<PAGE>
As filed with the Securities and Exchange Commission on January 21, 2000.
Registration No. 333-93529
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
AMENDMENT NO. 3 TO
FORM S-1
REGISTRATION STATEMENT
Under the Securities Act of 1933
----------------
XM SATELLITE RADIO HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware 4899 54-1878819
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification
incorporation or Number)
organization)
1250 23rd Street, N.W., Suite 57
Washington, D.C. 20037-1100
(202) 969-7100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Joseph M. Titlebaum
Senior Vice President, General
Counsel and Secretary
XM Satellite Radio Holdings Inc.
1250 23rd Street, N.W., Suite 57
Washington, D.C. 20037-1100
(202) 969-7100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
With Copies To:
Steven M. Kaufman, Esq. Gregory A. Ezring, Esq.
HOGAN & HARTSON L.L.P. LATHAM & WATKINS
555 13th Street, N.W. 885 Third Avenue
Washington, D.C. 20004 Suite 1000
(202) 637-5600 New York, New York 10022
(212) 906-1200
----------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (as defined below), check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until this registration statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE>
EXPLANATORY NOTE TO AMENDMENT NO. 3
This Amendment No. 3 to the XM Satellite Radio Holdings Inc. Registration
Statement on Form S-1 has been filed solely for the purpose of filing certain
exhibits to the Registration Statement.
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Description
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<C> <S>
1.1 Form of Underwriting Agreement relating to the offering of Class A
Common Stock.
1.2 Form of Underwriting Agreement relating to the offering of Series B
Convertible Redeemable Preferred Stock.
3.1 Restated Certificate of Incorporation of XM Satellite Radio Holdings
Inc.
3.2 Restated Bylaws of XM Satellite Radio Holdings Inc.
4.1 Form of Certificate for our Class A common stock (incorporated by
reference to Exhibit 3 to the XM Satellite Radio Holdings Inc.
Registration Statement on Form 8-A, filed with the SEC on September
23, 1999).
4.2 Form of Certificate for our % Series B Convertible Redeemable
Preferred Stock.
4.3 Form of Certificate of Designation Establishing the Voting Powers,
Designations, Preferences, Limitations, Restrictions and Relative
Rights of % Series B Convertible Redeemable Preferred Stock due
2012.
5.1 Opinion of Hogan & Hartson L.L.P. with respect to the securities being
registered.
10.1++ Shareholders' Agreement, dated as of July 7, 1999, by and among XM
Satellite Radio Holdings Inc., American Mobile Satellite Corporation,
Baron Asset Fund, Clear Channel Investments, Inc., Columbia XM Radio
Partners, LLC, DIRECTV Enterprises, Inc., General Motors Corporation,
Madison Dearborn Capital Partners III, L.P., Special Advisors Fund I,
LLC, Madison Dearborn Special Equity III, L.P., and Telcom-XM
Investors, L.L.C.
10.2++ Registration Rights Agreement, dated July 7, 1999, by and among XM
Satellite Radio Holdings Inc., American Mobile Satellite Corporation,
the Baron Asset Fund series of Baron Asset Fund, and the holders of
Series A subordinated convertible notes of XM Satellite Radio
Holdings Inc.
10.3++ Note Purchase Agreement, dated June 7, 1999, by and between XM
Satellite Radio Holdings Inc., XM Satellite Radio Inc., Clear Channel
Communications, Inc., DIRECTV Enterprises, Inc., General Motors
Corporation, Telcom-XM Investors, L.L.C., Columbia XM Radio Partners,
LLC, Madison Dearborn Capital Partners III, L.P., Madison Dearborn
Special Equity III, L.P., and Special Advisors Fund I, LLC (including
form of Series A subordinated convertible note of XM Satellite Radio
Holdings Inc. attached as Exhibit A thereto).
10.4++* Technology Licensing Agreement by and among XM Satellite Radio Inc.,
XM Satellite Radio Holdings Inc., WorldSpace Management Corporation
and American Mobile Satellite Corporation, dated as of January 1,
1998, amended by Amendment No. 1 to Technology Licensing Agreement,
dated June 7, 1999.
10.5++* Technical Services Agreement between XM Satellite Radio Holdings Inc.
and American Mobile Satellite Corporation, dated as of January 1,
1998, as amended by Amendment No. 1 to Technical Services Agreement,
dated June 7, 1998.
10.6++* Satellite Purchase Contract for In-Orbit Delivery, by and between XM
Satellite Radio Inc. and Hughes Space and Communications
International, Inc., dated July 21, 1999.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
-------- -----------
<C> <S>
10.7++* Amended and Restated Agreement by and between XM Satellite Radio,
Inc. and STMicroelectronics Srl, dated September 27, 1999.
10.8++* Distribution Agreement, dated June 7, 1999, between OnStar, a
division of General Motors Corporation, and XM Satellite Radio Inc.
10.9++* Operational Assistance Agreement, dated as of June 7, 1999, between
XM Satellite Radio Inc. and DIRECTV, INC.
10.10++* Operational Assistance Agreement, dated as of June 7, 1999, between
XM Satellite Radio Inc. and Clear Channel Communications, Inc.
10.11++* Operational Assistance Agreement, dated as of June 7, 1999, between
XM Satellite Radio Inc. and TCM, LLC.
10.12++ Agreement, dated as of July 16, 1999 between XM Satellite Radio
Holdings Inc. and Gary Parsons.
10.13++ Employment Agreement, dated as of June 1, 1998, between XM Satellite
Radio Holdings Inc. and Hugh Panero.
10.14++ Letter Agreement with Lee Abrams date May 22, 1998.
10.15++ Letter Agreement with Stelios Patsiokas dated September 14, 1998.
10.16++ Letter Agreement with Heinz Stubblefield dated May 22, 1998.
10.17++ Form of Indemnification Agreement between XM Satellite Radio Holdings
Inc. and each of its directors and executive officers.
10.18 1998 Shares Award Plan (Incorporated by reference to the Registrant's
Registration Statement on Form S-8, File No. 333-92049).
10.19++ Form of Employee Non-Qualified Stock Option Agreement.
10.20++* Firm Fixed Price Contract #001 between XM Satellite Radio Inc. and
the Fraunhofer Gesellschaft zur Foderung Der angewandten Forschung
e.V., dated July 16, 1999.
10.21++* Contract for Engineering and Construction of Terrestrial Repeater
Network System by and between XM Satellite Radio Inc. and LCC
International, Inc., dated August 18, 1999.
10.22 Employee Stock Purchase Plan (Incorporated by reference to the
Registrant's Registration Statement on Form S-8, File No. 333-
92049).
10.23++ Non-Qualified Stock Option Agreement between Gary Parsons and XM
Satellite Radio Holdings Inc., dated July 16, 1999.
10.24++ Non-Qualified Stock Option Agreement between Hugh Panero and XM
Satellite Radio Holdings Inc., dated July 1, 1998, as amended.
10.25++ Form of Director Non-Qualified Stock Option Agreement.
10.26++ Form of Lease between Consortium One Eckington, L.L.C. and XM
Satellite Radio Inc., dated September 29, 1999.
10.27 Letter Agreement with Stephen Cook dated January 12, 1999.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
12.1 Statement on Computation of Ratios.
21.1+++ Subsidiaries of XM Satellite Radio Holdings Inc.
23.1 Consent of Hogan & Hartson L.L.P. (contained in their opinion filed as
Exhibit 5.1).
23.2+++ Consent of KPMG LLP.
24.1+++ Powers of Attorney.
27.1+++ Financial Data Schedule.
</TABLE>
- --------
++ Incorporated by reference to the Registrant's Registration Statement on Form
S-1, File No. 333-83619.
+++ Previously filed.
* Pursuant to the Commission's Order Granting Confidential Treatment under
Rule 406 of the Securities Act, certain confidential portions of this
Exhibit were omitted by means of redacting a portion of the text.
(b) Financial Statement Schedules included separately in the Registration
Statement.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this Amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the District of Columbia, on the 21st day of January, 2000.
XM Satellite Radio Holdings Inc.
*
By:
Name: Hugh Panero
Title: President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President, Chief Executive January 21, 2000
______________________________________ Officer, and Director
Hugh Panero (Principal Executive
Officer)
* Senior Vice President and January 21, 2000
______________________________________ Chief Financial Officer
Heinz Stubblefield (Principal Financial and
Accounting Officer)
* Chairman of the Board of January 21, 2000
______________________________________ Directors
Gary M. Parsons
* Director January 21, 2000
______________________________________
Nathaniel A. Davis
* Director January 21, 2000
______________________________________
Thomas J. Donahue
* Director January 21, 2000
______________________________________
Randall T. Mays
* Director January 21, 2000
______________________________________
Randy S. Segal
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director January 21, 2000
______________________________________
Jack Shaw
* Director January 21, 2000
______________________________________
Rajendra Singh
Director January , 2000
______________________________________
Ronald L. Zarrella
</TABLE>
*By:/s/ Joseph M. Titlebaum
Joseph M. Titlebaum
Attorney-in-Fact
II-5
<PAGE>
EXHIBIT 1.1
XM SATELLITE RADIO HOLDINGS INC.
4,000,000 Shares of Class A Common Stock
UNDERWRITING AGREEMENT
January __, 2000
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
C. E. UNTERBERG, TOWBIN
SALOMON SMITH BARNEY INC.
<PAGE>
4,000,000 Shares of Class A Common Stock
XM SATELLITE RADIO HOLDINGS INC.
UNDERWRITING AGREEMENT
----------------------
January __, 2000
Donaldson, Lufkin & Jenrette Securities Corporation
Bear, Stearns & Co. Inc.
C. E. Unterberg, Towbin
Salomon Smith Barney Inc.
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
XM Satellite Radio Holdings Inc., a corporation organized and existing
under the laws of Delaware (the "Company"), proposes, subject to the terms and
-------
conditions stated herein, to issue and sell to the several underwriters named in
Schedule I hereto (collectively, the "Underwriters") an aggregate of 4,000,000
------------
shares (the "Firm Shares") of its Class A common stock, par value $0.01 per
-----------
share (the "Common Stock") and, for the sole purpose of covering over-allotments
------------
in connection with the sale of the Firm Shares, at the option of the
Underwriters, up to an additional 600,000 shares (the "Additional Shares") of
-----------------
Common Stock. The Firm Shares and any Additional Shares purchased by the
Underwriters are referred to herein as the "Shares". The Shares are more fully
------
described in the Registration Statement referred to below. Simultaneously with
the offer and sale of the Shares hereunder, the Company is offering to the
public 2,000,000 shares of its Series B Convertible Redeemable Preferred Stock
(the "Concurrent Offering").
1. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (No. 333-93529),
-----------
and any amendments thereto, and related preliminary prospectuses for the
registration under the Securities Act of 1933, as amended (the "Securities
----------
Act"), of shares of Common Stock, which registration statement, as so
---
amended, has been declared effective by the Commission and copies of which
have heretofore been delivered to the Underwriters. The registration
statement, as amended at the time it became effective, including the
exhibits and information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the Act,
is hereinafter referred to as the "Registration Statement". If the Company
----------------------
has filed or is required pursuant to the terms hereof to file a
registration statement pursuant to Rule 462(b) under the Securities Act
registering additional shares of Common Stock (a "Rule 462(b) Registration
------------------------
<PAGE>
Statement"), then, unless otherwise specified, any reference herein to the
---------
term "Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement. Other than a Rule 462(b) Registration Statement,
which became effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the Commission (other
than prospectuses filed pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Securities Act (the "Securities Act
--------------
Regulations"), each in the form heretofore delivered to the Underwriters).
-----------
No stop order suspending the effectiveness of either the Registration
Statement or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or, to the
Company's knowledge, threatened by the Commission. The Company, if
required by the Securities Act Regulations, proposes to file the Prospectus
with the Commission pursuant to Rule 424(b) of the Securities Act
Regulations. The Prospectus relating to the Shares, in the form in which
it is to be filed with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations, is hereinafter referred to as the "Prospectus",
----------
except that if any revised prospectus or prospectus supplement shall be
provided to the Underwriters by the Company for use in connection with the
offering and sale of the Shares (the "Offering") which differs from the
--------
Prospectus (whether or not such revised prospectus or prospectus supplement
is required to be filed by the Company pursuant to Rule 424(b) of the
Securities Act Regulations), the term "Prospectus" shall refer to such
revised prospectus or prospectus supplement, as the case may be, from and
after the time it is first provided to the Underwriters for such use; and,
provided, further, that the term "Prospectus" shall be deemed to include
any wrapper or supplement thereto prepared in connection with the
distribution of any Reserved Shares (as defined in Section 2(f), below).
Any preliminary prospectus relating to the Shares or prospectus subject to
completion relating to the Shares included in the Registration Statement or
filed with the Commission pursuant to Rule 424 under the Securities Act is
hereafter called a "Preliminary Prospectus". All references in this
----------------------
Agreement to the Registration Statement, the Rule 462(b) Registration
Statement, a Preliminary Prospectus and the Prospectus, or any amendments
or supplements to any of the foregoing, shall be deemed to include any copy
thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System ("EDGAR").
-----
(b) The Registration Statement and the Prospectus, at the time the
Registration Statement became effective and as of the Closing Date referred
to in Section 2 hereof, and the Preliminary Prospectus as of the date
thereof, complied and comply in all material respects with the requirements
of the Securities Act and the Securities Act Regulations, and did not and
as of the Closing Date do not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus, as
of the date hereof (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriters by the Company for use in
connection with the offering of the Shares which differs from the
Prospectus filed with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations, in which case at the time it is first provided
to the Underwriters for such use) and on the Closing Date, does not and
will not include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this Section (1)(b)
shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing
by any Underwriter expressly for use in the Registration Statement or the
Prospectus. Each Preliminary Prospectus and Prospectus filed as part of the
Registration Statement, as part of any amendment thereto or pursuant to
Rule 424 under the Securities Act Regulations, if filed by electronic
transmission pursuant to Regulation S-T under the Securities Act, was
identical to the copy thereof delivered to the Underwriters for use in
connection with
2
<PAGE>
the offer and sales of the Shares (except as may be permitted by Regulation
S-T under the Securities Act). There are no contracts or other documents
required to be described in the Prospectus or to be filed as exhibits to
the Registration Statement under the Securities Act that have not been
described or filed therein as required, and there are no business
relationships or related-party transactions involving the Company or any of
its subsidiaries or any other person required to be described in the
Prospectus that have not been described therein as required.
(c) Each of the Company and its subsidiaries (i) has been duly
organized and is validly existing as a corporation in good standing under
the laws of its respective jurisdiction of incorporation, (ii) has all
requisite corporate power and authority to carry on its business as it is
currently being conducted and as described in the Prospectus and to own,
lease and operate its properties, and (iii) is duly qualified and in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification except, with respect to
clauses (i) (as it relates to good standing) and (iii), where the failure
to be so qualified or in good standing does not and could not reasonably be
expected to (x) individually or in the aggregate, result in a material
adverse effect on the properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of the Company and
its subsidiaries, taken as a whole, (y) interfere with or adversely affect
the issuance or marketability of the Shares pursuant hereto or (z) in any
manner draw into question the validity of this Agreement or the
transactions described in the Prospectus under the caption "Use of
Proceeds" (any of the events set forth in clauses (x), (y) or (z), a
"Material Adverse Effect").
-----------------------
(d) All of the outstanding shares of capital stock of the Company
have been duly authorized, validly issued, and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights. The Shares, when issued, delivered and sold in accordance with this
Agreement, will be duly authorized and validly issued, fully paid and
nonassessable, and will not have been issued in violation of or subject to
any preemptive or similar rights. At September 30, 1999, the Company had
the pro forma, pro forma as adjusted, and pro forma as further adjusted
capitalization as set forth in the Prospectus under the caption
"Capitalization" (subject in each case to the assumptions set forth under
such caption).
(e) Except as disclosed in the Prospectus, all of the outstanding
capital stock of, or other ownership interests in, the Company's
subsidiaries is owned by the Company, free and clear of any security
interest, claim, lien, limitation on voting rights or encumbrance; and all
such securities have been duly authorized, validly issued, and are fully
paid and nonassessable and were not issued in violation of any preemptive
or similar rights.
(f) Except as disclosed in the Prospectus there are not currently,
and will not be as a result of the Offering, any outstanding subscriptions,
rights, warrants, calls, commitments of sale or options to acquire or
instruments convertible into or exchangeable for, any capital stock or
other equity interest of the Company or any of its subsidiaries (other than
options issued pursuant to the Company's 1998 Shares Award Plan (as such
term is defined in the Prospectus)).
(g) The Common Stock (including the Shares) is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act")
------------
and is listed for quotation on the Nasdaq National Market System
("Nasdaq"), and the Company has taken no action designed to, or likely to
------
have the effect of, terminating the registration of the Common Stock under
the Exchange Act or delisting the Common Stock from Nasdaq, nor has the
Company received any notification that the Commission or Nasdaq is
contemplating terminating such registration or listing.
3
<PAGE>
(h) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby, including, without
limitation, the corporate power and authority to issue, sell and deliver
the Shares as provided herein and the corporate power to effect the Use of
Proceeds as described in the Prospectus.
(i) The statistical and market-related data included in the
Prospectus are based on or are derived from sources which the Company
believes to be reliable and accurate in all material respects.
(j) This Agreement has been duly and validly authorized, executed and
delivered by the Company and is the legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors generally
and subject to general principles of equity, and except insofar as
indemnification and contribution provisions may be limited by applicable
law or equitable principles.
(k) Neither the Company nor any of its subsidiaries is, nor after
giving effect to the Offering and the Concurrent Offering will be, (i) in
violation of its certificate of incorporation or bylaws, (ii) in default in
the performance of any bond, debenture, note, indenture, mortgage, deed of
trust or other agreement or instrument to which it is a party or by which
it is bound or to which any of its properties is subject, or (iii) in
violation of any local, state or federal law, statute, ordinance, rule,
regulation, requirement, judgment or court decree (including, without
limitation, the Communications Act of 1934 (the "Communications Act") and
------------------
the rules and regulations of the Federal Communications Commission (the
"FCC"), and environmental laws, statutes, ordinances, rules regulations,
---
judgments or court decrees) applicable to the Company or any of its
subsidiaries or any of their assets or properties (whether owned or leased)
other than, in the case of clauses (ii) and (iii), any default or violation
that (A) could not reasonably be expected to have a Material Adverse Effect
or (B) which is disclosed in the Prospectus. There exists no condition
that, with notice, the passage of time or otherwise, would constitute a
default under any such document or instrument, except as disclosed in the
Prospectus.
(l) None of (i) the execution, delivery or performance by the Company
of this Agreement, (ii) the issuance and sale of the Shares and (iii)
consummation by the Company of the transactions contemplated hereby and in
the Prospectus, including without limitation the Concurrent Offering,
violate, conflict with or constitute a breach of any of the terms or
provisions of, or a default under (or an event that with notice or the
lapse of time, or both, would constitute a default), or require consent
under, or result in the imposition of a lien on any properties of the
Company or any of its subsidiaries, or an acceleration of any indebtedness
of the Company or any of its subsidiaries pursuant to, (A) the certificate
of incorporation or bylaws of the Company or any of its subsidiaries, (B)
any bond, debenture, note, indenture, mortgage, deed of trust, contract or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or its subsidiaries or
their properties is or may be bound, (C) any statute, rule or regulation
applicable to the Company or any of its subsidiaries or any of their assets
or properties or (D) any judgment, order or decree of any court or
governmental agency or authority having jurisdiction over the Company or
any of its subsidiaries or any of their assets or properties, other than,
in the case of clause (B) above, any default or violation that (1) could
not reasonably be expected to have a Material Adverse Effect or (1) which
is disclosed in the Prospectus. No consent, approval, authorization or
order of, or filing, registration, qualification, license or permit of or
with, (i) any court or governmental agency, body or administrative agency
or (ii) any other person is required for (A) the execution, delivery
4
<PAGE>
and performance by the Company of this Agreement, (B) the issuance and sale
of the Shares and the transactions contemplated hereby and thereby,
including without limitation the Concurrent Offering, except such as have
been obtained and made under the Securities Act and state securities or
Blue Sky laws and regulations or such as may be required by the National
Association of Securities Dealers, Inc. (the "NASD").
----
(m) There is (i) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the best knowledge of the Company or any of its
subsidiaries, threatened or contemplated to which the Company or any of its
subsidiaries is a party or to which the business or property of the Company
or any of its subsidiaries is subject, (ii) no statute, rule, regulation or
order that has been enacted, adopted or issued by any governmental agency
or that has been proposed by any governmental body or (iii) no injunction,
restraining order or order of any nature by a federal or state court or
foreign court of competent jurisdiction to which the Company or any of its
subsidiaries is or may be subject or to which the business, assets, or
property of the Company or any of its subsidiaries are or may be subject,
that, in the case of clauses (i), (ii) and (iii) above, (w) is required to
be disclosed in the Prospectus and that is not so disclosed, or (x) except
as has been disclosed in the Prospectus could reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect.
(n) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency that
prevents the issuance of the Shares or prevents or suspends the use of the
Prospectus; no injunction, restraining order or order of any kind by a
federal or state court of competent jurisdiction has been issued that
prevents the issuance of the Shares, prevents or suspends the sale of the
Shares in any jurisdiction referred to in Section 1(c) hereof or that could
adversely affect the consummation of the transactions contemplated by this
Agreement or the Prospectus; and every request of any securities authority
or agency of any jurisdiction for additional information has been complied
with in all material respects.
(o) There is (i) no significant unfair labor practice complaint
pending against the Company or any of its subsidiaries nor, to the best
knowledge of the Company, threatened against any of them, before the
National Labor Relations Board, any state or local labor relations board or
any foreign labor relations board, and no significant grievance or
significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any of its
subsidiaries nor, to the best knowledge of the Company, threatened against
any of them, (ii) no significant strike, labor dispute, slowdown or
stoppage pending against the Company or any of its subsidiaries nor, to the
best knowledge of the Company, threatened against the Company or any of its
subsidiaries and (iii) to the best knowledge of the Company, no union
representation question existing with respect to the employees of the
Company or any of its subsidiaries that, in the case of clauses (i), (ii)
or (iii) above, could reasonably be expected to result in a Material
Adverse Effect. To the best knowledge of the Company, no collective
bargaining organizing activities are taking place with respect to the
Company or any of its subsidiaries. None of the Company or any of its
subsidiaries has violated (A) any federal, state or local law or foreign
law relating to discrimination in hiring, promotion or pay of employees,
(B) any applicable wage or hour laws or (C) any provision of the Employee
Retirement Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder (collectively, "ERISA"), which in the
-----
case of clause (A), (B) or (C) above could reasonably be expected to result
in a Material Adverse Effect.
5
<PAGE>
(p) None of the Company or any of its subsidiaries has violated any
environmental, safety or similar law or regulation applicable to it or its
business or property relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), lacks any permit, license or other
------------------
approval required of it under applicable Environmental Laws or is violating
any term or condition of such permit, license or approval, which could
reasonably be expected to, either individually or in the aggregate, have a
Material Adverse Effect.
(q) Each of the Company and its subsidiaries has (i) good and
marketable title to all of the properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges,
encumbrances and restrictions, except such as are described in the
Prospectus or as would not have a Material Adverse Effect, (ii) peaceful
and undisturbed possession of its properties under all material leases to
which it is a party as lessee, (iii) all licenses, certificates, permits,
authorizations, approvals, franchises and other rights from, and has made
all declarations and filings with, all federal, state and local
authorities, all self-regulatory authorities and all courts and other
tribunals (each an "Authorization") necessary to engage in the business
-------------
conducted by it in the manner described in the Prospectus, except as
described in the Prospectus or where failure to hold such Authorizations
would not, individually or in the aggregate, have a Material Adverse Effect
and (iv) no reason to believe that any governmental body or agency is
considering limiting, suspending or revoking any such Authorization. Except
where the failure to be in full force and effect would not have a Material
Adverse Effect, all such Authorizations are valid and in full force and
effect, and each of the Company and its subsidiaries is in compliance in
all material respects with the terms and conditions of all such
Authorizations and with the rules and regulations of the regulatory
authorities having jurisdiction with respect thereto. All material leases
to which the Company or any of its subsidiaries is a party are valid and
binding, and no default by the Company or any subsidiary has occurred and
is continuing thereunder and, to the best knowledge of the Company and its
subsidiaries, no material defaults by the landlord are existing under any
such lease that could reasonably be expected to result in a Material
Adverse Effect.
(r) Each of the Company and its subsidiaries owns, possesses or has
the right to employ all patents, patent rights, licenses (including all
FCC, state, local or other regulatory licenses), inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, software, systems or procedures),
trademarks, service marks and trade names, inventions, computer programs,
technical data and information (collectively, the "Intellectual Property")
---------------------
presently employed by it in connection with the businesses now operated by
it or that are proposed to be operated by it or its subsidiaries free and
clear of and without violating any right, claimed right, charge,
encumbrance, pledge, security interest, restriction or lien of any kind of
any other person and none of the Company or any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing, except as (1) disclosed in the
Prospectus or (2) as could not reasonably be expected to have a Material
Adverse Effect. To the best knowledge of the Company, the use of the
Intellectual Property in connection with the business and operations of the
Company and its subsidiaries does not infringe on the rights of any person,
except as disclosed in the Prospectus or as could not reasonably be
expected to have a Material Adverse Effect.
(s) None of the Company or any of its subsidiaries or, to the best
knowledge of the Company, any of their respective officers, directors,
partners, employees, agents or affiliates or any other person acting on
behalf of the Company or any of its subsidiaries has, directly or
indirectly, given or agreed to give any money, gift or similar benefit
(other than legal price
6
<PAGE>
concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, official
or employee of any governmental agency (domestic or foreign),
instrumentality of any government (domestic or foreign) or any political
party or candidate for office (domestic or foreign) or other person who
was, is or may be in a position to help or hinder the business of the
Company or any of its subsidiaries (or assist the Company or any of its
subsidiaries in connection with any actual or proposed transaction), which
(i) might subject the Company or any of its subsidiaries, or any other
individual or entity, to any damage or penalty in any civil, criminal or
governmental litigation or proceeding (domestic or foreign), (ii) if not
given in the past, might have had a material adverse effect on the assets,
business or operations of the Company or any of its subsidiaries or (iii)
if not continued in the future, might have a Material Adverse Effect.
(t) All material tax returns required to be filed by the Company and
each of its subsidiaries in all jurisdictions have been so filed. All
taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities or that
are due and payable have been paid, other than those being contested in
good faith and for which adequate reserves have been provided or those
currently payable without penalty or interest. To the knowledge of the
Company, there are no material proposed additional tax assessments against
the Company, the assets or property of the Company or any of its
subsidiaries. The Company has made adequate charges, accruals and reserves
in the applicable financial statements included in the Prospectus in
respect of all federal, state and foreign income and franchise taxes for
all periods as to which the tax liability of the Company or any of its
consolidated subsidiaries has not been finally determined.
(u) None of the Company or any of its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), or (ii) a "holding company" or a "subsidiary
----------------------
company" or an "affiliate" of a holding company within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(v) Except as disclosed in the Prospectus, there are no holders of
securities of the Company or any of its subsidiaries who, by reason of the
execution by the Company of this Agreement to which it is a party or the
consummation by the Company or any of its subsidiaries of the transactions
contemplated hereby, have the right to request or demand that the Company
or any of its subsidiaries register under the Securities Act or analogous
foreign laws and regulations securities held by them, other than such that
have been duly waived.
(w) Each of the Company and its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences thereto.
(x) Except as disclosed in the Prospectus, each of the Company and
its subsidiaries maintains insurance covering its properties, operations,
personnel and businesses. Such insurance insures against such losses and
risks as are adequate in accordance with customary industry practice to
protect the Company and its subsidiaries and their respective businesses.
None of the Company or any of its subsidiaries has received notice from any
insurer or agent of
7
<PAGE>
such insurer that substantial capital improvements or other expenditures
will have to be made in order to continue such insurance. All such
insurance is outstanding and duly in force on the date hereof, subject only
to changes made in the ordinary course of business, consistent with past
practice, which do not, singly or in the aggregate, materially alter the
coverage thereunder or the risks covered thereby. The Company has no reason
to believe that it or any subsidiary will not be able (a) to renew its
existing insurance coverage as and when such policies expire or (b) to
obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted or as presently
contemplated and at a cost that would not result in a Material Adverse
Effect.
(y) None of the Company or any of its subsidiaries has (i) taken,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price
of any security of the Company or any of its subsidiaries to facilitate the
sale or resale of the Shares or (ii) since the date of the Preliminary
Prospectus (A) sold, bid for, purchased or paid any person any compensation
for soliciting purchases of, the Shares or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other
securities of the Company or any of its subsidiaries.
