................51
11.2. Subsidiary Guarantors may Consolidate, Etc. on Certain Terms......................................52
11.3. Releases Following Sale of Assets.................................................................52
11.4. Application of Certain Terms and Provisions to Holdings and the Subsidiary Guarantors.............52
12. SECURITY AGREEMENTS........................................................................................53
12.1. Security Agreements..................................................................................53
12.2. Release of Collateral................................................................................53
13. CONDITIONS TO CLOSING......................................................................................53
13.1 Conditions to Obligations of the Investors........................................................53
13.2 Conditions to the Obligations of the Obligors.....................................................55
13.3 Investment Election in Absence of Closing.........................................................55
14. EXPENSES ..................................................................................................56
15. SURVIVAL ..................................................................................................56
16. AMENDMENTS AND WAIVERS.....................................................................................56
17. NOTICES ...................................................................................................57
18. EXECUTION IN COUNTERPARTS..................................................................................57
19. BINDING EFFECT.............................................................................................58
20. GOVERNING LAW; CHOICE OF FORUM; JURY TRIAL WAIVER..........................................................58
21. MISCELLANEOUS..............................................................................................58
21.1. Severability......................................................................................58
21.2. No Waiver.........................................................................................58
21.3. Further Assurances................................................................................58
21.4. Construction......................................................................................59
Exhibit A Form of Note
Exhibit B Form of Security Agreement
Exhibit C Form of Amended and Restated Security Agreement
Exhibit D Form of Noteholders Agreement
Exhibit E Form of Registration Rights Agreement
Exhibit F Form of Agreement Guarantee
Exhibit G Form of Voting Agreement
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NOTE PURCHASE AGREEMENT
NOTE PURCHASE AGREEMENT, dated as of December 21, 2002, by and
among XM SATELLITE RADIO INC., a Delaware corporation (the "Company"), XM
SATELLITE RADIO HOLDINGS INC., a Delaware corporation and the sole stockholder
of the Company ("Holdings" and, together with the Company, the "Obligors"), and
each of the investors set forth on the signature pages hereto (each, an
"Investor," and collectively, the "Investors," and together with the Company and
Holdings, the "Parties," and each, a "Party").
WITNESSETH
WHEREAS, the Obligors are engaged in the development of a
satellite digital audio radio service in the United States;
WHEREAS, the Obligors require significant incremental capital to
fund their operations and are in the process of attempting to restructure
certain of their obligations under their outstanding securities and other
contractual obligations;
WHEREAS, the Obligors desire to consummate a financing of newly
invested funds by issuing the Obligors' 10% Senior Secured Discount Convertible
Notes due 2009, substantially in the form attached hereto as Exhibit A;
WHEREAS, as an inducement to the Investors to purchase the Notes,
the Obligors hereby agree that (a) each of the Obligors will enter into the
General Security Agreement, substantially in the form attached hereto as Exhibit
B, (b) the Company will enter into the FCC License Subsidiary Pledge Agreement,
substantially in the form attached hereto as Exhibit C, (c) Holdings will enter
into the Noteholders Agreement, substantially in the form attached hereto as
Exhibit D, (d) Holdings will enter into the Registration Rights Agreement,
substantially in the form attached hereto as Exhibit E, and (e) the Company will
cause its subsidiary XM Equipment Leasing LLC to enter into, on the Closing Date
referred to below, such General Security Agreement and an Agreement Guarantee,
substantially in the form attached hereto as Exhibit F, and will cause certain
other subsidiaries to enter into similar agreements in the circumstances
described herein;
WHEREAS, on the terms and subject to the conditions set forth
herein, each of the Investors is willing to purchase Notes for the aggregate
purchase price set forth next to its name on Attachment 1; and
WHEREAS, the Parties desire to set forth the terms and conditions
of and to provide for the issuance by the Obligors of the Notes described
herein.
NOW THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
1. DEFINITIONS
The following terms when used in this Agreement, including its
preamble and recitals, shall, except where the context otherwise requires, have
the following meanings (such meanings to be equally applicable to the singular
and plural forms thereof):
"Accredited Investor" has the meaning set forth in Rule 501(a)
under the Securities Act.
"Accreted Value" means (1) as of any date prior to January 1,
2006, an amount per $1,000 principal amount at maturity of Notes that is equal
to the sum of (a) the Initial Value and (b) the portion of the excess of such
$1,000 principal amount over the Initial Value which shall have accreted through
such date, such amount to be so accreted on a daily basis and compounded
semi-annually each June 30 and December 31 at the rate of 10% per annum from the
Closing Date through the date of determination computed on the basis of a
360-day year of twelve 30-day months, and (2) as of any date on or after January
1, 2006, the principal amount of each Note.
"Acquired Debt" means, with respect to any specified Person, (x)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person or (y)
Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person, provided that, in each case, such Indebtedness or Lien, as applicable,
is not incurred in connection with, or in contemplation of, such other Person
merging with or into, or becoming a Subsidiary of, such specified Person.
"Additional Interest" means interest, if any, accruing on the
Notes pursuant to Section 2.2 of the Registration Rights Agreement.
"Adjusted Consolidated Operating Cash Flow" means, with respect
to an Obligor, the Consolidated Operating Cash Flow of such Obligor for the
latest four fiscal quarters for which consolidated financial statements of such
Obligor are available, taken as a whole. For purposes of calculating
Consolidated Operating Cash Flow for any four fiscal quarter period for purposes
of this definition, all Subsidiaries of an Obligor on the date of the
transaction giving rise to the need to calculate Adjusted Consolidated Operating
Cash Flow (the "Transaction Date") shall be deemed to have been Subsidiaries of
such Obligor at all times during such four fiscal quarter period. In addition,
for purposes of calculating Adjusted Consolidated Operating Cash Flow:
(1) acquisitions that have been made by the specified Obligor
or any of its Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the calculation
date shall be given pro forma effect as if they had occurred on the first day of
the four-quarter reference period and Adjusted Consolidated Operating Cash Flow
for such reference period shall be calculated on a pro forma basis; and
(2) the Consolidated Operating Cash Flow attributable to
discontinued operations of such Obligor or its Subsidiaries, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
calculation date, shall be excluded.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control," as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided that beneficial ownership of 10%
or more of the Voting Stock of a Person shall be deemed to be control. For
purposes of this definition, the terms "controlling," "controlled by" and "under
common control with" shall have correlative meanings.
"Affiliate Transaction" has the meaning set forth in Section 7.9
of this Agreement.
"Agreement" means this Note Purchase Agreement (including any
Schedules and Exhibits hereto), as it may from time to time be amended,
supplemented or modified in accordance with its terms.
"Agreements and Instruments" have the meaning specified in
Section 4.6 of this Agreement.
"Agreement Guarantee" means (1) the Guarantee, dated as of the
Closing Date, entered into by XM Leasing Subsidiary in favor of the Holders and
(2) any other Guarantee entered into by a Subsidiary Guarantor in favor of the
Holders pursuant to the terms of Section 11.1 hereof.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any
assets; provided that the sale, conveyance or other disposition of all or
substantially all of the assets of an Obligor and its Subsidiaries taken as a
whole will be governed by the provisions of Sections 7.12 and 7.16(a) hereof and
not by the provisions of Section 7.8 hereof; and
(2) the issuance or sale of new Equity Interests, or the sale
or other disposition of outstanding Equity Interests, of an Obligor's
Subsidiary.
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Notwithstanding the preceding, the following items shall not be
deemed to be Asset Sales:
(1) any single transaction or series of related transactions
that involves assets having a fair market value or that involve net proceeds of
less than $1,000,000;
(2) a transfer of assets between or among either Obligor and
any of its Wholly Owned Subsidiaries,
(3) an issuance of Equity Interests by a Wholly Owned
Subsidiary to an Obligor or to another Wholly Owned Subsidiary;
(4) the sale or lease of equipment, inventory, accounts
receivable or other assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash Equivalents;
(6) a Restricted Payment or Permitted Investment that is
permitted by Section 7.5 hereof;
(7) any Qualified Sale and Leaseback Transaction; and
(8) the sale by XM Building Subsidiary of its real property
located at 1500 Eckington Place, NE, Washington, DC and related improvements.
"Attributable Debt" in respect of a sale and leaseback
transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance with
GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms "Beneficially Owns" and "Beneficially Owned" shall have
corresponding meanings.
"Board of Directors" means:
(1) with respect to a corporation, the board of directors of
the corporation;
(2) with respect to a partnership, the Board of Directors of
the general partner of the partnership; and
(3) with respect to any other Person, the board or committee
of such Person serving a similar function.
"Board Resolution" means, with respect to an Obligor, a
resolution duly adopted by the Board of Directors of such Obligor or a committee
of the Board of Directors in the case of Holdings, certified by the Secretary or
an Assistant Secretary of such Obligor to have been duly adopted and to be in
full force and effect on the date of such certification.
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"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in the City of New York or at a place of
payment are authorized by law, regulation or executive order to remain closed.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at that time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is pledged in
support thereof) having maturities of not more than six months from the date of
acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any domestic commercial bank having capital and
surplus in excess of $500,000,000;
(4) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (2) and (3)
above entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having one of the two highest ratings
obtainable from Moody's Investors Service, Inc. or Standard & Poor's Rating
Services and in each case maturing within six months after the date of
acquisition; and
(6) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (1) through (5) of
this definition.
"Change of Control" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the properties or assets
of an Obligor and its Subsidiaries taken as a whole to any "person" (as that
term is used in Section 13(d)(3) of the Exchange Act) other than a Principal or
a Related Party of a Principal;
(2) the adoption of a plan relating to the liquidation or
dissolution of an Obligor (other than a liquidation or dissolution of the
Company into Holdings);
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(3) the consummation of any transaction (including any merger
or consolidation) the result of which is that any "person", other than the
Principals and their Related Parties, becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Stock of Holdings or the Company,
measured by voting power rather than number of shares;
(4) the first day on which a majority of the members of the
Board of Directors of an Obligor are not Continuing Directors;
(5) an Obligor consolidates with, or merges with or into, any
Person, or any Person consolidates with, or merges with or into, an Obligor, in
any such event pursuant to a transaction in which any of the outstanding Voting
Stock of such Obligor or such other Person is converted into or exchanged for
cash, securities or other property, other than any such transaction where the
Voting Stock of an Obligor outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee Person constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person (immediately
after giving effect to such issuance); or
(6) the first day on which the Company ceases to be a Wholly
Owned Subsidiary of Holdings.
Notwithstanding the foregoing, neither the Concurrent Financing
Transactions nor a Parent Company Merger shall constitute a "Change of Control".
"Class A Common Stock" means the Class A Common Stock, par value
$0.01 per share, of Holdings.
"Closing" means the consummation of the transactions contemplated
by this Agreement, including the sale and purchase of the Notes.
"Closing Date" means the date of the Closing.
"Collateral" means (1) the Collateral (as defined in the General
Security Agreement), and (2) the Collateral (as defined in the FCC License
Subsidiary Pledge Agreement).
"Collateral Agent" means the collateral agent under the
applicable Intercreditor Agreement.
"Company" means XM Satellite Radio Inc., a Delaware corporation
and direct Wholly Owned Subsidiary of Holdings, and any and all successors
thereto.
"Concurrent Financing Transactions" means (1) the issuance to
General Motors Corporation or Affiliates thereof ("GM") of the Obligors' Series
GM Senior Secured Convertible Notes due 2009 (the "GM Notes") in the principal
amount of $89,042,387 in lieu of certain guaranteed payments due to GM during
the period from 2003 to 2006 under the Company's Distribution Agreement with GM
(the "Distribution Agreement"), (2) the amendment of the Distribution Agreement
to provide for, among other things, the issuance of the GM Notes and the payment
of up to $35,000,000 in subscriber bounty payments in the form of Class A Common
Stock, (3) the issuance of the Company's 14% Senior Secured Discount Notes due
2009, warrants to purchase Class A Common Stock (the "Exchange Warrants") and
cash in exchange for some or all of the Company's outstanding 14% Senior Secured
Notes due 2010 (the "Existing Notes"), (4) the Obligors' entering into a
$100,000,000 Senior Secured Credit Facility with GM (the "GM Credit Facility")
to finance certain revenue share payments owed to GM under the Distribution
Agreement or other amounts which may be owed to GM, (5) the issuance of a
warrant to GM to purchase 10,000,000 shares of Class A Common Stock (the "GM
Warrant"), (6) the issuance and sale on or before the Closing Date, to the
extent determined to be desirable by Holdings or after the Closing Date to the
extent contemplated by the letter agreement between Holdings and the BayStar
Group, of Class A Common Stock, with or without warrants to purchase Class A
Common Stock, in accordance with Section 4(2) of the Securities Act or pursuant
to a registration statement under the Securities Act, all of which transactions
shall be on terms substantially as previously disclosed to the Investors or
otherwise on terms reasonably satisfactory to the Majority Holders,
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including the proposed sale of 5,555,556 shares of Class A Common Stock to U.S.
Trust Company (the "US Trust Purchase") and warrants to purchase 900,000 shares
of Class A Common Stock, and (7) execution, delivery and performance of all
agreements, documents and instruments, including the Noteholders Agreement and
Registration Rights Agreement, in substantially the form previously provided to
the Investors, evidencing the transactions described in clauses (1) through (6)
of this definition and arrangements contemplated thereby.
"Concurrent Financing Transactions Issuances" means the issuances
or potential issuances of: (a) Class A Common Stock upon conversion of the GM
Notes and the Notes; (b) the GM Warrant and Class A Common Stock upon exercise
thereof; (c) the Exchange Warrants and Class A Common Stock upon exercise
thereof; (d) Class A Common Stock as payment of interest on the GM Notes in
accordance with the terms thereof; (e) Class A Common Stock as payment of
interest under the GM Credit Facility in accordance with the terms thereof; (f)
Class A Common Stock pursuant to the Distribution Agreement in accordance with
the terms thereof, and (g) Class A Common Stock and warrants issued and sold as
contemplated by clause (6) of the definition of Concurrent Financing
Transactions, including the US Trust Purchase and including Class A Common Stock
upon exercise of such warrants.
"Consolidated Net Income" means, with respect to an Obligor for
any period, the aggregate of the Net Income of such Obligor and its Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that:
(1) the Net Income (but not loss) of an Obligor's Subsidiary
that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid in cash to such
Obligor or a Subsidiary thereof;
(2) the Net Income of an Obligor's Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders;
(3) the Net Income of an Obligor's Subsidiary acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded; and
(4) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Net Worth" means, with respect to a specified
Person as of any date, the sum of:
(1) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date; plus
(2) the respective amounts reported on such Person's balance
sheet as of such date with respect to any series of preferred stock (other than
Disqualified Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of any cash received by such Person upon issuance of such preferred
stock.
"Consolidated Operating Cash Flow" means, with respect to an
Obligor for any period, the Consolidated Net Income of such Obligor for such
period, plus:
(1) an amount equal to any extraordinary loss plus any net
loss realized by such Obligor or any of its Subsidiaries in connection with an
Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income; plus
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(2) any provision for taxes based on income or profits of such
Obligor and its Subsidiaries for such period, to the extent that such provision
for taxes was deducted in computing such Consolidated Net Income; plus
(3) consolidated interest expense of such Obligor and its
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations and Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net of the effect of all payments made or received
pursuant to Hedging Obligations), to the extent that any such expense was
deducted in computing such Consolidated Net Income; plus
(4) depreciation, amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it represents an accrual
of or reserve for cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such Obligor and its
Subsidiaries for such period to the extent that such depreciation, amortization
and other non-cash expenses were deducted in computing such Consolidated Net
Income; minus
(5) non-cash items increasing such Consolidated Net Income for
such period, other than the accrual of revenue in the ordinary course of
business, in each case, on a consolidated basis and determined in accordance
with GAAP.
Notwithstanding the preceding, the provision for taxes based on
the income or profits of, and the depreciation and amortization and other
non-cash expenses of, a Subsidiary of an Obligor shall be added to Consolidated
Net Income to compute Consolidated Operating Cash Flow of such Obligor only to
the extent that a corresponding amount would be permitted at the date of
determination to be dividended to such Obligor by such Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Continuing Directors" means, with respect to an Obligor as of
any date of determination, any member of the Board of Directors of such Obligor
who:
(1) was a member of such Board of Directors on the date
hereof; or
(2) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.
"Conversion" means the conversion of all or a portion of the
Accreted Value of a Note, together with accrued but unpaid premium and interest
thereon, into shares of Class A Common Stock in accordance with the provisions
of Section 9 of this Agreement.
"Conversion Price" means $3.18 per share of Class A Common Stock.
"Conversion Stock" means the shares of Class A Common Stock that
may be issued upon any Conversion, in accordance with the provisions of Section
9 of this Agreement.
"Core XM Radio Assets" means XM Radio Assets reasonably necessary
to operate the XM Radio Business.
"Cumulative Available Cash Flow" means, as at any date of
determination, the positive cumulative Consolidated Operating Cash Flow realized
during the period commencing on the beginning of the first fiscal quarter
following the date hereof and ending on the last day of the most recent fiscal
quarter immediately preceding the date of determination for which consolidated
financial information of Holdings is available or, if such
7
cumulative Consolidated Operating Cash Flow for such period is negative, the
negative amount by which cumulative Consolidated Operating Cash Flow is less
than zero.
"Default" means any event that is, or with the passage of time or
the giving of notice or both would be, an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible, or for which it
is exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to April 1, 2010. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders thereof have the right to require the issuer thereof
to repurchase such Capital Stock upon the occurrence of a change of control or
an asset sale shall not constitute Disqualified Stock if the terms of such
Capital Stock provide that such issuer may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with Section 7.5 of this Agreement.
"Equity Interests" means Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"Event of Default" has the meaning set forth in Section 8.1 of
this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Act Filings" has the meaning set forth in Section 4.3
of this Agreement.
"Existing Indebtedness" means Indebtedness of an Obligor and its
Subsidiaries in existence on the date hereof, including the Indebtedness
incurred or to be incurred pursuant to the Concurrent Financing Transactions,
until such amounts are repaid.
"Fair Market Value" means, with respect to the Class A Common
Stock, the average, calculated to two decimal places, of the weighted average
daily trading prices of such stock over the ten Trading Day period ending on the
Trading Day prior to calculation thereof as reported on Bloomberg. If at any
time the Class A Common Stock is not listed on any national securities exchange
or quoted on the Nasdaq Stock Market or the over-the-counter market, the Fair
Market Value of the Class A Common Stock shall be the fair value thereof as
determined by the Board of Directors of Holdings in good faith.
"FCC License Subsidiary" means XM Radio Inc., a Delaware
corporation and direct Wholly Owned Subsidiary of the Company.
"FCC License Subsidiary Pledge Agreement" means the agreement,
dated as of the Closing Date, among the Company, the Collateral Agent and the
other parties thereto, providing for the pledge of the stock of the FCC License
Subsidiary as security for the Notes and certain other indebtedness.
"FCC License Subsidiary Pledge Intercreditor Agreement" means the
Intercreditor and Collateral Agency Agreement, dated as of the Closing Date,
pursuant to which the collateral agent named therein will be appointed on behalf
of the various secured creditor parties to serve as collateral agent under the
FCC License Subsidiary Pledge Agreement.
"GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
8
"General Intercreditor Agreement" means the Intercreditor and
Collateral Agency Agreement, dated as of the Closing Date, pursuant to which the
collateral agent named therein will be appointed on behalf of the various
secured creditor parties to serve as collateral agent under the General Security
Agreement.
"General Security Agreement" means the agreement, dated as of the
Closing Date, among the Obligors, XM Leasing Subsidiary, the Collateral Agent
and the Subsidiary Guarantors from time to time, providing for a grant of
security interest in certain assets of the Company as security for the Notes and
certain other indebtedness.
"Governmental Approval" means the authorization, consent,
approval, license, ruling, permit, certification, exemption, filing or
registration by or with a Governmental Entity required by applicable
requirements of law to be obtained or held in connection herewith or with the
Concurrent Financing Transactions.
"Governmental Entity" means any international body or any nation
or government, any state of political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government any corporation or other entity owned or controlled,
through stock or capital or otherwise, by any of the foregoing.
"Governmental Licenses" has the meaning set forth in Section 4.8
of this Agreement.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America, and the payment for
which the United States pledges its full faith and credit.
"Guarantee" means a guarantee other than by endorsement of
negotiable instruments for collection in the ordinary course of business, direct
or indirect, in any manner including by way of a pledge of assets or through
letters of credit or reimbursement agreements in respect thereof, of all or any
part of any Indebtedness.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Hedging Obligations" means, with respect to any specified
Person, the obligations of such Person under:
(1) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such
Person against fluctuations in interest rates or currency values.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means XM Satellite Radio Holdings Inc. and any and all
successors thereto.
"Hughes Repeater Contract" means the Contract for the Design,
Development and Purchase of Terrestrial Repeater Equipment by and between the
Company and Hughes Electronics Corporation, dated February 14, 2000 as amended
from time to time provided that such amendments, taken as a whole, shall not be
materially adverse to the Company.
"Hughes Repeater Escrow Agreement" means the agreement between
the Company and Hughes Electronics Corporation, dated as of March 2, 2000,
providing for the escrow of funds payable under the Hughes Repeater Contract.
"Hughes Satellite Agreement" means the Satellite Purchase
Agreement between the Company and Hughes Space and Communications Inc., dated
July 21, 1999, as in effect on the date hereof and as it may be amended from
time to time in any respect other than with respect to the terms or scope of the
security interest granted by the Company thereunder.
9
"incur" has the meaning set forth in Section 7.7 hereof.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of
any property, except any such balance that constitutes an accrued expense or
trade payable; or
(6) representing any Hedging Obligations;
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" shall include (a) all Indebtedness of others secured by a Lien on
any asset of the specified Person (whether or not such Indebtedness is assumed
by the specified Person), (b) to the extent not otherwise included, the
Guarantee by the specified Person of any indebtedness of any other Person and
(c) all Attributable Debt of such Person. The amount of any Indebtedness
outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any
Indebtedness issued with original issue discount; and
(2) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"Indenture" means the Indenture, dated as of the Closing Date,
among the Company, each of the Guarantors named therein, and The Bank of New
York, as Trustee, as amended or supplemented from time to time.
"Initial Value" means, with respect to a given principal amount
at maturity of the Notes, an amount equal to the discounted value of such
principal amount using a discount rate of 10% per annum and interest periods of
six months (or shorter for the interest period beginning on the Closing Date)
and calculated for the period back from 11:59 p.m. on December 31, 2005 to the
Closing Date.
"Intercreditor Agreements" means the General Intercreditor
Agreement and the FCC License Subsidiary Pledge Intercreditor Agreement.
"Interest Payment Date" means June 30 and December 31 of each
year, commencing June 30, 2006, provided that (i) if any Additional Interest
shall accrue prior to January 1, 2006, then the initial Interest Payment Date
shall occur on the June 30 or December 31 next following the date on which such
accrual begins, and (ii) if any Interest Payment Date is not a Business Day, the
Interest Payment Date will be deferred and interest will be payable through the
next Business Day.
"Interest Rate" means a rate equal to (i) for the period from the
Closing Date through December 31, 2005, the rate of Additional Interest, if any,
accruing from time to time and (ii) from January 1, 2006 through the date on
which the Notes are paid in full, the rate of 10% per annum plus the rate of
Additional Interest, if any, accruing from time to time.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended.
10
"Investments" means, with respect to an Obligor, all direct or
indirect investments by such Obligor in other Persons (including Affiliates) in
the form of loans (including Guarantees or other obligations), advances or
capital contributions (excluding commission, travel and similar advances to
officers, directors and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
The acquisition by an Obligor or any Subsidiary of such Obligor of a Person that
holds an Investment in a third Person shall be deemed to be an Investment by
such Obligor in such third Person in an amount equal to the fair market value of
the Investment held by the acquired Person in such third Person determined as
provided in the final paragraph of Section 7.5 hereof.
"Investor" has the meaning set forth in the recitals to this
Agreement.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law, including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction.
"Majority Holders" means (1) as of any time prior to the Closing,
Investors that have agreed to purchase a majority in Initial Value of the Notes
at the Closing as set forth in Attachment 1 and (2) at any time after the
Closing, the Holders of a majority in aggregate principal amount at maturity of
the then outstanding Notes.
"material" means individually or in the aggregate (i) material in
relation to the business, operations, affairs, assets, liabilities, financial
condition, or properties of Holdings and its Subsidiaries taken as a whole or
(ii) having a value or worth, individually, or when combined with breaches of
any other representation, warranty or covenant (without giving effect to any
materiality or Material Adverse Effect qualifiers contained therein), in excess
of $10,000,000, provided, however, that any individual breaches or violations
having a value or worth below $100,000, shall not be combined with breaches of
any other representation, warranty or covenant for purposes of calculating the
$10,000,000 threshold.
"Material Subsidiary" means, with respect to an Obligor, a
Subsidiary of such Obligor (1) the business, operations, affairs, assets,
liabilities, financial condition, or properties of which are material to the
business, operations, affairs, assets, liabilities, financial condition, or
properties of the Obligors and their Subsidiaries taken as a whole, (2) owning
assets having an aggregate book value greater than $10,000,000 or (3) that has
been designated by the Board of Directors as a Material Subsidiary.
Notwithstanding the foregoing, "Material Subsidiary" shall not include the
Subsidiary contemplated by clause (10) of the definition of "Permitted
Investments" herein.
"Material Adverse Effect" means individually or in the aggregate
(i) a material adverse effect on the business, operations, affairs, assets,
liabilities, financial condition or properties of Holdings and its Subsidiaries
taken as a whole, (ii) a material adverse effect on the ability of Holdings or
any of its Subsidiaries to perform their respective obligations under this
Agreement or any of the Transaction Documents, or (iii) an economic cost or
liability, individually, or when combined with breaches of any other
representation, warranty or covenant (without giving effect to any materiality
or Material Adverse Effect qualifiers contained therein), to Holdings or any of
its Subsidiaries in excess of $10,000,000, in each case other than continued
deferrals of vendor payments; provided, however, that any individual breaches or
violations having an economic cost or resulting in a liability below $100,000
shall not be combined with breaches of any other representation, warranty or
covenant for purposes of calculating the $10,000,000 threshold.
"Maturity Date" means December 31, 2009.
"Net Income" means, with respect to an Obligor or a Subsidiary of
an Obligor, the net income (loss) of such Person and its Subsidiaries,
determined in accordance with GAAP and before any reduction in respect of
preferred stock dividends, excluding, however:
11
(1) any gain or loss, together with any related provision for
taxes on such gain or loss, realized in connection with: (a) any Asset Sale; or
(b) the disposition of any securities by such Person or any of its Subsidiaries
or the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries; and
(2) any extraordinary gain or loss, together with any related
provision for taxes on such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by an
Obligor or any of its Material Subsidiaries in respect of any Asset Sale or
other transaction (including any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale or other transaction, including
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof, in each case, after taking into account any available tax
credits or deductions and any tax sharing arrangements, and amounts required to
be applied to the repayment of Indebtedness secured by a Lien on the asset or
assets that were the subject of such Asset Sale or other transaction and any
reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"Notes" means the Obligors' 10% Senior Secured Discount
Convertible Notes due 2009, including any additional such notes paid as interest
thereon.
"Noteholders Agreement" means the Second Amended and Restated
Shareholders and Noteholders Agreement, dated as of the Closing Date, by and
among Holdings and the other parties named on the signature pages thereof, as
such agreement may be amended, modified or supplemented from time to time.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Obligors" means Holdings and the Company.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means, with respect to any Person, a
certificate signed on behalf of such Person by two Officers of such Person.
"Parent Company Merger" means (a) a merger or consolidation of
the Company with or into Holdings or a merger or consolidation of Holdings with
or into the Company, provided that the holders of Voting Stock of Holdings
immediately prior to such transaction own substantially all of the Voting Stock
of the surviving entity immediately after such transaction, or (b) any
assignment, transfer, conveyance or other disposition of all or substantially
all of the properties or assets of the Company to Holdings or of Holdings to the
Company.
"Pari Passu Indebtedness" means, with respect to an Obligor,
Indebtedness of such Obligor that is pari passu in right of payment to the
Notes.
"Permitted Business" means any of the lines of business conducted
by an Obligor and its Subsidiaries on the date hereof and any business similar,
ancillary or related thereto or that constitutes a reasonable extension or
expansion thereof, including in connection with such Obligor's existing and
future technology, trademarks and patents.
"Permitted Investments" means:
(1) any Investment in a Wholly Owned Subsidiary of Holdings;
(2) any Investment in Cash Equivalents;
12
(3) any Investment by an Obligor or any Subsidiary of an
Obligor in a Person, if as a result of such Investment:
(a) such Person becomes a Wholly Owned Subsidiary of
such Obligor; or
(b) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, such Obligor or a Wholly Owned Subsidiary of such Obligor;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 7.8;
(5) any acquisition of assets solely in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of Holdings;
(6) Hedging Obligations;
(7) Investments in existence on the date hereof and
modifications thereof (but not including any increase in the amount of such
Investment);
(8) Investments in securities of trade creditors or customers
received in compromise of obligations of such Person incurred in the ordinary
course of business, including under any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such Person;
(9) Investments indirectly acquired by an Obligor or any of
its Subsidiaries through a direct Investment in another Person made in
compliance with this Agreement, provided that such Investments existed prior to
and were not made in contemplation of such acquisition;
(10) Investments in a joint venture with Sirius Satellite
Radio, Inc., or an affiliate or successor thereof, the proceeds of which
investments are used solely to develop interoperable radio technology capable of
receiving and processing radio system signals broadcast by both the Company and
Sirius Satellite Radio Inc., for the licensing of other satellite radio
technology from the Company and Sirius Satellite Radio, Inc. in connection
therewith and for activities reasonably ancillary thereto in accordance with the
Joint Development Agreement between the Company and Sirius Satellite Radio,
Inc., as in effect on the date hereof or as it may be amended in a manner not
materially adverse to the Company; and
(11) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (11) since the date hereof that
are at the time outstanding not to exceed $10,000,000.
"Permitted Liens" means:
(1) Liens on any assets of an Obligor or its Material
Subsidiaries securing Pari Passu Indebtedness incurred pursuant to clause (i) of
Section 7.7 hereof or Permitted Refinancing Indebtedness in respect thereof;
provided that the Notes shall be equally and ratably secured by such assets;
(2) Liens in favor of an Obligor;
(3) Liens on property, or on shares of stock or Indebtedness,
of a Person existing at the time such Person is merged with or into or
consolidated with an Obligor or any Subsidiary of an Obligor; provided that such
Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with such Obligor or the Subsidiary;
13
(4) Liens on property existing at the time of acquisition
thereof by an Obligor or any Subsidiary of an Obligor, provided that such Liens
were not incurred in contemplation of such acquisition;
(5) Liens to secure the performance of bids, tenders, leases,
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (vi) of the third paragraph of Section 7.7
hereof covering only the assets acquired, constructed or improved with such
Indebtedness;
(7) Liens existing on the date hereof (including Liens arising
under the Prior Indenture in favor of the trustee thereunder and Liens under the
Hughes Repeater Escrow Agreement) and Liens securing Indebtedness incurred
pursuant to the Concurrent Financing Transactions;
(8) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefore;
(9) Liens securing the Notes;
(10) Liens that (a) are incidental to the conduct of an
Obligor's or a Material Subsidiary's business or the ownership of its property
and assets not securing Indebtedness, and (b) do not in the aggregate materially
detract from the value of the assets or property of such Obligor and its
Subsidiaries taken as a whole, or materially impair the use thereof in the
operation of its business;
(11) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security;
(12) judgment Liens which do not give rise to an Event of
Default;
(13) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not interfering in
any material respect with the ordinary conduct of the business of an Obligor or
any of its Subsidiaries;
(14) any interest or title of a lessor under any Capital Lease
Obligation;
(15) leases or subleases granted to others that do not
materially interfere with the ordinary course of business of the Obligors and
their Subsidiaries;
(16) Liens arising from filing Uniform Commercial Code
financing statements regarding leases;
(17) Liens in favor of customs and revenue authorities arising
as a mater of law to secure payment of customer duties in connection with the
importation of goods;
(18) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary course
of business that are not delinquent or remain payable without penalty;
(19) Liens which secure Hedging Obligations that relate to
Indebtedness otherwise permitted under this Agreement;
(20) Liens encumbering property or other assets under
construction in the ordinary course of business arising from progress or partial
payments by a customer of the Company or its Subsidiaries relating to such
property or other assets;
14
(21) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by the
Company or any of its Subsidiaries in the ordinary course of business;
(22) Liens on an Obligor's interests in satellites and its
terrestrial repeater network, including under the Hughes Satellite Agreement,
subsequent satellite procurement or launch contracts and the Hughes Repeater
Contract;
(23) Liens incurred in the ordinary course of business of the
Obligors and their Subsidiaries with respect to obligations that do not exceed
$10,000,000 (in the aggregate for both Obligors and their Subsidiaries) at any
one time outstanding;
(24) Liens on Qualified Receivables securing Indebtedness
permitted by clause (xii) of the third paragraph of Section 7.7 hereof; and
(25) Liens arising out of financing provided by a satellite or
satellite launch vendor or Affiliate thereof of all or part of the cost of
construction, launch and insurance of one or more replacement satellites or
satellite launches relating to such satellites provided by such vendor or its
Affiliates;
(26) Liens securing Indebtedness permitted under clause (vii)
of Section 7.7, provided that such Liens are no more extensive than the Liens
securing the Indebtedness refunded, refinanced or replaced thereby; and
(27) Liens securing Indebtedness incurred in any Qualified Sale
and Leaseback Transaction.
"Permitted Refinancing Indebtedness" means any Indebtedness of an
Obligor or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of such Obligor or any of its Subsidiaries (other than intercompany
Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus all accrued interest thereon and
the amount of all expenses, consent fees and premiums incurred in connection
therewith);
(2) (A) if such Permitted Refinancing Indebtedness has a
Weighted Average Life to Maturity shorter than that of the Notes or a final
maturity date earlier than the final maturity date of the Notes, such Permitted
Refinancing Indebtedness shall have a Weighted Average Life to Maturity no
shorter than the remaining Weighted Average Life to Maturity of the debt so
extended, refinanced, renewed, replaced, defeased or refunded and a final Stated
Maturity no earlier than the final maturity date of the debt so extended,
refinanced, renewed, replaced, defeased or refunded or (B) in all other cases,
such Permitted Refinancing Indebtedness shall have a final maturity date later
than the final maturity date of, and shall have a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Notes;
(3) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness is subordinated in right of payment to
the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by such Obligor or by
the Subsidiary, as applicable, that is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.
15
"Principals" means General Motors Corporation, DIRECTV
Enterprises, Inc. and Clear Channel Investments, Inc.
"Prior Indenture" means the Indenture, dated as of March 15,
2000, between the Company and U.S. Trust Company of New York, as Trustee, as
amended or supplemented from time to time.
"Qualified Institutional Buyer" has the meaning set forth in Rule
144A under the Securities Act.
"Qualified Receivables" means the aggregate amount of accounts
receivables of an Obligor determined in accordance with GAAP that are not more
than 90 days past due.
"Qualified Sale and Leaseback Transaction" means a sale and
leaseback transaction (1) involving one or more satellites of an Obligor or any
of its Subsidiaries and (2) the Net Proceeds of which, together with the
aggregate Net Proceeds from all other sale and leaseback transactions involving
satellites consummated after the date hereof (including any subsequent
replacements, amendments or modifications thereof), do not exceed $150,000,000
(in the aggregate for the Obligors and their Subsidiaries).
"Reclassified Securities" has the meaning set forth in Section
9.6 of this Agreement.
"Registration Rights Agreement" means the Second Amended and
Restated Registration Rights Agreement, dated as of the Closing Date, by and
among Holdings and the other parties named on the signature pages thereof, as
such agreement may be amended, modified or supplemented from time to time.
"Related Party" means:
(1) any controlling stockholder, 80% (or more) owned
Subsidiary, or immediate family member (in the case of an individual) of any
Principal; or
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of any one or more Principals
and/or such other Persons referred to in the immediately preceding clause (1).
"Restricted Payment" has the meaning set forth in Section 7.5 of
this Agreement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreements" means the FCC License Subsidiary Pledge
Agreement and the General Security Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"Subordinated Indebtedness" means (i) with respect to the
Company, either (a) unsecured Indebtedness of the Company contractually
subordinated in right of payment to the Notes or (b) Indebtedness of Holdings
(and not the Company) that is structurally subordinated to the Notes and (ii)
with respect to Holdings, unsecured Indebtedness of Holdings that is
contractually subordinated in right of payment to the Notes.
16
"Subscriber" means a subscriber in good standing to the XM Radio
Service that has paid subscription fees for at least one month of such service
and whose subscription payments are not delinquent.
"Subsidiary" means, with respect to any specified Person:
(1) any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Voting Stock is at
the time owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership, trust or limited liability company (a)
the sole general partner or the managing general partner, manager or trustee of
which is such Person or a Subsidiary of such Person or (b) the only general
partners or managing members of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantor" means any entity that enters into an
Agreement Guarantee pursuant to Section 11.
"Supermajority Investors" means any combination of Investors and
purchasers in the US Trust Purchase that have agreed to invest at least 66-2/3%
of the amount to be invested at the Closing under this Agreement, as set forth
in Attachment 1 and the US Trust Purchase, taken collectively.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Internal Revenue
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax, fee, levy, duty, tariff,
impost and other charges of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not imposed by any governing
or taxing authority.
"Tax Sharing Agreement" means the tax sharing agreement dated
March 15, 2000 between the Obligors and XM Radio Inc., as in effect on the date
hereof.
"Total Consolidated Indebtedness" means, at any date of
determination, an amount equal to the aggregate amount of all Indebtedness of
Holdings and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP, outstanding as of the date of determination.
"Total Incremental Equity" means, at any date of determination,
the sum of, without duplication: (1) the aggregate cash proceeds received by
Holdings after the Closing from the issuance or sale of Capital Stock of
Holdings (other than Disqualified Stock but including Capital Stock issued upon
the conversion of convertible Pari Passu Indebtedness or from the exercise of
options, warrants or rights to purchase Capital Stock of Holdings other than
Disqualified Stock) to any Person other than a Subsidiary of Holdings; plus (2)
an amount equal to the net reduction in Investments in any Person (other than
Permitted Investments) resulting from the payment in cash of dividends,
repayments of loans or advances or other transfers of assets, in each case to
Holdings or any Subsidiary thereof after the Closing from such Person; provided,
however, that the foregoing sum shall not exceed the amount of Investments
previously made (and treated as a Restricted Payment) by Holdings or any
Subsidiary thereof in such Person and that constitutes a Restricted Payment that
has been deducted from Total Incremental Equity pursuant to clause (3) below;
minus (3) the aggregate amount of all Restricted Payments declared or made on or
after the Closing (including the aggregate amount paid pursuant to clauses (1),
(2), (3), (4), (5) and (7) of the second paragraph of Section 7.5).
"Trading Day" means any day on which the Class A Common Stock is
traded on the Nasdaq National Market or such other primary national securities
exchange on which the Class A Common Stock is then listed or quoted.
17
"Transaction Documents" means all documents delivered in
connection with the transactions contemplated by this Agreement, including the
Security Agreements, the Noteholders Agreement, the Intercreditor Agreements,
the Registration Rights Agreement, the Voting Agreement and the Agreement
Guarantee of XM Leasing Subsidiary.
"Trustee" means the party named as such in the Indenture until a
successor replaces it in accordance with the applicable provisions of the
Indenture and thereafter means the successor serving thereunder.
"Voting Agreement" means the Voting Agreement, dated as of the
date hereof, by and among the Investors and other parties, if any, named on the
signature pages thereof, as such agreement may be amended, modified or
supplemented from time to time.
"Voting Stock" of any Person as of any date means the Capital
Stock of such Person that is at the time entitled to vote in the election of
directors, general partners, managers or trustees of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Disqualified Stock at any date, the number of years obtained by
dividing:
(1) the sum of the products obtained by multiplying (a) the
amount of each then remaining installment, sinking fund, serial maturity or
other required payments of principal (or liquidation preference, as applicable),
including payment at final maturity, in respect thereof, by (b) the number of
years (calculated to the nearest one-twelfth) that will elapse between such date
and the making of such payment; by
(2) the then outstanding principal amount (or liquidation
preference) of such Indebtedness (or Disqualified Stock, as applicable).
"Wholly Owned" means, with respect to a Subsidiary of a specified
Person, all of the outstanding Equity Interests of such Subsidiary (other than
directors' qualifying shares) are at the time owned by such Person or by one or
more Wholly Owned Subsidiaries of such Person.
"XM Building Subsidiary" means XM 1500 Eckington LLC, a Delaware
corporation and direct Wholly Owned Subsidiary of Holdings, and any and all
successors thereto.
"XM Capital Subsidiary" means XM Capital Resources Inc., a
Delaware corporation and direct Wholly Owned Subsidiary of the Company, and any
and all successors thereto.
"XM Leasing Subsidiary" means XM Equipment Leasing LLC, a
Delaware limited liability company and direct Wholly Owned Subsidiary of the
Company, and any and all successors thereto.
"XM Radio Assets" means all assets, rights, services and
properties, whether tangible or intangible, used or intended for use in
connection with an XM Radio Business, including satellites, terrestrial
repeating stations, FCC licenses, uplink facilities, musical libraries and other
recorded programming, furniture, fixtures and equipment and telemetry, tracking,
monitoring and control equipment.
"XM Radio Business" means the business of transmitting digital
radio programming throughout the United States by satellite and terrestrial
repeating stations to be received by subscribers, including any business in
which the Company was engaged on the date hereof, and any business reasonably
related thereto.
"XM Radio Service" means digital radio programming transmitted by
satellites and terrestrial repeating stations to vehicle, home and portable
radios in the United States.
18
2. PURCHASE AND SALE OF THE NOTES; CLOSING
(a) The Obligors have duly authorized $366,300,000 in
aggregate principal amount at maturity of the 10% Senior Secured Discount
Convertible Notes due December 31, 2009, which includes additional Notes
issuable after January 1, 2006 as payment of Interest under Section 3.1, for
issuance to the Investors on the terms and subject to the conditions set forth
in this Agreement. The Notes, including any Notes issued in substitution or
exchange therefor pursuant to this Agreement, will bear interest at the Interest
Rate on the principal amount at maturity of the Notes and will mature on
December 31, 2009, unless earlier repurchased, paid or Converted in accordance
with the terms hereof, and will be in substantially the form of Exhibit A
attached hereto, with such changes thereto, if any, as may be approved by the
Obligors and the Majority Holders.
(b) Subject to the terms and conditions of this Agreement,
each of the Investors agrees, severally and not jointly, to purchase for cash
from the Obligors at the Closing, and the Obligors agree to sell and issue to
each of the Investors at the Closing, an aggregate principal amount at maturity
of Notes equal to (i) the amount set forth opposite such Investor's name on
Attachment 1 divided by (ii) the Initial Value. Each of the Obligors and the
Investors acknowledges that the Notes are being issued with an "original issue
discount" for federal and state tax purposes. The Obligors' agreements with each
of the Investors are separate agreements, and the sale of Notes to each of the
Investors is a separate sale. The Closing shall take place as of 10 A.M.,
Eastern time, on the Closing Date, which shall be the next Business Day after
the conditions set forth in Section 13 (other than delivery of items to be
delivered at the Closing and other than satisfaction of those conditions that by
their nature are to be satisfied at the Closing, it being understood that the
occurrence of the Closing shall remain subject to the delivery of such items and
the satisfaction or waiver of such conditions at the Closing) are first
satisfied or waived, provided that the date of the Closing may be deferred (i)
for up to ten Business Days after the satisfaction of such conditions, as may be
mutually agreed upon in writing by the Obligors and Eastbourne Capital
Management, L.L.C., acting in its sole discretion on behalf of the Noteholders,
or (ii) until such later date as may be mutually agreed upon in writing by the
Obligors and the Majority Holders. This Agreement shall terminate at 5:00 p.m.,
Eastern standard time, on March 31, 2003, if the Closing has not occurred,
unless such date is extended by the written consent of the Obligors and all of
the Investors.
(c) Each Note shall be governed by, and the rights and the
benefits of the Investors determined in accordance with, the terms and
conditions of this Agreement and, to the extent an Investor is party thereto,
the Noteholders Agreement. Each of the Investors that is a party to the
Noteholders Agreement, by accepting a Note, hereby agrees and acknowledges that
the Note (and the shares of Class A Common Stock into which it may be Converted)
may be offered, sold or otherwise transferred only in accordance with the
provisions of the Noteholders Agreement.
(d) The Accreted Value of a Note, together with any premium or
accrued interest thereon, may be Converted at any time, in whole or in part, at
the option of the Holder thereof into Class A Common Stock in accordance with
the provisions of Section 9 of this Agreement. The stock into which such
Accreted Value, premium and interest are Converted in accordance with this
Section 2(d) shall be referred to as "Conversion Stock."
(e) At the Closing, (i) each Party will deliver executed
counterparts of each Transaction Document to which it is a party; (ii) the
Obligors shall deliver to each Investor a Note in the principal amount at
maturity stated on Attachment 1 opposite such Investor's name, together with an
Agreement Guarantee of XM Leasing Subsidiary; and (iii), each Investor shall
deliver by wire transfer, to an account or accounts designated by the Obligors,
immediately available funds in an aggregate amount equal to the Initial Value
for each $1,000 of principal amount of such Notes stated on Attachment 1
opposite such Investor's name. The Obligors shall provide each of the Investors
with information as to such wire transfers, including information as to the
account or accounts to which funds are to be transferred and the amount of funds
to be transferred to each such account, no later than three Business Days prior
to the Closing.
(f) The obligations of each Investor hereunder and under each
of the Transaction Documents are several and not joint with the obligations of
any other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor hereunder or under any
Transaction Document. Nothing contained herein or in any Transaction Document,
and no action taken by any Investor pursuant hereto or thereto, shall be deemed
to constitute the Investors as a partnership, an association, a joint venture or
any other kind of
19
entity, or create a presumption that the Investors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated hereby or by the Transaction Documents. Each Investor shall be
entitled to independently protect and enforce its rights, including the rights
arising out of this Agreement and out of each of the Transaction Documents, and
it shall not be necessary for any other Investor to be joined as an additional
party in any proceeding for such purpose.
3. INTEREST AND REPAYMENT
With respect to each Note:
3.1. INTEREST ON THE NOTES
Interest will accrue on the principal amount at maturity of the
Notes at the rate of 10% per annum commencing January 1, 2006, and Additional
Interest may accrue on the principal amount at maturity of the Notes at the
rates, and in the circumstances, set forth in Section 2.2 of the Registration
Rights Agreement. All interest on the Notes will be payable in arrears on each
Interest Payment Date. Each payment of interest on the Notes will be made to the
Holder by certified or bank cashier's check or wire transfer of immediately
available funds or by the issuance of additional Notes, at such address or to
such account as the Holder specifies in writing to the Obligors at least five
Business Days before such payment is to be made. Any such written instructions
may provide that the information contained therein shall continue to be in
effect with respect to subsequent interest payments until thereafter modified by
written instructions of such Holder, which modified instructions shall take
effect as of the next Interest Payment Date occurring more than five Business
Days after delivery of such modified instructions. Any Note issued to a Holder
as payment of interest due on an Interest Payment Date will be issued in a
principal amount equal to the amount of such interest, will commence accruing
interest as of the calendar day immediately following such Interest Payment
Date, will otherwise have the same terms as the Notes issued at Closing and will
be subject to the provisions and have the benefits of this Agreement.
Notwithstanding the foregoing, no Additional Interest shall be payable at any
time by the issuance of additional Notes and no other interest shall be payable
by issuance of additional Notes if Additional Interest shall be accruing on the
Notes as of the applicable Interest Payment Date.
3.2. INTEREST AFTER MATURITY
In the event the Obligors shall fail to make any payment of the
principal amount at maturity of, or interest on, any Note when due, the Obligors
shall pay interest on such unpaid amount, payable from time to time on demand,
from the date such amount shall have become due to the date of payment thereof
(after as well as before judgment), accruing on a daily basis, at a per annum
rate of 12% plus any Additional Interest pursuant to Section 2.2 of the
Registration Rights Agreement (or such lesser maximum rate that is permitted to
be paid under applicable law).
3.3. PAYMENTS AND COMPUTATIONS
(a) The Obligors will pay all sums becoming due on each Note
for interest, premium or principal, without the presentation or surrender of the
Note or the making of any notation thereon, except that if a Note is paid in
full, following such payment, the Note shall be surrendered to the Obligors at
their principal office for cancellation.
(b) Interest on each Note shall be calculated for the actual
number of days (including the first day but excluding the last day of any
relevant period) elapsed and shall be computed on the basis of a 360-day year of
twelve 30-day months.
(c) If a payment date is not a Business Day at a place of
payment, then (notwithstanding any other provision of this Agreement or the
Notes) payment of interest, premium or principal otherwise due on such
20
date shall instead be made at that place on the next succeeding Business Day and
no interest shall accrue on such payment for the intervening period.
3.4. PAYMENT AT MATURITY OR UPON CONVERSION
(a) The Accreted Value of each Note, together with any premium
and accrued interest thereon, shall be due and payable in full in cash on the
earlier of (i) the Maturity Date or (ii) such other date as the Note becomes due
and payable or purchasable pursuant to this Agreement. Payment of principal of
and premium, if any, on the Notes will be made to each Holder by certified or
bank cashier's check or wire transfer of immediately available funds, at such
address and to such account as the Holder shall specify in writing to the
Obligors at least five Business Days before such payment is to be made.
(b) Upon any Conversion of any Note in accordance with the
terms of Section 9 hereunder, the Accreted Value of such Note (or any portion
thereof subject to such Conversion), together with any premium or accrued
interest on such Accreted Value or portion thereof (as the case may be), shall
be Converted into a number of shares of Class A Common Stock equal to the amount
of such Accreted Value, premium and accrued interest divided by the Conversion
Price, with any fractional shares that may result treated in the manner set
forth in Section 9.4 of this Agreement.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF XM
Each of the Obligors hereby represents and warrants to and agrees
with the Investors as follows as of the date hereof:
4.1. INCORPORATION, STANDING, ETC.
Each of the Obligors and the Material Subsidiaries is duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and as presently
proposed to be conducted, to enter into this Agreement and the other Transaction
Documents to which each is a party and to perform its obligations hereunder and
thereunder. Each of the Obligors has the corporate power and authority to issue
the Notes and perform its obligations thereunder. Each of the Obligors and XM
Leasing Subsidiary has, by all necessary corporate action, duly authorized the
execution and delivery of this Agreement and the other Transaction Documents to
which each is a party and the performance of its obligations hereunder and
thereunder. Each of the Obligors has, by all necessary corporate action, duly
authorized the execution and delivery of the Notes and the performance of its
obligations thereunder. Each Subsidiary Guarantor has, by all necessary
corporate action, duly authorized the execution and delivery of its Agreement
Guarantee and the performance of its obligations thereunder.
4.2. SUBSIDIARIES
The Company, the FCC License Subsidiary, XM Building Subsidiary,
XM Capital Subsidiary and XM Leasing Subsidiary are the only Material
Subsidiaries. The only assets of the FCC License Subsidiary consist of all of
the FCC licenses used in transmitting the XM Radio Service. The only assets of
the XM Building Subsidiary consist of real property located at 1500 Eckington
Place, NE, Washington, DC and related improvements.
All of the outstanding Capital Stock of the Company and XM
Building Subsidiary are duly authorized, validly issued, fully paid and
non-assessable, and all such Capital Stock is owned beneficially and of record
by Holdings free and clear of any Lien. All of the outstanding Capital Stock of
the FCC License Subsidiary, XM Capital Subsidiary and XM Leasing Subsidiary are
duly authorized, validly issued, fully paid and non-assessable, and all such
Capital Stock is owned beneficially and of record by the Company free and clear
of any Lien, except as contemplated by the FCC License Subsidiary Pledge
Agreement or its predecessor agreement.
21
4.3. SEC REPORTS
(a) The Obligors have provided to the Investors a draft of
their Offering Circular, dated December 21, 2002, to be used in connection with
the exchange contemplated by clause (3) of the definition of Concurrent
Financing Transactions (the "Offering Circular"), which contains information
about the Obligors' business. Such draft of the Offering Circular does not
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) The Annual Reports on Form 10-K for the year ended
December 31, 2001 filed by the Obligors, and all other reports filed by the
Obligors pursuant to Section 13(a) or 15(d) of the Exchange Act since December
31, 2001 (collectively, the "Exchange Act Filings") through the Closing Date,
complied and will comply (as the case may be) as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the SEC thereunder and such filings, taken as a whole, do not and will not
(as the case may be) include any untrue statement of material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) Holdings is eligible to register Class A Common Stock for
resale by the Holders pursuant to a registration statement on Form S-3 under the
Securities Act.
4.4. QUALIFICATION
Each of the Obligors and the Material Subsidiaries is duly
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the character of the properties owned or
leased by it therein or in which the transaction of its business makes such
qualification necessary, except where the failure to be so qualified and in good
standing would not, individually or in the aggregate, result in a Material
Adverse Effect.
4.5. AUTHORIZATION OF AGREEMENT AND NOTES
(a) This Agreement has been duly executed and delivered by
each of the Obligors and constitutes a valid, binding and enforceable obligation
of each of them, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally, and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(b) When, on the Closing Date, the Notes and the Security
Agreements have been duly executed and delivered by the Company and the Notes
have been paid for by the Investors in accordance with the terms of this
Agreement, the Notes and the Security Agreements will constitute valid, binding
and enforceable obligations of the Company, subject to applicable bankruptcy,
insolvency, moratorium and similar laws affecting creditors' rights generally,
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(c) When, on the Closing Date, the Notes, the Noteholders
Agreement and the Registration Rights Agreement have been duly executed and
delivered by Holdings and the Notes have been paid for by the Investors in
accordance with the terms of this Agreement, the Notes, the Noteholders
Agreement and the Registration Rights Agreement will constitute valid, binding
and enforceable obligations of Holdings, subject to applicable bankruptcy,
insolvency, moratorium and similar laws affecting creditors' rights generally,
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(d) When, on the Closing Date, the Agreement Guarantee of XM
Leasing Subsidiary has been duly executed and delivered by XM Leasing Subsidiary
in accordance with the terms of this Agreement, such Agreement Guarantee will
constitute a valid, binding and enforceable obligation of XM Leasing Subsidiary,
subject to applicable bankruptcy, insolvency, moratorium and similar laws
affecting creditors' rights generally, and subject,
22
as to enforceability, to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
4.6. ABSENCE OF DEFAULTS AND CONFLICTS
Neither of the Obligors nor any of the Material Subsidiaries is
in violation of its respective certificate of incorporation, bylaws or other
charter documents or is in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
any of them is a party or by which any of them may be bound, or to which any of
the property or assets of the Obligors or the Material Subsidiaries is subject
(collectively, "Agreements and Instruments"); and the execution, delivery and
performance of this Agreement and the Transaction Documents by the Obligors and
the Material Subsidiaries party thereto in connection with the transactions
contemplated hereby and thereby, and the consummation of the transactions
contemplated herein and therein (including the issuance of the Notes) and
compliance by the Obligors and the Material Subsidiaries with their respective
obligations hereunder and thereunder, do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default (or an event that with notice of lapse of
time or both would become a default) under, require the Obligors to conduct an
offer to repurchase any outstanding Obligations in accordance with the documents
establishing the terms under which such Obligations were incurred, give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
either of the Obligors or any of the Material Subsidiaries pursuant to such
Agreements and Instruments, nor will such action result in any violation of the
provisions of the certificate of incorporation, bylaws or other charter
documents of either of the Obligors or any of the Material Subsidiaries or any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality, stock exchange or Nasdaq Stock
Market or court, domestic or foreign, having jurisdiction over either of the
Obligors, any of the Material Subsidiaries or any of the assets or properties of
the Obligors and the Material Subsidiaries.
There are no control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provisions, in each case, which could be violated or
triggered by the ownership level of a stockholder or group, under Holdings'
certificate of incorporation or the laws of the State of Delaware that would be
violated or triggered by the Investors and the Obligors fulfilling their
obligations or exercising their rights under the Notes or the Transaction
Documents, including the Obligors' issuance of the Notes and the Investors'
subsequent Conversion of Notes for Conversion Stock.
4.7. ABSENCE OF PROCEEDINGS
Except as disclosed in Schedule 4.7, there is no action, suit or
proceeding before or by any court or governmental agency or body, domestic or
foreign, now pending, or to the knowledge of the Obligors threatened, against or
affecting the Obligors, the Material Subsidiaries, any of the Officers or
directors of the Obligors or Material Subsidiaries in their capacity as such, or
any of the property or assets of the Obligors or Material Subsidiaries. There
has not been, and to the knowledge of the Obligors there is not pending or
contemplated, any investigation by the SEC involving the Obligors or any current
or former director or officer of an Obligor with respect to such Obligor or any
Subsidiary thereof. The SEC has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by an Obligor
under the Exchange Act or the Securities Act.
