Execution Copy
WAIVER AND LETTER AGREEMENT
WAIVER AND LETTER AGREEMENT, dated as
of July 14, 2008 (this “ Agreement ”), by
and among XM Satellite Radio Inc., a Delaware corporation (“
XM Inc. ” or the “ Company ”), XM
Satellite Radio Holdings Inc. (“ XM Holdings ”),
the undersigned beneficial owners (or investment managers or
advisors with authority for the beneficial owners) of the Notes (as
defined below) identified on Schedule A to this
Agreement on the date of this Agreement (each a “
Beneficial Noteholder ” and collectively, the “
Beneficial Noteholders ”).
WHEREAS, the Beneficial Noteholders
of the 9.75% Senior Notes due 2014 of XM Inc., guaranteed by XM
Holdings (the “ Notes ”) issued pursuant to the
Indenture, dated as of May 1, 2006, among XM Inc., XM
Holdings, XM Equipment Leasing LLC as subsidiary guarantor, XM
Radio Inc. as subsidiary guarantor, and The Bank of New York as
trustee (the “ Trustee ”) relating to the Notes
(the “ Indenture ”), hold a majority in
aggregate principal amount of the Notes as of the time of execution
hereof and desire to agree to waivers of the change of control
provisions of the Indenture.
WHEREAS, the proposed merger of XM
Holdings with Vernon Merger Corporation (“ Merger Sub
”), a wholly-owned subsidiary of Sirius Satellite Radio Inc.
(“ Sirius ”), pursuant to the terms of an
Agreement and Plan of Merger, dated as of February 19, 2007,
as it may be amended, modified or extended (the “ Merger
Agreement ”), among XM Holdings, Merger Sub and Sirius,
or other business combination in which XM Holdings and Sirius
become affiliated (the “ Merger ”) may trigger
certain obligations of the Company pursuant to the Indenture.
NOW, THEREFORE, in consideration of
the mutual covenants and agreements set forth in this Agreement,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the parties
signatory to this Agreement hereby agrees as follows:
1. Waiver . Each of the
Beneficial Noteholders hereby irrevocably agrees and consents that,
to the extent that the consummation of the Merger constitutes a
“Change of Control” as defined under Section 1.01
of the Indenture, the requirements pursuant to Section 4.14
(Offer to Repurchase Upon Change of Control) of the Indenture that
the Company repurchase Notes or make an offer to the holders of the
Notes to repurchase the Notes and to give notice of such Change of
Control or Offer to Repurchase Upon a Change of Control are,
subject to the other provisions of this Agreement, hereby waived in
respect of such “Change of Control” (the “
Waiver ”). The Waiver will be set forth in a
supplemental indenture substantially in the form attached hereto as
Exhibit A , and pursuant to the terms of the Indenture all
holders of the Notes will be bound thereby. The Trustee is hereby
instructed by each of the Beneficial Noteholders, and will be
instructed by the registered holders under Section 4, to
execute the supplemental indenture referred to in the preceding
sentence. Each Beneficial Noteholder acknowledges and agrees that
the Waiver shall be binding upon their respective successors,
assigns, trustees in bankruptcy and other legal
representatives.
2. Termination of
Effectiveness .
(a) The
Waiver shall become effective upon signing and shall cease to be
effective as of August 31, 2008 unless the following events
have occurred on or prior to such date:
(i) the consummation of the
Merger;
(ii) the Company having caused funds
to be raised in the amount of at least $400,000,000 through the
issuance of (A) a new series of senior notes (the “
New Senior Notes ”) or (B) other securities, both
of which will be equal to or junior in right of payment to the
Exchange Notes (as defined in Section 3 below), to fund the
cash portion of the consideration payable in the Exchange Offer (as
defined below);
(iii) the Company or XM Holdings
having raised at least $500,000,000 through a contribution to the
Company’s equity capital, the issuance and sale of
convertible or exchangeable notes that will be junior in right of
payment to the Exchange Notes or the issuance and sale of equity
securities (it being understood that, the financing conditions in
subsection (ii) above and this subsection (iii) are
independent of each other resulting in an aggregate condition of
$900,000,000 of financing);
(iv) the Company or XM Holdings
having funded or contributed the necessary funds into a segregated
account to fund the mandatory offer to repurchase all Senior
Floating Rate Notes due 2013 of XM Inc. (the “ Floating
Rate Notes ”) triggered by the Merger;
(v) the Company or XM Holdings having
funded or contributed the necessary funds into a segregated account
to fund the mandatory offer to repurchase transponders of the XM-4
satellite, triggered by the Merger under the sale and leaseback
transaction pursuant to (A) the Participation Agreement, dated as
of February 13, 2007, by and among XM Holdings, Wells Fargo
Bank Northwest in its capacity as Owner Trustee and other parties,
(B) the lease agreement, dated as of February 13, 2007,
by and between Wells Fargo Bank Northwest, as Owner Trustee, and
the Company and (C) the other related documents (the “
Sale-Leaseback Transaction ”);
(vi) the Company or XM Holdings
having repaid all borrowings under Section 13 and related
“credit facility” portions of the Third Amended and
Restated Distribution and Credit Agreement, dated as of
February 6, 2008, by and among General Motors Corporation, XM
Holdings and XM Inc.;
(vii) with respect to XM
Holdings’ 1.75% Convertible Senior Notes due 2009 (the
“ Convertible Senior Notes ”), XM Holdings
having obtained the consent of holders of at least 98% of the
aggregate principal amount of such Convertible Senior Notes to
waive a change of control offer, if any, triggered by the Merger
with the interest rate on such Convertible Senior Notes to be
increased to 10% subject to the Merger being completed; and
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(viii) the absence of any occurrence
of an event that, with notice or lapse of time or both, would
constitute a default, in the due performance or observance of any
term, covenant or condition contained in the indenture governing
the Exchange Notes (as defined below).
3. The Company’s
Obligations to Make the Exchange Offer . The Company agrees to
commence the exchange offer for the Notes held by the Beneficial
Noteholders and other “qualified institutional buyers”
(as defined in the Securities Act) (“ QIBs ”)
(and at the Company’s option, the other registered holders of
the Notes) for $600,000,000 (assuming the offer is for all
outstanding Notes) of aggregate consideration which shall be paid
(a) two thirds in cash and (b) the remaining one third in new
senior unsecured notes (the “ Exchange Notes ”)
on the terms and conditions set forth in the description of notes
attached hereto as Exhibit B hereto (the “
Exchange Offer ”); provided , that for each
dollar in excess of $400,000,000 raised by the Company in the
offering contemplated by Section 2(a)(ii) hereof (other than
securities that rank junior in right of payment to Exchange Notes),
the Company will increase the cash portion and concurrently reduce
the Exchange Notes portion of the consideration in the Exchange
Offer. The Exchange Notes will have the same coupon as the New
Senior Notes. The exchange ratio for each $1000 principal amount of
Notes exchanged in the Exchange Offer will be $1,000 divided by the
price on the Exchange Notes (expressed as a decimal) that equates
to a yield to maturity (to the investor) of the greater of
(a) 13.92% or (b) the yield to maturity of the New Senior
Notes (calculated solely based on the coupon of the New Senior
Notes and the price at which they are sold to investors). If less
than $150 million of New Senior Notes are issued, then the
coupon of the Exchange Notes will be 13% and the yield to maturity
used to calculate the exchange ratio will be the greater of
(a) 15% or (b) the yield to maturity of the New Senior
Notes (calculated solely based on the coupon of the New Senior
Notes and the price at which they are sold to investors). The
Company agrees that it will commence the Exchange Offer as promptly
as practicable following the Merger, but in no event later than
five business days following the consummation of the Merger and to
do all things reasonably necessary and appropriate in furtherance
thereof, including filing any related documents with the Securities
and Exchange Commission (the “ Commission ”), if
applicable, and to use its best efforts to consummate the Exchange
Offer within 30 business days of its commencement.
4. Instruction to Registered
Holders . Section 9.02 of the Indenture provides that the
Holders (defined as the registered holders) of a majority in
aggregate principal amount of the Notes then outstanding may waive
compliance with certain provisions of the Indenture, subject to the
limitations set forth therein. Each of the Beneficial Noteholders
hereby covenants and agrees to instruct its registered holder or
holders of the Notes to execute a waiver, as of the date hereof,
substantially in the form attached hereto as Exhibit C
, implementing the Waiver and instructing the Trustee to execute
the supplemental indenture referred to in Section 1 and agrees
to take any additional action as may be reasonably requested by the
Company in order to give effect to the Waiver and to make the
supplemental indenture effective.
5. Effectiveness of this
Agreement . This Agreement shall become effective immediately
upon the execution hereof by the parties listed on the signature
pages hereto.
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6. Termination of
Agreement . Notwithstanding anything to the contrary set forth
in this Agreement, this Agreement and the Waiver shall terminate
upon termination of the Merger Agreement without the Merger having
been consummated upon or prior to such termination.
7. Representations and
Warranties .