(z) The Company and its subsidiaries and any "employee benefit plan"
(as defined under ERISA) established or maintained by the Company, its
subsidiaries or their "ERISA Affiliates" (as defined below) are in
compliance in all material respects with ERISA. "ERISA Affiliate" means,
---------------
with respect to the Company or a subsidiary, any member of any group of
organizations described in Sections 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such
----
subsidiary is a member. No "reportable event" (as defined under ERISA) has
occurred or is reasonably expected to occur with respect to any "employee
benefit plan" established or maintained by the Company, its subsidiaries or
any of their ERISA Affiliates. No "employee benefit plan" established or
maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such "employee benefit plan" were terminated, would have any
"amount of unfunded benefit liabilities" (as defined under ERISA). Neither
the Company, its subsidiaries nor any of their ERISA Affiliates has
incurred or reasonably expects to incur any liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "employee
benefit plan" or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each
"employee benefit plan" established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or failure to act, which would cause the loss
of such qualification.
(aa) Subsequent to the respective dates as of which information is
given in the Prospectus and up to the Closing Date, except as set forth in
the Prospectus, (i) none of the Company or any of its subsidiaries has
incurred any liabilities or obligations, direct or contingent, that are
material, individually or in the aggregate, to the Company and its
subsidiaries taken as a whole, nor entered into any transaction not in the
ordinary course of business, (ii) none of the Company or any of its
subsidiaries has incurred any liabilities or obligations, direct or
contingent, that will be material to the Company and its subsidiaries taken
as a whole, (iii) there has not been, singly or in the aggregate, any
change or development that could reasonably be expected to result in a
Material Adverse Effect, (iv) there has been no dividend or distribution of
any kind declared, paid or made by the Company or any of its subsidiaries
on any class of its capital stock, (v) there has been no change in
accounting methods or practices (including any change in depreciation or
amortization policies or rates) by the Company or any of its subsidiaries,
(vi) there has been no revaluation by the Company or any of
8
<PAGE>
its subsidiaries of any of their assets, (vii) there has been no increase
in the salary or other compensation payable or to become payable by the
Company or any of its subsidiaries to any of their officers, directors,
employees or advisors, nor any declaration, payment or commitment or
obligation of any kind for the payment by the Company or any of its
subsidiaries of a bonus or other additional salary or compensation to any
such person, (viii) there has been no amendment or termination of any
material contract, agreement or license to which the Company or any
subsidiary is a party or by which it is bound, (ix) there has been no
waiver or release of any material right or claim of the Company or any
subsidiary, including any write-off or other compromise of any material
account receivable of the Company or any subsidiary, and (x) there has been
no material change in pricing or royalties set or charged by the Company or
any subsidiary to their respective customers or licensees or in pricing or
royalties set or charged by persons who have licensed Intellectual Property
Rights to the Company or any of its subsidiaries.
(bb) KPMG LLP, who have expressed their opinion with respect to the
financial statements (which term as used in this Agreement includes the
related notes thereto) and supporting schedules included in the Prospectus,
are independent public or certified public accountants within the meaning
of Regulation S-X under the Securities Act and the Exchange Act.
(cc) The financial statements, together with the related notes,
included in the Prospectus present fairly in all material respects the
consolidated financial position of the Company and its subsidiaries as of
and at the dates indicated and the results of their operations and cash
flows for the periods specified. Such financial statements have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved, except as
may be expressly stated in the related notes thereto. The financial data
set forth in the Prospectus under the captions "Prospectus Summary--Summary
Consolidated Financial Data", "Selected Consolidated Financial Data" and
"Capitalization" fairly present the information set forth therein on a
basis consistent with that of the audited financial statements contained in
the Prospectus.
(dd) Except pursuant to this Agreement, there are no contracts,
agreements or understandings between the Company and any other person that
would give rise to a valid claim against the Company or any of the
Underwriters for a brokerage commission, finder's fee or like payment in
connection with the issuance, purchase and sale of the Shares.
(ee) The statements (including the assumptions described therein)
included in the Prospectus (i) are within the coverage of Rule 175(b) under
the Securities Act to the extent such data constitute forward looking
statements as defined in Rule 175(c) and (ii) were made by the Company with
a reasonable basis and reflect the Company's good faith estimate of the
matters described therein.
(ff) Each of the Company and its subsidiaries has implemented Year
2000 compliance programs designed to ensure that its computer systems and
applications will function properly beyond 1999. The Company believes that
adequate resources have been allocated for this purpose and expects the
Company's and its subsidiaries' Year 2000 date conversion programs to be
completed on a timely basis.
(gg) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
9
<PAGE>
The Company acknowledges that each of the Underwriters and, for
purposes of the opinions to be delivered to the Underwriters pursuant to Section
6 hereof, counsel to the Company and counsel to the Underwriters, will rely upon
the accuracy and truth of the foregoing representations and hereby consents to
such reliance.
2. Purchase, Sale and Delivery of the Shares.
-----------------------------------------
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Company, at a purchase
price of $[ ] per share, the number of Firm Shares set forth opposite the
respective names of the Underwriters in Schedule I hereto plus any additional
number of Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the office of Latham &
Watkins, 885 Third Avenue, Suite 1000, New York, New York, 10022, or at such
other place as shall be agreed upon by the Underwriters and the Company, at
10:00 A.M. on January [ ], 2000 (unless postponed in accordance with the
provisions of Section 9 hereof) after the determination of the public offering
price of the Firm Shares, or such other time not later than ten business days
after such date as shall be agreed upon by the Underwriters and the Company
(such time and date of payment and delivery being herein called the "Closing
-------
Date"). Payment shall be made to the Company by wire transfer in same day funds,
- ----
against delivery to the Underwriters of certificates for the Shares to be
purchased by them. Certificates for the Firm Shares shall be registered in such
name or names and in such authorized denominations as the Underwriters may
request in writing at least two full business days hours prior to the Closing
Date. The Company will permit the Underwriters to examine and package such
certificates for delivery at least one full business day prior to the Closing
Date.
(c) In addition, the Company hereby grants to the Underwriters
the option to purchase up to 600,000 Additional Shares at the same purchase
price per share to be paid by the Underwriters to the Company for the Firm
Shares as set forth in this Section 2, for the sole purpose of covering over-
allotments in the sale of Firm Shares by the Underwriters. This option may be
exercised at any time, in whole or in part, on or before the thirtieth day
following the date of the Prospectus, by written notice by the Underwriters to
the Company. Such notice shall set forth the aggregate number of Additional
Shares as to which the option is being exercised and the date and time, as
reasonably determined by the Underwriters, when the Additional Shares are to be
delivered (such date and time being herein sometimes referred to as the
"Additional Closing Date"); provided, however, that the Additional Closing Date
-----------------------
shall not be earlier than the Closing Date or earlier than the second full
business day after the date on which the option shall have been exercised nor
later than the eighth full business day after the date on which the option shall
have been exercised (unless such time and date are postponed in accordance with
the provisions of Section 9 hereof). Certificates for the Additional Shares
shall be registered in such name or names and in such authorized denominations
as the Underwriters may request in writing at least two full business days prior
to the Additional Closing Date. The Company will permit the Underwriters to
examine and package such certificates for delivery at least one full business
day prior to the Additional Closing Date.
(d) The number of Additional Shares to be sold to each
Underwriter shall be the number which bears the same ratio to the aggregate
number of Additional Shares being purchased as the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereto (or such
10
<PAGE>
number increased as set forth in Section 9 hereof) bears to the total number of
Firm Shares being purchased from the Company, subject, however, to such
adjustments to eliminate any fractional shares as the Underwriters in their sole
discretion shall make.
(e) Payment for the Additional Shares shall be made by wire
transfer in same day funds each payable to the order of the Company at the
office of Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New York,
10022, or such other location as may be mutually acceptable, upon delivery of
the certificates for the Additional Shares to the Underwriters.
3. Offering. Upon the Underwriters' authorization of the release of
--------
the Firm Shares, the Underwriters propose to offer the Shares for sale to the
public upon the terms set forth in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees with
------------------------
each of the Underwriters that:
(a) The Company will notify the Underwriters immediately (and,
if requested by the Underwriters, will confirm such notice in writing) (i) when
any post-effective amendment to the Registration Statement becomes effective,
(ii) of any request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for any additional information,
(iii) of the mailing or the delivery to the Commission for filing of the
Prospectus or any amendment of or supplement to the Registration Statement or
the Prospectus or any document to be filed pursuant to the Exchange Act during
any period when the Prospectus is required to be delivered under the Securities
Act, (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of the initiation, or the threatening, of any proceedings therefor,
(v) of the receipt of any comments or inquiries from the Commission, and (vi) of
the receipt by the Company of any notification with respect to the suspension of
the qualification of the Shares for sale in any jurisdiction or the initiation
or threatening of any proceeding for that purpose. If the Commission shall
propose or enter a stop order at any time, the Company will make every
reasonable effort to prevent the issuance of any such stop order and, if issued,
to obtain the lifting of such order as soon as possible. The Company will not
file any post-effective amendment to the Registration Statement or any amendment
of or supplement to the Prospectus (including any revised prospectus which the
Company proposes for use by the Underwriters in connection with the offering of
the Shares which differs from the prospectus filed with the Commission pursuant
to Rule 424(b) of the Securities Act Regulations, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the Securities Act
Regulations) to which the Underwriters or Underwriters' Counsel (as hereinafter
defined) shall reasonably object, will furnish the Underwriters with copies of
any such amendment or supplement a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file any such amendment
or supplement or use any such prospectus to which the Underwriters or counsel
for the Underwriters shall reasonably object.
(b) If any event shall occur as a result of which the Prospectus
would, in the judgment of the Underwriters or the Company, include an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it shall be
necessary at any time to amend or supplement the Prospectus or the Registration
Statement to comply with the Securities Act or the Securities Act Regulations,
the Company will notify the Underwriters promptly and prepare and file with the
Commission an appropriate amendment or supplement (in form and substance
satisfactory to the Underwriters) which will correct such statement or omission
or which will effect such compliance.
11
<PAGE>
(c) The Company has delivered to the Underwriters a signed copy
of the Registration Statement as originally filed, including exhibits, and all
amendments thereto, and the Company will promptly deliver to each of the
Underwriters, from time to time during the period that the Prospectus is
required to be delivered under the Securities Act, such number of copies of the
Prospectus and the Registration Statement, and all amendments of and supplements
to such documents, if any, as the Underwriters may reasonably request.
(d) The Company will endeavor in good faith, in cooperation with
the Underwriters, to qualify the Shares for offering and sale under the
securities laws relating to the offering or sale of the Shares of such
jurisdictions as the Underwriters may designate and to maintain such
qualification in effect for so long as required for the distribution thereof;
except that in no event shall the Company be obligated in connection therewith
to qualify as a foreign corporation or to execute a general consent to service
of process.
(e) The Company will make generally available (within the
meaning of Section 11(a) of the Securities Act) to its security holders and to
the Underwriters as soon as practicable, but not later than 45 days after the
end of its fiscal quarter in which the first anniversary date of the effective
date of the Registration Statement occurs (or if such fiscal quarter is the
Company's fourth fiscal quarter, not later than 90 days after the end of such
quarter), an earnings statement (in form complying with the provisions of Rule
158 of the Securities Act Regulations) covering a period of at least twelve
consecutive months beginning after the effective date of the Registration
Statement (as defined in Rule 158(c) under the Securities Act).
(f) During the period of 90 days from the date of the
Prospectus, the Company will not, directly or indirectly, without the prior
written consent of Bear, Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette
Securities Corporation, offer, sell, contract to sell, grant any option to
purchase, pledge or otherwise dispose (or announce any offer, sale, contract to
sell, grant of an option to purchase, pledge or other disposition) of any shares
of Common Stock of the Company or any securities convertible into or exercisable
or exchangeable for such Common Stock, except that the Company may issue (i)
shares of Common Stock and options to purchase Common Stock under its 1998
Shares Award Plan and Employee Stock Purchase Plan, (ii) shares of Common Stock
upon exercise of warrants to purchase Common Stock or conversion of notes and
other convertible securities that were issued and outstanding on the date of the
Prospectus or (iii) shares of Common Stock in connection with strategic
relationships and acquisitions of businesses, technologies and products
complementary to those of the Company, so long as the recipients of such shares
with respect to clause (iii) agree to be bound by a lock-up agreement
substantially in the form of Exhibit C hereto (which shall provide that any
---------
transferees and assigns of such recipients shall be bound by the lock-up
agreement) for the remainder of the 90-day lock-up period.
(g) During a period of three years from the date of the
Prospectus, the Company will furnish to the Underwriters copies of (i) all
reports to its stockholders; and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or any
national securities exchange.
(h) The Company will apply the proceeds from the sale of the
Shares as set forth under "Use of Proceeds" in the Prospectus.
(i) If the Company elects to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M., New
York City time, on the date of this Agreement, no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened
12
<PAGE>
by the Commission, and all requests for additional information on the part of
the Commission shall have been complied with to the Underwriters' reasonable
satisfaction.
(j) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act or the Exchange Act, will file
all documents required to be filed with the Commission pursuant to Sections 13,
14 or 15 of the Exchange Act within the time periods required by the Exchange
Act and the rules and regulations thereunder.
5. Payment of Expenses. Whether or not the transactions contemplated
-------------------
in this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (a)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereto (including all
exhibits thereto), any Preliminary Prospectus, the Prospectus and any amendments
or supplements thereto (including, without limitation, fees and expenses of the
Company's accountants and counsel), the underwriting documents (including this
Agreement, the Agreement Among Underwriters and the Selling Agreement) and all
other documents related to the public offering of the Shares (including those
supplied to the Underwriters in quantities as hereinabove stated), (b) the
issuance, transfer and delivery of the Shares to the Underwriters, including any
transfer or other taxes payable thereon, (c) the qualification of the Shares
under state or foreign securities or Blue Sky laws, including the costs of
printing and mailing a preliminary and final "Blue Sky Memorandum" and the fees
of counsel in connection therewith and such counsel's disbursements in relation
thereto, (d) listing of the Shares for quotation on the Nasdaq, (e) filing fees
of the Commission and the NASD, (f) the cost of printing certificates
representing the Shares, (g) the cost and charges of any transfer agent or
registrar and (h) all costs and expenses of the Underwriters, including the fees
and disbursements of counsel for the Underwriters, in connection with matters
related to the Reserved Shares.
6. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6, "Closing Date" shall refer to the
------------
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to the Underwriters or to Latham &
Watkins ("Underwriters' Counsel") pursuant to this Section 6 of any material
---------------------
misstatement or omission, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
(a) Prior to the Closing Date the Registration Statement shall
have become effective, and on the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
Securities Act or proceedings therefor initiated or, to the Company's knowledge,
threatened by the Commission. The Prospectus shall have been filed or
transmitted for filing with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations within the prescribed time period, and prior to
Closing Date the Company shall have provided evidence satisfactory to the
Underwriters of such timely filing or transmittal.
(b) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the date hereof and on
the Closing Date with the same force and effect as if made on and as of the date
hereof and the Closing Date, respectively. The Company shall have performed or
complied with all of the agreements herein contained and required to be
performed or complied with by it at or prior to the Closing Date.
13
<PAGE>
(c) The Prospectus shall have been printed and copies
distributed to the Underwriters not later than 10:00 a.m., New York City time,
on the second business day following the date of this Agreement or at such later
date and time as to which the Underwriters may agree, and no stop order
suspending the qualification or exemption from qualification of the Shares in
any jurisdiction referred to in Section 4(d) shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending or
threatened.
(d) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the issuance of
the Shares; no action, suit or proceeding shall have been commenced and be
pending against or affecting or, to the best knowledge of the Company,
threatened against, the Company or any of its subsidiaries before any court or
arbitrator or any governmental body, agency or official that (i) could
reasonably be expected to result in a Material Adverse Effect or (ii) has not
been disclosed in the Prospectus.
(e) Since the dates as of which information is given in the
Prospectus, except as disclosed in the Prospectus with respect to the stock
split, (i) there shall not have been any material adverse change, or any
development that is reasonably likely to result in a material adverse change, in
the capital stock or the long-term debt, or material increase in the short-term
debt, of the Company or any of its subsidiaries from that set forth in the
Prospectus, (ii) no dividend or distribution of any kind shall have been
declared, paid or made by the Company or any of its subsidiaries on any class of
its capital stock, (iii) neither the Company nor any of its subsidiaries shall
have incurred any liabilities or obligations, direct or contingent, that are
material, individually or in the aggregate, to the Company and its subsidiaries,
taken as a whole, and that are required to be disclosed on a balance sheet or
notes thereto in accordance with generally accepted accounting principles and
are not disclosed on the latest balance sheet or notes thereto included in the
Prospectus. Since the date hereof and since the dates as of which information is
given in the Prospectus, there shall not have occurred any Material Adverse
Effect.
(f) The Underwriters shall have received (1) a certificate,
dated the Closing Date, signed on behalf of the Company by each of the Company's
Chief Executive Officer and Chief Financial Officer in form and substance
reasonably satisfactory to the Underwriters, confirming, as of the Closing Date,
the matters set forth in paragraphs (a) through (e) of this Section 6 and that,
as of the Closing Date, the obligations of the Company to be performed hereunder
on or prior thereto have been duly performed in all material respect and (2) a
certificate, dated the Closing Date, signed by the Company's Secretary, in form
and substance reasonably satisfactory to the Underwriters.
(g) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters and counsel to the Underwriters, of Hogan & Hartson L.L.P., counsel
for the Company, to the effect set forth in Exhibit A hereto.
---------
(h) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters and counsel to the Underwriters, of Fisher Wayland Cooper Leader &
Zaragoza L.L.P., counsel for the Company, to the effect set forth in Exhibit B
---------
hereto.
(i) The Underwriters shall have received an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to the Underwriters,
of Latham & Watkins, counsel to the Underwriters, covering such matters as are
customarily covered in such opinions.
14
<PAGE>
(j) Latham & Watkins shall have been furnished with such
documents, in addition to those set forth above, as they may reasonably require
for the purpose of enabling them to review or pass upon the matters referred to
in this Section 6 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations, warranties
or conditions herein contained.
(k) At the time this Agreement is executed and at the Closing
Date the Underwriters shall have received from KPMG LLP, independent public
accountants for the Company and its subsidiaries, dated as of the date of this
Agreement and as of the Closing Date, customary comfort letters addressed to the
Underwriters in form and substance satisfactory to the Underwriters and counsel
to the Underwriters with respect to the financial statements and certain
financial information of the Company and its subsidiaries contained in the
Prospectus.
(l) At the time this Agreement is executed, the Underwriters
shall have received a "lock-up" agreement, substantially in the form attached as
Exhibit C hereto, from each of the officers and directors of the Company
- ---------
identified on Exhibit D hereto.
---------
(m) At the time this Agreement is executed, the Underwriters
shall have received a "lock-up" agreement, substantially in the form attached as
Exhibit E hereto, from each of the stockholders of the Company identified on
- ---------
Exhibit F hereto.
- ---------
(n) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq.
(o) At the time this Agreement is executed and at the Closing
Time, the NASD shall not have withdrawn, or given notice of an intention to
withdraw, its approval of the fairness of the underwriting terms and
arrangements of the Offering of the Shares by the Underwriters.
(p) Each of the (1) Shareholders' Agreement, dated July 7, 1999,
by and among the Company and the other parties thereto, (2) Technology Licensing
Agreement, dated June 7, 1999, by and among the Company and the other parties
thereto, (3) Technical Services Agreement, dated January 1, 1998, as amended,
between the Company and AMSC, (4) Satellite Purchase Contract for In-Orbit
Delivery, dated March 20, 1998, between the Company and Hughes Space and
Communications International, Inc., (5) Agreement, dated November 2, 1998, by
and between the Company and STMicroelectronics Srl, (6) Distribution Agreement,
dated June 7, 1999, between the OnStar Division of General Motors Corporation
and the Company, (8) Operational Assistance Agreement, dated June 7, 1999,
between the Company and DIRECTV, INC., (9) Operational Assistance Agreement,
dated June 7, 1999, between the Company and Clear Channel Communications, Inc.,
(10) Operational Assistance Agreement, dated June 7, 1999, between the Company
and TCM, LLC. and (11) Agreement, dated August 18, 1999, as amended on November
2, 1999, between LCC International and the Company, shall be in full force and
effect, and no party to any such agreement shall have given any notice of
termination or amendment of any material provision thereof, or of any intention
to terminate or amend any material provision thereof, to any other party, and no
event shall have occurred which would prevent any party from substantially
performing its obligations under such agreements.
(q) All opinions, certificates, letters and other documents
required by this Section 6 to be delivered by the Company will be in compliance
with the provisions hereof only if they are reasonably satisfactory in form and
substance to the Underwriters. The Company will furnish the Underwriters with
such conformed copies of such opinions, certificates, letters and other
documents as Donaldson, Lufkin & Jenrette Securities Corporation and Bear,
Stearns & Co. Inc. shall reasonably
15
<PAGE>
request. Prior to the Closing Date, the Company shall have furnished to the
Underwriters such further information, certificates and documents as the
Underwriters may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to the
Underwriters or to Underwriters' Counsel pursuant to this Section 6 shall not be
in all material respects reasonably satisfactory in form and substance to the
Underwriters and to Underwriters' Counsel, all obligations of the Underwriters
hereunder may be canceled by the Underwriters at, or at any time prior to, the
Closing Date and the obligations of the Underwriters to purchase the Additional
Shares may be canceled by the Underwriters at, or at any time prior to, the
Additional Closing Date. Notice of such cancellation shall be given to the
Company in writing, or by telephone, telecopy, telex or telegraph, confirmed in
writing.
7. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
against any and all losses, liabilities, claims, damages and expenses whatsoever
as incurred (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company will not be liable in any such case (i) to the extent but only to
the extent that any such loss, liability, claim, damage or expense arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter expressly for use therein and (ii) with respect to any preliminary
prospectus or preliminary prospectus supplement to the extent that any such
loss, claim, damage or liability results from the fact that an Underwriter sold
Shares to a person as to whom it shall be established that there was not sent or
given, at or prior to written confirmation of such sale, a copy of the
prospectus or prospectus supplement as then amended or supplemented in any case
where such delivery is required by the Securities Act if the Company has
previously furnished copies thereof in sufficient quantity to such Underwriter
and with sufficient time to effect a recirculation pursuant to Rule 461 under
the Securities Act and the loss, claim, damage or liability of the Underwriters
results from an untrue statement or omission of a material fact contained in the
preliminary prospectus or preliminary prospectus supplement which was identified
in writing prior to the effective date of the registration statement to such
underwriter and corrected in the prospectus or prospectus supplement as then
amended, and such correction would have cured the defect giving rise to such
loss, claim, damage or liability. This indemnity agreement will be in addition
to any liability which the Company may otherwise have including under this
Agreement.
(b) Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company and each other person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, against any and all losses, liabilities,
claims, damages and expenses whatsoever as incurred (including but not limited
to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any
16
<PAGE>
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or any amendment thereof, or any
related preliminary prospectus, preliminary prospectus supplement or prospectus,
or in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter expressly for use
therein; provided, however, that in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter hereunder. This indemnity will be in
addition to any liability which any Underwriter may otherwise have, including
under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses shall be borne by the indemnifying parties.
Anything in this subsection to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent; provided, however, that such consent was not
unreasonably withheld.
8. Contribution. In order to provide for contribution in
------------
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
17
<PAGE>
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, officers of the Company who signed the Registration
Statement and directors of the Company) as incurred to which the Company and one
or more of the Underwriters may be subject, in such proportions as is
appropriate to reflect the relative benefits received by the Company and the
Underwriters from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 7
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and the
Underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other hand shall be deemed to be in
the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and (y) the underwriting discounts and commissions received by
the Underwriters, respectively, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Company and the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 8, (i) in no case shall any Underwriter be liable or responsible
for any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) of this Section 8. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties, notify each party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
provided, however, that such consent was not unreasonably withheld.
9. Default by an Underwriter.
-------------------------
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default relates
do not (after giving effect to arrangements, if any, made by the Underwriters
pursuant to Subsection (b) below) exceed in the aggregate 10% of the number of
Firm Shares or Additional Shares, the Firm Shares or Additional Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase shall be purchased by the non-defaulting Underwriters in proportion to
the respective proportions which the numbers of Firm Shares set forth opposite
their respective names in Schedule I hereto bear to the aggregate number of Firm
Shares set forth opposite the names of the non-defaulting Underwriters.
18
<PAGE>
(b) In the event that such default relates to more than 10% of
the Firm Shares or Additional Shares, as the case may be, the Underwriters may
in their discretion arrange for themselves or for another party or parties
(including any non-defaulting Underwriter or Underwriters who so agree) to
purchase such Firm Shares or Additional Shares, as the case may be, to which
such default relates on the terms contained herein. In the event that within
five calendar days after such a default the Underwriters do not arrange for the
purchase of the Firm Shares or Additional Shares, as the case may be, to which
such default relates as provided in this Section 9, this Agreement, or in the
case of a default with respect to the Additional Shares, the obligations of the
Underwriters to purchase and of the Company to sell the Additional Shares, shall
thereupon terminate, without liability on the part of the Company with respect
thereto (except in each case as provided in Section 5, 7(a) and 8 hereof) or the
Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter or Underwriters of its or their liability, if any, to the other
Underwriters and the Company for damages occasioned by its or their default
hereunder.
(c) In the event that the Firm Shares or Additional Shares to
which the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
the Underwriters or the Company shall have the right to postpone the Closing
Date or Additional Closing Date, as the case may be, for a period not exceeding
five business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus which,
in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include any
party substituted under this Section 9 with like effect as if it had originally
been a party to this Agreement with respect to such Firm Shares or Additional
Shares.
10. Survival of Representations and Agreements. All representations
------------------------------------------
and warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors, or any controlling person of the Company, and shall
survive delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8, 11(d) and 12 hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
----------------------------------------
(a) This Agreement shall become effective upon the execution and
delivery of a counterpart hereof by each of the parties hereto.
(b) The Underwriters shall have the right to terminate this
Agreement at any time prior to the Closing Date or the obligations of the
Underwriters to purchase the Additional Shares at any time prior to the
Additional Closing Date, as the case may be, if on or prior to such date, (i)
the Company shall have failed, refused or been unable to perform in any material
respect any agreement on its part to be performed hereunder, (ii) any other
condition to the obligations of the Underwriters hereunder as provided in
Section 6 is not fulfilled when and as required in any material respect, (iii)
in the judgment of the Underwriters any changes of circumstance shall have
occurred since the respective dates as of which information is given in the
Prospectus which could have a Material Adverse Effect, other than as set forth
in the Prospectus, or (iv) (A) any domestic or international event or act or
occurrence has materially adversely affected, or in the opinion of the
Underwriters will in the immediate
19
<PAGE>
future materially adversely affect, the market for the Company's securities or
for securities in general; or (B) trading in securities generally on the New
York Stock Exchange ("NYSE") or quotations on the Nasdaq shall have been
----
suspended or materially limited, or minimum or maximum prices for trading shall
have been established, or maximum ranges for prices for securities shall have
been required, on such exchange, or by such exchange or other regulatory body or
governmental authority having jurisdiction; or (C) a banking moratorium shall
have been declared by federal or state authorities, or a moratorium in foreign
exchange trading by major international banks or persons shall have been
declared; or (D) there is an outbreak or escalation of armed hostilities
involving the United States on or after the date hereof, or if there has been a
declaration by the United States of a national emergency or war, the effect of
which shall be, in the Underwriters' judgment, to make it inadvisable or
impracticable to proceed with the offering, sale and delivery of the Firm Shares
or the Additional Shares, as the case may be, on the terms and in the manner
contemplated by the Prospectus; or (E) there shall have been such a material
adverse change in general economic, political or financial conditions or if the
effect of international conditions on the financial markets in the United States
shall be such as, in the Underwriters' judgment, makes it inadvisable or
impracticable to proceed with the offering, sale and delivery of the Firm Shares
or the Additional Shares, as the case may be, on the terms and in the manner
contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall
be by telephone, telecopy, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than pursuant to Section 9(b) or 11(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by the Underwriters, reimburse the Underwriters
for all out-of-pocket expenses (including the reasonable fees and expenses of
their counsel), incurred by the Underwriters in connection herewith.
12. Underwriters' Information. The Company and the Underwriters
-------------------------
severally acknowledge that the statements set forth in (i) the fourth paragraph
under the caption "Underwriting" in the Prospectus concerning the proposed
public offering price, discount and concession; and (ii) the seventh paragraph
under the caption "Underwriting" in the Prospectus concerning transactions that
stabilize, maintain, or otherwise affect the price of the Common Stock,
constitute the only information furnished in writing by or on behalf of any
Underwriter expressly for use in the Registration Statement, as originally filed
or in any amendment thereof, any related Preliminary Prospectus or preliminary
prospectus supplement or the Prospectus or in any amendment thereof or
supplement thereto, as the case may be.
