Exhibit 10.7
THIS AGREEMENT IS NOT AN OFFER TO
ISSUE OR SELL, OR A SOLICITATION OF AN OFFER TO ACQUIRE OR BUY,
SECURITIES. SUCH OFFER OR SOLICITATION ONLY WILL BE MADE IN
COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS.
AGREEMENT
AGREEMENT (the “
Agreement ”), dated as of June 26, 2008, by and
among XM Satellite Radio Holdings Inc. (the “ Issuer
”) and the undersigned institutions, severally, but not
jointly and severally (each such institution, a “
Holder ” and collectively, all such institutions, the
“ Holders ”), solely for purposes of
Section 21, Brown Rudnick LLP (“ Brown Rudnick
”), and solely for purposes of Section 22, Sirius
Satellite Radio Inc. (“ Sirius ”). For purposes
hereof, all references in this Agreement to Holders shall mean, as
of any date of determination, those Holders or parties, as the case
may be, that on or before such date of determination executed and
delivered a counterpart signature page to this Agreement prior to
the Effective Date (as hereinafter defined) substantially in the
form attached as Exhibit A hereto, together with any
transferee of Bonds (as hereinafter defined) beneficially owned by
such Holders that pursuant to Section 5 hereof executed and
delivered a joinder signature page to this Agreement.
W I T N E S S E T H
:
Reference is made to the 1.75%
Convertible Senior Notes due 2009 in the original principal amount
of $400 million (the “ Bonds ”) issued pursuant
to the Indenture (the “ Bond Indenture ”), dated
as of November 23, 2004, as supplemented or amended from time
to time, between the Issuer and The Bank of New York/Mellon, as
bond trustee. Terms not defined herein shall have the meanings
ascribed to such terms in the Bond Indenture.
WHEREAS, each of the Holders is the
beneficial owner of, or the investment adviser or manager for the
beneficial owners of (with the power and authority to vote and
dispose of), the Bonds in the aggregate principal amount set forth
opposite its name on Exhibit A (the “ Participating
Bonds ”);
WHEREAS, pursuant to that certain
Agreement and Plan of Merger, dated as of February 19, 2007,
as amended (the “ Merger Agreement ”) by and
among Sirius, Vernon Merger Corporation and the Issuer, the parties
thereto intend to consummate the Merger (as defined in the Merger
Agreement);
WHEREAS, the Holders have asserted
that the Merger constitutes a Fundamental Change, obligating the
Issuer to offer the Fundamental Change Purchase Price to all
holders of the Bonds, but the Issuer has disputed that
assertion;
WHEREAS, pursuant to the terms
hereof, each Holder has agreed, among other things, to consent to
the Merger and waive any right to contend that the Merger
constitutes a Fundamental Change in consideration of the
Issuer’s undertakings hereunder;
NOW, THEREFORE, in consideration of
the premises and the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Issuer and
each of Holders hereby agree as follows:
1. Effectiveness of the
Agreement .
The effectiveness of this Agreement,
and the respective obligations of the parties hereto, are
conditioned upon the execution of this Agreement by the Issuer and
Holders who, in the aggregate, beneficially own, or are the
investment advisors or managers for the beneficial owners of (with
the power and authority to vote and dispose of), more than
seventy-five percent (75%) of the outstanding principal amount
of the Bonds (the “ Requisite Percentage ”). The
date upon which the Issuer and the Requisite Percentage have
executed this Agreement (the “ Effective Date ”)
shall have occurred by 10 p.m., New York City time, on
June 26, 2008 (the “ Deadline ”) or this
Agreement shall be void and of no force and effect.
2. Undertakings by the Issuer
.
Pursuant and subject to the terms of
this Agreement, the Issuer hereby agrees to the
following:
(a) Consideration : The
Issuer shall increase the interest rate applicable to the Bonds
which have been validly tendered into the Offer (as defined below)
and not withdrawn as of the expiry of the Offer, to 10% (the
“ New Rate ”). The New Rate shall commence to
accrue retroactively to July 2, 2008. Subject to
Section 3(c), the terms of the Bonds and the Bond Indenture
shall otherwise remain unchanged, including but not limited to the
maturity date, the conversion ratio of the Bonds and the
obligations of the Issuer to enter into a supplemental indenture
making the Bonds convertible into shares of the common stock of
Sirius on and after the consummation of the Merger.
(b) The Offer : The Issuer
agrees to use commercially reasonable efforts to promptly commence
and consummate an exchange offer for any and all of the Bonds (the
“ Offer ”) to effectuate the New Rate, which
Offer shall not be subject to a minimum condition. Prior to
commencement, Sirius, the Issuer and the Initial Holders (as
defined below) will determine in good faith whether the Offer shall
be conducted pursuant to Section 5 of the Securities Act of
1933, as amended (the “ Securities Act ”), or
pursuant to an exemption therefrom and whether compliance with all
or any portion of Section 14 of the Securities Exchange Act of
1934, as amended, is required. Absent an alternative agreement by
Sirius, the Issuer and the Initial Holders, the Offer shall be
conducted pursuant to Section 5 of the Securities Act and in
compliance with Section 14 of the Securities Exchange Act.