(a) Each
of XM Holdings and the Company represents and warrants to each of
the Beneficial Noteholders that:
(i) each of XM Holdings and XM Inc.
is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all requisite
corporate, partnership or other power and authority to enter into
this Agreement and to carry out the transactions contemplated by,
and perform its respective obligations under, this Agreement;
(ii) the execution and delivery of
this Agreement and the performance of its obligations hereunder
have been duly authorized by all necessary corporate, partnership
or other action on its part;
(iii) the execution, delivery and
performance by it of this Agreement do not and shall not
(A) violate any provision of law, rule or regulation
applicable to either of XM Holdings or XM Inc. or their respective
certificate of incorporation or bylaws or other organizational
documents or (B) conflict with, result in the breach of or
constitute (with due notice or lapse of time or both) a default
under any material contractual obligations to which either of XM
Holdings or XM Inc. is a party or under their respective
certificate of incorporation, bylaws or other governing
instruments;
(iv) the execution, delivery and
performance by it of this Agreement do not and shall not require
any registration or filing with, the consent or approval of, notice
to, or any other action with respect to, any Federal, state or
other governmental authority or regulatory body, except for
(A) the registration under the Securities Act of 1933, as
amended (the “ Securities Act ”), of the
securities to be issued in the Exchange Offer in the event that the
Company determines to register the Exchange Offer under the
Securities Act and (B) such consents, approvals,
authorizations, registrations or qualifications as may be required
under the state securities or Blue Sky laws in connection with the
Exchange Offer and such other filings as may be necessary or
required by the Commission; and
(v) assuming the due execution and
delivery of this Agreement by each of the other parties hereto,
this Agreement is the legally valid and binding obligation of it,
enforceable against it in accordance with its terms.
(b) Each
of the Beneficial Noteholders severally and not jointly represents
and warrants to the Company and XM Holdings that:
(i) it is duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its organization and has all requisite corporate, partnership or
other
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power and
authority to enter into this Agreement and to carry out the
transactions contemplated by, and perform its respective
obligations under, this Agreement;
(ii) the execution and delivery of
this Agreement and the performance of its obligations hereunder
have been duly authorized by all necessary corporate, partnership
or other action on its part;
(iii) assuming the due execution and
delivery of this Agreement by each of the other parties hereto,
this Agreement is the legally valid and binding obligation of it,
enforceable against it in accordance with its terms;
(iv) as of the date of this
Agreement, such Beneficial Noteholder is the beneficial owner of,
or the investment adviser or manager for the beneficial owners of,
the principal amount at maturity of the Notes, set forth opposite
such Beneficial Noteholder’s name on Schedule A hereto,
with the power and authority to vote and dispose of such
Notes;
(v) as of the date of this Agreement,
such Beneficial Noteholder is not aware, after due inquiry, of any
event that, due to any fiduciary or similar duty to any other
Person, would prevent it from taking any action required of it
under this Agreement;
(vi) it is a “qualified
institutional buyer” (as such term is defined in
Rule 144A promulgated under the Securities Act);
(vii) the knowledge and experience of
such Beneficial Noteholder in financial and business matters is
such that it, together with its advisors, is capable of evaluating
the merits and risks of entering into this Agreement;
(viii) such Beneficial Noteholder
acknowledges that no representations, express or implied, are being
made with respect to XM Holdings or any of its subsidiaries or
affiliates or representatives, Sirius or any of its subsidiaries or
affiliates or representatives or otherwise, other than those
expressly set forth herein;
(ix) in making its decision to enter
into this Agreement, such Beneficial Noteholder has relied upon
independent investigations made by such Beneficial Noteholder (and
has not relied on XM Holdings or any of its subsidiaries or
affiliates, Sirius or any of its subsidiaries or affiliates or J.P.
Morgan Securities Inc. or any of its subsidiaries or affiliates
(collectively, “ JPMorgan ”)) and, to the extent
believed by such Beneficial Noteholder to be appropriate, such
Beneficial Noteholder’s representatives, including such
Beneficial Noteholder’s own legal, tax and other
advisors;
(x) such Beneficial Noteholder and
its representatives have been given the opportunity to examine
documents and to ask questions of, and to receive answers from, XM
Holdings and XM Inc. or any of their subsidiaries concerning the
terms and conditions of the transactions contemplated hereby;
and
(xi) such Beneficial Noteholder has
been represented by counsel in connection with this Agreement and
the transactions contemplated by this Agreement.
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8. Amendments and
Modifications . Except as otherwise expressly provided in this
Agreement, this Agreement shall not be amended, modified or
supplemented, except in writing signed by the Company, XM Holdings
and each of the Beneficial Noteholders.
9. No Other Waivers .
Each of the signatories to this Agreement expressly acknowledges
and agrees that, except as expressly provided in this Agreement,
nothing in this Agreement is intended to, or does, in any manner
waive, limit, impair or restrict the ability of any party to this
Agreement to protect and preserve all of its rights, remedies and
interests, including, without limitation, with respect to its
claims against the Company and XM Holdings.
10. Further Assurances .
Each of the signatories to this Agreement hereby further covenants
and agrees to execute and deliver all further documents and
agreements and take all further action that may be reasonably
necessary or desirable in order to enforce and effectively
implement the terms and conditions of this Agreement, including
instructing the registered holder of the Notes to take the actions
described in Section 4 hereof.
11. Complete Agreement .
This Agreement, including the Schedules and Exhibits hereto,
constitutes the complete agreement between the signatories to this
Agreement with respect to the subject matter hereof and supersedes
all prior negotiations, agreements and understandings with respect
to the subject matter hereof. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the intent of
the signatories to this Agreement.
12. Notices . All
notices, requests, demands, claims and other communications
hereunder shall be in writing and shall be (a) transmitted by
hand delivery, or (b) mailed by first class, registered or
certified mail, postage prepaid, or (c) transmitted by
overnight courier, or (d) transmitted by telecopy, and in each
case, if to the Company or XM Holdings, at the address set forth
below:
XM Satellite
Radio Inc.
XM Satellite Radio Holdings Inc.
1500 Eckington Place, N.E.
Washington, DC 20002
Fax: (202) 380-4000
Attention: General Counsel
with a copy to:
Chief Financial Officer
if to a
Beneficial Noteholder, to the address set forth on the signature
pages to this Agreement, with a copy to the Beneficial
Noteholders’ counsel:
Notices
mailed or transmitted in accordance with the foregoing shall be
deemed to have been given upon receipt.
13. Governing Law . This
Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
14. Jurisdiction . Each
party hereto irrevocably submits to the jurisdiction of
(i) the Supreme Court of the State of New York, New York
County, and (ii) the United States District
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Court
for the Southern District of New York, for the purposes of any
suit, action or other proceeding arising out of this Agreement or
any transaction contemplated hereby. Each party hereto agrees to
commence any action, suit or proceeding relating hereto either in
the United States District Court for the Southern District of New
York or, if such suit, action or other proceeding may not be
brought in such court for reasons of subject matter jurisdiction,
in the Supreme Court of the State of New York, New York County.
Each party hereto irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated
hereby in (A) the Supreme Court of the State of New York, New
York County, or (B) the United States District Court for the
Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such
court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
15. Consent to Service of
Process . Each of the signatories to this Agreement irrevocably
consents to service of process by mail at the address listed with
the signature of each such party on the signature pages to this
Agreement. Each of the signatories to this Agreement agrees that
its submission to jurisdiction and consent to service of process by
mail is made for the express benefit of each of the other
signatories to this Agreement.
16. Specific Performance
. It is understood and agreed by each of the signatories to this
Agreement that money damages would not be a sufficient remedy for
any breach of this Agreement by any party and the sole remedy for
each non-breaching party shall be specific performance as remedy
for any such breach.
17. Headings . The
headings of the sections, paragraphs and subsections of this
Agreement are inserted for convenience only and shall not affect
the interpretation hereof.
18. Successors and
Assigns . This Agreement is intended to bind and inure to the
benefit of the signatories to this Agreement and their respective
successors, permitted assigns, heirs, executors, administrators and
representatives. The agreements, representations and obligations of
the undersigned parties under this Agreement are, in all respects,
several and not joint.
19. Counterparts . This
Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which shall constitute
one and the same agreement. Delivery of an executed counterpart of
a signature page by facsimile shall be effective as delivery of a
manually executed counterpart.
20. No Third-Party
Beneficiaries . Unless expressly stated in this Agreement, this
Agreement shall be solely for the benefit of the signatories to
this Agreement, and no other person or entity shall be a
third-party beneficiary hereof, except that (i) each person or
entity to which a Beneficial Noteholder transfers a Note from and
after the execution hereof shall have the right to enforce XM
Holdings’ and its subsidiaries’ obligations under
Section 3, for so long as such person or entity holds such
Note and (ii) JPMorgan shall be a third party beneficiary of
the representations and warranties of the Beneficial Noteholders in
Section 7(b).
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IN WITNESS WHEREOF, each of the
parties has caused this Agreement to be executed and delivered by
its duly authorized officers as of the date first written
above.
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XM SATELLITE RADIO
INC. |
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/s/ Joseph J. Euteneuer |
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Name: Joseph J.
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Title: EVP & CFO |
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XM SATELLITE RADIO
HOLDINGS INC. |
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By: |
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/s/ Joseph J. Euteneuer |
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Name: Joseph J.
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Title: EVP & CFO |
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FRANKLIN ADVISERS,
INC. |
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/s/ Edward D. Perks |
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Name: Edward D.
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Title: Senior Vice
President |
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UBS SECURITIES LLC |
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/s/ Robert Del Grande |
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Name: Robert Del
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Title: Executive
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/s/ James B. Fuqua |
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Name: James B. Fuqua |
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Title: Managing Director
and Counsel |
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JOHN HANCOCK |
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/s/ Diane R. Landers |
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Name: Diane R.
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Title: Chief
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SCHEDULE A
BENEFICIAL OWNERS
EXHIBIT A
Supplemental Indenture Regarding Waiver
EXHIBIT A
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL
INDENTURE, dated as of July ,
2008 (this “ First Supplemental Indenture ”),
among XM Satellite Radio Inc., a Delaware corporation (the “
Issuer ”), XM Satellite Radio Holdings Inc. (“
XM Holdings ”), XM Equipment Leasing LLC as subsidiary
guarantor, XM Radio Inc. as subsidiary guarantor (together with XM
Equipment Leasing LLC, the “Subsidiary Guarantors
”), and The Bank of New York Mellon, as trustee under the
Indenture referred to below (the “ Trustee
”).