13. Notices. All communications hereunder, except as may be otherwise
-------
specifically provided herein, shall be in writing and, if sent to the
Underwriters shall be mailed, delivered, telegraphed or telecopied and confirmed
in writing to the Underwriters, c/o Bear, Stearns & Co. Inc., 245 Park Avenue,
New York, New York 10167, Attention: Corporate Finance Department, telecopy
number: (212) 272-3092 and Donaldson, Lufkin & Jenrette Securities Corporation,
277 Park Avenue, New York, New York, 10172, Attention: Syndicate Department,
with a copy to Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New
York 10022, Attention: Gregory A. Ezring, telecopy number (212) 751-4864, and if
sent to the Company, shall be mailed, delivered or telexed, telegraphed or
telecopied and confirmed in writing to XM Satellite Radio Holdings Inc., 1250
23/rd/ Street, NW, Suite 57, Washington, D.C. 20037-1100, Attention: Chief
Financial Officer, telecopy number: (202) 969-7113, with a copy to Hogan &
Hartson L.L.P., 555 Thirteenth Street NW, Washington, D.C. 20004-1109,
20
<PAGE>
Attention: Steve Kaufman, telecopy number (202) 637-5910; provided, however,
that any notice pursuant to Sections 7 or 8 shall be mailed, delivered,
telegraphed or telecopied and confirmed in writing
14. Parties. This Agreement shall inure solely to the benefit of,
-------
and shall be binding upon, the Underwriters, the Company and the controlling
persons, directors, officers, employees and agents referred to in Section 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares from any of the Underwriters.
15. Construction. This Agreement shall be construed in accordance
------------
with the internal laws of the State of New York applicable to agreements made
and to be performed within New York, without giving any effect to any provisions
thereof relating to conflicts of law. TIME IS OF THE ESSENCE IN THIS AGREEMENT.
16. Captions. The captions included in this Agreement are included
--------
solely for convenience of reference and are not to be considered a part of this
Agreement.
17. Counterparts. This Agreement may be executed in various
------------
counterparts which together shall constitute one and the same instrument.
21
<PAGE>
If the foregoing correctly sets forth the understanding among the
Underwriters and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
XM SATELLITE RADIO HOLDINGS INC.
By: ________________________________
Name: _____________________________
Title: ____________________________
Accepted as of the date first above written
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
Acting severally on behalf of themselves and the
several Underwriters named in Schedule I hereto
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By:___________________________
Name:
Title:
BEAR, STEARNS & CO. INC.
By:___________________________
Name:
Title:
<PAGE>
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
- --------------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette Securities Corporation................ [ ]
Bear, Stearns & Co. Inc............................................ [ ]
C. E. Unterberg, Towbin............................................ [ ]
Salomon Smith Barney Inc........................................... [ ]
Total............................................................ 4,000,000
<PAGE>
Exhibit A
Form of Opinion of Hogan & Hartson LLP
1. Each of XM Satellite Radio Holdings Inc. (the "Company") and its
-------
subsidiaries is duly organized and validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, and has all
requisite corporate power and authority to carry on its business as it is being
conducted and as described in the Prospectus and to own, lease and operate its
properties, and is duly qualified and in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified or in good standing would not,
singly or in the aggregate, have a Material Adverse Effect.
2. All of the outstanding shares of capital stock of the Company have
been duly authorized, validly issued, and are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights under the
Delaware General Corporation Law. The authorized, issued and outstanding
capital stock of the Company conforms in all respects to the description thereof
set forth in the Prospectus.
3. All of the issued and outstanding capital stock of, or other
ownership interests in, the Company's subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable and were not issued in
violation of or subject to any preemptive or similar rights under the Delaware
General Corporation Law or known to us, after reasonable inquiry, and, are owned
by the Company of record and, to our knowledge, after reasonable inquiry, free
and clear of any security interest, claim, lien, limitation on voting rights or
encumbrance. There are not, to our knowledge, currently, and will not be
following the Offering, any outstanding subscriptions, rights, warrants, calls,
commitments of sale or options to acquire or instruments convertible into or
exchangeable for, any capital stock or other equity interest of the Company or
any of its subsidiaries (other than options issued pursuant to the Company's
stock option plan).
4. The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Underwriting Agreement
and to consummate the transactions contemplated thereby and in the Prospectus,
including, without limitation, the corporate power and authority to issue, sell
and deliver the Shares as provided herein and therein.
5. The Underwriting Agreement has been duly and validly authorized,
executed and delivered by the Company and, assuming due execution by the other
parties hereto, is the legally valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
6. The Registration Statement has become effective under the Act and,
to the best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Act and no proceedings therefor
have been initiated or threatened by the Commission; and any required filing of
the Prospectus pursuant to Rule 424(b) under the Act has been made in accordance
with Rule 424(b) and 430A under the Act.
7. The Registration Statement, Preliminary Prospectus and Prospectus
comply as to form in all material respects with the requirements for
registration statements on Form S-1 under the Securities Act and the Securities
Act Regulations; it being understood, however, that such counsel need not
express an opinion with respect to the financial statements, schedules and other
financial data
<PAGE>
included in the Registration Statement, Preliminary Prospectus or Prospectus. To
such counsel's knowledge, there are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be described or
referred to in the Registration Statement or to be filed as exhibits thereto
other than those described or referred to therein, and, to such counsel's
knowledge, the descriptions thereof or references thereto are correct in all
material respects.
8. None of (A) the execution, delivery or performance by the Company of
the Underwriting Agreement, (B) the issuance and sale of the Shares, (C) the
consummation of the Concurrent Offering or (D) the consummation by the Company
of the transactions described in the Prospectus under the caption "Use of
Proceeds" violates, conflicts with or constitutes a breach of any of the terms
or provisions of, or a default under (or an event that with notice or the lapse
of time, or both, would constitute a default), or requires consent under, or
will result in the imposition of a lien or encumbrance on any properties of the
Company or any of its subsidiaries, or an acceleration of any indebtedness of
the Company or any of its subsidiaries pursuant to, (i) the certificate of
incorporation or bylaws of the Company or any of its subsidiaries, (ii) any
bond, debenture, note, indenture, mortgage, deed of trust, contract or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which any of them or their property is or may be bound identified to
such counsel as material, (iii) any statute, rule of regulation applicable to
the Company or any of its subsidiaries, or (iv) any judgment, order or decree of
any court or governmental agency or authority having jurisdiction over the
Company or any of its subsidiaries or any of their assets or properties known to
such counsel, and except in the case of clauses (ii), (iiii) and (iv) for such
violations, conflicts, breaches, defaults, consents, impositions of liens or
accelerations that (x) would not, singly or in the aggregate, have a Material
Adverse Effect or (y) are disclosed in the Prospectus. No consent, approval,
authorization or order of, or filing, registration, qualification, license or
permit of or with, (a) any court or governmental agency, body or administrative
agency (b) or any other person is required for (1) the execution, delivery and
performance by the Company of the Underwriting Agreement, (2) the issuance and
sale of the Shares, (3) the consummation of the Concurrent Offering or (4)
consummation by the Company of the transactions described in the Prospectus
except (i) such as have been obtained and made or have been disclosed in the
Prospectus or (ii) where the failure to obtain such consents or waivers would
not, singly or in the aggregate, have a Material Adverse Effect. To the best of
such counsel's knowledge, after reasonable inquiry, no consents or waivers from
any other person are required for the execution, delivery and performance by the
Company of the Underwriting Agreement, the issuance and sale of the Shares ,
other than such consents and waivers as have been obtained or are being applied
for.
9. None of the Company or any of its subsidiaries is (i) an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, or (ii) a "holding company"
or a "subsidiary company" or an "affiliate" of a holding company within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
10. Except as set forth in the Underwriting Agreement or in the Prospectus,
to such counsel's knowledge, after reasonable inquiry there are no holders of
any securities of the Company who, by reason of the execution by the Company of
the Underwriting Agreement or the consummation by the Company of the
transactions contemplated thereby, have the right to request or demand that the
Company register under the Act securities held by them.
11. To the knowledge of such counsel, after reasonable inquiry, no search
of courts having been made, there is (i) no action, suit, investigation or
proceeding before or by any court, arbitrator or governmental agency, body or
official, domestic or foreign, now pending, or threatened or contemplated to
which any of the Company or any of its subsidiaries is or may be a party or to
which the business or property of any of the Company or any of its subsidiaries
is or may be subject, (ii) no statute, rule, regulation or order that has been
enacted, adopted or issued by any governmental agency or that has
ii
<PAGE>
been proposed by any governmental body, or (iii) no injunction, restraining
order or order of any nature by a federal or state court of competent
jurisdiction to which any of the Company or any of its subsidiaries is or may be
subject has been issued that, in the case of clauses (i), (ii) and (iii) above,
(w) is required to be disclosed in the Prospectus and that is not so disclosed
or, (x) could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect, except as disclosed in the Prospectus; or
(y) might interfere with, adversely affect or in any manner question the
validity of the issuance and sale of the Shares or any of the other transactions
contemplated by the Underwriting Agreement.
12. The statements contained in the Prospectus under the captions
"Risk Factors--Large payment obligations under our distribution agreement with
General Motors may prevent us from becoming profitable", "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources--Funds Required for XM Radio Through
Commencement of Commercial Operations--Sources of Funds", "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources--Funds Required for XM Radio Following
Commencement of Commercial Operations" "Management", "Certain Relationships and
Related Party Transactions", "Principal Stockholders" and "Description of
Capital Stock", in each case, insofar as such statements constitute summaries of
the legal matters, documents or proceedings referred to therein, fairly present
the information required with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein in all material
respects.
We have participated in conferences with officers and other
representatives of the Company, representatives of the independent certified
public accountants of the Company and the Underwriters and their representatives
at which the contents of the Registration Statement, Preliminary Prospectus and
Prospectus and related matters were discussed and, although we have not
undertaken to investigate or verify independently, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement, Preliminary Prospectus or Prospectus
(except as indicated above), on the basis of the foregoing, no facts have come
to our attention which led us to believe that the Registration Statement,
Preliminary Prospectus and Prospectus, as of its date or the Closing Date,
contained an untrue statement of a material fact or omitted to state any fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(except as to financial statements and related notes, the financial statement
schedules and other financial and statistical data included therein).
iii
<PAGE>
Exhibit B
Form of Opinion of Fisher Wayland Cooper Leader & Zaragoza L.L.P.
1. Except as set forth in the Prospectus, the (i) the FCC has granted
XM Satellite Radio Holdings Inc. (the "Company") all material authorizations
-------
needed to construct, launch, and operate a satellite radio service and offer a
subscription service on a non-common carrier basis, and (ii) the FCC has
assigned XM two orbital locations at 85 degrees W.L. and 105 degrees W.L. for XM
Radio's two satellites and the frequency band 2332.5-2345 MHz to provide such
satellite radio service.
2. Except for such FCC consents, approvals, authorizations or orders
that have already been obtained, no material consent, approval, authorization or
order of the FCC is required to be obtained by the Company or its subsidiaries
under the Communications Laws for the consummation of the transactions
contemplated under the Underwriting Agreement, except that, from time to time,
the Company and its subsidiaries may be required to obtain certain
authorizations that would be required in the ordinary course of business.
3. The execution and delivery of the Underwriting Agreement, and the
consummation of the transactions contemplated thereunder, by the Company do not
and will not violate any material provision of the Communications Laws.
4. The statements set forth in the Prospectus under the captions
"Risk Factors Failure to comply with FCC requirements could damage our
business," "Risk Factors--If the challenge to our FCC license is successful, our
business could be harmed" and "Business--Regulatory Matters," insofar as such
statements constitute a summary of material (a) legal matters, (b) documents, or
(c) proceedings under the Communications laws, fairly present the information
contained under such captions in light of the circumstances in which they were
made.
5. Except as set forth in the Prospectus, to our knowledge, there is
no investigation or complaint before the FCC pending or threatened in writing
that is specifically directed against or in respect of the Company or its
subsidiaries, or any of the FCC licenses held by the Company or its subsidiaries
that would reasonably be expected to result in the revocation of any material
FCC authorizations or otherwise to materially impair the operations of the
Company or its subsidiaries.
<PAGE>
Exhibit C
XM Satellite Radio Holdings Inc.
1250 23/rd/ Street, NW, Suite 57
Washington, D.C. 20037-1100
Lock-Up Agreement
Donaldson, Lufkin & Jenrette Securities Corporation
Bear, Stearns & Co. Inc.
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
The undersigned understands that Bear, Stearns & Co. Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation, as representatives of the several
underwriters (the "Underwriters"), propose to enter into an Underwriting
------------
Agreement with XM Satellite Radio Holdings Inc., a Delaware corporation (the
"Company"), providing for a public offering (the "Offering") of the Company's
-------
Class A common stock, par value $.01 per share (the "Common Stock"), pursuant to
------------
a Registration Statement on Form S-1 (File No. 333-93529). The undersigned
wishes to facilitate the Offering and recognizes that the Offering will be of
benefit to the undersigned.
In consideration of the foregoing and in order to induce you to act as
Underwriters in connection with the Offering, the undersigned hereby agrees, for
the benefit of the Company and the Underwriters, that during the period
beginning from the date hereof and continuing to and including the date 90 days
after the date of the final prospectus relating to the Offering, the undersigned
will not, directly or indirectly, without the prior written consent of Bear,
Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette Securities Corporation,
offer, sell, contract to sell, swap, make any short sale, pledge, establish an
open "put equivalent position" within the meaning of Rule 16a-1(h) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), grant any
------------
option to purchase or otherwise dispose (or publicly announce the undersigned's
intention to do any of the foregoing) of, directly or indirectly, any shares of
Common Stock or other capital stock of the Company, or any securities
convertible into, or exercisable or exchangeable for, any shares of Common Stock
or other capital stock of the Company that the undersigned currently
beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act),
directly or indirectly, or may beneficially own, directly or indirectly, in the
future; provided that the foregoing shall not prohibit the exercise of options
or other rights pursuant to the Company's 1998 Shares Award Plan or Employee
Stock Purchase Plan.
Notwithstanding the foregoing, if the undersigned is an individual, he or
she may transfer shares of Common Stock (or any securities convertible into,
exercisable for, or exchangeable for Common Stock) by gift, will, or intestate
succession to his or her immediate family or to a trust the beneficiaries of
which are exclusively the undersigned and/or a member or members of his or her
immediate family (for purposes of this paragraph, "immediate family" shall mean
spouse, lineal descendant, father, mother, brother or sister of the transferor);
provided, however, that in any such case it shall be a condition to the transfer
that (i) each transferee execute an agreement stating that the transferee is
receiving and holding the shares of Common Stock (or any securities convertible
into, exercisable for, or exchangeable for Common Stock) subject to the
provisions of this agreement, and there shall be no further transfer of such
shares of Common Stock (or any securities convertible into, exercisable for, or
exchangeable for Common Stock) except in accordance with this agreement and (ii)
each transferee certifies in writing to Bear, Stearns & Co. Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation that such transferee is in compliance
with the terms of this agreement as if such transferee had been bound by this
agreement from the original date of this agreement.
<PAGE>
The undersigned confirms that the undersigned understands that the
Underwriters and the Company will rely upon the representations set forth in
this agreement in proceeding with the Offering. The undersigned further confirms
that the agreements of the undersigned are irrevocable and shall be binding upon
the undersigned's heirs, legal representatives, successors and assigns. The
undersigned agrees and consents to the entry of stop transfer instructions with
the Company's transfer agent against the transfer of securities of the Company
held by the undersigned except in compliance with this agreement.
Very truly yours,
By:____________________________
Name:
Title:
Dated: January ___, 2000
ii
<PAGE>
Exhibit D
Individuals Delivering a Lock-Up Agreement Pursuant to Section 6(l)
Lee Abrams
Stephen Cook
Nathaniel Davis
Thomas R. Donohue
Steven P. Gavenas
Randall T. Mays
Gary M. Parsons
Hugh Panero
Dr. Stelios Patsiokas
Randy S. Segal
Jack Shaw
Dr. Rajendra Singh
Heinz Stubblefield
Joseph M. Titlebaum
John R. Wormington
Ronald L. Zarrella
<PAGE>
Exhibit E
Lock-Up Agreement
Donaldson, Lufkin & Jenrette Securities Corporation
Bear, Stearns & Co. Inc.
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
The undersigned understands that Bear, Stearns & Co. Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation, as representatives of the several
underwriters (the "Underwriters"), propose to enter into an Underwriting
------------
Agreement with XM Satellite Radio Holdings Inc., a Delaware corporation (the
"Company"), providing for a public offering (the "Offering") of the Company's
-------
Class A common stock, par value $.01 per share (the "Common Stock"), pursuant to
------------
a Registration Statement on Form S-1 (File No. 333-93529). The undersigned is a
holder of securities of the Company and wishes to facilitate the Offering and
recognizes that the Offering will be of benefit to the undersigned.
In consideration of the foregoing and in order to induce you to act as
Underwriters in connection with the Offering, the undersigned hereby agrees, for
the benefit of the Company and the Underwriter, that during the period beginning
from the date hereof and continuing to and including the date 90 days after the
date of the final prospectus relating to the Offering, the undersigned will not,
directly or indirectly, without the prior written consent of Bear, Stearns & Co.
Inc. and Donaldson, Lufkin & Jenrette Securities Corporation, offer, sell,
contract to sell, swap, make any short sale, pledge, establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), grant any option to
------------
purchase or otherwise dispose (or publicly announce the undersigned's intention
to do any of the foregoing) of, directly or indirectly, any shares of Common
Stock or other capital stock of the Company, or any securities convertible into,
or exercisable or exchangeable for, any shares of Common Stock or other capital
stock of the Company that the undersigned currently beneficially owns (within
the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, or
may beneficially own, directly or indirectly, in the future; provided that the
foregoing shall not prohibit any conversion of the Company's Series A
convertible preferred stock or Class B common stock into Common Stock.
The undersigned confirms that the undersigned understands that the
Underwriters and the Company will rely upon the representations set forth in
this agreement in proceeding with the Offering. The undersigned further confirms
that the agreements of the undersigned are irrevocable and shall be binding upon
the undersigned's heirs, legal representatives, successors and assigns. The
undersigned agrees and consents to the entry of stop transfer instructions with
the Company's transfer agent against the transfer of securities of the Company
held by the undersigned except in compliance with this agreement.
Very truly yours,
By:_______________________________
Name:
<PAGE>
Title:
Dated: January __, 2000
1
<PAGE>
Exhibit F
Stockholders Delivering a Lock-Up Agreement Pursuant to Section 6(m)
American Mobile Satellite Corporation
Clear Channel Investments, Inc.
Columbia XM Radio Partners L.L.C.
DIRECTV Enterprises, Inc.
General Motors Corporation
Madison Dearborn Capital Partners III, L.P.
Madison Dearborn Special Equity III, L.P.
Special Advisors Fund I, LLC
Telecom-XM Investors, L.L.C.
<PAGE>
EXHIBIT 1.2
XM SATELLITE RADIO HOLDINGS INC.
2,000,000 Shares of Series B Convertible Redeemable Preferred Stock
UNDERWRITING AGREEMENT
January __, 2000
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BANC OF AMERICA SECURITIES LLC
SALOMON SMITH BARNEY INC.
<PAGE>
2,000,000 Shares of Series B Convertible Redeemable Preferred Stock
XM SATELLITE RADIO HOLDINGS INC.
UNDERWRITING AGREEMENT
----------------------
January __, 2000
Bear, Stearns & Co. Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Banc of America Securities LLC
Salomon Smith Barney Inc.
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
XM Satellite Radio Holdings Inc., a corporation organized and existing
under the laws of Delaware (the "Company"), proposes, subject to the terms and
-------
conditions stated herein, to issue and sell to the several underwriters named in
Schedule I hereto (collectively, the "Underwriters") an aggregate of 2,000,000
------------
shares (the "Firm Shares") of its Series B Convertible Redeemable Preferred
-----------
Stock, par value $0.01 per share (the "Preferred Stock") and, for the sole
---------------
purpose of covering over-allotments in connection with the sale of the Firm
Shares, at the option of the Underwriters, up to an additional 300,000 shares
(the "Additional Shares") of Preferred Stock. The Firm Shares and any
-----------------
Additional Shares purchased by the Underwriters are referred to herein as the
"Shares". The Shares are more fully described in the Registration Statement
------
referred to below. Simultaneously with the offer and sale of the Shares
Preferred Stock hereunder, the Company is offering to the public 4,000,000
shares of its Class A Common Stock (the "Concurrent Offering").
1. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (No. 333-93529),
----------
and any amendments thereto, and related preliminary prospectuses for the
registration under the Securities Act of 1933, as amended (the "Securities
----------
Act"), of shares of Preferred Stock, which registration statement, as so
---
amended, has been declared effective by the Commission and copies of which
have heretofore been delivered to the Underwriters. The registration
statement, as amended at the time it became effective, including the
exhibits and information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the Act,
is hereinafter referred to as the "Registration Statement". If the Company
----------------------
has filed or is required pursuant to the terms hereof to file a
registration statement pursuant to Rule 462(b) under the Securities Act
registering additional shares of Preferred Stock (a "Rule 462(b)
-----------
Registration
------------
<PAGE>
Statement"), then, unless otherwise specified, any reference herein to the
---------
term "Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement. Other than a Rule 462(b) Registration Statement,
which became effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the Commission (other
than prospectuses filed pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Securities Act (the "Securities Act
--------------
Regulations"), each in the form heretofore delivered to the Underwriters).
-----------
No stop order suspending the effectiveness of either the Registration
Statement or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or, to the
Company's knowledge, threatened by the Commission. The Company, if required
by the Securities Act Regulations, proposes to file the Prospectus with the
Commission pursuant to Rule 424(b) of the Securities Act Regulations. The
Prospectus relating to the Shares, in the form in which it is to be filed
with the Commission pursuant to Rule 424(b) of the Securities Act
Regulations, is hereinafter referred to as the "Prospectus", except that if
----------
any revised prospectus or prospectus supplement shall be provided to the
Underwriters by the Company for use in connection with the offering and
sale of the Shares (the "Offering") which differs from the Prospectus
--------
(whether or not such revised prospectus or prospectus supplement is
required to be filed by the Company pursuant to Rule 424(b) of the
Securities Act Regulations), the term "Prospectus" shall refer to such
revised prospectus or prospectus supplement, as the case may be, from and
after the time it is first provided to the Underwriters for such use; and,
provided, further, that the term "Prospectus" shall be deemed to include
any wrapper or supplement thereto prepared in connection with the
distribution of any Reserved Shares (as defined in Section 2(f), below).
Any preliminary prospectus relating to the Shares, or prospectus subject to
completion relating to the Shares, included in the Registration Statement
or filed with the Commission pursuant to Rule 424 under the Securities Act
is hereafter called a "Preliminary Prospectus". All references in this
----------------------
Agreement to the Registration Statement, the Rule 462(b) Registration
Statement, a Preliminary Prospectus and the Prospectus, or any amendments
or supplements to any of the foregoing, shall be deemed to include any copy
thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System ("EDGAR").
-----
(b) The Registration Statement and the Prospectus, at the time the
Registration Statement became effective and as of the Closing Date referred
to in Section 2 hereof, and the Preliminary Prospectus as of the date
thereof, complied and comply in all material respects with the requirements
of the Securities Act and the Securities Act Regulations, and did not and
as of the Closing Date do not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus, as
of the date hereof (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriters by the Company for use in
connection with the offering of the Shares which differs from the
Prospectus filed with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations, in which case at the time it is first provided
to the Underwriters for such use) and on the Closing Date, does not and
will not include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this Section (1)(b)
shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing
by any Underwriter expressly for use in the Registration Statement or the
Prospectus. Each Preliminary Prospectus and Prospectus filed as part of the
Registration Statement, as part of any amendment thereto or pursuant to
Rule 424 under the Securities Act Regulations, if filed by electronic
transmission pursuant to Regulation S-T under the Securities Act, was
identical to the copy thereof delivered to the Underwriters for use in
connection with
2
<PAGE>
the offer and sales of the Shares (except as may be permitted by Regulation
S-T under the Securities Act). There are no contracts or other documents
required to be described in the Prospectus or to be filed as exhibits to
the Registration Statement under the Securities Act that have not been
described or filed therein as required, and there are no business
relationships or related-party transactions involving the Company or any of
its subsidiaries or any other person required to be described in the
Prospectus that have not been described therein as required.
(c) Each of the Company and its subsidiaries (i) has been duly
organized and is validly existing as a corporation in good standing under
the laws of its respective jurisdiction of incorporation, (ii) has all
requisite corporate power and authority to carry on its business as it is
currently being conducted and as described in the Prospectus and to own,
lease and operate its properties, and (iii) is duly qualified and in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification except, with respect to
clauses (i) (as it relates to good standing) and (iii), where the failure
to be so qualified or in good standing does not and could not reasonably be
expected to (x) individually or in the aggregate, result in a material
adverse effect on the properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of the Company and
its subsidiaries, taken as a whole, (y) interfere with or adversely affect
the issuance or marketability of the Shares pursuant hereto or (z) in any
manner draw into question the validity of this Agreement or the
transactions described in the Prospectus under the caption "Use of
Proceeds" (any of the events set forth in clauses (x), (y) or (z), a
"Material Adverse Effect").
-----------------------
(d) All of the outstanding shares of capital stock of the Company
have been duly authorized, validly issued, and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights. The Shares, when issued, delivered and sold in accordance with this
Agreement, will be duly authorized and validly issued, fully paid and
nonassessable, and will not have been issued in violation of or subject to
any preemptive or similar rights. At September 30, 1999, the Company had
the pro forma, pro forma as adjusted, and pro forma as further adjusted
capitalization as set forth in the Prospectus under the caption
"Capitalization" (subject in each case to the assumptions set forth under
such caption).
(e) Except as disclosed in the Prospectus, all of the outstanding
capital stock of, or other ownership interests in, the Company's
subsidiaries is owned by the Company, free and clear of any security
interest, claim, lien, limitation on voting rights or encumbrance; and all
such securities have been duly authorized, validly issued, and are fully
paid and nonassessable and were not issued in violation of any preemptive
or similar rights.
(f) Upon issuance and delivery of the Shares in accordance with this
Agreement, the Shares will be convertible at the option of the holder
thereof for shares of the Company's Class A Common Stock, par value $.01
per share (the "Class A Common Stock") in accordance with the Certificate
--------------------
of Designation of Voting Power, Designation Preferences and Relative,
Optional or Other Special Rights and Qualifications, Limitations and
Restrictions (the "Certificate of Designations") governing the Shares; the
shares of Class A Common Stock issuable upon any such conversion of Shares
have been duly authorized and reserved for issuance upon such conversion
and such shares of Class A Common Stock, when issued upon such conversion,
will be validly issued and will be fully paid and nonassessable and not
issued in violation of any preemptive or similar rights
(g) The Company has duly authorized and reserved for issuance such
shares of Class A Common Stock as may be payable as a dividend on the
Shares in accordance with the Certificate
3
<PAGE>
of Designations, and such shares of Class A Common Stock, when issued upon
such conversion, will be validly issued and will be fully paid and
nonassessable and not issued in violation of any preemptive or similar
rights.
(h) Except as disclosed in the Prospectus there are not currently,
and will not be as a result of the Offering, any outstanding subscriptions,
rights, warrants, calls, commitments of sale or options to acquire or
instruments convertible into or exchangeable for, any capital stock or
other equity interest of the Company or any of its subsidiaries (other than
options issued pursuant to the Company's 1998 Shares Award Plan (as such
term is defined in the Prospectus)).
(i) The Preferred Stock (including the Shares) is registered pursuant
to Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange
--------
Act"), and the Company has taken no action designed to, or likely to have
---
the effect of, terminating the registration of the Preferred Stock under
the Exchange Act, nor has the Company received any notification that the
Commission is contemplating terminating such registration.
(j) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby, including, without
limitation, the corporate power and authority to issue, sell and deliver
the Shares as provided herein and the corporate power to effect the Use of
Proceeds as described in the Prospectus.
(k) The statistical and market-related data included in the
Prospectus are based on or are derived from sources which the Company
believes to be reliable and accurate in all material respects.
(l) This Agreement has been duly and validly authorized, executed and
delivered by the Company and is the legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors generally
and subject to general principles of equity, and except insofar as
indemnification and contribution provisions may be limited by applicable
law or equitable principles.
(m) Neither the Company nor any of its subsidiaries is, nor after
giving effect to the Offering and the Concurrent Offering will be, (i) in
violation of its certificate of incorporation or bylaws, (ii) in default in
the performance of any bond, debenture, note, indenture, mortgage, deed of
trust or other agreement or instrument to which it is a party or by which
it is bound or to which any of its properties is subject, or (iii) in
violation of any local, state or federal law, statute, ordinance, rule,
regulation, requirement, judgment or court decree (including, without
limitation, the Communications Act of 1934 (the "Communications Act") and
------------------
the rules and regulations of the Federal Communications Commission (the
"FCC"), and environmental laws, statutes, ordinances, rules regulations,
---
judgments or court decrees) applicable to the Company or any of its
subsidiaries or any of their assets or properties (whether owned or leased)
other than, in the case of clauses (ii) and (iii), any default or violation
that (A) could not reasonably be expected to have a Material Adverse Effect
or (B) which is disclosed in the Prospectus. There exists no condition
that, with notice, the passage of time or otherwise, would constitute a
default under any such document or instrument, except as disclosed in the
Prospectus.