4.8. POSSESSION OF LICENSES AND PERMITS
Except as disclosed in Schedule 4.8: (i) each of the Obligors and
the Material Subsidiaries possesses such material permits, certificates,
licenses, approvals, consents, orders and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate Federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by it or planned to be conducted by it; (ii) each of the Obligors and
the Material Subsidiaries is in compliance with the terms and conditions of all
of its Governmental Licenses; (iii) all of the Governmental Licenses are valid
and in full force and effect; and (iv) neither of the Obligors nor any of the
Material Subsidiaries has received any notice of, nor do any of them have any
knowledge of any
23
pending or threatened (or any basis therefor), proceedings relating to the
revocation, withdrawal, cancellation, modification, suspension or non-renewal of
any Governmental Licenses.
4.9. NO VIOLATIONS OF LAWS
Neither of the Obligors nor any of the Material Subsidiaries has
violated any law, including (i) the U.S. Communications Act of 1934, as amended,
and the rules or regulations promulgated thereunder, (ii) any applicable state
law or regulation concerning intra-state telecommunications, and (iii) any
foreign law or regulation concerning international communications, in each case
the violation of which, together with any other such violations, would have a
Material Adverse Effect.
4.10. INTERNAL ACCOUNTING CONTROLS
The books, records and accounts of each of the Obligors and the
Material Subsidiaries accurately and fairly reflect, in all material respects,
in reasonable detail, the transactions in and dispositions of the assets of the
respective Obligors and Material Subsidiaries. Each of the Obligors and the
Material Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded amount for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
4.11. TAX RETURNS AND PAYMENTS
The Obligors and the Material Subsidiaries have filed all income
tax returns required by law to be filed by them and have paid all Taxes shown on
such returns and all other Taxes and other governmental charges levied upon them
and their respective properties, assets, income and franchises, to the extent
such Taxes have become due and payable and before they have become delinquent,
except for any Taxes the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which the Obligors or the Material Subsidiaries, as the case may be, have
established adequate reserves in accordance with GAAP. The charges, accruals and
reserves on the books of the Obligors and the Material Subsidiaries in respect
of Taxes for all fiscal periods are adequate in the reasonable opinion of the
Obligors and, to the knowledge of the Obligors, there are no additional
assessments for such periods or any basis therefore.
4.12. INDEBTEDNESS
Neither of the Obligors nor any of the Material Subsidiaries is
in default, and no waiver of default is currently in effect, in the payment of
any interest or principal on any Indebtedness in aggregate principal amount in
excess of $5,000,000.
4.13. TITLE TO PROPERTIES; LIENS
Each of the Obligors and the Material Subsidiaries has good and
marketable title to all of its properties and assets, free and clear of all
Liens, except for Permitted Liens.
4.14. PATENTS, TRADEMARKS, AUTHORIZATIONS, ETC.
Except as disclosed in Schedule 4.14, each of the Obligors and
the Material Subsidiaries owns, possesses or has the right to use (without any
known conflict with the rights of others) all patents, trademarks, service
marks, trade names, copyrights, licenses and authorizations which are necessary
to the conduct of its business as currently conducted.
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4.15. GOVERNMENTAL CONSENTS
Except as may be required to be obtained or made under the
Securities Act and applicable state securities laws in connection with the
exercise of any registration rights of a Holder provided for in the Registration
Rights Agreement or any registration rights granted to purchasers in the
offering(s) contemplated by clause (6) of the definition of Concurrent Financing
Transactions, neither of the Obligors nor any of the Material Subsidiaries is
required to procure, make or file any consent, approval or authorization of, or
any notice to, of filing, registration or qualification with, any court or
administrative or governmental body in order to execute and deliver this
Agreement and the Notes and to perform its obligations hereunder and under any
and all Transaction Documents.
4.16. RESTRICTIONS
Except for the restrictions contained herein or under applicable
law, there will be no restrictions upon the Notes (including any restrictions
set forth in any existing shareholder agreement), with the exception of any
restrictions contained in the Noteholders Agreement and in the Registration
Rights Agreement.
4.17. CAPITALIZATION
The authorized, issued and outstanding Capital Stock of Holdings
is as set forth in Schedule 4.17 hereof under "Capitalization." All of the
outstanding shares of Capital Stock of Holdings are duly authorized, validly
issued, fully paid and non-assessable. Except as disclosed on Schedule 4.17,
neither of the Obligors nor any of the Material Subsidiaries has outstanding any
securities convertible into or exchangeable for any of its Capital Stock nor
does it have outstanding any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, any of its Capital Stock or securities convertible into
or exchangeable for any of its Capital Stock. Subject to the provisions of
Section 9.7, all shares of Conversion Stock will, when issued in accordance with
the terms of this Agreement and the Notes, be duly and validly issued, fully
paid and non-assessable and free from all Liens (other than any Liens created by
Holders).
4.18. SENIORITY OF NOTES
The Notes shall rank equal to all Indebtedness incurred by the
Obligors pursuant to the Concurrent Financing Transactions and all Indebtedness
of the Company under the Prior Indenture. Except as disclosed on Schedule 4.18,
the Notes shall rank senior to all other existing Indebtedness of the Obligors
as of the date of issuance of the Notes.
4.19. MATERIAL EVENTS
Except as disclosed in the Exchange Act Filings and the Offering
Circular, since September 30, 2002, there has not been with respect to Holdings
or any of its Material Subsidiaries:
(a) any event which could reasonably be expected to result in
a Material Adverse Effect; or
(b) any damages, destruction or loss to the properties or
assets of either of the Obligors or any of the Material Subsidiaries, whether or
not covered by insurance, that has or could reasonably be expected to have a
Material Adverse Effect or that in the aggregate exceeds $100,000; or
(c) any loss or waiver by either of the Obligors or any of the
Material Subsidiaries of any right, not in the ordinary course of business, or
any material debt owed to any of them; or
(d) other than the sales of assets in the ordinary course of
business (including pursuant to sale leaseback transactions), any sale, transfer
or other disposition of, or agreements to sell, transfer or otherwise dispose
of, any assets by either of the Obligors or any of the Material Subsidiaries in
excess of $100,000 in the aggregate, or
25
any cancellation or agreement to cancel any debt or claims of either of the
Obligors or any of the Material Subsidiaries; or
(e) any declaration or setting aside or payment of any
dividend (whether in cash, property or stock) or any distribution (whether in
cash, property or stock) or other payment with respect to any of the Capital
Stock of either of the Obligors or any of the Material Subsidiaries, or any
repurchase, purchase or other acquisition of, or agreement to repurchase,
purchase or otherwise acquire, any Capital Stock of either of the Obligors or
any of the Material Subsidiaries; or
(f) any amendment or termination of any contract, agreement or
license to which either of the Obligors or any of the Material Subsidiaries is a
party or by which it is bound, except where such amendment or termination could
not be reasonably expected to have a Material Adverse Effect; or
(g) any resignation or termination or employment of any key
employee, and there is no impending or threatened resignation or termination or
terminations of employment of any key employee; or
(h) any labor dispute (including any negotiation, or request
for negotiation, for any labor representation or any labor contract) affecting
either of the Obligors or any of the Material Subsidiaries; or
(i) any application of any existing (or the enactment of any
new) environmental law or personnel, product safety law or other governmental
regulation that has or which could reasonably be expected to have a Material
Adverse Effect.
4.20. FINANCIAL STATEMENTS
The financial statements and schedules of Holdings and its
consolidated subsidiaries included in the Exchange Act Filings comply as to form
in all material respects with applicable accounting requirements and present
fairly in all material respects the consolidated financial condition of Holdings
and its consolidated Subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows of Holdings and its
consolidated Subsidiaries for the respective periods covered thereby, all in
conformity with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto and subject, in the
case of unaudited statements, to normal year-end audit adjustments).
The financial statements and schedules of the Company and its
consolidated subsidiaries included in the Exchange Act Filings comply as to form
in all material respects with applicable accounting requirements and present
fairly in all material respects the consolidated financial condition of the
Company and its consolidated Subsidiaries as of the respective dates thereof and
the consolidated results of operations and cash flows of the Company and its
consolidated Subsidiaries for the respective periods covered thereby, all in
conformity with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto and subject, in the
case of unaudited statements, to normal year-end audit adjustments).
4.21. NO UNDISCLOSED FEES
Except as disclosed on Schedule 4.21, there are no fees or
payments to be made by either Obligor to bankers, brokers or agents with regard
to the issue and delivery of the Notes or the transactions contemplated by the
Concurrent Financing Transactions.
4.22. NO TRANSACTIONS WITH AFFILIATES
Neither of the Obligors nor any of the Material Subsidiaries is
presently party to any material transaction with an Affiliate thereof on terms
any less favorable to such Obligor or Material Subsidiary than would have been
obtainable in arm's length dealing with a Person not an Affiliate.
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4.23. REGISTRATION RIGHTS
Except as disclosed on Schedule 4.23, there are no contracts,
agreements or understandings between Holdings and any other Person granting such
Person the right to require Holdings to file a registration statement under the
Securities Act with respect to any securities that Holdings owned or to be owned
by such a Person or to require Holdings to include such securities in the
securities registered pursuant to any of the registration statements filed by
Holdings under the Securities Act.
4.24. PRIVATE PLACEMENT
Neither of the Obligors nor any Person acting on such Obligor's
behalf has sold or offered to sell or solicited any offer to buy the Notes by
means of any form of general solicitation or advertising. Neither of the
Obligors nor any of its Affiliates nor any Person acting on such Obligor's
behalf has, directly or indirectly, at any time within the past six months, made
any offer or sale of any security or solicitation of any offer to buy any
security under circumstances that would (i) eliminate the availability of an
exemption from registration under the Securities Act in connection with the
offer and sale of the Notes as contemplated hereby or (ii) cause the offering of
the Notes pursuant to this Agreement to be integrated with other securities
offerings by such Obligor (including any such offering contemplated by the
Concurrent Financing Transactions) for purposes of any applicable law,
regulation or shareholder approval provisions, including under the rules and
regulations of the Nasdaq Stock Market.
4.25. ACKNOWLEDGEMENT REGARDING INVESTORS' PURCHASES OF NOTES
The Obligors acknowledge and agree that each of the Investors is
acting solely in the capacity of an arm's-length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Obligors further
acknowledge that no Investor is acting as a financial advisor or fiduciary of
the Obligors (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any advice given by any Investor or any of
their respective representatives or agents in connection with this Agreement and
the transactions contemplated hereby is merely incidental to the Investors'
purchase of the Notes. Each Obligor further represents to each Investor that its
decision to enter into this Agreement has been based solely on its independent
evaluation and the independent evaluation of its representatives.
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors, severally and not jointly and as to itself
only, represents and warrants to and agrees with each Obligor that as of the
date hereof:
5.1. RISKS OF INVESTMENT
Its management recognizes that the purchase of a Note and any
securities which may be issued in payment of interest on or upon the Conversion
thereof (collectively, the "Securities") involves a high degree of risk
including the following: (i) an investment in the Obligors is highly
speculative, and only investors who can afford the loss of their entire
investment should consider investing in the Obligors and purchasing the
Securities; (ii) the Investor may not be able to liquidate its investment; (iii)
transferability of the Securities is restricted; (iv) in the event of a
disposition of the Securities, the Investor could sustain the loss of its entire
investment; and (v) the Obligors do not anticipate the payment of dividends in
the foreseeable future.
5.2. INVESTMENT EXPERIENCE
Its management has prior investment experience, including
investment in securities which are traded on the Nasdaq National Market. To the
extent it has deemed appropriate, the Investor has retained and relied upon
professional advice regarding the investment, tax and legal merits and
consequences of this Agreement and its purchase of Notes hereunder.
27
5.3. ABILITY TO BEAR RISK
By reason of its management's business or financial experience,
the Investor has the capacity to protect its own interests in connection with
the transaction contemplated hereby, and is able to bear the economic risk which
it hereby assumes.
5.4. RECEIPT AND REVIEW OF DOCUMENTATION
Its management has been furnished by the Obligors during the
course of this transaction with information regarding the Obligors which such
Investor's management has requested, has been afforded the opportunity to ask
questions of and receive answers from duly authorized officers or other
representatives of the Obligors concerning the terms and conditions of the
Securities, and has received any additional information which its management has
requested.
5.5. ACQUISITION FOR OWN ACCOUNT
The Investor is acquiring the Securities for its own account for
investment only, and not with a view towards their distribution in violation of
applicable securities laws.
5.6. NO PUBLIC MARKET; RULE 144
(a) Its management understands that there currently is no
public market for the Notes. Its management understands and hereby acknowledges
that the Obligors are under no obligation to register the Notes under the
Securities Act or any state securities or "blue sky" laws.
(b) The Investor's management acknowledges and agrees that the
shares of Class A Common Stock the Investor may receive upon a Conversion of
Notes must be held indefinitely unless such shares are subsequently registered
under the Securities Act or an exemption from such registration is available.
The Investor has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act, which permits limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things: the availability of certain current
public information about Holdings, the resale occurring not less than one year
after a party has purchased and paid for the security to be sold, the sale being
through an unsolicited "broker's transaction" or in transactions directly with a
market maker (as said term is defined under the Exchange Act) and the number of
shares being sold during any three-month period not exceeding specified
limitations.
5.7. ORGANIZATION, GOOD STANDING, CORPORATE AUTHORITY
It (other than an individual Investor) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, with requisite corporate or partnership power and authority to
enter into this Agreement and the Transaction Documents to which it is to be a
party and to consummate the transactions contemplated hereby and thereby,
including the purchase of the Notes to be acquired by it hereunder.
5.8. DUE AUTHORIZATION
The execution and delivery of, and the performance by the
Investor of its obligations under, this Agreement and the other Transaction
Documents to which it is a party have been duly and validly authorized and, upon
execution and delivery thereof, this Agreement and the other Transaction
Documents to which it is a party will constitute the legal, valid, binding
obligations of such Investor, enforceable against such Investor in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally, and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
28
5.9. QUALIFIED INSTITUTIONAL BUYER, ACCREDITED INVESTOR
It is:
(a) a Qualified Institutional Buyer, an institutional
Accredited Investor, or an Accredited Investor, as will be indicated to the
Obligors in writing prior to the Closing, and
(b) aware that the sale of Securities to it is being made in
reliance on the exemption from the registration requirements provided by Section
4(2) of the Securities Act and the regulations promulgated thereunder.
5.10. ACKNOWLEDGEMENT REGARDING INVESTORS' PURCHASES OF NOTES
It acknowledges that it is not relying upon any person, firm or
corporation other than the Obligors in making its investment or decision to
invest in the Notes. It represents to each of the other Investors that it has
been solely responsible for its own "due diligence" investigation of the
Obligors and their respective management personnel and businesses, and for its
own analysis of the merits and risks of this investment. It agrees that no
Investor nor the respective controlling persons, officers, directors,
shareholders, investors partners, agents or employees of any such Investor shall
be liable to any other Investor for any actions taken in connection with the
purchase of Notes in accordance with the terms of this Agreement.
5.11 NO NET SHORT POSITIONS
As of the date hereof through the time of filing of a Current
Report on Form 8-K on the Business Day succeeding the date hereof (as
contemplated by the first sentence of Section 7.22 hereof), it has no Net Short
Position (as defined in Section 7.17), without giving any effect to the proposed
purchase of Notes contemplated hereby.
6. RESTRICTIONS ON TRANSFER
(a) Each of the Investors party to the Noteholders Agreement
agrees, and each subsequent Holder of the Securities by its acceptance thereof
will agree (to the extent bound by the terms of the Noteholders Agreement), to
offer, sell or otherwise transfer such Securities only in compliance with the
terms and conditions set forth in the Noteholders Agreement. Each Investor
acknowledges that each certificate representing Securities will contain a legend
substantially to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
Certificates evidencing Securities shall not be required to contain such legend
(i) following any sale of such Securities pursuant to an effective registration
statement covering the resale of such Securities under the Securities Act, (ii)
following any sale of such Securities pursuant to Rule 144 under the Securities
Act, (iii) if such Securities are eligible for sale under Rule 144(k), or (iv)
if such legend is not, in the opinion of counsel to Holdings, required in the
circumstances under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the SEC).
(b) In addition, each Investor party to the Noteholders
Agreement acknowledges that each certificate issued to such Investor to
represent Securities will contain a legend substantially to the following
effect:
29
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE THE
SUBJECT OF A CERTAIN SHAREHOLDERS AND NOTEHOLDERS AGREEMENT
WHICH, AMONG OTHER THINGS, CONTAINS RESTRICTIONS ON THE
TRANSFER OF SUCH SECURITIES. A COPY OF THE SHAREHOLDERS AND
NOTEHOLDERS AGREEMENT IS AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICE OF XM SATELLITE RADIO INC. AND XM SATELLITE
RADIO HOLDINGS INC.
Upon termination of the Noteholders Agreement, the Obligors shall remove the
applicable legend from the certificate(s) representing such Securities promptly
upon request of the Holder thereof and shall promptly deliver replacement
certificate(s) to such Holder.
7. COVENANTS
The Obligors hereby covenant and agree with each Investor as
follows, it being understood that prior to the Closing only those covenants
specified in Sections 7.2, 7.18, 7.19, 7.21 and 7.23 shall be in effect.
7.1. PAYMENT OF NOTES AND MAINTENANCE OF OFFICE
The Obligors will punctually pay or cause to be paid the
principal, premium (if any) and interest due in respect of each Note according
to the terms thereof and hereof and will maintain an office within the
continental boundaries of the United States of America where notices,
presentations and demands in respect of this Agreement and the Notes may be made
upon them and will notify the Holders of such Notes of any change of location of
such office. Such office is presently maintained at 1500 Eckington Place, NE,
Washington, DC 20002.
7.2. REPORTS
So long as any Notes are outstanding, each of the Obligors shall
file with the SEC, within the time periods specified in the SEC's rules and
regulations, periodic reports on Forms 10-Q, 10-K and 8-K (or any successor
forms). If at any time an Obligor is not required to file such reports, such
Obligor (as the case may be) shall furnish to the Holders within such time
periods: (i) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if such
Obligor were required to file such forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and, with respect
to the annual financial statements only, a report thereon by the certified
independent accountants of such Obligor and (ii) all information that would be
required to be filed with the SEC on Form 8-K if such Obligor were required to
file such reports.
7.3. TAXES
Each of the Obligors shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
7.4. STAY, EXTENSION AND USURY LAWS
Each of the Obligors and the Subsidiary Guarantors covenants (to
the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Agreement; and each of the Obligors and the Subsidiary Guarantors (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any rights of the Holders, but shall
suffer and permit the execution of every such right as though no such law has
been enacted.
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Notwithstanding any provision to the contrary contained in any Note or
Transaction Document, it is expressly agreed and provided that the total
liability of the Obligors under the Notes for payments in the nature of interest
shall not exceed the maximum lawful rate authorized under applicable law, and,
without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Obligors may be obligated to pay under the Notes
exceed such maximum lawful rate. It is agreed that if the maximum contract rate
of interest allowed by law and applicable to the Notes is increased or decreased
by statute or any official governmental action subsequent to the date hereof,
the new maximum contract rate of interest allowed by law will be the maximum
lawful rate of interest applicable to the Notes from the effective date forward,
unless such application is precluded by applicable law. If under any
circumstances whatsoever, interest in excess of the maximum lawful rate is paid
by the Obligors to any Investor with respect to indebtedness evidenced by the
Notes, such excess shall be applied by such Investor to the unpaid principal
balance of any such indebtedness or be refunded to the Obligors, the manner of
handling such excess to be at such Investor's election.
7.5 RESTRICTED PAYMENTS
Neither of the Obligors shall directly or indirectly (through a
Material Subsidiary or otherwise): (i) declare or pay any dividend or make any
other payment or distribution on account of the Equity Interests of either
Obligor (including any payment in connection with any merger or consolidation
involving an Obligor) or to the direct or indirect holders of such Equity
Interests in their capacities as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of an Obligor and
cash in lieu of fractional interests not to exceed 1% of the Equity Interests
distributed or paid); (ii) other than pursuant to a Parent Company Merger,
purchase, redeem or otherwise acquire or retire for value (including in
connection with any merger or consolidation involving an Obligor) any Equity
Interests of an Obligor (other than any such Equity Interests owned by an
Obligor or any of its Material Subsidiaries) or any Affiliate of an Obligor
(other than any of its Material Subsidiaries); (iii) make any payment on or with
respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated in right of payment to the Notes
except a payment of interest or a payment of principal at Stated Maturity
thereof; or (iv) make any Investment other than a Permitted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments").
So long as no Default has occurred and is continuing or would be
caused thereby, the foregoing provisions shall not prohibit: (1) the redemption,
repurchase, retirement, defeasance or other acquisition of any Subordinated
Indebtedness of an Obligor or of any Equity Interests of Holdings in exchange
for, or out of the net cash proceeds of the substantially concurrent sale (other
than to a Subsidiary of an Obligor) of, Equity Interests of Holdings (other than
Disqualified Stock) and cash payments in lieu of fractional interests not to
exceed 1% of the Equity Interests so redeemed, repurchased, retired, defeased or
otherwise acquired; (2) the purchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Indebtedness of an Obligor
in exchange for, or out of the net cash proceeds of a substantially concurrent
incurrence (other than to a Subsidiary of an Obligor) of, Permitted Refinancing
Indebtedness; (3) the declaration or payment of any dividend or distribution by
a Wholly Owned Subsidiary of an Obligor to the holders of its common Equity
Interests; (4) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of Holdings or any Subsidiary thereof held by any
member of such Obligor's (or any of its Subsidiaries') management pursuant to
any management equity subscription agreement or stock option agreement in effect
as of the date hereof; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed
$250,000 in any twelve-month period; (5) the purchase of any Subordinated
Indebtedness of an Obligor at a purchase price not greater than 100% of the
principal amount or accreted value thereof, as the case may be, together with
accrued interest, if any, following an Asset Sale in accordance with provisions
similar to those contained in Section 7.8; provided, however, that prior to
making any such purchase the Obligor has made the Excess Proceeds Offer as
provided in such covenant with respect to the Notes and has purchased all Notes
validly tendered for payment in connection with such Excess Proceeds Offer; (6)
making payments to dissenting shareholders pursuant to applicable law in
connection with a consolidation or merger of an Obligor made in compliance with
the provisions of this Agreement; (7) Investments, other than Permitted
Investments, in an amount equal to 100% of Total Incremental Equity determined
as of the date any such Investment is made; (8) the purchase of (a) any
Subordinated Indebtedness of an Obligor at a purchase price not greater than
101% of the principal amount or accreted value thereof, as the case may be,
together with accrued interest, if any, in the event of a Change of Control in
accordance with provisions similar
31
to those of Section 7.12 or (b) any Preferred Stock of an Obligor at a purchase
price not greater than 101% of the liquidation preference thereof, together with
accrued dividends, if any, in the event of a Change of Control in accordance
with provisions similar to those of Section 7.12; provided, however, that, in
each case, prior to such purchase the Obligors have made the Change of Control
Offer required by this Agreement with respect to the Notes and have purchased
all Notes validly tendered for payment in connection with such Change of Control
Offer; (9) the payment of any dividend required pursuant to the Tax Sharing
Agreement between the Obligors, as such is in effect on the date hereof; and
(10) any payments required by Section 9.7(b).
The amount of all Restricted Payments (other than cash) shall be
the fair market value on the date of the Restricted Payment of the assets or
securities proposed to be transferred or issued to or by an Obligor pursuant to
the Restricted Payment. The fair market value of any assets or securities that
are required to be valued by this covenant shall be determined by the Board of
Directors of such Obligor whose Board Resolution with respect thereto shall be
conclusive. Such Board of Directors' determination must be based upon an opinion
or appraisal issued by an accounting, appraisal or investment banking firm of
national standing if the fair market value of such assets or securities exceeds
$20,000,000.
7.6. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING MATERIAL
SUBSIDIARIES
Neither of the Obligors shall, or permit any of the Material
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Material Subsidiary to (a) pay dividends or make any other distributions on its
Capital Stock to such Obligor or any of its Material Subsidiaries or with
respect to any other interest or participation in, or measured by, its profits
or pay any indebtedness owed to either of the Obligors or any of the Material
Subsidiaries, (b) make loans or advances to either of the Obligors or any of the
Material Subsidiaries, (c) transfer any of its properties or assets to either of
the Obligors or any of the Material Subsidiaries, or (d) guarantee any
Indebtedness of either of the Obligors or any of the Material Subsidiaries.
However, the preceding restrictions will not apply to
encumbrances or restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date hereof, and
any amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive, taken as a whole, with
respect to such dividend and other payment restrictions than those contained in
such Existing Indebtedness or Indebtedness pursuant to the Concurrent Financing
Transactions, as in effect on the date hereof;
(2) Indebtedness pursuant to the Notes and this Agreement;
(3) applicable law;
(4) any instrument governing Indebtedness or Capital Stock of
a Person acquired by either of the Obligors or any of the Material Subsidiaries
as in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Agreement to
be incurred;
(5) customary non-assignment provisions in leases or contracts
or real property mortgages or related documents entered into in the ordinary
course of business and consistent with past practices;
(6) purchase money obligations, Capital Lease Obligations or
mortgage financings that impose restrictions on the property so acquired of the
nature described in clause (c) of the preceding paragraph;
32
(7) any agreement for the sale or other disposition of a
Material Subsidiary that restricts distributions by that Subsidiary pending its
sale or other disposition;
(8) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those contained in
the agreements governing the Indebtedness being refinanced;
(9) Liens securing Indebtedness that limit the right of the
debtor to dispose of the assets subject to such Lien;
(10) provisions with respect to the disposition or distribution
of assets or property in joint venture agreements, asset sale agreements, stock
sale agreements and other similar agreements entered into in the ordinary course
of business; and
(11) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course of
business.
7.7. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Neither of the Obligors shall, or shall permit any of its
Material Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt), and neither of the Obligors shall issue any Disqualified Stock.
Neither of the Obligors shall incur any Indebtedness (including
Permitted Debt) that is contractually subordinated in right of payment to any
other Indebtedness of such Obligor unless such Indebtedness is also
contractually subordinated to the Notes on substantially identical terms;
provided, however, that no Indebtedness of such Obligor shall be deemed to be
contractually subordinated in right of payment to any other Indebtedness of such
Obligor solely by virtue of being unsecured.
The provisions of the first paragraph of this Section 7.7 shall
not apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by an Obligor of Pari Passu
Indebtedness in an aggregate principal amount (including the
aggregate principal amount of all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (i)), which does
not exceed $100,000,000 (in the aggregate for both Obligors),
provided that (A) no more than $50,000,000 thereof (less any
amount of Indebtedness incurred under clause (xii) below) may
consist of Indebtedness under revolving credit working capital
facilities entered into with one or more commercial bank or
similar institutional lenders and (B) none of which may consist
of Indebtedness under any other type of borrowing arrangement
with a commercial bank or similar institutional lender;
(ii) unsecured Subordinated Indebtedness or
Disqualified Stock of an Obligor incurred to finance the
construction, expansion, development or acquisition of music
libraries and other recorded music programming, furniture,
fixtures and equipment (including satellites, ground stations and
related equipment) if such Subordinated Indebtedness or
Disqualified Stock, as applicable, has a Weighted Average Life to
Maturity longer than the Weighted Average Life to Maturity of the
Notes and has a final Stated Maturity of principal later than the
Stated Maturity of principal of the Notes;
(iii) unsecured Subordinated Indebtedness or
Disqualified Stock of an Obligor in an aggregate principal amount
(or liquidation preference, as applicable) (including the
aggregate principal amount (or liquidation preference, as
applicable) of all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness or Disqualified
Stock, as
33
applicable, incurred pursuant to this clause (iii)) at any time
outstanding not to exceed the product of (a) $100.00 and (b) the
number of Subscribers at such time if such Subordinated
Indebtedness or Disqualified Stock, as applicable, has a Weighted
Average Life to Maturity longer than the Weighted Average Life to
Maturity of the Notes and has a final Stated Maturity of
principal later than the Stated Maturity of principal of the
Notes;
(iv) the incurrence by an Obligor or a Material
Subsidiary of Existing Indebtedness and the incurrence by an
Obligor or a Material Subsidiary of Indebtedness pursuant to the
Concurrent Financing Transactions;
(v) the incurrence by the Obligors of the Indebtedness
represented by the Notes;
(vi) the incurrence by an Obligor or a Material
Subsidiary of Indebtedness represented by Capital Lease
Obligations, mortgage financings or purchase money obligations,
in each case, incurred for the purpose of financing all or any
part of the purchase price or cost of acquisition, construction
or improvement of (A) replacement satellites and related
equipment and launches in an aggregate principal amount (or
initial accreted value if such indebtedness is issued with
original issue discount), including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (vi)(A), not to
exceed $200,000,000 at anytime outstanding in the aggregate for
both of the Obligors and all of the Material Subsidiaries and (B)
property, plant or equipment used in the business of such Obligor
or Material Subsidiary, in an aggregate principal amount,
including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant
to this clause (vi), not to exceed $30,000,000 at any time
outstanding in the aggregate for both of the Obligors and all of
the Material Subsidiaries;
(vii) the incurrence by an Obligor or a Material
Subsidiary of Permitted Refinancing Indebtedness in exchange for,
or the net proceeds of which are used to refund, refinance or
replace Indebtedness (other than intercompany Indebtedness) that
was permitted by this Agreement to be incurred under clauses (i),
(ii), (iii), (iv), (v), (vi), (xii), (xiii), (xiv) or (xv) of
this paragraph;
(viii) the incurrence by an Obligor or a Material
Subsidiary of intercompany Indebtedness between or among such
Obligor and any of its Material Subsidiaries; provided, however,
that: (a) if such Obligor is the obligor on such Indebtedness,
such Indebtedness must be expressly subordinated to the prior
payment in full in cash of all Obligations with respect to the
Notes; and (b) (i) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a
Person other than such Obligor or a Material Subsidiary thereof
and (ii) any sale or other transfer of any such Indebtedness to a
Person that is not either such Obligor or a Material Subsidiary
thereof; shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by such Obligor or such Material
Subsidiary, as the case may be, that was not permitted by this
clause (viii);
(ix) the incurrence by an Obligor of Hedging
Obligations that are incurred for the sole purpose of fixing or
hedging (x) interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Agreement to
be outstanding or (y) fluctuation in currency values;
(x) the accrual of interest, the accretion or
amortization of original issue discount, the payment of interest
on any Indebtedness in the form of additional Indebtedness with
the same terms, and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of
Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of
this covenant;
(xi) the incurrence by an Obligor of additional
Indebtedness (including Acquired Debt) or Disqualified Stock in
an aggregate principal amount (or liquidation preference or
34
accreted value, as applicable) at any time outstanding, including
all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness or Disqualified Stock
incurred pursuant to this clause (xi), not to exceed $30,000,000
in the aggregate for both Obligors;
(xii) Indebtedness the proceeds of which are utilized
solely to finance working capital in an aggregate principal
amount not to exceed the lesser of (a) $50,000,000 and (b) 80% of
Qualified Receivables (in the aggregate for both Obligors);
(xiii) financing provided by a satellite or satellite
launch vendor or Affiliate thereof of all or part of the cost of
construction, launch and insurance of one or more replacement
satellites or satellite launches relating to such satellites
provided by such vendor or its Affiliates;
(xiv) Indebtedness for which the Obligors have received
consent of the Note Investors (as defined therein) in accordance
with Section 5.1 of the Noteholders Agreement; and
(xv) any Qualified Sale and Leaseback Transaction.
For purposes of determining compliance with this Section 7.7, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Debt described in clauses (i) through (xv) above, an
Obligor shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this Section 7.7 and such item of Indebtedness shall
be treated as having been incurred pursuant to only one of such clauses.
7.8. ASSET SALES
Neither of the Obligors shall, or shall permit any of its
Material Subsidiaries to, consummate an Asset Sale unless (x) such Obligor or
Material Subsidiary receives consideration at the time of such Asset Sale at
least equal to the fair market value of the assets or Equity Interests issued,
sold or otherwise disposed of; (y) such fair market value shall be determined by
such Obligor's Board of Directors (whose good faith determination shall be
conclusive) and evidenced by a Board Resolution; and (z) at least 75% of the
consideration received therefore by such Obligor or Material Subsidiary is in
the form of cash or Cash Equivalents; provided, however, that the amount of (A)
any liabilities (as shown on such Obligor's or Material Subsidiary's most recent
balance sheet or in the notes thereto) of such Obligor or Material Subsidiary
(other than contingent liabilities and liabilities that are by their terms
contractually subordinated in right of payment to the Notes or any Guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases such Obligor or Material Subsidiary
from further liability and (B) any securities, notes or other obligations
received by such Obligor or Material Subsidiary from such transferee that are
converted by such Obligor or Material Subsidiary into cash (to the extent of the
cash received in that conversion) within 30 days of receipt thereof, shall be
deemed to be cash for purposes of this provision.
A transfer of assets by the Company to a Material Subsidiary or
by a Material Subsidiary to an Obligor or to another Material Subsidiary, and an
issuance of Equity Interests by a Material Subsidiary to an Obligor or to
another Material Subsidiary, shall not be deemed to be an Asset Sale. Any
Restricted Payment that is permitted by Section 7.5 hereof will not be deemed to
be an Asset Sale.
Within 360 days after the receipt of any Net Proceeds from an
Asset Sale, the Obligor or a Material Subsidiary may (a) apply the Net Proceeds
from such Asset Sale, at its option, (i) to acquire all or substantially all of
the assets of, or a majority of the Voting Stock of, another Permitted Business,
or Voting Stock of a Subsidiary engaged in a Permitted Business (other than any
such Voting Stock owned or held by an Obligor or a Material Subsidiary), (ii) to
make a capital expenditure, or (iii) to acquire other assets that are used or
useful in a Permitted Business that have an expected useful life of one year or
longer; (b) enter into a legally binding agreement to apply such Net Proceeds as
described in the preceding clause (a) within six months after such agreement is
entered into and apply such Net Proceeds in accordance with the terms of such
agreement or the provisions of clause (a) above; provided that if such agreement
terminates such Obligor shall have until the earlier of (i) 90 days after the
date of such termination and (ii) six months after the date of the Asset Sale
resulting in such Net Proceeds to effect
35
such an application; or (c) to permanently repay (and reduce the commitments
with respect to) Pari Passu Indebtedness and the Notes, pro rata. Pending the
final application of any such Net Proceeds, the Obligor or a Material Subsidiary
may temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Agreement. Any Net
Proceeds from such Asset Sale that are not finally applied or invested as
provided in the first sentence of this paragraph will be deemed to constitute
"Excess Proceeds." Within five days of each date on which the aggregate amount
of Excess Proceeds exceeds $10,000,000, the Obligors shall commence an Asset
Sale Offer pursuant to this Section 7.8 to all Holders of Notes and all holders
of Pari Passu Indebtedness containing provisions similar to those set forth in
this Agreement with respect to offers to purchase or redeem with the proceeds of
sales of assets (including the Indebtedness under the Indenture) to purchase the
maximum principal amount (or, if applicable, Accreted Value) of Notes and such
Pari Passu Indebtedness that may be purchased out of the Excess Proceeds at an
offer price in cash in an amount equal to 100% of the Accreted Value of the
Notes or the accreted value or principal amount (as appropriate) of such Pari
Passu Indebtedness, plus accrued and unpaid interest thereon, if any, to the
date fixed for the closing of such offer, in accordance with the procedures set
forth in this Section 7.8. To the extent that the aggregate amount of Accreted
Value of the Notes tendered pursuant to an Asset Sale Offer, together with any
accrued and unpaid interest thereon, is less than the Excess Proceeds, the
Obligors may use such difference for any purpose not otherwise prohibited by
this Agreement. If the aggregate Accreted Value of the Notes and accreted value
or principal amount (as appropriate) of such Pari Passu Indebtedness tendered
into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee
shall select the Notes and such Pari Passu Indebtedness to be purchased on a pro
rata basis based on the Accreted Value of the Notes and the accreted value or
principal amount (as appropriate) of such Pari Passu Indebtedness. Upon
completion of each Asset Sale Offer, the amount of Excess Proceeds shall be
deemed to be reset at zero.
The Obligors shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sales
provisions of this Agreement, the Obligors shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the Asset Sale provisions of this Agreement by virtue of such
conflict.
In the event that the Obligors shall be required to commence an
Asset Sale Offer, they shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Obligors shall purchase the Accreted Value of Notes
required to be purchased pursuant to this Section 7.8 (the "Offer Amount") or,
if less than the Offer Amount has been tendered, all Notes tendered in response
to the Asset Sale Offer. Payment for any Notes so purchased shall be made in
cash.
Any accrued and unpaid interest on the Notes so purchased shall
be paid to the Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Obligors shall
send a notice to the Holders. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the Asset
Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 7.8 and the length of time the Asset Sale Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrete or accrue interest;
36
(d) that, unless the Obligors default in making such payment,
any Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to
any Asset Sale Offer shall be required to surrender the Note to the Obligors at
the address specified in the notice at least three days before the Purchase
Date;
(f) that Holders shall be entitled to withdraw their election
if the Obligors receive, not later than the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing its election to have such Note
purchased;
(g) that, if the aggregate Accreted Value of Notes surrendered
by Holders exceeds the Offer Amount, the Obligors shall select the Notes to be
purchased on a pro rata basis; and
(h) that Holders whose Notes were purchased only in part shall
be issued new Notes equal in principal amount at maturity to the unpurchased
portion of the Notes surrendered.
On or before the Purchase Date, the Obligors shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered.
The Obligors shall promptly (but in any case not later than five Business Days
after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Obligors for purchase, and the Obligors shall promptly issue a new Note, and
shall mail or deliver such new Note to such Holder, in a principal amount at
maturity equal to any unpurchased portion of the Note surrendered. Any Note not
so accepted shall be promptly mailed or delivered by the Obligors to the Holder
thereof.
7.9. TRANSACTIONS WITH AFFILIATES
Neither of the Obligors shall, or shall permit any of its
Material Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each, an "Affiliate Transaction"), unless: (a) such
Affiliate Transaction is on terms that are no less favorable to such Obligor or
Material Subsidiary than those that would have been obtained in a comparable
transaction by such Obligor or such Material Subsidiary with an unrelated
Person; and (b) (i) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$5,000,000, if an opinion meeting the requirements set forth in clause (ii) of
this paragraph has not been obtained, such Affiliate Transaction has been
approved by a majority of the members of such Obligor's Board of Directors who
have no direct financial interest in such Affiliate Transaction (other than as a
stockholder of such Obligor), and (ii) with respect to (x) any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $20,000,000, or (y) any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $5,000,000 where none of the members of such Obligor's Board of
Directors qualify as having no direct financial interest in such Affiliate
Transaction (other than as a stockholder of such Obligor), such Obligor obtains
an opinion as to the fairness to such Obligor or such Material Subsidiary of
such Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing; provided
however that the following items shall not be deemed to be Affiliate
Transactions and, therefore, will not be subject to the provisions of this
paragraph:
(1) any transaction by an Obligor or any Material Subsidiary
with an Affiliate directly related to the purchase, sale or distribution of
products in the ordinary course of business consistent with industry practice
which has been approved by a majority of the members of the Board of Directors
who are disinterested with respect to such transaction;
37
(2) any employment agreement or arrangement or employee
benefit plan entered into by an Obligor or any of its Material Subsidiaries in
the ordinary course of business of such Obligor or such Material Subsidiary;
(3) transactions between or among an Obligor and its Material
Subsidiaries;
(4) payment of reasonable directors fees and provisions of
customary indemnification to directors, officers and employees of an Obligor and
its Material Subsidiaries;
(5) sales of Equity Interests (other than Disqualified Stock)
to Affiliates of an Obligor;
(6) Restricted Payments that are permitted by the provisions
of Section 7.5 hereof (other than clause (7) thereof);
(7) transactions pursuant to the Tax Sharing Agreement;
(8) contractual arrangements existing on the date hereof, and
any renewals, extensions, implementations or modifications thereof that are not
materially adverse to the Holders;
(9) the Concurrent Financing Transactions (including all
agreements evidencing the same in substantially the form provided to the
Investors on December 19, 20 or 21, 2002 and arrangements contemplated thereby);
and
(10) a Parent Company Merger.
7.10. LIENS
Neither of the Obligors shall, or shall permit any of its
Material Subsidiaries to, create, incur, assume or otherwise cause or suffer to
exist or become effective any Lien of any kind (other than Permitted Liens) upon
any of their property or assets, now owned or hereafter acquired, other than any
Liens for which the Obligors have received consent of the Note Investors (as
defined therein) in accordance with Section 5.1 of the Noteholders Agreement.
7.11. CORPORATE EXISTENCE
Subject to Section 7.16 hereof, each Obligor shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each of its Material Subsidiaries, in accordance with the respective
organizational documents thereof (as the same may be amended from time to time)
and (ii) the rights (charter and statutory), licenses and franchises thereof;
provided, however, that neither Obligor shall be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of
any of its Material Subsidiaries, if the Board of Directors of such Obligor,
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of such Obligor, taken as a whole with its Subsidiaries,
and that the loss thereof is not adverse in any material respect to the Holders
of the Notes; provided further, that nothing in this Section 7.11 shall prohibit
a Parent Company Merger.
7.12. OFFER TO REPURCHASE UPON CHANGE OF CONTROL
(a) Upon the occurrence of a Change of Control, the Obligors
shall make an offer (a "Change of Control Offer") to each Holder to repurchase
all or any part (equal to $1,000 or an integral multiple thereof) of each
Holder's Notes at a purchase price equal to 101% of the Accreted Value thereof
plus accrued and unpaid interest, if any, to the date of purchase (the "Change
of Control Payment"). Within 30 days following any Change of Control, the
Obligors shall mail a notice to each Holder stating: (1) that the Change of
Control Offer is being made pursuant to this Section 7.12 and that all Notes
tendered will be accepted for payment; (2) the purchase price and the purchase
date, which shall be no earlier than 30 and no later than 60 calendar days from
the date such
38
notice is mailed (the "Change of Control Payment Date"); (3) that any Note not
tendered will continue to accrete or accrue interest; (4) that, unless the
Obligors default in the payment of the Change of Control Payment, all Notes
accepted for payment pursuant to the Change of Control Offer shall cease to
accrete or accrue interest after the Change of Control Payment Date; (5) that
Holders electing to have any Notes purchased pursuant to a Change of Control
Offer will be required to surrender the Notes, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Notes completed, to the Obligors
at the address specified in the notice prior to the close of business on the
third Business Day preceding the Change of Control Payment Date; (6) that
Holders will be entitled to withdraw their election if the Obligors receive, not
later than the close of business on the second Business Day preceding the Change
of Control Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount at maturity of Notes
delivered for purchase, and a statement that such Holder is withdrawing his
election to have the Notes purchased; and (7) that Holders whose Notes are being
purchased only in part will be issued new Notes equal in principal amount at
maturity to the unpurchased portion of the Notes surrendered, which unpurchased
portion must be equal to $1,000 in principal amount at maturity or an integral
multiple thereof. The Obligors shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes in connection with a Change of Control. To the extent that
the provisions of any securities laws or regulations conflict with the Change of
Control provisions of this Agreement, the Obligors will comply with the
applicable securities laws and regulations and will not be deemed to have
breached their obligations under the Change of Control provisions of this
Agreement by virtue of such conflict.
(b) On the Change of Control Payment Date, the Obligors shall,
to the extent lawful, accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer. The Obligors shall promptly
mail to each Holder of Notes so tendered the Change of Control Payment for such
Notes, and shall promptly mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount at maturity to any unpurchased
portion of the Notes surrendered by such Holder, if any; provided, that each
such new Note shall be in a principal amount at maturity of $1,000 or an
integral multiple thereof. The Obligors shall publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
(c) The Obligors shall not be required to make a Change of
Control Offer upon a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Agreement applicable to a Change of Control Offer
made by the Obligors and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
7.13. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
Neither of the Obligors shall, or shall permit any of its
Material Subsidiaries to, enter into any sale and leaseback transaction;
provided that an Obligor may enter into a sale and leaseback transaction if: (i)
the lease is for a period, including renewal rights, of not in excess of five
years; (ii) the transaction is solely between such Obligor and any Material
Subsidiary or solely between Material Subsidiaries; (iii) such Obligor or such
Material Subsidiary, within 12 months after the sale or transfer of any assets
or properties is completed, applies an amount not less than the Net Proceeds
received from such sale in accordance with Section 7.8 hereof; or (iv) such sale
and leaseback transaction is a Qualified Sale and Leaseback Transaction.
7.14. LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS OF MATERIAL
SUBSIDIARIES
Neither of the Obligors (i) shall, or shall permit any of its
Material Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of
any Equity Interests in a Material Subsidiary of such Obligor to any Person or
(ii) shall permit any of its Material Subsidiaries to issue any Equity Interests
other than:
(a) to an Obligor or another Material Subsidiary;
(b) issuances of directors' qualifying shares to the extent
necessary to comply with applicable law;
39
(c) to the extent required by applicable law, issuances or
transfers to nationals of the jurisdiction in which a Material Subsidiary is
organized in an amount not to exceed 1% of the total Equity Interests of such
Material Subsidiary;
(d) distributions of Capital Stock other than Disqualified
Stock to all common shareholders of a Material Subsidiary on a pro rata basis;
or
(e) the sale of all the Equity Interests in such Material
Subsidiary (excluding the Company), provided that the cash Net Proceeds from
such transfer, conveyance, sale, lease or other disposition are applied in
accordance with Section 7.8 hereof.
7.15. INSURANCE
(a) The Obligors shall obtain prior to the launch of each
satellite and shall maintain launch insurance with respect to each satellite
launch covering the period from the launch to 180 days following the launch of
each satellite in an amount equal to or greater than the sum of (1) the cost to
replace such satellite with a satellite of comparable or superior technological
capability (as determined by the Board of Directors of Holdings, whose
determination shall be conclusive and evidenced by a Board Resolution) and
having at least as much transmission capacity as the satellite to be replaced,
(2) the cost to launch a replacement satellite pursuant to the contract whereby
a replacement satellite will be launched and (3) the cost of launch insurance
for such replacement or, in the event that the Obligors have reason to believe
that the cost of obtaining comparable insurance for a replacement would be
materially higher, the Obligors' best estimate of the cost of such comparable
insurance (in each case such costs being determined as of the date such
insurance is procured by the Board of Directors of Holdings, whose determination
shall be conclusive and evidenced by a Board Resolution). Notwithstanding the
foregoing, at any time when the Obligors have two primary satellites in orbit
and fully functioning, the Obligors shall not be obligated to obtain insurance
pursuant to this paragraph (a) with respect to the launch of any satellite that
the Obligors do not intend to use as a replacement for one of the two primary
satellites used by them to provide the XM Radio Service.
(b) The Obligors shall maintain full in-orbit insurance with
respect to each satellite they own and launch in an amount at least equal to the
sum of (1) the cost to replace such satellite with a satellite of comparable or
superior technological capability (as determined by the Board of Directors of
Holdings, whose determination shall be conclusive and evidenced by a Board
Resolution) and having at least as much transmission capacity as the satellite
to be replaced (or such percentage of replacement value as is then reasonably
obtainable in the insurance market at a commercially reasonable cost), (2) the
cost to launch a replacement satellite pursuant to the contract pursuant to
which a replacement satellite will be launched and (3) the cost of launch
insurance for such replacement or, in the event that the Obligors have reason to
believe that the cost of obtaining comparable insurance for a replacement would
be materially higher, the Obligors' best estimate of the cost of such comparable
insurance (provided, however, that with respect to any satellite as to which
there has been an insured loss, the required amount of such insurance shall
equal the lesser of such sum and the amount reasonably obtainable in the
insurance market at a commercially reasonable cost, as determined by the Board
of Directors of Holdings, whose determination shall be conclusive and evidenced
by a Board Resolution). The in-orbit insurance required by this paragraph shall
provide that if 50% or more of a satellite's capacity is lost, the full amount
of insurance shall become due and payable, and that if a satellite is able to
maintain more than 50% but less than 100% of its capacity, a portion of such
insurance shall become due and payable.
(c) In the event that the Obligors receive proceeds from
insurance relating to any satellite, the Obligors shall be entitled to use all
or any portion of such proceeds for any purpose, including (1) to repay any
vendor or third-party purchase money financing pertaining to such satellite that
is required to be repaid by reason of the loss giving rise to such insurance
proceeds, (2) to develop and construct a replacement satellite, or (3) general
corporate purposes.
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7.16. MERGER, CONSOLIDATION, OR SALE OF ASSETS
(a) Neither of the Obligors shall, directly or indirectly,
consolidate or merge with or into (whether or not such Obligor is the surviving
corporation), or sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of such Obligor and its Material
Subsidiaries taken as a whole, in one or more related transactions to, another
Person unless (i) such Obligor is the surviving corporation or the Person formed
by or surviving any such consolidation or merger (if other than such Obligor) or
to which such sale, assignment, transfer, conveyance or other disposition shall
have been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia, (ii) the Person
formed by or surviving any such consolidation or merger (if other than such
Obligor) or the Person to which such sale, assignment, transfer, conveyance or
other disposition shall have been made assumes all the obligations of the
Obligors under the Registration Rights Agreement, the Security Agreements, the
Intercreditor Agreements, the Notes and this Agreement pursuant to agreements in
a form reasonably satisfactory to the Majority Holders, (iii) immediately after
such transaction, no Default or Event of Default exists and (iv) such Obligor or
the Person formed by or surviving any such consolidation or merger (if other
than such Obligor), or to which such sale, assignment, transfer, conveyance or
other disposition shall have been made (A) shall have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of such Obligor immediately preceding the transaction and (B) shall, on
the date of such transaction after giving pro forma effect thereto and any
related financing transactions as if the same had occurred at the beginning of
such Obligor's latest four fiscal quarters for which consolidated financial
statements of such Obligor are available immediately preceding the date of such
transaction, have a ratio of Total Consolidated Indebtedness to Adjusted
Consolidated Operating Cash Flow for such four-quarter period less than 6.0 to
1.0.
In addition, each Obligor shall not, directly or indirectly,
lease all or substantially all of its properties or assets, in one or more
related transactions, to any other Person. The provisions of this Section
7.16(a) shall not be applicable to a consolidation, merger, sale, assignment,
transfer, conveyance or other disposition of properties or assets between or
among (i) either Obligor and its Material Subsidiaries or (ii) the Obligors.
(b) Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of an Obligor in accordance with Section 7.16(a) hereof, the
successor corporation formed by such consolidation or into or with which such
Obligor is merged or to which such sale, assignment, transfer, lease, conveyance
or other disposition is made shall succeed to, and be substituted for (so that
from and after the date of such consolidation, merger, sale, lease, conveyance
or other disposition, the provisions of this Agreement referring to such
"Obligor" shall refer instead to the successor corporation), and may exercise
every right and power of such Obligor under this Agreement with the same effect
as if such successor Person had been named as such Obligor herein; provided,
however, that the predecessor Obligor shall not be relieved from the obligation
to pay the principal of and interest (and premium, if any) on the Notes except
in the case of a sale, assignment, transfer, conveyance or other disposition of
all of the Obligor's assets that meets the requirements of Section 7.16(a)
hereof.
7.17. CERTAIN TRADING LIMITATIONS
For so long as an Investor holds at least $10,000,000 in
principal amount at maturity of the Notes originally purchased by such Investor
under this Agreement, such Investor agrees that it will not enter into any Short
Sales. For purposes of this Section 7.17, a "Short Sale" by an Investor means to
sell, contract to sell, grant any option to purchase, or make any short sale of
Class A Common Stock, establish a "put equivalent position" (as such term is
defined in Rule 16a-1(h) under the Exchange Act) or engage in any transaction
the result of which will involve any of the foregoing, at a time when such
Investor has no equivalent offsetting long position in Class A Common Stock or
preferred stock or indebtedness convertible into Class A Common Stock (a "Net
Short Position"). For purposes of determining whether an Investor has an
equivalent offsetting long position in Class A Common Stock, all Class A Common
Stock held by such Investor, all Conversion Stock that would be issuable upon
Conversion in full of all Notes then held by such Investor (assuming that such
Notes were then fully Convertible, notwithstanding any provisions to the
contrary, and giving effect to any Conversion Price adjustments scheduled to
take effect in the future) and all shares of Class A Common Stock issuable upon
conversion of Holdings' outstanding preferred stock and Holdings' outstanding
7.75% Convertible Subordinated Notes, exercise of any call option or
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"call equivalent position" (as defined in Rule 16a-1(b) under the Exchange Act)
held by such Investor (assuming that such call position was then fully
convertible or exercisable, notwithstanding any provisions to the contrary, and
giving effect to any conversion or exercise price adjustments scheduled to take
effect in the future) shall be deemed to be held long by such Investor. For
purposes of this Section 7.17, the term "Investor" includes an Investor and its
Affiliates and Related Parties.
7.18 PAYMENTS FOR CONSENT
Neither Obligor nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Agreement, the Noteholders Agreement or the Notes unless such consideration is
offered to be paid and is paid to all Holders of the Notes that consent, waive
or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
7.19. HART-SCOTT-RODINO
(a) The Parties shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings (which
shall include any necessary filings under the HSR Act and under the competition
laws of any other jurisdiction), and to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all third parties and
Governmental Entities which are necessary or advisable to consummate the
transactions contemplated by this Agreement. The Parties agree that they will
consult with each other with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and the other Transaction Documents and each Party will keep the other
apprised of the status of significant matters relating to contemplation of the
transactions contemplated hereby and thereby.
(b) Each of the Parties shall use its reasonable best efforts
to resolve objections, if any, which may be asserted with respect to the
transactions contemplated hereby and by the other Transaction Documents under
antitrust laws, including, if applicable, the HSR Act. In the event a suit is
threatened or instituted challenging any of the transactions contemplated hereby
and thereby as violative of antitrust laws, each of the Parties shall use its
reasonable best efforts to avoid the filing of, or resist or resolve such suit.
The Parties shall use their reasonable best efforts to take such action as may
be required by: (a) the DOJ or the FTC in order to resolve such objections as
either of them may have to such transaction under antitrust laws, or (b) any
federal or state court of the United States, in any suit brought by a private
party or Governmental Entity challenging such transactions as violative of
antitrust laws, in order to avoid the entry of, or to effect the dissolution of,
any injunction, temporary restraining order, or other order which has the effect
of preventing the consummation of such transactions. Reasonable best efforts
shall not include the willingness of an Obligor to accept an order (1) agreeing
to the divestiture, or the holding separate, of any assets of Holdings or its
Subsidiaries or (2) restricting the conduct of the Obligors in a manner that
Holdings reasonably determines to be material to Holdings and its Subsidiaries,
taken as a whole.
7.20. PLEDGES OF SECURITIES
The Obligors acknowledge and agree that a Holder may from time to
time pledge pursuant to a bona fide margin agreement or grant a security
interest in some or all of the Securities and, if required under the terms of
such arrangement, such Holder may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer shall not be subject to
approval of either of the Obligors, and no legal opinion of the pledgee, secured
party or pledgor shall be required in connection therewith except as required by
applicable law.
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Further, no notice shall be required of such pledge. At the appropriate Holder's
expense, the Obligors will execute and deliver such reasonable documentation as
a pledgee or secured party of Securities may reasonably request in connection
with a pledge or transfer of the Securities, including the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of selling stockholders thereunder.
7.21. SECURITIES LAW DISCLOSURE; PUBLICITY
The Obligors shall, within one Business Day after each of the
date hereof and the Closing Date, file a Current Report on Form 8-K disclosing
material terms of the transactions contemplated hereby. After the date hereof,
the Obligors shall timely file any filings and notices required by the SEC or
applicable law with respect to the transactions contemplated hereby. Neither of
the Obligors nor any Person acting on its behalf will provide any Holder (other
than in connection with service by a designee of such Holder as a director or
board observer under the Noteholder Agreement) with material, nonpublic
information about the Obligors unless such Holder consents to receive such
information in writing in advance even if otherwise required pursuant to the
terms of any Transaction Document.
7.22. REIMBURSEMENT
Each of the Obligors, jointly and severally, shall indemnify and
hold harmless each Holder and any of its Affiliates or Related Parties from and
against any and all losses, claims, damages, liabilities, settlement costs and
expenses, including costs of preparation of legal action and reasonable
attorneys' fees, as incurred, arising out of or relating to any breach by either
of the Obligors of any of the representations, warranties or covenants made by
either of the Obligors in this Agreement or any other Transaction Document, or
any allegation by a third party that, if true, would constitute such a breach.