W I T
N E S S E T H:
WHEREAS,
the Issuer, XM Holdings, the Subsidiary Guarantors and the Trustee
have heretofore executed and delivered an Indenture, dated as of
May 1, 2006 (the “ Indenture ”), providing
for the issuance of 9.75% Senior Notes due 2014 (the “
Notes ”);
WHEREAS,
Section 9.02 of the Indenture provides that compliance with
any provision of the Indenture may be waived with the consent of
the Holders (as defined in the Indenture) of a majority in
aggregate principal amount of the then outstanding Notes;
WHEREAS,
the proposed merger of XM Holdings with Vernon Merger Corporation
(“ Merger Sub ”), a wholly-owned subsidiary of
Sirius Satellite Radio Inc. (“ Sirius ”),
pursuant to the terms of an Agreement and Plan of Merger, dated as
of February 19, 2007, as it may be amended, modified or
extended (the “ Merger Agreement ”), among XM
Holdings, Merger Sub and Sirius, or other business combination in
which XM Holdings and Sirius become affiliated (the “
Merger ”) may trigger certain obligations of the
Issuer pursuant to the Indenture;
WHEREAS,
the Issuer, XM Holdings and certain beneficial owners of the Notes
(the “ Beneficial Noteholders ”) have entered
into a Waiver and Letter Agreement, dated as of July
, 2008 (the “ Waiver
and Letter Agreement ”), pursuant to which the Beneficial
Noteholders, holding a majority in aggregate principal amount of
the Notes, have duly agreed and consented that, to the extent the
consummation of the Merger constitutes a “Change of
Control” as defined under Section 1.01 of the Indenture,
the requirements pursuant to Section 4.14 (Offer to Repurchase
Upon Change of Control) of the Indenture that the Issuer repurchase
the Notes or make an offer to the Holders of the Notes to
repurchase the Notes and to give notice of such Change of Control
or Offer to Repurchase Upon a Change of Control are waived in
respect of such “Change of Control”; and
WHEREAS,
the execution and delivery of this First Supplemental Indenture
have been duly authorized by all necessary corporate or limited
liability company, as the case may be, action on the part of the
Issuer, XM Holdings and the Subsidiary Guarantors and all
conditions and requirements necessary to make this instrument a
valid and binding agreement have been duly performed and complied
with.
NOW
THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Issuer, XM Holdings, the Subsidiary
Guarantors and the Trustee mutually covenant and agree, for the
equal and ratable benefit of the Holders of the Notes, as
follows:
ARTICLE I — WAIVER OF COMPLIANCE
Section 1.1.
Waiver of the “Change of Control” Provision in the
Indenture .
(a) To
the extent that the consummation of the Merger constitutes a
“Change of Control” as defined under Section 1.01
of the Indenture, the requirements pursuant to Section 4.14
(Offer to Repurchase Upon Change of Control) of the Indenture that
the Issuer repurchase the Notes or make an offer to the Holders of
the Notes to repurchase the Notes are waived in respect of such
“Change of Control” (the “ Waiver
”).
(b) The
Waiver shall become effective upon signing and shall cease to be
effective as of August 31, 2008 unless the following events
have occurred on or prior to that date:
(i) the
consummation of the Merger;
(ii)
the Issuer or XM Holdings having caused funds to be raised in the
amount of at least $400,000,000 through the issuance of (A) a
new series of senior notes (the “ New Senior Notes
”) or (B) other securities that will be equal or junior
in right of payment to the new senior unsecured notes to be issued
on substantially the terms set forth on Exhibit B to the
Waiver and Letter Agreement (the “ Exchange Notes
”), to fund the cash portion of the consideration payable in
the exchange offer to be made for the Notes held by the Beneficial
Noteholders and other “qualified institutional buyers”
(as defined in the Securities Act of 1933, as amended) (and at the
Issuer’s option, the other Holders of the Notes) (the “
Exchange Offer ”);
(iii)
the Issuer or XM Holdings having raised at least $500,000,000
through a contribution to the Issuer’s equity capital, the
issuance and sale of convertible or exchangeable notes that will be
junior in right of payment to the Exchange Notes or the issuance
and sale of equity securities (it being understood that the
financing conditions in subsection (ii) above and this
subsection (iii) are independent of each other resulting in an
aggregate condition of $900,000,000 of financing);
(iv)
the Issuer or XM Holdings having funded or contributed the
necessary funds into a segregated account to fund the mandatory
offer to repurchase all Senior Floating Rate Notes due 2013 of the
Issuer (the “ Floating Rate Notes ”) triggered
by the Merger;
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(v) the
Issuer or XM Holdings having funded or contributed the necessary
funds into a segregated account to fund the mandatory offer to
repurchase transponders of the XM-4 satellite, triggered by the
Merger under the sale and leaseback transaction pursuant to
(A) the Participation Agreement, dated as of February 13,
2007, by and among XM Holdings, Wells Fargo Bank Northwest in its
capacity as Owner Trustee and other parties, (B) the lease
agreement, dated as of February 13, 2007, by and between Wells
Fargo Bank Northwest, as Owner Trustee, and the Issuer and
(C) the other related documents (the “ Sale-Leaseback
Transaction ”);
(vi)
the Issuer or XM Holdings having repaid all borrowings under
Section 13 and related “credit facility” portions
of the Third Amended and Restated Distribution and Credit
Agreement, dated as of February 6, 2008, by and among General
Motors Corporation, XM Holdings and the Issuer;
(vii)
with respect to XM Holdings’ 1.75% Convertible Senior Notes
due 2009 (the “ Convertible Senior Notes ”), XM
Holdings having obtained the consent of holders of at least 98% of
the aggregate principal amount of such Convertible Senior Notes to
waive a change of control offer, if any, triggered by the Merger
with the interest rate on such Convertible Senior Notes to be
increased to 10% subject to the Merger being completed; and
(viii)
the absence of any occurrence of an event that, with notice or
lapse of time or both, would constitute a default, in the due
performance or observance of any term, covenant or condition
contained in the indenture governing the Exchange Notes.
ARTICLE II — MISCELLANEOUS
Section 2.1.
Effect of Supplemental Indenture . From and after the
effective date of this First Supplemental Indenture, the Indenture
and the Notes shall be supplemented in accordance herewith, and
this First Supplemental Indenture shall form a part of the
Indenture and the Notes for all purposes, and every Holder of Notes
heretofore or hereafter authenticated and delivered under the
Indenture shall be bound thereby.
Section 2.2.
Indenture Remains in Full Force and Effect . Except as
supplemented by this First Supplemental Indenture, all provisions
in the Indenture and the Notes shall remain in full force and
effect.
Section 2.3.
References to Supplemental Indenture . Any and all notices,
requests, certificates and other instruments executed and delivered
after the execution and delivery of this First Supplemental
Indenture may refer to the Indenture without making specific
reference to this First Supplemental Indenture, but nevertheless
all such
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references shall include this First Supplemental Indenture unless
the context requires otherwise.
Section 2.4.
Conflict with Trust Indenture Act (“TIA”) . If
any provision of this First Supplemental Indenture limits,
qualifies or conflicts with any provision of the TIA that is
required under the TIA to be part of and govern any provision of
this First Supplemental Indenture, the provision of the TIA shall
control. If any provision of this First Supplemental Indenture
modifies or excludes any provision of the TIA that may be so
modified or excluded, the provision of the TIA shall be deemed to
apply to the Indenture as so modified or to be excluded by this
First Supplemental Indenture, as the case may be.
Section 2.5.
Severability . If any court of competent jurisdiction shall
determine that any provision in this First Supplemental Indenture
shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
Section 2.6.
Terms Defined in the Indenture . All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them
in the Indenture.
Section 2.7.
Headings . The Article and Section headings of this First
Supplemental Indenture have been inserted for convenience of
reference only, are not to be considered a part of this First
Supplemental Indenture and shall in no way modify or restrict any
of the terms or provisions hereof.
Section 2.8.
Benefits of First Supplemental Indenture . Nothing in this
First Supplemental Indenture or the Notes, express or implied,
shall give to any Person, other than the parties hereto and thereto
and their successors hereunder and thereunder and the Holders of
the Notes any benefit of any legal or equitable right, remedy or
claim under the Indenture, this First Supplemental Indenture or the
Notes.
Section 2.9.
Successors . All agreements of the Issuer and XM Holdings in
this First Supplemental Indenture shall bind their respective
successors. All agreements of the Trustee in this First
Supplemental Indenture shall bind its successors.
Section 2.10.
Trustee Not Responsible for Recitals . The recitals
contained herein shall be taken as the statements of the Issuer and
XM Holdings and the Trustee assumes no responsibility for their
correctness.
Section 2.11.
Certain Duties and Responsibilities of the Trustee . In
entering into this First Supplemental Indenture, the Trustee shall
be entitled to the benefit of every provision of the Indenture and
the Notes relating to the conduct or affecting the liability or
affording protection to the Trustee, whether or not elsewhere
herein so provided.
Section 2.12.
Governing Law . This First Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the
State of New York.
4
Section 2.13.
Counterpart Originals . The parties may sign any number of
copies of this First Supplemental Indenture. Each signed copy shall
be an original, but all of them together represent the same
agreement.
Section 2.14.
Effectiveness . This First Supplemental Indenture shall
become effective upon execution hereof by the parties listed on the
signature pages hereto.