(n) None of (i) the execution, delivery or performance by the Company
of this Agreement, (ii) the issuance and sale of the Shares and (iii)
consummation by the Company of the transactions contemplated hereby and in
the Prospectus, including without limitation the
4
<PAGE>
Concurrent Offering, violate, conflict with or constitute a breach of any
of the terms or provisions of, or a default under (or an event that with
notice or the lapse of time, or both, would constitute a default), or
require consent under, or result in the imposition of a lien on any
properties of the Company or any of its subsidiaries, or an acceleration of
any indebtedness of the Company or any of its subsidiaries pursuant to, (A)
the certificate of incorporation or bylaws of the Company or any of its
subsidiaries, (B) any bond, debenture, note, indenture, mortgage, deed of
trust, contract or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or its
subsidiaries or their properties is or may be bound, (C) any statute, rule
or regulation applicable to the Company or any of its subsidiaries or any
of their assets or properties or (D) any judgment, order or decree of any
court or governmental agency or authority having jurisdiction over the
Company or any of its subsidiaries or any of their assets or properties,
other than, in the case of clause (B) above, any default or violation that
(1) could not reasonably be expected to have a Material Adverse Effect or
(1) which is disclosed in the Prospectus. No consent, approval,
authorization or order of, or filing, registration, qualification, license
or permit of or with, (i) any court or governmental agency, body or
administrative agency or (ii) any other person is required for (A) the
execution, delivery and performance by the Company of this Agreement, (B)
the issuance and sale of the Shares and the transactions contemplated
hereby and thereby, including without limitation the Concurrent Offering,
except such as have been obtained and made under the Securities Act and
state securities or Blue Sky laws and regulations or such as may be
required by the National Association of Securities Dealers, Inc. (the
"NASD").
----
(o) There is (i) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the best knowledge of the Company or any of its
subsidiaries, threatened or contemplated to which the Company or any of its
subsidiaries is a party or to which the business or property of the Company
or any of its subsidiaries is subject, (ii) no statute, rule, regulation or
order that has been enacted, adopted or issued by any governmental agency
or that has been proposed by any governmental body or (iii) no injunction,
restraining order or order of any nature by a federal or state court or
foreign court of competent jurisdiction to which the Company or any of its
subsidiaries is or may be subject or to which the business, assets, or
property of the Company or any of its subsidiaries are or may be subject,
that, in the case of clauses (i), (ii) and (iii) above, (w) is required to
be disclosed in the Prospectus and that is not so disclosed, or (x) except
as has been disclosed in the Prospectus could reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect.
(p) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency that
prevents the issuance of the Shares or prevents or suspends the use of the
Prospectus; no injunction, restraining order or order of any kind by a
federal or state court of competent jurisdiction has been issued that
prevents the issuance of the Shares, prevents or suspends the sale of the
Shares in any jurisdiction referred to in Section 1(c) hereof or that could
adversely affect the consummation of the transactions contemplated by this
Agreement or the Prospectus; and every request of any securities authority
or agency of any jurisdiction for additional information has been complied
with in all material respects.
(q) There is (i) no significant unfair labor practice complaint
pending against the Company or any of its subsidiaries nor, to the best
knowledge of the Company, threatened against any of them, before the
National Labor Relations Board, any state or local labor relations board or
any foreign labor relations board, and no significant grievance or
significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the
5
<PAGE>
Company or any of its subsidiaries nor, to the best knowledge of the
Company, threatened against any of them, (ii) no significant strike, labor
dispute, slowdown or stoppage pending against the Company or any of its
subsidiaries nor, to the best knowledge of the Company, threatened against
the Company or any of its subsidiaries and (iii) to the best knowledge of
the Company, no union representation question existing with respect to the
employees of the Company or any of its subsidiaries that, in the case of
clauses (i), (ii) or (iii) above, could reasonably be expected to result in
a Material Adverse Effect. To the best knowledge of the Company, no
collective bargaining organizing activities are taking place with respect
to the Company or any of its subsidiaries. None of the Company or any of
its subsidiaries has violated (A) any federal, state or local law or
foreign law relating to discrimination in hiring, promotion or pay of
employees, (B) any applicable wage or hour laws or (C) any provision of the
Employee Retirement Income Security Act of 1974, as amended, and the
regulations and published interpretations thereunder (collectively,
"ERISA"), which in the case of clause (A), (B) or (C) above could
-----
reasonably be expected to result in a Material Adverse Effect.
(r) None of the Company or any of its subsidiaries has violated any
environmental, safety or similar law or regulation applicable to it or its
business or property relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), lacks any permit, license or other
------------------
approval required of it under applicable Environmental Laws or is violating
any term or condition of such permit, license or approval, which could
reasonably be expected to, either individually or in the aggregate, have a
Material Adverse Effect.
(s) Each of the Company and its subsidiaries has (i) good and
marketable title to all of the properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges,
encumbrances and restrictions, except such as are described in the
Prospectus or as would not have a Material Adverse Effect, (ii) peaceful
and undisturbed possession of its properties under all material leases to
which it is a party as lessee, (iii) all licenses, certificates, permits,
authorizations, approvals, franchises and other rights from, and has made
all declarations and filings with, all federal, state and local
authorities, all self-regulatory authorities and all courts and other
tribunals (each an "Authorization") necessary to engage in the business
-------------
conducted by it in the manner described in the Prospectus, except as
described in the Prospectus or where failure to hold such Authorizations
would not, individually or in the aggregate, have a Material Adverse Effect
and (iv) no reason to believe that any governmental body or agency is
considering limiting, suspending or revoking any such Authorization. Except
where the failure to be in full force and effect would not have a Material
Adverse Effect, all such Authorizations are valid and in full force and
effect, and each of the Company and its subsidiaries is in compliance in
all material respects with the terms and conditions of all such
Authorizations and with the rules and regulations of the regulatory
authorities having jurisdiction with respect thereto. All material leases
to which the Company or any of its subsidiaries is a party are valid and
binding, and no default by the Company or any subsidiary has occurred and
is continuing thereunder and, to the best knowledge of the Company and its
subsidiaries, no material defaults by the landlord are existing under any
such lease that could reasonably be expected to result in a Material
Adverse Effect.
(t) Each of the Company and its subsidiaries owns, possesses or has
the right to employ all patents, patent rights, licenses (including all
FCC, state, local or other regulatory licenses), inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, software, systems or procedures),
trademarks, service marks and trade names, inventions, computer programs,
technical data and information (collectively, the "Intellectual Property")
---------------------
presently employed by it in connection
6
<PAGE>
with the businesses now operated by it or that are proposed to be operated
by it or its subsidiaries free and clear of and without violating any
right, claimed right, charge, encumbrance, pledge, security interest,
restriction or lien of any kind of any other person and none of the Company
or any of its subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the
foregoing, except as (1) disclosed in the Prospectus or (2) as could not
reasonably be expected to have a Material Adverse Effect. To the best
knowledge of the Company, the use of the Intellectual Property in
connection with the business and operations of the Company and its
subsidiaries does not infringe on the rights of any person, except as
disclosed in the Prospectus or as could not reasonably be expected to have
a Material Adverse Effect.
(u) None of the Company or any of its subsidiaries or, to the best
knowledge of the Company, any of their respective officers, directors,
partners, employees, agents or affiliates or any other person acting on
behalf of the Company or any of its subsidiaries has, directly or
indirectly, given or agreed to give any money, gift or similar benefit
(other than legal price concessions to customers in the ordinary course of
business) to any customer, supplier, employee or agent of a customer or
supplier, official or employee of any governmental agency (domestic or
foreign), instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other
person who was, is or may be in a position to help or hinder the business
of the Company or any of its subsidiaries (or assist the Company or any of
its subsidiaries in connection with any actual or proposed transaction),
which (i) might subject the Company or any of its subsidiaries, or any
other individual or entity, to any damage or penalty in any civil, criminal
or governmental litigation or proceeding (domestic or foreign), (ii) if not
given in the past, might have had a material adverse effect on the assets,
business or operations of the Company or any of its subsidiaries or (iii)
if not continued in the future, might have a Material Adverse Effect.
(v) All material tax returns required to be filed by the Company and
each of its subsidiaries in all jurisdictions have been so filed. All
taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities or that
are due and payable have been paid, other than those being contested in
good faith and for which adequate reserves have been provided or those
currently payable without penalty or interest. To the knowledge of the
Company, there are no material proposed additional tax assessments against
the Company, the assets or property of the Company or any of its
subsidiaries. The Company has made adequate charges, accruals and reserves
in the applicable financial statements included in the Prospectus in
respect of all federal, state and foreign income and franchise taxes for
all periods as to which the tax liability of the Company or any of its
consolidated subsidiaries has not been finally determined.
(w) None of the Company or any of its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), or (ii) a "holding company" or a "subsidiary
----------------------
company" or an "affiliate" of a holding company within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(x) Except as disclosed in the Prospectus, there are no holders of
securities of the Company or any of its subsidiaries who, by reason of the
execution by the Company of this Agreement to which it is a party or the
consummation by the Company or any of its subsidiaries of the transactions
contemplated hereby, have the right to request or demand that the Company
or any of its subsidiaries register under the Securities Act or analogous
foreign laws and regulations securities held by them, other than such that
have been duly waived.
7
<PAGE>
(y) Each of the Company and its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences thereto.
(z) Except as disclosed in the Prospectus, each of the Company and
its subsidiaries maintains insurance covering its properties, operations,
personnel and businesses. Such insurance insures against such losses and
risks as are adequate in accordance with customary industry practice to
protect the Company and its subsidiaries and their respective businesses.
None of the Company or any of its subsidiaries has received notice from any
insurer or agent of such insurer that substantial capital improvements or
other expenditures will have to be made in order to continue such
insurance. All such insurance is outstanding and duly in force on the date
hereof, subject only to changes made in the ordinary course of business,
consistent with past practice, which do not, singly or in the aggregate,
materially alter the coverage thereunder or the risks covered thereby. The
Company has no reason to believe that it or any subsidiary will not be able
(a) to renew its existing insurance coverage as and when such policies
expire or (b) to obtain comparable coverage from similar institutions as
may be necessary or appropriate to conduct its business as now conducted or
as presently contemplated and at a cost that would not result in a Material
Adverse Effect.
(aa) None of the Company or any of its subsidiaries has (i) taken,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price
of any security of the Company or any of its subsidiaries to facilitate the
sale or resale of the Shares or (ii) since the date of the Preliminary
Prospectus (A) sold, bid for, purchased or paid any person any compensation
for soliciting purchases of, the Shares or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other
securities of the Company or any of its subsidiaries.
(bb) The Company and its subsidiaries and any "employee benefit plan"
(as defined under ERISA) established or maintained by the Company, its
subsidiaries or their "ERISA Affiliates" (as defined below) are in
compliance in all material respects with ERISA. "ERISA Affiliate" means,
---------------
with respect to the Company or a subsidiary, any member of any group of
organizations described in Sections 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such
----
subsidiary is a member. No "reportable event" (as defined under ERISA) has
occurred or is reasonably expected to occur with respect to any "employee
benefit plan" established or maintained by the Company, its subsidiaries or
any of their ERISA Affiliates. No "employee benefit plan" established or
maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such "employee benefit plan" were terminated, would have any
"amount of unfunded benefit liabilities" (as defined under ERISA). Neither
the Company, its subsidiaries nor any of their ERISA Affiliates has
incurred or reasonably expects to incur any liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "employee
benefit plan" or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each
"employee benefit plan" established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or failure to act, which would cause the loss
of such qualification.
8
<PAGE>
(cc) Subsequent to the respective dates as of which information is
given in the Prospectus and up to the Closing Date, except as set forth in
the Prospectus, (i) none of the Company or any of its subsidiaries has
incurred any liabilities or obligations, direct or contingent, that are
material, individually or in the aggregate, to the Company and its
subsidiaries taken as a whole, nor entered into any transaction not in the
ordinary course of business, (ii) none of the Company or any of its
subsidiaries has incurred any liabilities or obligations, direct or
contingent, that will be material to the Company and its subsidiaries taken
as a whole, (iii) there has not been, singly or in the aggregate, any
change or development that could reasonably be expected to result in a
Material Adverse Effect, (iv) there has been no dividend or distribution of
any kind declared, paid or made by the Company or any of its subsidiaries
on any class of its capital stock, (v) there has been no change in
accounting methods or practices (including any change in depreciation or
amortization policies or rates) by the Company or any of its subsidiaries,
(vi) there has been no revaluation by the Company or any of its
subsidiaries of any of their assets, (vii) there has been no increase in
the salary or other compensation payable or to become payable by the
Company or any of its subsidiaries to any of their officers, directors,
employees or advisors, nor any declaration, payment or commitment or
obligation of any kind for the payment by the Company or any of its
subsidiaries of a bonus or other additional salary or compensation to any
such person, (viii) there has been no amendment or termination of any
material contract, agreement or license to which the Company or any
subsidiary is a party or by which it is bound, (ix) there has been no
waiver or release of any material right or claim of the Company or any
subsidiary, including any write-off or other compromise of any material
account receivable of the Company or any subsidiary, and (x) there has been
no material change in pricing or royalties set or charged by the Company or
any subsidiary to their respective customers or licensees or in pricing or
royalties set or charged by persons who have licensed Intellectual Property
Rights to the Company or any of its subsidiaries.
(dd) KPMG LLP, who have expressed their opinion with respect to the
financial statements (which term as used in this Agreement includes the
related notes thereto) and supporting schedules included in the Prospectus,
are independent public or certified public accountants within the meaning
of Regulation S-X under the Securities Act and the Exchange Act.
(ee) The financial statements, together with the related notes,
included in the Prospectus present fairly in all material respects the
consolidated financial position of the Company and its subsidiaries as of
and at the dates indicated and the results of their operations and cash
flows for the periods specified. Such financial statements have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved, except as
may be expressly stated in the related notes thereto. The financial data
set forth in the Prospectus under the captions "Prospectus Summary--Summary
Consolidated Financial Data", "Selected Consolidated Financial Data" and
"Capitalization" fairly present the information set forth therein on a
basis consistent with that of the audited financial statements contained in
the Prospectus.
(ff) Except pursuant to this Agreement, there are no contracts,
agreements or understandings between the Company and any other person that
would give rise to a valid claim against the Company or any of the
Underwriters for a brokerage commission, finder's fee or like payment in
connection with the issuance, purchase and sale of the Shares.
(gg) The statements (including the assumptions described therein)
included in the Prospectus (i) are within the coverage of Rule 175(b) under
the Securities Act to the extent such data constitute forward looking
statements as defined in Rule 175(c) and (ii) were made by the
9
<PAGE>
Company with a reasonable basis and reflect the Company's good faith
estimate of the matters described therein.
(hh) Each of the Company and its subsidiaries has implemented Year
2000 compliance programs designed to ensure that its computer systems and
applications will function properly beyond 1999. The Company believes that
adequate resources have been allocated for this purpose and expects the
Company's and its subsidiaries' Year 2000 date conversion programs to be
completed on a timely basis.
(ii) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
The Company acknowledges that each of the Underwriters and, for
purposes of the opinions to be delivered to the Underwriters pursuant to Section
6 hereof, counsel to the Company and counsel to the Underwriters, will rely upon
the accuracy and truth of the foregoing representations and hereby consents to
such reliance.
2. Purchase, Sale and Delivery of the Shares.
-----------------------------------------
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Company, at a purchase
price of $[_] per share, the number of Firm Shares set forth opposite the
respective names of the Underwriters in Schedule I hereto plus any additional
number of Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the office of Latham &
Watkins, 885 Third Avenue, Suite 1000, New York, New York, 10022, or at such
other place as shall be agreed upon by the Underwriters and the Company, at
10:00 A.M. on January [_], 2000 (unless postponed in accordance with the
provisions of Section 9 hereof) after the determination of the public offering
price of the Firm Shares, or such other time not later than ten business days
after such date as shall be agreed upon by the Underwriters and the Company
(such time and date of payment and delivery being herein called the "Closing
-------
Date"). Payment shall be made to the Company by wire transfer in same day funds,
- ----
against delivery to the Underwriters of certificates for the Shares to be
purchased by them. Certificates for the Firm Shares shall be registered in such
name or names and in such authorized denominations as the Underwriters may
request in writing at least two full business days hours prior to the Closing
Date. The Company will permit the Underwriters to examine and package such
certificates for delivery at least one full business day prior to the Closing
Date.
(c) In addition, the Company hereby grants to the Underwriters
the option to purchase up to 300,000 Additional Shares at the same purchase
price per share to be paid by the Underwriters to the Company for the Firm
Shares as set forth in this Section 2, for the sole purpose of covering over-
allotments in the sale of Firm Shares by the Underwriters. This option may be
exercised at any time, in whole or in part, on or before the thirtieth day
following the date of the Prospectus, by written notice by the Underwriters to
the Company. Such notice shall set forth the aggregate number of Additional
Shares as to which the option is being exercised and the date and time, as
reasonably determined by the Underwriters, when the Additional Shares are to be
delivered (such date and time
10
<PAGE>
being herein sometimes referred to as the "Additional Closing Date"); provided,
-----------------------
however, that the Additional Closing Date shall not be earlier than the Closing
Date or earlier than the second full business day after the date on which the
option shall have been exercised nor later than the eighth full business day
after the date on which the option shall have been exercised (unless such time
and date are postponed in accordance with the provisions of Section 9 hereof).
Certificates for the Additional Shares shall be registered in such name or names
and in such authorized denominations as the Underwriters may request in writing
at least two full business days prior to the Additional Closing Date. The
Company will permit the Underwriters to examine and package such certificates
for delivery at least one full business day prior to the Additional Closing
Date.
(d) The number of Additional Shares to be sold to each
Underwriter shall be the number which bears the same ratio to the aggregate
number of Additional Shares being purchased as the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereto (or such number
increased as set forth in Section 9 hereof) bears to the total number of Firm
Shares being purchased from the Company, subject, however, to such adjustments
to eliminate any fractional shares as the Underwriters in their sole discretion
shall make.
(e) Payment for the Additional Shares shall be made by wire
transfer in same day funds each payable to the order of the Company at the
office of Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New York,
10022, or such other location as may be mutually acceptable, upon delivery of
the certificates for the Additional Shares to the Underwriters.
3. Offering. Upon the Underwriters' authorization of the release of
--------
the Firm Shares, the Underwriters propose to offer the Shares for sale to the
public upon the terms set forth in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees with
------------------------
each of the Underwriters that:
(a) The Company will notify the Underwriters immediately (and,
if requested by the Underwriters, will confirm such notice in writing) (i) when
any post-effective amendment to the Registration Statement becomes effective,
(ii) of any request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for any additional information,
(iii) of the mailing or the delivery to the Commission for filing of the
Prospectus or any amendment of or supplement to the Registration Statement or
the Prospectus or any document to be filed pursuant to the Exchange Act during
any period when the Prospectus is required to be delivered under the Securities
Act, (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of the initiation, or the threatening, of any proceedings therefor,
(v) of the receipt of any comments or inquiries from the Commission, and (vi) of
the receipt by the Company of any notification with respect to the suspension of
the qualification of the Shares for sale in any jurisdiction or the initiation
or threatening of any proceeding for that purpose. If the Commission shall
propose or enter a stop order at any time, the Company will make every
reasonable effort to prevent the issuance of any such stop order and, if issued,
to obtain the lifting of such order as soon as possible. The Company will not
file any post-effective amendment to the Registration Statement or any amendment
of or supplement to the Prospectus (including any revised prospectus which the
Company proposes for use by the Underwriters in connection with the offering of
the Shares which differs from the prospectus filed with the Commission pursuant
to Rule 424(b) of the Securities Act Regulations, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the Securities Act
Regulations) to which the Underwriters or Underwriters' Counsel (as hereinafter
defined) shall reasonably object, will furnish the Underwriters with copies of
any such amendment or supplement a reasonable amount of time prior to such
proposed
11
<PAGE>
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Underwriters or counsel for
the Underwriters shall reasonably object.
(b) If any event shall occur as a result of which the Prospectus
would, in the judgment of the Underwriters or the Company, include an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it shall be
necessary at any time to amend or supplement the Prospectus or the Registration
Statement to comply with the Securities Act or the Securities Act Regulations,
the Company will notify the Underwriters promptly and prepare and file with the
Commission an appropriate amendment or supplement (in form and substance
satisfactory to the Underwriters) which will correct such statement or omission
or which will effect such compliance.
(c) The Company has delivered to the Underwriters a signed copy
of the Registration Statement as originally filed, including exhibits, and all
amendments thereto, and the Company will promptly deliver to each of the
Underwriters, from time to time during the period that the Prospectus is
required to be delivered under the Securities Act, such number of copies of the
Prospectus and the Registration Statement, and all amendments of and supplements
to such documents, if any, as the Underwriters may reasonably request.
(d) The Company will endeavor in good faith, in cooperation with
the Underwriters, to qualify the Shares for offering and sale under the
securities laws relating to the offering or sale of the Shares of such
jurisdictions as the Underwriters may designate and to maintain such
qualification in effect for so long as required for the distribution thereof;
except that in no event shall the Company be obligated in connection therewith
to qualify as a foreign corporation or to execute a general consent to service
of process.
(e) The Company will make generally available (within the
meaning of Section 11(a) of the Securities Act) to its security holders and to
the Underwriters as soon as practicable, but not later than 45 days after the
end of its fiscal quarter in which the first anniversary date of the effective
date of the Registration Statement occurs (or if such fiscal quarter is the
Company's fourth fiscal quarter, not later than 90 days after the end of such
quarter), an earnings statement (in form complying with the provisions of Rule
158 of the Securities Act Regulations) covering a period of at least twelve
consecutive months beginning after the effective date of the Registration
Statement (as defined in Rule 158(c) under the Securities Act).
(f) During the period of 90 days from the date of the
Prospectus, the Company will not, directly or indirectly, without the prior
written consent of Bear, Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette
Securities Corporation, offer, sell, contract to sell, grant any option to
purchase, pledge or otherwise dispose (or announce any offer, sale, contract to
sell, grant of an option to purchase, pledge or other disposition) of any shares
of Class A Common Stock or preferred stock of the Company or any securities
convertible into or exercisable or exchangeable for such Class A Common Stock or
preferred stock, except that the Company may issue (i) shares of Class A Common
Stock and options to purchase Class A Common Stock under its 1998 Shares Award
Plan and Employee Stock Purchase Plan, (ii) shares of Class A Common Stock upon
exercise of warrants to purchase Class A Common Stock or conversion of notes and
other convertible securities that were issued and outstanding on the date of the
Prospectus or (iii) shares of Class A Common Stock in connection with strategic
relationships and acquisitions of businesses, technologies and products
complementary to those of the Company, so long as the recipients of such shares
with respect to clause (iii) agree to be bound by a lock-up agreement
substantially in the form of Exhibit C hereto (which shall provide that any
---------
transferees and
12
<PAGE>
assigns of such recipients shall be bound by the lock-up agreement) for the
remainder of the 90-day lock-up period.
(g) During a period of three years from the date of the
Prospectus, the Company will furnish to the Underwriters copies of (i) all
reports to its stockholders; and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or any
national securities exchange.
(h) The Company will apply the proceeds from the sale of the
Shares as set forth under "Use of Proceeds" in the Prospectus.
(i) If the Company elects to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M., New
York City time, on the date of this Agreement, no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission, and all requests for additional information on the
part of the Commission shall have been complied with to the Underwriters'
reasonable satisfaction.
(j) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act or the Exchange Act, will file
all documents required to be filed with the Commission pursuant to Sections 13,
14 or 15 of the Exchange Act within the time periods required by the Exchange
Act and the rules and regulations thereunder.
(k) The Company shall file with the Commission and have declared
effective one or more registration statements on Form S-1, Form S-3 or such
similar form as may be applicable at the time to register the shares of Class A
Common Stock issuable upon conversion of the Shares.
(l) The Company will effect and maintain the quotation of the
shares of Class A Common Stock issuable upon conversion of the Shares on the
Nasdaq National Market.
5. Payment of Expenses. Whether or not the transactions
-------------------
contemplated in this Agreement are consummated or this Agreement is terminated,
the Company hereby agrees to pay all costs and expenses incident to the
performance of the obligations of the Company hereunder, including those in
connection with (a) preparing, printing, duplicating, filing and distributing
the Registration Statement, as originally filed and all amendments thereto
(including all exhibits thereto), any Preliminary Prospectus, the Prospectus and
any amendments or supplements thereto (including, without limitation, fees and
expenses of the Company's accountants and counsel), the underwriting documents
(including this Agreement, the Agreement Among Underwriters and the Selling
Agreement) and all other documents related to the public offering of the Shares
(including those supplied to the Underwriters in quantities as hereinabove
stated), (b) the issuance, transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (c) the
qualification of the Shares under state or foreign securities or Blue Sky laws,
including the costs of printing and mailing a preliminary and final "Blue Sky
Memorandum" and the fees of counsel in connection therewith and such counsel's
disbursements in relation thereto, (d) listing of the shares of Class A Common
Stock issuable upon conversion of the Shares for quotation on the Nasdaq, (d)
filing fees of the Commission and the NASD, (e) the cost of printing
certificates representing the Shares, (f) the cost and charges of any transfer
agent or registrar and (g) all costs and expenses of the Underwriters, including
the fees and disbursements of counsel for the Underwriters, in connection with
matters related to the Reserved Shares.
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<PAGE>
6. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6, "Closing Date" shall refer to the
------------
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to the Underwriters or to Latham &
Watkins ("Underwriters' Counsel") pursuant to this Section 6 of any material
---------------------
misstatement or omission, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
(a) Prior to the Closing Date the Registration Statement shall
have become effective, and on the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
Securities Act or proceedings therefor initiated or, to the Company's knowledge,
threatened by the Commission. The Prospectus shall have been filed or
transmitted for filing with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations within the prescribed time period, and prior to
Closing Date the Company shall have provided evidence satisfactory to the
Underwriters of such timely filing or transmittal.
(b) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the date hereof and on
the Closing Date with the same force and effect as if made on and as of the date
hereof and the Closing Date, respectively. The Company shall have performed or
complied with all of the agreements herein contained and required to be
performed or complied with by it at or prior to the Closing Date.
(c) The Prospectus shall have been printed and copies
distributed to the Underwriters not later than 10:00 a.m., New York City time,
on the second business day following the date of this Agreement or at such later
date and time as to which the Underwriters may agree, and no stop order
suspending the qualification or exemption from qualification of the Shares in
any jurisdiction referred to in Section 4(d) shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending or
threatened.
(d) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the issuance of
the Shares; no action, suit or proceeding shall have been commenced and be
pending against or affecting or, to the best knowledge of the Company,
threatened against, the Company or any of its subsidiaries before any court or
arbitrator or any governmental body, agency or official that (i) could
reasonably be expected to result in a Material Adverse Effect or (ii) has not
been disclosed in the Prospectus.
(e) Since the dates as of which information is given in the
Prospectus, except as disclosed in the Prospectus with respect to the stock
split, (i) there shall not have been any material adverse change, or any
development that is reasonably likely to result in a material adverse change, in
the capital stock or the long-term debt, or material increase in the short-term
debt, of the Company or any of its subsidiaries from that set forth in the
Prospectus, (ii) no dividend or distribution of any kind shall have been
declared, paid or made by the Company or any of its subsidiaries on any class of
its capital stock, (iii) neither the Company nor any of its subsidiaries shall
have incurred any liabilities or obligations, direct or contingent, that are
material, individually or in the aggregate, to the Company and its subsidiaries,
taken as a whole, and that are required to be disclosed on a balance sheet or
notes thereto in accordance with generally accepted accounting principles and
are not disclosed on the latest balance sheet or notes thereto included in the
Prospectus. Since the date hereof and since the dates as of which information is
given in the Prospectus, there shall not have occurred any Material Adverse
Effect.
14
<PAGE>
(f) The Underwriters shall have received (1) a certificate,
dated the Closing Date, signed on behalf of the Company by each of the Company's
Chief Executive Officer and Chief Financial Officer in form and substance
reasonably satisfactory to the Underwriters, confirming, as of the Closing Date,
the matters set forth in paragraphs (a) through (e) of this Section 6 and that,
as of the Closing Date, the obligations of the Company to be performed hereunder
on or prior thereto have been duly performed in all material respect and (2) a
certificate, dated the Closing Date, signed by the Company's Secretary, in form
and substance reasonably satisfactory to the Underwriters.
(g) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters and counsel to the Underwriters, of Hogan & Hartson L.L.P., counsel
for the Company, to the effect set forth in Exhibit A hereto.
---------
(h) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters and counsel to the Underwriters, of Fisher Wayland Cooper Leader &
Zaragoza L.L.P., counsel for the Company, to the effect set forth in Exhibit B
---------
hereto.
(i) The Underwriters shall have received an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to the Underwriters,
of Latham & Watkins, counsel to the Underwriters, covering such matters as are
customarily covered in such opinions.
(j) Latham & Watkins shall have been furnished with such
documents, in addition to those set forth above, as they may reasonably require
for the purpose of enabling them to review or pass upon the matters referred to
in this Section 6 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations, warranties
or conditions herein contained.
(k) At the time this Agreement is executed and at the Closing
Date the Underwriters shall have received from KPMG LLP, independent public
accountants for the Company and its subsidiaries, dated as of the date of this
Agreement and as of the Closing Date, customary comfort letters addressed to the
Underwriters in form and substance satisfactory to the Underwriters and counsel
to the Underwriters with respect to the financial statements and certain
financial information of the Company and its subsidiaries contained in the
Prospectus.
(l) At the time this Agreement is executed, the Underwriters
shall have received a "lock-up" agreement, substantially in the form attached as
Exhibit C hereto, from each of the officers and directors of the Company
- ---------
identified on Exhibit D hereto.