The indemnification obligations of the Obligors under this Section 7.23 shall be
in addition to any liability that they may otherwise have and shall be binding
upon and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Holders and any such Related Parties. In no event shall
the liability of either of the Obligors under this Section 7.23 to a Holder or
its Related Parties exceed the total Initial Value paid by the Holder under this
Agreement. If either of the Obligors breaches its obligations under this
Agreement or any Transaction Document, then, in addition to any other
liabilities either of the Obligors may have under this Agreement or any
Transaction Document or applicable law, the Obligors shall pay or reimburse the
Holders on demand for all costs of collection and enforcement (including
reasonable attorney's fees and expenses). Without limiting the generality of the
foregoing, each of the Obligors specifically agrees to reimburse the Holders on
demand for all costs of enforcing the indemnification obligations in this
Section 7.23. The rights of the Holders under this paragraph do not transfer
automatically upon transfer of the Notes, and may be transferred only by an
Investor delivering a written notice to such effect to the Obligors at or prior
to the transfer.
7.23. AVOIDANCE OF CONFLICTS
The Parties agree that notwithstanding anything else to the
contrary set forth herein, the covenants set forth in Sections 7.5 and 7.7
hereof shall not restrict Holdings from complying with its letter agreement with
BayStar Group included in the Concurrent Financing Transactions.
8. DEFAULTS AND REMEDIES
8.1. EVENTS OF DEFAULT
An "Event of Default" occurs if:
(a) the Obligors default in the payment when due of interest
on the Notes and such default continues for a period of 30 days;
43
(b) the Obligors default in the payment when due of principal
of or premium, if any, on the Notes when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to purchase) or
otherwise;
(c) the Obligors default in the performance, or breach the
provisions of Section 7.16 hereof, the Obligors fail to make or consummate a
Change of Control Offer in accordance with the provisions of Section 7.12 hereof
or the Obligors fail to make or consummate an Asset Sale Offer in accordance
with the provisions of Section 7.8 hereof;
(d) an Obligor or any of its Subsidiaries fails to observe or
perform any other covenant or other agreement in this Agreement, the Notes or
either of the Security Agreements for 60 days after notice to such Obligor by
the Holders of at least 25% in aggregate principal amount at maturity of the
Notes then outstanding;
(e) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by an Obligor or any of its
Material Subsidiaries (or the payment of which is guaranteed by an Obligor or
any of its Material Subsidiaries), whether such Indebtedness or guarantee now
exists or is created after the date hereof, which default results in the
acceleration of such Indebtedness prior to its Stated Maturity or is caused by a
failure to pay principal of, or interest or premium, if any, on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") and, in each
case, the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $10,000,000
or more;
(f) a final nonappealable judgment or final nonappealable
judgments for the payment of money are entered by a court or courts of competent
jurisdiction against an Obligor or any of its Material Subsidiaries and such
judgment or judgments remain undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the aggregate of all
such undischarged judgments exceeds $10,000,000 (net of any amounts with respect
to which a reputable and creditworthy insurance company has acknowledged
liability in writing); or a final nonappealable judgment or final nonappealable
judgments for the payment of money or for the rescission of the sale of
securities of either of the Obligors are entered by a court or courts of
competent jurisdiction against either of the Obligors, or either of the Obligors
enters into a settlement arrangement that includes the redemption, repurchase or
cancellation of any securities of either of the Obligors, in either case with
respect to an action filed by a security holder of either of the Obligors (other
than a Holder of Notes in its capacity as such) alleging that such Obligor
violated Section 5 of the Securities Act in connection with the offering and
sale of the Notes hereunder or the offering and sale of any of the Concurrent
Financing Transactions Issuances;
(g) an Obligor or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a custodian of it
or for all or substantially all of its property,
(iv) makes a general assignment for the benefit of
its creditors, or
(v) generally can not pay its debts as they become
due;
(h) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
44
(i) is for relief against an Obligor or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary in an
involuntary case;
(ii) appoints a custodian of an Obligor or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary or for all
or substantially all of the property of an Obligor or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary; or
(iii) orders the liquidation of an Obligor or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days;
(i) an Obligor or Material Subsidiary shall breach any
material representation, warranty or agreement set forth in either of the
Security Agreements or shall repudiate any of its obligations under either of
the Security Agreements, or either of the Security Agreements shall be held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect; or
(j) any Agreement Guarantee shall be held in a judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect (except pursuant to its terms), or any Subsidiary
Guarantor shall deny or disaffirm its obligations under its Agreement Guarantee.
The Obligors shall deliver written notice to the Holders within
five days after any Officer of either Obligor has knowledge of the occurrence of
any event that with the giving of notice or the lapse of time or both would
become an Event of Default under this Section 8.1.
8.2. ACCELERATION
If any Event of Default (other than an Event of Default specified
in clause (g) or (h) of Section 8.1 hereof with respect to an Obligor, any
Significant Subsidiary or any group of Significant Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) occurs and is continuing, the
Holders of at least 25% in principal amount at maturity of the then outstanding
Notes may declare all the Notes to be due and payable immediately. Upon any such
declaration, the Accreted Value of the Notes, together with any premium and
accrued interest thereon, shall become due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (g) or
(h) of Section 8.1 hereof occurs with respect to an Obligor, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary or any Material Subsidiary thereof,
the Accreted Value of all outstanding Notes, together with any premium and
accrued interest thereon, shall be due and payable immediately without further
action or notice. The Majority Holders may on behalf of all of the Holders
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of Accreted Value, interest or premium that has become due
solely because of the acceleration) have been cured or waived.
8.3. OTHER REMEDIES
If an Event of Default occurs and is continuing, the Holder may
pursue any available remedy to collect the payment of the Accreted Value of, and
any premium or accrued interest on, the Notes or to enforce the performance of
any provision of the Notes, this Agreement, the Agreement Guarantees and the
Security Agreements (subject to the Intercreditor Agreements).
A Holder may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by any Holder of a Note in exercising any right or remedy accruing upon
an Event of Default shall not impair the right or remedy or constitute a waiver
of or acquiescence in the Event of Default. All remedies are cumulative to the
extent permitted by law.
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8.4. WAIVER OF PAST DEFAULTS
The Majority Holders may on behalf of the Holders of all of the
Notes waive an existing Default or Event of Default and its consequences
hereunder, except a continuing Default or Event of Default in the payment of the
Accreted Value of, or any premium or accrued interest on, the Notes (including
in connection with an offer to purchase), provided, however, that the Majority
Holders may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Agreement; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
8.5. CONTROL BY MAJORITY
The Majority Holders may direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Holders or
exercising any trust or power conferred on them.
8.6. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT
Notwithstanding any other provision of this Agreement, the right
of any Holder of a Note to receive payment of Accreted Value of, and any premium
or accrued interest on, the Note on the Stated Maturity expressed in the Note or
this Agreement (including in connection with an offer to purchase), or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder; provided
that a Holder shall not have the right to institute any such suit for the
enforcement of payment if and to the extent that the institution or prosecution
thereof or the entry of judgment therein would, under applicable law, result in
the surrender, impairment, waiver or loss of the Lien of this Agreement upon any
property subject to such Lien.
9. CONVERSION PROVISIONS
9.1. CONVERSION AT OPTION OF HOLDERS
Each Holder shall have the right, at its option, at any time,
subject to the terms and provisions of this Agreement, as applicable, to Convert
the Accreted Value of each of its Notes or any portion thereof held by such
Holder (together with interest accrued and any premium on such Note or portion
thereof to be Converted) into shares of Conversion Stock at the Conversion
Price, promptly after surrender of such Note, accompanied by written notice of
Conversion (with respect to such Conversion, a "Conversion Notice") specifying
the Accreted Value thereof to be Converted (together with such interest and
premium) duly executed, to Holdings at any time during usual business hours at
the office of Holdings at, and, if so required by Holdings, accompanied by a
written instrument or instruments of transfer in form satisfactory to Holdings,
duly executed by such Holder or its attorney duly authorized in writing.
Notwithstanding the foregoing, no Holder may Convert the Accreted Value of its
Notes or any portion thereof held by such Holder (together with interest accrued
and any premium on such Note or portion thereof to be Converted) if such
proposed Conversion would constitute or result in an assignment of any FCC
license of the FCC License Subsidiary or any change of control (whether de jure
or de facto) of the FCC License Subsidiary or the exercise of any voting rights
relating to the stock of the FCC License Subsidiary or the Company if such
assignment or change of control or exercise of voting rights would require,
under then existing law, the prior approval of the FCC, without first obtaining
such prior approval of the FCC. Notwithstanding any other provision of this
Agreement or the Notes, if a Conversion of a Note is to be made in connection
with a sale of Holdings or other event, such Conversion may, at the election of
any Holder tendering such Note for Conversion, be expressly conditioned upon the
consummation of such other event, in which case such conversion shall not be
deemed to be effective until the consummation or occurrence of such other event.
The date on which a Conversion Notice is delivered to Holdings (as determined in
accordance with Section 17 hereof) shall be the "Conversion Date" with respect
thereto. Subject to Section 9.7(b) hereof, but not withstanding any other
provision of this Agreement or the
46
Notes, a Holder may Convert its Notes into Class A Common Stock only to the
extent shares of Class A Common Stock have been reserved by Holdings for
issuance upon such Conversion.
9.2. CONVERSION AT OPTION OF OBLIGORS
The Obligors may, at any time on or after the fourth anniversary
of the Closing Date, require the Holders to Convert the Accreted Value of all,
but not less than all, of the Notes (together with any premium and accrued
interest thereon) into shares of Conversion Stock at the Conversion Price if
each of the following conditions is met:
(a) shares of the Class A Common Stock shall have traded on
the Nasdaq National Market or a national securities exchange during each of the
30 Trading Days immediately preceding the Determination Date (as defined below);
(b) on each of the 30 Trading Days immediately prior to the
Determination Date, shares of Class A Common Stock shall have traded at a price
in excess of 200% of the Conversion Price then in effect;
(c) Holdings shall have reported earnings before interest
income and expense, other income, taxes, depreciation (including amounts related
to research and development) and amortization greater than $0 for the
immediately preceding quarterly period for which Holdings reports its financial
results, as set forth in consolidated financial statements contained in
Holdings' SEC reports for such quarterly period, which financial statements
shall have been reviewed (or audited in the case of an annual report) by the
certified independent accountants of Holdings;
(d) immediately following such Conversion, the aggregate
amount of Indebtedness of Holdings and its Subsidiaries on a consolidated basis
shall be less than $250,000,000; and
(e) no shares of Series C Preferred Stock shall remain
outstanding.
The Obligors may require a Conversion pursuant to this Section 9.2 by delivering
irrevocable written notice of such election to the Holders (with respect to such
Conversion, such notice is referred to herein as a "Conversion Notice" and the
date on which the Conversion Notice is sent is referred to herein as the
"Determination Date"), and the fifth Trading Day after the date any such
Conversion Notice is delivered to the Holders (as determined in accordance with
Section 17 hereof) will be the "Conversion Date" for such required Conversion.
Promptly upon receipt of a Conversion Notice pursuant to this Section 9.2, each
Holder shall surrender its Note or Notes to Holdings at a time during usual
business hours at the office of Holdings, and, if so required by Holdings,
accompanied by a written instrument or instruments of transfer in form
satisfactory to Holdings, duly executed by such Holder or its attorney duly
authorized in writing.
9.3. ISSUANCE OF CERTIFICATES
Holdings and the Holder surrendering a Note for Conversion, in
whole or in part, in a transaction that would be reportable under the HSR Act or
that would require approval by any Governmental Entity, shall promptly make all
filings which may be required in connection with such Conversion under the HSR
Act and other applicable laws, rules or regulations. Holdings and any such
Holder shall provide each other with such necessary information and assistance
as may reasonably be requested in connection with such filings. As promptly as
practicable after the surrender of a Note for Conversion (or, if applicable, the
specified waiting period under the HSR Act and receipt of other required
approvals from Governmental Entities), as provided in Section 9.1 or 9.2 hereof
(but in no event later than three Trading Days after such surrender, in the
absence of any HSR waiting period or other required approvals from Governmental
Entities), Holdings at its expense shall deliver or cause to be delivered at its
principal office to or upon the written order of the Holder of such Note so
surrendered (a) certificates bearing, if required by the terms hereof, the
restrictive legends set forth in Section 6 hereof, representing the number of
fully paid and non-assessable shares of Conversion Stock into which such Note is
being Converted in accordance with the provisions hereof, and (b) a Note,
registered in the name of such Holder, representing the portion of the
47
principal amount, if any, of the surrendered Note that is not attributable to
the Accreted Value being Converted at such time, dated so that there will be no
loss of interest on such principal amount and otherwise of like tenor. Subject
to the following provisions of this Section 9.3, such Conversion shall be deemed
to have been made at the close of business on the Conversion Date (or, if
applicable, the expiration of the specified waiting period under the HSR Act),
so that (i) the rights of the Holder of such Note as a Holder shall cease at
such time with respect to the Accreted Value being Converted, (ii) there shall
be no loss of interest on the portion of the principal amount of any surrendered
Note that is not attributable to the Accreted Value being Converted and (iii)
the Person entitled to receive the shares of Conversion Stock upon Conversion of
such Note shall be treated for all purposes as having become the record holder
or holders of such shares of Conversion Stock at such time; provided, however,
that no such surrender on any date when the stock transfer books of Holdings
shall be closed shall be effective to constitute the Person entitled to receive
the shares of Conversion Stock upon such Conversion as the record Holder of such
shares of Conversion Stock on such date, but such surrender shall be effective
to constitute the Person entitled to receive such shares of Conversion Stock as
the record Holder thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open.
9.4. NO FRACTIONAL SHARES
If, but for the provisions of this Section 9.4, the Conversion of
any Note for Conversion Stock were to result in the issuance by Holdings of a
fraction of a share of Class A Common Stock, Holdings, at its option, shall
either (a) round up such fraction to the nearest whole share, or (b) pay an
amount in cash equal to the product of (i) such fraction, multiplied by (ii) the
Fair Market Value of a share of Class A Common Stock on the date of the
Conversion notice, computed to the nearest whole cent, in lieu of issuing a
fractional share.
9.5. MERGER OF HOLDINGS
In case of any consolidation with or merger of Holdings with
another corporation, or in case of any sale, lease or conveyance to another
corporation of the property of Holdings as an entirety or substantially as an
entirety, a Holder shall have the right thereafter to exchange any Notes for the
kind and amount of shares of stock and other securities and property or cash
receivable upon such consolidation, merger, sale, lease or conveyance by a
Holder of the number of shares of Conversion Stock of Holdings into which such
Note might have been converted immediately prior to such consolidation, merger,
sale, lease or conveyance. Holdings shall not effect any such consolidation,
merger, sale, lease or conveyance unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than Holdings)
resulting from such consolidation or merger or the corporation purchasing or
otherwise acquiring such property shall assume, by written instrument executed
and mailed or delivered to the Holders at the last address of such Holders
appearing on the books of Holdings, the obligation to deliver to such Holders
such securities, property or cash as, in accordance with the foregoing
provisions, such Holders may be entitled to acquire upon Conversion.
9.6. RECLASSIFICATION OF CLASS A COMMON STOCK
In case of any reclassification, stock split, subdivision,
dividend or distribution payable in shares of Class A Common Stock (or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly shares of Class A Common Stock), or similar
recapitalization or event with respect to shares of Class A Common Stock (other
than a change in par value, or from par value to no par value, but including any
change in the shares of Class A Common Stock into two or more classes or series
of shares) or in case of any consolidation or merger of another corporation into
Holdings in which Holdings is the surviving corporation and in which there is a
reclassification or change of the shares of Class A Common Stock (other than a
change in par value, or from par value to no par value, but including any change
in the shares of Class A Common Stock into two or more classes or series of
shares), Holdings shall provide that the Holders shall have the right thereafter
to Convert the Notes into the kind and amount of shares of stock and other
securities and property or cash receivable upon such reclassification or similar
recapitalization or event or such consolidation or merger ("Reclassified
Securities") by a holder of the number of shares of Class A Common Stock into
which the Notes might have been Converted immediately prior to such
reclassification or similar recapitalization or event of such consolidation or
merger. The above provisions hereof shall similarly apply to successive
reclassifications and changes of shares of Class A
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Common Stock and to successive consolidations, mergers, sales or conveyances
involving such reclassifications and changes of shares of Class A Common Stock.
Holdings shall not effect any such consolidation, merger, sale, transfer or
other disposition, unless prior to or simultaneously with the consummation
thereof the successor corporation (if other than Holdings) resulting from such
consolidation or merger or the corporation purchasing or otherwise acquiring
such properties shall assume, by written instrument executed and mailed or
delivered to the Holders at the last address of such Holders appearing on the
books of Holdings, the obligation to deliver to such Holders such Reclassified
Securities as, in accordance with the foregoing provisions, such Holders may be
entitled to acquire. The above provisions of this subparagraph shall similarly
apply to successive reorganizations, reclassifications, consolidations, mergers,
sales, transfers, or other dispositions.
9.7. RESERVATION OF CLASS A COMMON STOCK
(a) Holdings shall have reserved 40,000,000 shares of Class A
Common Stock for issuance as Conversion Stock as of the Closing, which will be
sufficient to allow $127,200,000 in Initial Value of Notes to be Converted, less
the number of shares needed (if any) under the letter agreement between Holdings
and BayStar Group. Holdings will seek shareholder approval at its next
shareholders meeting to amend its certificate of incorporation to increase the
number of shares of its authorized Class A Common Stock to 600,000,000. Holdings
covenants that it will, immediately following receipt of such shareholder
approval, reserve and keep available out of its authorized Class A Common Stock,
a sufficient number of shares for the purposes of issuance upon Conversion of
all or any portion of such Notes which the Holders may Convert as provided in
Section 9.2 herein. Such shareholders meeting shall in any event be held within
six months after the Closing Date. Holdings covenants that all shares of Class A
Common Stock which shall be so issuable shall be duly and validly issued and
fully paid and non-assessable, free from preemptive or similar rights on the
part of the holders of any shares of Capital Stock or securities of Holdings,
and free from all Liens or other charges with respect to the issuance thereof.
Holdings will take all such action as may be necessary to assure that such
shares of Class A Common Stock are approved for listing on the Nasdaq Stock
Market (subject to notice of issuance) and generally may be so issued without
violation by the Company of any applicable law or regulation, or of any
requirements of the Nasdaq Stock Market or any domestic securities exchange or
other public trading market upon which the Class A Common Stock may be listed or
quoted.
(b) If, at the time any Holder requests a Conversion of any of
the Notes in compliance with Section 9.1, and Holdings does not have available a
sufficient number of authorized but unissued shares of Class A Common Stock to
effect such Conversion, within three Business Days after such notice, (i)
Holdings shall issue such number of shares of Class A Common Stock as it has
available and (ii) the Obligors shall pay to such Holder in cash, as liquidated
damages and not as a penalty, an amount equal to (A) the number of shares of
Class A Common Stock to have been issued upon such Conversion in excess of the
number of shares of Class A Common Stock actually issued upon such Conversion,
multiplied by the Fair Market Value per share of Class A Common Stock on the
date of such notice. Upon complying with the foregoing requirements, Holdings
shall have no further obligation to issue or deliver the shares of Class A
Common Stock to have been issued upon such Conversion, or to take any other
actions specified in Section 9 relating to such Conversion.
9.8. TAXES
The issuance of certificates for shares of Conversion Stock upon
the Conversion of any Note shall be made without charge to the Holder for any
Tax in respect of the issuance of such certificates, and such certificates shall
be issued in the name of, or in such name as may be directed by, the Holder of
such Note; provided, however, that Holdings shall not be required to pay any Tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the Holder of such
Note, and Holdings shall not be required to issue or deliver such certificates
unless or until the Person or Persons requiring the issuance thereof shall have
paid to Holdings the amount of such Tax or shall have established to the
satisfaction of Holdings that such Tax has been paid. The Holder shall be
responsible for the payment of all applicable income Taxes in connection with
the Conversion of a Note.
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9.9. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS
No Note shall entitle any Holder thereof to any of the rights of
a stockholder of Holdings. No provision of this Agreement or of any Note, in the
absence of the actual Conversion of such Note or any part thereof by the Holder
thereof into Conversion Stock issuable upon such Conversion shall give rise to
any liability on the part of such Holder as a stockholder of Holdings, whether
such liability shall be asserted by Holdings or by creditors of Holdings.
9.10. LIMITATION ON CONVERSION
Notwithstanding the provisions of Section 9.1 hereof, the number
of shares of Class A Common Stock that may be acquired by a Holder upon any
Conversion of Notes shall be limited to the extent necessary to ensure that,
following such exercise, the total number of shares of Class A Common Stock then
beneficially owned by such Holder and its Affiliates and any other Persons whose
beneficial ownership of Class A Common Stock would be aggregated with the
Holder's for purposes of Section 13(d) of the Exchange Act, does not exceed
4.999% (the "Limiting Percentage") of the total number of issued and outstanding
shares of Class A Common Stock (including for such purpose the shares of Class A
Common Stock issuable upon such Conversion). For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations thereunder. Each delivery of a Conversion
Notice hereunder will constitute a representation by the Holder that it has
evaluated the limitation set forth in this Section 9.10 and determined that
issuance of the full number of shares of Class A Common Stock requested in such
Conversion Notice is permitted under this Section 9.10. Holdings' obligation to
issue shares of Class A Common Stock in excess of the limitation referred to in
this Section 9.10 shall be suspended (and shall not terminate or expire
notwithstanding any contrary provisions hereof) until such time, if any, as such
shares of Class A Common Stock may be issued in compliance with such limitation.
By written notice to the Obligors at any time on or after the date hereof, a
Holder may waive the provisions of this Section 9.10 or increase or decrease
such limitation percentage to any other percentage specified in such notice, but
not exceeding 9.999%. Any such waiver or increase will not be effective until
the sixty-first day after such notice is delivered to the Obligors, provided,
that any such waiver or increase delivered prior to or at the Closing will take
effect as of the Closing. Any such waiver, increase or decrease will apply only
to such Holder and not to any other Holder. Notwithstanding the foregoing, an
Investor may elect to have the limitations of this Section 9.10 in their
entirety not apply to such Investor and its subsequent transferees at any and
all times by delivering, or causing to be delivered, a written notice to such
effect to the Obligors at or prior to the Closing.
10. REGISTRATION, TRANSFER AND SUBSTITUTION OF NOTES
10.1. NOTE REGISTER
The Obligors will keep at their principal office a register in
which the Obligors will provide for the registration of the Notes and the
registration of transfers of the Notes. The Obligors may treat the Person in
whose name the Note is registered on such register as the owner and holder
thereof (the "Holder") for the purpose of receiving payment of the principal of
and interest on the Note and for all other purposes, whether or not the Note
shall be overdue, and the Obligors shall not be affected by any notice to the
contrary. The Obligors will provide the Collateral Agent with a copy of their
Note register semi-annually on each June 15 and December 15, or at any other
time upon the written request of the Collateral Agent.
10.2. TRANSFER AND CONVERSION OF NOTES
Upon surrender of one or more Notes for registration of transfer
or for exchange to the Obligors at their principal office with evidence that all
applicable transfer taxes have been paid, the Obligors at their expense will
execute and deliver in exchange therefore one or more Notes in the aggregate
unpaid principal amount(s) of such surrendered Note(s). Each such new Note shall
be registered in the name of such Person, or its nominee, as such Holder or
transferee may request, dated so that there will be no loss of interest on such
surrendered Note and otherwise of like tenor.
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10.3. REPLACEMENT OF NOTES
Upon receipt of evidence reasonably satisfactory to the Obligors
of the loss, theft, destruction or mutilation of a Note and, in the case of any
such loss, theft or destruction, upon delivery of an indemnity bond in such
reasonable amount and form as the Obligors may determine (or of an indemnity
agreement from the Holder reasonably satisfactory to the Obligors), or, in the
case of any such mutilation, upon the surrender of such Holder for cancellation
to the Company at its principal office, the Obligors at their expense will
execute and deliver, in lieu thereof, a new Note of like tenor, dated so that
there will be no loss of interest on such lost, stolen, destroyed or mutilated
Note. Any Note in lieu of which any such new Note has been so executed and
delivered by the Obligors shall not be deemed to be an outstanding Note for any
purpose of this Agreement.
11. GUARANTEES
11.1. EXECUTION AND DELIVERY OF AGREEMENT GUARANTEES
The Obligors shall cause XM Leasing Subsidiary to execute and
deliver at the Closing to each Holder of a Note an Agreement Guarantee
substantially in the form included in Exhibit F hereto, duly executed on behalf
of XM Leasing Subsidiary by an Officer thereof. The Obligors shall further cause
any Person that becomes, as a result of its acquisition by an Obligor or by a
Subsidiary of an Obligor or otherwise, a Material Subsidiary at any time after
the Closing Date to execute and deliver reasonably promptly after such event to
each Holder of a then outstanding Note an Agreement Guarantee substantially in
the form included in Exhibit F hereto, duly executed on behalf of such Material
Subsidiary by an Officer thereof. Notwithstanding the foregoing and subject to
the provisions set forth in the succeeding paragraph, the Obligors shall cause:
(a) XM Capital Subsidiary to execute and deliver an Agreement
Guarantee only in the event that XM Capital Subsidiary continues to constitute a
Material Subsidiary on the date six months after the Closing Date or becomes a
Material Subsidiary as of any date thereafter;
(b) XM Building Subsidiary to execute and deliver an Agreement
Guarantee only as of the date, if any, as of which (i) XM Building Subsidiary
becomes a Material Subsidiary and the existing mortgage on the real property
located at 1500 Eckington Place, NE, Washington, DC and related improvements (or
any successor mortgage) shall not, in the reasonable opinion of the Obligors,
prohibit the grant to the Noteholders of a security interest in the Capital
Stock or assets of XM Building Subsidiary or (ii) XM Building Subsidiary
constitutes a Material Subsidiary without giving effect to its ownership of the
real property located at 1500 Eckington Place, NE, Washington, DC and related
improvements; and
(c) FCC License Subsidiary to execute and deliver an Agreement
Guarantee only in the event that FCC License Subsidiary constitutes a Material
Subsidiary without giving effect to its ownership of the FCC licenses used in
the transmission of the XM Radio Service.
In addition:
(A) Promptly after completing preparation of its consolidated
financial statements for each fiscal quarter ending after the Closing Date,
Holdings shall calculate, as of the final day of such fiscal quarter and in
accordance with GAAP, the aggregate book value of the assets of all of its
Subsidiaries excluding the value of the capital stock of the Subsidiaries,
excluding (i) all assets of the Company, (ii) all assets of any Subsidiary
Guarantors, (iii) the FCC licenses of FCC License Subsidiary used in the
transmission of the XM Radio Service, (iv) the real property of XM Building
Subsidiary located at 1500 Eckington Place, NE, Washington, DC and related
improvements and (v) all assets of XM Capital Subsidiary, but only with respect
to a fiscal quarter commencing on or after July 1, 2003 and only to the extent
it is not a Subsidiary Guarantor as of such final day of such fiscal quarter. If
the amount of such aggregate book value exceeds $10,000,000, Holdings shall
cause one or more of its Subsidiaries to become additional Subsidiary Guarantors
so that the aggregate book value of the assets of all of the Subsidiaries of
Holdings, excluding assets described in the preceding clauses (i) through (v)
(except to the extent
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such assets are owned by such additional Subsidiary Guarantors) as of such final
day of such fiscal quarter shall be less than $10,000,000. Any such additional
Subsidiary Guarantor will also constitute a Material Subsidiary.
(B) If at any time a Subsidiary of either Obligor (other than
a Subsidiary that has executed and delivered an Agreement Guarantee) Guarantees
any Pari Passu Indebtedness, the Obligors shall cause such Subsidiary to become
a Subsidiary Guarantor.
11.2. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN TERMS
(a) Nothing contained in this Agreement, in any Agreement
Guarantee or in the Notes shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into an Obligor or another Subsidiary Guarantor, or
shall prevent the transfer of all or substantially all of the assets of a
Subsidiary Guarantor to an Obligor or another Subsidiary Guarantor. Upon any
such consolidation, merger, transfer or sale, the Agreement Guarantee of the
Subsidiary Guarantor being consolidated or merged or into an Obligor or such
other Subsidiary Guarantor (or the assets of which are being so transferred)
shall no longer have any force or effect.
(b) Nothing contained in this Agreement or in any of the Notes
shall prevent any consolidation or merger of a Subsidiary Guarantor with or into
a corporation or corporations other than an Obligor or another Subsidiary
Guarantor (whether or not affiliated with the Subsidiary Guarantor), or
successive consolidations or mergers in which a Subsidiary Guarantor or its
successor or successors shall be a party or parties, or shall prevent the
transfer of all or substantially all of the assets of a Subsidiary Guarantor, to
a corporation other than an Obligor or another Subsidiary Guarantor (whether or
not affiliated with the Subsidiary Guarantor) authorized to acquire and operate
the same in the event that such consolidation, merger or transfer complies with
the terms and conditions of this Agreement, the Notes, the Noteholders Agreement
and any Agreement Guarantee.
11.3. RELEASES FOLLOWING SALE OF ASSETS
Concurrently with any sale or other disposition of all or
substantially all of the assets of any Subsidiary Guarantor or all of the
Capital Stock of any Subsidiary Guarantor, in each case, in compliance with the
terms hereof, then such Subsidiary Guarantor (in the event of a sale or other
disposition of all of the Capital Stock of such Subsidiary Guarantor) or the
corporation acquiring the property (in the event of a sale or other disposition
of all or substantially all of the assets of a Subsidiary Guarantor) shall be
released from and relieved of its obligations under its Agreement Guarantee and
this Section 11, as the case may be; provided that in the event of an Asset
Sale, the Net Proceeds from such sale or other disposition are treated in
accordance with the provisions of Section 7.8 hereof. Any Subsidiary Guarantor
not released from its obligations under its Agreement Guarantee shall remain
liable for the full amount of principal of and interest on the Notes and for the
other obligations of any Subsidiary Guarantor under the Agreement Guarantee as
provided in this Section 11.
11.4. APPLICATION OF CERTAIN TERMS AND PROVISIONS TO HOLDINGS AND THE
SUBSIDIARY GUARANTORS
(a) For purposes of any provision of this Agreement that
provides for the delivery by any Subsidiary Guarantor of an Officers'
Certificate, the definitions of such terms in Section 1 shall apply to such
Subsidiary Guarantor, as if references therein to the Company were references to
such Subsidiary Guarantor.
(b) Any notice or demand which by any provision of this
Agreement is required or permitted to be given or served by the Holders of Notes
to or on any Subsidiary Guarantor may be given or served as described in this
Agreement as if references therein to the Obligors were references to such
Subsidiary Guarantor.
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12. SECURITY AGREEMENTS
12.1. SECURITY AGREEMENTS
The due and punctual payment of the Accreted Value of, and any
premium and interest on, the Notes when and as the same shall be due and
payable, whether on an Interest Payment Date, at maturity, by acceleration,
repurchase, redemption or otherwise, and interest on the overdue principal of
and interest on the Notes and performance of all other obligations of the
Obligors to the Holders of Notes under this Agreement and the Notes, according
to the terms hereunder or thereunder, shall be secured as provided in the
Security Agreements. The Company shall enter into at the Closing the FCC License
Subsidiary Pledge Agreement. The Obligors shall, and shall cause XM Leasing
Subsidiary to enter into at the Closing, and any other Subsidiary Guarantor to
enter into concurrently with the execution and delivery of an Agreement
Guarantee by such Subsidiary Guarantor, the General Security Agreement, the form
of which is attached as Exhibit B hereto.
Each Holder of Notes, by its acceptance thereof, consents and
agrees to the terms of the Security Agreements and the Intercreditor Agreements
(including the provisions providing for foreclosure and release of Collateral)
as the same may be in effect or may be amended from time to time in accordance
with their terms and authorizes and directs the Collateral Agent named in the
Intercreditor Agreements to enter into the Security Agreements and to perform
its obligations and exercise its rights thereunder in accordance therewith. The
Obligors shall do or cause to be done all such acts and things as may be
required by the provisions of the Security Agreements, to assure and confirm to
the Holders and the Collateral Agent the security interest in the Collateral
contemplated hereby, by the Security Agreements or any part thereof, as from
time to time constituted, so as to render the same available for the security
and benefit of this Agreement and of the Notes secured hereby, according to the
intent and purposes herein and therein expressed.
12.2. RELEASE OF COLLATERAL
(a) Collateral may be released only in accordance with the
terms of the Security Agreements and the Intercreditor Agreements.
(b) At any time when a Default or Event of Default shall have
occurred and be continuing and the maturity of the Notes shall have been
accelerated (whether by declaration or otherwise) and the Holders shall have
delivered a notice of acceleration to the Collateral Agent, no release of
Collateral pursuant to the provisions of the Security Agreements shall be
effective as against the Holders of Notes.
(c) The release of any Collateral from the terms of this
Agreement and the Security Agreements shall not be deemed to impair the security
under this Agreement in contravention of the provisions hereof if and to the
extent the Collateral is released pursuant to the terms of the Security
Agreements.
13. CONDITIONS TO CLOSING
13.1 CONDITIONS TO OBLIGATIONS OF THE INVESTORS
The obligation of each of the Investors to acquire Notes at the
Closing is subject to the fulfillment on or prior to the Closing of the
following conditions:
(a) The representations and warranties made by the Obligors in
Section 4 hereof shall be true and correct in all material respects when made,
and shall be true and correct in all material respects at the Closing Date with
the same force and effect as if they had been made on and as of said date
(unless any representation or warranty refers to a specific earlier date, in
which case it shall have been true and correct in all material respects at such
date).
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(b) All covenants, agreements and conditions to be performed
by either of the Obligors or any Subsidiaries of the Obligors on or prior to the
Closing contained in this Agreement and the other Transaction Documents to which
either is a party shall have been performed or complied with in all material
respects.
(c) There shall not then be in effect any legal or other order
enjoining or restraining the transactions contemplated by this Agreement and the
other Transaction Documents.
(d) All waiting periods, if any, under the HSR Act or foreign
merger notification requirements, if applicable, relating to the transactions
contemplated hereby and by the other Transaction Documents will have expired or
been terminated early and all material foreign antitrust approvals required to
be obtained prior to the Closing in connection with the transactions
contemplated hereby and thereby shall have been obtained.
(e) There shall not be in effect any law, rule or regulation
prohibiting or restricting such purchase or requiring any consent or approval of
any Person which shall not have been obtained to issue the Notes (except as
otherwise provided in this Agreement).
(f) At least 90% of the principal amount of the Company's
outstanding 14% Senior Secured Notes due 2010 shall have been exchanged as
contemplated in clause (3) of the definition of Concurrent Financing
Transactions.
(g) The Concurrent Financing Transactions shall close on or
prior to the Closing in the manner contemplated in the agreements governing such
transactions (or, to the extent any such agreement has not been executed as of
the time of delivery of this Agreement, in the manner contemplated in the most
recent draft thereof provided to the Investors prior to the date of this
Agreement) with all of the conditions therein satisfied or waived, provided that
any such waiver shall be reasonably acceptable to the Supermajority Investors.
(h) The Investors shall have received an opinion of counsel to
the Obligors with respect to the legality of the Notes and such other matters as
may be customary for transactions of this type, in form and substance reasonably
satisfactory to the Investors.
(i) Each of the Obligors and any other Person (other than an
Investor) shall have entered into the Transaction Documents to which it is a
party.
(j) The Investors shall have received a completely executed
copy of each of the Transaction Documents to which it is a party.
(k) The aggregate Initial Value of Notes purchased at the
Closing, together with the gross proceeds to Holdings of the sale of Class A
Common Stock, if any, issued as contemplated by clause (6) of the definition of
Concurrent Financing Transactions (collectively, the "Gross Proceeds"), shall
not be less than $200,000,000.
(l) Since the date hereof, no event or series of events shall
have occurred that reasonably could be expected to have or result in a Material
Adverse Effect. Trading in the Class A Common Stock shall not have been
suspended by the SEC or the Nasdaq National Market (except for any suspension of
trading of not more than one Business Day solely to permit dissemination of
material information regarding the Obligors or a general suspension of trading
on the Nasdaq National Market) at any time since the date hereof, and the Class
A Common Stock shall have been at all times since the date hereof listed for
trading on the Nasdaq National Market.
(m) Each of the Obligors shall have delivered to the Investors
an Officers' Certificate, dated the Closing Date, certifying that the conditions
specified in clauses (a), (b) and (l) of this Section 13.1 have been fulfilled.
Any of the preceding clauses (a), (b), (c), (d), (e), (h), (i),
(j) and (m) may be waived in writing by the Majority Holders to the extent
permitted by law. The written consent of the Supermajority Investors shall be
required to waive the provisions of clauses (f), (g), (k) and (l) above, it
being understood that a waiver of clause (k)
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shall not be cause for elimination or reduction of any Investor's obligation to
close on its purchase of the aggregate purchase price as set forth opposite such
Investor's name on Attachment 1, nor shall any such waiver constitute a waiver
by the Obligors of any cause of action they might have against the breaching
party, provided, however, that in the event that the Gross Proceeds would be
less than $175,000,000, the provisions of clause (k) may be waived only by the
consent of all Investors.
13.2 CONDITIONS TO THE OBLIGATIONS OF THE OBLIGORS
The obligation of the Obligors to issue the Notes at the Closing
is subject to the fulfillment on or prior to Closing of the following
conditions, each of which may be waived in writing by the Obligors to the extent
permitted by law:
(a) The representations and warranties made by each of the
Investors in Section 5 hereof shall be true and correct in all material respects
when made, and shall be true and correct in all material respects at the Closing
Date with the same force and effect as if they had been made on and as of said
date (unless any representation or warrant refers to a specific earlier date, in
which case it shall have been true and correct in all material respects at such
date).
(b) There shall not then be in effect any legal or other order
enjoining or restraining the transactions contemplated by this Agreement and the
other Transaction Documents.
(c) All waiting periods, if any, under the HSR Act or foreign
merger notification requirements, if applicable, relating to the transactions
contemplated hereby and by the other Transaction Documents will have expired or
been terminated early and all material foreign antitrust approvals required to
be obtained prior to the Closing in connection with the transactions
contemplated hereby and thereby shall have been obtained.
(d) Each of the Investors shall have entered into the
Transaction Documents to which it is a party, except that any Investor that
purchased Notes with an Initial Value less than $10,000,000 shall not be
required to sign the Noteholders Agreement.
(e) The aggregate Initial Value of Notes purchased at the
Closing, together with the gross proceeds to Holdings of the sale of Class A
Common Stock, if any, issued as contemplated by clause (6) of the definition of
Concurrent Financing Transactions, shall not be less than $200,000,000.
13.3 INVESTMENT ELECTION IN ABSENCE OF CLOSING
In the event the Closing does not occur, whether due to the
actions or omissions of any Party, the failure of satisfaction of closing
conditions or for any other reason whatsoever, then each of the Investors shall
have the right (but not the obligation), during the fifteen-day period following
the Business Day on which the Obligors notify such Investor that the Closing
will not occur, to notify the Obligors of such Investor's election to purchase
shares of Class A Common Stock (subject to applicable securities law and
regulatory requirements) at a per share price equal to the Conversion Price, in
the full amount of the aggregate Initial Value of Notes set forth opposite such
Investor's name on Attachment 1. Notwithstanding the foregoing, if the Closing
does not occur due to a decision by the Board of Directors of the Obligors,
acting upon their fiduciary duties, to sell a majority interest in the Obligors
by way of an acquisition, merger, asset sale or other form of business
combination (which sale shall not be considered a breach of this Agreement),
each Investor's right to purchase shares set forth in this Section 13.3 shall be
limited to one-half of the applicable Initial Value of Notes referenced above at
a price per share equal to the Conversion Price. Such purchase of shares shall
be effected within ten Business Days after the delivery of such notice to the
Obligors, on a Business Day mutually agreed upon by the Obligors and such
Investor. Upon the request of one or more Investors exercising their respective
rights under this Section 13.3, Holdings will enter into registration rights
arrangements with such Investors affording them registration rights regarding
the Class A Common Stock purchased under this Section 13.3 that are, to the
extent feasible, substantially identical to the rights to have been afforded to
Holders with respect to a "Noteholder Shelf Registration" under the Registration
Rights Agreement. Notwithstanding the foregoing, no Investor shall be entitled
to exercise the right provided in this
55
Section 13.3 if such Investor or any of its Affiliates breached any of its
obligations hereunder in connection with the failed Closing. The provisions of
this Section 13.3 are intended to provide for liquidated damages and not a
penalty, and each Investor agrees that (a) if such Investor exercises its rights
under this Section 13.3 and purchases shares of Class A Common Stock as
contemplated hereby, such actions shall serve as such Investor's sole remedy
against the Obligors and their Affiliates with respect to the failed Closing and
(b) if the Closing does not occur and such failure is not due in whole or in
part to an act omission of either of the Obligors, a failure by either of the
Obligors to satisfy its closing conditions or any other default hereunder by
either of the Obligors, the rights of the Investors under this Section 13.3
constitute the Investors' sole remedy against the Obligors with respect to such
Closing.
14. EXPENSES
The Obligors will pay (a) the reasonable fees and disbursements
of Hale and Dorr LLP, as counsel for the Investors, and (b) the reasonable fees
and disbursements of one additional counsel for each Investor that purchases, at
the Closing, Notes with an Initial Value of at least $50,000,000. All such fees
and disbursements shall be paid by the Obligors even if the transactions
contemplated hereby do not close.
15. SURVIVAL
All express representations and warranties contained in this
Agreement or made in writing by or on behalf of Holdings or its Subsidiaries in
connection with the transactions contemplated by this Agreement shall survive
the execution and delivery of this Agreement, any investigation at any time made
by the Investors or on behalf of the Investors, the issuance of the Notes
hereunder, and any disposition, payment or Conversion of the Notes. All
statements contained in any certificate or other instrument delivered by or on
behalf of Holdings or its Subsidiaries pursuant to this Agreement or in
connection with the transactions contemplated hereby shall be deemed
representations and warranties of Holdings or its Subsidiaries under this
Agreement.
16. AMENDMENTS AND WAIVERS
Except as expressly provided elsewhere herein or in the Notes,
any term of this Agreement or of the Notes may be amended or modified, and the
observance of any term of this Agreement or of the Notes may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of (i) each Obligor and (ii) the Majority Holders.
Any provision of this Agreement or the Notes that expressly provides for waiver
or consent by a specified group or percentage of the Investors or Holders may be
amended or waived only by such specified group or percentage of the Investors or
Holders. Any amendment or waiver effected in accordance with this Section 16
shall be binding upon each Holder of the Notes, each future Holder of the Notes
and each Obligor. Any consent or waiver obtained under Section 7.3 of the
Noteholders Agreement that approves an action not permitted hereunder shall be
considered a waiver of the applicable provision of this Agreement with respect
to the matter as to which the consent or waiver was obtained. Notwithstanding
the foregoing, this Agreement or the Notes may be amended or supplemented,
without the consent of any Holder of a Note, to cure any ambiguity, defect or
inconsistency in a manner that does not materially adversely affect any Holder,
to make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights of any
such Holder. Further, notwithstanding any of the foregoing, without the consent
of each Holder affected, an amendment or waiver under this Section 16 may not,
with respect to any Note held by a non-consenting Holder:
(a) reduce the principal amount at maturity of Notes whose
Holders must consent to an amendment, supplement or waiver;
(b) reduce the Accreted Value or principal amount of, or
change the fixed maturity of, such Note or alter or waive any of the provisions
with respect to the repurchase of such Note pursuant to Sections 7.8 and 7.12
hereof;
56
(c) reduce the Interest Rate applicable to such Note, reduce
the rate at which the Accreted Value of such Note increases, or change the time
for payment of interest, including default interest, on such Note;
(d) waive a Default or Event of Default in the payment of
interest or premium, if any, on such Note (except a rescission of acceleration
of the Notes by the Majority Holders and a waiver of the payment default that
resulted from such acceleration);
(e) make the principal or Accreted Value of, or interest or
premium on, such Note payable in money or assets other than that stated in this
Agreement or the Notes;
(f) except as expressly provided herein or in the Notes,
increase the Conversion Price applicable to such Note, limit the times at which
or amounts for which such Note may be Converted into Conversion Stock, change
the terms under which the Obligor can require Conversion of such Note, or change
the nature of the consideration to be received upon a Conversion of such Note;
(g) make any change in the provisions of this Agreement
relating to waivers of past Defaults or the rights of the Holder of such Note to
receive payments of principal of or interest or premium, if any, on such Note;
(h) release any portion of the Collateral from the Lien of the
Security Agreements, except in accordance with the terms thereof, including the
provisions of Section 19 of the FCC License Subsidiary Pledge Agreement and
Section 8 of the General Security Agreement; or
(i) make any change in Section 8.6 hereof.
17. NOTICES
Except as otherwise provided in this Agreement, notices and other
communications under this Agreement shall be in writing and shall be deemed
properly served if: (i) mailed by registered or certified mail, return receipt
requested, (ii) delivered by a recognized overnight courier service, (iii)
delivered personally, or (iv) sent by facsimile transmission, addressed to the
General Counsel for each Party at the address set forth below for such Party or
at such other address or to the attention of such other officers as such Party
shall have furnished in writing pursuant to this Section 17. Such notice shall
be deemed to have been received: (i) three (3) days after the date of mailing if
sent by certified or registered mail, (ii) one (1) day after the date of
delivery if sent by overnight courier, (iii) the date of delivery if personally
delivered, or (iv) the next succeeding business day after transmission by
facsimile.
If to Holdings or the Company:
XM SATELLITE RADIO HOLDINGS INC.
1500 Eckington Place, NE
Washington, D.C. 20002-2194
Fax No.: (202) 380-4500
Attention: General Counsel
If to the Investors:
As set forth on Attachment 1 hereto.
18. EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts and
by different Parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
57
19. BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors and assigns, except that (a) the
Obligors shall not have the right to assign their respective rights or
obligations hereunder or any interest herein without the prior written consent
of all of the Holders and (b) the Investors may, prior to the Closing and with
the consent of each of the Obligors, assign their rights hereunder to purchase
all or a portion of the Initial Value of Notes set forth in Attachment 1 hereto,
in which case the assignees thereof shall be deemed to be "Investors" with
respect to the assigned Initial Value of Notes.
20. GOVERNING LAW; CHOICE OF FORUM; JURY TRIAL WAIVER
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK AND THE CORPORATE
LAW OF THE STATE OF DELAWARE, AS APPLICABLE, WITHOUT GIVING EFFECT TO ANY
CONFLICT OF LAW PROVISIONS THEREOF OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW
SECTIONS 5-1401 AND 5-1402.
(b) IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE
SOLE FORUM FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT
IS THE SUPREME COURT OF THE STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK
OR THE FEDERAL COURTS LOCATED IN SUCH STATE AND COUNTY, AND RELATED APPELLATE
COURTS. THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH
COURTS AND AGREE TO SAID VENUE.
(c) THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
21. MISCELLANEOUS
21.1. SEVERABILITY
The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect. If any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions shall be deemed dependent upon any other covenant
or provision unless so expressed herein.
21.2. NO WAIVER
It is agreed that a waiver by any Party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by the breaching Party.
21.3. FURTHER ASSURANCES
The Parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement, including entering into the other Transaction Documents to which each
is a Party.
58
21.4. CONSTRUCTION
The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party. The word "including" as
used herein shall not be construed so as to exclude any other thing not referred
to or described.
59
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly signed as of the date first above written.
XM SATELLITE RADIO HOLDINGS INC. MOTIENT CORPORATION
By: By:
-------------------------------------------------- --------------------------------------------------
Name: Name:
Title: Title:
BARON ASSET FUND CLEAR CHANNEL INVESTMENTS, INC.
on behalf of THE BARON ASSET FUND SERIES
By: By:
-------------------------------------------------- --------------------------------------------------
Name: Name:
Title: Title:
COLUMBIA XM RADIO PARTNERS, LLC DIRECTV ENTERPRISES, INC.
By Columbia Capital LLC, its Managing Member
By: By:
-------------------------------------------------- --------------------------------------------------
Name: Name:
Title: Title:
GENERAL MOTORS CORPORATION MADISON DEARBORN CAPITAL PARTNERS III, L.P.
By Madison Dearborn Partners III, L.P., its general partner
By: By Madison Dearborn Partners LLC, its general partner
--------------------------------------------------
Name: By:
Title: --------------------------------------------------
Name:
Title:
MADISON DEARBORN SPECIAL EQUITY III, L.P. SPECIAL ADVISORS FUND I, LLC
By Madison Dearborn Partners III, L.P., its general partner By Madison Dearborn Partners III, L.P., its manager
By Madison Dearborn Partners LLC, its general partner By Madison Dearborn Partners LLC, its general partner
By: By:
-------------------------------------------------- --------------------------------------------------
Name: Name:
Title: Title:
TELCOM--XM INVESTORS, L.L.C. AEA XM INVESTORS I LLC
By: By:
-------------------------------------------------- --------------------------------------------------
Name: Name:
Title: Title:
COLUMBIA XM SATELLITE PARTNERS III, LLC AEA XM INVESTORS II LLC
By:
By: By:
-------------------------------------------------- --------------------------------------------------
Name: Name:
Title: Title:
60
COLUMBIA CAPITAL EQUITY PARTNERS III AMERICAN HONDA MOTOR CO., INC.
(QP), L.P.,
By: Columbia Capital Equity Partners III, L.P., its General By:
Partner --------------------------------------------------
Name:
By: Title:
--------------------------------------------------
Name:
Title:
BARON ASSET FUND BARON CAPITAL FUND TRUST
on behalf of THE BARON iOPPORTUNITY FUND SERIES on behalf of THE BARON CAPITAL ASSET FUND SERIES
By: By:
-------------------------------------------------- --------------------------------------------------
Name: Name:
Title: Title:
BLACK BEAR FUND I, L.P. BLACK BEAR FUND II, L.L.C.
By Eastbourne Capital Management, L.L.C., its general By Eastbourne Capital Management, L.L.C., its
partner manager
By: By:
-------------------------------------------------- --------------------------------------------------
Eric M. Sippel Eric M. Sippel
Chief Operating Officer Chief Operating Officer
BLACK BEAR OFFSHORE MASTER FUND LIMITED HEARST COMMUNICATIONS, INC.
By Eastbourne Capital Management, L.L.C., its
investment adviser and attorney in fact
By: By:
-------------------------------------------------- --------------------------------------------------
Eric M. Sippel Name:
Chief Operating Officer Title:
GEORGE HAYWOOD COLUMBIA CAPITAL EQUITY PARTNERS II (QP), L.P.,
By: Columbia Capital Equity Partners III, L.P., its General
- ----------------------------------------------------- Partner
By:
--------------------------------------------------
Name:
Title:
AEA XM INVESTORS IA LLC AEA XM INVESTORS IIA LLC
By: By:
--------------------------------------------------
Name: Name:
Title: Title:
BAYSTAR CAPITAL II, L.P., BAYSTAR INTERNATIONAL II L.P.,
By: By:
By: By:
-------------------------------------------------- --------------------------------------------------
Name: Name:
Title: Title:
SUPERIUS SECURITIES GROUP, INC. MONEY PURCHASE PLAN ADVAN PARTNERS, L.P.
By:
By: By:
-------------------------------------------------- --------------------------------------------------
Name: Name:
Title: Title:
SF CAPITAL PARTNERS, LTD. VERNON INVESTORS II, L.L.C.
By: By:
-------------------------------------------------- --------------------------------------------------
Name: Name:
Title: Title:
MICHAEL W. HARRIS JOHN DEALY
- ----------------------------------------------------- -----------------------------------------------------
PAUL GREENWALD A.R. SANCHEZ, JR.
- ----------------------------------------------------- -----------------------------------------------------
61
ATTACHMENT 1
Aggregate Initial Value
Investor of Notes Purchased
- -------- -----------------------
AEA $7,700,000
AEA XM Investors IA LLC
AEA XM Investors IIA LLC
Columbia Capital 8,500,000
Columbia Capital Equity Partners II (QP), L.P.
Columbia XM Radio Partners, LLC
Columbia Capital Equity Partners III (QP), L.P.
Columbia XM Satellite Partners III, LLC
Hughes Electronics Corporation 10,000,000
Eastbourne Capital Management, L.L.C.
Black Bear Fund I, L.P. 11,358,000
Black Bear Fund II, L.L.C. 1,343,000
Black Bear Offshore Master Fund Limited 24,599,000
George Haywood 7,000,000
Hearst Communications, Inc. 12,500,000
BayStar Group 36,800,000
BayStar Capital II, LP
BayStar International II, Ltd.
America Honda Motor Co., Inc. 50,000,000
Superius Securities Group, Inc. Money Purchase Plan 3,000,000
John Dealy 500,000
Advan Partners, L.P. 700,000
Michael W. Harris 500,000
Paul Greenwald 1,500,000
SF Capital Partners, Ltd. 5,000,000
Vernon Investors II, L.L.C. 3,000,000
A.R. Sanchez, Jr. 1,000,000
-------------
Total 185,000,000
EXHIBIT A
[Face of Note]
10% Senior Secured Discount Convertible Notes due 2009
No. 1 $____________
XM SATELLITE RADIO HOLDINGS INC.
XM SATELLITE RADIO INC.
promises to pay to _____________________________________________________________
or registered assigns,
the principal sum of ___________________________________________________________
Dollars on December 31, 2009.
Interest Payment Dates: _______ and _______
Record Dates: _______ and _______
Dated: _______
XM SATELLITE RADIO HOLDINGS INC.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
XM SATELLITE RADIO INC.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
A-1
[Back of Note]
10% Senior Secured Discount Convertible Notes due 2009
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES
ACT.
[THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE THE SUBJECT OF A CERTAIN
NOTEHOLDERS AND SHAREHOLDERS AGREEMENT WHICH, AMONG OTHER THINGS, CONTAINS
RESTRICTIONS ON THE TRANSFER OF SUCH SECURITIES. A COPY OF THE NOTEHOLDERS AND
SHAREHOLDERS AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF XM
SATELLITE RADIO INC. AND XM SATELLITE RADIO HOLDINGS INC.]
Capitalized terms used herein shall have the meanings assigned to them
in the Note Purchase Agreement, dated as of December 21, 2002, by and among XM
Satellite Radio Inc., XM Satellite Radio Holdings Inc. and the investors set
forth therein (the "Note Purchase Agreement").
1. Interest. XM Satellite Radio Inc., a Delaware corporation (the
"Company"), and XM Satellite Radio Holdings Inc, a Delaware corporation (the
"Holdings" and, together with the Company, the "Obligors"), promise to pay
interest on the principal amount of this Note at 10% per annum from January 1,
2006 until maturity, together with any additional interest accruing from time to
time pursuant to Section 2.2 of the Registration Rights Agreement ("Additional
Interest"). The Obligors will pay interest semi-annually in arrears on June 30
and December 31 of each year, commencing June 30, 2006 (or, with respect to
Additional Interest accruing on an earlier June 30 and December 31 if Additional
Interest shall accrue prior to January 1, 2006, as provided in the Note Purchase
Agreement), or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from January 1, 2006, except that Additional Interest
will accrue in accordance with Section 2.2 of the Registration Rights Agreement.
The Obligors shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate of 12% per annum (plus the rate of any
applicable Additional Interest accruing from time to time); they shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest from time to time on demand
at the same rate to the extent lawful. Interest will be computed on the basis of
a 360-day year of twelve 30-day months. From the date of issuance through
December 31, 2005, the Initial Value of this Note shall accrete a portion of the
excess of the $1,000 principal amount of such Note over the Initial Value, such
amount to be so accreted on a daily basis and compounded semi-annually each June
30 and December 31 at the rate of 10% per annum from the date of original issue
of the Notes through the date of determination computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Obligors will pay interest on the Notes to
the Persons who are registered Holders of Notes at the close of business on the
June 15 or December 15 next preceding an Interest Payment Date, even if such
Notes are canceled after such record date and on or before such Interest Payment
Date. Each payment of interest on the Notes will be made to the Holder by
certified or bank cashier's check or wire transfer of immediately available
funds or by the issuance of additional Notes, at such address or to such account
as the Holder specifies in writing to the Obligors at least five Business Days
before such payment is to be made. Any such written instructions may provide
that the information contained therein shall continue to be in effect with
respect to subsequent interest payments until thereafter modified by written
instructions of such Holder, which modified instructions shall take effect as of
the next Interest Payment Date occurring more than five Business Days after
delivery of such modified instructions. Any Note issued to a Holder as payment
of interest due on an Interest Payment Date will be issued in a principal amount
equal to the amount of such interest, will commence accruing interest as of the
calendar day immediately following such Interest Payment Date, will otherwise
have the same
A-2
terms as the Notes issued at Closing and will be subject to the provisions and
have the benefits of the Note Purchase Agreement. Notwithstanding the foregoing,
no Additional Interest shall be payable at any time by the issuance of
additional Notes and no other interest shall be payable by issuance of
additional Notes if Additional Interest shall be accruing on the Notes as of the
applicable Interest Payment Date.