Section 2.15.
Confirmation . Each of the Issuer, XM Holdings, the
Subsidiary Guarantors and the Trustee hereby confirms and reaffirms
the Indenture in every particular except as amended and
supplemented by this First Supplemental Indenture.
Section 2.16.
Notation on Notes . Pursuant to Section 9.05 of the
Indenture, new Notes reflecting the amendments to the Indenture
made hereby shall not be issued; however, corresponding changes to
the Notes to reflect the amendments made hereby shall be deemed to
be made to the Notes as of the date of this First Supplemental
Indenture. The Trustee may, but shall not be required to, place an
appropriate notation as to this First Supplemental Indenture on any
Note hereafter authenticated in accordance with Section 9.05
of the Indenture.
Section 2.17.
Entire Agreement . This First Supplemental Indenture,
together with the Indenture as amended hereby and the Notes,
contains the entire agreement of the parties, and supersedes all
other representations, warranties, agreements and understandings
between the parties, oral or otherwise, with respect to the matters
contained herein and therein.
5
IN
WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the date first
above written.
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XM SATELLITE RADIO
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XM SATELLITE RADIO
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XM EQUIPMENT LEASING
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XM RADIO INC. |
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THE BANK OF NEW YORK
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[XM
Satellite Radio Inc. Supplemental Indenture]
EXHIBIT B
Description of Notes
EXHIBIT B
DESCRIPTION OF NOTES
For purposes of this description,
references to the “Company,” “we,”
“our” and “us” refers XM Satellite Radio
Inc. (not including its parent company or any of its subsidiaries).
The term “Outstanding Notes” refers to the 9.75% Senior
Notes due 2014 and the term “Notes” refers to
the % Senior Notes due
2014 offered hereby in accordance with Section 3(a)(9) of the
Securities Act.
The Outstanding Notes were and the
Notes will be issued under an Indenture between the Company and The
Bank of New York Mellon, as Trustee. The terms of the Notes include
those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act.
Certain terms used in this
description are defined under the subheading “—Certain
definitions”. Certain defined terms used in this description
but not defined herein have the meanings assigned to them in the
Indenture. The following description is only a summary of the
material provisions of the Indenture. We urge you to read the
Indenture because it, not this description, defines your rights as
holders of these Notes. You may request copies of the Indenture at
our address set forth under the heading “Where you can find
more information”.
Brief description of Notes
These Notes:
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are unsecured senior obligations of the Company; |
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are senior in right of payment to any existing and future
Subordinated Obligations of the Company; |
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will be unconditionally guaranteed by the Guarantors (including
Holdings) on a senior basis, subject to the limitations described
below under the caption “Note Guarantee”; and |
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are effectively junior to all of the existing and future
liabilities of any of the Company’s Subsidiaries that are not
Subsidiary Guarantors. |
Principal, maturity and interest
The Company issued the Outstanding
Notes initially with an aggregate principal amount of $600 million.
The Company issued the Outstanding Notes in denominations of $1,000
and any integral multiple of $1,000. As long as we are subject to
the debt incurrence covenants under the Existing Sale and Leaseback
Transaction and subject to the indentures governing the
Company’s 9.75% Senior Notes due 2014 or the Company’s
Senior Floating Rate Notes due 2013, the Notes will have a maturity
of , 2014. If at any time prior to
, 2013, the Company is no longer
either (i) subject to the debt incurrence covenants under the
Existing Sale and Leaseback Transaction or (ii) subject to the
indentures governing the Company’s 9.75% Senior Notes due
2014 and the Company’s Senior Floating Rate Notes due 2013,
to the extent any notes issued thereunder remain outstanding
following the refinancing
transactions described in this offering memorandum, the Notes will
mature on , 2013. Subject to our
compliance with the covenant described under the subheading
“—Certain covenants—Limitation on
indebtedness”, we will be permitted to issue more Notes from
time to time under the Indenture (the “ Additional
Notes ”). The Notes and the Additional Notes, if any,
will be treated as a single class for all purposes of the
Indenture, including waivers, amendments, redemptions and offers to
purchase. Unless the context otherwise requires, for all purposes
of the Indenture and this “Description of Notes”,
references to the Notes include any Additional Notes actually
issued.
Interest on these Notes will accrue
at the rate of % per annum and will
be payable semiannually in arrears on
and
of each year, commencing on
. We will make each
interest payment to the holders of record of these Notes on the
immediately preceding and
. We will pay interest on overdue
principal at 1% per annum in excess of the above rate and will pay
interest on overdue installments of interest at such higher rate to
the extent lawful.
Interest on these Notes will accrue
from the date of original issuance or, if interest has already been
paid, from the most recent interest payment date. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day
months.
Payments on the Notes; paying agent and registrar
We will pay principal of, premium, if
any, and interest on the Notes at the office or agency designated
by the Company in the Borough of Manhattan, The City of New York,
except that we may, at our option, pay interest on the Notes by
check mailed to holders of the Notes at their registered address as
it appears in the Registrar’s books. We have initially
designated the corporate trust office of the Trustee in New York,
New York to act as our Paying Agent and Registrar. We may, however,
change the Paying Agent or Registrar without prior notice to the
holders of the Notes, and the Company or any of its Restricted
Subsidiaries may act as Paying Agent or Registrar.
We will pay principal of, premium, if
any, and interest on, Notes in global form registered in the name
of or held by The Depository Trust Company or its nominee in
immediately available funds to The Depository Trust Company or its
nominee, as the case may be, as the registered holder of such
global Note.
Transfer and exchange
A holder may transfer or exchange
Notes in accordance with the Indenture. The Registrar and the
Trustee may require a holder, among other things, to furnish
appropriate endorsements and transfer documents. No service charge
will be imposed by the Company, the Trustee or the Registrar for
any registration of transfer or exchange of Notes, but the Company
may require a holder to pay a sum sufficient to cover any transfer
tax or other governmental taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer
or exchange any Note selected for redemption. Also, the Company is
not required to transfer or exchange any Note for a period of
15 days before a selection of Notes to be redeemed.
The registered holder of a Note will
be treated as the owner of it for all purposes.
2
Optional redemption
We may, at our option, redeem some or
all of the Notes at any time and from time to time at a redemption
price equal to the greater of the following amounts, plus, in each
case, accrued and unpaid interest on the principal amount being
redeemed to the applicable redemption date:
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100% of the principal amount of the Notes to be redeemed;
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the sum of the present values of the principal amount and the
remaining scheduled payments of interest on the Notes to be
redeemed (not including any portion of payments of interest accrued
as of the applicable redemption date), discounted to the applicable
redemption date in accordance with customary market practice on a
semi-annual basis at a rate equal to the sum of the Treasury Rate
plus 0.50%. |
The redemption prices will be
calculated by the Independent Investment Banker assuming a 360-day
year consisting of twelve 30-day months. For purposes of
calculating the redemption prices, the following terms will have
the meanings set forth below.
“Comparable Treasury
Issue” means the U.S. Treasury security or securities
selected by the Independent Investment Banker as having a maturity
comparable to the remaining term of the Notes to be redeemed that
would be used, at the time of selection and in accordance with
customary market practice, in pricing new issues of corporate debt
securities of a comparable maturity to the remaining term of such
Notes.
“Comparable Treasury
Price” means, with respect to any redemption date,
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the bid-side price for the Comparable Treasury Issue as of the
third Business Day preceding the redemption date, as set forth in
the daily statistical release (or any successor release) published
by the Wall Street Journal in the table entitled “Treasury
Bonds, Notes, and Bills,” as determined by the Independent
Investment Banker, or |
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if such release (or any successor release) is not published or
does not contain such prices on such Business Day: |
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the average of the Reference Treasury Dealer Quotations for
that redemption date, after excluding the highest and lowest of the
Reference Treasury Dealer Quotations; |
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if the Trustee obtains fewer than four Reference Treasury
Dealer Quotations, the average of all Reference Treasury Dealer
Quotations so received; or |
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if only one Reference Treasury Dealer Quotation is received,
such quotation. |
“Independent Investment
Banker” means one of the Reference Treasury Dealers selected
by the Trustee after consultation with us.
3
“Reference Treasury
Dealer” means each of four primary U.S. Government securities
dealers in New York City (each a “Primary Treasury
Dealer”), consisting of (i) J.P. Morgan Securities Inc.
(or its affiliate), (ii) Morgan Stanley & Co. Incorporated
(or its affiliate), (iii) UBS Securities LLC and
(iv) another nationally recognized investment banking firm (or
its affiliate) that we select in connection with the particular
redemption, and their respective successors, provided that if any
of them ceases to be a Primary Treasury Dealer, we will substitute
another nationally recognized investment banking firm (or its
affiliate) that is a Primary Treasury Dealer.
“Reference Treasury Dealer
Quotations” means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 3:30
p.m., New York City time, on the third Business Day preceding that
redemption date.
“Treasury Rate” means,
with respect to any redemption date, the rate per year equal to the
semi-annual equivalent yield to maturity of the Comparable Treasury
Issue, calculated on the third Business Day preceding the
applicable redemption date, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for that redemption
date.
Unless we default in the payment of
the redemption price, on and after the applicable redemption date,
interest will cease to accrue on the Notes or portions of the Notes
called for redemption.
If the optional redemption date is on
or after an interest record date and on or before the related
interest payment date, the accrued and unpaid interest, if any,
will be paid to the Person in whose name the Note is registered at
the close of business, on such record date, and no additional
interest will be payable to holders whose Notes will be subject to
redemption by the Company.