---------
(m) At the time this Agreement is executed, the Underwriters
shall have received a "lock-up" agreement, substantially in the form attached as
Exhibit E hereto, from each of the stockholders of the Company identified on
- ---------
Exhibit F hereto.
- ---------
(n) Each of the (1) Shareholders' Agreement, dated July 7, 1999,
by and among the Company and the other parties thereto, (2) Technology Licensing
Agreement, dated June 7, 1999, by and among the Company and the other parties
thereto, (3) Technical Services Agreement, dated January 1, 1998, as amended,
between the Company and AMSC, (4) Satellite Purchase Contract for In-Orbit
Delivery, dated March 20, 1998, between the Company and Hughes Space and
Communications International, Inc., (5) Agreement, dated November 2, 1998, by
and between the Company and STMicroelectronics Srl, (6) Distribution Agreement,
dated June 7, 1999, between the OnStar Division of General Motors Corporation
and the Company, (8) Operational Assistance Agreement, dated June 7,
15
<PAGE>
1999, between the Company and DIRECTV, INC., (9) Operational Assistance
Agreement, dated June 7, 1999, between the Company and Clear Channel
Communications, Inc., (10) Operational Assistance Agreement, dated June 7, 1999,
between the Company and TCM, LLC. and (11) Agreement, dated August 18, 1999, as
amended on November 2, 1999, between LCC International and the Company, shall be
in full force and effect, and no party to any such agreement shall have given
any notice of termination or amendment of any material provision thereof, or of
any intention to terminate or amend any material provision thereof, to any other
party, and no event shall have occurred which would prevent any party from
substantially performing its obligations under such agreements.
(o) All opinions, certificates, letters and other documents
required by this Section 6 to be delivered by the Company will be in compliance
with the provisions hereof only if they are reasonably satisfactory in form and
substance to the Underwriters. The Company will furnish the Underwriters with
such conformed copies of such opinions, certificates, letters and other
documents as Bear, Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette
Securities Corporation shall reasonably request. Prior to the Closing Date, the
Company shall have furnished to the Underwriters such further information,
certificates and documents as the Underwriters may reasonably request.
(p) The Company shall have filed with the Secretary of State of
Delaware the Certificate of Designations which, in the sole judgment of the
Underwriters, the provisions of which shall be substantially identical in all
material respects to the "Description of Series B Preferred Stock" contained in
the Prospectus.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to the
Underwriters or to Underwriters' Counsel pursuant to this Section 6 shall not be
in all material respects reasonably satisfactory in form and substance to the
Underwriters and to Underwriters' Counsel, all obligations of the Underwriters
hereunder may be canceled by the Underwriters at, or at any time prior to, the
Closing Date and the obligations of the Underwriters to purchase the Additional
Shares may be canceled by the Underwriters at, or at any time prior to, the
Additional Closing Date. Notice of such cancellation shall be given to the
Company in writing, or by telephone, telecopy, telex or telegraph, confirmed in
writing.
7. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
against any and all losses, liabilities, claims, damages and expenses whatsoever
as incurred (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company will not be liable in any such case (i) to the extent but only to
the extent that any such loss, liability, claim, damage or expense arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter
16
<PAGE>
expressly for use therein and (ii) with respect to any preliminary prospectus or
preliminary prospectus supplement to the extent that any such loss, claim,
damage or liability results from the fact that an Underwriter sold Shares to a
person as to whom it shall be established that there was not sent or given, at
or prior to written confirmation of such sale, a copy of the prospectus or
prospectus supplement as then amended or supplemented in any case where such
delivery is required by the Securities Act if the Company has previously
furnished copies thereof in sufficient quantity to such Underwriter and with
sufficient time to effect a recirculation pursuant to Rule 461 under the
Securities Act and the loss, claim, damage or liability of the Underwriters
results from an untrue statement or omission of a material fact contained in the
preliminary prospectus or preliminary prospectus supplement which was identified
in writing prior to the effective date of the registration statement to such
underwriter and corrected in the prospectus or prospectus supplement as then
amended, and such correction would have cured the defect giving rise to such
loss, claim, damage or liability. This indemnity agreement will be in addition
to any liability which the Company may otherwise have including under this
Agreement.
(b) Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company and each other person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, against any and all losses, liabilities,
claims, damages and expenses whatsoever as incurred (including but not limited
to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, as
originally filed or any amendment thereof, or any related preliminary
prospectus, preliminary prospectus supplement or prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter expressly for use therein; provided, however, that in
no case shall any Underwriter be liable or responsible for any amount in excess
of the underwriting discount applicable to the Shares purchased by such
Underwriter hereunder. This indemnity will be in addition to any liability which
any Underwriter may otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have
17
<PAGE>
employed counsel to take charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses shall be borne by the indemnifying parties.
Anything in this subsection to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent; provided, however, that such consent was not
unreasonably withheld.
8. Contribution. In order to provide for contribution in
------------
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, officers of the Company who signed the Registration
Statement and directors of the Company) as incurred to which the Company and one
or more of the Underwriters may be subject, in such proportions as is
appropriate to reflect the relative benefits received by the Company and the
Underwriters from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 7
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and the
Underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other hand shall be deemed to be in
the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and (y) the underwriting discounts and commissions received by
the Underwriters, respectively, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Company and the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 8, (i) in no case shall any Underwriter be liable or responsible
for any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) of
18
<PAGE>
this Section 8. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties, notify each party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 8 or otherwise. No party shall be liable
for contribution with respect to any action or claim settled without its
consent; provided, however, that such consent was not unreasonably withheld.
9. Default by an Underwriter.
-------------------------
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default relates
do not (after giving effect to arrangements, if any, made by the Underwriters
pursuant to Subsection (b) below) exceed in the aggregate 10% of the number of
Firm Shares or Additional Shares, the Firm Shares or Additional Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase shall be purchased by the non-defaulting Underwriters in proportion to
the respective proportions which the numbers of Firm Shares set forth opposite
their respective names in Schedule I hereto bear to the aggregate number of Firm
Shares set forth opposite the names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of
the Firm Shares or Additional Shares, as the case may be, the Underwriters may
in their discretion arrange for themselves or for another party or parties
(including any non-defaulting Underwriter or Underwriters who so agree) to
purchase such Firm Shares or Additional Shares, as the case may be, to which
such default relates on the terms contained herein. In the event that within
five calendar days after such a default the Underwriters do not arrange for the
purchase of the Firm Shares or Additional Shares, as the case may be, to which
such default relates as provided in this Section 9, this Agreement, or in the
case of a default with respect to the Additional Shares, the obligations of the
Underwriters to purchase and of the Company to sell the Additional Shares, shall
thereupon terminate, without liability on the part of the Company with respect
thereto (except in each case as provided in Section 5, 7(a) and 8 hereof) or the
Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter or Underwriters of its or their liability, if any, to the other
Underwriters and the Company for damages occasioned by its or their default
hereunder.
(c) In the event that the Firm Shares or Additional Shares to
which the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
the Underwriters or the Company shall have the right to postpone the Closing
Date or Additional Closing Date, as the case may be, for a period not exceeding
five business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus which,
in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include any
party substituted under this Section 9 with like effect as if it had originally
been a party to this Agreement with respect to such Firm Shares or Additional
Shares.
10. Survival of Representations and Agreements. All representations
------------------------------------------
and warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors, or any controlling
19
<PAGE>
person of the Company, and shall survive delivery of and payment for the Shares
to and by the Underwriters. The representations contained in Section 1 and the
agreements contained in Sections 5, 7, 8, 11(d) and 12 hereof shall survive the
termination of this Agreement, including termination pursuant to Section 9 or 11
hereof.
11. Effective Date of Agreement; Termination.
----------------------------------------
(a) This Agreement shall become effective upon the execution
and delivery of a counterpart hereof by each of the parties hereto.
(b) The Underwriters shall have the right to terminate this
Agreement at any time prior to the Closing Date or the obligations of the
Underwriters to purchase the Additional Shares at any time prior to the
Additional Closing Date, as the case may be, if on or prior to such date, (i)
the Company shall have failed, refused or been unable to perform in any material
respect any agreement on its part to be performed hereunder, (ii) any other
condition to the obligations of the Underwriters hereunder as provided in
Section 6 is not fulfilled when and as required in any material respect, (iii)
in the judgment of the Underwriters any changes of circumstance shall have
occurred since the respective dates as of which information is given in the
Prospectus which could have a Material Adverse Effect, other than as set forth
in the Prospectus, or (iv) (A) any domestic or international event or act or
occurrence has materially adversely affected, or in the opinion of the
Underwriters will in the immediate future materially adversely affect, the
market for the Company's securities or for securities in general; or (B) trading
in securities generally on the New York Stock Exchange ("NYSE") or quotations on
----
the Nasdaq shall have been suspended or materially limited, or minimum or
maximum prices for trading shall have been established, or maximum ranges for
prices for securities shall have been required, on such exchange, or by such
exchange or other regulatory body or governmental authority having jurisdiction;
or (C) a banking moratorium shall have been declared by federal or state
authorities, or a moratorium in foreign exchange trading by major international
banks or persons shall have been declared; or (D) there is an outbreak or
escalation of armed hostilities involving the United States on or after the date
hereof, or if there has been a declaration by the United States of a national
emergency or war, the effect of which shall be, in the Underwriters' judgment,
to make it inadvisable or impracticable to proceed with the offering, sale and
delivery of the Firm Shares or the Additional Shares, as the case may be, on the
terms and in the manner contemplated by the Prospectus; or (E) there shall have
been such a material adverse change in general economic, political or financial
conditions or if the effect of international conditions on the financial markets
in the United States shall be such as, in the Underwriters' judgment, makes it
inadvisable or impracticable to proceed with the offering, sale and delivery of
the Firm Shares or the Additional Shares, as the case may be, on the terms and
in the manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11
shall be by telephone, telecopy, telex, or telegraph, confirmed in writing by
letter.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (other than pursuant to Section 9(b) or 11(b) hereof), or
if the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by the Underwriters, reimburse the Underwriters
for all out-of-pocket expenses (including the reasonable fees and expenses of
their counsel), incurred by the Underwriters in connection herewith.
12. Underwriters' Information. The Company and the Underwriters
-------------------------
severally acknowledge that the statements set forth in (i) the fourth paragraph
under the caption "Underwriting" in
20
<PAGE>
the Prospectus concerning the proposed public offering price, discount and
concession; and (ii) the sixth paragraph under the caption "Underwriting" in the
Prospectus concerning transactions that stabilize, maintain, or otherwise affect
the price of the Preferred Stock, constitute the only information furnished in
writing by or on behalf of any Underwriter expressly for use in the Registration
Statement, as originally filed or in any amendment thereof, any related
Preliminary Prospectus or preliminary prospectus supplement or the Prospectus or
in any amendment thereof or supplement thereto, as the case may be.
13. Notices. All communications hereunder, except as may be
-------
otherwise specifically provided herein, shall be in writing and, if sent to the
Underwriters shall be mailed, delivered, telegraphed or telecopied and confirmed
in writing to the Underwriters, c/o Bear, Stearns & Co. Inc., 245 Park Avenue,
New York, New York 10167, Attention: Corporate Finance Department, telecopy
number: (212) 272-3092 and Donaldson, Lufkin & Jenrette Securities Corporation,
277 Park Avenue, New York, New York, 10172, Attention: Syndicate Department,
with a copy to Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New
York 10022, Attention: Gregory A. Ezring, telecopy number (212) 751-4864, and if
sent to the Company, shall be mailed, delivered or telexed, telegraphed or
telecopied and confirmed in writing to XM Satellite Radio Holdings Inc., 1250
23rd Street, NW, Suite 57, Washington, D.C. 20037-1100, Attention: Chief
Financial Officer, telecopy number: (202) 969-7113, with a copy to Hogan &
Hartson L.L.P., 555 Thirteenth Street NW, Washington, D.C. 20004-1109,
Attention: Steve Kaufman, telecopy number (202) 637-5910; provided, however,
that any notice pursuant to Sections 7 or 8 shall be mailed, delivered,
telegraphed or telecopied and confirmed in writing
14. Parties. This Agreement shall inure solely to the benefit of,
-------
and shall be binding upon, the Underwriters, the Company and the controlling
persons, directors, officers, employees and agents referred to in Section 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares from any of the Underwriters.
15. Construction. This Agreement shall be construed in
------------
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed within New York, without giving any effect
to any provisions thereof relating to conflicts of law. TIME IS OF THE ESSENCE
IN THIS AGREEMENT.
16. Captions. The captions included in this Agreement are
--------
convenience of reference and are not to be considered a part of this Agreement.
17. Counterparts. This Agreement may be executed in various
------------
counterparts which together shall constitute one and the same instrument.
21
<PAGE>
If the foregoing correctly sets forth the understanding among the
Underwriters and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
XM SATELLITE RADIO HOLDINGS INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
Accepted as of the date first above written
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
Acting severally on behalf of themselves and the
several Underwriters named in Schedule I hereto
BEAR, STEARNS & CO. INC.
By:______________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By:______________________
Name:
Title:
<PAGE>
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
- --------------------------------------------------------------------------------
Bear, Stearns & Co. Inc. ................................................. [_]
Donaldson, Lufkin & Jenrette Securities Corporation ..................... . [_]
Banc of America Securities LLC ............................................ [_]
Salomon Smith Barney Inc. ................................................. [_]
Total ............................................................. 2,000,000
<PAGE>
Exhibit A
Form of Opinion of Hogan & Hartson LLP
1. Each of XM Satellite Radio Holdings Inc. (the "Company") and its
-------
subsidiaries is duly organized and validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, and has all
requisite corporate power and authority to carry on its business as it is being
conducted and as described in the Prospectus and to own, lease and operate its
properties, and is duly qualified and in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified or in good standing would not,
singly or in the aggregate, have a Material Adverse Effect.
2. All of the outstanding shares of capital stock of the Company have
been duly authorized, validly issued, and are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights under the
Delaware General Corporation Law. The authorized, issued and outstanding
capital stock of the Company conforms in all respects to the description thereof
set forth in the Prospectus.
3. All of the issued and outstanding capital stock of, or other
ownership interests in, the Company's subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable and were not issued in
violation of or subject to any preemptive or similar rights under the Delaware
General Corporation Law or known to us, after reasonable inquiry, and, are owned
by the Company of record and, to our knowledge, after reasonable inquiry, free
and clear of any security interest, claim, lien, limitation on voting rights or
encumbrance. There are not, to our knowledge, currently, and will not be
following the Offering, any outstanding subscriptions, rights, warrants, calls,
commitments of sale or options to acquire or instruments convertible into or
exchangeable for, any capital stock or other equity interest of the Company or
any of its subsidiaries (other than options issued pursuant to the Company's
stock option plan).
4. Upon the issuance and delivery of the Preferred Stock in
accordance with the Underwriting Agreement, the Preferred Stock will be
convertible at the option of the holder thereof for shares of Class A Common
Stock in accordance with the Certificate of Designation of Voting Power,
Designation Preferences and Relative, Optional or Other Special Rights and
Qualifications, Limitations and Restrictions (the "Certificate of Designations")
governing the Preferred Stock. The shares of Class A Common Stock issuable upon
any such conversion of Preferred Stock have been duly authorized and reserved
for issuance upon such conversion and such shares of Class A Common Stock, when
issued upon such conversion, will be validly issued and will be fully paid and
nonassessable and not issued in violation of any preemptive or similar rights.
5. The Company has duly authorized and reserved for issuance such
shares of Class A Common Stock as may be payable as a dividend on the Preferred
Stock in accordance with the Certificate of Designations, and such shares of
Class A Common Stock, when issued upon such conversion, will be validly issued
and will be fully paid and nonassessable and not issued in violation of any
preemptive or similar rights.
6. The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Underwriting Agreement
and to consummate the transactions contemplated thereby and in the Prospectus,
including, without limitation, the corporate power and authority to issue, sell
and deliver the Shares as provided herein and therein.
<PAGE>
5. The Underwriting Agreement has been duly and validly authorized,
executed and delivered by the Company and, assuming due execution by the other
parties hereto, is the legally valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
6. The Registration Statement has become effective under the Act and,
to the best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Act and no proceedings therefor
have been initiated or threatened by the Commission; and any required filing of
the Prospectus pursuant to Rule 424(b) under the Act has been made in accordance
with Rule 424(b) and 430A under the Act.
7. The Registration Statement, Preliminary Prospectus and Prospectus
comply as to form in all material respects with the requirements for
registration statements on Form S-1 under the Securities Act and the Securities
Act Regulations; it being understood, however, that such counsel need not
express an opinion with respect to the financial statements, schedules and other
financial data included in the Registration Statement, Preliminary Prospectus or
Prospectus. To such counsel's knowledge, there are no contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein, and, to such
counsel's knowledge, the descriptions thereof or references thereto are correct
in all material respects.
8. None of (A) the execution, delivery or performance by the Company
of the Underwriting Agreement, (B) the issuance and sale of the Shares, (C) the
consummation of the Concurrent Offering or (D) the consummation by the Company
of the transactions described in the Prospectus under the caption "Use of
Proceeds" violates, conflicts with or constitutes a breach of any of the terms
or provisions of, or a default under (or an event that with notice or the lapse
of time, or both, would constitute a default), or requires consent under, or
will result in the imposition of a lien or encumbrance on any properties of the
Company or any of its subsidiaries, or an acceleration of any indebtedness of
the Company or any of its subsidiaries pursuant to, (i) the certificate of
incorporation or bylaws of the Company or any of its subsidiaries, (ii) any
bond, debenture, note, indenture, mortgage, deed of trust, contract or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which any of them or their property is or may be bound identified to
such counsel as material, (iii) any statute, rule of regulation applicable to
the Company or any of its subsidiaries, or (iv) any judgment, order or decree of
any court or governmental agency or authority having jurisdiction over the
Company or any of its subsidiaries or any of their assets or properties known to
such counsel, and except in the case of clauses (ii), (iiii) and (iv) for such
violations, conflicts, breaches, defaults, consents, impositions of liens or
accelerations that (x) would not, singly or in the aggregate, have a Material
Adverse Effect or (y) are disclosed in the Prospectus. No consent, approval,
authorization or order of, or filing, registration, qualification, license or
permit of or with, (a) any court or governmental agency, body or administrative
agency (b) or any other person is required for (1) the execution, delivery and
performance by the Company of the Underwriting Agreement, (2) the issuance and
sale of the Shares, (3) the consummation of the Concurrent Offering or (4)
consummation by the Company of the transactions described in the Prospectus
except (i) such as have been obtained and made or have been disclosed in the
Prospectus or (ii) where the failure to obtain such consents or waivers would
not, singly or in the aggregate, have a Material Adverse Effect. To the best of
such counsel's knowledge, after reasonable inquiry, no consents or waivers from
any other person are required for the execution, delivery and performance by the
Company of the Underwriting Agreement, the issuance and sale of the Shares,
other than such consents and waivers as have been obtained or are being applied
for.
ii
<PAGE>
9. None of the Company or any of its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or (ii) a
"holding company" or a "subsidiary company" or an "affiliate" of a holding
company within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
10. Except as set forth in the Underwriting Agreement or in the
Prospectus, to such counsel's knowledge, after reasonable inquiry there are no
holders of any securities of the Company who, by reason of the execution by the
Company of the Underwriting Agreement or the consummation by the Company of the
transactions contemplated thereby, have the right to request or demand that the
Company register under the Act securities held by them.
11. To the knowledge of such counsel, after reasonable inquiry, no
search of courts having been made, there is (i) no action, suit, investigation
or proceeding before or by any court, arbitrator or governmental agency, body or
official, domestic or foreign, now pending, or threatened or contemplated to
which any of the Company or any of its subsidiaries is or may be a party or to
which the business or property of any of the Company or any of its subsidiaries
is or may be subject, (ii) no statute, rule, regulation or order that has been
enacted, adopted or issued by any governmental agency or that has been proposed
by any governmental body, or (iii) no injunction, restraining order or order of
any nature by a federal or state court of competent jurisdiction to which any of
the Company or any of its subsidiaries is or may be subject has been issued
that, in the case of clauses (i), (ii) and (iii) above, (w) is required to be
disclosed in the Prospectus and that is not so disclosed or, (x) could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, except as disclosed in the Prospectus; or (y) might
interfere with, adversely affect or in any manner question the validity of the
issuance and sale of the Shares or any of the other transactions contemplated by
the Underwriting Agreement.
12. The statements contained in the Prospectus under the captions
"Risk FactorsLarge payment obligations under our distribution agreement with
General Motors may prevent us from becoming profitable", "Management's
Discussion and Analysis of Financial Condition and Results of
OperationsLiquidity and Capital ResourcesFunds Required for XM Radio Through
Commencement of Commercial OperationsSources of Funds", "Management's Discussion
and Analysis of Financial Condition and Results of OperationsLiquidity and
Capital ResourcesFunds Required for XM Radio Following Commencement of
Commercial Operations" "Management", "Certain Relationships and Related Party
Transactions", "Principal Stockholders", "Description of Capital Stock",
"Description of Series B Preferred Stock" and "Certain United States Federal Tax
Consequences", in each case, insofar as such statements constitute summaries of
the legal matters, documents or proceedings referred to therein, fairly present
the information required with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein in all material
respects.
We have participated in conferences with officers and other
representatives of the Company, representatives of the independent certified
public accountants of the Company and the Underwriters and their representatives
at which the contents of the Registration Statement, Preliminary Prospectus and
Prospectus and related matters were discussed and, although we have not
undertaken to investigate or verify independently, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement, Preliminary Prospectus or Prospectus
(except as indicated above), on the basis of the foregoing, no facts have come
to our attention which led us to believe that the Registration Statement,
Preliminary Prospectus and Prospectus, as of its date or the Closing Date,
contained an untrue statement of a material fact or omitted to state any fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances
iii
<PAGE>
under which they were made, not misleading (except as to financial statements
and related notes, the financial statement schedules and other financial and
statistical data included therein).
iv
<PAGE>
Exhibit B
Form of Opinion of Fisher Wayland Cooper Leader & Zaragoza L.L.P.
1. Except as set forth in the Prospectus, the (i) the FCC has
granted XM Satellite Radio Holdings Inc. (the "Company") all material
-------
authorizations needed to construct, launch, and operate a satellite radio
service and offer a subscription service on a non-common carrier basis, and (ii)
the FCC has assigned XM two orbital locations at 85 degrees W.L. and 105 degrees
W.L. for XM Radio's two satellites and the frequency band 2332.5-2345 MHz to
provide such satellite radio service.
2. Except for such FCC consents, approvals, authorizations or orders
that have already been obtained, no material consent, approval, authorization or
order of the FCC is required to be obtained by the Company or its subsidiaries
under the Communications Laws for the consummation of the transactions
contemplated under the Underwriting Agreement, except that, from time to time,
the Company and its subsidiaries may be required to obtain certain
authorizations that would be required in the ordinary course of business.
3. The execution and delivery of the Underwriting Agreement, and the
consummation of the transactions contemplated thereunder, by the Company do not
and will not violate any material provision of the Communications Laws.
4. The statements set forth in the Prospectus under the captions
"Risk Factors--Failure to comply with FCC requirements could damage our
business," "Risk Factors--If the challenge to our FCC license is successful, our
business could be harmed" and "Business--Regulatory Matters," insofar as such
statements constitute a summary of material (a) legal matters, (b) documents, or
(c) proceedings under the Communications laws, fairly present the information
contained under such captions in light of the circumstances in which they were
made.
5. Except as set forth in the Prospectus, to our knowledge, there is
no investigation or complaint before the FCC pending or threatened in writing
that is specifically directed against or in respect of the Company or its
subsidiaries, or any of the FCC licenses held by the Company or its subsidiaries
that would reasonably be expected to result in the revocation of any material
FCC authorizations or otherwise to materially impair the operations of the
Company or its subsidiaries.
<PAGE>
Exhibit C
XM Satellite Radio Holdings Inc.
1250 23/rd/ Street, NW, Suite 57
Washington, D.C. 20037-1100
Lock-Up Agreement
Bear, Stearns & Co. Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Dear Sirs:
The undersigned understands that Bear, Stearns & Co. Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation, as representatives of the several
underwriters (the "Underwriters"), propose to enter into an Underwriting
------------
Agreement with XM Satellite Radio Holdings Inc., a Delaware corporation (the
"Company"), providing for the public offering of the Company's Series B
-------
Convertible Redeemable Preferred Stock, par value $.01 per share, pursuant to a
Registration Statement on Form S-1 (File No. 333-93529). The undersigned wishes
to facilitate the Offering and recognizes that the Offering will be of benefit
to the undersigned.
In consideration of the foregoing and in order to induce you to act as
Underwriters in connection with the Offering, the undersigned hereby agrees, for
the benefit of the Company and the Underwriters, that during the period
beginning from the date hereof and continuing to and including the date 90 days
after the date of the final prospectus relating to the Offering, the undersigned
will not, directly or indirectly, without the prior written consent of Bear,
Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette Securities Corporation,
offer, sell, contract to sell, swap, make any short sale, pledge, establish an
open "put equivalent position" within the meaning of Rule 16a-1(h) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), grant any
------------
option to purchase or otherwise dispose (or publicly announce the undersigned's
intention to do any of the foregoing) of, directly or indirectly, any shares of
the Company's Class A Common Stock, par value $.01 per share (the "Common
Stock"), or other capital stock of the Company, or any securities convertible
into, or exercisable or exchangeable for, any shares of Common Stock or other
capital stock of the Company that the undersigned currently beneficially owns
(within the meaning of Rule 13d-3 under the Exchange Act), directly or
indirectly, or may beneficially own, directly or indirectly, in the future;
provided that the foregoing shall not prohibit the exercise of options pursuant
to the Company's 1998 Shares Award Plan.
Notwithstanding the foregoing, if the undersigned is an individual, he or
she may transfer shares of Common Stock (or any securities convertible into,
exercisable for, or exchangeable for Common Stock) by gift, will, or intestate
succession to his or her immediate family or to a trust the beneficiaries of
which are exclusively the undersigned and/or a member or members of his or her
immediate family (for purposes of this paragraph, "immediate family" shall mean
spouse, lineal descendant, father, mother, brother or sister of the transferor);
provided, however, that in any such case it shall be a condition to the transfer
that (i) each transferee execute an agreement stating that the transferee is
receiving and holding the shares of Common Stock (or any securities convertible
into, exercisable for, or exchangeable for Common Stock) subject to the
provisions of this Agreement, and there shall be no further transfer of such
shares of Common Stock (or any securities convertible into, exercisable for, or
exchangeable for Common Stock) except in accordance with this Agreement (and
(ii) that each transferee certifies in writing to Bear, Stearns & Co. Inc. and
Donaldson, Lufkin & Jenrette Securities Corporation that such transferee is in
compliance with the terms of this agreement as if such transferee had been bound
by this agreement from the original date of this agreement.
<PAGE>
The undersigned confirms that the undersigned understands that the
Underwriters and the Company will rely upon the representations set forth in
this Agreement in proceeding with the Offering. The undersigned further
confirms that the agreements of the undersigned are irrevocable and shall be
binding upon the undersigned's heirs, legal representatives, successors and
assigns. The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of
securities of the Company held by the undersigned except in compliance with this
Agreement.
Very truly yours,
By:________________________
Name:
Title:
Dated: January ___, 2000
ii
<PAGE>
Exhibit D
Individuals Delivering a Lock-Up Agreement Pursuant to Section 6(l)
Lee Abrams
Stephen Cook
Nathaniel Davis
Thomas R. Donohue
Steven P. Gavenas
Randall T. Mays
Gary M. Parsons
Hugh Panero
Dr. Stelios Patsiokas
Randy S. Segal
Jack Shaw
Dr. Rajendra Singh
Heinz Stubblefield
Joseph M. Titlebaum
John R. Wormington
Ronald L. Zarrella
<PAGE>
Exhibit E
Lock-Up Agreement
Bear, Stearns & Co. Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Dear Sirs:
The undersigned understands that Bear, Stearns & Co. Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation, as representatives of the several
underwriters (the "Underwriters"), propose to enter into an Underwriting
------------
Agreement with XM Satellite Radio Holdings Inc., a Delaware corporation (the
"Company"), providing for the public offering of the Company's Series B
-------
Convertible Redeemable Preferred Stock, par value $.01 per share, pursuant to a
Registration Statement on Form S-1 (File No. 333-93529). The undersigned is a
holder of securities of the Company and wishes to facilitate the Offering and
recognizes that the Offering will be of benefit to the undersigned.
In consideration of the foregoing and in order to induce you to act as
Underwriters in connection with the Offering, the undersigned hereby agrees, for
the benefit of the Company and the Underwriter, that during the period beginning
from the date hereof and continuing to and including the date 90 days after the
date of the final prospectus relating to the Offering, the undersigned will not,
directly or indirectly, without the prior written consent of Bear, Stearns & Co.