3. Security Agreements. The Notes are secured obligations of the
Obligors. The Notes are secured by a pledge of the Collateral pursuant to the
Security Agreements.
4. Conversion. Each Holder shall have the right, at its option, at any
time, subject to the terms and provisions of this Agreement, as applicable, to
Convert the Accreted Value of each of its Notes or any portion thereof held by
such Holder (together with interest accrued and any premium on such Note or
portion thereof to be Converted) into shares of Conversion Stock at the
Conversion Price, promptly after surrender of such Note, accompanied by written
notice of Conversion specifying the principal amount thereof to be Converted
duly executed, to Holdings at any time during usual business hours at the office
of Holdings at, and, if so required by Holdings, accompanied by a written
instrument or instruments of transfer in form satisfactory to Holdings, duly
executed by such Holder or its attorney duly authorized in writing.
Notwithstanding any other provision hereof, if a Conversion of a Note is to be
made in connection with a sale of Holdings or other event, such Conversion may,
at the election of any Holder tendering such Note for Conversion, be expressly
conditioned upon the consummation of such other event, in which case such
conversion shall not be deemed to be effective until the consummation or
occurrence of such other event. Conversions of this Note may be limited pursuant
to Sections 9.1, 9.7 or 9.10 of the Note Purchase Agreement.
5. Conversion at the Option of Holdings.
The Obligors may, at any time on or after the fourth anniversary
of the Closing Date, require the Holders to Convert the Accreted Value of all,
but not less than all, of the Notes (together with any premium and accrued
interest thereon) into shares of Conversion Stock at the Conversion Price if
each of the following conditions is met:
(a) shares of the Class A Common Stock shall have traded on
the Nasdaq National Market or a national securities exchange during each of the
30 Trading Days immediately preceding the Determination Date (as defined below);
(b) on each of the 30 Trading Days immediately prior to the
Determination Date, shares of Class A Common Stock shall have traded at a price
in excess of 200% of the Conversion Price then in effect;
(c) Holdings shall have reported earnings before interest
income and expense, other income, taxes, depreciation (including amounts related
to research and development) and amortization greater than $0 for the
immediately preceding quarterly period for which Holdings reports its financial
results, as set forth in consolidated financial statements contained in
Holdings' SEC reports for such quarterly period, which financial statements
shall have been reviewed (or audited in the case of an annual report) by the
certified independent accountants of Holdings;
(d) immediately following such Conversion, the aggregate
amount of Indebtedness of Holdings and its Subsidiaries on a consolidated basis
shall be less than $250,000,000; and
(e) no shares of Series C Preferred Stock shall remain
outstanding.
The Obligors may require such a Conversion by delivering irrevocable written
notice of such election to the Holders (the date on which such notice is sent
being referred to herein as the "Determination Date"), and the fifth Trading Day
after the date any such notice is delivered to the Holders (as determined in
accordance with the notice provisions hereof) will be the "Conversion Date" for
such required conversion. Promptly upon receipt of such written notice, each
Holder shall surrender its Note or Notes to Holdings at a time during usual
business hours at the office of Holdings at, and, if so required by Holdings,
accompanied by a written instrument or instruments of transfer in form
satisfactory to Holdings, duly executed by such Holder or its attorney duly
authorized in writing.
A-3
6. Denominations, Transfer. The Notes are in registered form without
coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered as provided in the Note Purchase Agreement.
The Obligors may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Obligors may require a Holder to pay
any taxes and fees required by law in connection with a transfer or conversion.
7. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
8. Amendment, Supplement and Waiver. Except as expressly provided
elsewhere herein or in the Note Purchase Agreement, any term of the Note
Purchase Agreement or of this Note may be amended, and the observance of any
term of the Agreement or of this Note may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of (i) each Obligor and (ii) the Majority Holders. Any provision
of this Note or the Note Purchase Agreement that expressly provides for waiver
or consent by a specified group or percentage of the Investors or Holders may be
amended or waived only by such specified group or percentage of the Investors or
Holders. Any amendment or waiver effected in accordance with this Section 8
shall be binding upon each Holder of the Notes, each future Holder of the Notes
and each Obligor. Any consent or waiver obtained under Section 7.3 of the
Noteholders Agreement that approves an action not permitted hereunder shall be
considered a waiver of the applicable provision of this Agreement with respect
to the matter as to which the consent or waiver was obtained. Notwithstanding
the foregoing, the Notes (including this Note) or the Note Purchase Agreement
may be amended or supplemented, without the consent of any Holder of this Note,
to cure any ambiguity, defect or inconsistency in a manner that does not
materially adversely affect any Holder of the Notes, to make any change that
would provide any additional rights or benefits to the Holders of the Notes or
that does not adversely affect the legal rights of any such Holder. Further,
notwithstanding any of the foregoing, without the consent of each Holder
affected, an amendment or waiver under this Section 8 or Section 16 of the Note
Purchase Agreement may not, with respect to any Note held by a non-consenting
Holder:
(a) reduce the principal amount at maturity of Notes whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the Accreted Value or principal amount of, or change the
fixed maturity of, such Note or alter or waive any of the provisions with
respect to the repurchase of such Note pursuant to Sections 7.8 and 7.12 of the
Note Purchase Agreement;
(c) reduce the Interest Rate applicable to such Note, reduce the
rate at which the Accreted Value of such Note increases, or change the time for
payment of interest, including default interest, on such Note;
(d) waive a Default or Event of Default in the payment of interest
or premium, if any, on such Note (except a rescission of acceleration of the
Notes by the Majority Holders and a waiver of the payment default that resulted
from such acceleration);
(e) make the principal or Accreted Value of, or interest or premium
on, such Note payable in money or assets other than that stated in such Note or
the Note Purchase Agreement;
(f) except as expressly provided in such Note or the Note Purchase
Agreement, increase the Conversion Price applicable to such Note, limit the
times at which or amounts for which such Note may be Converted into Conversion
Stock, change the terms under which the Obligor can require Conversion of such
Note, or change the nature of the consideration to be received upon a Conversion
of such Note;
(g) make any change in the provisions of the Note Purchase Agreement
relating to waivers of past Defaults or the rights of the Holder of such Note to
receive payments of principal of or interest or premium, if any, on such Note;
A-4
(h) release any portion of the Collateral from the Lien of the
Security Agreements, except in accordance with the terms thereof, including the
provisions of Section 19 of the FCC License Subsidiary Pledge Agreement and
Section 8 of the General Security Agreement; or
(i) make any change in Section 8.6 of the Note Purchase Agreement.
9. Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest on the Notes; (ii) default in payment
when due of principal of or premium, if any, on the Notes (including in
connection with an offer to purchase) or otherwise, (iii) failure by the
Obligors to comply with the provisions of Section 7.16 of the Note Purchase
Agreement, the failure of the Obligors to make or consummate a Change of Control
Offer in accordance with the provisions of Section 7.12 of the Note Purchase
Agreement, or the failure of the Obligors to make or consummate an Asset Sale
Offer in accordance with the provisions of Section 7.8 of the Note Purchase
Agreement; (iv) failure by an Obligor or any of its Subsidiaries, for 60 days
after notice to such Obligor by the Holders of at least 25% in principal amount
at maturity of the Notes then outstanding, to comply with certain covenants and
other agreements in the Agreement, the Notes or either of the Security
Agreements; (v) default under certain other agreements relating to Indebtedness
of an Obligor or any of its Material Subsidiaries, which default results in the
acceleration of such Indebtedness prior to its express maturity; (vi) certain
final judgments for the payment of money that remain undischarged for a period
of 60 days and with respect to certain actions against an Obligor under Section
5 of the Securities Act; (vii) certain events of bankruptcy or insolvency with
respect to an Obligor or any of its Significant Subsidiaries and (viii) the
breach or repudiation of certain covenants in either of the Security Agreements
or any Agreement Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect. If any Event of Default occurs and is continuing, the Holders of at
least 25% in principal amount at maturity of the then outstanding Notes may
declare the Accreted Value of the Notes, together with any premium and accrued
interest thereon, to be due and payable. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, the Accreted Value of all outstanding Notes will become due and
payable without further action or notice. The Majority Holders may on behalf of
the Holders of all of the Notes waive any existing Default or Event of Default
and its consequences under the Note Purchase Agreement except a continuing
Default or Event of Default in the payment of interest on, or the principal of,
the Notes.
10. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of an Obligor or any Subsidiary Guarantor, as such,
shall not have any liability for any obligations of such Obligor or such
Subsidiary Guarantor under the Notes, the Note Purchase Agreement, the Agreement
Guarantees, the Security Agreements or the Intercreditor Agreements or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
11. Subsidiary Guarantors. Payment of principal, premium, if any, and
interest (including interest on overdue principal amount, premium, if any, and
interest, if lawful) is unconditionally guaranteed by each Subsidiary Guarantor
pursuant to Section 11 of the Note Purchase Agreement.
A-5
EXHIBIT F
FORM OF AGREEMENT GUARANTEE
This Agreement Guarantee is delivered by the undersigned (the
"Subsidiary Guarantor") with respect to the 10% Senior Secured Discount
Convertible Notes issued by XM Satellite Radio Inc. and XM Satellite Radio
Holdings Inc. from time to time pursuant to the Note Purchase Agreement dated as
of December 19, 2002 among XM Satellite Radio Inc., XM Satellite Radio Holdings
Inc. and the several investors named therein (the "Note Purchase Agreement").
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Note Purchase Agreement.
For value received, the Subsidiary Guarantor hereby fully and
unconditionally guarantees to each Holder of a Note that: (a) the Accreted Value
of, and premium and interest on, the Notes will be duly and punctually paid in
full when due, whether at maturity, by acceleration or otherwise, and interest
on overdue principal and premium amount and (to the extent permitted by law)
interest on any interest, if any, on the Notes and all other obligations of the
Obligors to the Holders under the Note Purchase Agreement, the Notes or the
Security Agreements (including fees, expenses or other) will be promptly paid in
full or performed, all in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Notes or any of
such other obligations the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
Stated Maturity, by acceleration or otherwise.
The Subsidiary Guarantor, and by its acceptance hereof each
Holder, hereby confirms that it is the intention of such parties that the
guarantee by such Subsidiary Guarantor pursuant to this Agreement Guarantee not
constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar federal or state law. To effectuate the foregoing intention, the
Holders and the Subsidiary Guarantor hereby irrevocably agree that the
obligations of the Subsidiary Guarantor under this Agreement Guarantee shall be
limited to the minimum extent necessary to ensure that, after giving effect to
all other contingent and fixed liabilities of the Subsidiary Guarantor and after
giving effect to any collections from or payments made by or on behalf of any
other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under this Agreement Guarantee, the obligations of the
Subsidiary Guarantor under this Agreement Guarantee do not constitute a
fraudulent transfer or conveyance under applicable law.
Failing payment when due of any amount so guaranteed or failing
performance of any other obligation of the Obligors to the Holders, for whatever
reason, the Subsidiary Guarantor will be obligated to pay or to perform or to
cause the performance of, the same immediately without the necessity of any
action by the Holders of Notes. An Event of Default under the Note Purchase
Agreement or the Notes shall constitute an event of default under this Agreement
Guarantee, and shall entitle the Holders of Notes to accelerate the obligations
of the Subsidiary Guarantor hereunder in the same manner and to the same extent
as the obligations of the Obligors.
The Subsidiary Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or the Note Purchase Agreement, the absence of any
action to enforce the same, any waiver or consent by any Holder of the Notes
with respect to any thereof, the entry of any judgment against an Obligor, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of the Subsidiary
Guarantor.
The Subsidiary Guarantor hereby waives and relinquishes: (a) any
right to require the Holders (each, a "Benefited Party") to proceed against the
Obligors, any Subsidiary thereof or any other Person or to proceed against or
exhaust any security held by or on behalf of a Benefited Party at any time or to
pursue any other remedy in any secured party's power before proceeding against
the Subsidiary Guarantor; (b) any defense that may arise by reason of the
incapacity, lack of authority, death or disability of any other Person or
Persons or the failure of a Benefited Party to file or enforce a claim against
the estate (in administration, bankruptcy or any other proceeding) of any other
Person or Persons; (c) demand, protest and notice of any kind, including but not
limited to notice of the existence, creation or incurring of any new or
additional Indebtedness or obligation or of any action or non-action on
F-1
the part of the Subsidiary Guarantor, the Obligors, the Material Subsidiaries,
any Benefited Party, or any creditor of the Subsidiary Guarantor, the Obligors
or the Material Subsidiaries or on the part of any other Person whomsoever in
connection with any obligations the performance of which are hereby guaranteed;
(d) any defense based upon an election of remedies by a Benefited Party,
including but not limited to an election to proceed against the Subsidiary
Guarantor for reimbursement; (e) any defense based upon any statute or rule of
law which provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal; (f) any
defense arising because of a Benefited Party's election, in any proceeding
instituted under the Bankruptcy Law, of the application of Section 1111 (b)(2)
of the Bankruptcy Code; and (g) any defense based on any borrowing or grant of a
security interest under Section 364 of the Bankruptcy Code.
The Subsidiary Guarantor hereby covenants that this Agreement
Guarantee will not be discharged except by payment in full of all principal,
premium, if any, and interest on the Notes and all other costs provided for
under the Note Purchase Agreement, or as provided in Section 11.3 of the Note
Purchase Agreement.
If any Holder is required by any court or otherwise to return to
either the Obligors or the Subsidiary Guarantor, or any custodian, trustee, or
similar official acting in relation to the Obligors or the Subsidiary Guarantor,
any amount paid by the Obligors or the Subsidiary Guarantor to such Holder, this
Agreement Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect. The Subsidiary Guarantor agrees that it will not be
entitled to any right of subrogation in relation to the Holders in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.
The Subsidiary Guarantor agrees that, as between it, on the one
hand, and the Holders of Notes, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Section 8 of the
Note Purchase Agreement for the purposes hereof, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any acceleration of such
obligations as provided in Section 8 of the Note Purchase Agreement, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Subsidiary Guarantor for the purpose of this Agreement Guarantee.
The Subsidiary Guarantor hereby acknowledges that it shall not
consolidate or merge with or into a corporation or any other entity other than
an Obligor or another Subsidiary Guarantor (whether or not affiliated with the
Subsidiary Guarantor), or transfer all or substantially all of its assets to a
corporation or any other entity other than an Obligor or another Subsidiary
Guarantor (whether or not affiliated with the Subsidiary Guarantor), unless this
Agreement Guarantee shall be expressly assumed (in the event that the Subsidiary
Guarantor is not the surviving corporation in the merger) or a new Agreement
Guarantee shall be signed by such successor corporation or other entity and
delivered to each Holder of Notes. Any Agreement Guarantee so issued shall in
all respects have the same legal rank and benefit under the Note Purchase
Agreement as any Agreement Guarantee theretofore and thereafter issued in
accordance with the terms of the Note Purchase Agreement as though all of such
Agreement Guarantees had been issued at the date of the execution thereof.
This Agreement Guarantee shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned Subsidiary Guarantor has
caused this Agreement Guarantee to be duly executed as of __________, 200_.
[Name of Subsidiary Guarantor]
By:
-----------------------------------
Name:
Title:
F-2
Exhibit J
SECURITY AGREEMENT
dated as of __________, 2003
among
XM SATELLITE RADIO INC.,
XM SATELLITE RADIO HOLDINGS INC.,
and
XM EQUIPMENT LEASING LLC
as Grantors
and
[United States Trust Company of New York],
as Collateral Agent
TABLE OF CONTENTS
PAGE
1. DEFINITIONS. 2
1.1 General Definitions........................................ 2
1.2 Definitions; Interpretation................................ 6
2. GRANT OF SECURITY. 7
2.1 Grant of Security.......................................... 7
2.2 Intercreditor Agreement.................................... 8
3. SECURITY FOR OBLIGATIONS. 8
3.1 Security for Obligations................................... 8
3.2 Obligations Remain......................................... 8
4. REPRESENTATIONS AND WARRANTIES AND COVENANTS. 8
4.1 Generally.................................................. 8
4.2 Intellectual Property...................................... 10
4.3 Investment Property........................................ 11
5. FURTHER ASSURANCES; ADDITIONAL GRANTORS. 13
5.1 Further Assurances......................................... 13
5.2 Additional Grantors........................................ 14
6. ATTORNEY-IN-FACT. 14
6.1 Power of Attorney.......................................... 14
6.2 No Duty on the Part of Collateral Agent.................... 15
7. REMEDIES. 15
7.1 Generally.................................................. 15
7.2 Application of Proceeds.................................... 16
7.3 Investment Property........................................ 16
7.4 Intellectual Property...................................... 17
7.5 FCC Licenses............................................... 18
8. CONTINUING SECURITY INTEREST; TERMINATION AND RELEASE. 19
9. STANDARD OF CARE; SECURED PARTY MAY PERFORM. 19
10. INDEMNITY. 19
11. MISCELLANEOUS. 20
11.1 Notices.................................................... 20
11.2 Expenses................................................... 20
11.3 Amendments and Waivers..................................... 20
11.4 Successors and Assigns..................................... 21
11.5 Independence of Covenants.................................. 21
11.6 Survival of Representations, Warranties and Agreements..... 21
11.7 No Waiver; Remedies Cumulative............................. 21
11.8 Marshaling; Payments Set Aside............................ 21
11.9 Severability.............................................. 21
11.10 Headings.................................................. 21
11.11 Applicable law............................................ 21
11.12 Consent To Jurisdiction................................... 21
11.13 Waiver Of Jury Trial...................................... 21
11.14 Counterparts.............................................. 22
11.15 Effectiveness............................................. 22
11.16 Entire Agreement.......................................... 22
11.17 Trust Indenture Act Controls.............................. 22
SCHEDULE 1.1 - FCC LICENSE
SCHEDULE 4.1 - FINANCING STATEMENTS
SCHEDULE 4.2 - INTELLECTUAL PROPERTY
SCHEDULE 4.3 - INVESTMENT PROPERTY
EXHIBIT A - FORM OF SECURITY AGREEMENT SUPPLEMENT
EXHIBIT B - FORM OF JOINDER AGREEMENT
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement"), dated as of
___________, 2003, made by XM SATELLITE RADIO INC., a Delaware corporation
("Company"), XM Satellite Radio Holdings Inc., a Delaware corporation,
("Holdings"), XM Equipment Leasing LLC, a Delaware limited liability company
("XM Leasing Subsidiary") (the Company, Holdings, and XM Leasing Subsidiary,
together with each subsidiary that may from time to time become a party hereto
pursuant to Section 5.2, the "Grantors") and [United States Trust Company of New
York], acting as collateral agent ("Collateral Agent") for the benefit of the
Secured Parties (as defined below).
RECITALS
A. Company and The Bank of New York, as Trustee (in such
capacity, the "New Trustee") have entered into that certain Indenture dated as
of the date hereof (as amended, restated, supplemented or otherwise modified
from time to time, the "New Indenture"), pursuant to which the Company may issue
up to $_________ aggregate principal amount at maturity of its 14% Senior
Secured Discount Notes due 2009 (the "New Notes").
B. Company, Holdings and certain noteholders (the "Convertible
Notes Noteholders") have entered into that certain Note Purchase Agreement,
dated as of the date hereof, pursuant to which the Company and Holdings are
issuing 10% Senior Secured Discount Convertible Notes due 2009 in an aggregate
principal amount of
$--------.
C. Company and Holdings have entered into (a) that certain
Credit Agreement General Motors Corporation ("General Motors"), dated as of the
date hereof, pursuant to which the Company and Holdings may receive certain
advances in an aggregate principal amount not to exceed $125,000,000, and (b)
that certain Note Purchase Agreement with OnStar Corporation ("OnStar"), dated
as of the date hereof, pursuant to which the Company and Holdings are issuing
Series GM Senior Secured Convertible Notes in the aggregate principal amount of
$89,042,387.
D. From time to time after the date hereof, the Company may,
subject to the terms and conditions of the Secured Agreements (as defined
below), incur additional indebtedness to obligees (the "Additional Creditors")
that is pari passu in right of payment to the obligations described in
Paragraphs A through C above.
E. Holdings has guaranteed the obligations of the Company
under the New Indenture and the New Notes and XM Leasing Subsidiary has
guaranteed the obligations of the Company under each of the agreements described
in Paragraphs A through C above.
F. Certain subsidiaries of the Company may from time to time
execute and deliver guaranties in respect of each of the agreements described in
Paragraphs A through D above and become Grantors hereunder.
G. The New Trustee, General Motors, OnStar, the Convertible
Notes Noteholders, the Additional Creditors that from time to time become party
thereto and the [United States Trust Company of New York], as Collateral Agent,
have entered into that certain Intercreditor and Collateral Agency (General
Security Agreement), dated as of the date hereof (as amended, restated,
supplemented or otherwise modified from time to time, the "Intercreditor
Agreement"), pursuant to which, among other things, [United States Trust Company
of New York] was appointed to serve as Collateral Agent under this Agreement on
behalf of the New Trustee, General Motors, OnStar, the Convertible Notes
Noteholders and the other Persons from time to time
constituting "New Secured Parties" thereunder (collectively, the "Secured
Parties").
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, each Grantor and
Collateral Agent agree as follows:
1. DEFINITIONS.
1.1 General Definitions. In this Agreement, the following terms shall have
the following meanings:
"Accounts" shall mean all "accounts" as defined in Article 9
of the UCC, excluding assets described in the definition of Excluded Collateral.
"Additional Grantors" shall mean those additional Persons that
may become parties to this Agreement as additional Grantors, by executing a
Joinder Agreement.
"Agreement" shall have the meaning set forth in the preamble.
"Boeing Credit Agreement" shall mean that certain Customer
Credit Agreement, dated as of December 5, 2001, between Holdings and Boeing
Capital Services Corporation and all other agreements relating thereto, as
amended, restated, supplemented or otherwise modified from time to time.
"Books" shall mean books and records of Grantors (including
all of their Records indicating, summarizing, or evidencing assets (including
the Collateral) or liabilities, all Records relating to Grantor's business
operations or financial conditions, and all of their goods or General
Intangibles related to such information.
"Capital Lease Obligations" shall mean a liability in respect
of a capital lease that at the time any determination thereof is to be made
would be required to be capitalized on a balance sheet in accordance with GAAP.
"Capital Stock" shall have the meaning set forth in the New
Indenture.
"Chattel Paper" shall mean all "chattel paper" as defined in
Article 9 of the UCC, including, without limitation, "electronic chattel paper"
or "tangible chattel paper", as each term is defined in Article 9 of the UCC,
excluding assets described in the definition of Excluded Collateral.
"Collateral" shall have the meaning set forth in Section 2.1.
"Collateral Agent" shall have the meaning set forth in the
preamble.
"Commercial Tort Claims" shall mean all "commercial tort
claims" as defined in Article 9 of the UCC, excluding assets described in the
definition of Excluded Collateral.
"Commodities Accounts" shall mean all "commodity accounts" as
defined in Article 9 of the UCC, excluding assets described in the definition of
Excluded Collateral.
"Communications Act" shall mean the Communications Act of
1934, as amended, and the rules and regulations of the FCC, as from time to time
in effect.
2
"Controlled Foreign Corporation" shall mean "controlled
foreign corporation" as defined in the United States Internal Revenue Code of
1986, as amended from time to time.
"Convertible Notes Noteholders" shall have the meaning set
forth in the Recitals.
"Copyrights" shall mean (i) copyrights and copyright
registrations, including, without limitation, the copyright registrations listed
on Schedule 4.2(A) and (A) all renewals thereof, (B) all income, royalties,
damages and payments now and hereafter due or payable under and with respect
thereto, including, without limitation, payments under all licenses entered into
in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (C) the right to sue for past, present and
future infringements and dilutions thereof, (D) the goodwill of any Grantor's
business symbolized by the foregoing and connected therewith, and (E) all of any
Grantor's rights corresponding thereto throughout the world; and (ii) all
proceeds of any and all of the foregoing, including, without limitation,
licensed royalties and proceeds of infringement suits, in each case, excluding
assets described in the definition of Excluded Collateral.
"Deposit Accounts" shall mean all "deposit accounts" as
defined in Article 9 of the UCC and, excluding assets described in the
definition of Excluded Collateral.
"Document" shall mean "document" as defined in Article 9 of
the UCC, excluding assets described in the definition of Excluded Collateral.
"Equipment" shall mean all equipment (whether or not any such
equipment is so attached to the real property that it constitutes fixtures),
machinery, machine tools, motors, furniture, furnishings, vehicles (including
motor vehicles), tools, parts, goods (other than consumer goods, farm products,
or Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing, excluding assets described in the definition of Excluded
Collateral.
"Excluded Collateral" shall mean all of each Grantor's right,
title, and interest in and to each of the following:
(a) any licenses issued by the FCC to XM Radio Inc., as more
fully described on Schedule 1.1;
(b) assets securing Purchase Money Obligations or Capital
Lease Obligations permitted to be incurred under the Secured Agreements;
(c) assets subject to that certain Amended and Restated
Security Agreement, dated as of the date hereof, by the Company in favor of
United States Trust Company of New York, as collateral agent;
(d) any assets, agreements, leases, permits or licenses or
other assets or property that are not permitted to be subjected to a Lien
hereunder without the consent of third parties, to the extent that such consent
is not obtained;
(e) the outstanding capital stock of a Controlled Foreign
Corporation in excess of 65% of the voting power of all classes of capital stock
of such Controlled Foreign Corporation entitled to vote; provided that
immediately upon the amendment of the United States Internal Revenue Code of
1986, as amended, to allow the pledge of a greater percentage of the voting
power of capital stock in a
3
Controlled Foreign Corporation without adverse tax
consequences, the Collateral shall include, and each Grantor shall be deemed to
have granted a security interest in, such greater percentage of capital stock of
the applicable Controlled Foreign Corporation; and
(f) all rights, title and interest of Holdings in and to the
"Collateral" described in the Boeing Credit Agreement, including, without
limitation, the Ground Spare Satellite Bus described therein and certain
insurance proceeds relating thereto.
(g) [OTHER UNDER REVIEW]
"FCC" shall mean the Federal Communications Commission or any
Governmental Body succeeding to the functions thereof.
"Financial Asset" shall mean "financial asset" as defined in
Article 8 of the UCC, excluding assets described in the definition of Excluded
Collateral.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
"General Intangibles" shall mean any "general intangible" as
defined in Article 9 of the UCC, excluding assets described in the definition of
Excluded Collateral.
"General Motors" shall have the meaning set forth in the
Recitals.
"Governmental Body" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator.
"Grantor" shall have the meaning set forth in the preamble
hereof.
"Instrument" shall mean "instrument" as defined in Article 9
of the UCC, excluding assets described in the definition of Excluded Collateral.
"Intellectual Property" shall mean, collectively, the
Copyrights, the Patents, the Trademarks and the Intellectual Property Licenses.
"Intellectual Property Licenses" shall mean all rights under
or interest in any Patent, Trademark or Copyright license agreements with any
other party, whether a Grantor is a licensee or licensor under any such license
agreement, excluding assets described in the definition of Excluded Collateral;
provided, however, that Intellectual Property Licenses shall not include any
license agreement in effect as of the date hereof which by its terms prohibits
the grant of the security interest contemplated by this Agreement, except that
upon the termination of such prohibitions for any reason whatsoever, such
license agreement shall be deemed to be included in Intellectual Property
Licenses.
"Intercreditor Agreement" shall have the meaning set forth in
the Recitals.
4
"Inventory" shall mean any "inventory" as defined in Article 9
of the UCC, excluding assets described in the definition of Excluded Collateral.
"Investment Property" shall mean all "investment property" as
defined in Article 9 of the UCC, including all Securities, Securities Accounts
and Commodities Accounts, excluding assets described in the definition of
Excluded Collateral.
"Issue Date" shall mean the date of first issuance of the New
Notes.
"Joinder Agreement" shall mean any joinder to this agreement
in substantially the form of Exhibit B.
"Letter-of-Credit Right" shall mean "letter-of-credit right"
as defined in Article 9 of the UCC, excluding assets described in the definition
of Excluded Collateral.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law, including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest and any filing of or agreement to give any financing
statement, under the UCC (or equivalent statutes) of any jurisdiction.
"Money" shall mean "money" as defined in Article 9 of the UCC,
excluding assets described in the definition of Excluded Collateral.
"New Holders" shall mean each Person in whose name any New
Note is registered from time to time.
"New Notes" shall have the meaning set forth in the Recitals
hereof.
"New Trustee" shall have the meaning set forth in the Recitals
hereof.
"OnStar" shall have the meaning set forth in the Recitals.
"Patents" shall mean all (i) patents and patent applications,
including, without limitation, the patents and patent applications listed on
Schedule 4.2(B), and (A) all extensions and adjustments thereof, (B) all income,
royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including, without limitation, payments under all licenses
entered into in connection therewith and damages and payments for past or future
infringements thereof, (C) the right to sue for past, present and future
infringements thereof, and (D) all of Grantor's rights corresponding thereto
throughout the world; and (ii) proceeds of any and all of the foregoing,
including, without limitation, license royalties and proceeds of infringement
suits, excluding assets described in the definition of Excluded Collateral.
"Permitted Liens" shall have the meaning set forth in the New
Indenture.
"Purchase Money Obligations" shall mean obligations incurred
in accordance with the Secured Agreements for the purpose of financing all or
any part of the purchase price or cost of acquisition, construction,
installation or improvement of property, plant equipment or other assets used in
the business of any Grantor; provided that the liens attributable to such
obligations cover only the assets acquired, constructed, installed or improved
with such financing.
5
"Record" shall mean information that is inscribed on a
tangible medium or that is stored in an electronic or other medium and is
retrievable in perceivable form.
"Secured Agreements" shall have the meaning set forth in
Section 1 of the Intercreditor Agreement.
"Secured Obligations" shall have the meaning specified in
Section 3.1.
"Secured Parties" shall have the meaning set forth in the
recitals.
"Securities Accounts" shall mean all "securities accounts" as
defined in Article 8 of the UCC, excluding assets described in the definition of
Excluded Collateral.
"Security" shall mean "security" as defined in Article 8 of
the UCC, excluding assets described in the definition of Excluded Collateral.
"Security Agreement Supplement" shall mean any supplement to
this agreement in substantially the form of Exhibit A.
"Subsidiary" shall have the meaning set forth in the
Indenture.
"Supporting Obligation" shall mean "supporting obligation" as
defined in Article 9 of the UCC, excluding assets described in the definition of
Excluded Collateral.
"Trademarks" shall mean (i) all trademarks, trade names,
registered trademarks, trademark applications, service marks, registered service
marks and service mark applications, including, without limitation, the trade
names, registered trademarks, trademark applications, registered service marks
and service mark applications listed on Schedule 4.2(C), and (A) all renewals
thereof, (B) all income, royalties, damages and payments now and hereafter due
or payable under and with respect thereto, including, without limitation,
payments under all licenses entered into in connection therewith and damages and
payments for past or future infringements or dilutions thereof, (C) the right to
sue for past, present and future infringements and dilutions thereof, (D) the
goodwill of any Grantor's business symbolized by the foregoing and connected
therewith, and (E) all of any Grantor's rights corresponding thereto throughout
the world; and (ii) all proceeds of any and all of the foregoing, including,
without limitation, license royalties and proceeds of infringement suits, in
each case, excluding assets described in the definition of Excluded Collateral.
"Trustee" shall have the meaning set forth in the Recitals.
"UCC" shall mean the Uniform Commercial Code as in effect from
time to time in the State of New York or, when the context requires, the Uniform
Commercial Code as in effect from time to time in any other applicable
jurisdiction.
1.2 Definitions; Interpretation. All capitalized terms used
herein (including the preamble and recitals hereto) and not otherwise defined
herein shall have the meanings ascribed thereto in the Intercreditor Agreement
or, if not defined therein, in the UCC. References to "Sections," "Exhibits" and
"Schedules" shall be to Sections, Exhibits and Schedules, as the case may be, of
this Agreement unless otherwise specifically provided. Any of the terms defined
herein may, unless the context otherwise requires, be used in the singular or
the plural, depending on the reference. The use herein of the word "include" or
"including", when following any general statement, term or matter, shall not be
construed to
6
limit such statement, term or matter to the specific items or matters
set forth immediately following such word or to similar items or matters,
whether or not nonlimiting language (such as "without limitation" or "but not
limited to" or words of similar import) is used with reference thereto, but
rather shall be deemed to refer to all other items or matters that fall within
the broadest possible scope of such general statement, term or matter. All
references herein to provisions of the UCC shall include all successor
provisions under any subsequent version or amendment to any Article of the UCC.
2. GRANT OF SECURITY.
2.1 Grant of Security. Each Grantor hereby grants to
Collateral Agent for its benefit and the benefit of the Secured Parties, a
security interest and continuing lien on all of such Grantor's right, title and
interest in, to and under all property of such Grantor including, but not
limited to the following, in each case whether now owned or existing or
hereafter acquired or arising and wherever located (collectively, "Collateral"):
(A) Accounts;
(B) Books;
(C) Chattel Paper;
(D) Commercial Tort Claims;
(E) Deposit Accounts;
(F) Documents;
(G) Equipment;
(H) Financial Assets;
(I) General Intangibles;
(J) Intellectual Property;
(K) Inventory;
(L) Investment Property;
(M) Instruments;
(N) Letter-of-Credit Rights;
(O) Money;
(P) Cash Equivalent Investments, or other assets of any
Grantor that now or hereafter come into the possession,
custody, or control of Collateral Agent;
7
(Q) to the extent not otherwise included above, all
Supporting Obligations relating to any of the
foregoing;
(R) to the extent not otherwise included above, all of the
proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of
insurance covering any or all of the foregoing; and
(S) to the extent not otherwise included above, all other
personal property of the Grantors of any kind or
description;
provided, however, notwithstanding anything herein to the contrary, in no event
shall the Collateral include any Excluded Collateral.
2.2 Intercreditor Agreement. Notwithstanding anything herein
to the contrary, the rights and remedies of Collateral Agent hereunder shall be
subject to and governed by the terms of the Intercreditor Agreement.
3. SECURITY FOR OBLIGATIONS.
3.1 Security for Obligations.With respect to each Grantor,
this Agreement secures, and the Collateral granted by such Grantor is collateral
security for, the prompt and complete payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. ss.362(a) (and any successor provision thereof)), of all
obligations of such Grantor under the Secured Agreements to which such Grantor
is a party (the "Secured Obligations").
3.2 Obligations RemainAnything contained herein to the
contrary notwithstanding (a) each Grantor shall remain liable under any
partnership agreement or limited liability company agreement relating to any
partnership interest or limited liability company interest included in the
Collateral and any other contracts and agreements included in the Collateral, to
the extent set forth therein, to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed; and
(b) Collateral Agent shall not have any obligation or liability under any
partnership agreement or limited liability company agreement relating to any
partnership interest or limited liability company interest included in the
Collateral and any other contracts and agreements included in the Collateral by
reason of this Agreement, nor shall Collateral Agent, be obligated to perform
any of the obligations or duties of any Grantor thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder.
4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.
4.1 Generally.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants on the Issue Date that:
(A) it is the legal and beneficial owner of the Collateral
with respect to which it is granting a security interest hereunder free and
clear of all Liens other than Permitted Liens;
8
(B) upon the filing of all UCC financing statements naming
such Grantor as "Grantor" and Collateral Agent as
"Secured Party" and describing the Collateral, in the
filing offices set forth opposite such Grantor's name
on Schedule 4.1 hereof and, to the extent not subject
to Article 9 of the UCC, upon the recordation of the
security interest granted hereunder in Patents,
Trademarks and Copyrights in the applicable patent,
trademark and copyright registries (including the
United States Patent and Trademark Office and the
United States Copyright Office), the security interests
granted to Collateral Agent hereunder will constitute
valid and, to the extent that a security interest in
such Collateral (other than any Collateral constituting
fixtures) can be perfected by the filing of financing
statements under the UCC, perfected Liens (subject in
the case of priority only to Permitted Liens); and
(C) no authorization, approval or other action by, and no
notice to or filing with, any Governmental Body is
required for either (i) the pledge or grant by any
Grantor of the Liens purported to be created in favor
of Collateral Agent hereunder or (ii) the exercise by
Collateral Agent of any rights or remedies in respect
of any Collateral (whether specifically granted or
created hereunder or created or provided for by
applicable law), except (A) for the filings
contemplated by Section 4.1(a)(ii) above, (B) as may be
required, in connection with the disposition of any
Investment Property, by laws generally affecting the
offering and sale of Securities and (C) to the extent
any consents or approvals are required under the
Assignment of Claims Act of 1940 or the Communications
Act.
(b) Covenants and Agreements. Each Grantor hereby covenants
and agrees that:
(A) except for the security interest created by this
Agreement, it shall not create or suffer to exist any
Lien upon or with respect to any of the Collateral,
except Permitted Liens, and such Grantor shall (A)
defend the Collateral against all Persons at any time
claiming any interest therein and (B) file such
financing or continuation statements, or amendments
thereto, as may be reasonably requested by the
Collateral Agent to preserve the perfection of the
security interests granted hereunder (other than any
security interests in Collateral constituting
fixtures);
(B) it shall not use or permit any Collateral to be used
unlawfully or in violation of any provision of this
Agreement or any applicable statute, regulation or
ordinance or any policy of insurance covering the
Collateral;
(C) it shall not change Grantor's name or jurisdiction of
organization unless it shall have (a) if such change
would adversely affect the validity or perfection of
Collateral Agent's security interest in the Collateral,
notified Collateral Agent in writing, by executing and
delivering to Collateral Agent a completed Security
Agreement Supplement, substantially in the form of
Exhibit A attached hereto, together with a
9
supplement to Schedule 4.1, at least thirty
(30) days prior to any such change or
establishment, identifying such new proposed
name or jurisdiction of organization and
providing such other information in
connection therewith as Collateral Agent may
reasonably request and (b) taken all actions
necessary to maintain the continuous
validity and perfection of Collateral
Agent's security interest in the Collateral
intended to be granted hereby; and
(D) it shall make payment of (i) all taxes, assessments,
license fees, levies and other charges of Governmental
Bodies imposed upon it which if unpaid, would be
reasonably likely to become a Lien on the Collateral
that is not a Permitted Lien, (ii) all claims
(including, without limitation, claims for labor,
services, materials and supplies) for sums which have
become due and payable and which by law have or are
reasonably likely to become a Lien upon any of the
Collateral other than a Permitted Lien; and
(E) upon such Grantor or any officer of such Grantor
obtaining knowledge thereof, it shall promptly notify
Collateral Agent in writing of the levy of any legal
process against the Collateral or any portion thereof.
4.2 Intellectual Property.
(a) Representations and Warranties. Except with respect to
any abandoned or expired patents, each Grantor hereby represents and warrants,
on the Issue Date, that Schedule 4.2 sets forth a true and complete list of all
United States registrations of and applications for Patents, Trademarks, and
registered Copyrights owned by such Grantor and material to the business of such
Grantor.
(b) Covenants and Agreements. Each Grantor hereby covenants
and agrees as follows:
(A) except as permitted under the Secured Agreements, it
shall not do any act or omit to do any act whereby any
of the Intellectual Property which is material to the
business of such Grantor may lapse, or become
abandoned, dedicated to the public, or unenforceable,
or which would adversely affect the validity, grant, or
enforceability of the security interest granted
therein;
(B) it shall take all reasonable steps in the United States
Patent and Trademark Office and the United States
Copyright Office, to pursue any application and
maintain any registration of each Trademark, Patent,
and Copyright owned by such Grantor and material to its
business which is now or shall become included in the
Collateral constituting Intellectual Property (except
for such works with respect to which such Grantor has
determined in the exercise of its commercially
reasonable judgment that it shall not seek
registration) including, but not limited to, those
items on Schedule 4.2(A), (B) and (C);
(C) at any time upon the reasonable request of the
Collateral Agent, it shall report to Collateral Agent
(i) the filing of any new application to register
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any Intellectual Property with the United
States Patent and Trademark Office or the
United States Copyright Office (whether such
application is filed by such Grantor or
through any agent, employee, licensee, or
designee thereof) and (ii) any new
registration of any Intellectual Property by
any such office, in each case by executing
and delivering to Collateral Agent a
completed Security Agreement Supplement,
substantially in the form of Exhibit A
attached hereto, together with a supplement
to Schedule 4.2; and
(D) if requested by the Collateral Agent in connection with
the actions required pursuant to Section 4.2(b)(iii),
it shall promptly execute and deliver to Collateral
Agent any document required to acknowledge, confirm,
register, record, or perfect Collateral Agent's
interest in any part of the new Intellectual Property,
whether now owned or hereafter acquired.
4.3 Investment Property.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, that on the Issue Date:
(A) Schedule 4.3 sets forth under the headings "Pledged
Stock," "Pledged LLC Interests," and "Pledged
Partnership Interests", all material equity interests
owned by any Grantor included in the Collateral and
such equity interests constitute the percentage of
issued and outstanding shares of stock, percentage of
membership interests, percentage of partnership
interests or percentage of beneficial interest of the
respective Companies thereof to the extent indicated on
such Schedule;
(B) it is the record and beneficial owner of the equity
interests included in the Collateral free of all Liens,
rights or claims of other Persons other than Permitted
Liens; and
(C) Schedule 4.3 sets forth under the heading "Pledged
Debt" all of the material issued and outstanding
Indebtedness evidenced by an instrument or certificated
security of the respective issuers thereof owing to
such Grantor.
(b) Covenants and Agreements. Each Grantor hereby covenants
and agrees that:
(A) it shall not vote to enable or take any other action
to: (a) amend or terminate any partnership agreement,
limited liability company agreement, certificate of
incorporation, by-laws or other organizational
documents in any way that adversely affects the
validity, perfection or priority of Collateral Agent's
security interest, (b) permit any of its Subsidiaries
to dispose of all or a material portion of their assets
in a manner which would be prohibited under the Secured
Agreements or (c) cause any issuer of any partnership
interests or limited liability company interests
included in the Collateral which are not securities
(for purposes of the UCC) on the date hereof to elect
or otherwise take any action to
11
cause such partnership interests or limited
liability company interests to be treated as
securities for purposes of the UCC unless
such Grantor shall take all steps necessary
to establish Collateral Agent's "control"
thereof;
(B) at any time upon the reasonable request of the
Collateral Agent, it shall report to the Collateral
Agent the acquisition of any new material Investment
Property not previously disclosed hereunder by
delivering to Collateral Agent a completed Security
Agreement Supplement, substantially in the form of
Exhibit A attached hereto, together with a supplement
to Schedule 4.3, reflecting such new Investment
Property. To the extent that any Investment Property
specified on such Schedule 4.3 constitutes certificated
Capital Stock of a Subsidiary, such Grantor shall
deliver such certificates to the Collateral Agent,
together with undated stock powers executed in blank.
Notwithstanding the foregoing, it is understood and
agreed that the security interest of Collateral Agent
shall attach to all Investment Property immediately
upon any Grantor's acquisition of rights therein and
shall not be affected by the failure of any Grantor to
deliver a supplement to Schedule 4.3 as required
hereby;
(C) in the event such Grantor receives any dividends,
interest, distributions or any securities or other
property on account of any Collateral, then such
dividends, interest, distributions, securities and
other property shall be included in the definition of
Collateral without further action; and
(D) each Grantor consents to the grant by any other Grantor
of a security interest in all Investment Property to
Collateral Agent.
(c) Voting and Distributions.
(A) So long as no Event of Default shall have occurred and
be continuing, subject to applicable laws:
(A) each Grantor shall be entitled to
exercise or refrain from exercising any
and all voting and other consensual
rights pertaining to the Investment
Property or any part thereof for any
purpose not inconsistent with the terms
of this Agreement or any Secured
Agreement; and
(B) Collateral Agent shall promptly execute
and deliver (or cause to be executed and
delivered) to each Grantor all proxies
and other instruments as such Grantor
may from time to time reasonably request
for the purpose of enabling such Grantor
to exercise the voting and other
consensual rights it is entitled to
exercise pursuant to clause (A) above.
(B) Upon the occurrence and during the continuation of an
Event of Default, subject to applicable laws and the
terms of the Secured Agreements and the Intercreditor
Agreement:
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(A) all rights of each Grantor to
exercise or refrain from exercising
the voting and other consensual
rights which it would otherwise be
entitled to exercise pursuant hereto
shall cease and all such rights
shall thereupon become vested in
Collateral Agent who shall thereupon
have the sole right to exercise such
voting and other consensual rights;
and
(B) in order to permit Collateral Agent to exercise the voting
and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends and
other distributions which it may be entitled to receive
hereunder: (1) each Grantor shall promptly execute and
deliver (or cause to be executed and delivered) to
Collateral Agent all proxies, dividend payment orders and
other instruments as necessary or as Collateral Agent may
from time to time reasonably request and (2) each Grantor
acknowledges that Collateral Agent may utilize the power of
attorney set forth in Section 6.
5. FURTHER ASSURANCES; ADDITIONAL GRANTORS.
5.1 Further Assurances
(a) Each Grantor agrees that from time to time, at the
expense of such Grantor, it shall promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
reasonably requested in order to create and/or maintain the validity, perfection
or priority of and protect any security interest granted or purported to be
granted hereby or to enable Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral; provided, however, that
(i) so long as no Default of Event of Default shall have occurred and be
continuing, such Grantor shall not be required to take any actions to perfect or
protect the security interest granted hereunder or enable the Collateral Agent
to exercise and enforce its rights and remedies with respect to the Collateral
other than as is expressly required pursuant to Sections 4.1, 4.2 and 4.3 hereof
and (ii) in no event shall such Grantor be obligated to perfect security
interests in deposit accounts, securities accounts, or fixtures or obtain
consents, waivers, acknowledgment or access agreements from any landlord, bailee
or other similar party. Without limiting the generality of the foregoing, each
Grantor shall:
(A) at any reasonable time and upon reasonable notice by
Collateral Agent, exhibit the Collateral to and allow
inspection of the Collateral by Collateral Agent, or persons
designated by Collateral Agent; and
(B) appear in and defend any action or proceeding that may
affect Grantor's title to or Collateral Agent's security
interest in all or any part of the Collateral.
(b) Each Grantor hereby authorizes Collateral Agent to file a
Record or Records, including, without limitation, financing or continuation
statements, and amendments thereto, in all jurisdictions and with all filing
offices as are necessary or advisable to perfect the security interest granted
to Collateral Agent herein. Such financing statements may describe the
Collateral in the same manner as described herein or may contain an indication
or description of collateral that describes such property in any other manner as
is necessary, advisable or prudent to ensure the perfection of the security
interest in the Collateral granted to Collateral Agent herein. Each Grantor
shall, if requested by Collateral Agent,
13
furnish to Collateral Agent from time to time statements and schedules further
identifying and describing the Collateral, all in reasonable detail.
(c) Each Grantor hereby authorizes Collateral Agent to modify
this Agreement after obtaining such Grantor's approval of or signature to such
modification by amending Schedule 4.3 to include reference to any right, title
or interest in any existing Intellectual Property or any Intellectual Property
acquired or developed by any Grantor after the execution hereof or to delete any
reference to any right, title or interest in any Intellectual Property in which
any Grantor no longer has or claims any right, title or interest.
5.2 Additional Grantors. From time to time subsequent to the
date hereof, additional Persons may become Additional Grantors, by executing a
Joinder Agreement substantially in the form attached hereto as Exhibit B. Upon
delivery of any such Joinder Agreement to Collateral Agent, notice of which is
hereby waived by Grantors, (a) each Additional Grantor shall be a Grantor and
shall be as fully a party hereto as if such Additional Grantor were an original
signatory hereto and (b) the supplemental schedules thereto shall be
incorporated into and become a part of and supplement the respective schedules
to this Agreement; and each reference to such Schedules shall mean and be a
reference to such Schedules as supplemented pursuant to such Joinder Agreement.
Each Grantor expressly agrees that its obligations arising hereunder shall not
be affected or diminished by the addition or release of any other Grantor
hereunder. This Agreement shall be fully effective as to any Grantor that is or
becomes a party hereto regardless of whether any other Person becomes or fails
to become or ceases to be a Grantor hereunder.
6. ATTORNEY-IN-FACT.
6.1 Power of Attorney. Each Grantor hereby irrevocably
appoints Collateral Agent (such appointment being coupled with an interest) as
such Grantor's attorney-in-fact, with full authority in the place and stead of
such Grantor and in the name of such Grantor then in effect, from time to time
in its discretion to take any action permitted under this Agreement and
consistent with the relevant provisions of the Intercreditor Agreement and to
execute any instrument that it may deem reasonably necessary or advisable to
accomplish the purposes of this Agreement and the Intercreditor Agreement,
including, without limitation, the following:
(a) upon the occurrence and during the continuance of any
Event of Default, to obtain and adjust insurance required to be maintained by
Grantors pursuant to the Secured Agreements;
(b) upon the occurrence and during the continuance of any
Event of Default, to ask for, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(c) upon the occurrence and during the continuance of any
Event of Default, to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (b) above,
subject in all respects to the rights of any lender under the Credit Agreement
to receive, endorse and collect the same;
(d) upon the occurrence and during the continuance of any
Event of Default, to file any claims or take any action or institute any
proceedings necessary or desirable for the collection of any of the Collateral
or otherwise to enforce the rights of Collateral Agent with respect to any of
the Collateral;
(e) to prepare and file any UCC financing statements against
such Grantor as Grantor;
14
(f) to prepare, sign, and file for recordation in any
intellectual property registry, appropriate evidence of the lien and security
interest granted herein in the Intellectual Property in the name of such Grantor
as assignor;
(g) to take or cause to be taken all actions necessary to
perform or comply or cause performance or compliance with the terms of this
Agreement, including, without limitation, access to pay or discharge taxes or
Liens (other than Permitted Liens) levied or placed upon or threatened against
the Collateral, the legality or validity thereof and the amounts necessary to
discharge the same, any such payments made by Collateral Agent to become
obligations of such Grantor to Collateral Agent, due and payable immediately
without demand; and
(h) upon the occurrence and during the continuance of any
Event of Default and subject to the provisions of the UCC, generally to sell,
transfer, pledge, make any agreement with respect to or otherwise deal with any
of the Collateral as fully and completely as though Collateral Agent were the
absolute owner thereof for all purposes, and to do, at Collateral Agent's option
and such Grantor's expense, at any time or from time to time, all acts and
things necessary to protect, preserve or realize upon the Collateral and
Collateral Agent's security interest therein in order to effect the intent of
this Agreement, all as fully and effectively as such Grantor might do.
6.2 No Duty on the Part of Collateral Agent. The powers
conferred on Collateral Agent hereunder are solely to protect the interests of
Collateral Agent in the Collateral and shall not impose any duty upon Collateral
Agent to exercise any such powers. The Collateral Agent shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers, and neither it nor any of its officers, directors, employees or agents
shall be responsible to any Grantor for any act or failure to act hereunder,
except for their own gross negligence or willful misconduct.
7. REMEDIES.
7.1 Generally.
(a) Upon the occurrence and during the continuation of any
Event of Default, Collateral Agent may, subject to the requirements of the
Intercreditor Agreement and applicable law, including regulatory requirements,
exercise any and all remedies and other rights provided under this Agreement and
by applicable law, including, without limitation, the following:
(A) require Grantors to, and Grantors hereby agree that they
shall at their expense and promptly upon request of
Collateral Agent forthwith, assemble all or part of the
Collateral as directed by Collateral Agent and make it
available to Collateral Agent at a place to be designated by
Collateral Agent that is reasonably convenient to all
parties;
(B) enter onto the property where any Collateral is located and
take possession thereof with or without judicial process if
such may be done without a breach of the peace; and
(C) prior to the disposition of the Collateral, store, process,
repair or recondition the Collateral or otherwise prepare
the Collateral for disposition in any manner to the extent
Collateral Agent may deem commercially reasonable.
15
(b) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party upon
default under the UCC and also may without notice, except as specified below,
sell, lease, assign, grant an option or options to purchase or otherwise dispose
of the Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any of Collateral Agent's
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as Collateral Agent may deem commercially reasonable. Each Grantor
agrees that, to the extent notice of sale shall be required by law, at least ten
days' notice to the each Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Collateral Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(c) All amounts and proceeds (including checks and other
instruments) received by any Grantor in respect of amounts due to such Grantor
in respect of the Collateral or any portion thereof following the occurrence and
during the continuance of an Event of Default shall be received in trust for the
benefit of Collateral Agent, shall be segregated from other funds of such
Grantor and shall be forthwith paid over or delivered to Collateral Agent in the
same form as so received (with any necessary endorsement) to be held as cash
Collateral and applied as provided by Section 7.2 following the occurrence and
during the continuance of an Event of Default. Upon demand from Collateral
Agent, Grantors shall not adjust, settle or compromise the amount or payment of
any such amount or release wholly or partly any obligor with respect thereto or
allow any credit or discount thereon.
(d) Each Grantor hereby expressly waives and covenants not to
assert any appraisement, valuation, extension, redemption or similar laws, now
or at any time hereafter in force, which might delay, prevent or otherwise
impede the performance or enforcement of this Agreement.
7.2 Application of Proceeds. Any cash held by Collateral
Agent as Collateral and all cash proceeds received by Collateral Agent in
respect of any sale of, collection from or other realization upon all or any
part of the Collateral may, in the discretion of Collateral Agent, be held by
Collateral Agent as Collateral for, and then or at any time thereafter applied
(after the payment of any amounts payable to Collateral Agent pursuant to
Section 11.2 hereof) in whole or in part by Collateral Agent for the benefit of
the Secured Parties against the Secured Obligations in such order of application
as is required by the Intercreditor Agreement. Any surplus of such cash or cash
proceeds held by Collateral Agent and remaining after payment of all of the
Secured Obligations shall be paid over to the Grantors or to whomsoever may be
lawfully entitled to receive such surplus.
7.3 Investment Property. Each Grantor acknowledges and agrees
that Collateral Agent may elect, with respect to the offer or sale of any or all
of the Collateral constituting Investment Property, to conduct such offer and
sale in such a manner as to avoid the need for registration or qualification of
the Collateral or the offer and sale thereof under any federal or state
securities laws and that Collateral Agent is authorized to comply with any
limitation or restriction in connection with such sale as counsel may advise
Collateral Agent is necessary in order to avoid any violation of applicable law
or avoid obtaining approval of the sale or of the purchaser by any Governmental
Body, including, without limitation, compliance with such procedures as may
restrict the number of prospective bidders and purchasers, requiring that such
prospective bidders and purchasers have certain qualifications, and restricting
such prospective bidders and purchasers to Persons who will represent and agree
that they are purchasing for their own account for investment and not with a
view to the distribution or resale of such Collateral. Each Grantor further
acknowledges and agrees that any such transaction may be at prices and on terms
less
16
favorable than those which may be obtained through a public sale and not subject
to such restrictions and agrees that, notwithstanding the foregoing, Collateral
Agent is under no obligation to conduct any such public sale and may elect to
impose any or all of the foregoing restrictions, or any other restrictions which
may be necessary or desirable in order to avoid any such registration or
qualification, at its sole discretion or with the consent or direction of the
parties entitled to give direction pursuant to the Intercreditor Agreement.
7.4 Intellectual Property.
(a) Anything contained herein to the contrary notwithstanding, upon the
occurrence and during the continuation of an Event of Default, subject to the
Intercreditor Agreement:
(A) Collateral Agent shall have the right (but not the
obligation) to bring suit or otherwise commence any action
or proceeding in the name of any Grantor, Collateral Agent
or otherwise, in Collateral Agent's sole discretion, to
enforce any Intellectual Property which is material to such
Grantor's business, in which event such Grantor shall, at
the request of Collateral Agent, do any and all lawful acts
and execute any and all documents required by Collateral
Agent in aid of such enforcement and such Grantor shall
promptly, upon demand, reimburse and indemnify Collateral
Agent as provided in Section 10 hereof in connection with
the exercise of its rights under this Section, and, to the
extent that Collateral Agent shall elect not to bring suit
to enforce any Intellectual Property which is material to
such Grantor's business as provided in this Section, such
Grantor agrees to use all reasonable measures, whether by
action, suit, proceeding or otherwise, to prevent the
infringement of any such Intellectual Property by others and
for that purpose agrees to diligently maintain any action,
suit or proceeding against any Person so infringing as shall
be necessary to prevent such infringement;
(B) upon written demand from Collateral Agent, each Grantor
shall grant, assign, convey or otherwise transfer to
Collateral Agent all of such Grantor's right, title and
interest in and to the Intellectual Property and shall
execute and deliver to Collateral Agent such documents as
are necessary or appropriate to carry out the intent and
purposes of this Agreement;
(C) each Grantor agrees that such an assignment and/or recording
shall be applied to reduce the Secured Obligations
outstanding only to the extent that Collateral Agent
receives cash proceeds in respect of the sale of, or other
realization upon, the Intellectual Property; and
(D) Collateral Agent shall have the right to notify, or require
each Grantor to notify, any obligors with respect to amounts
due or to become due to such Grantor in respect of the
Intellectual Property, of the existence of the security
interest created herein, to direct such obligors to make
payment of all such amounts directly to Collateral Agent,
and, upon such notification and at the expense of such
Grantor, to enforce collection of any such amounts and to
adjust, settle or compromise the amount or
17
payment thereof, in the same manner and to
the same extent as such Grantor might have
done.