Selection and notice of redemption
If we are redeeming less than all the
Notes at any time, the Registrar will select Notes to be redeemed
using any method that it deems fair and appropriate. However, if
the Notes are solely registered in the name of Cede & Co. and
traded through The Depository Trust Company, then The Depository
Trust Company will select the Notes to be redeemed in accordance
with its practices.
We will redeem Notes of $1,000 or
less in whole and not in part. We will cause notices of redemption
to be mailed by first-class mail at least 30 but not more than
60 days before the redemption date to each holder of Notes to
be redeemed at its registered address.
If any Note is to be redeemed in part
only, the notice of redemption that relates to that Note will state
the portion of the principal amount thereof to be redeemed. We will
issue a new Note in a principal amount equal to the unredeemed
portion of the original Note in the name of the holder upon
cancellation of the original Note. Notes called for redemption
become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on Notes or portions of
them called for redemption.
4
Mandatory redemption; offers to purchase; open market
purchases
We are not required to make any
mandatory redemption or sinking fund payments with respect to the
Notes. However, under certain circumstances, we may be required to
offer to purchase Notes as described under the captions
“—Change of control” and “—Certain
covenants—Limitation on sales of assets and subsidiary
stock”. We may at any time and from time to time purchase
Notes in the open market or otherwise.
Ranking
Senior indebtedness versus Notes
The indebtedness evidenced by these
Notes will be unsecured and will rank pari passu in right of
payment to any other Senior Indebtedness of the Company. Secured
debt and other secured obligations of the Company will be
effectively senior to the Notes to the extent of the value of the
assets securing such debt or other obligations.
As of March 31, 2008, on a
pro forma basis after giving effect to the refinancing
transactions described in this offering memorandum, including the
offering of the Notes and the application of the proceeds
therefrom, Holdings, the Company and the Subsidiary Guarantors
would have had approximately $2,107.6 million of Indebtedness
outstanding, of which $407.6 million is secured Indebtedness.
The amounts we will receive as a result of the refinancing
transactions described in this offering memorandum may vary from
those described in this offering memorandum depending on several
factors, including changes in our refinancing plans as a result of
market conditions or other factors, the extent to which holders of
existing indebtedness may elect not to accept our offer to
refinance their indebtedness, the timing of the merger and other
factors. For more information on the sources and uses of proceeds
associated with the refinancing transactions described in this
offering memorandum, you should read the table under the caption
“Use of proceeds” as well as “The merger,”
“Capitalization” and “Summary of historical
consolidated financial data” appearing elsewhere in this
offering memorandum.
Liabilities of subsidiaries versus Notes
A portion of our operations are
conducted through our Subsidiaries. Claims of creditors of
Subsidiaries that are not Subsidiary Guarantors, including trade
creditors and creditors holding indebtedness issued by such
non-Guarantor Subsidiaries, and claims of preferred stockholders of
such non-Guarantor Subsidiaries generally will have priority with
respect to the assets and earnings of such non-Guarantor
Subsidiaries over the claims of our creditors, including holders of
the Notes. Accordingly, the Notes will be effectively subordinated
to creditors (including trade creditors) and preferred
stockholders, if any, of our non-Guarantor Subsidiaries.
As of March 31, 2008, on a
pro forma basis after giving effect to the refinancing
transactions described in this offering memorandum, including the
offering of the Notes, non-Guarantor Subsidiaries would have had
$25.9 million of liabilities, including trade and other
payables.
5
Although the Indenture limits the
Incurrence of Indebtedness and preferred stock by certain of our
Subsidiaries, such limitation is subject to a number of significant
qualifications. Moreover, the Indenture does not impose any
limitation on the Incurrence by such Subsidiaries of liabilities
that are not considered Indebtedness under the Indenture. See
“—Certain covenants—Limitation on
indebtedness”.
Note Guarantees
Upon consummation of the Escrow
LLC-Company Merger, the Notes will be guaranteed by Holdings and
each of the Company’s current and future Material
Subsidiaries. Currently, XM Equipment Leasing LLC and XM Radio Inc.
(to the extent permitted by FCC rules and regulations) are the only
Subsidiary Guarantors. These Note Guarantees will be joint and
several obligations of the Guarantors. The Subsidiary Guarantees
will be effectively subordinated to any secured Indebtedness of the
applicable Guarantor to the extent of the value of the assets
securing such Indebtedness. The obligations of each Guarantor under
its Note Guarantee will be limited as necessary to prevent that
Note Guarantee from constituting a fraudulent conveyance under
applicable law. See “Risk Factors—Federal and state
statutes allow courts, under specific circumstances, to void or
subordinate guarantees and require noteholders to return payments
received from guarantors.”
As of March 31, 2008, on a
pro forma basis after giving effect to the refinancing
transactions described in this offering memorandum, including the
offering of the Notes and the application of the proceeds
therefrom, the Subsidiary Guarantors and the Parent Guarantor would
have had $2,107.6 million in Indebtedness outstanding, of which
$407.6 million is secured Indebtedness.
A Guarantor may not sell or otherwise
dispose of all or substantially all of its assets to, or
consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person) another Person, other than the
Company or another Guarantor, unless:
(1) immediately after giving
effect to that transaction, no Default or Event of Default exists;
and
(2) either:
(a) the
Person acquiring the property in any such sale or disposition or
the Person formed by or surviving any such consolidation or merger
assumes all the obligations of that Guarantor under the Indenture
and its Note Guarantee pursuant to a supplemental indenture
satisfactory to the Trustee; or
(b) the
Net Proceeds of such sale or other disposition are applied in
accordance with the applicable “Asset Sale” provisions
of the Indenture.
The Note Guarantee of a Guarantor
will be released with respect to the Notes:
(1) in connection with any sale
or other disposition of all or substantially all of the assets of
that Guarantor (including by way of merger or consolidation) to a
Person that is not (either before or after giving effect to such
transaction) the Company or a Restricted Subsidiary
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of the
Company, if the sale or other disposition does not violate the
“Asset Sale” provisions of the Indenture;
(2) in connection with any sale
or other disposition of all of the Capital Stock of that Guarantor
to a Person that is not (either before or after giving effect to
such transaction) the Company or a Restricted Subsidiary of the
Company, if the sale or other disposition does not violate the
“Asset Sale” provisions of the Indenture;
(3) if the Company designates
any Restricted Subsidiary that is a Guarantor to be an Unrestricted
Subsidiary in accordance with the applicable provisions of the
Indenture; or
(4) upon legal defeasance or
satisfaction and discharge of the Indenture as provided below under
the captions “—Defeasance” and
“—Satisfaction and discharge.”
See “—Limitation on sales
of assets and subsidiary stock.”
Book-entry, delivery and form
The Notes will initially be
represented in the form of one or more global notes (the
“Global Notes”) in fully-registered book-entry form
without interest coupons that will be deposited upon issuance with
the Trustee under the Indenture, The Bank of New York Mellon, as
custodian for The Depository Trust Company, or “DTC,”
and registered in the name of DTC or its nominee, in each case for
credit to an account of a direct or indirect participant as
described below.
Except as set forth below, the global
notes may be transferred, in whole and not in part, only to another
nominee of DTC or to a successor of DTC or its nominee. Beneficial
interests in the global notes may not be exchanged for notes in
certificated form (the “Certificated Notes”) except in
the limited circumstances described below. See
“—Exchange of global notes for certificated
notes.” In addition, transfer of beneficial interests in the
global notes will be subject to the applicable rules and procedures
of DTC and its direct or indirect participants, which may change
from time to time. The Notes may be presented for registration of
transfer and exchange at the Corporate Trust Office of the
Trustee.
Depository procedures
The following description of the
operations and procedures of DTC is provided solely as a matter of
convenience. These operations and procedures are solely within the
control of the respective settlement systems and are subject to
changes by them. We take no responsibility for these operations and
procedures and urge investors to contact the system or their
participants directly to discuss these matters.
DTC has advised us that DTC is a
limited-purpose trust company organized under the laws of the State
of New York, a “banking organization” within the
meaning of the New York Banking Law, a member of the Federal
Reserve System, a “clearing corporation” within the
meaning of the Uniform Commercial Code and a “clearing
agency” registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold
securities for its participating organizations (collectively, the
“ participants ”) and to facilitate the
clearance and
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settlement of transactions in those securities between participants
through electronic book-entry changes in accounts of its
participants. The participants include securities brokers and
dealers (including the initial purchasers of the Outstanding
Notes), banks, trust companies, clearing corporations and certain
other organizations. Access to DTC’s system is also available
to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly (collectively,
the " indirect participants ”). Persons who are not
participants may beneficially own securities held by or on behalf
of DTC only through the participants or the indirect participants.
The ownership interests in, and transfers of ownership interests
in, each security held by or on behalf of DTC are recorded on the
records of the participants and indirect participants.
DTC has also advised us that,
pursuant to procedures established by it:
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of participants designated by the initial purchasers of the
Outstanding Notes with portions of the principal amount of the
Global Notes; and |
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ownership of these interests in the Global Notes will be shown
on, and the transfer of ownership of these interests will be
effected only through, records maintained by DTC (with respect to
the participants) or by the participants and the indirect
participants (with respect to other owners of beneficial interests
in the Global Notes). |
Investors in the Global Notes who are
participants in DTC’s system may hold their interests therein
directly through DTC. Investors in the Global Notes who are not
participants may hold their interests therein indirectly through
organizations which are participants in such system. All interests
in a Global Note may be subject to the procedures and requirements
of DTC. The laws of some states require that certain Persons take
physical delivery in definitive form of securities that they own.