Inc. and Donaldson, Lufkin & Jenrette Securities Corporation, offer, sell,
contract to sell, swap, make any short sale, pledge, establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), grant any option to
------------
purchase or otherwise dispose (or publicly announce the undersigned's intention
to do any of the foregoing) of, directly or indirectly, any shares of the
Company's Class A Common Stock, par value $.01 per share (the "Common Stock"),
or other capital stock of the Company, or any securities convertible into, or
exercisable or exchangeable for, any shares of Common Stock or other capital
stock of the Company that the undersigned currently beneficially owns (within
the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, or
may beneficially own, directly or indirectly, in the future; provided that the
foregoing shall not prohibit conversion of the Company's Series A subordinated
convertible notes or Class B common stock into Common Stock.
The undersigned confirms that the undersigned understands that the
Underwriters and the Company will rely upon the representations set forth in
this Agreement in proceeding with the Offering. The undersigned further
confirms that the agreements of the undersigned are irrevocable and shall be
binding upon the undersigned's heirs, legal representatives, successors and
assigns. The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of
securities of the Company held by the undersigned except in compliance with this
Agreement.
Very truly yours,
By:__________________________
Name:
Title:
Dated: January __, 2000
<PAGE>
Exhibit F
Stockholders Delivering a Lock-Up Agreement Pursuant to Section 6(m)
American Mobile Satellite Corporation
Clear Channel Investments, Inc.
Columbia XM Radio Partners L.L.C.
DIRECTV Enterprises, Inc.
General Motors Corporation
Madison Dearborn Capital Partners III, L.P.
Madison Dearborn Special Equity III, L.P.
Special Advisors Fund I, LLC
Telecom-XM Investors, L.L.C.
<PAGE>
Exhibit 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
XM SATELLITE RADIO HOLDINGS INC.
XM Satellite Radio Holdings Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation") hereby certifies as
follows:
1. The name of the Corporation is XM SATELLITE RADIO HOLDINGS INC. The name
under which the Corporation was originally incorporated was AMRC Holdings, Inc.,
and the Corporation's original Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware on May 16, 1997.
2. This Restated Certificate of Incorporation was duly adopted by the
Corporation's Board of Directors and stockholders in accordance with Sections
242 and 245 of the General Corporation Law of the State of Delaware (the
"DGCL"). The Restated Certificate of Incorporation restates, integrates and
further amends the provisions of the Certificate of Incorporation of the
Corporation.
3. The text of the Certificate of Incorporation as heretofore amended is
hereby further amended and restated in its entirety, to read in its entirety as
follows:
<PAGE>
FIRST: The name of the corporation is XM Satellite Radio Holdings Inc. (the
"Corporation").
SECOND: The address of the registered office of the Corporation in the State
of Delaware is 1013 Centre Road, in the City of Wilmington, County of New
Castle. The name of the Corporation's registered agent at such address is the
Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware ("DGCL").
FOURTH: A. The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is Three Hundred Million
(300,000,000), consisting of (i) Sixty Million (60,000,000) shares of Preferred
Stock with a par value of $0.01 per share, and (ii) Two Hundred and Forty
Million (240,000,000) shares of Common Stock with a par value of $0.01 per
share, of which One Hundred and Eighty Million (180,000,000) shares shall be
designated "Class A Common Stock", Thirty Million (30,000,000) shares shall be
designated "Class B Common Stock" and Thirty Million (30,000,000) shares shall
be designated "Class C Common Stock."
B. The Class A Common Stock, the Class B Common Stock and the Class C
Common Stock shall be identical in all respects and shall have equal rights and
privileges, except as otherwise provided in this Article FOURTH. The relative
rights, preferences, privileges and restrictions of the shares of the classes
are as follows:
-2-
<PAGE>
1. The holders of shares of Class A Common Stock, Class B Common
Stock and Class C Common Stock shall ratably receive dividends and distributions
of the Corporation whether paid in cash, in property or shares of Common Stock.
2. The holders of shares of Class A Common Stock, Class B Common
Stock and Class C Common Stock shall have the following voting rights:
(i) At every annual or special meeting of the stockholders
of the Corporation or at any other time that any matter is submitted to a vote
or for the consent of the stockholders, every holder of Class A Common Stock
shall be entitled to one (1) vote for each share of Class A Common Stock
standing in such holder's name on the books of the Corporation.
(ii) At every annual or special meeting of the stockholders
of the Corporation or at any other time that any matter is submitted to a vote
or for the consent of the stockholders, every holder of Class B Common Stock
shall be entitled to three (3) votes for each share of Class B Common Stock
standing in such holder's name on the books of the Corporation.
(iii) The holders of shares of Class C Common Stock shall
not be entitled to vote at any annual or special meeting of the stockholders of
the Corporation or at any other time that any matter is submitted to a vote or
for the consent of the stockholders, except to the extent required by law.
3. Upon liquidation, dissolution, winding up or insolvency of the
Corporation, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities of the Corporation and of the
preferential
-3-
<PAGE>
amounts to which the holders of Preferred Stock shall be entitled, the holders
of all outstanding shares of Class A Common Stock, Class B Common Stock and
Class C Common Stock shall be entitled to share ratably in the remaining net
assets of the Corporation.
4. Each holder of record of a share of Class B Common Stock may
at any time or from time to time, in such holder's sole discretion and at such
holder's option, convert any whole number or all of such holder's shares of
Class B Common Stock into fully paid and nonassessable shares of Class A Common
Stock at the rate of one share of Class A Common Stock for each share of Class B
Common Stock surrendered for conversion.
(a) In the event that the Corporation shall at any time
prior to the conversion of all or a portion of Class B Common Stock either (i)
subdivide the outstanding shares of Class A Common Stock into a greater number
of shares, (ii) combine the outstanding shares of Class A Common Stock into a
smaller number of shares, (iii) change the outstanding shares of Class A Common
Stock into the same or a given number of shares of any other class or classes of
shares, (iv) declare on or in respect of the shares of Class A Common Stock a
dividend payable in shares or other securities of the Corporation, or (v) offer
to the holders of Class A Common Stock any rights to subscribe for shares of
other securities of the Corporation (each such event being referred to as a
"Recapitalization"), then the holders of the shares of Class B Common Stock
shall be entitled, as the case may be, to receive the same number of shares of
Class B
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<PAGE>
Common Stock, in the case of any Recapitalization involving Class A Common
Stock, or shares of any other class or classes of shares or other securities of
the Corporation, or shall be entitled to subscribe for and purchase at the same
price that the Recapitalization shares or securities are offered to the holders
of Class A Common Stock, the number of such shares or the amount of such other
class or classes of shares or other securities as will result in the holders of
the shares of Class B Common Stock holding such number of shares of Class B
Common Stock as necessary to maintain the same proportion of the outstanding
shares of Class B Common Stock in relation to the outstanding shares of Class A
Common Stock following the Recapitalization as the proportion of the outstanding
shares of Class B Common Stock in relation to the outstanding shares of Class A
Common Stock prior to such Recapitalization.
(b) Any conversion of one or more shares of Class B Common
Stock into one or more shares of Class A Common Stock may be effected by the
holder of Class B Common Stock by surrendering such holder's certificate or
certificates for the shares of Class B Common Stock to be converted, duly
endorsed, at the office of the Corporation or the office of any transfer agent
for the Class A Common Stock, together with a written notice to the Corporation
at such office that such holder elects to convert all or a specified number of
such shares of Class B Common Stock. Promptly thereafter, the Corporation shall
issue and deliver to such holder a certificate or certificates for the number of
shares of Class A Common Stock to which such holder shall be entitled as
aforesaid. Such conversion shall be made at the close of business on the date of
such surrender and the person entitled
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<PAGE>
to receive the shares of Class A Common Stock issuable on such conversion shall
be treated for all purposes as the record holder of such shares of Class A
Common Stock on such date.
(c) These provisions for conversion of Class B Common Stock
shall be subject to all applicable statutory limitations and restrictions.
5. Thirty Million (30,000,000) shares of Class A Common Stock
shall be reserved and set aside and such shares shall be issued upon conversion
of, and in exchange for, shares of Class B Common Stock as herein provided,
subject to increase in such number of shares of Class A Common Stock so reserved
and set aside in order to adjust for a Recapitalization.
6. Shares which have been converted hereunder shall revert to the
status of unissued shares and shall not be reissued. Such shares may be
eliminated as provided by law.
C. I. The Preferred Stock may be issued from time to time by the Board
of Directors as shares of one or more series of Preferred Stock and, except to
the extent that subdivision II below designates an initial series of Preferred
Stock and fixes the powers, preferences and relative, participating, optional or
other special rights of shares of, and the qualifications, limitations or
restrictions of, such initial series, and subject to the provisions hereof and
the limitations prescribed by law, the Board of Directors is expressly
authorized, prior to issuance, in the resolution or resolutions providing for
the issue of, or providing for a change in the number of, shares of any
particular series and by filing a certificate pursuant to the DGCL, to establish
or change the number of shares to be included in each such
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<PAGE>
series and to fix the designation, powers, preferences and relative,
participating, optional or other special rights of shares of, and the
qualifications, limitations or restrictions of, each such series.
The authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the following:
1. The number of shares constituting that series and the
distinctive designation of that series;
2. The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and whether
they shall be payable in preference to, or in another relation to, the dividends
payable on any other class or classes or series of stock;
3. Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting rights;
4. Whether that series shall have conversion or exchange
privileges, and, if so, the terms and conditions of such conversion or exchange,
including provision for adjustment of the conversion or exchange rate in such
events as the Board of Directors shall determine;
5. Whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the manner of
selecting shares for redemption if less than all shares are to be redeemed, the
date or dates upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
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<PAGE>
6 Whether that series shall be entitled to the benefit of a
sinking fund to be applied to the purchase or redemption of shares of that
series, and, if so, the terms and amounts of such sinking fund;
7. The right of the shares of that series to the benefit of
conditions and restrictions upon the creation of indebtedness of the Corporation
or any subsidiary, upon the issue of any additional stock (including additional
shares of such series or any other series) and upon payment of dividends or the
making of other distributions on, and the purchase, redemption or other
acquisition by the Corporation or any subsidiary of any outstanding stock of the
Corporation,
8. The right of the shares of that series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and whether such rights shall be in preference to, or in another
relation to, the comparable rights of any other class or classes or series of
stock; and
9. Any other relative, participating, optional or other special
rights, qualifications, limitations or restrictions of that series.
C. II. The designation, powers, preferences and relative,
participating, optional or other special rights of, and the qualifications,
limitations or restrictions of, the initial series of Preferred Stock, to
consist of Fifteen Million (15,000,000) shares of Preferred Stock, shall be as
follows:
1. Designation. The designation of the initial series of
-----------
Preferred Stock shall be "Series A Convertible Preferred Stock, par value $.01
per share" ("Series A Convertible Preferred Stock").
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<PAGE>
2. Conversion. Each holder of record of a share of Series A
----------
Convertible Preferred Stock may at any time or from time to time, in such
holder's sole discretion and at such holder's option, convert any whole number
or all of such holder's shares of Series A Convertible Preferred Stock into
fully paid and nonassessable shares of Class A Common Stock at the rate of one
share of Class A Common Stock for each share of Series A Convertible Preferred
Stock surrendered for conversion. Following the occurrence of a
Recapitalization, each share of Series A Convertible Preferred Stock shall be
convertible into the kind and number of shares of stock or other securities or
property of the Corporation or otherwise to which the holder of such share of
Series A Convertible Preferred Stock would have been entitled to receive if such
holder had converted such share into Class A Common Stock immediately prior to
such Recapitalization. Adjustments to the conversion rate shall similarly apply
to each successive Recapitalization.
Any such conversion may be effected by the holder of Series A Convertible
Preferred Stock by surrendering such holder's certificate or certificates for
the shares of Series A Convertible Preferred Stock to be converted, duly
endorsed, at the office of the Corporation or the office of any transfer agent
for the Class A Common Stock, together with a written notice to the Corporation
at such office that such holder elects to convert all or a specified number of
such shares of Series A Convertible Preferred Stock. Promptly thereafter, the
Corporation shall issue and deliver to such holder a certificate or certificates
for the number of shares of Class A Common Stock to which such holder shall be
entitled as aforesaid. Such conversion shall be made at the close of business on
the date of such surrender and the person
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<PAGE>
entitled to receive the shares of Class A Common Stock issuable on such
conversion shall be treated for all purposes as the record holder of such shares
of Class A Common Stock on such date.
3. Voting Rights. The holders of shares of Series A Convertible
-------------
Preferred Stock shall not be entitled to vote at any annual or special meeting
of the stockholders of the Corporation or at any other time that any matter is
submitted to a vote or for the consent of the stockholders. So long as any
shares of the Series A Convertible Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval by vote or written
consent, in the manner provided by law, of a majority of the total number of
shares of the Series A Convertible Preferred Stock at the time outstanding,
voting separately as a class, alter or change any or all of the rights,
preferences, privileges and restrictions granted to or imposed upon the Series A
Convertible Preferred Stock or increase or decrease the authorized number of
shares of Series A Convertible Preferred Stock.
4. Dividends. The holders of shares of Series A Convertible
---------
Preferred Stock shall receive dividends and distributions of the Corporation
ratably with the holders of shares of Class A Common Stock, Class B Common Stock
and Class C Common Stock.
5. Liquidation, Dissolution, Winding Up or Insolvency. In the
--------------------------------------------------
event of any liquidation, dissolution, winding up or insolvency of the
Corporation, whether voluntary or involuntary, before any distribution or
payment is made to any holders of shares of Class A Common Stock, Class B Common
Stock and Class C Common Stock or any other class or series of capital stock of
the Corporation
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<PAGE>
designated to be junior to the Series A Convertible Preferred Stock, and subject
to the liquidation rights and preferences of any class or series of preferred
stock designated in the future to be senior to, or on a parity with, the Series
A Convertible Preferred Stock with respect to liquidation preferences, the
holders of Series A Convertible Preferred Stock shall be entitled to be paid
first out of the assets of the Corporation available for distribution to holders
of capital stock of all classes whether such assets are capital, surplus or
earnings ("Available Assets"), an amount equal to $9.5248159 per share of Series
A Convertible Preferred Stock, together with the amount of any accrued or
capitalized dividends in respect thereof (the "Liquidation Preference"). After
payment in full to the holders of Series A Convertible Preferred Stock of the
Liquidation Preference, holders of the Series A Convertible Preferred Stock
shall, as such, have no right or claim to any of the remaining Available Assets.
D. Upon the filing and effectiveness (the "Effective Time") of this
Restated Certificate of Incorporation pursuant to the DGCL to reflect the
addition of this paragraph to Article FOURTH of the Corporation's certificate of
incorporation, each share of the Corporation's Class A Common Stock, par value
$.01 per share, or Class B Common Stock, par value $.01 per share issued and
outstanding immediately prior to the Effective Time (the "Old Common Stock")
shall be reclassified as and changed and converted into 53,514 validly issued,
fully paid, and non-assessable shares of Class A Common Stock or 53,514 validly
issued, fully paid, and non-assessable shares of Class B Common Stock,
respectively, without any action by the holder thereof. Each certificate that
prior to the Effective
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<PAGE>
Time represented a share or shares of Old Common Stock shall thereafter
represent that number of shares of Class A Common Stock and the number of shares
of Class B Common Stock into which the share or shares of Old Common Stock
represented by such certificate shall have been reclassified; provided, however,
that each record holder of a stock certificate or certificates that prior to the
Effective Time represented a share or shares of Old Common Stock shall receive,
upon surrender of such certificate or certificates, a new certificate or
certificates evidencing and representing the number of shares of Class A Common
Stock or the number of shares of Class B Common Stock to which such record
holder is entitled pursuant to the foregoing reclassification.
FIFTH: Elections of directors need not be by written ballot. The books of
the Corporation may be kept (subject to any provision contained in the DGCL or
other applicable statutes) outside the State of Delaware at such place or places
as may be designated from time to time by the Board of Directors or in the
bylaws of the Corporation. The number of directors shall be such number as from
time to time shall be fixed by, or in the manner provided in, the bylaws of the
Corporation.
SIXTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend,
change, add to or repeal the bylaws of the Corporation. In addition to the
powers and authority hereinbefore or by statute expressly conferred upon them,
the directors are hereby empowered to exercise all such powers and do all such
acts and things as may be exercised or done by the Corporation, subject,
nevertheless, to the provisions of the statutes of Delaware, this Restated
Certificate of Incorporation,
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<PAGE>
and any bylaws adopted by the stockholders; provided, however, that no bylaws
--------
hereafter adopted by the stockholders shall invalidate any prior act of the
directors which would have been valid if such bylaws had not been adopted.
SEVENTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware, may on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation in
accordance with the laws of Delaware or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation in
accordance with the laws of Delaware, order a meeting of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or the stockholders or class of
stockholders of the Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of the Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of the Corporation, as the case
may be, and also on the Corporation.
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<PAGE>
EIGHTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such a director as a director. Notwithstanding the foregoing sentence, a
director shall be liable to the extent provided by applicable law (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
DGCL, or (iv) for any transaction from which such director derived an improper
personal benefit. No amendment to or repeal of this Article EIGHTH shall
adversely affect any right or protection of any director of the Corporation
existing at the time of such amendment or repeal for or with respect to any acts
or omissions of such director occurring prior to such amendment or repeal.
NINTH: The Corporation shall indemnify to the full extent authorized or
permitted by the laws of the State of Delaware any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or officer of
the Corporation, or by reason of the fact that such director or officer is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, domestic or foreign, against expenses (including attorneys' fees)
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding, and shall advance
expenses incurred by any such officer or
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<PAGE>
director in defending any such action, suit or proceeding to the full extent
authorized or permitted by the laws of the State of Delaware upon receipt of an
undertaking that he is not entitled to be indemnified by the Corporation as
authorized by Section 145 of the DGCL. Nothing contained herein shall affect any
rights to indemnification to which employees other than directors and officers
may be entitled by law. No amendment to or repeal of this Article NINTH shall
apply to or have any effect on any right to indemnification provided hereunder
with respect to any acts or omissions occurring prior to such amendment or
repeal.
TENTH: The Corporation expressly elects not to be governed by Section 203
of the DGCL.
ELEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in its Certificate of Incorporation, or any
amendment thereof, in the manner now or hereafter prescribed by the laws of the
State of Delaware or the Certificate of Incorporation, and all rights conferred
upon stockholders of the Corporation are granted subject to this reservation.
TWELFTH: Notwithstanding any other provision of this Restated Certificate
of Incorporation to the contrary, outstanding shares of stock of the Corporation
shall always be subject to redemption by the Corporation, by action of the Board
of Directors, if in the judgment of the Board of Directors such action should be
taken, pursuant to Section 151(b) of the DGCL or any other applicable provision
of law, to the extent necessary to prevent the loss or secure the reinstatement
of any license or franchise from any governmental agency held by the Corporation
or any of its subsidiaries to conduct any portion of the business of the
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<PAGE>
Corporation or any of its subsidiaries, which license or franchise is
conditioned upon some or all of the holders of the Corporation's stock
possessing prescribed qualifications. The terms and conditions of such
redemption shall be as follows:
(a) The redemption price of the shares to be redeemed pursuant to this
Article TWELFTH shall be determined by the Board of Directors and shall be equal
to the Fair Market Value (as defined herein) of such shares or, if such shares
were purchased by one or more Disqualified Holders (as defined herein) within
one year of the Redemption Date (as defined herein), the lesser of (i) the Fair
Market Value of such shares and (ii) the purchase price paid by such
Disqualified Holder for such shares.
(b) At the election of the Corporation, the redemption price of such
shares may be paid in cash, Redemption Securities (as defined herein) or any
combination thereof.
(c) If fewer than all shares held by Disqualified Holders are to be
redeemed, the shares to be redeemed shall be selected in such manner as shall be
determined by the Board of Directors, which may include selection first of the
most recently purchased shares thereof, selection by lot or selection in any
other manner determined by the Board of Directors.
(d) At least 30 days' prior written notice of the Redemption Date
shall be given to any Disqualified Holder of shares selected to be redeemed
(unless waived in writing by any such holder), provided that the Redemption Date
may be the date on which written notice shall be given to such holder if the
cash or Redemption Securities necessary to effect the redemption shall have been
deposited
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<PAGE>
in trust for the benefit of such holder and subject to immediate withdrawal by
it upon surrender of the stock certificates formerly representing the shares
redeemed.
(e) From and after the Redemption Date, any and all rights of whatever
nature that any Disqualified Holder may have with respect to any shares selected
for redemption (including, without limitation, any rights to vote or participate
in dividends declared on stock of the same class or series as such shares) shall
cease and terminate, and such Disqualified Holder shall thenceforth be entitled
only to receive, with respect to such shares, the cash or Redemption Securities
payable upon redemption.
(f) The Board of Directors may also impose additional terms and
conditions.
(g) For purposes of this Article TWELFTH:
(i) "Disqualified Holder" shall mean any holder of shares of
stock of the Corporation whose holding of such stock, either individually or
when taken together with the holding of shares of stock of the Corporation by
any other holders, may result, in the judgment of the Board of Directors, in the
loss of, or the failure to secure the reinstatement of, any license or franchise
from any governmental agency held by the Corporation or any of its subsidiaries
to conduct any portion of the business of the Corporation or any of its
subsidiaries.
(ii) "Fair Market Value" of a share of the Corporation's stock
of any class or series shall mean the average Closing Price (as defined herein)
for such a share for each of the 45 most recent days on which shares of stock of
such class or series shall have been traded preceding the day on which notice of
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<PAGE>
redemption shall be given pursuant to paragraph (d) of this Article TWELFTH;
provided, however, that if shares of stock of such class or series are not
- -------- -------
traded on any securities exchange or in the over-the-counter market, "Fair
Market Value" shall be determined by the Board of Directors in good faith.
"Closing Price" on any day means the reported closing sales price or, in case no
such sale takes place, the average of the reported closing bid and asked prices
on the principal United States securities exchange registered under the
Securities Exchange Act of 1934 on which such stock is listed, or, if such stock
is not listed on any such exchange, the highest closing sales price or bid
quotation for such stock on the Nasdaq National Market of The Nasdaq Stock
Market, Inc. or any system then in use, or if no such prices or quotations are
available, the fair market value on the day in question as determined by the
Board of Directors in good faith.
(iii) "Redemption Date" shall mean the date fixed by the Board
of Directors for the redemption of any shares of stock of the Corporation
pursuant to this Article TWELFTH.
(iv) "Redemption Securities" shall mean any debt or equity
securities of the Corporation, any of its subsidiaries or any other
corporations, or any combination thereof, having such terms and conditions as
shall be approved by the Board of Directors and which, together with any cash to
be paid as part of the redemption price, in the opinion of any investment
banking firm selected by the Board of Directors (which may be a firm which
provides other investment banking, brokerage or other services to the
Corporation), has a value, at the time notice of redemption is given pursuant to
paragraph (d) of this Article TWELFTH, at least
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<PAGE>
equal to the price required to be paid pursuant to paragraph (a) of this Article
TWELFTH (assuming for purposes of such valuation, in the case of Redemption
Securities to be publicly traded, such Redemption Securities were fully
distributed and trading under normal conditions).
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<PAGE>
IN WITNESS WHEREOF, XM Satellite Radio Holdings Inc. has caused this
Restated Certificate of Incorporation to be signed by its Senior Vice President,
General Counsel and Secretary, Joseph M. Titlebaum, this 30th day of September,
1999.
/s/ Joseph M. Titlebaum
------------------------------------
Name: Joseph M. Titlebaum
Title: Senior Vice President,
General Counsel and Secretary
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<PAGE>
Exhibit 3.2
RESTATED BYLAWS OF
XM SATELLITE RADIO HOLDINGS INC.
(As of September 9, 1999)
A Delaware Corporation
ARTICLE I.
Offices
SECTION 1. Registered Office. The registered office of XM Satellite Radio
Holdings Inc. (hereinafter called the "Corporation") shall be within the State
of Delaware.
SECTION 2. Other Offices. The Corporation may also have offices at such
place or places as the Board of Directors shall from time to time determine or
the business of the Corporation may require.
ARTICLE II.
The Stockholders;
Meetings of the Stockholders
SECTION 1. Place of Meetings. All meetings of the stockholders shall be
held at any such place, either within or without the State of Delaware, but
within the United States of America, as shall be designated from time to time by
the Board of Directors and stated in the notice of meeting or in a duly executed
waiver thereof.
SECTION 2. Annual Meeting. The annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may come
before the meeting shall be held at such time and place as shall be determined
by the Board of Directors and stated in the notice of the meeting.
<PAGE>
SECTION 3. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the Board of Directors, by stockholders holding at least fifteen percent of
the outstanding common stock of the Corporation or by the Chairman, the Chief
Executive Officer or the President.
SECTION 4. Notice of Meetings. Notice of meetings of the stockholders
shall be given as required by applicable law.
SECTION 5. Organization. At every meeting of the stockholders, the
Chairman shall preside, or in his or her absence or inability to act, the person
whom the Chairman, the Chief Executive Officer or the President shall appoint
shall act as chairman of the meeting. The Secretary, or, in his or her absence
or inability to act, the person whom the chairman of the meeting shall appoint,
shall act as secretary of the meeting and keep the minutes thereof.
SECTION 6. Order of Business. The order of business at all meetings of
the stockholders shall be as determined by the chairman of the meeting.
SECTION 7. Quorum at Meetings. Stockholders may take action on a matter
at a meeting only if a quorum exists with respect to that matter. Except as
otherwise provided by statute or by the Certificate of Incorporation, the
holders of a majority of the shares entitled to vote at the meeting, and who are
present in person or represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business. Where a separate
vote by a class or series or classes or series is required, a majority of the
outstanding shares of such class or series or classes or series, present in
2
<PAGE>
person or represented by proxy, shall constitute a quorum entitled to take
action with respect to that vote on that matter. Once a share is represented
for any purpose at a meeting (other than solely to object (1) to holding the
meeting or transacting business at the meeting, or (2) (if it is a special
meeting) to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice), it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for the
adjourned meeting. The holders of a majority of the voting shares represented
at a meeting, whether or not a quorum is present, may adjourn such meeting from
time to time.
SECTION 8. Stockholder Proposals. For business to be properly brought
before an annual meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation not less than 60 days or more
than 90 days prior to the meeting; provided, however, that in the event that
less than 70 days' notice of the date of the meeting is given to stockholders or
prior public disclosure of the date of the meeting is made, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the annual
meeting was mailed or such public disclosure was made. A stockholder's notice
to the Secretary shall set forth as to each matter the stockholder proposes to
bring before the annual meeting (a) a brief description of the business desired
to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (b) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business, (c)
3
<PAGE>
the class and number of shares of the Corporation which are beneficially owned
by the stockholder, (d) any material interest of the stockholder in such
business and (e) the same information required by clauses (b), (c) and (d) above
with respect to any other stockholder that, to the knowledge of the stockholder
proposing such business, supports such proposal. Notwithstanding anything in
these Bylaws to the contrary, no business shall be conducted at an annual
meeting except in accordance with the procedures set forth in this Section 3.
The chairman of an annual meeting shall, if the facts warrant, determine and
declare to the annual meeting that a matter of business was not properly brought
before the meeting in accordance with the provisions of this Section 3, and if
he or she should so determine, he or she shall so declare to the meeting and any
such business not properly brought before the meeting shall not be transacted.
SECTION 9. Action by Consent. Any action required or permitted to be
taken at any annual or special meeting of the stockholders of the Corporation
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by
stockholders holding outstanding stock having not less than the minimum number
of votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted and shall be
delivered to the Corporation and the other stockholders.
ARTICLE III.
Board of Directors
SECTION 1. General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors.
4
<PAGE>
SECTION 2. Number, Qualifications, Election and Term of Office. The Board
of Directors shall initially consist of that number of directors as provided for
in that certain Shareholders Agreement dated as of July 7, 1999, by and among
the Corporation, American Mobile Satellite Corporation and the Investors named
therein (the "Shareholders Agreement"). Thereafter, subject to the provisions
of the Shareholders Agreement, the number of directors shall be between three
and 15, unless otherwise determined from time to time by the affirmative vote of
at least a majority of the Board of Directors. Members of the Board need not be
residents of the State of Delaware and need not be stockholders of the
Corporation. Subject to the provisions of the Shareholders Agreement, and except
as set forth in the bylaws, directors shall be elected at the annual meeting of
the stockholders.
SECTION 3. Place of Meetings. Meetings of the Board of Directors shall be
held at such place or places, within or without the State of Delaware, as the
Board of Directors may from time to time determine or as shall be specified in
the notice of any such meeting.
SECTION 4. Annual Meeting. The Board of Directors shall meet for the
purpose of organization, the election of officers and the transaction of other
business, as soon as practicable after each annual meeting of the stockholders,
on the same day and at the same place where such annual meeting shall be held.
Notice of such meeting need not be given. In the event such annual meeting is
not so held, the annual meeting of the Board of Directors may be held at such
other time or place (within or without the State of Delaware) as shall be
specified in a notice thereof given as hereinafter provided in Section 7 of this
Article III.
5
<PAGE>
SECTION 5. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such time and place as the Board of Directors may fix. Notice
of regular meetings of the Board of Directors need not be given except as
otherwise required by statute or these Bylaws.
SECTION 6. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman, the Chief Executive Officer or the President or
at the request of one-third of the directors.
SECTION 7. Notice of Meetings. Notice of each special meeting of the
Board of Directors (and of each regular meeting for which notice shall be
required) shall be given by the Secretary as hereinafter provided in this
Section 7, in which notice shall be stated the time and place of the meeting.