(b) If (i) an Event of Default shall have occurred and, by
reason of cure, waiver, modification, amendment or otherwise, no longer be
continuing, (ii) no other Event of Default shall have occurred and be
continuing, (iii) an assignment or other transfer to Collateral Agent of any
rights, title and interests in and to the Intellectual Property shall have been
previously made and shall have become absolute and effective, and (iv) the
Secured Obligations shall not have become immediately due and payable, upon the
written request of any Grantor, Collateral Agent shall promptly execute and
deliver to such Grantor, at such Grantor's sole cost and expense, such
assignments or other transfer as may be necessary to reassign to such Grantor
any such rights, title and interests as may have been assigned to Collateral
Agent as aforesaid, subject to any disposition thereof that may have been made
by Collateral Agent; provided, after giving effect to such reassignment,
Collateral Agent's security interest granted pursuant hereto, as well as all
other rights and remedies of Collateral Agent granted hereunder, shall continue
to be in full force and effect; and provided further, the rights, title and
interests so reassigned shall be free and clear of any Liens granted by or on
behalf of Collateral Agent.
(c) Solely for the purpose of enabling Collateral Agent to
exercise rights and remedies under this Section 7 and at such time as Collateral
Agent shall be lawfully entitled to exercise such rights and remedies, each
Grantor hereby grants to Collateral Agent, to the extent it has the right to do
so an irrevocable, nonexclusive license (exercisable without payment of royalty
or other compensation to such Grantor), subject, in the case of Trademarks, to
sufficient rights to quality control and inspection in favor of such Grantor to
avoid the risk of invalidation of said Trademarks, to use, operate under,
license, or sublicense any Intellectual Property now owned or hereafter acquired
by such Grantor, and wherever the same may be located.
7.5 FCC Licenses.
Notwithstanding anything to the contrary contained in this
Agreement, the Intercreditor Agreement, the Secured Agreements or in any other
agreement, instrument or document executed by any Grantor in connection with the
Secured Agreements, to the extent that any FCC license is included in the
Collateral, the Collateral Agent will not take any action pursuant to any
document referred to above which would constitute or result in any assignment of
any FCC license or any change of control (whether de jure or de facto) of any
Grantor or subsidiary of any Grantor if such assignment of any FCC license or
change of control would require, under then existing law, the prior approval of
the FCC without first obtaining such prior approval of the FCC. Upon the
occurrence of an Event of Default or at any time thereafter during the
continuance thereof, subject to terms and conditions of this Agreement, each
Grantor agrees to take any action that Collateral Agent may reasonably request
in order to obtain from the FCC such approval as may be necessary to enable
Collateral Agent to exercise and enjoy the full rights and benefits granted to
Collateral Agent by this Agreement and the other documents referred to above,
including specifically, at the cost and expense of each Grantor, the use of its
best efforts to assist in obtaining approval of the FCC for any action or
transaction contemplated by this Agreement for which such approval is or shall
be required by law, and specifically, without limitation, upon request, to
prepare, sign and file with the FCC the assignor's or transferor's portion of
any application or applications for consent to the assignment of license or
transfer of control necessary or appropriate under the FCC's rules and
regulations for approval of (i) any sale or other disposition of the Collateral
by or on behalf of Collateral Agent, or (ii) any assumption by Collateral Agent
of voting rights in the Collateral effected in accordance with the terms of this
Agreement. It is understood and agreed that all foreclosure and related actions
will be made in accordance with the Communications Act and other applicable FCC
regulations and published policies and decisions.
18
8. CONTINUING SECURITY INTEREST; TERMINATION AND RELEASE.
(a) This Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until
the payment in full of all of the Secured Obligations, (ii) be binding upon the
each Grantor, its successors and assigns and (iii) inure, together with the
rights and remedies of Collateral Agent hereunder, to the benefit of Collateral
Agent, the Secured Parties and their respective successors, transferees and
assigns.
(b) Subject to Section 314(d) of the Trust Indenture Act of
1939, notwithstanding anything to the contrary in this Section 8, (i) the
security interests created under this Agreement shall terminate upon the
termination of the Intercreditor Agreement pursuant to Section 8.10 thereof, and
(ii) the security interests created under this Agreement with respect to any
Collateral that is permitted to be released pursuant to Section 6.8 of the
Intercreditor Agreement shall automatically be released and, in each case, the
Collateral Agent shall, at the request and expense of any Grantor (and, if
requested by the Collateral Agent, upon the delivery of an officer's certificate
by the Company certifying that such release is permitted under the Secured
Agreements), cause to be assigned, transferred and delivered, against receipt
but without recourse, warranty or representation whatsoever, all Collateral
subject to such termination or release, as applicable, to or on the order of
such Grantor, and shall execute and deliver to such Grantor such documents and
instruments as such Grantor may reasonably request to evidence the release of
such Collateral from the Lien of this Agreement, including, without limitation,
any UCC termination statements and any filings with the United States Patent and
Trademark Office or the United States Copyright Office.
9. STANDARD OF CARE; SECURED PARTY MAY PERFORM.
The powers conferred on Collateral Agent hereunder are solely
to protect its interest in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. The Collateral
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Collateral Agent accords its own
property. Neither Collateral Agent nor any of its directors, officers, employees
or agents shall be liable for failure to demand, collect or realize upon all or
any part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
any Grantor or otherwise. If any Grantor fails to perform any agreement
contained herein, Collateral Agent may itself perform, or cause performance of,
such agreement, and the expenses of Collateral Agent incurred in connection
therewith shall be payable by each Grantor under Section 11.2 hereof.
10. INDEMNITY.
(a) Each Grantor agrees to indemnify and hold harmless
Collateral Agent and the Secured Parties, the respective affiliates of
Collateral Agent and the Secured Parties, and the respective officers,
directors, employees, agents (including, without limitation each of their
counsel), and controlling persons of Collateral Agent and the Secured Parties,
and each such affiliate (each, an "Indemnified Party") from and against any and
all claims, actions and suits whether groundless or otherwise, and from and
against any and all liabilities, losses, damages and costs and expenses
(including, without limitation, the reasonable fees and disbursements of counsel
and with respect to Collateral Agent, reasonably allocated costs and expenses of
in-house counsel and legal staff) of every nature and character arising out
19
of or in connection with any actual or threatened claim, litigation,
investigation or proceeding relating to this Agreement or the Secured Agreements
or the transactions contemplated hereby or thereby (other than any such actions
or expenses resulting from the gross negligence or willful misconduct of
Collateral Agent or any Secured Party), in each case including, without
limitation, the reasonable fees and disbursements of counsel and allocated costs
of in-house counsel and legal staff incurred in connection with any such
investigation, litigation or other proceeding whether or not such Indemnified
Party is a party thereto, and each Grantor agrees to reimburse each Indemnified
Party, upon demand, for all out-of-pocket costs and expenses (including, without
limitation, the reasonable fees and disbursements of counsel and with respect to
Collateral Agent, reasonably allocated costs and expenses of in-house counsel
and legal staff) incurred in connection with any of the foregoing. In
litigation, or the preparation therefor, Collateral Agent and the Secured
Parties, shall be entitled to select their own counsel and, in addition to the
foregoing indemnity, each Grantor agrees to pay promptly the reasonable fees and
expenses of such counsel. If, and to the extent that the obligations of any
Grantor under this Section 10 are unenforceable for any reason, such Grantor
hereby agrees to make the maximum contribution to the payment in satisfaction of
such obligations which is permissible under applicable law.
(b) No Grantor shall make any claim against any Indemnified
Party for any special, indirect or consequential damages in respect of any
breach or wrongful conduct (whether the claim therefor is based in contract,
tort or duty imposed by law) in connection with, arising out of or in any way
related to the transactions contemplated by, and the relationship established by
the Secured Agreements, or any act, omission or event occurring in connection
therewith, and hereby waives, releases and agrees not to sue upon any such claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in such Grantor's favor.
(c) The covenants contained in this Section 10 shall survive
payment or satisfaction in full of all other of the Secured Obligations.
11. MISCELLANEOUS.
11.1 Notices. Unless otherwise specifically provided herein,
any notice or other communication herein required or permitted to be given to a
Grantor or Collateral Agent shall be sent to such Person's address as set forth
in the Intercreditor Agreement. All such notices and other communications shall,
when mailed, telegraphed, telecopied, telexed or cabled, be effective when
deposited in the mails, delivered to the telegraph company, transmitted by
telecopier, confirmed by telex answerback or delivered to the cable company,
respectively.
11.2 Expenses. Each Grantor will upon demand make payment to
Collateral Agent of any and all reasonable out-of-pocket sums, costs and
expenses, which Collateral Agent may pay or incur pursuant to the provisions of
this Agreement or in perfecting, defending, protecting or enforcing this
Agreement or the security interests granted herein or in enforcing payment of
all of the Secured Obligations or otherwise in connection with the provisions
hereof, including, but not limited to court costs, reasonable collection
charges, reasonable travel expenses, and reasonable attorneys' fees (including
with respect to Collateral Agent, the reasonable allocated costs and expenses of
in-house counsel and legal staff) all of which together with interest at the
highest rate then payable under the Indenture, shall be part of the Secured
Obligations.
11.3 Amendments and Waivers. Any consent or approval required
or permitted by this Agreement to be given by Collateral Agent may be given, and
any term of this Agreement, may be amended, and the performance or observance by
the Grantors of any terms of this Agreement, or the continuance of any Default
or Event of Default may be waived (either generally or in a particular instance
20
and either retroactively or prospectively) with, but only with, the written
consent of the Grantors and the written consent of Collateral Agent. No waiver
shall extend to or affect any obligation not expressly waived or impair any
right consequent thereon. No course of dealing or delay or omission on the part
of Collateral Agent or any Secured Party in exercising any right shall operate
as a waiver thereof or otherwise be prejudicial thereto. No notice to or demand
upon the Grantors shall entitle the Grantors to other or further notice or
demand in similar or other circumstances.
11.4 Successors and Assigns. This Agreement shall be binding
upon the parties hereto and their respective successors and assigns including
all persons who become bound as Grantor to this Agreement. No Grantor shall,
except as permitted under the Secured Agreements, assign any right, duty or
obligation hereunder.
11.5 Independence of Covenants. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists.
11.6 Survival of Representations, Warranties and Agreements.
All representations, warranties and agreements made herein shall survive the
execution and delivery hereof. Notwithstanding anything herein or implied by law
to the contrary, the agreements of Grantors set forth in Sections 10 and 11.2
shall survive the payment of the Secured Obligations under the Indenture and the
termination hereof.
11.7 No Waiver; Remedies Cumulative. No failure or delay on
the part of Collateral Agent in the exercise of any power, right or privilege
hereunder or under any Secured Agreement shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other power, right or
privilege. All rights, powers and remedies existing under this Agreement and the
Secured Agreements are cumulative, and not exclusive of, any rights or remedies
otherwise available. Any forbearance or failure to exercise, and any delay in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.
11.8 Marshaling; Payments Set Aside. The Collateral Agent
shall not be under any obligation to marshal any assets in favor of any Grantor
or any other Person or against or in payment of any or all of the Secured
Obligations.
11.9 Severability. In case any provision in or obligation
hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
11.10 Headings. Section headings herein are included herein
for convenience of reference only and shall not constitute a part hereof for any
other purpose or be given any substantive effect.
11.11 Applicable law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.
11.12 Consent To Jurisdiction. Each Grantor hereby appoints
[_______________] (the "Process Agent") at [________, New York _____], as its
legally authorized process agent to accept service on behalf of such Grantor.
Each Grantor agrees that any suit for the enforcement of this
21
Agreement may be brought in the courts of the State of New York or any federal
court sitting therein and consents to the nonexclusive jurisdiction of such
court and service of process in any such suit being made upon such Grantor by
mail to the Process Agent at the address specified above. Each Grantor hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
11.13 Waiver Of Jury Trial. Each Grantor hereby waives its
right to a jury trial with respect to any action or claim arising out of any
dispute in connection with this Agreement, or any of the Secured Agreements, any
rights or obligations hereunder or thereunder or the performance of such rights
and obligations.
11.14 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
11.15 Effectiveness. This Agreement shall become effective
upon the execution of a counterpart hereof by each of the parties hereto and
receipt by Collateral Agent of written or telephonic notification of such
execution and authorization of delivery thereof.
11.16 Entire Agreement. This Agreement and the Intercreditor
Agreement embody the entire agreement and understanding between Grantors and
Collateral Agent and supersede all prior agreements and understandings between
such parties relating to the subject matter hereof and thereof. There are no
unwritten oral agreements between the parties.
11.17 Trust Indenture Act Controls. If any provision of this
Agreement limits, qualifies or conflicts with the duties imposed by the Trust
Indenture Act of 1939 as in effect on the date of this Agreement, the imposed
duties shall control.
[Remainder of page intentionally left blank; signature
page follows.]
22
IN WITNESS WHEREOF, Grantors and Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
XM SATELLITE RADIO INC
By:__________________________
Name:
Title:
XM SATELLITE RADIO HOLDINGS INC.
By:__________________________
Name:
Title:
XM EQUIPMENT LEASING LLC
By:__________________________
Name:
Title:
[UNITED STATES TRUST COMPANY OF NEW YORK],
as Collateral Agent
By:__________________________
Name:
Title:
SCHEDULE 1.1
TO SECURITY AGREEMENT
[DESCRIPTION OF FCC LICENSE]
SCHEDULE 4.1
TO SECURITY AGREEMENT
Financing Statement Filing Offices:
Name of Grantor Filing Jurisdiction(s)
SCHEDULE 4.2
TO PLEDGE AND SECURITY AGREEMENT
INTELLECTUAL PROPERTY
A. Copyrights:
Grantor Copyright Title Registration Registration No.
Date
B. Patents:
Grantor Patent Title Patent No. Issue Date Inventor
C. Trademarks:
Grantor Registration
No.
SCHEDULE 4.3
TO SECURITY AGREEMENT
MATERIAL INVESTMENT PROPERTY
Pledged Stock:
- -------------------------------------------------------------------------------
% of
No. of Outstanding
Certificated Stock Par Value Shares of Stock of the
Grantor Stock Company Class of Stock (Y/N) Certificate No. Pledged Stock Stock Company
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Pledged Partnership Interests:
Pledged LLC Interests:
Pledged Debt:
------------------------------------------ -----------------------------
Company Principal Amount
------------------------------------------ -----------------------------
------------------------------------------ -----------------------------
------------------------------------------ -----------------------------
------------------------------------------ -----------------------------
------------------------------------------ -----------------------------
------------------------------------------ -----------------------------
------------------------------------------ -----------------------------
------------------------------------------ -----------------------------
------------------------------------------ -----------------------------
------------------------------------------ -----------------------------
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EXHIBIT A
TO SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
This SECURITY AGREEMENT SUPPLEMENT, dated [mm/dd/yy] (the
"Supplement"), is delivered pursuant to the Pledge and Security Agreement, dated
as of ___________, 2003 (as it may be from time to time amended, restated,
modified or supplemented, the "Security Agreement"), XM Satellite Radio Inc. and
certain of its Subsidiaries party thereto and [United States Trust Company of
New York], as Collateral Agent. Capitalized terms used herein not otherwise
defined herein shall have the meanings ascribed thereto in the Security
Agreement. This Supplement is being delivered pursuant to Section [__]1 of the
Security Agreement.
Grantor hereby confirms, as of the date first written above, the grant
to Collateral Agent set forth in the Security Agreement of, does hereby grant to
Collateral Agent, a security interest in all of Grantor's right, title and
interest in and to all Collateral to secure the Secured Obligations, in each
case whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located and hereby agrees, as
of the date first above written, to continue to be bound as a Grantor by all of
the terms and provisions of the Security Agreement, as supplemented by this
Security Agreement Supplement. Grantor hereby represents and warrants that the
attached Supplements to Schedules accurately and completely set forth all
additional information currently required pursuant to the Security Agreement and
hereby agrees that such Supplements to Schedules shall constitute part of the
Schedules to the Security Agreement.
IN WITNESS WHEREOF, Grantor has caused this Security Agreement
Supplement to be duly executed and delivered by its duly authorized officer as
of [mm/dd/yy].
[NAME OF GRANTOR]
By: _____________________________
Name:
Title:
SUPPLEMENT TO SCHEDULE 4.1
TO SECURITY AGREEMENT
Additional Information:
Financing Statements:
Name of Grantor Filing Jurisdiction(s)
SUPPLEMENT TO SCHEDULE 4.2
TO SECURITY AGREEMENT
Additional Information:
(A) Copyrights:
(B) Patents:
(C) Trademarks:
EXHIBIT B
TO SECURITY AGREEMENT
FORM OF JOINDER AGREEMENT
This JOINDER AGREEMENT, dated [mm/dd/yy], is delivered pursuant to the
Security Agreement, dated as of _________________, 2003 (as it may be from time
to time amended, restated, modified or supplemented, the "Security Agreement"),
among XM Satellite Radio Inc. and [United States Trust Company of New York], as
Collateral Agent. Capitalized terms used herein not otherwise defined herein
shall have the meanings ascribed thereto
Section 1. Grant of Security Interest. The undersigned hereby grants to
Collateral Agent a security interest and continuing lien on all of its right,
title and interest in, to and under all personal property of the undersigned
that may be perfected by the filing of UCC financing statements in the
appropriate jurisdictions, including without limitation, the property and assets
of the undersigned set forth on the attached supplemental schedules to the
Schedules to the Security Agreement, in each case whether now owned or existing
or hereafter acquired or arising and wherever located (the undersigned's
"Collateral"), subject to the same limited exclusions set forth in the Security
Agreement.
Section 2. Security For Obligations. The grant of security interest and
continuing lien under this Joinder Agreement secures, and the Collateral is
collateral security for, the prompt and complete payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C.ss.362(a) (and any successor provision thereof)),
of all obligations of Grantor.
Section 3. Supplements to Security Agreement Schedules. The undersigned
has attached hereto supplemental Schedules 4.1, 4.2 and 4.3 to Schedules 4.1,
4.2, and 4.3, respectively, to the Security Agreement, and the undersigned
hereby certifies, as of the date first above written, that such supplemental
schedules have been prepared by the undersigned in substantially the form of the
equivalent Schedules to the Security Agreement and are complete and correct in
all material respects.
Section 4. Representations and Warrants and Covenants. As of the date
hereof, the undersigned hereby makes each representation and warranty and
covenant set forth in Section 4 of the Security Agreement (as supplemented by
the attached supplemental schedules) to the same extent as each other Grantor.
Section 5. Obligations Under the Security Agreement. The undersigned
hereby agrees, as of the date first above written, to be bound as a Grantor by
all of the terms and provisions of the Security Agreement to the same extent as
Grantor. The undersigned further agrees, as of the date first above written,
that each reference in the Security Agreement to an "Additional Grantor" or a
"Grantor" shall also mean and be a reference to the undersigned.
The terms of Sections 11.11, 11.12, 11.13 and 11.14 of the Security
Agreement are hereby incorporated by reference.
IN WITNESS WHEREOF, the undersigned has caused this Joinder Agreement
to be duly executed and delivered by its duly authorized officer as of
[mm/dd/yy].
[NAME OF ADDITIONAL GRANTOR]
By:_____________________________
Name:
Title:
SUPPLEMENT TO SCHEDULE 4.1
TO SECURITY AGREEMENT
Additional Information:
Financing Statements Filing Offices:
Name of Grantor Filing Jurisdiction(s)
SUPPLEMENT TO SCHEDULE 4.2
TO SECURITY AGREEMENT
Additional Information:
(A) Copyrights
(B) Patents
(C) Trademarks
SUPPLEMENT TO SCHEDULE 4.3
TO SECURITY AGREEMENT
Additional Information:
Pledged Stock:
Pledged Partnership Interests:
Pledged LLC Interests:
Pledged Debt:
- --------
1 Insert Section 4.1(b)(iii), 4.2(b)(iii) or 4.3(b)(ii), as applicable.
AMENDED AND RESTATED
SECURITY AGREEMENT
Dated as of ___________, 2003
from
XM SATELLITE RADIO INC.,
as Pledgor
to
THE BANK OF NEW YORK,
as Collateral Agent
TABLE OF CONTENTS
Page
----
1. Definitions................................................................2
2. Grant of Security Interest.................................................2
3. Security for Obligations...................................................3
4. Delivery of Collateral.....................................................4
5. Representations and Warranties.............................................5
6. As to the Collateral.......................................................6
7. Additional Shares..........................................................7
8. Payment of Taxes and Claims................................................8
9. Covenants and Agreements...................................................8
10. The Collateral Agent Appointed Attorney-in-Fact...........................10
11. The Collateral Agent May Perform..........................................10
12. The Collateral Agent's Duties.............................................10
13. Stock Pledge Events of Default............................................11
14. Notice of Event of Default................................................11
15. Remedies..................................................................11
16. Expenses..................................................................13
17. Repayment in Bankruptcy, etc..............................................13
18. No Segregation of Moneys; No Interest.....................................13
19. Continuing Security Interest; Termination.................................13
20. Notices...................................................................14
21. Margin Regulations........................................................14
22. Other Provisions..........................................................14
i
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT (this "Agreement"), dated as
of ___________, 2003, made by XM Satellite Radio Inc., a Delaware corporation
(the "Pledgor"), to [United States Trust Company of New York], as collateral
agent (the "Collateral Agent") for the Secured Parties (as defined herein).
RECITALS
A. The Pledgor and United States Trust Company of New York, as
Trustee (in such capacity, the "Original Trustee"), have entered into that
certain Indenture dated as of March 15, 2000 (as amended, restated, supplemented
or otherwise modified from time to time, the "Original Indenture"), pursuant to
which the Pledgor (a) issued $325,000,000 aggregate principal amount at maturity
of its 14% Senior Secured Notes due 2010 (the "Original Notes"), and (b)
executed and delivered a Security Agreement, dated as of March 15, 2000 (the
"Original Security Agreement"), to United States Trust Company of New York, as
Collateral Agent for the benefit of the holders under the Original Indenture.
B. The Pledgor and The Bank of New York, as Trustee (in such
capacity, the "New Trustee"), have entered into that certain Indenture, dated as
of the date hereof, pursuant to which the Pledgor may issue up to $_________
aggregate principal amount at maturity of its 14% Senior Secured Discount Notes
due 2009 (the "New Notes").
C. The Pledgor, XM Satellite Radio Holdings Inc., a Delaware
corporation ("Holdings") and certain noteholders (the "Convertible Notes
Noteholders") have entered into that certain Note Purchase Agreement, dated as
of December __, 2002, pursuant to which the Pledgor and Holdings are issuing
Senior Secured Discount Convertible Notes due 2009 in an aggregate principal
amount of $______.
D. The Pledgor and Holdings have entered into (a) that certain
Credit Agreement with General Motors Corporation ("General Motors"), dated as of
the date hereof, pursuant to which the Pledgor and Holdings may receive certain
advances in an aggregate principal amount not to exceed $110,000,000, and (b)
that certain Note Purchase Agreement with OnStar Corporation ("OnStar"), dated
as of December __, 2002, pursuant to which the Pledgor and Holdings are issuing
10% Series GM Senior Secured Convertible Notes due 2009 in the aggregate
principal amount of $89,042,387.
E. From time to time after the date hereof, the Company may,
subject to the terms and conditions of the agreements described in Paragraphs A
through D above, incur additional indebtedness to obligees (the "Additional
Creditors") that is pari passu in right of payment to the obligations of the
Company under such agreements.
F. The Original Trustee, the New Trustee, General Motors, OnStar,
the Convertible Notes Noteholders, the Additional Creditors that may from time
to time become party thereto and [United States Trust Company of New York], as
Collateral Agent, have entered into that certain Intercreditor and Collateral
Agency Agreement (FCC Licence Subsidiary Pledge Agreement), dated as of the date
hereof (as amended, restated, supplemented or otherwise modified from time to
time, the "Intercreditor Agreement"), pursuant to which, among other
things, [United States Trust Company of New York] was appointed to serve as
Collateral Agent under this Agreement on behalf of the Original Trustee, the New
Trustee, the Convertible Notes Noteholders, General Motors, OnStar and the
Additional Creditors (the Original Trustee, the New Trustee, the Convertible
Notes Noteholders, General Motors, OnStar and the Additional Creditors are
hereinafter referred to collectively as the "Secured Parties").
G. The Pledgor is the owner of the issued and outstanding capital
stock described in Schedule I hereto (the "Pledged Shares") representing 100% of
the issued and outstanding capital stock of XM Radio Inc., a Delaware
corporation (the "FCC License Subsidiary").
H. The Pledgor has agreed to amend and restate the Original
Security Agreement to grant to the Collateral Agent, for the benefit of the
Secured Parties the assignment and security interest and make the pledge and
assignment contemplated by this Agreement.
In consideration of the premises, the agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Pledgor hereby covenants and agrees with the Collateral
Agent for the benefit of the Secured Parties, to amend and restate the Original
Security Agreement in its entirety so that on and after the date hereof the
Original Security Agreement shall read in its entirety as follows:
1. Definitions.
All capitalized terms used but not otherwise defined herein have the
meanings given to them in the Intercreditor Agreement.
2. Grant of Security Interest.
(a) The Pledgor hereby unconditionally assigns, pledges and grants to the
Collateral Agent for its benefit and the benefit of the Secured Parties, a first
priority security interest in and to all of the Pledgor's right, title and
interest in and to the following, whether now owned or existing or hereafter
arising or acquired and wheresoever located (collectively, the "Collateral"):
(i) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Pledged Shares;
(ii) all additional shares of issued and outstanding shares,
interests, participations, warrants or other equivalents (however
designated) of corporate stock ("Stock") of the FCC License Subsidiary from
time to time acquired by the Pledgor in any manner, and the certificates
representing such additional shares, and all dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares; and
(iii) all Proceeds (as defined herein) of any and all of the
foregoing Collateral (including, without limitation, proceeds that
constitute property of the types described in clauses (i) and (ii) above).
2
(b) As used herein, the term "Proceeds" shall have the meaning assigned to
such term under Article 9 of the Uniform Commercial Code from time to time in
effect in the State of New York (the "UCC"; provided that in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection
or priority of the Collateral Agent's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions) and, to the extent not otherwise
included, shall include, but not be limited to, (i) any stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spin-off or split-off; (ii) any option or other right, whether as
an addition to, in substitution of or in exchange for any Pledged Shares or
otherwise; (iii) distributions payable in property (whether real, personal,
tangible, intangible, or mixed property; collectively "Property"); (iv)
dividends or distributions on dissolution, or in partial or total liquidation,
or from capital, capital surplus or paid-in surplus; (v) any and all payments
(in any form whatsoever) made or due and payable to the Pledgor from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator (a "Governmental Body"); and (vi) any
and all other amounts from time to time paid or payable under or in connection
with the Collateral.
3. Security for Obligations.
This Agreement secures the payment of all of the obligations and
liabilities of any kind of the Pledgor under this Agreement and the Secured
Agreements, now or hereafter existing in each case, whether liquidated,
unliquidated, direct, indirect, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured, and whether for principal,
interest, fees, costs, expenses or otherwise (whether arising or accruing before
or after the occurrence of any Event of Default and whether discharged, stayed
or otherwise affected or allowed as a claim in any bankruptcy proceeding of the
FCC License Subsidiary), and all costs, fees and expenses of the Collateral
Agent, the Secured Parties or the Holders (including reasonable attorneys' fees
and expenses and with respect to the Collateral Agent and reasonable allocated
costs and expenses of in-house counsel and legal staff) incurred in enforcing,
preserving and protecting its rights against the Pledgor, whether or not suit is
instituted, as the foregoing obligations and liabilities may be amended,
increased, modified, renewed, refinanced, refunded or extended from time to time
(collectively, the "Secured Obligations").
Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts that constitute part of the Secured
Obligations and would be owed by the Pledgor to the Collateral Agent, the
Secured Parties or the Holders under this Agreement or the Secured Agreements,
as the case may be, but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Pledgor.
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The parties hereto intend to maintain the validity, effectiveness,
enforceability, perfection and priority of the Original Security Agreement and
this Agreement is intended, inter alia, to continue, increase and modify the
obligations and indebtedness secured by the security interests and pledges
created under the Original Security Agreement. Except as specifically provided
herein and in the Intercreditor Agreement, this Agreement shall not have the
effect of terminating, limiting, modifying or otherwise affecting the validity,
effectiveness, enforceability, perfection and priority of the security interests
or the pledges created under the Original Security Agreement.
4. Delivery of Collateral.
(a) All certificates and other instruments at any time owned or acquired
by the Pledgor representing or evidencing the Pledged Shares shall be delivered
to and held by or on behalf of the Collateral Agent pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. Upon the occurrence and during
the continuance of an Event of Default, the Collateral Agent shall have the
right, subject to the requirements of the Intercreditor Agreement, without
notice to the Pledgor, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Collateral. In
addition, upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right at any time to exchange certificates
or instruments representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations.
(b) If there shall occur a change in applicable law or regulations
regarding (i) the steps necessary to obtain and maintain a perfected security
interest in any Collateral or (ii) the ability to obtain a security interest
directly in any license granted by the Federal Communications Commission or
Governmental Body succeeding to the functions thereof (the "FCC"), or if there
is Collateral for which the foregoing procedures are not effective to perfect a
security interest, the Pledgor will immediately upon its becoming aware thereof
so notify the Collateral Agent and will deliver to the Collateral Agent an
opinion of counsel setting forth the steps necessary for the Collateral Agent to
obtain and maintain such a perfected security interest in the Collateral
affected by such change or for which the foregoing procedures are not effective
to perfect a security interest, and the Collateral Agent, instead of the actions
specified in this Section 4, shall take such other action, as specified in such
opinion of counsel, as will create and maintain such perfected security
interest.
(c) Upon the execution and delivery of this Agreement, the Pledgor will
file proper financing statements, initial financing statements in lieu of
continuation statements, or amendments to financing statements with the
appropriate office or offices under the Uniform Commercial Code, covering the
Collateral described in this Agreement and, thereafter, such renewals,
amendments or continuations thereof or such additional financing statements in
such additional offices in such jurisdictions or in the appropriate filing
offices in such additional jurisdictions as shall be required from time to time
under the UCC in order to perfect and to continue the perfection of the security
interest in the Collateral.
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5. Representations and Warranties.
The Pledgor hereby represents and warrants to the Collateral Agent as
follows:
(a) Organization; Good Standing. The Pledgor is duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified and in good standing in every other jurisdiction where it is
doing business, except where the failure to be so qualified or maintain good
standing would not have a Material Adverse Effect. The chief place of business
and chief executive office of the Pledgor are located at 1250 23rd Street, N.W.,
Washington, D.C. 20037.
(b) Corporate Power; Authorization. The execution, delivery and
performance by the Pledgor of this Agreement, and the consummation of the
transactions contemplated hereby, (i) are within the Pledgor's corporate
authority; (ii) have been duly authorized by all necessary or proper corporate
action; (iii) are not in contravention of any provision of the Pledgor's by-laws
or charter; (iv) will not violate any law or regulation, or any order or decree
of any court or governmental instrumentality to which the Pledgor or its
property is subject; and (v) will not conflict with or result in the breach or
termination of, constitute a default under, or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which the Pledgor is a party or by which the Pledgor or any of its
property is bound (except for such conflict, breach, termination, default or
acceleration as could not reasonably be expected to have a Material Adverse
Effect). Subject to Section 22(f) hereof, no authorization, approval or action
by, or notice to, or filing with, any governmental authority or regulatory body
is required under existing laws and regulations on the date hereof (i) for the
grant or perfection of the security interests contemplated hereby or for the
execution, delivery or performance of this Agreement by the Pledgor, except as
may be set forth in Section 4 with respect to actions to be taken by the
Collateral Agent, or a financial intermediary holding Collateral and except for
the filings referred to in Section 4(b) and 4(c) that may be required in the
future, or (ii) for the exercise by the Collateral Agent of the voting or other
rights provided for in this Agreement or its rights and remedies in respect of
the Collateral pursuant to this Agreement, except (A) as may be required in
connection with the disposition of Collateral by laws affecting the offering and
sale of securities, generally, and (B) with respect to Pledged Shares, for
authorizations, approvals, notices and filings that may be required pursuant to
regulations of the FCC (as defined herein), or any successor laws or
regulations.
(c) Enforceability. This Agreement is the legal, valid and binding
obligation of the Pledgor enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights or insolvent corporations generally, and
except to the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
(d) Absence of Liens. It is the legal and beneficial owner of the
Collateral free and clear of all Liens other than the security interest created
by this Agreement. No effective financing statement or other instrument similar
in effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Collateral Agent
under this Agreement.
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(e) Collateral. The Pledged Shares have been duly authorized and validly
issued and are fully paid and non-assessable. The Pledged Shares represent one
hundred percent (100%) of the total number of shares of the FCC License
Subsidiary which are issued and outstanding.
(f) Security Interest. This Agreement and the pledge of the Collateral
pursuant hereto create a valid and perfected first priority security interest in
the Collateral in favor of the Collateral Agent, securing the payment of all of
the Secured Obligations, and all filings and other actions necessary or
desirable as may be required by the Collateral Agent and the Secured Parties to
perfect and protect such security interest have been duly taken.
6. As to the Collateral.
(a) So long as no event or circumstance which constitutes a Default shall
have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement
or the Secured Agreements; provided, however, that the Pledgor shall not
exercise or refrain from exercising any such right without the consent of
the Collateral Agent if, in the Collateral Agent's judgment, such action or
inaction would have a Material Adverse Effect on the fair market value of
any of the Collateral including, without limitation, the validity, priority
or perfection of the security interests granted hereby or the remedies of
the Collateral Agent hereunder.
(ii) Any and all dividends and other distributions (whether or not
in cash) paid or payable, and certificates, instruments and other Property
received, receivable or otherwise distributed in respect of, or in exchange
for, Collateral, shall be forthwith delivered to the Collateral Agent to be
held as Collateral and shall, if received by the Pledgor, be received in
trust for the benefit of the Collateral Agent and the Secured Parties, be
segregated from the other Property of the Pledgor, and be forthwith
delivered to the Collateral Agent, as Collateral in the same form as so
received (with any necessary endorsement). Any cash dividends or
distributions delivered to or otherwise held by the Collateral Agent
pursuant to this Section 6, and any other cash constituting Collateral
delivered to the Collateral Agent, shall be invested, at the written
direction of the Pledgor, by the Collateral Agent in Cash Equivalents.
(iii) The Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to exercise the voting and other rights which it is
entitled to exercise pursuant to subsection (i) or (ii) above.
(b) Upon the occurrence and during the continuance of a Default (except as
provided below), at the Collateral Agent's option and following written notice
by the Collateral Agent to the Pledgor:
(i) all rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant
to Section 6(a)(i) shall cease, provided, however, that the Pledgor shall
be entitled to exercise such rights without the
6
prior consent of the Collateral Agent if such rights are to be exercised to
vote in favor of a transaction which is reasonably expected to cure the
Default, not result in another Default and not result in a Material Adverse
Effect. Except as provided in the prior sentence, after the occurrence and
during the continuance of an Event of Default, all such voting and other
consensual rights shall thereupon become vested in the Collateral Agent,
who shall thereupon have the sole right to exercise such voting and other
consensual rights, subject to the satisfaction of any regulatory
requirements. Effective upon the occurrence and during the continuance of
an Event of Default, the Pledgor hereby appoints the Collateral Agent the
Pledgor's true and lawful attorney-in-fact and grants to the Collateral
Agent an IRREVOCABLE PROXY to vote the Collateral in any manner the
Collateral Agent deems advisable for or against all matters submitted or
which may be submitted to a vote of shareholders. The power-of-attorney
granted hereby is coupled with an interest and shall be irrevocable; and
(ii) the provisions of Section 6(a)(ii) shall continue in full force
and effect, except that no dividends or distributions may be paid to the
Pledgor.
As used in this Agreement, the term "Material Adverse Effect" shall
mean an effect resulting from any circumstance or event of whatever nature
(including any adverse determination in any litigation) which does, or could
reasonably be expected to, materially and adversely (a) impair the validity or
enforceability of any of the Original Indenture or the Original Notes or the
Collateral Agent's, the Trustee's or any Holder's rights or remedies with
respect thereto; (b) cause a Default; (c) affect the business, property,
business prospects, operations, or financial or other condition of the FCC
License Subsidiary or Pledgor; or (d) impair or affect the Collateral or the
Collateral Agent's Liens on the Collateral or the priority of such Liens.
(c) In the event that all or any part of the securities or instruments
constituting the Collateral are lost, mutilated, destroyed or wrongfully taken
while such securities or instruments are in the possession of the Collateral
Agent, the Pledgor agrees that it will cause the delivery of new securities or
instruments in place of the lost, mutilated, destroyed or wrongfully taken
securities or instruments upon request therefor by the Collateral Agent without
the necessity of any indemnity bond or other security other than the Collateral
Agent's agreement or indemnity therefor customary for security agreements
similar to this Agreement.
7. Additional Shares.
(a) The Pledgor agrees that it will cause the FCC License Subsidiary not
to issue any Stock of any kind.
(b) Without derogating from paragraph (a) of this Section 7, in the event
that, during the term of this Agreement:
(i) any stock dividend, stock split, reclassification,
readjustment, or other change is declared or made in the capital structure
of the FCC License Subsidiary, all new, substituted, and additional shares,
or other securities, issued by reason of any such change and received by
the Pledgor (directly or indirectly) or to which the Pledgor shall be
entitled shall be promptly delivered or otherwise transferred to the
Collateral Agent,
7
together with undated stock powers endorsed in blank by the Pledgor, and
shall thereupon constitute additional Collateral to be held by the
Collateral Agent under the terms of this Agreement; and
(ii) any subscriptions, warrants or any other rights or options
shall be issued in connection with the Pledged Shares, all new stock or
other securities acquired through such subscriptions, warrants, rights or
options, and all additional shares of capital stock of the FCC License
Subsidiary or any successor in interest thereto from time to time acquired
by the Pledgor (directly or indirectly) in any manner whatsoever
(including, without limitation, any shares of preferred stock issued by the
FCC License Subsidiary) together with appropriate stock powers by the
Pledgor, shall be promptly delivered or otherwise transferred to the
Collateral Agent and shall thereupon constitute Collateral to be held by
the Collateral Agent under the terms of this Agreement.
8. Payment of Taxes and Claims.
The Pledgor shall make payment of (i) all taxes, assessments, license
fees, levies and other charges of Governmental Bodies imposed upon it which if
unpaid, could reasonably be expected to have a Material Adverse Effect or become
a Lien on the Property of the Pledgor, unless and to the extent only that such
taxes, assessments, charges, license fees, levies and other charges shall be
contested in good faith and by appropriate proceedings diligently conducted by
the Pledgor and the Collateral Agent has received prompt notice of such contest,
(ii) all taxes, assessments, license fees, levies and other charges of
Governmental Bodies on any of the Collateral before any penalty or interest
accrues thereon, unless and to the extent only that such taxes, assessments,
charges, license fees, levies and other charges shall be contested in good faith
and by appropriate proceedings diligently conducted by the Pledgor and the
Collateral Agent has received prompt notice of such contest, before any penalty
or interest accrues thereon, and (iii) all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums
materially adversely affecting the Collateral, which have become due and payable
and which by law have or may become a Lien upon any of the Collateral prior to
the time when any penalty or fine shall be incurred with respect thereto, unless
and to the extent such claim is being contested in good faith and by appropriate
proceedings diligently conducted by the Pledgor, the Collateral Agent has
received prompt notice of such contest, any proceeding to place a lien on the
Collateral or to enforce a lien on the Collateral has been stayed and such
contest is not reasonably expected to have a Material Adverse Effect.
9. Covenants and Agreements.
The Pledgor covenants and agrees that on and after the date hereof
until the payment in full of the Secured Obligations and the termination and
discharge of the Secured Agreements, unless the Collateral Agent shall otherwise
consent in writing:
(a) At any time and from time to time, upon the reasonable request of the
Collateral Agent, and at the sole expense of the Pledgor, the Pledgor shall
promptly do, file, record, execute and deliver any and all such further notices,
instruments and documents and will take such further action as may be reasonably
deemed necessary or desirable in the judgment of the Collateral Agent and its
counsel to obtain, protect and perfect the security interests granted
8
hereby and enforce and give effect to the rights, remedies and powers hereunder,
including, without limitation, the recording or filing of all instruments and
documents reasonably necessary to perfect and protect the perfection of the
security interests granted hereby under Articles 8 or 9 of the Uniform
Commercial Code in effect in any applicable jurisdiction. In connection
therewith, the Collateral Agent is hereby irrevocably authorized and empowered
as the Pledgor's attorney-in-fact, solely to make, at the Collateral Agent's
option, all filings and to give all other notices as it shall reasonably deem
necessary with respect to any of the Collateral, all of which may be done with
or without the signature of the Pledgor. The Pledgor agrees that the foregoing
power constitutes a power coupled with an interest which shall survive until the
payment in full of all of the Secured Obligations. The Pledgor agrees to
reimburse the Collateral Agent on demand for any actual and reasonable expenses
(including reasonable attorneys' fees and expenses with respect to the
Collateral Agent, including reasonable allocated costs and expenses of in-house
counsel and legal staff) incurred by the Collateral Agent in connection with
such matters and, until such reimbursement, such expenses shall be a part of the
Secured Obligations.
(b) The Pledgor shall defend its ownership interest in and to the
Collateral and the Collateral Agent's security interest in and to the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to the interests of the Collateral Agent.
(c) The Pledgor shall, at all times, maintain or cause to be maintained
accurate books and records with respect to the Collateral, and shall furnish to
the Collateral Agent such information concerning such Collateral as the
Collateral Agent may from time to time reasonably request. The Collateral Agent
and its designees are hereby given the right, at the Pledgor's expense, to
inspect and copy, following prior notice to the Pledgor and during regular
business hours, or the Pledgor shall furnish the Collateral Agent with copies
of, all records and documents reasonably required by the Collateral Agent
relating to the Collateral.
(d) The Pledgor shall not further hypothecate, assign, pledge, encumber,
transfer, sell or otherwise dispose of, or grant any option with respect to, or
create or suffer to exist a security interest in, or a Lien on, the Collateral
or any portion thereof, except for the pledge, assignment and security interest
created by this Agreement in favor of the Collateral Agent. The inclusion of
"Proceeds" of the Collateral under the security interest granted herein shall
not be deemed a consent by the Collateral Agent to any sale or other disposition
of any Collateral except as expressly permitted herein.
(e) The Pledgor shall promptly notify the Collateral Agent of any change
occurring in or to the Collateral, of a change in the Pledgor's mailing address,
of any material change in any fact or circumstance warranted or represented by
the Pledgor in this Agreement or furnished to the Collateral Agent, or if any
Stock Pledge Event of Default (as defined in Section 13 hereof) shall occur.
(f) The Pledgor shall not, without the prior written consent of the
Collateral Agent, sign or file or authorize the signing or filing of any
document, financing statement or instrument creating or perfecting, or
purporting to create or perfect, any Lien or other encumbrance on all or any
part of its Collateral except in favor of the Collateral Agent as required
hereby.
9
(g) The security interest granted hereby constitutes and shall at all
times constitute a perfected continuing first priority security interest in the
Collateral.
10. The Collateral Agent Appointed Attorney-in-Fact.
Effective upon the occurrence and during the continuance of an Event
of Default, the Pledgor hereby irrevocably appoints the Collateral Agent its
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time in the Collateral
Agent's discretion, to take any action and to execute any instrument which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation:
(a) to ask, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral and/or extend the time of payment, arrange for
payment in installments, or otherwise modify the terms of, or release, any
Collateral or obligations, without otherwise discharging or affecting the
Secured Obligations, the Collateral or the security interests granted by this
Agreement,
(b) to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of the Collateral Agent
with respect to any of the Collateral, and
(c) to receive, indorse and collect any drafts or other instruments and
documents made payable to the Pledgor in connection with clause (a) above or
representing any dividend or other distribution in respect of the Collateral or
any part thereof and to give full discharge for the same.
The power-of-attorney granted hereby is coupled with an interest and
shall be irrevocable.
11. The Collateral Agent May Perform.
If the Pledgor fails to perform any agreement contained herein or make
payment of any amount required hereunder, the Collateral Agent may itself
perform, or cause performance of, or provide payment for the performance
thereof, and the reasonable expenses of the Collateral Agent incurred in
connection therewith shall be payable by the Pledgor under Section 16 of this
Agreement and any such payment made shall be deemed an advance by the Collateral
Agent to the Pledgor, payable on demand together with interest at the interest
rate then payable under the Original Indenture.
12. The Collateral Agent's Duties.
The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral, including the filing
of any financing or continuation statements relating to the Collateral. The
10
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which the Collateral Agent
accords its own Property, it being understood that the Collateral Agent shall
not be under any obligation to (a) ascertain or take action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Collateral, whether or not the Collateral Agent has or is deemed to have
knowledge of such matters, or (b) take any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral, but may
do so at its option, and all reasonable expenses incurred in connection
therewith shall be for the sole account of the Pledgor, and shall be added to
the Secured Obligations.
13. Stock Pledge Events of Default.
If any of the following events shall occur, then a "Stock Pledge Event
of Default" has occurred hereunder:
(a) If the Pledgor fails to fully and punctually pay, perform or observe
any debt, obligation or liability of the Pledgor under this Agreement or the
Original Indenture; or
(b) If any representation or warranty made herein or the Original
Indenture or in any certificate, report or other document furnished by the
Pledgor in connection with this Agreement or the Original Indenture shall prove
to have been false in any material respect upon the date when made or deemed to
have been made or repeated; or
(c) If the Pledgor shall fail to observe or perform any term, covenant or
agreement contained in Sections 9(a), 9(d) or 9(f) of this Agreement; or
(d) If the Pledgor shall fail to perform or observe any other term,
covenant or agreement on its part to be performed or observed pursuant to this
Agreement and such failure shall have continued unremedied for a period of
thirty (30) days after the Pledgor shall become aware of such failure; or
(e) The occurrence and continuance of an Event of Default under and as
defined in the Intercreditor Agreement.
14. Notice of Event of Default.
The Pledgor agrees to notify the Collateral Agent of the occurrence of
a Stock Pledge Event of Default promptly upon its obtaining knowledge thereof.
15. Remedies.
Upon the occurrence and during the continuation of a Stock Pledge
Event of Default that also constitutes an Event of Default under any Secured
Agreement, the Collateral Agent may, subject to the requirements of the
Intercreditor Agreement and regulatory requirements, exercise any and all
remedies and other rights provided under this Agreement and by applicable law,
including, without limitation, the following:
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(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party upon default under the UCC
(whether or not the UCC applies to the affected Collateral) and also may without
notice, except as specified below, sell, lease, assign, grant an option or
options to purchase or otherwise dispose of the Collateral or any part thereof
in one or more parcels at public or private sale, at any exchange, broker's
board or at any of the Collateral Agent's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Collateral Agent
may deem commercially reasonable. The Pledgor agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to the Pledgor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Collateral Agent
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned.
(b) Any cash held by the Collateral Agent as Collateral and all cash
proceeds received by the Collateral Agent in respect of any sale of, collection
from or other realization upon all or any part of the Collateral may, in the
discretion of the Collateral Agent, be held by the Collateral Agent as
Collateral for, and then or at any time thereafter applied (after the payment of
any amounts payable to the Collateral Agent pursuant to Section 16 hereof) in
whole or in part by the Collateral Agent for the benefit of the Secured Parties
against the Secured Obligations in such order of application as is required by
the Intercreditor Agreement. Any surplus of such cash or cash proceeds held by
the Collateral Agent and remaining after payment of all of the Secured
Obligations shall be paid over to the Pledgor or to whomsoever may be lawfully
entitled to receive such surplus.
(c) The Pledgor acknowledges and agrees that the Collateral Agent may
elect, with respect to the offer or sale of any or all of the Collateral, to
conduct such offer and sale in such a manner as to avoid the need for
registration or qualification of the Collateral or the offer and sale thereof
under any federal or state securities laws and that the Collateral Agent is
authorized to comply with any limitation or restriction in connection with such
sale as counsel may advise the Collateral Agent is necessary in order to avoid
any violation of applicable law, including, without limitation, compliance with
such procedures as may restrict the number of prospective bidders and
purchasers, require that such prospective bidders and purchasers have certain
qualifications, and restrict such prospective bidders and purchasers to Persons
who will represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such Collateral,
or in order to obtain any required approval of the sale or of the purchaser by
any Governmental Body. The Pledgor further acknowledges and agrees that any such
transaction may be at prices and on terms less favorable than those which may be
obtained through a public sale and not subject to such restrictions and agrees
that, notwithstanding the foregoing, the Collateral Agent is under no obligation
to conduct any such public sale and may elect to impose any or all of the
foregoing restrictions, or any other restrictions which may be necessary or
desirable in order to avoid any such registration or qualification, at its sole
discretion or with the consent or direction of the parties entitled to give
direction pursuant to the Intercreditor Agreement, and that any such offer and
sale shall, taking
12
into account the possible restrictions on such offer and sale described in this
subsection (c), be conducted in a commercially reasonable manner.
(d) The Pledgor hereby expressly waives and covenants not to assert any
appraisement, valuation, extension, redemption or similar laws, now or at any
time hereafter in force, which might delay, prevent or otherwise impede the
performance or enforcement of this Agreement.
16. Expenses.
The Pledgor will upon demand make payment to the Collateral Agent of
any and all reasonable out-of-pocket sums, costs and expenses, which the
Collateral Agent may pay or incur pursuant to the provisions of this Agreement
or in perfecting, defending, protecting or enforcing this Agreement or the
security interests granted herein or in enforcing payment of all of the Secured
Obligations or otherwise in connection with the provisions hereof, including,
but not limited to court costs, reasonable collection charges, reasonable travel
expenses, and reasonable attorneys' fees (including with respect to the
Collateral Agent, the reasonable allocated costs and expenses of in-house
counsel and legal staff) all of which together with interest at the highest rate
then payable under the Original Indenture, shall be part of the Secured
Obligations.
17. Repayment in Bankruptcy, etc.
Notwithstanding anything to the contrary contained in this Agreement,
if, at any time or times subsequent to the payment of all or any part of the
Secured Obligations, the Collateral Agent shall be required to repay any amounts
previously paid by or on behalf of the FCC License Subsidiary or the Pledgor in
reduction thereof by virtue of an order of any court having jurisdiction
thereof, including, without limitation, as a result of an adjudication that such
amounts constituted preferential payments or fraudulent conveyances, the Pledgor
unconditionally agrees to make payment to the Collateral Agent within 10 days
after demand of the amount of such repayment, together with interest on such
amount from the date of such repayment by the Collateral Agent to the date of
payment to the Collateral Agent at the default interest rate set forth in the
Original Indenture.
18. No Segregation of Moneys; No Interest.
No moneys or any other property received by the Collateral Agent
hereunder need be segregated in any manner except to the extent required by law,
and any such moneys or other Property may be deposited under such general
conditions as may be prescribed by law applicable to the Collateral Agent, and
the Collateral Agent shall not be liable for any interest thereon.
19. Continuing Security Interest; Termination.
(a) This Agreement shall create a continuing perfected first security
interest in the Collateral and shall (i) remain in full force and effect until
the termination of the Intercreditor Agreement pursuant to Section 8.10 thereof,
(ii) be binding upon the Pledgor, its successors and assigns and (iii) inure,
together with the rights and remedies of the Collateral Agent hereunder, to
13
the benefit of the Collateral Agent the Secured Parties and the Holders and
their respective successors, transferees and assigns.
(b) Upon termination of this Agreement, the Collateral Agent shall, at the
request and expense of the Pledgor, cause to be assigned, transferred and
delivered, against receipt but without recourse, warranty or representation
whatsoever, any remaining Collateral, to or on the order of the Pledgor, and
shall execute and deliver to the Pledgor an instrument or instruments
acknowledging the release of such Collateral from the Lien of this Agreement.
20. Notices.
All notices and other communications provided for hereunder shall be
in writing (including telegraphic, telecopy, telex or cable communication) and
mailed, telegraphed, telecopied, telexed, cabled or delivered to it, if to the
Pledgor, addressed to it at XM Satellite Radio Inc., 1500 Eckington Place, N.E.,
Washington, D.C. 20002, Attention: Chief Executive Officer, if to the Collateral
Agent, at the address of the Collateral Agent specified in the Intercreditor
Agreement, or as to any party at such other address as shall be designated by
such party in a written notice to each other party. All such notices and other
communications shall, when mailed, telegraphed, telecopied, telexed or cabled,
be effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
cable company, respectively.
21. Margin Regulations.
The Pledgor shall take such steps as may be necessary so that it shall
comply with Regulations G, U and X (in so far as Regulation X applies to
Regulations G and U) promulgated by the Board of Governors of the Federal
Reserve System, in each case as in effect from time to time and to the extent
such Regulations are at the time applicable to the Notes issued by the Pledgor.
22. Other Provisions.
(a) Except as expressly provided in this Agreement, the Pledgor hereby
waives presentment, demand for payment, notice of default, nonperformance and
dishonor, protest and notice of protest of or in respect of the Secured
Agreements or the Secured Obligations, notice of acceptance of this Agreement
and reliance hereupon by the Collateral Agent and notice of any sale of
collateral security or any default of any sort.
(b) The Pledgor waives all errors or omissions of the Collateral Agent in
connection with the administration of the security interests created hereby and
the Collateral, except errors or omissions which constitute gross negligence or
willful misconduct.
(c) The Pledgor agrees that the Collateral Agent, any Secured Party and
any Holder may at any time, without notice to or consent of the Pledgor, and
without in any manner affecting the liability of the Pledgor hereunder, amend,
modify or waive any term or condition of any Secured Agreement and any of the
other Secured Obligations and any collateral security therefor and otherwise
deal with Pledgor as if this Agreement did not exist.
14
(d) The Pledgor is not relying upon the Collateral Agent to provide to the
Pledgor any information concerning the FCC License Subsidiary, including,
without limitation, information which might have a Material Adverse Effect, and
the Pledgor has made arrangements satisfactory to the Pledgor to obtain from the
FCC License Subsidiary on a continuing basis such information concerning the FCC
License Subsidiary as the Pledgor may desire.
(e) In addition to all other rights it may have at law or otherwise, upon
the occurrence and during the continuance of an Event of Default, the Collateral
Agent is hereby authorized at any time and from time to time, without notice, to
set-off against any and all obligations which the Collateral Agent may owe to
the FCC License Subsidiary or the Pledgor, of any kind or nature, and the
Pledgor shall continue to be liable to the Collateral Agent for any deficiency
with interest at the applicable interest rate forth in the Original Indenture.
(f) Notwithstanding anything to the contrary contained in Secured
Agreements or in any other agreement, instrument or document executed by the
Pledgor in connection with the Secured Agreements, the Collateral Agent will not
take any action pursuant to this Agreement or any document referred to above
which would constitute or result in any assignment of any FCC license or any
change of control (whether de jure or de facto) of the Pledgor or the FCC
License Subsidiary if such assignment of any FCC license or change of control
would require, under then existing law, the prior approval of the FCC without
first obtaining such prior approval of the FCC. Upon the occurrence of an Event
of Default or at any time thereafter during the continuance thereof, subject to
terms and conditions of this Agreement, the Pledgor agrees to take any action
that the Collateral Agent may reasonably request in order to obtain from the FCC
such approval as may be necessary to enable the Collateral Agent to exercise and
enjoy, the full rights and benefits granted to the Collateral Agent by this
Agreement and the other documents referred to above, including specifically, at
the cost and expense of the Pledgor, the use of its best efforts to assist in
obtaining approval of the FCC for any action or transaction contemplated by this
Agreement for which such approval is or shall be required by law, and
specifically, without limitation, upon request, to prepare, sign and file with
the FCC the assignor's or transferor's portion of any application or
applications for consent to the assignment of license or transfer of control
necessary or appropriate under the FCC's rules and regulations for approval of
(i) any sale or other disposition of the Collateral by or on behalf of the
Collateral Agent, or (ii) any assumption by the Collateral Agent of voting
rights in the Collateral effected in accordance with the terms of this
Agreement. It is understood and agreed that all foreclosure and related actions
will be made in accordance with the Communications Act of 1934, as amended, and
the rules and regulations promulgated thereunder, as from time to time in effect
(the "Communications Act") and other applicable FCC regulations and published
policies and decisions.