Consequently, the ability to transfer beneficial interests in a
Global Note to such Persons will be limited to that extent. Because
DTC can act only on behalf of participants, which in turn act on
behalf of indirect participants, the ability of a Person having
beneficial interests in a Global Note to pledge such interests to
Persons that do not participate in the DTC system, or otherwise
take actions in respect of such interests, may be affected by the
lack of a physical certificate evidencing such interests.
Except as described below, owners
of an interest in the Global Notes will not have Notes registered
in their names, will not receive physical delivery of Notes in
certificated form and will not be considered the registered owners
or “Holders” thereof under the Indenture for any
purpose.
Payments in respect of the principal
of, and interest and premium and additional interest, if any, on a
Global Note registered in the name of DTC or its nominee will be
payable to DTC in its capacity as the registered Holder under the
Indenture. Under the terms of the Indenture, the Company and the
Trustee will treat the Persons in whose names the Notes, including
the Global Notes, are registered as the owners of the Notes for the
purpose of receiving payments and for all other purposes.
Consequently, neither the Company, the Trustee nor any agent of the
Company or the Trustee has or will have any responsibility or
liability for:
8
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(1) |
|
any aspect of DTC’s records or any participant’s or
indirect participant’s records relating to or payments made
on account of beneficial ownership interests in the Global Notes or
for maintaining, supervising or reviewing any of DTC’s
records or any participant’s or indirect participant’s
records relating to the beneficial ownership interests in the
Global Notes; or |
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(2) |
|
any other matter relating to the actions and practices of DTC
or any of its participants or indirect participants. |
Transfers between participants in DTC
will be effected in accordance with DTC’s procedures, and
will be settled in same-day funds.
DTC has advised us that its current
practice, upon receipt of any payment in respect of securities such
as the Notes (including principal and interest), is to credit the
accounts of the relevant participants with the payment on the
payment date unless DTC has reason to believe it will not receive
payment on such payment date. Each relevant participant is credited
with an amount proportionate to its beneficial ownership of an
interest in the principal amount of the relevant security as shown
on the records of DTC. Payments by the participants and the
indirect participants to the beneficial owners of Notes will be
governed by standing instructions and customary practices and will
be the responsibility of the participants or the indirect
participants and will not be the responsibility of DTC, the Trustee
or the Company. Neither the Company nor the Trustee will be liable
for any delay by DTC or any of its participants in identifying the
beneficial owners of the Notes, and the Company and the Trustee may
conclusively rely on and will be protected in relying on
instructions from DTC or its nominee for all purposes.
DTC has advised the Company that it
will take any action permitted to be taken by a Holder of Notes
only at the direction of one or more participants to whose account
DTC has credited the interests in the Global Notes and only in
respect of such portion of the aggregate principal amount of the
Notes as to which such participant or participants has or have
given such direction. However, if there is an Event of Default
under the Notes, DTC reserves the right to exchange the Global
Notes for legended Notes in certificated form, and to distribute
such Notes to its participants.
Although DTC has agreed to the
foregoing procedures in order to facilitate transfers of interests
in the Global Notes among participants, it is under no obligation
to perform such procedures, and such procedures may be discontinued
or changed at any time. Neither the Company nor the Trustee nor any
of their respective agents will have any responsibility for the
performance by DTC or its participants or indirect participants of
their respective obligations under the rules and procedures
governing their operations.
Exchange of global notes for certificated notes
A Global Note is exchangeable for
Certificated Notes if:
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(1) |
|
DTC (A) notifies the Company that it is unwilling or
unable to continue as depositary for the Global Notes or
(B) has ceased to be a clearing agency registered under the
Exchange Act and, in each case, a successor depositary is not
appointed; |
9
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(2) |
|
the Company, at its option, notifies the Trustee in writing
that it elects to cause the issuance of the Certificated Notes;
or |
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(3) |
|
there has occurred and is continuing an Event of Default with
respect to the Notes. |
In addition, beneficial interests in
a Global Note may be exchanged for Certificated Notes upon prior
written notice given to the Trustee by or on behalf of DTC in
accordance with the Indenture. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests
in Global Notes will be registered in the names, and issued in any
approved denominations, requested by or on behalf of the depositary
(in accordance with its customary procedures).
Exchange of certificated notes for global notes
Certificated Notes may not be
exchanged for beneficial interests in any Global Note unless the
transferor first delivers to the Trustee a written certificate (in
the form provided in the Indenture) to the effect that such
transfer will comply with the appropriate transfer restrictions
applicable to such Notes.
Same day settlement and payment
The Company will make payments in
respect of the Notes represented by the Global Notes (including
principal, premium, if any, interest and additional interest, if
any) by wire transfer of immediately available funds to the
accounts specified by the Global Note Holder. The Company will make
all payments of principal, interest, premium and additional
interest, if any, with respect to Certificated Notes by wire
transfer of immediately available funds to the accounts specified
by the Holders of the Certificated Notes or, if no such account is
specified, by mailing a check to each such Holder’s
registered address. The Notes represented by the Global Notes are
expected to be eligible to trade in DTC’s Same-Day Funds
Settlement System, and any permitted secondary market trading
activity in such Notes will, therefore, be required by DTC to be
settled in immediately available funds. The Company expects that
secondary trading in any Certificated Notes will also be settled in
immediately available funds.
Because of time zone differences, the
securities account of a Euroclear or Clearstream participant
purchasing an interest in a Global Note from a participant will be
credited, and any such crediting will be reported to the relevant
Euroclear or Clearstream participant, during the securities
settlement processing day (which must be a Business Day for
Euroclear and Clearstream) immediately following the settlement
date of DTC. DTC has advised us that cash received in Euroclear or
Clearstream as a result of sales of interests in a Global Note by
or through a Euroclear or Clearstream participant to a Participant
will be received with value on the settlement date of DTC but will
be available in the relevant Euroclear or Clearstream cash account
only as of the Business Day for Euroclear or Clearstream following
DTC’s settlement date.
Change of control
10
Upon the occurrence of any of the
following events (each a “ Change of Control ”),
each Holder shall have the right to require that the Company
repurchase such Holder’s Notes at a purchase price in cash
equal to 101% of the principal amount thereof on the date of
purchase plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest
payment date):
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(1) |
|
any “person” (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than one or more
Permitted Holders, is or becomes the “beneficial owner”
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that for purposes of this clause (1) such person shall
be deemed to have “beneficial ownership” of all shares
that any such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total voting power
of the Voting Stock of the Company or Sirius Satellite Radio Inc.
(for the purposes of this clause (1), such other person shall be
deemed to beneficially own any Voting Stock of a Person held by any
other Person (the “parent entity”), if such other
person is the beneficial owner (as defined above in this clause
(1)), directly or indirectly, of more than 50% of the voting power
of the Voting Stock of such parent entity); |
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(2) |
|
the first day on which a majority of the members of the Board
of Directors of the Company or Sirius Satellite Radio Inc. are not
Continuing Directors, other than in connection with the
Merger; |
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(3) |
|
the adoption of a plan relating to the liquidation or
dissolution of the Company or Sirius Satellite Radio Inc.; or |
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(4) |
|
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 the Company and its Restricted
Subsidiaries taken as a whole, or of Sirius Satellite Radio Inc.
and its Subsidiaries taken as a whole, to any “person”
(as that term is used in Section 13(d)(3) of the Exchange
Act); |
Notwithstanding the foregoing, the
consummation of none of the Merger, a Holdings-Company Merger, the
Escrow LLC-Company Merger, a Company-Sirius Merger or a
Holdings-Sirius Merger will constitute a Change of Control under
the Indenture.
Within 30 days following any
Change of Control, we will mail a notice to each Holder with a copy
to the Trustee (the “ Change of Control Offer ”)
stating:
| |
(1) |
|
that a Change of Control has occurred and that such Holder has
the right to require us to purchase such Holder’s Notes at a
purchase price in cash equal to 101% of the principal amount
thereof on the date of purchase, plus accrued and unpaid interest,
if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest on the
relevant interest payment date); |
11
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(2) |
|
the circumstances and relevant facts regarding such Change of
Control (including information with respect to pro forma
historical income, cash flow and capitalization, in each case after
giving effect to such Change of Control); |
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(3) |
|
the purchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed);
and |
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(4) |
|
the instructions, as determined by us, consistent with the
Indenture and the covenant described hereunder, that a Holder must
follow in order to have its Notes purchased. |
We will not be required to make a
Change of Control Offer following 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 the
Indenture applicable to a Change of Control Offer made by us and
purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
We will comply, to the extent
applicable, with the requirements of Section 14(e) of the Exchange
Act and any other securities laws or regulations in connection with
the repurchase of Notes as a result of a Change of Control. To the
extent that the provisions of any securities laws or regulations
conflict with the provisions of the Indenture and the covenant
described hereunder, we will comply with the applicable securities
laws and regulations and shall not be deemed to have breached our
obligations under the Indenture and the covenant described
hereunder by virtue of our compliance with such securities laws or
regulations.
The Change of Control purchase
feature of the Notes may in certain circumstances make more
difficult or discourage a sale or takeover of the Company or Sirius
Satellite Radio Inc. and, thus, the removal of incumbent
management. The Change of Control purchase feature is a result of
negotiations between the Company and the initial purchasers. We
have no present intention to, and we have no present knowledge of a
present intention by Sirius Satellite Radio Inc. to, engage in a
transaction involving a Change of Control, although it is possible
that we or Sirius Satellite Radio Inc. could decide to do so in the
future. Subject to the limitations discussed below, we or Sirius
Satellite Radio Inc. could, in the future, enter into certain
transactions, including acquisitions, refinancings or other
recapitalizations, that would not constitute a Change of Control
under the Indenture, but that could increase the amount of
indebtedness outstanding at such time or otherwise affect our
capital structure or credit ratings. Restrictions on our ability to
Incur additional Indebtedness are affected by the covenants
described under “—Certain covenants—Limitation on
indebtedness”, “—Limitation on liens” and
“—Limitation on sale/leaseback transactions”.