Except as otherwise required by these Bylaws, such notice need not state the
purposes of such meeting. Notice of each such meeting shall be mailed, postage
prepaid, to each director and to each party with observation rights as provided
for in the Shareholders Agreement, addressed to his or her residence or usual
place of business, by first class mail or by overnight courier, at least five
(5) days before the day on which such meeting is to be held, or shall be sent
addressed to such party at such place by telegraph, cable, telex, telecopier, or
other similar means, or be delivered to such director personally or be given to
him or her by telephone or other similar means, at least seventy-two (72) hours
before the time at which such meeting is to be held and if given by telephone or
other similar means, shall be followed by a confirmation in writing by
telegraph, cable, telex, telecopier or similar means within twenty-four (24)
hours after such telephone or other similar means, but such confirmation shall
not be necessary for the validity of such notice. Notice of any such meeting
need not
6
<PAGE>
be given to any director who shall, either before or after the meeting, submit a
signed waiver of notice or who shall attend such meeting, except when he or she
shall attend for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened.
SECTION 8. Nomination of Directors. Nominations of persons for election
to the Board of Directors may be made by the Board of Directors or by any
stockholder of the Corporation entitled to vote for the election of directors at
the annual meeting who complies with the notice procedures set forth in this
Section 8. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation not less than
60 days or more than 90 days prior to the meeting; provided, however, that in
the event that less than 70 days' notice of the date of the meeting is given to
stockholders or prior public disclosure of the date of the meeting is made,
notice by the stockholder to be timely must be so received not later than the
close of business on the 10th day following the day on which such notice of the
annual meeting was mailed or such public disclosure was made. Such
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or re-election as a director, (i) the name,
age, business address and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and number of shares of
the Corporation which are beneficially owned by such person, and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such person's written consent to being
named in
7
<PAGE>
the proxy statement as a nominee and to serving as a director if elected); and
(b) as to the stockholder giving notice (i) the name and address, as they appear
on the Corporation's books, of the stockholder proposing such nomination, and
(ii) the class and number of shares of the Corporation which are beneficially
owned by the stockholder. No person shall be eligible for election as a director
of the Corporation unless nominated in accordance with the procedures set forth
in this Section 8. The Chairman shall, if the facts warrant, determine and
declare to the annual meeting that a nomination was not made in accordance with
the provisions of this Section 8, and if the Chairman should so determine, the
Chairman shall so declare to the meeting and the defective nomination shall be
disregarded.
SECTION 9. Quorum and Manner of Acting. A majority of the entire Board of
Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, and, except as otherwise expressly required
by statute or the Certificate of Incorporation or these Bylaws, the act of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors. In the absence of a quorum at any
meeting of the Board of Directors, a majority of the directors present thereat
may adjourn such meeting to another time and place. Notice of the time and
place of any such adjourned meeting shall be given to all of the directors
unless such time and place were announced at the meeting at which the
adjournment was taken, in which case such notice shall only be given to the
directors who were not present thereat. At any adjourned meeting at which a
quorum is present, any business may be transacted which might have been
transacted at the meeting as originally called. The
8
<PAGE>
directors shall act only as a Board and the individual directors shall have no
power as such.
SECTION 10. Organization. At each meeting of the Board of Directors, the
Chairman shall preside, or in his or her absence or inability to act, a director
chosen by a majority of the directors present shall act as chairman of the
meeting and preside thereat. The person appointed by the chairman shall act as
secretary of the meeting and keep the minutes thereof.
SECTION 11. Resignations. Any director of the Corporation may resign at
any time by giving written notice of his or her resignation to the Corporation,
attention: Secretary. Any such resignation shall take effect at the time
specified therein or, if the time when it shall become effective shall not be
specified therein, immediately upon its receipt. Unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 12. Vacancies. Unless otherwise provided for by the Shareholders
Agreement, vacancies and newly created directorships resulting from any increase
in the authorized number of directors elected by all of the stockholders having
the right to vote as a single class may be filled by the affirmative vote of a
majority of the directors then in office, although fewer than a quorum, or by a
sole remaining director. Whenever the holders of any class or classes of stock
or series thereof are entitled to elect one or more directors by the provisions
of the Certificate of Incorporation, vacancies and newly created directorships
of such class or classes or series may be filled by the affirmative vote of a
majority of the directors elected by such class or classes or series thereof
then in
9
<PAGE>
office, or by a sole remaining director so elected. Each director so chosen
shall hold office until the next election of directors of the class to which
such director was appointed, and until such director's successor is elected and
qualified, or until the director's earlier death, resignation or removal. In the
event that one or more directors resign from the Board, effective at a future
date, a majority of the directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective, and
each director so chosen shall hold office until the next election of directors,
and until such director's successor is elected and qualified, or until the
director's earlier death, resignation or removal.
SECTION 13. Compensation. The Board of Directors shall compensate the
directors for serving as directors, and shall reimburse the directors for any
expenses incurred in attending the meetings of the Board of Directors or any
committee thereof, solely to the extent approved by the Board of Directors..
SECTION 14. Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of three or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not the member or members constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to
10
<PAGE>
the extent provided in the resolution of the Board, shall have and may exercise
all the powers and authority of the Board in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending
these Bylaws of the Corporation; and, unless the resolution designating it
expressly so provides, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock.
SECTION 15. Action by Consent. Unless restricted by the Certificate of
Incorporation, any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board of Directors of such committee, as the case may be, consent thereto
in writing, and the writing or writings are filed with the minutes of the
proceedings of the Board of Directors or such committee as the case may be.
SECTION 16. Telephonic Meeting. Unless restricted by the Certificate of
Incorporation, any one or more members of the Board of Directors or any
committee thereof may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other.
Participation by such means shall constitute presence in person at a meeting.
11
<PAGE>
ARTICLE IV.
Officers
SECTION 1. Number and Qualifications. The officers of the Corporation
shall be elected by the Board of Directors and shall include the Chairman, the
Chief Executive Officer, the President, one or more Vice Presidents, the
Treasurer and the Secretary and such other officers and assistant officers as
the Board of the Corporation may from time to time appoint, or authorize the
Chairman, the Chief Executive Officer or the President to appoint.
SECTION 2. Tenure. Officers and assistant officers of the Corporation
may, but need not, also be members of the Board. Each officer shall hold his or
her office until a successor is elected and qualified or until his or her
earlier death, resignation or removal in the manner specified in this Section 2
of Article IV of these Bylaws. Any officer elected or appointed by the Board
may be removed by the Board with or without cause. In addition, however, any
officer or assistant officer appointed by the Chairman, the Chief Executive
Officer or the President and, if the Chairman, the Chief Executive Officer or
the President is so authorized by the Board, any officer or assistant officer
appointed by the Board of the Corporation, may be removed from office by the
Chairman, the Chief Executive Officer or the President upon such terms as the
Chairman, the Chief Executive Officer or the President may specify in writing to
such officer. The removal of an officer without cause shall be without prejudice
to his or her contract rights, if any. The election or appointment of an
officer shall not of itself create contract rights. Should any vacancy occur
among the officers by reason of any of the specified acts or events, the
position shall be filled by appointment made by a majority vote of the Board
12
<PAGE>
or by the Chairman, the Chief Executive Officer or the President, if he or she
is so authorized by a resolution approved by a unanimous vote of the Board.
SECTION 3. Duties. The powers and duties of the several officers shall be
as provided from time to time by resolution or other directive of the Board. In
the absence of such provisions, the respective officers shall have the powers
and shall discharge the duties customarily and usually held and performed by
like officers of corporations similar in organization and business purposes to
the Corporation.
SECTION 4. Compensation. Officers may be paid such reasonable
compensation as the Board may from time to time authorize and direct.
ARTICLE V.
Stock Certificates and Their Transfer
SECTION 1. Regulations. Subject to and upon the terms and conditions set
forth in the Shareholders Agreement, the Board of Directors may make such rules
and regulations, not inconsistent with these Bylaws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation.
ARTICLE VI.
Indemnification
SECTION 1. Indemnification. Each person who is or was a director or
officer of the Corporation shall be indemnified by the Corporation to the
fullest extent permitted or authorized by the General Corporation Law of the
State of Delaware or any other applicable laws as presently or hereafter in
effect. The Corporation may, but shall not be
13
<PAGE>
obligated to, maintain insurance, at its expense, for the benefit of the
Corporation and of any person to be indemnified.
ARTICLE VII.
General Provisions
SECTION 1. Dividends. Subject to the provisions of statute and the
Certificate of Incorporation, dividends upon the shares of capital stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting. Dividends may be paid in cash, in property or in shares of stock of
the Corporation, unless otherwise provided by statute or the Certificate of
Incorporation.
SECTION 2. Reserves. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors may, from time to time, in its absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation or for such other purpose as the Board of Directors may think
conducive to the interests of the Corporation. The Board of Directors may
modify or abolish any such reserves in the manner in which it was created.
SECTION 3. Seal. The seal of the Corporation shall be in such form as
shall be approved by the Board of Directors.
SECTION 4. Fiscal Year. The fiscal year of the Corporation shall end on
December 31 of each year. The fiscal year of the Corporation may hereafter be
changed, by resolution of the Board of Directors.
14
<PAGE>
SECTION 5. Checks, Notes, Drafts, Etc. All checks, notes, drafts or other
orders for the payment of money of the Corporation shall be signed, endorsed or
accepted in the name of the Corporation by such officer, officers, person or
persons as from time to time may be designated by the Board of Directors or by
an officer or officers authorized by the Board of Directors to make such
designation.
SECTION 6. Execution of Contracts, Deeds, Etc. The Board may authorize
any officer, employee or agent to enter into any contract or execute and deliver
any instrument in the name and on behalf of the Corporation. Such authority may
be general or confined to specific instances, or otherwise limited, and if the
Board so provides may be delegated by the person so authorized.
SECTION 7. Loans. No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board. Such authority may be general or
confined to specific instances and if the Board so provides may be delegated by
the person so authorized.
ARTICLE VIII.
Amendments
SECTION 1. Amendments. Subject to the provisions of the Shareholders
Agreement, these Bylaws may be amended or repealed or new bylaws adopted by the
stockholders or the Board of Directors of the Corporation.
15
<PAGE>
EXHIBIT 4.2
<TABLE>
<S> <C> <C>
[LOGO OF XM SATELLITE RADIO APPEARS HERE]
NUMBER SHARES
SB
XM SATELLITE RADIO HOLDINGS INC.
% Series B Convertible INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE SEE REVERSE FOR
Redeemable Preferred Stock THIS CERTIFICATE IS TRANSFERABLE IN BOSTON, MA AND NEW YORK, NY CERTAIN DEFINITIONS
CUSIP 983759 200
(LIQUIDATION PREFERENCE $50.00 PER SHARE)
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $0.01 EACH OF THE _% SERIES B CONVERTIBLE REDEEMABLE PREFERRED STOCK OF
- -------========================================== XM SATELLITE RADIO HOLDINGS INC. =========================================--------
CERTIFICATE OF STOCK
designated the % Series B Convertible Redeemable Preferred Stock (par value $0.01 per share) (liquidation preference $50.00 per
share) (the "Series B Preferred Stock"). The shares of Series B Preferred Stock are transferable on the books and records of the
Registrar, in person or by duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for
transfer. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Series B Preferred
Stock represented hereby are issued and shall in all aspects be subject to the provisions of the Certificate of Designation of
Voting Power, Designation Preferences and Relative, Participating, Optional or Other Special Rights and Qualifications, Limitations
and Restrictions dated January , 2000 as the same may be amended from time to time (the "Certificate of Designations").
Capitalized terms used herein but not defined shall have the meanings given them in the Certificate of Designations. The Company
will provide a copy of the Certificate of Designations to a Holder without charge upon written request to the Company at the
principal place of business.
Reference is hereby made to select provisions of the Series B Preferred Stock set forth on the reverse side hereof, and to
the Certificate of Designations, when select provisions and the Certificate of Designations shall for all purposes have the same
effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the Certificate of Designations and is entitled to the benefits
thereunder.
This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
SPECIMEN
Dated:
[XM SATELLITE RADIO HOLDINGS INC. CORPORATE SEAL APPEARS HERE]
/s/ Joseph M. Titlebaum /s/ Hugh Panero
----------------------- ----------------------
SECRETARY PRESIDENT & CEO
COUNTERSIGNED AND REGISTERED:
BankBoston, N.A.
BY /s/ TRANSFER AGENT
----------------------- AND REGISTRAR
AUTHORIZED SIGNATURE
</TABLE>
<PAGE>
XM SATELLITE RADIO HOLDINGS INC.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT TEN -as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT- CUSTODIAN
------------ -----------
(Cust) (Minor)
under Uniform Gifts to Minors Act
---------------------------------
(State)
UNIF TRANS MIN ACT- Custodian
------------ -----------
(Cust) (Minor)
under Uniform Transfers to Minors Act
---------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received, hereby sell, assign
-----------------------------------------
and transfer unto.
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- --------------------------------------------------------------------------------
Shares
- --------------------------------------------------------------------------
of the Series B Preferred Stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint
-------------------------------------
Attorney to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated:
-----------------------------------------------------
- -----------------------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED:
--------------------------------------------------------
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
DIVIDENDS ON EACH SHARE OF SERIES B PREFERRED STOCK SHALL BE PAYABLE AT A RATE
PER ANNUM SET FORTH IN THE FACE HEREOF OR AS PROVIDED IN THE CERTIFICATE OF
DESIGNATIONS. DIVIDENDS MAY BE PAID IN CASH, IN SHARES OF CLASS A COMMON STOCK
OF XM SATELLITE RADIO HOLDINGS INC. (THE "CORPORATION") OR A COMBINATION THEREOF
AT THE OPTION OF THE CORPORATION.
THE SHARES OF SERIES B PREFERRED STOCK SHALL BE REDEEMABLE AS PROVIDED IN THE
CERTIFICATE OF DESIGNATIONS AND THE RESTATED CERTIFICATE OF INCORPORATION OF THE
CORPORATION. THE SHARES OF SERIES B PREFERRED STOCK SHALL BE CONVERTIBLE INTO
CASH OR THE CORPORATION'S CLASS A COMMON STOCK IN THE MANNER AND ACCORDING TO
THE TERMS SET FORTH IN THE CERTIFICATE OF DESIGNATIONS.
THE OWNERSHIP OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IS RESTRICTED BY
AND SUBJECT TO THE PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION OF
THE CORPORATION, WHICH (i) PROHIBITS THE RECORD OR BENEFICIAL OWNERSHIP OF ANY
SECURITIES BY AND PERSON WHOSE OWNERSHIP THEREOF WOULD CONSTITUTE A VIOLATION OF
SECTION 310(a) OR 310(b) OF THE COMMUNICATIONS ACT OF 1934, AS AMENDED, OR ANY
SIMILAR SUCCESSOR FEDERAL STATUTES, AND (ii) PROVIDES THAT THE CORPORATION SHALL
HAVE THE RIGHT TO REDEEM ANY SECURITIES OWNED IN VIOLATION OF THE FOREGOING. A
COPY OF THE RESTATED CERTIFICATE OF INCORPORATION IS AVAILABLE FOR INSPECTION AT
THE OFFICES OF THE CORPORATION.
THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OR SERIES OF STOCK.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS
A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL, OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR
SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS. SUCH REQUEST MAY BE MADE TO THE CORPORATION OR TO ITS
TRANSFER AGENT AND REGISTRAR.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
<PAGE>
EXHIBIT 4.3
XM SATELLITE RADIO HOLDINGS INC.
CERTIFICATE OF DESIGNATION
establishing the
Voting Powers, Designations, Preferences, Limitations,
Restrictions, and Relative Rights of
[ ]% Series B Convertible Redeemable Preferred Stock due 2012
------------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------------------------------------------
<PAGE>
XM SATELLITE RADIO HOLDINGS INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Issuer"), does
hereby certify that (i) pursuant to authority conferred upon the Board of
Directors of the Issuer by its Restated Certificate of Incorporation, as amended
to date, and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, the Board of Directors authorized the
creation and issuance of the Issuer's [ ]% Series B Convertible Redeemable
Preferred Stock (the "Preferred Stock"), and (ii) the following resolution
fixing the designations, preferences and rights of such Preferred Stock, which
was duly adopted by the Board of Directors, on January __, 2000, remains in full
force and effect. Certain capitalized terms used herein are defined in Article
10.
RESOLVED, that pursuant to the authority expressly granted to and vested in
the Board of Directors of the Issuer by the provisions of the Restated
Certificate of Incorporation, as amended from time to time (the
"Certificate of Incorporation"), and pursuant to Section 151(g) of the
General Corporation Laws of the State of Delaware, there be from the
60,000,000 shares of preferred stock, $0.01 par value, of the Issuer,
authorized to be issued pursuant to the Certificate of Incorporation, a
series of preferred stock, consisting of 3,000,000 shares of [ ]% Series
B Convertible Redeemable Preferred Stock (referred to herein as the
"Preferred Stock"), having the number of shares and, to the extent that the
designations, powers, preferences and relative and other special rights and
the qualifications, limitations and restrictions of such Preferred Stock
are not stated and expressed in the Certificate of Incorporation, the
powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions thereof, as follows:
1. Designation and Number of Shares
1.1 The series will be known as the [ ]% Series B Convertible Redeemable
Preferred Stock.
1.2 The Preferred Stock will be a series consisting of 3,000,000 shares
with a liquidation preference of $50 per share of the authorized but unissued
preferred stock of the Issuer.
2. Dividends
2.1 Payment of Dividends
(a) Holders of Preferred Stock will be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available
therefor, cumulative dividends from the issue date of the Preferred Stock (the
"Issuance Date") accruing at the rate per annum equal to [ ]% of the
liquidation preference per share, payable quarterly in arrears on [ ],
[ ], [ ] and [ ] of each year (each such date being referred to
herein as a "Dividend Payment Date"), commencing [ ], 2000. All dividends
will be cumulative, whether or not earned or declared.
(b) Each distribution in the form of a dividend shall be payable in
arrears to Holders of record as they appear on the stock books of the Issuer on
each record date as
<PAGE>
established by the Board of Directors of the Issuer (the "Dividend Payment
Record Date") not more than 60 nor less than ten days preceding a Dividend
Payment Date.
(i) Dividends payable on the Preferred Stock for each full dividend
period will be computed by dividing the annual dividend rate by four.
Dividends payable on the Preferred Stock for any period less than a full
dividend period will be computed on the basis of a 360-day year consisting
of twelve 30-day months.
(ii) The Preferred Stock will not be entitled to any dividends,
whether payable in cash, property or securities, in excess of the full
cumulative dividends.
(iii) No interest, or sum of money in lieu of interest, will be
payable in respect of any accumulated and unpaid dividends which may be in
arrears.
(c) Dividends, to the extent declared by the Issuer's Board of
Directors may, at the option of the Issuer, be paid in cash, by delivery of
fully paid and nonassessable shares of the Issuer's Class A common stock (the
"Common Stock"), or a combination thereof. If the Issuer elects to pay dividends
in shares of Common Stock, such shares of Common Stock shall be valued for such
purpose:
(i) If on the date of such payment, such shares of Common Stock are
freely tradable, such shares of Common Stock shall be valued at 95% of
Average Market Value.
(ii) If on the date of such payment, such shares of Common Stock are
not freely tradable, such shares of Common Stock shall be valued at 90% of
Average Market Value.
2.2 Declaration of Dividends
(a) No dividends or other distributions (other than a dividend or
distribution in Junior Securities) may be declared, made or paid or funds set
apart for payment on the Junior Securities or Parity Securities, and no Junior
Securities or any Parity Securities, including the Preferred Stock, may be
repurchased, redeemed or otherwise acquired for any consideration (or any money
paid to or made available for a sinking fund for the redemption of any shares of
any such stock) by the Issuer (except by conversion into or exchange for Junior
Securities or in the case that monies for such dividends, distributions,
redemptions, purchases, or other acquisitions are derived from the proceeds of a
substantially concurrent offering of such securities), unless full cumulative
dividends shall have been or contemporaneously are paid or declared and a sum
sufficient for the payment thereof is set apart for such payment on all
outstanding shares of Preferred Stock for all Dividend Payment Dates on or prior
to such declaration, payment, redemption, purchase or acquisition.
(b) No dividends may be declared, made or paid or funds set apart
for the payment of dividends upon any outstanding share of Preferred Stock with
respect to any dividend period unless all dividends for all preceding periods
have been paid or declared and a sum sufficient for the payment thereof is set
apart for the payment of such dividend upon all outstanding shares of Senior
Securities.
2
<PAGE>
(c) The holder of record of a share of Preferred Stock at the close
of business on a record date with respect to the payment of dividends on the
Preferred Stock will be entitled to receive such dividends with respect to such
share of Preferred Stock (except that Holders of shares called for redemption or
conversion on a Redemption Date or Conversion Date between the record date and a
date which is two days after the Dividend Payment Date will be entitled to
receive such dividend on such Redemption Date as indicated in Section 5.1 hereof
or such Conversion Date as indicated in Section 4 hereof, as applicable) on the
corresponding Dividend Payment Date, notwithstanding the conversion of such
share after such record date and prior to such Dividend Payment Date. A share of
Preferred Stock surrendered for conversion during the period from the close of
business on any record date for the payment of dividends to the opening of
business of the corresponding Dividend Payment Date must be accompanied by a
payment in cash, Common Stock or a combination thereof, depending on the method
of payment that the Issuer may chose to pay the dividend, in an amount equal to
the dividend payable on such dividend payment date, unless such share of
Preferred Stock has been called for redemption on a redemption date occurring
during the period from the close of business on any record date for the payment
of dividends to the close of business on the business day immediately following
the corresponding Dividend Payment Date. The dividend payment with respect to a
share of Preferred Stock called for redemption on a date during the period from
the close of business on any record date for the payment of dividends to the
close of business on the business day immediately following the corresponding
dividend payment date will be payable on such Dividend Payment Date to the
record holder of such share on such record date, notwithstanding the conversion
of such share after such record date and prior to such dividend payment date or
the Issuer's default in payment of the dividend due on that Dividend Payment
Date. No payment or adjustment will be made upon conversion of shares of
Preferred Stock for accumulated and unpaid dividends or for dividends with
respect to the Common Stock issued upon such conversion.
(d) Except as provided in Section 2.2(b) and in Section 4.2, the
Issuer shall make no payment or allowance for unpaid dividends, whether or not
in arrears, on converted shares or for dividends on the shares of Common Stock
issued upon conversion.
(e) The Issuer will take all actions required or permitted under
Delaware corporate law to permit the payment of dividends on the Preferred
Stock, including, without limitation, through the revaluation of its assets in
accordance with Delaware General Corporation Laws.
3. Ranking
3.1 The Preferred Stock will, with respect to dividend distributions and
distributions upon the liquidation, winding up or dissolution of the Issuer,
rank:
(a) senior to all classes of Common Stock, Series A Convertible
Preferred Stock and each other class of Capital Stock or series of preferred
stock issued by the Issuer, which is established after the date of this
Certificate of Designation, the terms of which do not expressly provide that
such class or series will rank senior to or on a parity with the Preferred Stock
as to dividend distributions and distributions upon the liquidation, winding up
or
3
<PAGE>
dissolution of the Issuer (collectively, with the Common Stock, referred to as
the "Junior Securities");
(b) on a parity with any class of Capital Stock or series of
preferred stock issued by the Issuer, which is established after the date of
this Certificate of Designation by the Board of Directors, the terms of which
expressly provide that such class or series will rank on a parity with the
Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding up or dissolution of the Issuer (collectively referred to
as "Parity Securities"); and
(c) junior to each class of Capital Stock or series of preferred
stock issued by the Issuer, which is established after the date of this
Certificate of Designation by the Board of Directors, the terms of which
expressly provide that such class or series will rank senior to the Preferred
Stock as to dividend distributions and distributions upon liquidation, winding-
up or dissolution of the Issuer (collectively referred to as "Senior
Securities").
3.2 Except as otherwise provided herein, the Issuer is entitled to amend
its Certificate of Incorporation to authorize one or more additional series of
preferred stock, file certificates of designation, and issue without restriction
from time to time, any series of Junior Securities, Parity Securities, or Senior
Securities.
4. Conversion
4.1 Conversion Rights
(a) Each Holder of Preferred Stock shall have the right, at its
option, at any time and from time to time to convert, subject to the terms and
provisions of this Article 4, any or all of such Holder's shares of Preferred
Stock. In such case, the shares of Preferred Stock shall be converted into such
whole number of fully paid and nonassessable shares of Common Stock as is equal,
subject to Section 4.3, to:
the product of the number of shares of Preferred Stock being so converted
multiplied by the quotient of (i) the Liquidation Preference divided by
(ii) the Conversion Price then in effect,
except that with respect to any share which shall be called for redemption such
right shall terminate at the close of business on the Business Day prior to the
Redemption Date unless the Issuer shall default in making the payment due upon
redemption thereof.
(b) The conversion right of a Holder of Preferred Stock shall be
exercised by the Holder by the surrender of the certificate representing shares
to be converted to the Issuer or to the Transfer Agent accompanied by the
Conversion Notice.
(i) Immediately prior to the close of business on the Conversion
Date, each converting Holder of Preferred Stock shall be deemed to be the
Holder of record of Common Stock issuable upon conversion of such Holder's
Preferred Stock notwithstanding that the share register of the Issuer shall
then be closed or that certificates representing such Common Stock shall
not then be actually delivered to such person.
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<PAGE>
(ii) Upon notice from the Issuer, each Holder of Preferred Stock so
converted shall promptly surrender to the Issuer or the Transfer Agent
certificates representing the shares so converted (if not previously
delivered), duly endorsed in blank or accompanied by proper instruments of
transfer.
(iii) On any Conversion Date, all rights with respect to the shares of
Preferred Stock so converted, including the rights, if any, to receive
notices, will terminate, except the rights of Holders thereof to: (1)
receive certificates for the number of shares of Common Stock into which
such shares of Preferred Stock have been converted; (2) receive the payment
in cash or shares of Common Stock of any accumulated and unpaid dividends
accrued thereon pursuant to Section 4.2 hereof; and (3) exercise the rights
to which they are entitled as Holders of Common Stock.
(c) If the Conversion Date shall not be a Business Day, then such
conversion right shall be deemed exercised on the next Business Day.
(d) When shares of Preferred Stock are converted pursuant to this
Section 4.1, all accumulated and unpaid dividends, including dividends payable
on the Conversion Date pursuant to Section 2.2, or liquidated damages (whether
or not in arrears or currently payable) on the Preferred Stock so converted to
(and not including) the Conversion Date shall immediately be due and payable, at
the Issuer's option:
(i) in cash;
(ii) by delivery of the Issuer's Common Stock; or
(iii) a combination thereof.
4.2 The Conversion Price shall be subject to adjustment from time to time
as follows:
(a) Stock Splits and Combinations. In case the Issuer shall at any
-----------------------------
time or from time to time after the Issuance Date (i) subdivide or split the
outstanding shares of Common Stock, (ii) combine or reclassify the outstanding
shares of Common Stock into a smaller number of shares or (iii) issue by
reclassification of the shares of Common Stock any shares of capital stock of
the Issuer, then, and in each such case, the Conversion Price in effect
immediately prior to such event or the record date therefor, whichever is
earlier, shall be adjusted so that the holder of any shares of Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock or other securities of the Issuer which such holder would
have owned or have been entitled to receive after the occurrence of any of the
events described above, had such shares of Preferred Stock been surrendered for
conversion immediately prior to the occurrence of such event or the record date
therefor, whichever is earlier. An adjustment made pursuant to this subparagraph
(a) shall become effective at the close of business on the day upon which such
corporate action becomes effective. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) Stock Dividends in Common Stock. In case the Issuer shall at any
-------------------------------
time or from time to time after the Issuance Date pay a dividend or make a
distribution in shares of Common Stock on any class of capital stock of the
Issuer other than dividends or distributions of
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<PAGE>
shares of Common Stock or other securities with respect to which adjustments are
provided in paragraph (a) above, the Conversion Price shall be adjusted so that
the holder of each share of Preferred Stock shall be entitled to receive upon
conversion thereof the number of shares of Common Stock determined by
multiplying (1) the applicable Conversion Price by (2) a fraction, the numerator
of which shall be the number of shares of Common Stock theretofore outstanding
and the denominator of which shall be the sum of such number of shares and the
total number of shares issued in such dividend or distribution.
(c) Issuance of Rights or Warrants. In case the Issuer shall issue to
------------------------------
all holders of Common Stock rights or warrants entitling such holders to
subscribe for or purchase Common Stock at a price per share less than the
Current Market Price, the Conversion Price in effect immediately prior to the
close of business on the record date fixed for determination of shareholders
entitled to receive such rights or warrants shall be reduced by multiplying such
Conversion Price by a fraction, the numerator of which is the sum of the number
of shares of Common Stock outstanding at the close of business on such record
date and the number of shares of Common Stock that the aggregate offering price
of the total number of shares of Common Stock so offered for subscription or
purchase would purchase at such Current Market Price, and the denominator of
which is the sum of the number of shares of Common Stock outstanding at the
close of business on such record date and the number of additional shares of
Common Stock so offered for subscription or purchase. For purposes of this
subparagraph (c), the issuance of rights or warrants to subscribe for or
purchase securities convertible into Common Stock shall be deemed to be the
issuance of rights or warrants to purchase the Common Stock into which such
securities are convertible at an aggregate offering price equal to the sum of
the aggregate offering price of such securities and the minimum aggregate amount
(if any) payable upon conversion of such securities into Common Stock. Such
adjustment shall be made successively whenever any such event shall occur.