(g) The Pledgor agrees to indemnify and hold harmless the Collateral
Agent, the Secured Parties and the Holders, the respective affiliates of the
Collateral Agent, the Secured Parties, and the Holders, and the respective
officers, directors, employees, agents (including, without limitation each of
their counsel), and controlling persons of the Collateral Agent, the Secured
Parties and the Holders, and each such affiliate (each, an "Indemnified Party")
from and against any and all claims, actions and suits whether groundless or
otherwise, and from and against any and all liabilities, losses, damages and
costs and expenses (including, without limitation, the reasonable fees and
disbursements of counsel and with respect to the Collateral
15
Agent, reasonably allocated costs and expenses of in-house counsel and legal
staff) of every nature and character arising out of or in connection with any
actual or threatened claim, litigation, investigation or proceeding relating to
this Agreement or the Secured Agreements or the transactions contemplated hereby
or thereby (other than any such actions or expenses resulting from the gross
negligence or willful misconduct of the Collateral Agent, the Secured Parties or
the Holders), in each case including, without limitation, the reasonable fees
and disbursements of counsel and allocated costs of in-house counsel and legal
staff incurred in connection with any such investigation, litigation or other
proceeding whether or not such Indemnified Party is a party thereto, and the
Pledgor agrees to reimburse each Indemnified Party, upon demand, for all
out-of-pocket costs and expenses (including, without limitation, the reasonable
fees and disbursements of counsel and with respect to the Collateral Agent,
reasonably allocated costs and expenses of in-house counsel and legal staff)
incurred in connection with any of the foregoing. In litigation, or the
preparation therefor, the Collateral Agent, the Secured Parties and the Holders
shall be entitled to select their own counsel and, in addition to the foregoing
indemnity, the Pledgor agrees to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of the Pledgor under
this Section 22(g) are unenforceable for any reason, the Pledgor hereby agrees
to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law.
The Pledgor shall not make any claim against any Indemnified Party for
any special, indirect or consequential damages in respect of any breach or
wrongful conduct (whether the claim therefor is based in contract, tort or duty
imposed by law) in connection with, arising out of or in any way related to the
transactions contemplated by, and the relationship established by the Secured
Agreements or any act, omission or event occurring in connection therewith, and
the Pledgor hereby waives, releases and agrees not to sue upon any such claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in the Pledgor's favor.
The covenants contained in this Section 22(g) shall survive payment or
satisfaction in full of all other of the Secured Obligations.
(h) The Pledgor hereby appoints [______________________] (the "Process
Agent") located at [________________, New York _______], as its legally
authorized process agent to accept service on behalf of the Pledgor.
(i) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York. The Pledgor agrees that any suit for the
enforcement of this Agreement may be brought in the courts of the State of New
York or any federal court sitting therein and consents to the nonexclusive
jurisdiction of such court and service of process in any such suit being made
upon the Pledgor by mail to the Process Agent at the address specified in
Section 22(h). The Pledgor hereby waives any objection that it may now or
hereafter have to the venue of any such suit or any such court or that such suit
is brought in an inconvenient court.
(j) This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In
16
proving this Agreement it shall not be necessary to produce or account for more
than one such counterpart signed by the party against whom enforcement is
sought.
(k) This Agreement and any other documents executed in connection herewith
express the entire understanding of the parties with respect to the transactions
contemplated hereby. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated, except as provided in Section 22(m).
(l) The Pledgor hereby waives its right to a jury trial with respect to
any action or claim arising out of any dispute in connection with this
Agreement, or any of the other loan documents, any rights or obligations
hereunder or thereunder or the performance of such rights and obligations.
Except as prohibited by law, the Pledgor hereby waives any right it
may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Pledgor (a) certifies
that no agent or representative of the Collateral Agent, the Secured Parties or
any Holder, has represented, expressly or otherwise, that the Collateral Agent,
any Secured Party or any Holder, as the case may be, would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that the
Collateral Agent, the Secured Parties and the Holders have been induced to enter
into this Agreement and Secured Agreements, as applicable, based on, among other
things, the waivers and certifications contained herein.
(m) Any consent or approval required or permitted by this Agreement to be
given by the Collateral Agent may be given, and any term of this Agreement, may
be amended, and the performance or observance by the Pledgor of any terms of
this Agreement, or the continuance of any Default or Event of Default may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Pledgor and the
written consent of the Collateral Agent. No waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of the Collateral Agent, any
Secured Party or any Holder in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto. No notice to or demand upon the
Pledgor shall entitle the Pledgor to other or further notice or demand in
similar or other circumstances.
(n) Notwithstanding the foregoing, this Agreement may be amended, revised
and supplemented only with the consent of the parties hereto and in accordance
with the requirements of Sections 6.6 and 6.7 of the Intercreditor Agreement.
(o) The Pledgor hereby waives any and all rights against immunity from
jurisdiction, attachment (both before and after judgment) and execution to which
it might be entitled.
(p) The provisions of this Agreement are severable and if any one clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
17
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly
executed and delivered as of the date hereof.
XM SATELLITE RADIO INC.
By:
-----------------------------
Name:
Title:
Accepted and Agreed to:
[UNITED STATES TRUST COMPANY OF NEW YORK],
as Collateral Agent
By:
--------------------------------------
Name:
Title:
SCHEDULE I
Pledged Shares
100 shares of common stock, par value $.01 per share, of XM Radio Inc.
SECOND AMENDED AND RESTATED
SHAREHOLDERS AND NOTEHOLDERS AGREEMENT
This Second Amended and Restated Shareholders and Noteholders
Agreement, dated as of _______, 2003 (this "Agreement"), is hereby entered into
by and among XM Satellite Radio Holdings Inc., a corporation duly organized
under the laws of the State of Delaware (the "Company"); Clear Channel
Investments, Inc., a corporation duly organized under the laws of the State of
Nevada ("Clear Channel"); Columbia XM Radio Partners, LLC, a limited liability
company duly organized under the laws of the Commonwealth of Virginia ("Columbia
Radio Partners"); DIRECTV Enterprises, Inc., a corporation duly organized under
the laws of the State of Delaware ("DIRECTV"); General Motors Corporation, a
corporation duly organized under the laws of the State of Delaware (together
with its Affiliate, OnStar Corporation, a Delaware corporation, "GM"); Madison
Dearborn Capital Partners III, L.P. ("Madison Capital"), Madison Dearborn
Special Equity III, L.P. ("Madison Equity"), Special Advisors Fund I, LLC
("Madison Advisors" and, collectively with Madison Capital and Madison Equity,
each an entity duly organized under the laws of the State of Delaware,
"Madison"); AEA XM Investors I LLC, AEA XM Investors II LLC, AEA XM Investors IA
LLC and AEA XM Investors IIA LLC, each a limited liability company organized
under the laws of the State of Delaware (individually or collectively "AEA XM"),
Columbia XM Satellite Partners III, LLC, a limited liability company duly
organized under the laws of the Commonwealth of Virginia ("Columbia Satellite
Partners"), Columbia Capital Equity Partners III (QP), L.P., and Columbia
Capital Equity Partners II (QP), L.P., each a limited partnership duly organized
under the laws of the State of Delaware ("Columbia Equity Partners", and
collectively with Columbia Radio Partners and Columbia Satellite Partners,
"Columbia"); American Honda Motor Co., Inc., a corporation duly organized under
the laws of the State of California ("Honda"); Black Bear Fund I, L.P., a
limited partnership duly organized under the laws of the State of California
("Black Bear I"), Black Bear Fund II, L.L.C., a limited liability company duly
organized under the laws of the State of California ("Black Bear II"), Black
Bear Offshore Master Fund Limited, an exempted company organized under the laws
of the Cayman Islands ("Black Bear Fund", and collectively with Black Bear I and
Black Bear II, "Black Bear"); and each of the other Persons identified on
Exhibit A attached hereto ("Additional Note Purchasers"). Clear Channel,
Columbia Radio Partners, DIRECTV, GM and Madison, each in its capacity as a
holder of securities in the Company other than Series C Convertible Preferred
Stock (as defined below) or Common Stock (as defined below) issuable upon
conversion thereof, are collectively referred to herein as the "Original
Investors." AEA XM, Columbia Satellite Partners, Columbia Equity Partners,
Columbia Radio Partners, DIRECTV, Honda, Madison Capital and Madison Equity,
each in its capacity as a holder of the Series C Convertible Preferred Stock or
Common Stock issuable upon conversion thereof, are collectively referred to
herein as the "Series C Investors." GM, Black Bear, and the Additional Note
Purchasers, each in its or his capacity as a holder of New Notes or GM Notes (as
defined below), as the case may be, or Common Stock issuable upon conversion
thereof, are collectively referred to herein as the "Note Investors." The
Original Investors, the Series C Investors and the Note Investors are
collectively referred to herein as the "Investors." The Company and the
Investors are collectively referred to herein as the "Parties." Motient
Corporation, a corporation duly organized under the laws of the State of
Delaware ("Motient"); the Baron Asset Fund series ("Baron Asset") and the Baron
iOpportunity Fund series ("Baron iOpportunity") of Baron Asset Fund, a business
trust organized under the laws of the Commonwealth of Massachusetts, and the
Baron Capital Asset Fund series of Baron Capital Funds Trust, a business trust
organized under the laws of the State of Delaware ("Baron Capital", and
collectively with Baron Asset and Baron iOpportunity, "Baron"); and Telcom-XM
Investors, L.L.C., a limited liability company duly organized under the laws of
the State of Delaware ("Telcom"), who were parties to the 2000 Agreement (as
defined below), are becoming parties hereto solely for the purposes of agreeing
to the amendment of the 2000 Agreement by this second amendment and restatement
of this Agreement, which amendment results in Motient, Baron and Telcom ceasing
to be parties to this Agreement and terminating their respective rights and
obligations hereunder. Upon effectiveness of this Agreement, each of Motient,
Baron and Telcom shall cease to be a party to this Agreement and all of its
respective rights and obligations hereunder shall be terminated.
WITNESSETH
WHEREAS, the Company, the Original Investors, the Series C Investors,
Motient, Baron and Telcom are parties to an Amended and Restated Shareholders
Agreement, dated August 8, 2000 (the "2000 Agreement");
WHEREAS, the Company owns one hundred percent (100%) of the issued
and outstanding shares of common stock of XM Satellite Radio Inc. ("XM");
WHEREAS, XM Radio Inc., a wholly owned subsidiary of XM, holds a
license awarded by the U.S. Federal Communications Commission for the
establishment of a Satellite Digital Audio Radio Service ("SDARS") system in the
United States;
WHEREAS, GM is entering into a note purchase agreement with the Company
and XM, dated as of the date hereof (the "GM Note Purchase Agreement"), under
which GM has agreed to acquire Series GM Senior Secured Convertible Notes due
2009 issued by the Company and XM, as joint obligors (the "GM Notes"), in an
aggregate principal amount of $89,042,387, which GM Notes bear interest at a
rate of 10% per annum that may be paid in cash or, at the Company's option, in
Class A Common Stock, and are convertible into Class A Common Stock, on the
terms and conditions described in the GM Note Purchase Agreement, will receive a
warrant to purchase 10,000,000 shares of Class A Common Stock (the "GM Warrant")
and will enter into a credit agreement and other agreements under which GM may
receive additional securities of the Company;
WHEREAS, Black Bear and the Additional Note Investors have entered into
a note purchase agreement with the Company and XM, dated as of December 21, 2002
(the "New Note Purchase Agreement"), under which such Note Investors have agreed
to purchase XM's 10% Senior Secured Discount Convertible Notes due 2009 in an
aggregate principal amount of up to $400,000,000 at maturity, under which they
may receive additional notes as payment of certain
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interest due thereunder (collectively, the "New Notes" and together with the GM
Notes, the "Notes"), on the terms and conditions described in the New Note
Purchase Agreement; and
WHEREAS, the Company, each of the Investors, Motient, Baron and Telcom
believe it to be in the best interests of the Company and the mutual best
interests of each of the Investors to set forth herein their agreements with
respect to certain matters related to the ownership and corporate governance of
the Company by amending and restating the 2000 Agreement.
NOW, THEREFORE, in consideration for the mutual covenants contained
herein, the adequacy, receipt, and sufficiency of which are hereby acknowledged,
the undersigned hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions.
-----------
Accredited Investor: has the meaning specified in Rule 501 of
Regulation D promulgated under the Securities Act.
Affiliate: means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. For purposes of
Sections 3.1, 5.2, 6.1 and 6.2, a member of a limited liability company or a
partner of a partnership shall be deemed an Affiliate of said company or
partnership.
Antidilution Protection: means any right to have the relevant price or
price ratio for the conversion of securities of the Company into any class of
common stock of the Company, or the number of securities issuable upon such
conversion, adjusted where the Company sells common stock (or securities
convertible into or exercisable or exchangeable for common stock) for a price
below a specified dollar amount that is less than the then applicable conversion
price of the securities subject to the adjustment or below the market price (as
defined in the terms of such right) of the common stock. As used herein,
Antidilution Protection is not intended to include stock splits,
reorganizations, distributions of stock or rights to all holders of common stock
or similar transactions.
Board or Board of Directors: means the Board of Directors of the
Company or a committee consisting of one or more directors lawfully exercising
the powers of the Board.
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Business Day: means any day other than a Saturday, Sunday or any
other day on which commercial banks are authorized or required by law to be
closed in New York City or the District of Columbia.
Capital Stock: means any and all securities, shares, interests,
warrants, options, rights to acquire equity or equity-linked securities of the
Company, participations or other equivalents (however designated, whether voting
or non-voting) in equity of the Company, whether issued by the Company or its
Subsidiaries, and whether now outstanding or issued subsequently hereto,
including, without limitation, all series and classes of Common Stock and
preferred stock of the Company, and all Convertible Securities, including the
Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock,
the Series C Convertible Preferred Stock, the GM Notes, the GM Warrant and the
New Notes.
Change of Control: means a transfer of control of XM Radio Inc. that
would require approval by the FCC under any terms of XM Radio Inc.'s SDARS
license.
Charter Documents: has the meaning specified in Section 3.5.
Class A Common Stock: means the Class A Common Stock, par value
$0.01 per share, of the Company having one (1) vote per share.
Clear Channel Operational Assistance Agreement: means the
operational assistance agreement dated on or about June 7, 1999, between Clear
Channel and the Company, as it may be amended from time to time.
Closing Date: means the date of the closings under the GM Note Purchase
Agreement and the New Note Purchase Agreement.
Commission: means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
Common Stock: means all classes and series of the common stock of the
Company, any stock into which such common stock shall have been changed or
converted or any stock resulting from any capital reorganization or
reclassification of such common stock, and all other stock of any class or
classes (however designated) of the Company, the holders of which have the
right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment of
dividends and distributions of any shares entitled to preference.
Common Stock Deemed Outstanding: means, at any given time, the number
of shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock issuable upon the conversion, exchange, or exercise in
full, of all Convertible Securities, whether or not the Convertible Securities
are convertible into or exercisable or exchangeable for Common Stock at such
time.
Communications Act: has the meaning specified in Section 2.1.
------------------
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Concurrent Financing Transactions: means (1) the issuance to GM of the
GM Notes in lieu of certain guaranteed payments due to GM during the period from
2003 to 2006 under XM's Distribution Agreement with GM (the "Distribution
Agreement"), (2) the amendment of the Distribution Agreement to provide for,
among other things, the issuance of the GM Notes and the payment of up to
$35,000,000 in subscriber bounty payments payable to GM in the form of Class A
Common Stock, (3) the issuance of XM's 14% Senior Secured Discount Notes due
2009, warrants to purchase Class A Common Stock (the "Exchange Warrants") and
cash in exchange for some or all of XM's outstanding 14% Senior Secured Notes
due 2010, (4) entering into a $100,000,000 Senior Secured Credit Facility with
GM (the "GM Credit Facility") to finance certain revenue share payments owed to
GM under the Distribution Agreement or other amounts which may be owed to GM,
(5) the issuance of the GM Warrant, (6) the issuance and sale, on or before the
closing of the transactions described in this definition, to the extent
determined to be desirable by the Company, or after the closing, to the extent
contemplated by the letter agreement between the Company and BayStar Group, of
Class A Common Stock, with or without warrants to purchase Class A Common Stock,
in accordance with Section 4(2) of the Securities Act or pursuant to the
Company's effective shelf registration statement under the Securities Act,
including the proposed sale of 5,555,556 shares of Class A Common Stock and the
issuance of a warrant to purchase 900,000 shares of Class A Common Stock, (7)
the issuance of the New Notes, and (8) the execution, delivery and performance
of all agreements, documents and instruments, including this Agreement,
evidencing the transactions described in clauses (1) through (7) of this
definition, and all arrangements contemplated thereby.
Concurrent Financing Transactions Issuances: means the issuances or
potential issuances of, without limitation, (1) the issuance of Class A Common
Stock upon conversion of the GM Notes and the New Notes, (2) the GM Warrant and
the Class A Common Stock upon exercise thereof, (3) the Exchange Warrants and
the Class A Common Stock upon exercise thereof, (4) Class A Common Stock as
payment of interest on the GM Notes, (5) Class A Common Stock as payment of
interest under the GM Credit Facility, (6) Class A Common Stock pursuant to the
Distribution Agreement in accordance with the terms thereof, and (7) Class A
Common Stock and warrants issued and sold as contemplated by clause (6) of the
definition of Concurrent Financing Transactions.
Convertible Securities: means securities or obligations that are
exercisable for, convertible into or exchangeable for shares of Common Stock.
The term includes options, warrants or other rights to subscribe for or purchase
Common Stock or to subscribe for or purchase other securities or obligations
that are convertible into or exercisable or exchangeable for Common Stock,
including, without limitation, the Series A Convertible Preferred Stock, the
Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock,
the GM Notes, the New Notes and the GM Warrant.
DIRECTV Operational Assistance Agreement: means the operational
assistance agreement dated on or about June 7, 1999 between DIRECTV, Inc. (an
Affiliate of DIRECTV) and XM, as it may be amended from time to time.
Disinterested: means when used in respect of a director, a director who
does not have a direct or indirect interest in the terms or nature of the
transaction to be entered into (other than as
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a stockholder of the Company), it being understood that directors of an
Affiliate of the Person that designated a director that is not deemed to be
Disinterested shall not be deemed to be Disinterested.
Excluded Securities: means any (a) Common Stock or Convertible
Securities outstanding as of the date hereof and any Common Stock issuable upon
exercise of such Convertible Securities, (b) Common Stock or Convertible
Securities issued under a Qualifying Stock Plan and (c) Common Stock or
Convertible Securities issued to Persons who are not Affiliates of the Company
as partial consideration for senior debt financing, equipment lease financing or
underwritten High Yield Debt financing pursuant to a registered public offering
under the Securities Act or pursuant to Rule 144A thereunder.
FCC: means the Federal Communications Commission, or successor agency
thereof.
GM Warrant: means the warrant to purchase 10,000,000 million shares of
Class A Common Stock issued to GM by the Company.
High Yield Debt: means secured or unsecured debt securities issued by
the Company or a wholly owned Subsidiary of the Company in a registered public
offering or an offering to Qualified Institutional Buyers and/or institutional
Accredited Investors under Rule 144A of the Securities Act of at least $50
million after the Series C Closing Date, with or without attached warrants or
quasi-equity rights issued by the Company or a Subsidiary of the Company.
Holders: means the Investors and their respective Permitted
Transferees.
Investors: means the Persons specified in the Preamble and their
Permitted Transferees.
Non-Public Capital Stock: means Capital Stock that the Company
intends to issue without registration under the Securities
Act.
Notice of Proposed Issuance: has the meaning specified in Section 6.
Offered Non-Public Capital Stock: has the meaning specified in
Section 6.
Permitted Transferees: means each transferee of any Capital Stock,
with the transfer being made in compliance with the provisions hereof.
Person: means any individual, partnership, corporation, joint
venture, limited liability company, association, trust, unincorporated
organization, or a government or agency or political subdivision thereof.
Primary Series C Investor: means AEA XM Investors I LLC and AEA XM
Investors II LLC, individually or collectively, or any of its/their successors.
Private Financing Transaction: means a private placement or similar
transaction which provides financing to the Company in the amount of $25,000,000
or more, excluding the Concurrent Financing Transactions and Concurrent
Financing Transactions Issuances and
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transactions in which (i) the only investors are Persons that have, or following
such transaction will have, substantive business relationship with the Company
(other than the ownership of securities of the Company or its Subsidiaries) and
(ii) the consideration received by the Company does not consist solely of cash.
Qualified Institutional Buyer: has the meaning specified in Rule 144A
promulgated under the Securities Act.
Qualifying Stock Plan: means, collectively, all approved stock
incentive plans for employees, consultants and non-employee directors, provided
that (i) issuances under a Qualifying Stock Plan do not exceed 10% in the
aggregate of the shares of Common Stock Deemed Outstanding and (ii) such
Qualifying Stock Plan has been approved by a compensation committee of the Board
of Directors or the full Board of Directors, which, in either case, shall
include at least one director designated by the Original Investors and which
approval shall include the approval of such director so designated.
Registration Statement: means a registration statement filed with the
Commission pursuant to the Securities Act.
Right of First Offer: means the rights granted to each Holder pursuant
to Section 6.1 hereof.
Securities Act: means the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
Series A Convertible Preferred Stock: means the Series A Convertible
Preferred Stock, par value $1.00 per share, of the Company having zero (0) votes
per share.
Series B Convertible Preferred Stock: means the Series B Convertible
Redeemable Preferred Stock, par value $.01 per share, of the Company having zero
(0) votes per share.
Series C Closing Date: means August 8, 2000.
Series C Convertible Preferred Stock: means the Series C Convertible
Redeemable Preferred Stock, par value $.01 per share, of the Company, having the
same voting rights as the Class A Common Stock determined on an as converted
basis.
Series C Purchase Agreement: means the Series C Convertible Preferred
Stock Purchase Agreement, dated as of July 7, 2000, by and among the Company and
the investors named therein.
Subsidiary: means, with respect to any Person, any corporation,
association or other business entity of which more than fifty percent (50%) of
the voting power of the outstanding Capital Stock is owned, directly or
indirectly, by such Person or one or other Subsidiaries of such Person.
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TCM Group: means Columbia, Madison and Telcom.
TCM: means TCM, LLC, a Delaware limited liability company.
TCM Operational Assistance Agreement: means the operational
assistance agreement dated on or about August 8, 2000 between TCM and the
Company, as amended by the parties from time to time.
ARTICLE II.
COMPLIANCE WITH COMMUNICATIONS ACT
Section 2.1 Conduct of Business. The Company, XM and XM Radio Inc.
shall, and the Company shall cause XM and its Subsidiaries to, conduct their
business in such manner as to comply with all applicable laws and regulations
(including but not limited to the Communications Act of 1934, as amended (the
"Communications Act"), and the rules and regulations of the FCC).
Section 2.2 Cooperation of Investors. The Company and the Investors
agree to work cooperatively in connection with the preservation, maintenance and
any extension or renewal by XM Radio Inc. of its SDARS license and to provide
(and to cause the Company to provide), with reasonable promptness, such
information, and assist in making all filings, as may be required or appropriate
in accordance with the Communications Act, FCC rules, regulations, and processes
to preserve, maintain and extend or renew XM Radio Inc.'s SDARS license.
Section 2.3 Regulatory Approvals. To the extent that any regulatory
approval, notification or other submission or procedure is required or
customarily provided in connection with the exercise of any right or obligations
as set forth in this Agreement with respect to the transfer or assignment of
Capital Stock or changes to the Boards of Directors or appointment rights of
such directors (including, but not limited to, FCC approvals (if required) and
applicable securities laws), such transfer or assignment of Capital Stock or
changes pursuant to this Agreement will be delayed and will only take place
after such approval, notification or other submission or procedure has been
obtained, submitted or completed.
ARTICLE III.
CORPORATE GOVERNANCE; VOTING AGREEMENT
Section 3.1 Board of Directors.
------------------
(a) The Board of Directors and the board of directors of XM and any
other material Subsidiary (other than the board of any joint venture with Sirius
Satellite Radio Inc. so long as the Company's management provides regular
reports to the Board of Directors as to the status of
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any such joint venture) (collectively, the "Boards of Directors") shall consist
of at least eight (8) members, of whom:
(i) two (2) members shall be designated by the Original
Investors, (x) one (1) of whom shall be a designee of Clear Channel and (y) one
(1) of whom shall be a designee of GM or DIRECTV, as those two Parties may
agree;
(ii) one (1) member shall be the President and CEO of the
Company;
(iii) one (1) member shall be the Chairman of the Company;
(iv) two (2) members shall be independent directors of
recognized industry expertise and stature both of whom shall be approved by the
Investors who hold a majority of the Common Stock Deemed Outstanding that is
held by the Investors; and
(v) one (1) member shall be designated by the Primary Series C
Investor who shall be appointed to any Audit Committee and Executive Committee
(subject to meeting the Nasdaq Stock Market's Audit Committee and Charter
requirements).
(vi) At Honda's option, one (1) member shall be designated by
Honda who shall be appointed to any Executive or comparable committee of the
Boards of Directors.
(b) Each Holder agrees to vote its Common Stock in favor of the persons
nominated in accordance with the provisions herein. The rights of each of (i)
Clear Channel and (ii) GM or DIRECTV to designate a director and approve the
appointment of independent directors pursuant to this Section 3.1 shall continue
for so long as such Party (or GM and DIRECTV together) holds (A) in excess of 5%
of the Common Stock Deemed Outstanding or (B) the full amount of such Party's
original investment in the Company (whether or not converted into shares of
Series A Convertible Preferred Stock, if applicable, or Class A Common Stock).
The right of the Primary Series C Investor to designate a director shall
continue for so long as AEA XM (or its Affiliates) holds at least 50% of the
stock that it originally purchased under the Series C Purchase Agreement, either
in Series C Convertible Preferred Stock or as converted into Class A Common
Stock. The right of Honda to designate a director shall continue for so long as
Honda (or any of its Affiliates) retains at least 50% of its investment,
including debt and equity securities, in the Company (measured by the purchase
price paid by Honda for such securities and without regard to (i) whether or not
such securities have been converted into any other security of the Company or
(ii) the current market value of any such securities) as of the date hereof.
(c) The right of each Original Investor to designate a director
pursuant to Section 3.1(a)(i) also shall terminate, and any director designated
by such Original Investor shall promptly resign from the Boards of Directors:
(i) in the case of Clear Channel, if a majority of the
ownership interests of Clear Channel cease to be owned, directly or indirectly,
by Clear Channel Communications, Inc.; and
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(ii) in the case of DIRECTV, if a majority of the ownership
interests of DIRECTV cease to be owned, directly or indirectly, by Hughes
Electronics Corporation or its Affiliates (provided that the loss of DIRECTV's
right to designate directors shall not affect GM's rights under this Section
3.1).
Section 3.2 Observation Rights.
(a) For such time as GM and DIRECTV (i) continue to hold, in the
aggregate, in excess of 5% of the Common Stock Deemed Outstanding, or (ii) each
retains the full amount of its original investment in the Company, (whether or
not converted into shares of Series A Convertible Preferred Stock or Class A
Common Stock), GM or DIRECTV shall be allowed one observer at Board of Directors
meetings to represent whichever company does not designate a member of the Board
of Directors at that time.
(b) For such time as any of Columbia and Madison (i) continues to hold
in excess of 2% of the Common Stock Deemed Outstanding, or (ii) such Investor
retains at least 50% of its investment in the Company as of the Series C Closing
Date, such Investor shall be allowed to have an observer at Board of Directors
meetings so long as such company(ies) does not have an Affiliate serving as a
member of the Board of Directors at that time.
(c) For such time as Clear Channel (i) continues to hold in excess of
5% of the Common Stock Deemed Outstanding, or (ii) retains the full amount of
its original investment in the Company, Clear Channel shall be allowed an
observer at Board of Directors meetings.
(d) For such time as Honda (i) retains at least 25% of its investment,
including debt and equity securities, in the Company (measured by the purchase
price paid by Honda for such securities and without regard to (A) whether or not
such securities have been converted into any other security of the Company or
(B) the current market value of any such securities) as of the date hereof and
(ii) Honda does not have an Affiliate serving as a member of the Board of
Directors, Honda shall be allowed an observer at Board of Directors meetings.
Section 3.3 Removal of Directors. The Investors agree to vote so that
each member of the Board of Directors nominated or designated in accordance with
Section 3.1 shall serve as a director of the Company until removed, upon the
instructions of the Party designating such director, and each Party agrees to
vote its shares of Common Stock in accordance with such directions. To the
extent permitted by law, each Investor agrees not to take any action to remove
or replace (and to use all reasonable efforts to cause the Board of Directors
not to replace), with or without cause, any director of the Company that has not
been designated for removal or replacement by the Party having originally
nominated or designated such director.
Section 3.4 Operational Involvement of Clear Channel, DIRECTV and the
TCM Group.
(a) For such time as Clear Channel (i) continues to hold in excess of
5% of the Common Stock Deemed Outstanding, or (ii) retains the full amount of
its original investment in the Company, the Company agrees that Clear Channel
shall have operational rights and
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involvement as set forth in the Clear Channel Operational Assistance Agreement,
provided that such rights and involvement shall terminate if Clear Channel
ceases to be a wholly-owned subsidiary of Clear Channel Communications, Inc.
(b) For such time as DIRECTV (i) continues to hold in excess of 5% of
the Common Stock Deemed Outstanding, or (ii) retains the full amount of its
original investment in the Company, (whether or not converted into shares of
Series A Convertible Preferred Stock or Class A Common Stock), the Company
agrees that DIRECTV, Inc. shall have operational rights and involvement as set
forth in the DIRECTV Operational Assistance Agreement.
(c) For such time as Columbia and Madison (i) continue to hold, in the
aggregate, in excess of 5% of the Common Stock Deemed Outstanding, or (ii)
retain, in the aggregate, at least 50% of their investment in the Company as of
the Series C Closing Date, the Company agrees that the TCM Group shall have
operational rights and involvement as set forth in the TCM Operational
Assistance Agreement.
Section 3.5 Shareholder Actions. Each Party shall at all times take all
actions necessary (i) to give effect to the terms and conditions of this
Agreement and (ii) to ensure that the certificate of incorporation and bylaws of
the Company (the "Charter Documents") do not, at any time, conflict with the
provisions of this Agreement, and hereby agrees to make or authorize any
amendments to the Charter Documents that may hereafter be required to give
effect to this Agreement.
Section 3.6 Transfers.
(a) Any assignment or transfer by a Holder to a single transferee or a
group of Affiliated transferees, whether in a single transaction or a series of
related transactions, of:
(i) Convertible Securities representing more than 1% of the
Common Stock Deemed Outstanding, other than Common Stock sold pursuant to an
effective registration statement or Rule 144 or Rule 145 under the Securities
Act, or
(ii) any Notes shall be subject to the assumption by such
transferee of the obligation to vote its Common Stock as provided in Section
3.1(b) and the obligation to require the same in subsequent such assignments or
transfers.
(b) Prior to the transfer of any Capital Stock, the Company at its
option may require an opinion of counsel reasonably satisfactory to the Company
to the effect that such transfer is in compliance with, or exempt from, the
registration requirements of the Securities Act.
ARTICLE IV.
CERTAIN REPRESENTATIONS
Each Party hereby represents and warrants on behalf of itself to each
other Party that:
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Section 4.1 Existence and Power. To the extent such Party is an
entity:
(a) it is an entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation;
(b) it has the power and authority to own its assets, carry on its
business and execute, deliver, and perform its obligations under this Agreement;
and
(c) it is duly qualified to do business and is licensed and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
or license except where such failure to qualify would not have a material
adverse effect on the business or financial condition of such Party.
Section 4.2 Due Authorization; No Contravention. To the extent such
Party is an entity, the execution, delivery and performance by it of this
Agreement have been duly authorized by all necessary action, and do not and will
not:
(a) Breach or violate the terms of its certificate of incorporation
(or similar constituent document) or bylaws (or similar constituent document);
(b) Breach or violate the terms of any material agreement to which it
is party; or
(c) Violate any law or regulation applicable to it, including but not
limited to the Communications Act and the rules and regulations promulgated from
time to time by the FCC.
To the extent such Party is an individual, the execution, delivery and
performance of by him of this Agreement does not and will not breach or violate
the terms of any material agreement to which he is a party or violate any law or
regulation applicable to him.
Section 4.3 Binding Effect. This Agreement has been duly authorized (to
the extent such Party is an entity), executed and delivered by such Party and
constitutes the legal, valid and binding obligation of such Party enforceable
against such Party in accordance with the terms hereof, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws affecting creditors' rights generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).
ARTICLE V.
CONSENT REQUIREMENTS
Section 5.1 Investor Approval Rights. For so long as an aggregate of at
least 50% of the original aggregate principal amount of the Notes at maturity
continues to be held by the Note Investors, the affirmative vote or consent of
Note Investors holding greater than 75% of the aggregate principal amount at
maturity of the then outstanding Notes, voting as a separate class, will be
required for the following actions:
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(a) Any amendment, alteration or repeal of any provision of the
Certificate of Incorporation (including any certificate of designations) or
By-laws of the Company or any of its Subsidiaries that is material to the rights
of the Note Investors;
(b) Any increase in the outstanding number of shares of the Series
A Convertible Preferred Stock, the Series B Convertible Preferred Stock or the
Series C Convertible Preferred Stock, except for increases in connection with
anti-dilution adjustments under the terms of such securities;
(c) The issuance of Common Stock or securities convertible into
Common Stock, (excluding Common Stock issued in respect of (1) Convertible
Securities outstanding on the date hereof, (2) securities issued as payment of
or in lieu of a dividend or interest payment on securities outstanding on the
date hereof and (3) any securities issued pursuant to the agreements
contemplated by or which implement the Concurrent Financing Transactions, which
would increase the number of shares of Common Stock Deemed Outstanding on the
date hereof (after giving effect to the Concurrent Financing Transactions and
the Concurrent Financing Transactions Issuances) by 20% or more in one, or more
than one issuance;
(d) The incurrence by the Company or any of its Subsidiaries of
any indebtedness or the issuance of any securities, in each case, that contain
financial, operational or subscriber maintenance or milestone covenants that if
not met would put the Company or any of its Subsidiaries in default under the
terms of any indebtedness or securities;
(e) The declaration and payment of any dividends on, or the making
of any distribution with respect to, any securities junior to or pari passu with
the Notes, other than dividends consisting solely of Class A Common Stock to the
holders of Series B Convertible Preferred Stock or the Series C Convertible
Preferred Stock to the extent such dividends are required to be paid by the
terms of such securities;
(f) Any merger or consolidation or sale, transfer, assignment,
conveyance or other disposition to a third party of all or substantially all of
the properties or assets of the Company or any of its Subsidiaries in one or
more related transactions;
(g) The dissolution of the Company or any Subsidiary or adoption of a
plan of liquidation for the Company or any Subsidiary;
(h) The purchase, redemption or other acquisition or retirement by
the Company or any Subsidiary for value (including, in connection with any
merger or reorganization) of any securities of the Company or any Subsidiary,
except that (i) the Company or XM may repurchase or redeem up to 35% of XM's 14%
Senior Secured Discount Notes due 2010 (or such applicable percentage as may
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be required upon a change of control) and exercise any similar option to
repurchase or redeem contained in future issuances of High Yield Debt, (ii) the
Company or XM may undertake any redemption under any of the documents
contemplated by the Concurrent Financing Transactions, including without
limitation, an offer to purchase in connection with a change of control, and
(iii) the Company may redeem its equity securities in an aggregate amount not to
exceed $5 million;
(i) any change in the terms of the Notes or any securities or debt
obligations of the Company or its Subsidiaries ranking senior to or on a parity
with the Notes (other than with respect to the Company's credit agreement with
Boeing Capital Corporation and the Company's mortgage with respect to its
headquarters facility) or any change in the terms of securities or debt
obligations ranking junior to the Notes as to right of payment or priority with
respect to the collateral securing the Notes that increases the seniority of
such junior securities or debt obligations so that they rank senior to or on a
parity with the Notes; provided, that (a) any change in the terms of the New
Notes that is not adverse to the GM Notes shall require only the approval of 75%
of the aggregate principal amount at maturity of the then outstanding New Notes
and (b) any change in the terms of the GM Notes that is not adverse to the New
Notes shall require only the approval of GM;
(j) Any action that results in any agreement, arrangement or
understanding that would impose material restrictions on the Company's or any of
its Subsidiary's ability to honor the exercise of any rights of the Note
Investors or violate or conflict with, rights of the Note Investors;
(k) The making of loans or advances to, transferring properties
to, or guaranteeing any indebtedness of the Company's Subsidiaries other than
Subsidiaries directly engaged in the satellite radio business;
(l) Any change in the principal nature of the business of the
Company and its Subsidiaries, taken as a whole, to a business other than the
satellite radio business or a business substantially related thereto;
(m) any payments to, or any sale, lease, transfer or other
disposition of any of the Company's or any of its Subsidiaries' properties or
assets to, or purchase of any property or assets from, or entering into or
making or amending any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each, an
"Affiliate Transaction"), unless the following are complied with:
(i) Such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such Subsidiary
with an unrelated Person; and
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(ii) the Company delivers to the Note Investors:
(A) with respect to any Affiliate Transaction or
series of related Affiliate Transactions
involving aggregate consideration in excess
of $5.0 million, a resolution of the Board
of Directors set forth in an officers'
certificate certifying that such Affiliate
Transaction complies with this clause (m)
and, if an opinion meeting the requirements
of clause (B) below has not been obtained,
that such AffiliateTransaction has been approved
by a majority of the Disinterested members of the
Board of Directors with respect to such Affiliate
Transaction; and
(B) with respect to any Affiliate Transaction or
series of related Affiliate Transactions
involving aggregate consideration in excess
of $20.0 million or any Affiliate
Transaction or series of related Affiliate
Transactions involving aggregate
consideration in excess of $5.0 million
where none of the members of the Board of
Directors qualifies as Disinterested, an
opinion as to the fairness to the Company or
such Subsidiary of such Affiliate
Transaction from a financial point of view
issued by an accounting, appraisal or
investment banking firm of national
standing.
The following items shall not be deemed to be
Affiliate Transactions and, therefore, will not be subject to the provisions of
this clause (m):
(1) any transaction by the Company or any of its
Subsidiaries with an Affiliate directly
related to the purchase, sale or
distribution of products in the ordinary
course of business consistent with industry
practice which has been approved by a
majority of the members of the Board of
Directors of the Company who are
Disinterested with respect to such
transaction;
(2) any employment agreement or arrangement or
employee benefit plan entered into or
instituted by the Company or any of its
Subsidiaries in the ordinary course of
business of the Company or Subsidiary and
which has been approved by a majority of the
members of the Board of Directors of the
Company who are Disinterested with respect
to such transaction;
(3) transactions between or among the Company and/or
its wholly-owned Subsidiaries;
(4) payment of reasonable directors fees and the
provision of customary indemnification to
directors, officers and employees of the Company
and its Subsidiaries;
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(5) contractual arrangements existing on the
date hereof, and any renewals, extensions,
implementations or modifications thereof
that are not materially adverse to the Note
Investors that have been approved by a
majority of the members of the Board of
Directors of the Company who are
Disinterested with respect to such
transaction.
(n) Entering into any transaction that would result in any
Subsidiary of the Company material to the Company's satellite radio business not
being wholly owned, directly or indirectly, by the Company other than pledges of
the common stock of any Subsidiary of the Company permitted pursuant to the Note
Purchase Agreement in connection with financing transactions;
(o) Any optional redemption, repurchase or other acquisition of
debt or equity securities or other debt obligations for cash of the Company or
any Subsidiaries of the Company, which securities or obligations are pari passu
with or junior to the Notes in right of payment, except to the extent permitted
by (i) above;
(p) Any authorization, creation, reclassification or issuance of
any debt or equity securities or other debt obligations senior to (or otherwise
having a preference over) or ranking pari passu with the Notes in right of
payment or priority with respect to the security provided therefor or otherwise
other than as permitted by the Concurrent Financing Transactions documents as in
effect on the date hereof; or
(q) Agreeing or committing to do any of the foregoing.
Section 5.2 Consent Rights Non-transferable. The consent rights
conferred upon the Note Investors pursuant to Section 5.1 hereof are personal to
the Note Investors and shall not be assignable or otherwise transferable other
than to an Affiliate of a Note Investor or another Note Investor.
ARTICLE VI.
RIGHT OF FIRST OFFER; ANTIDILUTION PROTECTION
Section 6.1 Right of First Offer. The Company shall only issue
Non-Public Capital Stock in a Private Financing Transaction in accordance with
the following terms:
(a) The Company shall not issue any Non-Public Capital Stock in a
Private Financing Transaction unless it first delivers to each Investor who is
then an Eligible Purchaser (as defined below) and who, in the case of Note
Investors, purchases at least $10 million in aggregate principal amount at
maturity of New Notes at the closing of the Concurrent Financing Transactions
(each such Person being referred to in this Section 6 as a "Buyer"), a written
notice (the "Notice of Proposed Issuance") specifying the type and total number
of such shares of Non-
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Public Capital Stock that the Company then intends to issue (the "Offered
Non-Public Capital Stock"), all of the material terms, including the price upon
which the Company proposes to issue the Offered Non-Public Capital Stock and
stating that the Buyers shall have the right to purchase the Offered Non-Public
Capital Stock in the manner specified in this Section 6.1(a) for the same price
per share and in accordance with the same terms and conditions specified in such
Notice of Proposed Issuance.
(b) For a period of ten (10) calendar days from the date the Company
delivers to all of the Buyers the Notice of Proposed Issuance (the "Ten Day
Period"), the Buyers may elect to subscribe to purchase Offered Non-Public
Capital Stock at the same price per share and upon the same terms and conditions
specified in the Notice of Proposed Issuance. Each Buyer electing to purchase
Offered Non-Public Capital Stock must give written notice of its election to the
Company prior to the expiration of the Ten Day Period. If the Offered Non-Public
Capital Stock is being offered as part of an investment unit together with debt
or other instruments, any election by a Buyer to purchase Offered Non-Public
Capital Stock shall also constitute an election to purchase a like portion of
such debt or other instruments.
(c) Each Buyer shall have the right to purchase that number of shares
of the Offered Non-Public Capital Stock as shall be equal to the number of
shares of the Offered Non-Public Capital Stock multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock then held by
such Buyer plus all shares of Common Stock issuable upon conversion of all
Convertible Securities then held by such Buyer and the denominator of which
shall be the aggregate number of shares of Common Stock Deemed Outstanding. The
amount of such Offered Non-Public Capital Stock that each Buyer is entitled to
purchase under this Section 6 shall be referred to as its "Proportionate Share."
(d) Each Buyer shall have a right of oversubscription such that if any
other Buyer fails to elect to purchase his or its full Proportionate Share of
the Offered Non-Public Capital Stock, the other Buyer(s) shall, among them, have
the right to purchase up to the balance of such Offered Non-Public Capital Stock
not so purchased. The Buyers may exercise such right of oversubscription by
electing to purchase more than their Proportionate Share of the Offered
Non-Public Capital Stock by so indicating in their written notice given during
the Ten Day Period. If, as a result thereof, such oversubscription elections
exceed the total number of the Offered Non-Public Capital Stock available in
respect to such oversubscription privilege, the oversubscribing Buyers shall be
cut back with respect to oversubscriptions on a pro rata basis in accordance
with their respective Proportionate Share or as they may otherwise agree among
themselves.
(e) If all of the Offered Non-Public Capital Stock has not been
subscribed for by the Buyers pursuant to the foregoing provisions, then the
Company shall have the right, until the expiration of one-hundred eighty (180)
consecutive days commencing on the first day immediately following the
expiration of the Ten Day Period, to issue the Offered Non-Public Capital Stock
not purchased by the Buyers at not less than, and on terms no more favorable in
any material respect to the purchaser(s) thereof than, the price and terms
specified in the Notice of Proposed Issuance. If such remaining Offered
Non-Public Capital Stock is not issued within such period and at such price and
on such terms, the right to issue in accordance with the Notice
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of Proposed Issuance shall expire and the provisions of this Agreement shall
continue to be applicable to the Offered Non-Public Capital Stock.
(f) The Company may proceed with the issuance of Non-Public Capital
Stock without first following the foregoing procedures provided that within ten
(10) days following the issuance of such Non-Public Capital Stock, the Company
or the purchaser of the Non-Public Capital Stock undertakes steps substantially
similar to those described above to offer to all Buyers the right to purchase
from such purchaser or from the Company such amount of such Non-Public Capital
Stock at the same price and terms applicable to the purchaser's purchase thereof
as is necessary for the Buyers to maintain the same ownership percentage of the
Company on a fully diluted basis as existed prior to such issuance of Non-Public
Capital Stock.
(g) Notwithstanding the foregoing, the Right of First Offer described
in this Section 6 shall not apply with respect to the issuance of Excluded
Securities or to any Investor who is not an Eligible Purchaser. For purposes of
this Section 6, any Investor shall be an "Eligible Purchaser" with respect to a
proposed issuance of Non-Public Capital Stock if such Investor meets the
Company's reasonable requirements for investors generally (such as being an
Accredited Investor or Qualified Institutional Buyer) to purchase Non-Public
Capital Stock in the particular Private Financing Transaction.
(h) The rights granted under this Section 6.1 are personal to the
Investors and shall not be assignable or otherwise transferable other than to an
Affiliate of an Investor.
Section 6.2 Antidilution Protection.
(a) In the event that, at a time when Series C Convertible Preferred
Stock is then outstanding, the Company grants any Antidilution Protection to any
purchaser(s) of 1% or more (on a fully diluted basis) of the Capital Stock which
would (if granted to the holders of the Series C Convertible Preferred Stock) be
materially more favorable (taken as a whole) to the holders of the Series C
Convertible Preferred Stock than the Antidilution Protection then applicable to
the Series C Convertible Preferred Stock (a "New Antidilution Protection"), then
if the holders of a majority of the Series C Convertible Preferred Stock so
elect by written notice to the Company, the Company and the Series C Investors
shall use their best efforts to take all steps determined in good faith by the
Board of Directors to be reasonably necessary to provide (and the Investors
shall vote in favor of any amendment to the Certificate of Designation of the
Series C Convertible Preferred Stock which may be necessary), as nearly as
practicable under the circumstances and consistent with the other terms of
Certificate of Designation for the Series C Convertible Preferred Stock, the New
Antidilution Protection to the holders of the Series C Convertible Preferred
Stock as a replacement for the Antidilution Protection then applicable to the
Series C Convertible Preferred Stock.
(b) In the event that a New Antidilution Protection is granted to the
holders of the Series C Convertible Preferred Stock as a replacement for the
Antidilution Protection then applicable to the Series C Convertible Preferred
Stock, if the Note Investors holding a majority of the outstanding aggregate
principal amount at maturity of the New Notes so elect, the Company and the Note
Investors shall use their best efforts to take all steps determined in good
faith by the
- 18 -
Board of Directors to be reasonably necessary to provide, as nearly as
practicable under the circumstances and consistent with the GM Note Purchase
Agreement, the New Note Purchase Agreement, the Notes and this Agreement, the
New Antidilution Protection to the Note Investors.
ARTICLE VII.
MISCELLANEOUS
Section 7.1 Amendment and Restatement. This Agreement hereby
restates, amends and supersedes the 2000 Agreement.
Section 7.2 Notices. Except as otherwise provided in this Agreement,
notices and other communications under this Agreement shall be in writing and
shall be deemed properly served if: (i) mailed by registered or certified mail,
return receipt requested, (ii) delivered by a recognized overnight courier
service, (iii) delivered personally, or (iv) sent by facsimile transmission
addressed to each Party at its address for notices specified on Schedule I
attached hereto, or at such other address, or to the attention of such officer,
as any Party shall have furnished to each other Party in writing pursuant to
this Section 7.2. Such notice shall be deemed to have been received: (i) three
(3) Business Days after the date of mailing if sent by certified or registered
mail, (ii) one (1) Business Day after the date of delivery if sent by overnight
courier, (iii) the date of delivery if personally delivered, or (iv) the next
succeeding Business Day after transmission by facsimile with confirmation of
receipt.
Section 7.3 Amendment. Any term of this Agreement may be amended only
with the written consent of (a) the Company, (b) Investors holding, (i) in the
case of amendments to provisions of this Agreement generally, 75% of the
aggregate of the Common Stock Deemed Outstanding held by Investors, and (ii) in
the case of any non-material change or technical correction of this Agreement, a
majority of the aggregate of the Common Stock Deemed Outstanding held by
Investors, (c) in the case of amendments to Section 6.1 or 6.2(a) of this
Agreement, in addition to the consents listed in clauses (a) and (b) of this
Section, at least 66-2/3% of the aggregate of the Common Stock Deemed
Outstanding held by Series C Investors, (d) in the case of amendments to Section
6.1 or 6.2(b) of this Agreement, in addition to the consents listed in clauses
(a) and (b) of this Section, at least 66-2/3% of the aggregate principal amount
at maturity of the then outstanding Notes, (e) in the case of amendments to
Section 5.1 of this Agreement, in addition to the consents listed in clauses (a)
and (b) of this Section, greater than 75% of the aggregate principal amount at
maturity of the then outstanding Notes held by the Note Investors, and (f) in
the case of amendments to any provision of Section 3.1(a) which adversely affect
the right of any Investor to designate one or more directors, in addition to the
consents listed in clauses (a) and (b) of this Section, the Investor having the
right that would be adversely affected; provided, however, that in the event the
rights, preferences or obligations hereunder of one or more Investors are being
amended in a manner that is materially adverse to such Investors and in a manner
that is different from those of other Investors, such rights, preferences or
obligations may be so amended only with the consent of the Investors holding at
least 75% in the aggregate of the Common Stock Deemed Outstanding held by
Investors whose rights, preferences or obligations are being materially
adversely amended in such different manner. Any amendment effected in accordance
with this Section 7.3 shall be binding upon each future Holder and the Company.
Section 7.4 Specific Performance. Each Party acknowledges
(i) that it will be impossible to measure in money the damage to each other
Party if any of them or any legal
- 19 -
representative of any Party fails to comply with any of the provisions of this
Agreement, (ii) that every such provision is material, and (iii) that in the
event of any such failure, the Company and the Investors will not have an
adequate remedy at law or in damages. Accordingly, each Party hereto consents to
the issuance of an injunction or the enforcement of other equitable remedies
against it at the suit of an aggrieved Party without the posting of any bond or
other security, to compel specific performance of all of the terms hereof and to
prevent any disposition of shares of Capital Stock in contravention of any terms
of this Agreement, and waives any defense thereto, including, without
limitation, the defenses of (i) failure of consideration, (ii) breach of any
other provision of this Agreement and (iii) availability or relief in damages.
Section 7.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING
EFFECT TO ANY CONFLICT OF LAW PROVISIONS THEREOF.
EACH OF THE PARTIES ACKNOWLEDGES THAT (i) IT IS A KNOWLEDGEABLE,
INFORMED, SOPHISTICATED BUSINESS ENTITY CAPABLE OF UNDERSTANDING AND EVALUATING
THE PROVISIONS SET FORTH IN THIS AGREEMENT, INCLUDING THIS SECTION 7.5, AND (ii)
IT HAS BEEN REPRESENTED BY SUCH COUNSEL AND OTHER ADVISORS OF ITS CHOOSING AS IT
HAS DEEMED APPROPRIATE IN CONNECTION WITH ITS DECISION TO ENTER INTO THIS
AGREEMENT.
Section 7.6 Parties In Interest. This Agreement shall be binding upon
and shall inure to the benefit of each Party and their respective successors and
assigns as provided for herein, and by their signatures hereto, and each Party
intends to and does hereby become bound. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any Person other than the
Parties hereto and their respective successors and assigns any legal or
equitable right, remedy or claim under or in or in respect of this Agreement or
any provision herein contained.
Section 7.7 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
Section 7.8 Plural; Singular. When used herein, the singular of each
term includes the plural and the plural of each term includes the singular.
Section 7.9 Counterparts. This Agreement may be executed in any number
of counterparts all of which taken together shall constitute one agreement and
any Party hereto may execute this Agreement by signing any such counterpart.
Section 7.10 Descriptive Headings. The descriptive headings of
the several sections of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.
- 20 -
Section 7.11 Future Assurances. Each Party shall execute and deliver
all such future instruments and take such other and further action as may be
reasonably necessary or appropriate to carry out the provisions of this
Agreement and the intention of the Parties as expressed herein.
Section 7.12 Termination. This Agreement shall be immediately
terminated upon any of the following: (i) the unanimous written consent to the
termination hereof by the Parties hereto, (ii) the dissolution, bankruptcy or
receivership of the Company, or (iii) at such time as only one (1) Holder
remains a Party hereto.
- 21 -
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
signed as of the date first above written.
XM SATELLITE RADIO HOLDINGS INC. MOTIENT CORPORATION
By: By:
Name: Name:
Title: Title:
BARON ASSET FUND CLEAR CHANNEL INVESTMENTS, INC.
on behalf of THE BARON ASSET
FUND SERIES
By: By:
Name: Name:
Title: Title:
COLUMBIA XM RADIO PARTNERS, LLC DIRECTV ENTERPRISES, INC.
By Columbia Capital LLC, its
Managing Member
By: By:
Name: Name:
Title: Title:
GENERAL MOTORS CORPORATION MADISON DEARBORN CAPITAL PARTNERS III, L.P.
By Madison Dearborn Partners III, L.P., its general partner
By: By Madison Dearborn Partners LLC, its general partner
Name:
Title:
By:
Name:
Title:
MADISON DEARBORN SPECIAL EQUITY III, L.P. SPECIAL ADVISORS FUND I, LLC
By Madison Dearborn Partners III, L.P., its general partner By Madison Dearborn Partners III, L.P., its manager
By Madison Dearborn Partners LLC, its general partner By Madison Dearborn Partners LLC, its general partner
By: By:
Name: Name:
Title: Title:
- i -
TELCOM--XM INVESTORS, L.L.C. AEA XM INVESTORS I LLC
By: By: ________________________________
--------------------------------
Name: Name:
Title: Title:
COLUMBIA XM SATELLITE PARTNERS III, LLC AEA XM INVESTORS II LLC
By:
By: By: ________________________________
--------------------------------
Name: Name:
Title: Title:
COLUMBIA CAPITAL EQUITY PARTNERS III AMERICAN HONDA MOTOR CO., INC.
(QP), L.P.,
By: Columbia Capital Equity Partners III, L.P., its General
Partner By:
Name:
By: Title:
--------------------------------------------------
Name:
Title:
BARON ASSET FUND BARON CAPITAL FUND TRUST
on behalf of THE BARON iOPPORTUNITY FUND SERIES on behalf of THE BARON CAPITAL ASSET FUND SERIES
By: By:
Name: Name:
Title: Title:
BLACK BEAR FUND I, L.P. BLACK BEAR FUND II, L.L.C.
By Eastbourne Capital Management, L.L.C., its general By Eastbourne Capital Management, L.L.C., its
partner manager
By: By:
---------------------------------------------------------
Eric M. Sippel Eric M. Sippel
Chief Operating Officer Chief Operating Officer
- ii -
BLACK BEAR OFFSHORE MASTER FUND LIMITED HEARST COMMUNICATIONS, INC.
By Eastbourne Capital Management, L.L.C., its
investment adviser and attorney in fact
By:
Eric M. Sippel By:
Chief Operating Officer Name:
Title:
GEORGE HAYWOOD COLUMBIA CAPITAL EQUITY PARTNERS II
(QP), L.P.,
By: Columbia Capital Equity Partners III, L.P., its General
Partner
By:
Name:
Title:
AEA XM INVESTORS IA LLC AEA XM INVESTORS IIA LLC
By: By: ________________________________
--------------------------------
Name: Name:
Title: Title:
BAYSTAR CAPITAL II, L.P., BAYSTAR INTERNATIONAL II L.P.,
By: By:
By: By:
--------------------------------------------------
Name: Name:
Title: Title:
SUPERIUS SECURITIES GROUP, INC. MONEY PURCHASE PLAN ADVAN PARTNERS, L.P.
By:
By:
Name: By:
Title: Name:
Title:
SF CAPITAL PARTNERS, LTD.
VERNON INVESTORS II, L.L.C.
By:
Name: By:
Title: Name:
Title:
- iii -
MICHAEL W. HARRIS JOHN DEALY
PAUL GREENWALD A.R. SANCHEZ, JR.
- iv -
EXHIBIT A
Additional Note Purchasers
AEA
AEA XM Investors IA LLC
AEA XM Investors IIA LLC
Columbia Capital
Columbia Capital Equity Partners II (QP), L.P.
Columbia XM Radio Partners, LLC
Columbia Capital Equity Partners III (QP), L.P.
Columbia XM Satellite Partners III, LLC
Hughes Electronics Corporation
George Haywood
Hearst Communications, Inc.