Once commenced, the Issuer shall not otherwise amend, modify,
terminate or withdraw the Offer other than pursuant to this
Agreement or to otherwise comply with law. The term “ Bond
Indenture ” as used in this Agreement also refers to any
supplemental indenture or new indenture, and the term “
Bonds ” also refers to any bonds issued in exchange
for the Bonds, all as may be utilized to effectuate the Offer. The
new indenture, indenture amendment, or indenture supplement and the
requirement to pay the New Rate will become effective if and only
if the Merger is consummated. The Issuer shall comply with all
applicable laws and any applicable contracts in effecting the Offer
and the transactions contemplated thereby.
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(c) Definitive Documentation
. No later than July 1, 2008, the Issuer shall provide the
Initial Holders with a draft of the definitive documentation in
connection with the Offer. The Issuer and the Initial Holders will
reasonably cooperate with each other to resolve any reasonable
revisions to the documents requested by the Holders. The final
documentation shall be subject to the reasonable review and comment
of the Holders who have executed this Agreement at or before the
Deadline (the “ Initial Holders ”).
(d) Press Release : The
Holders have executed certain nondisclosure agreements with the
Issuer (the “ Nondisclosure Agreements ”). The
Issuer shall issue a press release (the “ Press
Release ”) prior to 8:30 a.m., New York City time, on
June 27, 2008 (the “ Press Release Date ”)
that announces the Issuer’s entry into this Agreement and its
intention to commence the Offer and that describes the material
terms of the Offer. The Press Release shall be reviewed with Brown
Rudnick prior to its release and shall disclose to the public such
of the Evaluation Material (as defined in the Nondisclosure
Agreements) that constitutes material non-public information
(“ MNPI ”). In the event that the Issuer fails
to publicly disclose all of the Evaluation Material constituting
the MNPI in compliance with the terms specified herein in the Press
Release, the Recipient (as defined in the Nondisclosure Agreements)
may publicly disclose all of such Evaluation Material. For the
avoidance of doubt, the Recipients’ (and their
representatives’) confidentiality obligations under the
Nondisclosure Agreements shall terminate after the expiration of
the Press Release Date.
3. Undertakings by the
Holders .
Pursuant and subject to the terms of
this Agreement, each Holder, severally, but not jointly and
severally, hereby agrees to the following:
(a) Consent to Merger : Each
Holder agrees not to assert that, and to waive any default based on
the allegation that, or claim any other rights arising out of, the
consummation of the Merger or assertion that the Merger constitutes
a Fundamental Change (the “ Waiver
”).
(b) Standstill . Each Holder
agrees that it will not: (i) commence, participate or assist
in any lawsuit that claims that the Merger constitutes a
Fundamental Change; (ii) make or participate or assist with
any request or instruction under Section 8.5, 8.6 or 8.7 of
the Bond Indenture asserting that the Merger constitutes a
Fundamental Change; (iii) individually or as part of a group,
make any demand on the Issuer pursuant to the Bond Indenture based
on the assertion that the Merger constitutes a Fundamental Change;
(iv) participate or agree to participate directly or
indirectly in any offer to purchase Bonds (other than the Offer or
an Alternative Transaction (as defined in Section 8)) by the
Issuer or Sirius, or any of their respective affiliates (whether
the consideration for such offer consists of cash, rights,
securities or any combination of the foregoing); or
(v) instruct Brown Rudnick or any other attorney to file on
their behalf any action or proceeding in a court of competent
jurisdiction alleging that the Merger constitutes a Fundamental
Change.
(c) Consent to Modifications
. Subject to Section 6 hereof, each Holder hereby consents,
effective as of the date the Offer is initiated, to modifications
to the Bond Indenture to (x) exclude the Merger (and, to the
extent not already excluded, any other merger,
consolidation
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or similar transaction between the Issuer and
Sirius, or their respective affiliates necessary to effectuate the
Closing (as defined in the Merger Agreement)) from the definition
of Fundamental Change, (y) waive any notice required by
Section 12.6(c) of the Bond Indenture, and (z) any other
amendment, consent or modification reasonably requested by the
Issuer related to (x) or (y) above and subject to the
review and approval of the Holders as contemplated by
Section 2(c) above (together, such consent is referred to as
the “ Holders’ Consent ”). Each Holder
agrees not to withdraw such Holder’s consent and to execute
any document, instrument or agreement reasonably necessary to give
effect to the foregoing. Unless otherwise determined by the Issuer,
the record date under the Bond Indenture for the Holder’s
Consent shall be the date the Offer is initiated.
4. Authority to Accept the
Agreement .
Each of the Holders represents that,
as of the date of this Agreement, it is the beneficial owner of, or
the investment adviser or manager for the beneficial owners of, the
principal amount of the Bonds identified on Exhibit A
annexed to its counterpart or joinder signature page, with the
power and authority to vote and dispose of the Bonds described
therein. Each Holder shall deliver its respective Exhibit A
to Brown Rudnick, and neither such Exhibit A nor the
information contained therein sh