Such restrictions can only be waived with the consent of the
holders of a majority in principal amount of the Notes then
outstanding. Except for the limitations contained in such
covenants, however, the Indenture will not contain any covenants or
provisions that may afford holders of the Notes protection in the
event of a highly leveraged transaction.
Future indebtedness that we may Incur
may contain prohibitions on the occurrence of certain events that
would constitute a Change of Control or require the repurchase of
such indebtedness upon a Change of Control. Moreover, the exercise
by the holders of their right to require us to repurchase their
Notes could cause a default under existing or future
indebtedness,
12
even if
the Change of Control itself does not, due to the financial effect
of such repurchase on us. Finally, our ability to pay cash to the
holders of Notes following the occurrence of a Change of Control
may be limited by our then existing financial resources. There can
be no assurance that sufficient funds will be available when
necessary to make any required repurchases.
The definition of “Change of
Control” includes a disposition of all or substantially all
of the assets of the Company or Sirius Satellite Radio Inc. to any
Person. Although there is a limited body of case law interpreting
the phrase “substantially all”, there is no precise
established definition of the phrase under applicable law.
Accordingly, in certain circumstances there may be a degree of
uncertainty as to whether a particular transaction would involve a
disposition of “all or substantially all” of the assets
of the Company or Sirius Satellite Radio Inc. As a result, it may
be unclear as to whether a Change of Control has occurred and
whether a holder of Notes may require the Company to make an offer
to repurchase the Notes as described above.
The provisions under the Indenture
relative to our obligation to make an offer to repurchase the Notes
as a result of a Change of Control may be waived or modified with
the written consent of the holders of a majority in principal
amount of the Notes.
Certain covenants
Changes in covenants when
Notes rated investment grade
With respect to the Notes, if on any
date following the date of the Indenture:
(1) the Notes are rated Baa3 or
better by Moody’s and BBB- or better by Standard &
Poor’s (or, if either such entity ceases to rate the Notes
for reasons outside of the control of the Company, the equivalent
investment grade credit rating from any other “nationally
recognized statistical rating organization” within the
meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act
selected by the Company as a replacement agency); and
(2) no Default or Event of
Default shall have occurred and be continuing under the Indenture,
then, beginning on that day, the covenants specifically listed
under the following captions in this offering memorandum will no
longer be applicable to the series of Notes:
(1) “—Limitation on
sales of assets and subsidiary stock;”
(2) “—Limitation on
restricted payments;”
(3) “—Limitation on
indebtedness;”
(4) clauses (1)(A) and
(3) of the covenant described under the caption
“—Limitation on sale/leaseback
transactions;”
(5) “—Limitation on
affiliate transactions;”
(6) clause (3) of the
covenant described below under the caption “—Merger and
consolidation;” and
13
(7) “—Limitation on
restrictions on distributions from restricted
subsidiaries.”
There can be no assurance that the
Notes will ever achieve an investment grade rating or that any such
rating will be maintained.
The Indenture contains covenants
including, among others, the following:
Limitation on indebtedness
(a) The Company will not, and
will not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness; provided, however , that the
Company and any Subsidiary Guarantor will be entitled to Incur
Indebtedness if, on the date of such Incurrence and after giving
effect thereto on a pro forma basis, the Consolidated
Leverage Ratio would be less than 6.00 to 1.
(b) Notwithstanding the
foregoing paragraph (a), the Company and the Restricted
Subsidiaries will be entitled to Incur any or all of the following
Indebtedness:
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(1) |
|
Indebtedness incurred by the Company or any of its Restricted
Subsidiaries under this clause (1) that, after giving effect
to any such Incurrence, does not exceed $150 million at any
time outstanding; |
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(2) |
|
Indebtedness of the Company in an aggregate principal amount
which, when taken together with all other Indebtedness of the
Company Incurred pursuant to this clause (2) and then
outstanding, does not exceed 175% of the Net Cash Proceeds received
by the Company since immediately after the Issue Date from the
issue or sale of Capital Stock of the Company or cash contributed
to the capital of the Company, including cash contributions
received by the Company following a Holdings-Company Merger, (in
each case other than proceeds of Disqualified Stock or sales of
Capital Stock to the Company or any of its Subsidiaries);
provided, however , that (A) any Indebtedness Incurred
under this clause (2) after June 1, 2012 shall have a
weighted Average Life that is greater than the then remaining
weighted Average Life of the Notes and (B) any Indebtedness
Incurred under this clause (2) shall consist only of
Subordinated Obligations; provided further, however , that
any Net Cash Proceeds or cash contributions received by the Company
pursuant to this clause (2) and used to Incur Indebtedness
pursuant to this clause (2), shall be excluded from the calculation
of amounts under clause (a)(3)(B) of the covenant described under
“—Limitation on restricted payments”. |
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(3) |
|
Indebtedness owed to and held by the Company or a Restricted
Subsidiary; provided, however , that (A) any subsequent
issuance or transfer of any Capital Stock which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company
or a Restricted Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the obligor
thereon and (B) if the Company is the obligor on such
Indebtedness, such Indebtedness is expressly |
14
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subordinated to the prior payment in full in cash of all
obligations with respect to the Notes; |
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(4) |
|
the Notes (other than any Additional Notes) and the
Guarantees; |
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(5) |
|
Indebtedness outstanding on the Issue Date or Incurred in
connection with the refinancing transactions described in this
offering memorandum; provided, that the Indebtedness for borrowed
money outstanding immediately prior to the release of escrowed
funds on the Escrow Release Date shall not exceed $1.7 billion
on a pro forma basis after giving effect to the Refinancing
Transactions (exclusive of any additional amount of Indebtedness
that may be outstanding as a result of holders of the
Company’s 9.75% Senior Notes due 2014, Senior Floating Rate
Notes due 2013, 10% Senior Secured Discount Convertible Notes due
2009 and the Existing Sale and Leaseback Transaction having
declined mandatory offers to repurchase or an exchange offer in
respect of such Indebtedness); provided further , that the
aggregate principal amount of Senior Indebtedness outstanding
immediately prior to the release of escrowed funds on the Escrow
Release Date shall not exceed $1.0 billion on a pro
forma basis after giving effect to the Refinancing Transactions
(exclusive of any additional amount of Indebtedness that may be
outstanding as a result of holders of the Company’s 9.75%
Senior Notes due 2014, Senior Floating Rate Notes due 2013, 10%
Senior Secured Discount Convertible Notes due 2009 and the Existing
Sale and Leaseback Transaction having declined mandatory offers to
repurchase or an exchange offer in respect of such
Indebtedness); |
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(6) |
|
Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Subsidiary was
acquired by the Company (other than Indebtedness Incurred in
connection with, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Subsidiary became a
Subsidiary or was acquired by the Company); provided,
however , that on the date of such acquisition and after giving
pro forma effect thereto, the Company would have been
entitled to Incur at least $1.00 of additional Indebtedness
pursuant to paragraph (a) of this covenant; |
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(7) |
|
Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to paragraph (a) or pursuant to clause (2), (4),
(5) or (6) or this clause (7); provided, however ,
that to the extent such Refinancing Indebtedness directly or
indirectly Refinances Indebtedness of a Subsidiary Incurred
pursuant to clause (6), such Refinancing Indebtedness shall be
Incurred only by such Subsidiary; |
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(8) |
|
Hedging Obligations directly related to Indebtedness permitted
to be Incurred by the Company and its Restricted Subsidiaries
pursuant to the Indenture; |
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(9) |
|
obligations in respect of workers’ compensation claims,
self-insurance obligations, performance, bid and surety bonds and
completion guarantees |
15
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provided by the Company or any Restricted Subsidiary in the
ordinary course of business; |
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(10) |
|
Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business;
provided, however , that such Indebtedness is extinguished
within five Business Days of its Incurrence; |
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(11) |
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Unsecured Subordinated Obligations or Disqualified Stock of the
Company in an aggregate principal amount not in excess of
$250 million outstanding (at any one time) 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 Obligations or Disqualified Stock,
as applicable, has a weighted Average Life longer than the weighted
Average Life of the Notes and has a final Stated Maturity of
principal later than the Stated Maturity of principal of the
Notes; |
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(12) |
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Indebtedness arising from agreements of the Company or any of
its Restricted Subsidiaries providing for indemnification,
adjustment of purchase price or similar obligations, in each case,
Incurred or assumed in connection with the disposition of any
business, assets or Capital Stock of a Restricted Subsidiary,
provided, however , the maximum aggregate liability in
respect of all such Indebtedness shall at no time exceed the gross
proceeds actually received by the Company and its Restricted
Subsidiaries in connection with such disposition; |
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(13) |
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Any Indebtedness which becomes an Obligation of the Company as
a result of a Holdings-Company Merger or a Company-Sirius
Merger; |
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(14) |
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Replacement Satellite Vendor Indebtedness; and |
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(15) |
|
unsecured Subordinated Obligations or Disqualified Stock of the
Company in an aggregate principal amount (or liquidation
preference, as applicable) (including the aggregate principal
amount (or liquidation preference, as applicable) of all
Refinancing Indebtedness incurred to refund, refinance or replace
any Indebtedness or Disqualified Stock, as applicable, incurred
pursuant to this clause (15)) 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 longer than the
weighted Average Life of the Notes and has a final maturity date
later than the final maturity date of the Notes. |
(c) Notwithstanding the
foregoing, the Company will not be entitled to Incur any
Indebtedness pursuant to the foregoing paragraph (b) if the
proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Obligations of the Company unless such Indebtedness
shall be subordinated to the Notes to at least the same extent as
such Subordinated Obligations.