BayStar Group
BayStar Capital II, LP
BayStar International II, Ltd.
America Honda Motor Co., Inc.
Superius Securities Group, Inc. Money Purchase Plan
John Dealy
Advan Partners, L.P.
Michael W. Harris
Paul Greenwald
SF Capital Partners, Ltd.
Vernon Investors II, L.L.C.
A.R. Sanchez, Jr.
- v -
SCHEDULE I
NAMES, ADDRESSES AND FACSIMILE NUMBERS OF PARTIES
The Company: XM Satellite Radio Holdings Inc. 202-380-4500
1500 Eckington Place, N.E.
Washington, DC 20002
Attention: Joseph M. Titlebaum, Esq.
Clear Channel: Clear Channel Investments, Inc. 210-822-2299
200 Concord Plaza, Suite 600
San Antonio, TX 78216
Attention: Ken Wyker, Esq.
Columbia: Columbia XM Radio Partners, L.L.C. 703-519-3904
201 North Union Street, Suite 300
Alexandria, Virginia 22314
Attention: Mr. James B. Fleming
DIRECTV: DIRECTV Enterprises, Inc. 310-964-4114
2230 East Imperial Highway
El Segundo, CA 90245
Attention: Mr. Steven J. Cox
GM: General Motors Corporation 212-418-6258
100 Renaissance Center
Detroit, MI 48265 - 1000
Attention: Anne Larin, Esq.
Telcom: Telcom-XM Investors, L.L.C. 703-706-3801
211 North Union Street, Suite 300
Alexandria, VA 22314
Attention: Hal B. Perkins, Esq.
Madison: Madison Dearborn Partners, Inc. 312-895-1221
Three First National Plaza
Chicago, Illinois 60602
Attention: Mr. James N. Perry
AEA XM: AEA Investors, Inc. 212-888-1459
65 E. 55th Street
New York, New York 10022
Attention: General Counsel
Black Bear Fund I, L.P. c/o Eastbourne Capital Management, L.L.C. [fax]
Black Bear Fund II, L.P. 1101 Fifth Avenue, Suite 160
Black Bear Offshore Master Fund San Rafael, CA 94901
Limited
- vi -
George Haywood [address] [fax]
Honda: America Honda Motor Co., Inc. 310-783-2210
1919 Torrance Boulevard
Torrance, California 90501-2746
Attention: Shinichi Sakamoto
310-781-4970
Honda North America, Inc.
Law Department
700 Van Ness Avenue
Torrance, California 90501
Black Bear Fund I, L.P. c/o Eastbourne Capital Management, L.L.C. [fax]
Black Bear Fund II, L.P. 1101 Fifth Avenue, Suite 160
Black Bear Offshore Master Fund Limited San Rafael, California 94901
George Haywood [address] [fax]
R. Steven Hicks [address] [fax]
Hughes [address] [fax]
Rare Medium [address] [fax]
U.S. Trust Company [address] [fax]
Hughes Electronics Corporation C/o General Motors Corporation
767 Fifth Avenue
14th Floor
New York, NY 10153
Attn: Anne Larin, Esq.
Hearst Communications, Inc. [address] [fax]
BayStar Group
BayStar Capital II, LP [address] [fax]
BayStar International II, Ltd.
Superius Securities Group, Inc. Money Purchase [address] [fax]
Plan
John Dealy [address] [fax]
Advan Partners, L.P. [address] [fax]
Michael W. Harris [address] [fax]
Paul Greenwald [address] [fax]
- vii -
SF Capital Partners, Ltd. [address] [fax]
Vernon Investors II, L.L.C. [address] [fax]
A.R. Sanchez, Jr. [address] [fax]
- viii -
SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"Agreement"), dated as of _______, 2003, is hereby entered into by and among XM
Satellite Radio Holdings Inc., a corporation duly organized under the laws of
the State of Delaware (the "Company"); Clear Channel Investments, Inc., a
corporation duly organized under the laws of the State of Nevada ("Clear
Channel"); Columbia XM Radio Partners, LLC, a limited liability company duly
organized under the laws of the Commonwealth of Virginia ("Columbia Radio
Partners"); DIRECTV Enterprises, Inc. a corporation duly organized under the
laws of the State of Delaware ("DIRECTV"); General Motors Corporation, a
corporation duly organized under the laws of the State of Delaware
(collectively, with its Affiliate, OnStar Corporation, "GM"); Hughes Electronics
Corporation, a corporation duly organized under the laws of the State of
Delaware ("Hughes"); Rare Medium Group, Inc., a corporation duly organized under
the laws of the State of Delaware ("Rare Medium"); Madison Dearborn Capital
Partners III, L.P., ("Madison Capital"), Madison Dearborn Special Equity III,
L.P. ("Madison Equity") and Special Advisors Fund I, LLC ("Madison Advisors"
and, collectively with Madison Capital and Madison Equity, each an entity duly
organized under the laws of the State of Delaware, "Madison"); AEA XM Investors
I LLC, AEA XM Investors II LLC, AEA XM Investors IA, LLC and AEA XM Investors
IIA, LLC, each a limited liability company duly organized under the laws of the
State of Delaware (individually or collectively "AEA XM"); Columbia XM Satellite
Partners III, LLC, a limited liability company duly organized under the laws of
the Commonwealth of Virginia ("Columbia Satellite Partners"), Columbia Capital
Equity Partners II (QP), L.P., a limited partnership organized under the laws of
the State of Delaware ("Columbia Equity Partners II"), Columbia Capital Equity
Partners III (QP), L.P., a limited partnership duly organized under the laws of
the State of Delaware ("Columbia Equity Partners III", and collectively with
Columbia Radio Partners, Columbia Equity Partners II and Columbia Satellite
Partners, "Columbia"); American Honda Motor Co., Inc., a corporation duly
organized under the laws of the State of California ("Honda"); Black Bear Fund
I, L.P., a limited partnership duly organized under the laws of the State of
California ("Black Bear I"), Black Bear Fund II, L.L.C., a limited liability
company duly organized under the laws of the State of California ("Black Bear
II"), Black Bear Offshore Master Fund Limited, an exempted company organized
under the laws of the Cayman Islands ("Black Bear Fund", and collectively with
Black Bear I and Black Bear II, "Black Bear"); each of the other Persons
identified on Exhibit A attached hereto (the "Additional Note Purchasers"); R.
Steven Hicks ("Hicks"); and U.S. Trust Company ("U.S. Trust"). Clear Channel,
Columbia Radio Partners, DIRECTV, GM and Madison, each in its capacity as a
holder of securities in the Company other than Series C Convertible Preferred
Stock (as defined below) or Class A Common Stock (as defined below) issuable
upon conversion thereof, are collectively referred to herein as the "Original
Investors." AEA XM, Columbia Satellite Partners, Columbia Equity Partners III,
Columbia Radio Partners, DIRECTV, Honda, Madison Capital and Madison Equity,
each in its capacity as a holder of the Series C Convertible Preferred Stock or
Class A Common Stock issuable upon conversion thereof, are collectively referred
to herein as the "Series C Investors." Black Bear and the Additional Note
Purchasers, each in its or his capacity as a holder of New Notes (as defined
below) or Class A Common Stock issuable upon the conversion thereof, are
collectively referred to herein as the "Note Investors." The Original Investors,
the Series C
1
Investors and the Note Investors, Hicks and U.S. Trust, severally,
and any transferees of registration rights hereunder permitted pursuant to
Section 4.5 are collectively referred to herein as the "Holders." The Company
and the Holders are collectively referred to herein as the "Parties." Motient
Corporation, a corporation duly organized under the laws of the State of
Delaware ("Motient"); the Baron Asset Fund series ("Baron Asset") and the Baron
iOpportunity Fund series ("Baron iOpportunity") of Baron Asset Fund, a business
trust organized under the laws of the Commonwealth of Massachusetts, the Baron
Capital Asset Fund series ("Baron Capital") of Baron Capital Funds Trust, a
business trust organized under the laws of the State of Delaware, and Telcom-XM
Investors, L.L.C., a limited liability company duly organized under the laws of
the State of Delaware ("Telcom"), who were parties to the 2000 Agreement (as
defined below), are becoming parties hereto solely for the purposes of agreeing
to the amendment of the 2000 Agreement by this second amendment and restatement
of this Agreement, which amendment results in Motient, Baron Asset, Baron
iOpportunity, Baron Capital and Telcom ceasing to be parties to this Agreement
and terminating their respective rights and obligations hereunder. Upon
effectiveness of this Agreement, each of Motient, Baron Asset, Baron
iOpportunity, Baron Capital and Telcom shall cease to be a party to this
Agreement and all of its rights and obligations hereunder shall be terminated.
W I T N E S S E T H
WHEREAS, the Original Investors and Motient made investments in the
Company and, other than Motient, now hold Class A Common Stock and Series A
Convertible Preferred Stock (each as hereafter defined);
WHEREAS, the Series C Investors made an investment in the Company
through the purchase of Series C Convertible Redeemable Preferred Stock, par
value $.01 per share (the "Series C Convertible Preferred Stock"), pursuant to a
certain Stock Purchase Agreement, dated July 7, 2000, by and among the Company
and the Series C Investors;
WHEREAS, Motient no longer owns any securities of the Company and has
transferred each of its two demand registration rights to Rare Medium and to
Hughes, respectively;
WHEREAS, Motient transferred its shelf registration rights and
piggyback registration rights to Hughes;
WHEREAS, the Note Investors are investing in the Company and its
wholly-owned subsidiary, XM Satellite Radio Inc., a Delaware corporation ("XM"),
through the purchase of 10% Senior Secured Discount Convertible Notes due 2009
issued by the Company and XM, as joint obligors (the "New Notes"), pursuant to a
certain Note Purchase Agreement, dated December 21, 2002, by and among the
Company, XM and the Note Investors (the "Note Purchase Agreement"), and may
receive additional notes, which will also constitute New Notes, as payment of
certain interest due thereunder;
WHEREAS, GM is acquiring 10% Series GM Senior Secured Convertible
Notes due 2009 issued by the Company and XM, as joint obligors (the "GM Notes"),
in lieu of certain
2
guaranteed payments due to GM during the period from 2003 to 2006 under XM's
Distribution Agreement with GM (the "Distribution Agreement"), a warrant to
purchase 10,000,000 shares of the Class A Common Stock (the "GM Warrant") and
may acquire shares of Class A Common Stock as payment of interest on the GM
Notes, under the terms of a senior secured credit facility with XM (the "GM
Credit Facility") to finance certain revenue share payments owed to GM under the
Distribution Agreement and in lieu of cash in subscriber bounty payments payable
to GM under the terms of the Distribution Agreement;
WHEREAS, U.S. Trust is investing in the Company through the purchase
of 5,555,556 shares of Class A Common Stock pursuant to a certain Purchase
Agreement, dated December 21, 2002, by and between the Company and U.S. Trust
(the "U.S. Trust Purchase").
WHEREAS, the Company has agreed to execute this Agreement to provide
the Holders with certain rights to cause the registration of the Class A Common
Stock held by them or issuable upon conversion of their Series A Convertible
Preferred Stock or Series C Convertible Preferred Stock, exchange of their New
Notes or GM Notes, or exercise of the GM Warrant;
WHEREAS, Sony Electronics, Inc., a Delaware corporation ("Sony"), has
shelf and piggyback registration rights with respect to the shares of Class A
Common Stock issuable upon exercise of the Company's Common Stock Purchase
Warrant No. 1 issued to Sony (the "Sony Warrant"), which rights are to be pari
passu to those of the Original Investors, Hicks has certain registration rights
with respect to the shares of Class A Common Stock issuable upon exercise of the
Company's Common Stock Purchase Warrant No. 4 (the "Hicks Warrant") and U.S.
Trust has certain registration rights with respect to the shares of Class A
Common Stock acquired pursuant to the U.S. Trust Purchase; and
WHEREAS, this Agreement is to amend and restate that certain Amended
and Restated Registration Rights Agreement, dated as of August 8, 2000, by and
among the Company, Motient Corporation, the Original Investors and the Series C
Investors (the "2000 Agreement").
NOW, THEREFORE, in consideration of the foregoing and the promises and
covenants contained herein, the Parties agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. The following terms, as used herein, have the
following meanings:
"Accredited Investor" has the meaning specified in Rule 501 of
Regulation D promulgated under the Securities Act.
"Additional Demand Registration" has the meaning specified in Section
2.1(e).
3
"Agreement" means this Second Amended and Restated Registration Rights
Agreement (including any Schedules hereto), as it may from time to time be
amended, supplemented or modified in accordance with its terms.
"Business Day" means any day other than a Saturday, Sunday or any
other day on which commercial banks are authorized or required by law to be
closed in New York City or the District of Columbia.
"Capital Stock" means any and all of the Company's shares, interests,
warrants, options, rights to acquire equity or equity-linked securities of the
Company, participations or other equivalents (however designated, whether voting
or non-voting) in equity of the Company, whether now outstanding or issued
subsequently hereto, including, without limitation, all series and classes of
Common Stock and preferred stock of the Company, and all convertible securities.
"Class A Common Stock" means the Class A Common Stock, par value $0.01
per share, of the Company, having one (1) vote per share.
"Commission" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Common Stock" means all classes and series of the common stock of the
Company, any stock into which such common stock shall have been changed or
converted or any stock resulting from any capital reorganization or
reclassification of such common stock, and all other stock of any class or
classes (however designated) of the Company the holders of which have the right,
without limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of dividends and
distributions of any shares entitled to preference.
"Demand Registration" has the meaning specified in Section 2.1(a).
"End of Suspension Notice" has the meaning specified in Section
2.6(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, all as the same shall be
in effect at the time.
"Fair Market Value" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy.
If there is any dispute as to the Fair Market Value of any security of the
Company between the Holder who holds such security and the Company, the Fair
Market Value of such security shall be determined by a firm of independent
appraisers of national standing valuing such security on an as-converted basis.
"GM Registrable Securities" means the shares of Class A Common Stock
issued or issuable (i) upon exchange of, or payment of interest on, the GM
Notes, (ii) as payment of up to $35,000,000 in subscriber bounty payments
payable to GM under the terms of the Distribution Agreement, (iii) upon exercise
of the GM Warrant, and (iv) as payment of principal or interest under the GM
Credit Facility.
4
"High Yield Debt" means secured or unsecured debt securities issued by
the Company or a wholly owned subsidiary of the Company in a registered public
offering or an offering to Qualified Institutional Buyers and/or institutional
Accredited Investors under Rule 144A of the Securities Act in providing gross
proceeds of at least $50 million after the date hereof, with or without attached
warrants or quasi-equity rights issued by the Company.
"Losses" has the meaning specified in Section 3.1.
"Managing Underwriters" has the meaning specified in Section 2.1(c).
"Person" means any individual, partnership, corporation, joint
venture, limited liability company, association, trust, unincorporated
organization, or a government or agency or political subdivision thereof.
"Piggyback Registration" has the meaning specified in Section 2.3(a).
"Qualified Institutional Buyer" has the meaning specified in Rule 144A
promulgated under the Securities Act.
"Registrable Securities" means the shares of Class A Common Stock
outstanding from time to time and those issued or issuable (i) upon conversion
of the Series A Convertible Preferred Stock, (ii) upon conversion of the Series
C Convertible Preferred Stock, (iii) upon conversion of the New Notes, (iv) as
GM Registrable Securities, (v) upon exercise of the Hicks Warrant, and (vi) at
closing of the U.S. Trust Purchase, that may be available for registration from
time to time pursuant to the terms hereof, or, in each case, any other shares of
Class A Common Stock issued in respect thereof; provided, however, that such
securities shall cease to be Registrable Securities when (x) a Registration
Statement with respect to the registration of such securities shall have been
declared effective under the Securities Act and such securities shall have been
disposed of pursuant to such Registration Statement, (y) the Holder of such
securities may sell all of such securities pursuant to Rule 144(k) under the
Securities Act or (z) such Holder may otherwise sell such securities without
restriction pursuant to Rule 144 under the Securities Act. All references to
"Registrable Securities" held by a Holder shall include all Registrable
Securities issuable to such Holder upon conversion of any Convertible Securities
(as such term is defined in the Shareholders Agreement) held by such Holder.
"Registration Statement" means a registration statement (other than a
registration statement on Form S-4 or S-8) filed with the Commission pursuant to
the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Series A Convertible Preferred Stock" means the Series A Convertible
Preferred Stock, par value $1.00 per share, of the Company, having zero (0)
votes per share.
"Series A Holders" means each of Clear Channel, Columbia Radio
Partners, DIRECTV, GM, Hughes, Madison and Rare Medium, each in its capacity as
a holder of
5
securities of the Company other than the Series C Convertible Preferred Stock or
Common Stock issuable upon conversion thereof, severally, and any transferees of
registration rights permitted pursuant to Section 4.5.
"Series C Holders" means each of AEA XM, Columbia Satellite Partners,
Columbia Equity Partners, Columbia Radio Partners, DIRECTV, Honda, Madison
Capital and Madison Equity, each in its capacity as a holder of the Series C
Convertible Preferred Stock or Common Stock issuable upon conversion thereof,
severally, and any transferees of registration rights permitted pursuant to
Section 4.5.
"Series C Convertible Preferred Stock" means the Company's Series C
Convertible Redeemable Preferred Stock, par value $.01 per share, such series
having the same voting rights as the Class A Common Stock determined on an as
converted basis.
"Shareholders Agreement" means that certain Second Amended and
Restated Shareholders and Noteholders Agreement, dated on or about the date
hereof, by and among the Parties hereto other than Hicks and U.S. Trust.
"Shelf Registration" has the meaning specified in Section 2.2(a).
"Suspension Event" has the meaning specified in Section 2.6(a).
"Suspension Notice" has the meaning specified in Section 2.6(b).
"TCM Group" means Columbia and Madison, collectively.
"Underwritten Offering" has the meaning specified in Section 2.1(c).
ARTICLE II.
REGISTRATION RIGHTS
Section 2.1 Demand Registrations.
(a) Right to Demand.
(i) Series A Holders. Any Series A Holder may notify the Company
that it intends to offer to or cause to be offered for public sale all or any
portion of the Registrable Securities held by or issuable to it (a "Series A
Holder Demand Registration"); then, subject to the rights of the Company set
forth in Section 2.1(b) and the registration rights of each other Holder set
forth in Section 2.3, the Company will use its best efforts to cause such
Registrable Securities as may be requested by such Series A Holder to be
registered under the Securities Act, pursuant to a Registration Statement on
such form as may then be available to the Company for sale in an underwritten
offering or a non-underwritten offering, as elected by such Series A Holder, and
to keep such Registration Statement effective until the earlier of: (x) the date
six months from the date of effectiveness thereof, or (y) the date on which all
of such Series A Holder's Registrable Securities registered thereunder are sold;
provided, however, that the
6
requesting Series A Holder must request registration of Registrable Securities
with a Fair Market Value, on the date of such request, of at least $10 million
(unless the Fair Market Value of all of the Registrable Securities held by or
issuable to such Series A Holder is less than $10 million, in which event all of
the Registrable Securities held by or issuable to such Series A Holder must be
included in such registration in order to effect such registration). Subject to
the rights of each Holder as set forth in Section 2.1(e), each of Clear Channel,
DIRECTV, GM, Hughes, Rare Medium and the TCM Group (which, for purposes of this
Section 2.1(a), shall be considered a single "Series A Holder" and which shall
act at the direction of holders of a majority in interest of the Registrable
Securities of such group) shall be entitled to one Series A Holder Demand
Registration as provided herein. The Company may postpone the filing of any
Registration Statement required under this Section 2.1 for a reasonable period
of time, not to exceed 120 days following receipt by the Company of the Series A
Holder's request, if a Suspension Event (as hereinafter defined) has occurred
and is continuing.
(ii) Series C Holders. The Series C Holders, acting as a class by
written consent of the holders of at least twenty percent (20%) of the Series C
Convertible Preferred Stock constituting Registrable Securities, may notify the
Company that they intend to offer to or cause to be offered for public sale all
or any portion of the Registrable Securities held by or issuable to them (a
"Series C Holder Demand Registration"); then, subject to the rights of the
Company set forth in Section 2.1(b) and the registration rights of each other
Holder set forth in Section 2.3, the Company will use its best efforts to cause
such Registrable Securities as may be requested by the Series C Holders to be
registered under the Securities Act, pursuant to a Registration Statement on
such form as may then be available to the Company for sale in an underwritten
offering or a non-underwritten offering, as elected by the Series C Holders, and
to keep such Registration Statement effective until the earlier of: (x) the date
six months from the date of effectiveness thereof, or (y) the date on which all
of the Series C Holders' Registrable Securities registered thereunder are sold;
provided, however, that the Series C Holders must request registration of
Registrable Securities with a Fair Market Value, on the date of such request, of
at least $10 million (unless the Fair Market Value of all of the Registrable
Securities held by or issuable to the Series C Holders is less than $10 million,
in which event all of the Registrable Securities held by or issuable to the
Series C Holders must be included in such registration in order to effect such
registration). Subject to the rights of each Holder as set forth in Sections
2.1(e) and 2.1(j), the Series C Holders shall be entitled to two Series C Demand
Registrations as provided herein. If the Series C Holder Demand Registration is
requested by the holders of less than all of the Series C Holders, the Company
shall send prompt written notice to the other Series C Holders and if such other
Series C Holders also notify the Company that they intend to offer to or cause
to be offered for public sale all or any portion of the Registrable Securities
held by or issuable to them, such other Series C Holders shall have an equal
right to the original requesting Series C Holders to have Registrable Securities
registered under the Securities Act. The Company may postpone the filing of any
Registration Statement required under this Section 2.1 for a reasonable period
of time, not to exceed 120 days following receipt by the Company of the Series C
Holders' request, if a Suspension Event (as hereinafter defined) has occurred
and is continuing.
(iii) Note Investors. The Note Investors (for purposes of this
paragraph 2.1(a)(iii), Hicks and U.S. Trust each shall be considered a Note
Investor), acting as a class by
7
written consent of Note Investors holding at least 25% of the Registrable
Securities held by or issuable to Note Investors, may notify the Company that
they intend to offer to or cause to be offered for public sale all or any
portion of the Registrable Securities held by or issuable to them (a "Note
Investor Demand Registration," and together with a Series A Holder Demand
Registration and a Series C Holder Demand Registration, a "Demand
Registration"); then, subject to the rights of the Company set forth in Section
2.1(b) and the registration rights of each other Holder set forth in Section
2.3, the Company will use its best efforts to cause such Registrable Securities
as may be requested by the Note Investors to be registered under the Securities
Act, pursuant to a Registration Statement on such form as may then be available
to the Company for sale in an underwritten offering or a non-underwritten
offering, as elected by the Note Investors, and to keep such Registration
Statement effective until the earlier of: (x) the date six months from the date
of effectiveness thereof, or (y) the date on which all of the Note Investors'
Registrable Securities registered thereunder are sold; provided, however, that
the Note Investors must request registration of Registrable Securities with a
Fair Market Value, on the date of such request, of at least $10 million (unless
the Fair Market Value of all of the Registrable Securities held by or issuable
to the Note Investors is less than $10 million, in which event all of the
Registrable Securities held by or issuable to the Note Investors must be
included in such registration in order to effect such registration). Subject to
the rights of each Holder as set forth in Section 2.1(e), the Note Investors
shall be entitled to two Note Investor Demand Registrations as provided herein.
If the Note Investor Demand Registration is requested by less than all of the
Note Investors holding Registrable Securities, the Company shall send prompt
written notice to the other Note Investors, and if such other Note Investors
also notify the Company that they intend to offer to or cause to be offered for
public sale all or any portion of the Registrable Securities held by or issuable
to them, such other Note Investors shall have an equal right to the original
requesting Note Investors to have Registrable Securities registered under the
Securities Act. The Company may postpone the filing of any Registration
Statement required under this Section 2.1 for a reasonable period of time, not
to exceed 120 days following receipt by the Company of the Note Investors'
request, if a Suspension Event (as hereinafter defined) has occurred and is
continuing.
(iv) GM. GM may notify the Company that it intends to offer to or
cause to be offered for public sale the GM Registrable Securities held by or
issuable to it; then, subject to the rights of the Company set forth in Section
2.1(b) and the registration rights of each other Holder set forth in Section
2.3, the Company will use its best efforts to cause such GM Registrable
Securities as may be requested by GM to be registered under the Securities Act
(a "GM Demand Registration"), pursuant to a Registration Statement on such form
as may then be available to the Company for sale in an underwritten offering or
a non-underwritten offering, as elected by GM, and to keep such Registration
Statement effective until the earlier of: (x) the date six months from the date
of effectiveness thereof, or (y) the date on which all of the GM Registrable
Securities registered thereunder are sold; provided, however, that GM must
request registration of GM Registrable Securities with a Fair Market Value, on
the date of such request, of at least $10 million (unless the Fair Market Value
of all GM Registrable Securities is less than $10 million, in which event all of
the GM Registrable Securities must be included in such registration in order to
effect such registration). Subject to the rights of each Holder as set forth in
Section 2.1(e), GM shall be entitled to two GM Demand Registrations as provided
herein. The Company
8
may postpone the filing of any Registration Statement required under this
Section 2.1 for a reasonable period of time, not to exceed 120 days following
receipt by the Company of GM's request, if a Suspension Event (as hereinafter
defined) has occurred and is continuing.
(b) Company Priority on Registration. Notwithstanding any other provision
of this Agreement to the contrary, upon receipt by the Company of a request for
a Demand Registration from a Holder or a Demand Shelf Registration (but not a
Special Demand Registration, as defined in Section 2.1(j), or a Noteholder Shelf
Registration, as defined in Section 2.2(b)), the Company shall have the right,
within 30 days of receipt of such notice, to notify such Holder of the Company's
intention to commence a primary public offering of securities for its own
account (other than a registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 or any other similar rule of the
Commission under the Securities Act is applicable) by the filing of a
Registration Statement with the Commission and, in such a case, the Company
shall not have any obligation to honor the request to register the shares held
by such notifying Holder; in which event such request shall be deemed never to
have been made; provided, however, that the Company shall commence such public
offering by the filing of such a Registration Statement within 60 days of so
notifying that Holder. In addition, except as set forth in Section 2.1(j), the
Company shall not be required to cause a Registration Statement demanded
pursuant to this Section 2.1 or a Demand Shelf Registration to become effective
prior to 120 days following the effective date of a Registration Statement
initiated by the Company, if the request for registration has been received by
the Company subsequent to the giving of written notice by the Company, made in
good faith, to the Holders to the effect that the Company is commencing to
prepare a company-initiated Registration Statement (other than a registration
effected solely to implement an employee benefit plan or a transaction to which
Rule 145 or any other similar rule of the Commission under the Securities Act is
applicable); provided, however, that the Company shall use its best efforts to
achieve such effectiveness promptly.
(c) Selection of Managing Underwriters. The offering of Registrable
Securities pursuant to any Registration Statement filed under this Article II
shall be in the form of an underwritten offering ("Underwritten Offering"), if
the Holders of a majority of the Registrable Securities requested to be
registered in such offering so elect. In such event, the Company shall select
one or more managing underwriters to act in connection with such Underwritten
Offering (the "Managing Underwriters"), which Managing Underwriters shall be
approved by the Holder initiating such offering, which approval shall not be
unreasonably withheld. Any request by the Holders of Registrable Securities for
an Underwritten Offering shall, in addition to specifying the number of shares
requested to be registered, specify the anticipated per share price range for
such offering.
(d) Priority on Underwritten Offering. If the Managing Underwriters for an
Underwritten Offering demanded by the Holders pursuant to this Section 2.1
(except as set forth in Section 2.1(j)), notify the Company and such Holders
that in their opinion the number of Registrable Securities requested to be
included in such offering (together with any other shares of Common Stock which
the Company is required to include in such registration) exceeds the number of
shares which can be sold in such offering in an orderly manner within a price
range acceptable to the Holders of the majority of the Registrable Securities
requested to be included in such offering, the Company will include in such
offering the maximum amount of Registrable
9
Securities requested to be included pursuant to this Agreement, which, in the
opinion of the Managing Underwriters, can be sold in such offering in an orderly
manner within an acceptable price range, and such amount shall be allocated pro
rata among the Holders thereof on the basis of the number of shares of
Registrable Securities requested to be included in such registration by each
such Holder pursuant to Section 2.1(a) and Section 2.3(a); provided, however,
that the right of each of Hughes and Rare Medium to register its Registrable
Securities pursuant to this Section 2.1(d) shall be subordinate to the rights of
the other Holders hereunder.
(e) Additional Demand. In the event that, in connection with any exercise
by any Holder of a Demand Registration, other Holders exercise Piggyback
Registration rights as provided in Section 2.3, and following such exercise the
Managing Underwriters in an Underwritten Offering notify the Company that in
their opinion the number of Registrable Securities requested to be included in
such offering exceeds the number of shares which can be sold in an orderly
manner in such offering within a price range acceptable to the initiating Holder
such that the initiating Holder is unable to sell at least 75% of the number of
shares originally requested to be registered by it, such initiating Holder shall
be entitled to an additional Demand Registration exercisable at such later time
as such Holder may elect (an "Additional Demand Registration"). If such
Additional Demand Registration is exercised and such initiating Holder is unable
to sell in such offering, cumulatively with the number of shares sold in the
first offering requested by it, at least 75% of the number of shares originally
requested to be registered by it, such initiating Holder shall be entitled to
successive Additional Demand Registrations until it has sold in all such
Additional Demand Registrations, cumulatively with the first offering requested
by it, at least 75% of the amount originally requested to be registered by it.
(f) Rare Medium and Hughes Registration Rights. Each of Rare Medium and
Hughes shall be entitled to exercise one Demand Registration, subject to the
rights of the Company set forth in Section 2.1(b) and subject to the right of
each other Holder to exercise Piggyback Registration rights in connection with a
demand by either of Rare Medium or Hughes; provided that each other Holder shall
have priority over Rare Medium and Hughes (i) with respect to registration of
its Registrable Securities in such offering and (ii) with respect to
registration of Registrable Securities pursuant to Section 2.2. In the event
that either of Rare Medium or Hughes, in a Demand Registration it has initiated,
is not able to sell at least 75% of the number of shares originally requested to
be registered by it, then it shall be entitled to an Additional Demand
Registration exercisable at such later time as it may elect. If such Additional
Demand Registration is exercised and Rare Medium or Hughes, as the case may be,
is unable to sell in such offering, cumulatively with the number of shares sold
in the first offering requested by it, at least 75% of the number of shares
originally requested to be registered by it, then it shall be entitled to
successive Additional Demand Registrations until it has sold in all such
Additional Demand Registrations, cumulatively with the first offering requested
by it, at least 75% of the amount originally requested to be registered by it.
(g) Inclusion by the Company of its Common Stock in an Underwritten
Offering. If the Managing Underwriters for an Underwritten Offering notify the
Company that in their opinion the number of Registrable Securities to be
included in an Underwritten Offering is less than the number of shares which can
be sold in an orderly manner in such offering within a price range acceptable to
the Holder initiating such offering, the Company may include in such
registration,
10
on its own behalf, up to the greatest number of shares of Common Stock which in
the opinion of the Managing Underwriters can be sold (together with the
Registrable Securities demanded to be included in such registration) in an
orderly manner within the price range acceptable to the Holder initiating such
offering.
(h) Participation in Underwritten Registrations. Notwithstanding any other
provision of this Section 2.1 or Section 2.3 to the contrary, no Person may
participate in any Underwritten Offering hereunder unless such Person: (i)
agrees to sell such Person's securities on the basis provided in the applicable
underwriting arrangements, which shall contain customary terms and conditions,
and (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements; provided, however, that no Holder of
Registrable Securities included in any Underwritten Offering shall be required
to make any representations or warranties to the Company or the underwriters
other than representations and warranties regarding such Holder and such
Holder's intended method of distribution and no Holder shall be required to
undertake joint or joint and several obligations with any other Person.
(i) Expenses of Underwriting Offering. The Company shall pay any and all
registration expenses incident to the filing of each Registration Statement or
otherwise incident to the performance by the Company of, or its compliance with,
its obligations under this Section 2.1, including the fees of one counsel
retained by the Holders, up to a maximum of $75,000 per Demand Registration.
Each Holder shall pay all underwriting discounts and commissions relating to the
sale or disposition of such Holder's Registrable Securities included in the
Underwritten Offering.
(j) Special Demand Right Following Change of Control. Within 90 days
following a Change of Control as defined in the Certificate of Designation of
the Series C Convertible Preferred Stock (a "Change of Control"), the Series C
Holders, acting as a class by written consent of the holders of at least twenty
percent (20%) of the Series C Convertible Preferred Stock constituting
Registrable Securities, may notify the Company that they intend to offer to or
cause to be offered for public sale all or any portion of the Registrable
Securities issued or issuable upon conversion or exchange of the Series C
Convertible Preferred Stock held by them (a "Special Demand Registration"),
which shall be in addition to and not count as any other Demand Registration
hereunder, then the Company will use its best efforts to cause such Registrable
Securities as may be requested by the Series C Holders to be registered under
the Securities Act, pursuant to a Registration Statement on such form as may
then be available to the Company for sale in an underwritten offering or a
non-underwritten offering, as elected by the Series C Holders, and to keep such
Registration Statement effective until the earlier of: (x) the date six months
from the date of effectiveness thereof, or (y) the date on which all of such
Series C Holders' Registrable Securities registered thereunder are sold;
provided, however, that the Series C Holders must request registration of such
Registrable Securities with a Fair Market Value, on the date of such request, of
at least $10 million (unless the Fair Market Value of all of such Registrable
Securities held by or issuable to the Series C Holders is less than $10 million,
in which event all of such Registrable Securities held by or issuable to the
Series C Holders must be included in such registration in order to effect such
registration). A Special Demand Registration shall be treated like a Demand
Registration for purposes of this agreement, except that the rights
11
of the Company set forth in Section 2.1(b), the registration rights of other
Holders set forth in Section 2.3, the Company's rights to postpone the filing of
any Registration Statement if a Suspension Event has occurred, and the various
priority provisions and Managing Underwriter cut-backs shall not apply to a
Special Demand Registration. The Series C Holders shall be entitled to one
Special Demand Registration with respect to each Change of Control. If the
Special Demand Registration is requested by less than all of the Series C
Holders, the Company shall send prompt written notice to the other Series C
Holders, and if such other Series C Holders also notify the Company that they
intend to offer to or cause to be offered for public sale all or any portion of
such Registrable Securities held by or issuable to them, such other Series C
Holders shall have an equal right to the original requesting Series C Holders to
have such Registrable Securities registered under the Securities Act.
Section 2.2 Shelf Registration.
(a) Demand Shelf Registration. At the request of the Holders (for purposes
of this Section 2.2, each of Sony and Hughes shall be considered a "Holder")
holding Registrable Securities having a Fair Market Value of not less than $10
million (collectively, the "Requesting Holders"), the Company shall notify (such
notice a "Shelf Notification") each Holder not a Requesting Holder of the
Company's intention to prepare and file with the Commission a Registration
Statement for an offering to be made on a delayed or a continuous basis pursuant
to Rule 415 (or any appropriate similar rule that may be adopted by the
Commission) under the Securities Act covering all or a portion of the
Registrable Securities, and shall thereafter prepare and file such Registration
Statement (the "Demand Shelf Registration", and together with the Noteholder
Shelf Registration, as defined in Section 7.2(b), the "Shelf Registration").
Each Holder not a Requesting Holder shall notify the Company within ten (10)
days of receipt of a Shelf Notification if it intends to include Registrable
Securities held by it in such Demand Shelf Registration; otherwise, such Holder
shall have no right to include its Registrable Securities in such Demand Shelf
Registration. Each Shelf Registration shall be on a Form S-3 or another
appropriate form (unless the Holders of the Registrable Securities offered
thereby reasonably request a specific form) permitting registration of such
Registrable Securities for resale by the Holders in the manner or manners
reasonably designated by them (including, without limitation, one or more
underwritten offerings). For purposes of this Section 2.2, the term "Registrable
Securities" shall include the shares of Class A Common Stock issued upon
exercise of the Sony Warrant.
(b) Noteholder and GM Shelf Registrations.
(i) The Company shall use its reasonable best efforts to prepare
and file with the Commission, within five Business Days after the date hereof,
or if the Company's financial statements are not current under Securities Act
rules, no later than March 15, 2003 (the "Required Filing Date"), a Registration
Statement (the "Noteholder Shelf Registration") for an offering to be made on a
delayed or a continuous basis pursuant to Rule 415 (or any appropriate similar
rule that may be adopted by the Commission) under the Securities Act. The
Noteholder Shelf Registration shall cover such Registrable Securities held or
issuable to the Note Investors as the Note Investors shall have notified the
Company, at least ten calendar days prior to the date hereof, they intend to
include in the Noteholder Shelf Registration; otherwise, no Holder shall
12
have the right to include its Registrable Securities in the Noteholder Shelf
Registration. The Noteholder Shelf Registration shall be on a Form S-3 or
another appropriate form (unless the Holders of the Registrable Securities
offered thereby reasonably request a specific form) permitting registration of
such Registrable Securities for resale by the Holders in the manner or manners
reasonably designated by them (including, without limitation, an underwritten
offering).
(ii) The Company shall use its reasonable best efforts to prepare
and file with the Commission, within 180 days after the date hereof, an initial
Registration Statement (the "GM Shelf Registration") for an offering to be made
on a delayed or a continuous basis pursuant to Rule 415 (or any appropriate
similar rule that may be adopted by the Commission) under the Securities Act.
The initial GM Shelf Registration shall cover such Registrable Securities that
are issuable to GM as payment of interest on the GM Notes and under the GM
Credit Facility and as subscriber bounty payments under the Distribution
Agreement ("GM Shelf Securities") and as GM shall have notified the Company, at
least ten calendar days prior to the date of filing of the GM Shelf
Registration, they intend to include in the GM Shelf Registration. The Company
shall use its reasonable best efforts to add to the GM Shelf Registration, by
amendment or filing a new Registration Statement, additional GM Shelf Securities
as GM shall notify the Company from time to time they intend to include in the
GM Shelf Registration. The GM Shelf Registration shall be on a Form S-3 or
another appropriate form (unless GM reasonably requests a specific form)
permitting registration of such Registrable Securities for resale by the Holders
in the manner or manners reasonably designated by them (including, without
limitation, an underwritten offering). The Company shall use its reasonable best
efforts to update, amend and keep current the GM Shelf Registration, in
accordance with applicable law and the rules and regulations of the Commission.
(c) Effectiveness. The Company shall use its reasonable efforts to cause
any Shelf Registration to become effective under the Securities Act as soon as
practicable following the date of filing, but in any event within 90 days
following the date of filing. Subject to the requirements of the Securities Act,
including, without limitation, requirements relating to updating prospectuses
through post-effective amendments or otherwise, the Company shall use reasonable
efforts to keep each Shelf Registration continuously effective under the
Securities Act until the date on which all of the Registrable Securities
registered thereunder cease to be Registrable Securities (the "Effectiveness
Period").
(d) Priority in Underwritten Offering from Shelf Registration. If any of
the Registrable Securities to be registered pursuant to a Shelf Registration are
to be sold in an Underwritten Offering, and if the Managing Underwriters notify
the Company and the Holders of such Registrable Securities that in their
opinion, the number of Registrable Securities requested to be included in such
offering exceeds the number of shares which can be sold in such offering in an
orderly manner within an acceptable price range, there shall be included in such
Underwritten Offering the maximum amount of Registrable Securities requested to
be included, pursuant to this Agreement, which in the opinion of the Managing
Underwriters can be sold in an orderly manner within an acceptable price range,
and such amount shall be allocated pro rata among the Holders of such
Registrable Securities requested to be included in such Underwritten Offering on
the basis of the number of shares of Registrable Securities requested to be
included in such
13
registration by each such Holder. The right of Hughes to register its
Registrable Securities pursuant to this Section 2.2(c) shall be subordinate to
the rights of the other Holders hereunder.
(e) Number of Shelf Registrations. The number of Demand Shelf
Registrations under Section 2.2(a) shall be limited to five, provided that the
Company shall not be required to effect more than two Underwritten Offerings
pursuant to Section 2.2(a). The number of Noteholder Shelf Registrations under
Section 2.2(b) shall be limited to one.
(f) Expenses of Shelf Registration. The Company or Persons other than the
Holders shall pay any and all registration expenses incident to the filing of
each Registration Statement or otherwise incident to the performance by the
Company of or its compliance with, its obligations under this Section 2.2,
including the fees of one counsel retained by the Holders, up to a maximum of
$75,000 per Shelf Registration. Each Holder shall pay all underwriting discounts
and commissions relating to the sale or disposition of such Holder's Registrable
Securities included in a Shelf Registration.
(g) Upon the occurrence of any Event (as defined below) and on every 180
day anniversary thereof until the applicable Event is cured, as partial relief
for the damages suffered therefrom by the Holders (which remedy shall not be
exclusive of any other remedies available at law or in equity), the interest
rate on the New Notes and the GM Notes shall be increased, as liquidated damage
and not as a penalty, by 0.5% per annum for the first 180-day period and an
additional 0.5% per annum for each consecutive additional 180-day period until
the Event is cured. The liquidated damages payable pursuant to the terms hereof
shall apply on a pro-rata basis for any portion of a month prior to the cure of
an Event. For such purposes, each of the following shall constitute an "Event":
(i) the Noteholder Shelf Registration is not filed on or prior to the
Required Filing Date, which event shall be deemed to continue until the
Noteholder Shelf Registration is filed;
(ii) the Noteholder Shelf Registration is not declared effective by the
Commission within 180 days after the date on which it was initially filed
with the Commission, which shall be deemed to continue until the
Noteholder Shelf Registration is so declared effective;
(iii) after the effective date of the Noteholder Shelf Registration, any
period during which Holders whose Registrable Securities are covered by
the Noteholder Shelf Registration are not permitted to sell those
Registrable Securities under the Noteholder Shelf Registration for any
reason except (A) as a result of a suspension permitted pursuant to
Section 2.6 or (B) for five or more trading days, whether or not
consecutive, in any consecutive 365-day period for which such sales are
not permitted other than as a result of a suspension pursuant to Section
2.6;
(iv) the conversion rights of the Holders pursuant to the Note Purchase
Agreement are suspended for any reason, which shall be deemed to continue
until such suspension is lifted;
14
(v) the Common Stock is not listed or quoted, or is suspended from
trading, on the Nasdaq National Market; the Nasdaq SmallCap Market, the
New York Stock Exchange or the American Stock Exchange (each, an
"Eligible Market") for a period of more than five consecutive trading
days, which shall be deemed to continue until the Common Stock is so
listed or quoted or until such suspension is lifted;
(vi) after the effective date of the Noteholder Shelf Registration, any
Registrable Securities covered by the Noteholder Shelf Registration are
not listed on an Eligible Market.
Section 2.3 Piggyback Registration Rights.
(a) Requests for Piggyback Registration. If, at any time, the Company
proposes to effect a registered offering of its Common Stock (including pursuant
to Section 2.1 and Section 2.2, but excluding (i) a Special Demand Registration,
and (ii) the Noteholder Shelf Registration), the Company will give prompt
written notice to all Holders (for purposes of this Section 2.3, each of Sony
and Hughes shall be considered a "Holder") of its intention to effect such a
registration and, subject to Section 2.3(b) and Section 2.3(c), will include in
such registration all Registrable Securities with respect to which the Company
has received written requests for inclusion therein within fifteen (15) days
after the date the Company's notice is given (a "Piggyback Registration");
provided, however, that the Holders shall not have any right to cause a
Piggyback Registration in connection with any offering of High Yield Debt or a
Special Demand Registration or the Noteholder Shelf Registration. For purposes
of this Section 2.3, the term "Registrable Securities" shall include the shares
of Class A Common Stock issued upon exercise of the Sony Warrant.
(b) Priority on Primary Registrations. If, in connection with any proposed
Piggyback Registration in connection with an Underwritten Offering initiated by
the Company, the Managing Underwriters notify the Company that in their opinion
the number of shares of securities requested to be included in such offering
exceeds the number which can be sold in such offering in an orderly manner
within a price range acceptable to the Company, the Company will include in such
offering (i) first, the securities the Company proposes to sell and (ii) second,
the number of the Registrable Securities requested to be included pursuant to
this Agreement, pro rata among the Holders thereof on the basis of the number of
shares requested to be included in such registration by each such Holder, in
each case up to the greatest number of shares of Common Stock which, in the
opinion of the Managing Underwriters, can be sold in an orderly manner in the
price range of such offering; provided, however, that Hughes shall not be
entitled to participate in any such Piggyback Registration until all shares of
Registrable Securities held by other Holders which have been requested to be
included in such Piggyback Registration have been so included.
(c) Priority on Secondary Registrations. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of the Company's
securities (other than the Registrable Securities), and the Managing
Underwriters notify the Company that in their opinion the number of shares of
securities requested to be included in such offering exceeds the number which
can be sold in an orderly manner within an acceptable price range, except as set
forth in
15
Section 2.1(j), the Company will include in such offering the maximum amount of
Registrable Securities requested to be included pursuant to this Agreement,
which, in the opinion of the Managing Underwriters, can be sold in such offering
in an orderly manner within an acceptable price range, and such amount shall be
allocated (1) first, pro rata among the Holders thereof on the basis of the
number of shares of Registrable Securities requested to be included in such
registration by each such Holder pursuant to Section 2.1(a), and (2) second, pro
rata among the Holders thereof on the basis of the number of shares of
Registrable Securities requested to be included in such registration by each
such Holder pursuant to Section 2.3(a); provided, however, that the initiating
Holder shall retain its rights under Section 2.1(e) and that Hughes' right to
register its Registrable Securities pursuant to this Section 2.3(c) shall be
subordinate to the rights of the other Holders hereunder.
(d) Participation in Piggyback Registrations. Notwithstanding any other
provision of this Section 2.3 to the contrary, no Person may participate in any
Piggyback Registration hereunder unless such Person: (i) agrees to sell such
Person's securities on the basis provided in the applicable underwriting
arrangements, which shall contain customary terms and conditions, and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements; provided, however, that no Holder of Registrable
Securities included in any Piggyback Registration shall be required to make any
representations or warranties, jointly or severally, to the Company or the
underwriters other than representations and warranties regarding such Holder and
such Holder's intended method of distribution, and no Holder shall be required
to undertake joint or joint and several obligations with any other Person.
(e) Expenses of Piggyback Registration. The Company or Persons other than
the Holders shall pay any and all registration expenses incident to the filing
of each Registration Statement or otherwise incident to the performance by the
Company of or its compliance with, its obligations under this Section 2.3. Each
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Registrable
Securities included in the Piggyback Registration and the fees of any counsel
retained by such Holder in connection therewith.
Section 2.4 Registration Procedures. The Company hereby covenants and
agrees that it shall:
(a) perform its obligations with respect to a Registration Statement
pursuant to Section 2.1, Section 2.2 or Section 2.3 hereof and effect or cause
to be effected the registration of the Registrable Securities under the
Securities Act to permit the sale of such Registrable Securities by the Holders
in accordance with their intended method or methods of distribution, and that it
shall prepare and file with the Commission a Registration Statement with respect
to such Registrable Securities and use its best efforts to cause such
Registration Statement to become effective (provided that, before filing a
Registration Statement or prospectus or any amendments or supplements thereto,
it will furnish to one counsel selected by each Holder participating in such
registration (each of Clear Channel, DIRECTV, Hughes, Rare Medium and the TCM
Group shall, for such purposes, be considered a single "Holder;" the Series C
Investors shall, for such purposes, be considered a single "Holder" and, in the
case of TCM Group and the
16
Series C Investors shall act at the direction of holders of a majority in
interest of the Registrable Securities of such group; GM shall, for such
purposes, be considered a single "Holder;" and the Note Investors, Hicks and
U.S. Trust shall, for such purposes, be considered a single "Holder" and shall
act at the direction of holders of a majority in interest of the Registrable
Securities held by the Note Investors) copies of all such documents proposed to
be filed, which documents will be subject to the review of such counsel, and it
will incorporate in such Registration Statement the reasonable comments of such
counsel not inconsistent with the Company's disclosure obligations under
applicable securities laws;
(b) prepare and file with the Commission such amendments and supplements
to such Registration Statement and the prospectus used in connection therewith
as may be necessary to keep such Registration Statement effective for the period
required hereunder (or if no period is so required, a period of not less than
one hundred eighty (180) days or such shorter period which is sufficient to
complete the distribution of the securities registered under the Registration
Statement) and comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such Registration Statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement;
(c) furnish to each seller of Registrable Securities, the Managing
Underwriters, if any, and their respective counsel, prior to the filing thereof
with the Commission, such number of copies of such Registration Statement, each
amendment and supplement thereto, the prospectus included in such Registration
Statement (including each preliminary prospectus) and such other documents as
such seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller and to use its best efforts to
reflect in each such document, when so filed with the Commission, such comments
as the sellers of Registrable Securities or their counsel shall reasonably
propose;
(d) use its best efforts to comply with the requirements of any applicable
blue sky laws of such jurisdictions as any seller reasonably requests and do any
and all other acts and things which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller (provided, however, that the Company
will not be required to: (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subparagraph, (ii) subject itself to taxation in any such jurisdictions, or
(iii) consent to general service of process in any such jurisdiction);
(e) notify each seller of such Registrable Securities as promptly as
practicable in any of the following circumstances: (i) at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such Registration Statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading; (ii) when a Registration Statement and any
amendment thereto has been filed with the Commission and when the Registration
Statement or any post-effective amendment thereto has become effective; (iii) of
any request by the Commission for amendment
17
or supplements to the Registration Statement or the prospectus included therein
or for additional information; (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; and (v) the receipt by the
Company of any notification with respect to the suspension of the qualification
of the securities included therein for sale in any jurisdiction or the
initiation of any proceeding for such purpose;
(f) cause all such Registrable Securities to be listed on each securities
exchange or quoted in each quotation system on which similar securities issued
by the Company are then listed or quoted;
(g) enter into such agreements on terms reasonably acceptable to the
Company (including underwriting agreements) in form, scope and substance as are
customary in underwritten offerings, and take all other reasonable actions
necessary to facilitate the registration or the disposition of the Registrable
Securities included in any Registration Statement including, without limitation,
the participation of senior management in "road shows" and similar activities,
provided that such activities do not interfere with the duties of senior
management in a manner that would likely be detrimental to the best interests of
the Company;
(h) take such action as may be necessary so that: (i) any Registration
Statement and any amendment thereto and any prospectus forming part thereof and
any amendment or supplement thereto (and each report or other document
incorporated therein by reference in each case) complies in all material
respects with the Securities Act and the Exchange Act and the respective rules
and regulations thereunder; (ii) any Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (iii) any
prospectus forming part of any Registration Statement, and any amendment or
supplement to such prospectus, does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(i) use its best efforts to prevent the issuance, and if issued to obtain
the withdrawal, of any order suspending the effectiveness of any Registration
Statement at the earliest possible time;
(j) cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold pursuant
to any Registration Statement free of any restrictive legend and registered in
such names as the Holders may request in connection with the sale of Registrable
Securities pursuant to such Registration Statement; and
(k) obtain and furnish to each selling Holder, immediately prior to the
effectiveness of the Registration Statement (and, in the case of an Underwritten
Offering, at the time of delivery of any Registrable Securities sold pursuant
thereto) a cold comfort letter from the Company's independent public accountants
in the same form and covering the same matters as is typically delivered to
underwriters and, in the event that an underwriter or underwriters have been
retained in connection with such registration, such cold comfort letter to be
provided to the selling Holders shall be the same cold comfort letter delivered
to such underwriter or underwriters.
18
Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 2.4(e) hereof,
such Holder will immediately discontinue disposition of Registrable Securities
pursuant to a Registration Statement until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 2.4(e) hereof,
and, if so directed by the Company, such Holder will deliver to the Company (at
the expense of the Company) all copies in its possession, other than permanent
file copies then in such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. If the
Company shall give any such notice to suspend the disposition of Registrable
Securities pursuant to a Registration Statement, the Company shall extend the
period during which the Registration Statement shall be maintained effective
pursuant to this Agreement by the number of days during the period from and
including the date of the giving of such notice to and including the date when
the Holders shall have received copies of the supplemented or amended prospectus
necessary to resume such dispositions.
Section 2.5 Hold-Back Agreements.
(a) Restrictions on Public Sale by the Holders. Each Holder of Registrable
Securities shall be deemed to have agreed not to effect any public sale or
public distribution of securities of the Company of the same or similar class or
classes of the securities included in a Registration Statement or any securities
convertible into or exchangeable or exercisable for such securities, including a
sale pursuant to Rule 144 or Rule 144A under the Securities Act, during the
15-day period prior to, and during such period of time as may be required by the
Managing Underwriter, but not to exceed a 90-day period beginning on, the
effective date of the Registration Statement (except pursuant to an Underwritten
Offering being conducted by the Managing Underwriters), except to the extent
otherwise agreed in writing by the Managing Underwriter, and upon request of the
Managing Underwriters shall enter into a reasonable and customary "lock-up"
agreement to such effect and otherwise in a form agreed upon by the Company and
the Managing Underwriters. The foregoing restriction shall apply to those
Holders electing to include Registrable Securities in a Registration Statement
for an Underwritten Offering filed pursuant to Section 2.1, Section 2.2 or
Section 2.3. The restrictions set forth in this Section 2.5(a) shall not apply
to any private sales of Registrable Securities that are exempt from registration
under section 4(2) of the Securities Act.
(b) Restrictions on Public Sale by the Company. The Company shall not
effect any public sale or public distribution of any securities which are the
same as or substantially similar to the Registrable Securities being registered
pursuant to a Registration Statement for an Underwritten Offering filed pursuant
to Section 2.1, Section 2.2 or Section 2.3 hereof, or any securities convertible
into or exchangeable or exercisable for such securities during the 15-day period
prior to, and during the 30-day period beginning on, the effective date of a
Registration Statement (except pursuant to the Registration Statement),
provided, however, that the foregoing restrictions shall not apply in the case
of any registration for public sale or public distribution of any securities for
High Yield Debt (regardless of whether or not coupled with warrants, options, or
other equity equivalents) by the Company.
19
Section 2.6 Black-Out Periods for Registration Statements.
(a) Notwithstanding anything to the contrary in this Agreement, except as
set forth in Section 2.1(j), commencing ninety (90) days after the effectiveness
of a Registration Statement, the Company may, not more than once in any 12-month
period, and one additional time during the term of this Agreement (but not
during any other Suspension Event or within ninety (90) days after termination
of any other Suspension Event), direct the Holders to suspend sales of
Registrable Securities registered thereunder, as provided herein, if one or more
of the following events (a "Suspension Event") occurs pending negotiations
relating to, or consummation of, a material corporate transaction (i) that would
require additional disclosure of material information by the Company in the
Registration Statement (or such filings), (ii) as to which the Company has a
bona fide business purpose for preserving confidentiality and (iii) which
renders the Company unable to comply with Commission requirements, in each case
under circumstances that would make it impractical or inadvisable to cause the
Registration Statement (or such filings) to become effective or to promptly
amend or supplement the Registration Statement on a post-effective basis, as
applicable.
(b) In the case of a Suspension Event, the Company may give notice (a
"Suspension Notice") to the Holders to suspend sales of the Registrable
Securities so that the Company may correct or update the Registration Statement
(or such filings). Each such suspension shall continue only for so long as the
Suspension Event or its effect is continuing, and in no event will any such
suspension exceed ninety (90) days. The Holders agree that they will not effect
any sales of the Registrable Securities pursuant to such Registration Statement
(or such filings) at any time after they have received a Suspension Notice from
the Company and prior to the termination of such Suspension Event. If so
directed by the Company, the Holders will deliver to the Company all copies of
the prospectus covering the Registrable Securities held by them at the time of
receipt of the Suspension Notice. The Holders may recommence effecting sales of
the Registrable Securities pursuant to the Registration Statement (or such
filings) following further notice to such effect (an "End of Suspension Notice")
from the Company, which End of Suspension Notice shall, in the case of a
Suspension Event, be given by the Company not later than five (5) days after the
conclusion of any Suspension Event and shall be accompanied by copies of the
supplemented or amended prospectus necessary to resume such sales.
(c) If the Company shall give a Suspension Notice pursuant to this Section
2.6, the Company shall extend the period during which the Registration Statement
shall be maintained effective pursuant to this Agreement by the number of days
during the period from the date of the giving of the Suspension Notice to and
including the date when the Holders shall have received the End of Suspension
Notice and copies of the supplemented or amended prospectus necessary to resume
sales.
Section 2.7 Transferees of Motient Rights. Notwithstanding anything to
the contrary herein, the rights of Rare Medium and Hughes under Sections 2.1,
2.2 and 2.3, which were transferred by Motient, shall be subordinate to the
corresponding rights of the other Holders; provided, however, that the Company
shall in no event hereafter provide any Person with any rights to request the
Company to register any Capital Stock of the Company, with priority equal
20
to or superior to that of Hughes or Rare Medium hereunder, except in connection
with any offering of High Yield Debt.
Section 2.8 Additional Registration Rights. The Company shall in no event
hereafter provide any Person with any rights to request the Company to register
any Capital Stock of the Company, the terms of which are (a) as or more
favorable than the rights of the Series C Investors hereunder, unless the
Company obtains the prior written approval of holders of at least 60% of the
issued and outstanding Series C Convertible Preferred Stock constituting
Registrable Securities, or (b) as or more favorable than the rights of the Note
Investors hereunder, unless the Company obtains the prior written approval of
Note Investors holding 60% of the Registrable Securities held by or issuable to
Note Investors, except in each case in connection with any offering of High
Yield Debt.
ARTICLE III.
INDEMNIFICATION AND CONTRIBUTION
Section 3.1 Indemnification by the Company. The Company shall indemnify,
to the extent permitted by law, each Holder of Registrable Securities, each
Person who controls such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and its respective officers,
directors, partners, members, employees, agents and representatives, against all
actions, suits, claims, damages, losses, costs, expenses or proceedings
(collectively, "Losses") caused by, arising out of or based upon any untrue or
alleged untrue statement of material fact contained in any Registration
Statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which made, not misleading, except insofar as
the same are caused by or contained in any information furnished in writing to
the Company by such Holder expressly for use therein or by such Holder's failure
to deliver a copy of the Registration Statement or prospectus or any amendments
or supplements thereto after the Company has furnished such Holder with a
sufficient number of copies of the same and except insofar as the same are
caused by or contained in any prospectus if such Holder failed to send or
deliver a copy of any subsequent prospectus or prospectus supplement which would
have corrected such untrue or alleged untrue statement of material fact or such
omission or alleged omission of a material fact with or prior to the delivery of
written confirmation of the sale by such Holder after the Company has furnished
such Holder with a sufficient number of copies of the same. In connection with
an Underwritten Offering, the Company will indemnify such Underwriters, each
Person who controls such Underwriters (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and their respective officers,
directors, partners, employees, agents and representatives to the same extent as
provided above with respect to the indemnification of the Holders of Registrable
Securities.
Section 3.2 Indemnification by Holders. In connection with any
Registration Statement in which Holders of Registrable Securities are
participating, each such Holder will furnish to the Company in writing such
information as the Company reasonably requests for use in connection with any
such Registration Statement or prospectus and, to the extent permitted by
21
law, will indemnify the Company, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and their respective officers, directors, partners, employees, agents and
representatives against any Losses caused by, arising out of or based upon any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, prospectus, or form of prospectus, or arising out of or
based upon any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which made, not misleading, to the extent, but only to the
extent, that such untrue or alleged untrue statement is contained in, or such
omission or alleged omission is required to be contained in, any information so
furnished in writing by such Holder to the Company expressly for use in such
Registration Statement or prospectus and that such statement or omission was
relied upon by the Company in preparation of such Registration Statement,
prospectus or form of prospectus; provided, however, that such Holder of
Registrable Securities shall not be liable in any such case to the extent that
the Holder has furnished in writing to the Company prior to the filing of any
such Registration Statement or prospectus or amendment or supplement thereto
information expressly for use in such Registration Statement or prospectus or
any amendment or supplement thereto which corrected or made not misleading,
information previously furnished to the Company, and the Company failed to
include such information therein. In no event shall the liability of any selling
Holder of Registrable Securities hereunder be greater in amount than the dollar
amount of the proceeds (net of payment of all expenses) received by such Holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such indemnified party.
Section 3.3 Conduct of Indemnification Proceedings. If any Person shall
be entitled to indemnity hereunder such indemnified party shall give prompt
written notice to the party or parties from which such indemnity is sought of
the commencement of any proceeding with respect to which such indemnified party
seeks indemnification or contribution pursuant hereto; provided, however, that
the failure to so notify the indemnifying parties shall not relieve the
indemnifying parties from any obligation or liability except to the extent that
the indemnifying parties have been prejudiced by such failure. The indemnifying
parties shall have the right, exercisable by giving written notice to an
indemnified party promptly after the receipt of written notice from such
indemnified party of such proceeding, to assume, at the indemnifying parties'
expense, the defense of any such proceeding, with counsel reasonably
satisfactory to such indemnified party; provided, however, that an indemnified
party or parties (if more than one such indemnified party is named in any
proceeding) shall have the right to employ separate counsel in any such
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified party or parties
unless the parties to such proceeding include both the indemnified party or
parties and the indemnifying party or parties, and there exists, in the opinion
of the indemnified party(ies)' counsel, a conflict between one or more
indemnifying parties and one or more indemnified parties, in which case the
indemnifying parties shall, in connection with any one such proceeding or
separate but substantially similar or related proceedings in the same
jurisdiction, arising out of the same general allegations or circumstances, be
liable for the fees and expenses of not more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such indemnified party
or parties. If an indemnifying party assumes the defense of such proceeding, the
indemnifying parties will not be
22
subject to any liability for any settlement made by the indemnified party
without its or their consent (such consent not to be unreasonably withheld).
Section 3.4 Contribution. If the indemnification provided for in this
Article III is unavailable to an indemnified party or is insufficient to hold
such indemnified party harmless for any Losses in respect of which this Article
III would otherwise apply by its terms, then each applicable indemnifying party,
in lieu of indemnifying such indemnified party, shall have an obligation to
contribute to the amount paid or payable by such indemnified party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the indemnifying party, on the one hand, and such indemnified party, on
the other hand, in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such indemnifying party, on the one hand, and indemnified
party, on the other hand, shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been taken by, or relates to information supplied by, such
indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent any such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include any legal or other fees or expenses
incurred by such party in connection with any proceeding, to the extent such
party would have been indemnified for such expenses under Section 3.3, if the
indemnification provided for in Section 3.1 or Section 3.2 was available to such
party. The Parties agree that it would not be just and equitable if contribution
pursuant to this Section 3.4 were determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable
considerations referred to in the second sentence of this paragraph.
Notwithstanding the provisions of this Section 3.4, an indemnifying party that
is a selling Holder of Registrable Securities shall not be required to
contribute any amount in excess of the amount by which the net proceeds received
by such indemnifying party exceeds the amount of any damages that such
indemnifying party has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person adjudged
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
23
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Rule 144. The Company covenants that it will file any reports
required to be filed by it under the Securities Act and the Exchange Act and
that it will take such further action as any Holder may reasonably request, all
to the extent required from time to time to enable Holders to sell Registrable
Securities without registration under the Securities Act within the limitations
of the exemptions provided by (a) Rule 144 or 145 under the Securities Act, as
such rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
Section 4.2 Specific Performance. Each Holder, in addition to being
entitled to exercise all rights provided herein or granted by law, including
recovery of liquidated or other damages, will be entitled to specific
performance of its rights under this Agreement. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
Section 4.3 Amendments and Waivers. Any term of this Agreement may be
amended, and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
with respect to any proposed Piggyback Registration in connection with an
Underwritten Offering initiated by the Company, only with the written consent of
(a) the Company and (b) Holders holding, (i) in the case of amendments to or
waivers of provisions of this Agreement generally, 75% of the Registrable
Securities held by or issuable to Holders, and (ii) in the case of any other
non-material change or technical correction of this Agreement, a majority of the
Registrable Securities held by or issuable to Holders; provided, however, that
in the event the rights, preferences or obligations hereunder of one or more
Holders are being amended or waived in a manner that is materially adverse to
such Holders and in a manner that is different from those of other Holders, such
rights, preferences or obligations may be so amended or waived only with the
consent of the Holders holding in the aggregate 75% of the Registrable
Securities held by Holders whose rights, preferences or obligations are being
materially adversely amended or waived in such different manner, except in the
case of rights, preferences or obligations hereunder applicable only to Rare
Medium and Hughes, in which case such rights, preferences or obligations may be
amended with the consent of Rare Medium and Hughes. Any amendment or waiver
effected in accordance with this Section 4.3 shall be binding upon each future
Holder and the Company.
Section 4.4 Notices. Except as otherwise provided in this Agreement,
notices and other communications under this Agreement shall be in writing and
shall be deemed properly served if: (i) mailed by registered or certified mail,
return receipt requested, (ii) delivered by a recognized overnight courier
service, (iii) delivered personally, or (iv) sent by facsimile transmission
addressed to each Party at its address for notices specified on Schedule 4.4
attached hereto, or at such other address, or to the attention of such officer,
as any Party shall have furnished to each other Party in writing pursuant to
this Section 4.4. Such notice shall be deemed
24
to have been received: (i) three (3) Business Days after the date of mailing if
sent by certified or registered mail, (ii) one (1) Business Day after the date
of delivery if sent by overnight courier, (iii) the date of delivery if
personally delivered, or (iv) the next succeeding Business Day after
transmission by facsimile.
Section 4.5 Transfers.
(a) Subject to the transfer restrictions set forth in the Shareholders
Agreement, any Holder transferring any portion of its Registrable Securities may
transfer to its transferee any rights granted herein and then held by such
Holder, provided that no Series A Holder may transfer to more than one
transferee its rights to initiate any Demand Registration pursuant to Section
2.1, (provided that such transferees shall be able to participate in such Demand
Registration and all other registration rights held by such Holder, subject to
the terms and conditions set forth in this Agreement), nor shall any such
transfer be deemed to create any right to initiate additional demand
registrations or obligate the Company to issue notices hereunder to additional
Person(s), except to the extent the Company shall have received actual notice of
such transfer to such Person(s). A Series C Holder may transfer any registration
rights granted herein and then held by such Series C Holder only to a transferee
that following the transfer holds Series C Convertible Preferred Stock or Common
Stock equal to one percent (1%) or more of the outstanding Common Stock on a
fully diluted basis.
(b) Any assignment or transfer of any registration rights set forth herein
shall be subject to the assumption by the transferee of the terms and conditions
set forth in this Agreement applicable to the transferor, and any proposed
transferee shall execute such documents and instruments that the Company may
reasonably require to evidence that such transferee is bound by the terms and
conditions of this Agreement.
Section 4.6 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Section 4.7 GOVERNING LAW; CHOICE OF FORUM; JURY TRIAL WAIVER.
THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY
CONFLICT OF LAW PROVISIONS THEREOF OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW
SECTIONS 5-1401 AND 5-1402.
IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM
FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE
SUPREME COURT OF THE STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK OR THE
FEDERAL COURTS LOCATED IN SUCH STATE AND COUNTY, AND RELATED APPELLATE COURTS.
THE PARTIES HEREBY
25
IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.
THE PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
Section 4.8 Severability. The holding of any provision of this Agreement
to be invalid or unenforceable by a court of competent jurisdiction shall not
affect any other provision of this Agreement, which shall remain in full force
and effect. If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, such provision shall be interpreted so as to remain
enforceable to the maximum extent permissible consistent with applicable law and
the remaining conditions and provisions or portions thereof shall nevertheless
remain in full force and effect and enforceable to the extent they are valid,
legal and enforceable, and no provisions shall be deemed dependent upon any
other covenant or provision unless so expressed herein.
Section 4.9 Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
Section 4.10 No Inconsistent Agreement.
(a) The Company will not after the date of this Agreement enter into any
agreement with respect to its securities or any amendment to such an agreement
that is inconsistent with the rights granted to the Holders in this Agreement,
or otherwise conflicts with the provisions hereof.
(b) The Company shall not grant to any person the right to request the
Company to register any equity securities of the Company, or any securities
convertible or exchangeable or exercisable for such securities, or grant any
rights for additional demand registrations of the Company's securities other
than as provided in this Agreement, without the prior written consent of the
Holders of the Registrable Securities if such right is inconsistent with the
terms of this Agreement (including without limitation the priorities for
registration set forth herein); provided, however, that the foregoing
restrictions shall not apply in the case of any registration by the Company for
public sale or public distribution of any securities for High Yield Debt
(regardless of whether or not coupled with warrants, options, or other equity
equivalents).
Section 4.11 Further Assurances. The Parties agree to execute and deliver
all such further documents, agreements and instruments and take such other and
further action as may be necessary or appropriate to carry out the purposes and
intent of this Agreement, including making any necessary or required filings,
and obtaining any necessary or required approvals from the Federal
Communications Commission.
Section 4.12 Entire Agreement. This Agreement supersedes all other
agreements, written or oral, concerning the subject matter herein, including the
2000 Agreement, which is hereby terminated.
26
[Signatures begin on next page]
27
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
signed as of the date first above written.
XM SATELLITE RADIO HOLDINGS INC. MOTIENT CORPORATION
By: By:
------------------------------------- -------------------------------------
Name: Name:
Title: Title:
BARON ASSET FUND CLEAR CHANNEL INVESTMENTS, INC.
On behalf of THE BARON ASSET FUND SERIES
By: By:
------------------------------------- -------------------------------------
Name: Name:
Title: Title:
COLUMBIA XM RADIO PARTNERS, LLC DIRECTV ENTERPRISES, INC.
By Columbia Capital LLC, its Managing Member
By: By:
------------------------------------- -------------------------------------
Name: Name:
Title: Title:
GENERAL MOTORS CORPORATION MADISON DEARBORN CAPITAL PARTNERS III, L.P.
By Madison Dearborn Partners III, L.P., its general partner
By: By Madison Dearborn Partners LLC, its general partner
-------------------------------------
Name: By:
Title: -------------------------------------
Name:
Title:
MADISON DEARBORN SPECIAL EQUITY III, L.P. SPECIAL ADVISORS FUND I, LLC
By Madison Dearborn Partners III, L.P., its general partner By Madison Dearborn Partners III, L.P., its manager
By Madison Dearborn Partners LLC, its general partner By Madison Dearborn Partners LLC, its general partner
By: By:
------------------------------------- -------------------------------------
Name: Name:
Title: Title:
28
TELCOM--XM INVESTORS, L.L.C. AEA XM INVESTORS I LLC
By: By:
------------------------------------- -------------------------------------
Name: Name:
Title: Title:
COLUMBIA XM SATELLITE PARTNERS III, LLC AEA XM INVESTORS II LLC
By:
By: By:
------------------------------------- -------------------------------------
Name: Name:
Title: Title:
COLUMBIA CAPITAL EQUITY PARTNERS III (QP), L.P., AMERICAN HONDA MOTOR CO., INC.
By: Columbia Capital Equity Partners III, L.P., its General
Partner
By: By:
------------------------------------- -------------------------------------
Name: Name:
Title: Title:
BARON ASSET FUND BARON CAPITAL FUNDS TRUST
on behalf of THE BARON iOPPORTUNITY FUND SERIES on behalf of THE BARON CAPITAL ASSET FUND SERIES
By: By:
------------------------------------- -------------------------------------
Name: Name:
Title: Title:
BLACK BEAR FUND I, L.P. BLACK BEAR FUND II, L.L.C.
By Eastbourne Capital Management, L.L.C., its general By Eastbourne Capital Management, L.L.C., its
partner manager
By: By:
------------------------------------- -------------------------------------
Eric M. Sippel Eric M. Sippel
Chief Operating Officer Chief Operating Officer
BLACK BEAR OFFSHORE MASTER FUND LIMITED GEORGE HAYWOOD
By Eastbourne Capital Management, L.L.C., its
investment adviser and attorney in fact -------------------------------------
By:
-------------------------------------
Eric M. Sippel
Chief Operating Officer
29
HUGHES ELECTRONICS CORPORATION RARE MEDIUM GROUP, INC.
By: By:
------------------------------------- -------------------------------------
Name: Name:
Title: Title:
AEA XM INVESTORS IA, LLC AEA XM INVESTORS IIA, LLC
By: By:
------------------------------------- -------------------------------------
Name: Name:
Title: Title:
U.S. TRUST COMPANY COLUMBIA CAPITAL EQUITY PARTNERS II (QP), L.P.,
By: By:
-------------------------------------
Name:
Title: By:
-------------------------------------
Name:
Title:
30
EXHIBIT A
ADDITIONAL NOTE PURCHASERS
1
SCHEDULE 4.4
SCHEDULE OF HOLDERS
Name Address Facsimile
---- ------- ---------
Clear Channel Investments, Inc. 200 Concord Plaza 210-822-2299
Suite 600
San Antonio, TX 78216-6940
Attn: Ken Wyker, Esq.
Columbia Radio Partners 201 North Union Street 703-519-3904
Suite 300
Alexandria, VA 22314
Attn: Mr. James B. Fleming
DIRECTV Enterprises, Inc. 2230 E. Imperial Hwy. 310-964-4114
El Segundo, CA 90245
Attn: Mr. Steven J. Cox
General Motors Corporation 767 Fifth Avenue 212-418-6258
14th Floor
New York, NY 10153
Attn: Anne Larin, Esq.
Madison Dearborn Capital Partners III, L.P., Three First National Plaza 312-895-1221
Madison Dearborn Special Equity III, L.P., Chicago, IL 60602
Special Advisors Fund I, LLC Attn: Mr. James N. Perry, Jr.
Telcom-XM Investors LLC 211 North Union Street 703-706-3801
Suite 300
Alexandria, VA 22314
Attn: Hal B. Perkins, Esq.
AEA XM AEA Investors, Inc. 212-888-1459
65 E. 55th Street
New York, New York 10022
Attn: General Counsel
American Honda Motor Co., Inc. American Honda Motor Co., Inc. 310-783-2210
1919 Torrance Boulevard
Torrance, California 90501-2746
Attention: Shinichi Sakamoto
Honda North America, Inc. 310-781-4970
Law Department
700 Van Ness Avenue
Torrance, California 90501
Black Bear Fund I, L.P. c/o Eastbourne Capital Management, L.L.C. [fax]
Black Bear Fund II, L.P. 1101 Fifth Avenue, Suite 160
Black Bear Offshore Master Fund Limited San Rafael, California 94901
2
George Haywood [address] [fax]
R. Steven Hicks [address] [fax]
Hughes [address] [fax]
Rare Medium [address] [fax]
[Note Investors and U.S. Trust] [address] [fax]
3
VOTING AGREEMENT
This VOTING AGREEMENT, dated as of December 21, 2002 (this
"Agreement"), is entered into by and among XM Satellite Radio Holdings Inc., a
corporation organized under the laws of the State of Delaware (the "Company"),
Columbia XM Satellite Partners III, LLC, a limited liability company organized
under the laws of the Commonwealth of Virginia ("Columbia Capital"), Black Bear
Fund II, L.L.C., a limited liability company duly organized under the laws of
the State of California ("Black Bear"), and each of the other shareholders and
noteholders of the Company identified on the signature pages hereto (each, a
"Shareholder" and, collectively, the "Shareholders").
WHEREAS, the Shareholders own of record and/or beneficially the shares
of Class A common stock, par value $.01 per share, of the Company ("Class A
Common Stock"), and/or 8.25% Series C Convertible Redeemable Preferred Stock,
par value $.01 per share ("Series C Preferred Stock" and, together with the
Class A Common Stock, the "Capital Stock"), set forth opposite their respective
names on Schedule A hereto, and desire to enter into this Agreement with respect
to such shares of Capital Stock;
WHEREAS, the Company and its subsidiary, XM Satellite Radio Inc., a
Delaware corporation ("XM"), propose to: (i) offer to exchange a combination of
(a) 14% Senior Secured Discount Notes due 2009 of XM, (b) warrants to purchase
shares of Class A Common Stock (the "Exchange Warrants"), and (c) cash, for some
or all of the outstanding 14% Senior Secured Notes due 2010 of XM; (ii) issue
10% Senior Secured Discount Convertible Notes due 2009 (the "New Notes") to a
group comprised of qualified institutional buyers and accredited investors,
including some of the Shareholders or their affiliates (the "New Noteholders");
(iii) issue and sell, on or before the closing of the transactions described in
this recital, to the extent determined to be desirable by the Company, shares of
Class A Common Stock, with or without warrants to purchase shares of Class A
Common Stock, or after the closing to the extent contemplated by the letter
agreement between the Company and the BayStar Group, in accordance with Section
4(2) of the Securities Act of 1933, as amended, or pursuant to a registration
statement under the Securities Act, including the proposed sale of 5,555,556
shares of Class A Common Stock to U.S. Trust Company and the issuance of a
warrant to purchase 900,000 shares of Class A Common Stock, (iv) issue to
General Motors Corporation or an affiliate thereof ("GM") Series GM 10% Senior
Secured Convertible Notes due 2009 (the "GM Notes") in lieu of making certain
guaranteed payments owed to GM from 2003 to 2006, and in connection therewith to
(x) amend XM's distribution agreement with GM (the "Distribution Agreement") to
provide for the issuance of the GM Notes and for the payment, at the Company's
option, of up to $35,000,000 of certain subscriber bounty payments required
thereunder through the issuance of Class A Common Stock, (y) enter into a
$100,000,000 senior secured credit facility with GM to fund certain revenue
share payments owed to GM under the Distribution Agreement and other amounts
which may be owed to GM, and (z) issue a warrant to GM to purchase 10,000,000
shares of Class A Common Stock (the "GM Warrant"); (v) enter into a Second
Amended and Restated Shareholders and Noteholders Agreement (the "Shareholders
and Noteholders Agreement"), pursuant to which the New Noteholders and GM will
be granted certain consent and other rights; (vi) enter into a Second Amended
and Restated Registration Rights Agreement, and (vii) execute, deliver and
perform such other documents, and take all other actions, necessary or desirable
to carry out the foregoing (collectively, the "Concurrent Financing
Transactions"); and
WHEREAS, as an essential condition and inducement to the Company and
XM entering into the Concurrent Financing Transactions, the Company and XM have
requested that the Shareholders agree, and the Shareholders have agreed, to
enter into this Agreement and execute and deliver the Proxy contemplated hereby.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements contained herein and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, and intending to be legally bound hereby, agree as follows:
SECTION 1. AGREEMENT TO VOTE IN FAVOR OF PROPOSED CHARTER AMENDMENT AND
CONCURRENT FINANCING TRANSACTIONS
(a) Each Shareholder acknowledges and understands that the Company
will be required to obtain stockholder approval of an amendment to the Company's
restated certificate of incorporation to increase the number of authorized
shares of Class A Common Stock to 600,000,000 to permit the Company to validly
reserve for issuance a sufficient number of shares of Class A Common Stock as
may be required to effectuate the issuances or potential issuances (the
"Concurrent Financing Transactions Issuances") of Class A Common Stock or
otherwise in connection with the Concurrent Financing Transactions and for
general corporate purposes (such number, the "Required Number"). Such approval
will require (i) the affirmative vote of persons holding a majority of the
shares of Class A Common Stock outstanding on the record date set in advance of
the meeting called to consider the proposed amendment, voting as a separate
class, and (ii) the affirmative vote of persons holding 60% or more of the
shares of Series C Preferred Stock outstanding on the record date set in advance
of the meeting called to consider the proposed amendment.
(b) Each Shareholder hereby agrees, effective immediately following
the closing of the Concurrent Financing Transactions (the "Effective Time"), to
appear, or cause the holder of record (the "Record Holder") of any such Capital
Stock beneficially owned by it on any applicable record date (a "Record Date")
to appear, in person or by proxy, for the purpose of obtaining a quorum at any
annual or special meeting of shareholders of the Company, and at any adjournment
of either of them (a "Meeting"), called for the purpose of considering (i) the
approval of an amendment to the Company's restated certificate of incorporation
to increase the number of authorized shares of Class A Common Stock from
225,000,000 to 600,000,000 (the "Proposed Charter Amendment"), and (ii) the
Concurrent Financing Transactions and the Concurrent Financing Transactions
Issuances, if the same are submitted by the Company for approval by the
Company's stockholders.
(c) Each Shareholder further agrees that at any such Meeting such
Shareholder shall vote, or cause the Record Holder to vote, in person or by
proxy (including through the Proxy to be granted in accordance with Section 2
hereof) all of the shares of Capital Stock, and any other voting interests of
the Company directly or indirectly owned beneficially or of record by such
Shareholder on the Record Date set for such meeting, in favor of the Proposed
Charter Amendment and the Concurrent Financing Transactions and the transactions
contemplated thereby, including the Concurrent Financing Transactions Issuances
(including any amendments or modifications of the terms thereof, the terms of
which are immaterial in nature and not adverse to any of the Shareholders,
approved by the board of directors of the Company).
(d) To the extent inconsistent with the foregoing provisions of
this Section 1, each Shareholder revokes any and all previous proxies with
respect to shares of Capital Stock owned or hereafter acquired beneficially
and/or of record by such Shareholder and agrees not to grant any proxy or enter
into any voting trust or other agreement or arrangement with respect to the
voting of any Capital Stock or any rights, options, warrants or other rights to
acquire Capital Stock, except as provided herein.
2
Notwithstanding the foregoing, it is understood and acknowledged that nothing in
this Agreement shall be construed to restrict any Shareholder from transferring
any Capital Stock.
SECTION 2. PROXY; FURTHER ASSURANCES
(a) Contemporaneously with the execution of this Agreement: (i)
each New Noteholder has delivered to Black Bear a proxy in the form attached to
this Agreement as Exhibit A, which shall be irrevocable to the fullest extent
permitted by law, with respect to the shares referred to therein (a "Proxy"),
and (ii) each other Shareholder has delivered a Proxy to [Columbia Capital]. The
Company and the Shareholders agree and acknowledge that neither Black Bear nor
Columbia Capital, as the case may be, shall be entitled to vote any shares of
Capital Stock covered by any such Proxy at any Meeting until after the Effective
Time.
(b) Each Shareholder shall agree to supplement such Proxy to the
extent needed to include shares of Capital Stock hereafter acquired, and shall
perform such further acts and execute such further documents and instruments as
may reasonably be required to vest in the Company the power to carry out and
give effect to the provisions of this Agreement. Without limiting the generality
of the foregoing, none of the parties hereto shall enter into any agreement or
arrangement (or alter, amend or terminate any existing agreement or arrangement)
or transaction if such action would materially impair or materially interfere
with the ability of any party to effectuate, carry out and comply with all of
the terms of this Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER
Each Shareholder hereby, severally and not jointly, represents and
warrants to the Company as follows:
(a) Such Shareholder has the legal capacity and all other power and
authority necessary to enter into this Agreement, to perform the obligations
hereunder and to consummate the transactions contemplated hereby. This Agreement
and the Proxy have been duly executed and delivered by such Shareholder and
constitute the legal, valid and binding obligations of such Shareholder,
enforceable against such Shareholder in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditor's rights generally and by the application of
general principles of equity.
(b) The execution and delivery of this Agreement and the Proxy by
such Shareholder do not, and the performance of this Agreement and the Proxy by
such Shareholder will not, (i) conflict with or violate any law, regulation,
court order, judgment or decree applicable to such Shareholder or by which it or
any of its properties is or may be bound or affected, or (ii) result in or
constitute (with or without notice or lapse of time) any breach of or default
under, or give to any other person (with or without notice or lapse of time),
any right of termination, amendment, acceleration or cancellation, or result
(with or without notice or lapse of time) in the creation of any encumbrance,
pledge or mortgage, or the formation of any contract, option or other agreement
or understanding with respect to any encumbrance, pledge or mortgage (any of the
foregoing, an "Encumbrance") or restriction on any Capital Stock of such
Shareholder pursuant to, any contract or agreement to which such Shareholder is
a party or by which such Shareholder or any of its affiliates or properties is
or may be bound or affected.
3
(c) The execution and delivery of this Agreement and the Proxy do
not, and the performance of this Agreement and the Proxy will not require any
consent or approval or other action by any person.
(d) The shares of Capital Stock reflected on Schedule A as being
owned by such Shareholder are the only shares of Capital Stock of the Company
owned beneficially or of record by such Shareholder (other than shares the
beneficial ownership of which has been disclaimed by such Shareholder pursuant
to filings made pursuant to the Securities Exchange Act of 1934, as amended).
Such Shareholder has the sole power to vote and transfer such Shareholder's
shares of Capital Stock. The shares and certificates representing such shares
held by such Shareholder are now owned as indicated on Schedule A by such
Shareholder, free and clear of all liens, claims or any other Encumbrances,
except for any such Encumbrances or the Proxy arising under this Agreement or
the Amended and Restated Shareholders Agreement, dated August 8, 2000, by and
among the Company and the other parties thereto, and except for Encumbrances
which would not affect their power to vote such Shareholder's shares of Capital
Stock as provided in this Agreement.
SECTION 4. SPECIFIC PERFORMANCE
The parties agree that irreparable damage would occur in the event
that any provision of this Agreement or the Proxy was, or is, not performed in
accordance with its specific terms or was, or is, otherwise breached. Each
Shareholder agrees that, in the event of any breach or threatened breach by such
Shareholder of any covenant or obligation contained in this Agreement or in the
Proxy, the Company shall be entitled (in addition to any other remedy that may
be available to it, including monetary damages) to (a) a decree or order of
specific performance to enforce the observance and performance of such covenant
or obligation, and (b) an injunction restraining such breach or threatened
breach. Each Shareholder further agrees that neither the Company nor any other
person shall be required to obtain, furnish or post any bond or similar
instrument in connection with or as a condition to obtaining any remedy referred
to in this Section 4, and each Shareholder irrevocably waives any objection to
the imposition of such relief or any right he may have to require the obtaining,
furnishing or posting of any such bond or similar instrument.
SECTION 5. SURVIVAL
All representations, warranties and agreements made by the
Shareholders in this Agreement shall survive until the Expiration Date.
SECTION 6. ASSIGNMENT; BINDING EFFECT
Except as provided herein, neither this Agreement nor any of the
interests or obligations hereunder may be assigned or delegated by any
Shareholder or the Company without the prior written consent of the
non-assigning party, which consent shall not be unreasonably withheld, and any
attempted or purported assignment or delegation of any of such interests or
obligations shall be void. No consent of the Company shall be required as a
condition to the sale, assignment, disposition or other transfer, including by
means of an Encumbrance, of any shares of Capital Stock by any Shareholder, it
being expressly agreed to and acknowledged that the provisions of this Agreement
will not be binding upon, or inure to the benefit of, any such transferee.
Subject to the preceding two sentences, this Agreement shall be binding upon,
and inure to the benefit of, the Shareholders, and shall be binding upon, and
inure to the
4
benefit of, the Company and its successors and assigns. Nothing in this
Agreement is intended to confer on any person (other than the Company and its
successors and assigns) any rights or remedies of any nature.
SECTION 7. AMENDMENT AND WAIVER
This Agreement shall not be amended, altered or modified except by an
instrument in writing duly executed and delivered on behalf of each of the
parties hereto. No failure on the part of the Company to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of the
Company in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. The Company shall not be deemed to have waived any
claim available to the Company arising out of this Agreement, or any power,
right, privilege or remedy of the Company under this Agreement, unless the
waiver of such claim, power, right, privilege or remedy is expressly set forth
in a written instrument duly executed and delivered on behalf of the Company;
and any such waiver shall not be applicable or have any effect except in the
specific instance in which it is given.
SECTION 8. SEVERABILITY
If any provision of this Agreement or any part of any such provision
is held under any circumstances to be invalid or unenforceable in any
jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Agreement. Each provision of this
Agreement is separable from every other provision of this Agreement, and each
part of each provision of this Agreement is separable from every other part of
such provision.
SECTION 9. NOTICES
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered, mailed or transmitted, and shall be effective upon receipt,
if delivered personally, mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses (or
at such other address for a party as shall be specified by like changes of
address) or sent by facsimile to the fax number specified below:
If to a Shareholder:
To such Shareholder's address
or fax number as set forth
on Schedule A attached hereto
If to Black Bear:
5
c/o Eastbourne Capital Management, L.L.C.
1101 Fifth Avenue, Suite 160
San Rafael, California 94901
Attention: Eric M. Sippel,
Chief Operating Officer
Fax No.: (415) 448-1246
If to Columbia Capital:
201 North Union Street, Suite 300
Alexandria, VA 22314
Attention: James B. Fleming
Fax No.: (703) 519-3904
If to the Company or XM:
XM Satellite Radio
1500 Eckington Place, N.E.
Washington, D.C. 20002
Attention: Joseph M. Titlebaum, Esq.,
General Counsel
Fax No.: (202) 380-4534
SECTION 10. ENTIRE AGREEMENT
This Agreement, the Proxy and any other documents delivered by the
parties in connection herewith constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof and supercede all
prior agreements and understandings between the parties with respect thereto.
SECTION 11. COUNTERPARTS
This Agreement may be executed and delivered in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed and delivered shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement.
SECTION 12. TERMINATION
This Agreement and all of the parties' rights and obligations
hereunder shall terminate on the first to occur of (a) the date on which the
Concurrent Financing Transactions are validly terminated pursuant to the terms
of the definitive documents evidencing them, or (b) the date on which the last
Meeting held to consider the Proposed Charter Amendment or the Concurrent
Financing Transactions has been convened and adjourned, or (c) March 31, 2003
(such earliest date, the "Expiration Date").
6
SECTION 13. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law.
SECTION 14. NON-EXCLUSIVITY.
The rights and remedies of the Company under this Agreement are not
exclusive of or limited by any other rights or remedies which it may have,
whether at law, in equity, by contract or otherwise, all of which shall be
cumulative (and not alternative). Without limiting the generality of the
foregoing, the rights and remedies of the Company under this Agreement, and the
obligations and liabilities of the Shareholders under this Agreement, are in
addition to their respective rights, remedies, obligations and liabilities under
common law requirements and under all applicable statutes, rules and
regulations. Nothing in this Agreement shall limit any of any Shareholder's
obligations, or the rights or remedies of the Company, under any agreement
between the Company and such Shareholder; and nothing in any such agreement
shall limit any of any Shareholder's obligations, or any of the rights or
remedies of the Company, under this Agreement.
[SIGNATURE PAGES FOLLOW]
7
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement, or have caused this Agreement to be executed and delivered on
their behalf, as of the date first above written.
XM SATELLITE RADIO HOLDINGS INC.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
SHAREHOLDERS:
8
COLUMBIA CAPITAL EQUITY
PARTNERS III (QP), L.P.
By: Columbia Capital Equity Partners III, L.P.,
its General Partner
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
COLUMBIA XM RADIO PARTNERS, LLC
By: Columbia Capital LLC, its Managing Member
By:
--------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
COLUMBIA XM SATELLITE PARTNERS III, LLC
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
9
MADISON DEARBORN CAPITAL
PARTNERS III, L.P.
By: Madison Dearborn Partners III, L.P., its
general partner
By: Madison Dearborn Partners LLC, its
general partner
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
MADISON DEARBORN SPECIAL EQUITY III, L.P.
By: Madison Dearborn Partners III, L.P., its
general partner
By: Madison Dearborn Partners LLC, its
general partner
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
10
BLACK BEAR FUND I, L.P.
By: Eastbourne Capital Management, L.L.C., its
general partner
By:
--------------------------------------------
Name: Eric M. Sippel
Title: Chief Operating Officer
BLACK BEAR FUND II, L.L.C.
By: Eastbourne Capital Management, L.L.C., its
manager
By:
--------------------------------------------
Name: Eric M. Sippel
Title: Chief Operating Officer
BLACK BEAR OFFSHORE MASTER FUND LIMITED
By: Eastbourne Capital Management, L.L.C., its
investment adviser and attorney in fact
By:
--------------------------------------------
Name: Eric M. Sippel
Title: Chief Operating Officer
-----------------------------------------------
GEORGE HAYWOOD
11
CLEAR CHANNEL INVESTMENTS, INC.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
12
-----------------------------------------------
GARY PARSONS
-----------------------------------------------
HUGH PANERO
13
HUGHES ELECTRONICS CORPORATION
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
DIRECTV ENTERPRISES, INC.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
14
-----------------------------------------------
R. STEVEN HICKS
[OTHER PARTIES]
15
SCHEDULE A
NUMBER OF SERIES C NUMBER OF SHARES OF CLASS A
INVESTOR NAME AND ADDRESS FOR NOTICES SHARES COMMON STOCK
Columbia Capital Equity Partners III (QP), L.P. 8,356.496
Columbia XM Radio Partners, L.L.C.
201 North Union Street, Suite 300
Alexandria, VA 22314
Attention: James B. Fleming
Fax: 703-519-3904
Columbia XM Radio Partners, L.L.C. 4,500
201 North Union Street, Suite 300
Alexandria, VA 22314
Attention: James B. Fleming
Fax: 703-519-3904
Columbia XM Satellite Partners III, LLC 7,143.504
Columbia XM Radio Partners, L.L.C.
201 North Union Street, Suite 300
Alexandria, VA 22314
Attention: James B. Fleming
Fax: 703-519-3904
DIRECTV Enterprises, Inc. 20,000
2230 East Imperial Highway
El Segundo, CA 90245
Attention: Steven J. Cox
Fax: 310-964-4114
Madison Dearborn Capital Partners III, L.P. 48,914
Madison Dearborn Partners, Inc.
Three First National Plaza
Chicago, Illinois 60602
Attention: Mr. James N. Perry
Fax: 312-895-1221
Madison Dearborn Special Equity III, L.P. 1,086
Madison Dearborn Partners, Inc.
Three First National Plaza
Chicago, Illinois 60602
Attention: Mr. James N. Perry
Fax: 312-895-1221
16
Black Bear Fund I, L.P. 0 3,173,433
c/o Eastbourne Capital Management, L.L.C.
1101 Fifth Avenue, Suite 160
San Rafael, California 94901
Attention: Eric M. Sippel,
Chief Operating Officer
Fax No.: (415) 448-1246
Black Bear Fund II, L.L.C. 0 362,100
c/o Eastbourne Capital Management, L.L.C.
1101 Fifth Avenue, Suite 160
San Rafael, California 94901
Attention: Eric M. Sippel,
Chief Operating Officer
Fax No.: (415) 448-1246
Black Bear Offshore Master Fund Limited 0 6,491,765
c/o Eastbourne Capital Management, L.L.C.
1101 Fifth Avenue, Suite 160
San Rafael, California 94901
Attention: Eric M. Sippel,
Chief Operating Officer
Fax No.: (415) 448-1246
George Haywood 0 5,623,000
[Address]
Clear Channel Investments, Inc. 0 8,329,877
200 Concord Plaza, Suite 600
San Antonio, TX 78216
Attention: Ken Wyker, Esq.
Fax No.: (210) 822-2299
Gary Parsons 0
Chairman
XM Satellite Radio Holdings Inc.
1500 Eckington Place, NE
Washington, DC 20002
Hugh Panero 0
President and Chief Executive Officer
XM Satellite Radio Holdings Inc.
1500 Eckington Place, NE
Washington, DC 20002
Hughes Electronics Corporation 13,868,856
[Address]
R. Steven Hicks 0 0
[Address]
Vernon Ventures II, LLC/Telcom Ventures 2,411,211
[Address]
17
EXHIBIT A
FORM OF IRREVOCABLE PROXY
The undersigned Shareholder of XM Satellite Radio Holdings Inc., a
Delaware corporation (the "Company"), hereby irrevocably (to the fullest extent
permitted by law) appoints and constitutes [Name of Proxy], the attorney and
proxy of the undersigned, with full power of substitution and resubstitution, to
the full extent of the undersigned's voting rights with respect to (a) the
outstanding shares of Class A Common Stock, Series Preferred Stock, or any other
voting capital stock of the Company (collectively, the "Capital Stock") owned of
record by the undersigned as of the date of this proxy, which shares are
specified on the final page of this proxy, and (b) any and all other shares of
Capital Stock of the Company which the undersigned may acquire on or after the
date hereof. Upon the execution hereof, all prior proxies given by the
undersigned with respect to any of the Capital Stock are hereby revoked, and the
undersigned agrees that no subsequent proxy will be given with respect to any of
the Capital Stock.
This proxy is (i) irrevocable, (ii) coupled with an interest, (iii)
granted in connection with the execution and delivery of the Voting Agreement
dated as of the date hereof among the Company, Columbia Capital, Black Bear, the
undersigned and certain other Shareholders of the Company (the "Voting
Agreement"), and (iv) granted as an essential condition and inducement to the
Company entering into the Concurrent Financing Transactions. Capitalized terms
used but not defined in this proxy shall have the respective meanings ascribed
to such terms in the Voting Agreement.
The proxy named above (and its successors) will, following the
Effective Time but prior to the Expiration Date, be empowered, and is hereby
authorized and directed to vote the Capital Stock at any meeting of the
shareholders of the Company, however called, in favor of the approval of the
Proposed Charter Amendment, and (ii) the Concurrent Financing Transactions and
the Concurrent Financing Transactions Issuances, if the same are submitted by
the Company for approval by the Company's stockholders. The undersigned may vote
the Capital Stock on all other matters.
This proxy shall be binding upon the representatives, successors and
assigns of the undersigned (including any transferee of any of the Capital
Stock).
If any provision of this proxy or any part of any such provision is
held under any circumstances to be invalid or unenforceable in any jurisdiction,
then (a) such provision or part thereof shall, with respect to such
circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this proxy. Each provision of this
proxy is separable from every other provision of this proxy, and each part of
each provision of this proxy is separable from every other part of such
provision.
This proxy shall terminate upon the Expiration Date.
Date: _______________, 200__
---------------------------------
Shareholder's Name
Number of shares of Class A
Common Stock of the Company owned
of record as of the date of this
proxy:
---------------------------------
Number of shares of Series C
Preferred Stock of the Company
owned of record as of the date of
this proxy:
---------------------------------
ii
SCHEDULE 4.7
Absence of Proceedings
See Schedule 4.8.
S-1
SCHEDULE 4.8
Possession of Licenses and Permits
Attached hereto is the current disclosure of XM Satellite Radio Holdings Inc.
with respect to FCC matters:
XM Radio and Sirius Radio received licenses from the FCC in October 1997 to
construct and operate satellite radio service systems. The FCC has allocated 25
MHz for the new service in a range of radio frequencies known as the S-Band.
As the owner of one of two FCC licenses to operate a commercial satellite
radio service in the United States, we will continue to be subject to regulatory
oversight by the FCC. Our development, implementation and operation of our
system is subject to significant regulation by the FCC under authority granted
under the Communications Act and related federal law. Non-compliance by us with
FCC rules and regulations could result in fines, additional license conditions,
license revocation or other detrimental FCC actions. Any of these FCC actions
may harm our business. There is no guarantee that the rules and regulations of
the FCC will continue to support our business plan.
One of the two losing bidders in the satellite radio license auction filed
a petition to deny our application for an FCC license, but the petition was
denied. The losing bidder asked the FCC to review this decision. The losing
bidder also asked a federal court of appeals to mandate that the FCC review this
decision. On November 30, 2001, the FCC denied the losing bidder's application
for review and upheld the FCC's previous decision denying its petition to deny.
The losing bidder has appealed the decision to the United States Court of
Appeals for the District of Columbia Circuit. The losing bidder has argued that
WorldSpace had effectively taken control of us without FCC approval and that
WorldSpace has circumvented the FCC's application cut-off procedures. WorldSpace
is no longer a stockholder in us. We, along with the FCC, have opposed this
appeal and we have denied the allegations contained in the challenge. The FCC's
order granting our license remains in effect during the pendency of the appeal.
In December 2000, the FCC approved a transfer of control of our FCC license from
Motient Corporation to a diffuse group of owners, none of whom will have a
controlling interest in us. The FCC has conditioned this approval on the outcome
of the application for review. Although we believe that the award of the license
to us will continue to be upheld, we cannot predict the ultimate outcome of this
challenge. If this challenge is successful, the FCC could take a range of
actions, any of which could harm our ability to proceed with our satellite radio
service.
Our license, which is held by a subsidiary wholly owned by XM, has a term
of eight years from commencement of XM's operations and may be renewed. The FCC
requires the satellite radio licensees, including us, to adhere to certain
milestones in the development of their systems, including a requirement that the
licensees begin full operation by October 2003. We have certified to the FCC
that we have met all of the milestones applicable to our license.
The FCC has indicated that it may in the future impose public service
obligations, such as channel set-asides for educational programming, on
satellite radio licensees.
The FCC's rules require interoperability with all licensed satellite radio
systems that are operational or under construction. The FCC conditioned our
license on certification by us that our final receiver design is interoperable
with the final receiver design of the other licensee, Sirius Radio, which plans
to use a different transmission technology than we plan to use. Depending on
what level of interoperability is required, we may not initially meet this
interoperability requirement. We have signed an agreement with Sirius Radio to
develop a unified standard for satellite radios, but we anticipate that it will
take several years to develop the technologies necessary for radios that will be
capable of receiving both our service and Sirius Radio's service. Furthermore,
complying with the interoperability requirement could make the radios more
difficult and costly to manufacture. Together with Sirius Radio, we have
informed the FCC of the progress that has been made to date in meeting the
interoperability requirement.
The FCC is currently conducting a rulemaking proceeding to establish rules
for terrestrial repeater transmitters, which we have deployed and plan to
continue deploying to fill in gaps in satellite coverage. The FCC has proposed
to permit us to deploy these facilities. Specifically, the FCC has proposed a
form of blanket licensing for terrestrial repeaters and service rules which
would prohibit satellite radio licensees from using terrestrial repeating
transmitters
S-2
to originate local programming or transmit signals other than those received
from the satellite radio satellites. Various parties, including the National
Association of Broadcasters, Wireless Communications Service (WCS) licensees,
Multipoint Distribution Service (MDS) licensees, and Instructional Television
Fixed Service (ITFS) licensees have asked the FCC to:
.. limit the number of repeaters operating at greater than 2 kW EIRP that may
be deployed;
.. limit the power level of the repeaters operating at greater than 2 kW EIRP
that are deployed;
.. delay consideration of terrestrial repeater rules until XM Radio and Sirius
Radio provide additional information regarding planned terrestrial
repeaters;
.. require individual licensing of each terrestrial repeater; and
.. impose a waiting period on the use of repeaters in order to determine if
signal reception problems can be resolved through other means.
Our deployment of terrestrial repeaters may be impacted, possibly
materially, by whatever rules the FCC issues in this regard. We have made a
proposal to the FCC to set a 40 kW EIRP limit or, alternatively, a limit of 18
kW EIRP calculated by averaging power over 360 degrees, on the power of
terrestrial repeaters. We have also proposed to coordinate with WCS licensees in
certain cases prior to operating terrestrial repeaters above 2 kW EIRP. The
coordination may include our providing of filters in certain instances to limit
the interference WCS licensees claim will result from our operation of repeaters
operating above 2 kW EIRP.
On November 1, 2001, the FCC issued a further request for comments on
various proposals for permanent rules for the operation of terrestrial
repeaters. We have opposed some of these proposals. Some of the FCC's proposals
and proposals made by other parties, if adopted by the FCC, could impact our
ability to operate terrestrial repeaters, including requiring us to reduce the
power of some of our current repeaters, and subject us to monetary liability to
compensate other FCC licensees that claim they receive interference from our
repeaters.
We are currently operating terrestrial repeaters pursuant to Special
Temporary Authority ("STA") granted by the FCC in September 2001. This STA
authorizes us to operate our terrestrial repeaters for commercial service on a
non-interference basis. Because the STA was conditioned on a non-interference
basis, we are required to either reduce power or cease operating a repeater upon
receipt of a written complaint of interference. One party that opposed XM
Radio's request for STA has filed an application for review of the decision
granting us an STA asking the FCC to reverse the decision and deny XM Radio's
STA request. This Application for Review is pending. This STA expired on March
18, 2002. On March 11, 2002, we applied for an extension of this STA. Pursuant
to the FCC's rules, we can continue to operate our terrestrial repeaters
pursuant to the STA pending a final determination on our extension request.
The FCC also may adopt limits on emissions of terrestrial repeaters to
protect other services using nearby frequencies. While we believe that we will
meet any reasonable non-interference standard for terrestrial repeaters, the FCC
has no specific standard at this time, and the application of such limits might
increase our cost of using repeaters. Although we are optimistic that we will be
able to construct and use terrestrial repeaters as needed, the development and
implementation of the FCC's ultimate rules might delay this process or restrict
our ability to do so. We believe that it is not likely that an FCC order would
materially impact the terrestrial repeater system design currently in operation.
We are required to coordinate the XM Radio system with systems operating in
the same frequency bands in adjacent countries. Canada and Mexico are the
countries whose radio systems are most likely to be affected by satellite radio.
The United States government, which conducts the coordination process, has
resolved the issue with both the Canadian and Mexican governments.
We operate the communication uplinks between our own earth station and our
satellites in a band of radio frequencies that are used for several other
services. The FCC has granted us a license for this earth station which
S-3
expires in March 2011. The other services operating in this band are known under
FCC rules as fixed services, broadcast auxiliary services, electronic news
gathering services, and mobile satellite services for uplink station networks.
Although we are optimistic that we will succeed in coordinating any additional
domestic uplink earth stations, we may not be able to coordinate any such
further use of this spectrum in a timely manner, or at all.
We also need to protect our system from out-of-band emissions from
licensees operating in adjacent frequency bands. WCS licensees operating in
frequency bands adjacent to the satellite radio's S-Band allocation must comply
with certain out-of-band emissions limits imposed by the FCC to protect
satellite radio systems. These limits, however, are less stringent than those we
proposed. In July 2002, the FCC requested comment on a report issued by the
National Telecommunications and Information Administration ("NTIA") in which the
NTIA proposed to relocate current Department of Defense ("DOD") operations from
the 1710-1755 MHz band to the 2360-2395 MHz band. In the event that these DOD
operations are relocated to the 2360-2395 MHz band, we and Sirius Radio have
jointly proposed that the FCC apply the same out-of-band emissions limits to
these relocated users that are applied to WCS licensees. In February 2002, the
FCC initiated a rulemaking proceeding regarding rules for future licensees in
the 2385-2390 MHz band, which will be able to provide both fixed and mobile
services. We have proposed that the FCC apply the same out-of-band emissions
limits on these licensees that are applied to WCS licensees. In May 2002, the
FCC issued a decision rejecting this proposal. In July 2002, we filed a Petition
for Reconsideration of this decision which is pending. In addition, in April
1998, the FCC proposed to establish rules for radio frequency ("RF") lighting
devices that operate in an adjacent radio frequency band. We opposed the
proposal on the grounds that the proliferation of this new kind of lighting and
its proposed emissions limits, particularly if used for street lighting, may
interfere with XM Radio. Jointly with Sirius Radio, we have proposed to the FCC
an emissions limit for these RF lighting devices that we believe will protect
DARS receivers from interference. In addition, we have proposed that the FCC
require existing RF lighting devices that exceed our proposed limit to cease
operations. A manufacturer of RF lights has conducted tests which it claims
demonstrate that RF lights do not cause interference to our receivers. While our
proposal is pending, these RF lighting devices may continue to be produced and
used, which could adversely affect our signal quality. The FCC may not adopt our
proposal, a decision which could adversely affect our signal quality. In
addition, in May 2000, the FCC proposed to amend its rules to allow for the
operation of devices incorporating ultra-wideband (UWB) technology on an
unlicensed basis. We opposed this proposal on the basis that the operation of
these devices may interfere with XM Radio. In February 2002, the FCC decided to
allow for the operation of these devices and, in doing so, adopted out-of-band
emissions limits for these devices that are less stringent than XM Radio
proposed. In addition, the FCC has stated that it intends to review and
potentially relax these emissions limits and may allow for the operation of
additional types of UWB devices in the future. Jointly with Sirius Radio, we
have filed a Petition for Reconsideration of this decision and have asked that
the FCC impose stricter emissions limits on UWB devices. Interference from other
devices that operate on an unlicensed basis may also adversely affect our
signal. In May 2001, the FCC issued a notice of proposed rulemaking seeking to
facilitate the development of new unlicensed spread spectrum wireless devices
operating in a frequency band adjacent to XM Radio. XM Radio opposed this
proposal on the basis that the operation of these devices pursuant to the FCC's
current emissions limits may interfere with XM Radio's operations. In May 2002,
the FCC issued a decision rejecting our opposition. In October 2001, the FCC
initiated a rulemaking proceeding reviewing its rules for unlicensed devices. XM
Radio has proposed in this proceeding that the FCC adopt out-of-band emissions
limits for certain unlicensed devices sufficient to protect our system. XM Radio
has proposed that the FCC apply these emissions limits to products sold 18
months after a final rule is published. Some manufacturers of unlicensed devices
have opposed these limits on the grounds that they are too stringent and that it
will be costly for them to meet these limits. Our proposal is pending.
The FCC order granting our license determined that because we are a private
satellite system providing a subscription service on a non-common carrier basis,
we would not be subject to the FCC's foreign ownership restrictions. However,
such restrictions would apply to us if we were to offer non subscription
services, which may appear more lucrative to potential advertisers than
subscription services. The FCC also stated in its order that it may reconsider
its decision not to subject satellite radio licensees to its foreign ownership
restrictions.
S-4
SCHEDULE 4.12
Indebtedness
None.
S-5
SCHEDULE 4.13
Title to Properties; Liens
None.
S-6
SCHEDULE 4.14
Patents, Trademarks, Authorizations, Etc.
XM Satellite Radio Inc. has entered into a license agreement with
Scientific Atlanta with respect to certain intellectual property.
S-7
SCHEDULE 4.15
Governmental Consents
None.
S-8
SCHEDULE 4.17
Capitalization
AS OF
SEPTEMBER 30, 2002
------------------
(in thousands, except share data)
Cash and cash equivalents..................................................... $ 84,318
Restricted investments (1).................................................... 29,370
Total cash, cash equivalents and restricted investments................. 113,688
Total debt.............................................................. 415,206
Stockholders' equity:
Series A convertible preferred stock, par value $0.01 (liquidation preference
of $102,739 actual and as adjusted); 15,000,000 shares authorized,
10,786,504 shares issued and outstanding..................................... 108
Series B convertible redeemable preferred stock, par value $0.01
(liquidation preference of $43,364 actual and as adjusted); 3,000,000 shares
authorized, 867,289 shares issued and outstanding actual and as adjusted..... 9
Series C convertible redeemable preferred stock, par value $0.01
(liquidation preference of $235,383 actual and as adjusted); 250,000 shares
authorized, 200,000 shares issued and outstanding(2)......................... 2
Series D junior preferred stock, par value $.01
(liquidation preference of $0 at September 30, 2002 (unaudited) and
December 31, 2002); 250,000 shares and no shares issued and outstanding at
September 30, 2002 (unaudited) and December 31, 2001....................... --
Class A common stock, par value $0.01; 225,000,000 shares
authorized, 91,358,068 shares issued and outstanding....................... 489
Class C non-voting common stock, par value $0.01;
15,000,000 shares authorized, no shares issued and outstanding............. --
Additional paid-in capital.................................................... 1,475,867
Accumulated deficit during development stage.................................. (730,075)
Total stockholders' equity.............................................. 746,825
Total capitalization.................................................... $ 1,162,031
10,786,504 shares of Class A common stock issuable upon exercise of Series A
convertible redeemable preferred stock, convertible at the option of the holder
on a one-for-one basis.
1,084,111 shares of Class A common stock issuable upon conversion of Series B
convertible redeemable preferred stock, convertible at the option of the holder
at a rate of 1.25 shares of Class A common stock for each share.
11,997,110 shares of Class A common stock issuable upon conversion of Series C
convertible redeemable preferred stock at a conversion price of $19.62.
6,466,830 shares of Class A common stock issuable upon conversion of 7.75%
convertible subordinated notes due 2006, convertible at the option of the holder
at a conversion price of $12.225 per share.
7,749,686 shares of Class A common stock issuable upon exercise of outstanding
options exercisable at exercise prices ranging from $3.19 per share to $45.4375
per share.
S-9
2,852,800 shares of Class A common stock issuable upon exercise of warrants at
an exercise price of $44.84.
Up to 2% of total number of shares of Class A common stock outstanding on a
fully diluted basis upon achievement of certain performance targets at an
exercise price of 105% of then current market price.
90,000 shares of Class A common stock issuable upon exercise of warrants
outstanding at an exercise price of $26.50.
S-10
SCHEDULE 4.18
Seniority of Notes
1. Indebtedness incurred pursuant to the Customer Credit Agreement, dated as
of December 5, 2001, between XM Satellite Radio Holdings Inc. and Boeing
Capital Corporation (assignee of Boeing Capital Services Corporation).
2. Indebtedness incurred pursuant to the Limited Recourse Obligations
Guaranty, dated as of August 24, 2001, by XM Satellite Radio Holdings Inc. in
favor of Fremont Investment & Loan relating to the Loan and Security
Agreement, dated as of August 24, 2001, by and between Fremont Investment &
Loan and XM 1500 Eckington LLC.
S-11
SCHEDULE 4.21
No Undisclosed Fees
Certain fees have been paid to Bear Stearns & Co. Inc. pursuant to an
engagement letter with the Company.
S-12
SCHEDULE 4.22
Transactions with Affiliates
None.
S-13
SCHEDULE 4.23
Registration Rights
Amended and Restated Registration Rights Agreement, dated as of August 8,
2000, by and among XM Satellite Radio Holdings Inc. and the investors named
therein.
S-14