(d) For purposes of determining
compliance with this covenant:
16
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(1) |
|
in the event that an item of Indebtedness (or any portion
thereof) meets the criteria of more than one of the types of
Indebtedness described above, the Company, in its sole discretion,
will classify such item of Indebtedness (or any portion thereof) at
the time of Incurrence and will only be required to include the
amount and type of such Indebtedness in one of the above
clauses; |
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(2) |
|
the Company will be entitled to divide and classify (and later
reclassify) an item of Indebtedness in more than one of the types
of Indebtedness described above; |
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(3) |
|
any Indebtedness Incurred under clauses (1) or (2) of
paragraph (b) above shall cease to be deemed Incurred or
outstanding for purposes of those clauses, respectively, but
instead shall be deemed to be Incurred for purposes of paragraph
(a) above from and after the first date on which the Company
could have Incurred such Indebtedness under paragraph
(a) without reliance on any of such clauses; |
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(4) |
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Guarantees of, or obligations in respect of letters of credit
relating to, Indebtedness which is otherwise included in the
determination of a particular amount of Indebtedness shall not be
included; |
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(5) |
|
any Disqualified Stock of the Company or Preferred Stock of a
Restricted Subsidiary will be deemed to have a principal amount
equal to the greater of the maximum mandatory redemption or
repurchase price (not including, in either case, any redemption or
repurchase premium) or the liquidation preference thereof; and |
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(6) |
|
Increases in the amount of Indebtedness solely as a result of
fluctuations in the exchange rate of currencies will not be deemed
to be an Incurrence of Indebtedness for purposes of this
covenant. |
Limitation on restricted payments
(a) The Company will not, and
will not permit any Restricted Subsidiary, directly or indirectly,
to make a Restricted Payment if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:
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(1) |
|
a Default shall have occurred and be continuing (or would
result therefrom); |
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(2) |
|
the Company is not entitled to Incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) of the covenant
described under “—Limitation on indebtedness”
after giving effect, on a pro forma basis, to such
Restricted Payment; or |
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(3) |
|
the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of
(without duplication): |
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(A) |
|
100% of Consolidated Operating Cash Flow accrued during the
period (treated as one accounting period) from the beginning of the
first fiscal quarter during which the Company generates positive
Consolidated Operating Cash Flow to the end of the most recent
fiscal quarter for which |
17
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internal financial statements are available less 1.4 times the
Consolidated Interest Expense for the same period; plus |
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(B) |
|
100% of the aggregate Net Cash Proceeds received by the Company
from the issuance or sale of its Capital Stock (other than
Disqualified Stock) subsequent to the Issue Date (other than an
issuance or sale to a Subsidiary of the Company), 100% of any cash
capital contribution received by the Company from its shareholders
subsequent to the Issue Date, 100% of the fair market value (as
determined by the Board of Directors) of the consideration (if
other than cash) from the issue or sale of Capital Stock (other
than Disqualified Stock) of the Company and 100% of the fair market
value (as determined by the Board of Directors) of the actual or
deemed capital contributions to the common equity capital of the
Company by Holdings from the issuance of Capital Stock of Holdings
in exchange for the retirement of Indebtedness of the Company that
ranks equal to the Notes in right of payment ; provided,
however , that any Net Cash Proceeds received by the Company
from the issue or sale of its Capital Stock or cash capital
contributions received by the Company and used to Incur
Indebtedness pursuant to clause (b)(2) of the covenant described
under “—Limitation on indebtedness”, shall be
excluded from the calculation of Net Cash Proceeds and cash capital
contributions under this clause (B) until and to the extent
any Indebtedness Incurred pursuant to such clause (b)(2) in respect
of such Net Cash Proceeds or cash capital contributions has been
treated, pursuant to clause (d)(3) of such covenant, as Incurred
pursuant to paragraph (a) of such covenant; plus |
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(C) |
|
the amount by which Indebtedness of the Company or any
Restricted Subsidiary is reduced on the Company’s balance
sheet upon the conversion or exchange subsequent to the Issue Date
of any Indebtedness convertible or exchangeable for Capital Stock
(other than Disqualified Stock) of Holdings or the Company (less
the amount of any cash, or the fair value (as determined in good
faith by the Board of Directors) of any other property, distributed
by Holdings or the Company upon such conversion or exchange);
plus |
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(D) |
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an amount equal to the sum of (i) the net reduction in the
Investments (other than Permitted Investments) made by the Company
or any Restricted Subsidiary in any Person resulting from
repurchases, repayments or redemptions of such Investments by such
Person, proceeds realized on the sale of such Investment and
proceeds representing the return of capital (excluding dividends
and distributions to the extent included in Consolidated Operating
Cash Flow), in each case received by the Company or any Restricted
Subsidiary, and (ii) to the extent such Person is an
Unrestricted Subsidiary, the portion (proportionate to the
Company’s equity interest in such Subsidiary) of the fair
market value (as determined in good faith by the Board of
Directors) of the net assets of such Unrestricted Subsidiary at the
time such Unrestricted Subsidiary is |
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designated a Restricted Subsidiary; provided, however ,
that the foregoing sum shall not exceed, in the case of any such
Person or Unrestricted Subsidiary, the amount of Investments
(excluding Permitted Investments) previously made (and treated as a
Restricted Payment) by the Company or any Restricted Subsidiary in
such Person or Unrestricted Subsidiary. |
(b) The preceding provisions
will not prohibit:
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(1) |
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any Restricted Payment made within 90 days of the receipt
of Net Cash Proceeds from the sale of, or made by exchange for,
Capital Stock of the Company (other than Disqualified Stock) or a
substantially concurrent cash capital contribution received by the
Company; provided, however , that (A) such Restricted
Payment shall be excluded from subsequent calculations of the
amount of Restricted Payments and (B) the Net Cash Proceeds
from such sale or such cash capital contribution (to the extent so
used for such Restricted Payment) shall be excluded from the
calculation of amounts under clause (3)(B) of paragraph
(a) above; |
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(2) |
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any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations
(other than Permitted Subordinated Obligations) of the Company made
within 90 days by exchange for, or out of the proceeds of, the
Incurrence of Indebtedness of such Person which is permitted to be
Incurred pursuant to the covenant described under
“—Limitation on indebtedness”; provided,
however , that such purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value shall be
excluded from subsequent calculations of the amount of Restricted
Payments; |
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(3) |
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any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of
the Company Incurred pursuant to clause (b)(11) of the covenant
described under “—Limitation on indebtedness”
made by exchange for, or out of the proceeds of the substantially
concurrent Incurrence of, Subordinated Obligations that have, at
the time of Incurrence, a weighted Average Life that is greater
than the then remaining weighted Average Life of the Notes and a
Stated Maturity that is later than the date that is 91 days
after the Stated Maturity of the Notes; provided, however ,
that such purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value shall be excluded from
subsequent calculations of the amount of Restricted Payments; |
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(4) |
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dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend
would have complied with this covenant; provided, however ,
that such dividend shall be included in subsequent calculations of
the amount of Restricted Payments; |
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(5) |
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the declaration or payment of dividends on Disqualified Stock
issued pursuant to the covenant described under
“—Limitation on indebtedness”; provided,
however , that at the time of declaration of such dividend, no
Default shall have occurred and be continuing (or result
therefrom); provided further, however , that such |
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dividends shall be excluded from subsequent calculations of the
amount of Restricted Payments; |
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(6) |
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repurchases of Capital Stock deemed to occur upon exercise of
stock options, warrants or other convertible securities if such
Capital Stock represents a portion of the exercise price thereof;
provided, however , that such Restricted Payments shall be
excluded from subsequent calculations of the amount of Restricted
Payments; |
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(7) |
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cash payments in lieu of the issuance of fractional shares in
connection with a reverse stock split of the Capital Stock of the
Company or the exercise of warrants, options or other securities
convertible into or exchangeable for Capital Stock of the Company;
provided, however , that any such cash payment shall not be
for the purpose of evading the limitation of the covenant described
under this subheading (as determined in good faith by the Board of
Directors); provided further, however , that such payments
shall be excluded in subsequent calculations of the amount of
Restricted Payments; |
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(8) |
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in the event of a Change of Control or to the extent permitted
by the covenant described under “—Limitation on sales
of assets and subsidiary stock”, and if no Default shall have
occurred and be continuing, the payment, purchase, redemption,
defeasance or other acquisition or retirement of Subordinated
Obligations of the Company, in each case, at a purchase price not
greater than 101% of the principal amount of such Subordinated
Obligations, plus any accrued and unpaid interest thereon;
provided, however , that prior to such payment, purchase,
redemption, defeasance or other acquisition or retirement, the
Company (or a third party to the extent permitted by the Indenture)
has made a Change of Control Offer, or sale of assets offer, with
respect to the Notes and has repurchased all Notes validly tendered
and not withdrawn in connection with such Change of Control Offer,
or sale of assets offer; provided further, however , that
such payments, purchases, redemptions, defeasances or other
acquisitions or retirements shall be excluded from subsequent
calculations of the amount of Restricted Payments; |
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(9) |
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payments of intercompany subordinated Indebtedness, the
Incurrence of which was permitted under clause (3) of
paragraph (b) of the covenant described under
“—Limitation on indebtedness”; provided,
however , that no Default has occurred and is continuing or
would otherwise re |
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