(d) Distribution of Indebtedness, Securities or Assets. In case the
--------------------------------------------------
Issuer shall distribute to all holders of Common Stock (whether by dividend or
in a merger, amalgamation or consolidation or otherwise) evidences of
indebtedness, shares of capital stock of any class or series, other securities,
cash or assets (other than Common Stock, rights or warrants referred to in
subparagraph (c) above or a dividend payable exclusively in cash and other than
as a result of a Fundamental Change), the Conversion Price in effect immediately
prior to the close of business on the record date fixed for determination of
shareholders entitled to receive such distribution shall be reduced by
multiplying such Conversion Price by a fraction, the numerator of which is the
Current Market Price on such record date less the fair market value (as
determined by the Board of Directors of the Issuer, whose determination in good
faith shall be conclusive) of the portion of such evidences of indebtedness,
shares of capital stock, other securities, cash and assets so distributed
applicable to one share of Common Stock and the denominator of which is the
Current Market Price. Such adjustment shall be made successively whenever any
such event shall occur.
(e) Fundamental Changes. In case of any Fundamental Change, the
-------------------
holder of each share of Preferred Stock outstanding immediately prior to the
occurrence of such Fundamental Change shall have the right upon any subsequent
conversion to receive (but only out of legally available funds of the Issuer, to
the extent required by applicable law) the kind and
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<PAGE>
amount of stock, other securities, cash and assets that such holder would have
received if such share had been converted immediately prior thereto.
(f) Anything in the above sections (a)-(e) to the contrary
notwithstanding, the Issuer shall not be required to give effect to any
adjustment in the Conversion Price unless and until the net effect of one or
more adjustments (each of which shall be carried forward until counted toward
adjustment), determined as above provided, shall have resulted in a change of
the Conversion Price by at least 1%, and when the cumulative net effect of more
than one adjustment so determined shall be to change the Conversion Price by at
least 1%, such change in the Conversion Price shall thereupon be given effect.
In the event that, at any time as a result of the provisions of this Section,
the holder of shares of Preferred Stock upon subsequent conversion shall become
entitled to receive any shares of capital stock of the Issuer other than Common
Stock, the number of such other shares so receivable upon conversion of shares
of Preferred Stock shall thereafter be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
contained herein.
(g) There shall be no adjustment of the Conversion Price in case of
the issuance of any stock of the Issuer in a merger, reorganization,
acquisition, reclassification, recapitalization or other similar transaction
except as set forth in the above paragraphs (a)-(e).
(h) In any case in which the above paragraphs (a)-(e) require that an
adjustment as a result of any event become effective from and after a record
date, the Issuer may elect to defer until after the occurrence of such event (i)
issuing to the holder of any shares of Preferred Stock converted after such
record date and before the occurrence of such event the additional shares of
Common Stock issuable upon such conversion over and above the shares issuable on
the basis of the Conversion Price in effect immediately prior to adjustment and
(ii) paying to such holder any amount in cash in lieu of a fractional share of
Common Stock.
(i) If the Issuer shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to shareholders
thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the number of shares of Common
Stock issuable upon exercise of the right of conversion granted by the above
paragraphs (a)-(e) or in the Conversion Price then in effect shall be required
by reason of the taking of such record.
4.3 Upon a Change of Control, each Holder of Preferred Stock will have the
option, during the period commencing on the date that the applicable notice of
such Change of Control is mailed to Holders of Preferred Stock and ending on the
close of business on the 45/th/ day thereafter (the "Special Conversion Date")
to convert all, but not less than all, of such Holder's shares of Preferred
Stock into Common Stock at a conversion rate equal to the Liquidation Preference
divided by the Special Conversion Price.
(a) Within fifteen days after a Change of Control, notice of such
Change of Control shall be given by the Issuer by first-class mail to each
record Holder of shares of Preferred Stock, at such Holder's address as the same
appears on the books of the Issuer. Each such notice shall state: (i) that a
Change of Control has occurred; (ii) the last day on which the Change of Control
option may be exercised (the "Expiration Date"); (iii) the name and address of
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<PAGE>
the paying agent; and (iv) the procedures that Holders must follow to exercise
the Change of Control option.
(b) On or before the Expiration Date, each Holder of shares of
Preferred Stock wishing to exercise the Change of Control option shall surrender
the certificate or certificates representing the shares of Preferred Stock to be
converted, in the manner and at the place designated in the notice described in
Section 4.3 and on such date the cash or shares of Common Stock due to such
Holder shall be delivered to the person whose name appears on such certificate
or certificates as the owner thereof and each surrendered certificate shall be
returned to authorized but unissued shares. Upon surrender (in accordance with
the notice described in Section 4.3(a)) of the certificate or certificates
representing any shares to be so converted (properly endorsed or assigned for
transfer, if the Issuer shall so require and the notice shall so state), such
shares shall be converted by the Issuer at the Conversion Price as adjusted.
(c) Exercise by a holder of such holder's special conversion right
following a change of control is irrevocable, except that a holder may withdraw
its election to exercise such holder's special conversion right at any time
prior to the close of business on the Special Conversion Date by delivering a
written or facsimile transmission notice to the transfer agent at the address or
facsimile number specified in the change of control notice. Such notice, to be
effective, must be received by the transfer agent prior to the close of business
on the Special Conversion Date. All shares of Preferred stock tendered for
conversion pursuant to holders' special conversion rights as described herein
and not withdrawn will be converted at the close of business on the Special
Conversion Date.
4.4 If, as a result of any Conversion Price Adjustment Event, a Holder of
the Preferred Stock becomes entitled to receive upon conversion shares of two or
more classes of Capital Stock, the Issuer shall determine the reasonable
allocation of the adjusted Conversion Price between the classes of Capital
Stock. After such allocation, the Conversion Price of each class of Capital
Stock shall thereafter be subject to adjustment on terms applicable to the
Preferred Stock in this Article 4.
4.5 The Issuer shall at all times reserve and keep available for issuance
upon the conversion of the Preferred Stock such number of its authorized but
unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of all outstanding shares of Preferred Stock, and shall
take all action required to increase the authorized number of shares of Common
Stock if at any time there shall be insufficient authorized unissued shares of
Common Stock to permit such reservation or to permit the conversion of all
outstanding shares of Preferred Stock.
4.6 The issuance or delivery of certificates for Common Stock upon the
conversion of shares of Preferred Stock shall be made without charge to the
converting Holder of shares of Preferred Stock for such certificates or for any
tax in respect of the issuance or delivery of such certificates or the
securities represented thereby, and such certificates shall be issued or
delivered in the respective names of, or in such names as may be directed by,
the Holders of the shares of Preferred Stock converted; provided, however, that
the Issuer shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate in
a name other than that of the Holder of the shares of Preferred Stock
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<PAGE>
converted, and the Issuer shall not be required to issue or deliver such
certificate unless or until the Person or Persons requesting the issuance or
delivery thereof shall have paid to the Issuer the amount of such tax or shall
have established to the reasonable satisfaction of the Issuer that such tax has
been paid.
5. Redemption of Preferred Stock
5.1 Optional Redemption of the Preferred Stock
(a) Shares of the Preferred Stock may not be required to be redeemed
prior to [ ], 2003.
(b) On or after [ ], 2003, the Preferred Stock may be redeemed for
cash, in whole or in part, at the option of the Issuer, at the following
Redemption Prices per share (expressed as percentages of the Liquidation
Preference), in each case, together with accumulated and unpaid dividends
(including an amount equal to a prorated dividend for any partial dividend
period), if any, to the Redemption Date, upon not less than 30 nor more than 60
days' prior written notice (the "Redemption Notice"), if redeemed during the
12-month period commencing on _______ of each of the years set forth below:
<TABLE>
<CAPTION>
Year Redemption
Price Per Share
<C> <S>
2003................................... %
2004................................... %
2005................................... %
2006................................... %
2007................................... %
2008................................... %
2009................................... %
2010 and thereafter.................... %
</TABLE>
(c) In the event that fewer than all the outstanding shares of the
Preferred Stock are to be redeemed, the shares to be redeemed will be determined
pro rata or by lot, as determined by the Issuer.
(d) From and after the applicable Redemption Date (unless the Issuer
shall be in default of payment of the Redemption Price), dividends on the shares
of the Preferred Stock to be redeemed on such Redemption Date shall cease to
accumulate, such shares shall no longer be deemed to be outstanding, and all
rights of the Holders thereof as stockholders of the Issuer (except the right to
receive the Redemption Price and accumulated dividend amounts and liquidation
penalties, if any through the Redemption Date) will cease.
(e) No such optional redemption may be authorized or made unless,
prior to giving the applicable Redemption Notice, all accumulated and unpaid
dividends for periods ended prior to the date of such Redemption Notice shall
have been paid in cash or Common Stock.
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<PAGE>
5.2 (a) In the event the Issuer shall elect to redeem shares of the
Preferred Stock pursuant to Section 5.1 hereof:
(i) The Issuer must make a public announcement of the redemption
and provide the Holders with the Redemption Notice referred to in Section
5.1(b) not fewer than 30 days nor more than 60 days' prior to the
Redemption Date.
(ii) On or before any Redemption Date, each Holder of shares of
Preferred Stock to be redeemed shall surrender the certificate or
certificates representing such shares of Preferred Stock (properly endorsed
or assigned, or transferred, if the Issuer shall so require and the
Redemption Notice shall so state) to the Issuer or the Redemption Agent (if
appointed) in the manner and at the place designated in the Redemption
Notice.
(iii) On the Redemption Date, the Issuer or the Redemption Agent, as
applicable, shall pay or deliver to the Holder whose name appears on such
certificate or certificates as the owner thereof, the full Redemption Price
due such Holder in cash, in fully paid and nonassessable shares of Common
Stock or in a combination thereof.
(iv) The shares represented by each certificate to be surrendered
shall be automatically (and without any further action of the Issuer or the
Holder) canceled as of the Redemption Date whether or not certificates for
such shares are returned to the Issuer and returned to authorized but
unissued shares of preferred stock of no series.
(v) If fewer than all the shares represented by any such
certificate are to be redeemed, a new certificate shall be issued
representing the unredeemed shares, without cost to the Holder, together
with the amount of cash, if any, in lieu of fractional shares.
(b) If a Redemption Notice shall have been given as provided in
Section 5.1, all rights of the Holders thereof as stockholders of the Issuer
with respect to shares so called for redemption (except for the right to receive
from the Issuer the Redemption Price) shall cease either (i) from and after the
Redemption Date (unless the Issuer shall default in the payment of the
Redemption Price, in which case such rights shall not terminate at the
Redemption Date) or (ii) if the Issuer shall so elect and state in the
Redemption Notice, from and after the time and date (which date shall be the
Redemption Date or an earlier date not less than 20 days after the date of
mailing of the Redemption Notice) on which the Issuer shall irrevocably deposit
in trust for the Holders of the shares to be redeemed with a designated
Redemption Agent as paying agent sufficient to pay at the office of such paying
agent, on the Redemption Date, the Redemption Price. Any money or shares of
Common Stock so deposited with such Redemption Agent which shall not be required
for such redemption shall be returned to the Issuer forthwith. Subject to
applicable escheat laws, any moneys or shares of Common Stock so set aside by
the Issuer and unclaimed at the end of one year from the Redemption Date shall
revert to the general funds of the Issuer, after which reversion the Holders of
such shares so called for redemption shall look only to the general funds of the
Issuer for the payment of the Redemption Price without interest. Any interest
accrued on funds held by the Redemption Agent shall be paid to the Issuer from
time to time.
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<PAGE>
(c) In the event that fewer than all the outstanding shares of the
Preferred Stock are to be redeemed, the shares to be redeemed shall be
determined pro rata or by lot, as determined by the Issuer, except that the
Issuer may redeem such shares held by any Holder of fewer than 100 shares (or
shares held by Holders who would hold fewer than 100 shares as a result of such
redemption), as may be determined by the Issuer.
5.3 Mandatory Redemption of Preferred Stock
(a) The Issuer will redeem all shares of Preferred Stock on [ ],
2012, at a Mandatory Redemption Price equaling 100% of the Liquidation
Preference, together with any accumulated and unpaid dividends to the date of
Mandatory Redemption, unless the Preferred Stock has already been redeemed or
converted. The Issuer shall send notice of such redemption to Holders upon not
less than 30 nor more than 60 days' prior written notice.
(b) The Issuer must make mandatory redemption payments on the
Preferred Stock by delivery of shares of Common Stock and makes such payments as
follows:
(i) If on the date of such payment, such shares of Common Stock are
freely tradable, such shares of Common Stock shall be valued at 95% of
Average Market Value.
(ii) If on the date of such payment, such shares of Common Stock are
not freely tradable, such shares of Common Stock shall be valued at 90% of
Average Market Value.
(c) If, as a matter of law, the Issuer is unable to issue Common
Stock in payment of the Mandatory Redemption Price, then the Issuer shall cause
the Preferred Stock to be converted on the date of such mandatory redemption
into the same number of shares of Common Stock as could otherwise have been
issued in satisfaction of the Mandatory Redemption Price, provided that the
Issuer shall have given the Holders of Preferred Stock notice of the exercise of
this option at least 30 days prior to the date of such mandatory redemption.
(d) The Issuer shall pay a Cash Adjustment, determined based on the
proceeds received by the Transfer Agent from the sale of that number of shares
of Common Stock, which the Issuer will deliver to the Transfer Agent for such
purpose, equal to the aggregate of all such fractions rounded up to the nearest
whole share, to each Holder that would otherwise be entitled to a fraction of a
share of Common Stock.
(i) The Transfer Agent shall sell such shares of Common Stock at the
best available prices and distribute the proceeds to the Holders in
proportion to their respective interests therein.
(ii) The Issuer will pay the expenses of the Transfer Agent with
respect to such sale, including brokerage commissions. Any portion of any
such payment that is declared and not paid through the delivery of shares
of Common Stock will be paid in cash. The Issuer shall make a public
announcement no later than the close of business on the tenth business day
prior to the record date for each dividend as to whether the Issuer
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will pay such dividend and, if so, the form of consideration the Issuer
will use to make such payment.
6. Liquidation Preference
6.1 Upon any voluntary or involuntary liquidation, dissolution or winding
up of the Issuer or reduction or decrease in its capital stock resulting in a
distribution of assets to the holders of any class or series of the Issuer's
capital stock, Holders of the Preferred Stock will be entitled to be paid, out
of assets of the Issuer available for distribution, the Liquidation Preference
per share plus an amount in cash equal to all accumulated and unpaid dividends
thereon to the date fixed for liquidation, dissolution or winding up (including
an amount equal to a prorated dividend for the period from the last dividend
payment date to the date fixed for liquidation, dissolution or winding up),
before any distribution is made on any Junior Securities, including, without
limitation, the Common Stock.
6.2 If, upon any voluntary liquidation, dissolution or winding-up of the
Issuer, the amounts payable with respect to the liquidation performance of the
Preferred Stock and all other Parity Securities are not paid in full, the
Holders of the Preferred Stock and the Parity Securities will share pro rata in
proportion to the full distribution to which each is entitled.
6.3 After payment of the full amount of the Liquidation Preference to
which they are entitled, the Holders of shares of the Preferred Stock will have
no right or claim to any of the remaining assets of the Issuer.
6.4 Neither the voluntary sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Issuer nor the consolidation
or merger of the Issuer with or into one or more entities will be deemed to be a
voluntary or involuntary liquidation, dissolution or winding-up of the Issuer or
reduction or decrease in capital stock, unless such sale, conveyance, exchange
or transfer shall be in connection with a liquidation, dissolution or winding-up
of the business of the Issuer or reduction or decrease in capital stock.
7. Voting Rights
7.1 Holders of the Preferred Stock have no voting rights with respect to
general corporate matters except as provided by law or as set forth herein.
7.2 Special Voting Rights
(a) If dividends payable on the Preferred Stock are in arrears and
unpaid for six quarterly periods, whether or not consecutive, the Holders of a
majority of the outstanding Preferred Stock voting separately as a class with
the shares of any other subsequently issued Parity Securities then titled to
similar voting rights (the "Voting Rights Class") will be entitled at the next
regular or special meeting of stockholders of the Issuer to elect such number of
members to the board of directors constituting at least 20% of the then existing
board of directors before such election, rounded to the nearest whole number,
provided, however, that such number shall be no less than one nor greater than
two, and the number of members of the board of directors will be immediately and
automatically increased by one or two, as the case may be.
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<PAGE>
(b) Such voting rights may be exercised at a special meeting of the
holders of the shares of the Voting Rights Class, called as hereinafter
provided, or at any annual meeting of stockholders held for the purpose of
electing directors, and thereafter at each such annual meeting until such time
as all dividends in arrears on the shares of Preferred Stock shall have been
paid in full, at which time or times such voting rights and the term of the
directors elected pursuant to Section 7.2(a) shall terminate and such directors
shall be deemed to have resigned.
(c) At any time when such voting rights shall have vested in holders
of shares of the Voting Rights Class described in Section 7.2(a), a proper
officer of the Issuer may call, and, upon the written request of the record
holders of shares representing twenty-five percent (25%) of the voting power of
the shares then outstanding of the Voting Rights Class addressed to the
Secretary of the Issuer, shall call a special meeting of the holders of shares
of the Voting Rights Class. Such meeting shall be held at the earliest
practicable date upon the notice required for annual meetings of stockholders at
the place for holding annual meetings of stockholders of the Issuer, or, if
none, at a place designated by the Board of Directors. Notwithstanding the
provisions of this Section 7.2(c), no such special meeting shall be called
during a period within the 60 days immediately preceding the date fixed for the
next annual meeting of stockholders, in which such case the election of
directors pursuant to Section 7.2(a) shall be held at such annual meeting of
stockholders.
(d) At any meeting held for the purpose of electing directors at
which the holders of the Voting Rights Class shall have the right to elect
directors as provided herein, the presence in person or by proxy of the holders
of shares representing more than fifty percent (50%) in voting power of the then
outstanding shares of the Voting Rights Class shall be required and shall be
sufficient to constitute a quorum of such class for the election of directors by
such class.
(e) Any director elected pursuant to the voting rights created under
this Section 7.2 shall hold office until the next annual meeting of stockholders
(unless such term has previously terminated pursuant to Section 7.2(b)) and any
vacancy in respect of any such director shall be filled only by vote of the
remaining director so elected by holders of the Voting Rights Class, or if there
be no such remaining director, by the holders of shares of the Voting Rights
Class at a special meeting called in accordance with the procedures set forth in
this Section 7.2, or, if no such special meeting is called, at the next annual
meeting of stockholders. Upon any termination of such voting rights, the term of
office of all directors elected pursuant to this Section 7 shall terminate and
such directors shall be deemed to have resigned.
7.3 The affirmative vote or consent of the Holders of at least 50% of the
outstanding Preferred Stock will be required for the issuance of any class of
Senior Securities (or security convertible into Senior Securities or evidencing
a right to purchase any shares or any class or series of Senior Securities), and
amendments to the Certificate of Designation that would affect adversely the
rights of Holders of Preferred Stock or authorize the issuance of any additional
shares of Preferred Stock.
7.4 The affirmative vote or consent of the Holders of at least 66 2/3% of
the outstanding Preferred Stock will be required for amendments to the Change of
Control
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provisions in this certificate. In all such cases each share of Preferred Stock
shall be entitled to one vote.
7.5 Except as set forth in this Certificate of Designation, the creation,
authorization or issuance of any shares of Junior Securities or Parity
Securities or an increase or decrease in the amount of authorized Capital Stock
of any class, including any preferred stock, shall not require the consent of
the Holders of the Preferred Stock and shall not be deemed to affect adversely
the rights, preferences, privileges or voting rights of Holders of shares of the
Preferred Stock.
7.6 The consent of the Holders of Preferred Stock shall not be required to
authorize (by way of reclassification or otherwise) or issue any Parity
Securities or any obligation or security convertible into or exchangeable into
or evidencing a right to purchase shares of any class or series of Parity
Securities.
8. Merger, Consolidation and Sale of Assets
8.1 Without the vote or consent of the Holders of at least 50% of the then
outstanding shares of Preferred Stock, the Issuer may not consolidate or merge
with or into, or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its assets to, any person unless (a) the entity
formed by such consolidation or merger (if other than the Issuer) or to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made (in any such case, the "resulting entity") is a corporation
organized and existing under the laws of the United States or any State thereof
or the District of Columbia; (b) if the Issuer is not the resulting entity, the
Preferred Stock is converted into or exchanged for and becomes shares of such
resulting entity, having in respect of such resulting entity the same (or more
favorable) powers, preferences and relative, participating, optional or other
special rights thereof that the Preferred Stock had immediately prior to such
transaction; and (c) immediately after giving effect to such transaction, no
dividend arrearages which trigger voting rights have occurred and are
continuing. The resulting entity of such transaction shall thereafter be deemed
to be the issuer of the Preferred Stock or securities into which it is converted
for all purposes of this Certificate of Designation.
9. Amendment, Supplement and Waiver
9.1 Without the consent of any Holder of the Preferred Stock, subject to
the requirements of the Delaware General Corporation Law, the Issuer may amend
or supplement this Certificate of Designation to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Preferred Stock in addition to or
in place of certificated Preferred Stock, to provide for the assumption of the
Issuer's obligations to Holders of the Preferred Stock in the case of a merger
or consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Preferred Stock or that does not adversely affect
the legal rights under this Certificate of Designation of any such Holder.
10. Certain Definitions
Set forth below are certain defined terms used in this Certificate of
Designation.
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10.1 "Act" means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
10.2 "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person, whether through the
ownership of voting securities, by agreement of or otherwise.
10.3 "Average Market Value" of Common Stock means the arithmetic average of
the current market value of the Common Stock for the ten trading days ending on
the fifth business day prior to (a) in the case of the payment of any dividend,
the record date for such dividend and (b) in the case of the mandatory
redemption payment, the date of such payment.
10.4 "Business Day" means any day other than a Legal Holiday.
10.5 "Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock or
partnership or membership interests, whether common or preferred.
10.6 "Cash Adjustment" will be determined based on the proceeds received by
the Transfer Agent from the sale of that number of shares of Common Stock, which
the Issuer will deliver to the Transfer Agent for such purpose, equal to the
aggregate of all such fractions rounded up to the nearest whole share.
10.7 "Closing Price" with respect to the Common Stock on any trading day,
means the last reported regular-way sale price of the Common Stock on the NYSE,
or if the Common Stock is not then listed on the NYSE, the last reported
regular-way sale price of the Common Stock on the principal stock exchange or
market of the Nasdaq Stock Market on which the Common Stock is then listed or
traded, or if the Common Stock is not then listed or traded on any such stock
exchange or market, the average of the closing bid and asked prices in the over-
the-counter market as furnished by any NYSE member firm selected from time to
time by the Issuer for that purpose.
10.8 "Change of Control" means: (a) the sale, lease, transfer, conveyance
or other disposition of all or substantially all of the assets of the Issuer to
any "person" or "group" (within the meaning of Sections 13(d)(3) and 14(d)(2) of
the Exchange Act or any successor provision to either of the foregoing,
including any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act), in
one transaction or a series of related transactions, other than a Permitted
Owner or (b) the acquisition of beneficial ownership of shares of the Issuer's
Capital Stock by any "person" or "group" (within a meaning of Sections 13(d)(3)
and 14(d)(2) of the Exchange Act or any successor provision to either of the
foregoing, including any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other a Permitted Owner, by means of an exchange offer,
liquidation, tender offer, consolidation,
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<PAGE>
merger, combination, reclassification, recapitalization or otherwise of more
than fifty percent (50%) of the total voting power of all classes of the Voting
Stock of the Issuer or a successor and/or warrants or options to acquire such
Voting Stock, entitled to vote generally in elections of the Issuer's board of
directors.
Notwithstanding clause (b) above, a merger or consolidation that would otherwise
constitute a Change of Control hereunder shall not constitute a Change of
Control if (i) the closing price per share of Common Stock for any five trading
days within the period of ten consecutive trading days ending immediately after
the announcement of such change of control equals or exceeds 105% of the
conversion price of the Preferred Stock in effect on each such trading day or
(ii) at least 90% of the consideration in the transaction or transactions
constituting a change of control pursuant to this clause consists of shares of
Common Stock traded or to be traded immediately following such change of control
on a national securities exchange or the Nasdaq National Market and, as a result
of such transaction or transactions, the Preferred Stock becomes convertible
solely into such Common Stock (and any rights attached thereto).
However, a transaction of a type described above that results in the Common
Stock no longer being listed on a stock exchange or traded on the Nasdaq
National Market would also be treated as a change in control even if a Permitted
Owner were involved.
10.9 "Common Stock" means the Issuer's authorized $.01 par value Class A
Common Stock.
10.10 "Conversion Date" means the date the Issuer or the Transfer Agent
receives the Conversion Notice.
10.11 "Conversion Notice" means written notice from the Holder to the
Issuer stating that the Holder elects to convert all or a portion of the shares
of Preferred Stock represented by certificates delivered to the Issuer or the
Transfer Agent contemporaneously. The Conversion Notice will specify or include:
(i) The number of shares of Preferred Stock being converted by the
Holder,
(ii) The name or names (with address and taxpayer identification
number) in which a certificate or certificates for shares of Common Stock
are to be issued,
(iii) A written instrument or instruments of transfer in form
reasonably satisfactory to the Issuer or the Transfer Agent, duly executed
by the Holder or its duly authorized legal representative, or in blank, and
(iv) Transfer tax stamps or funds thereof, if required pursuant to
Section 4.6.
10.12 "Conversion Price" shall initially be $[ ].
10.13 "Conversion Price Adjustment Events" are any of those events
specified in Section 4.2.
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10.14 "Current Market Price" means, as of any date, the average of the
daily Closing Price for the five consecutive Trading Days selected by the Board
of Directors beginning not more than 20 trading days before, and ending not
later than the date of the applicable event described in Section 4.2(c) or
4.2(d) hereof and the date immediately preceding the record date fixed in
connection with that event.
10.15 "Current Market Value" of Common Stock means the average of the high
and low sale prices of the Common Stock as reported on the Nasdaq National
Market or such other SEC-recognized national securities exchange or trading
system which the Issuer may from time to time designate upon which the greatest
number of shares of the Common Stock is then listed or traded, for the trading
day in question.
10.16 "Dividend Payment Date" is as defined in Section 2.1, above.
10.17 "Dividend Payment Record Date" is as defined in Section 2.1, above.
10.18 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
10.19 "Expiration Date" is as defined in Section 4.4(a)(i), above.
10.20 "Fundamental Change" means any transaction or event, including,
without limitation, any merger, consolidation, sale of assets, tender or
exchange offer, reclassification, compulsory share exchange or liquidation, in
which all or substantially all outstanding shares of the Issuer's Common Stock
are converted into or exchanged for stock, other securities, cash or assets.
10.21 "Holder" means a Person in whose name shares of Capital Stock is
registered.
10.22 "Issuance Date" is as defined in Section 2.1
10.23 "Issuer" means XM Satellite Radio Holdings Inc., a Delaware
corporation.
10.24 "Junior Security" is as defined in Section 3.1, above.
10.25 "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place payment is to be received are
authorized by law, regulation or executive order to remain closed. If a payment
date is Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
10.26 "Liquidation Preference" means $50 per share of Preferred Stock.
10.27 "Mandatory Redemption Price" is as defined in Section 5.4(a), above
10.28 "Market Capitalization" means the product of the then-current market
price times the total number of shares of Common Stock then outstanding.
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<PAGE>
10.29 "Market Value" means the average of the Closing Prices of the Common
Stock for the five trading days ending on the last trading day preceding the
date of occurrence of a Change of Control.
10.30 "Notice Date" means the tenth day prior to a Deposit Payment Date.
10.31 "Parity Security" is as defined in Section 3.1, above
10.32 "Permitted Owner" means American Mobile Satellite Corporation,
General Motors Corporation, DIRECTV and Clear Channel Communications, Inc. and
their respective affiliates.
10.33 "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock issuer, interest, trust or unincorporated
organization (including any subdivision or ongoing business of any such entity
or substantially all of the assets of any such entity, subdivision or business).
10.34 "Preferred Stock" means the Preferred Stock authorized in this
Certificate of Designation.
10.35 "Redemption Agent" means that Person, if any, appointed by the Issuer
to hold funds deposited by the Issuer in trust to pay to the Holders of shares
to be redeemed.
10.36 "Redemption Date" means that certain date set forth in the Redemption
Notice on which date the redemption of the Preferred Stock is completed.
10.37 "Redemption Notice" means that notice to be given by the Issuer to
the Holders notifying the Holders as to the redemption, in whole or in part, of
the Preferred Stock pursuant to Article 5 hereof. The Redemption Notice shall
include the following information: (i) the Redemption Date and the time of day
on such date; (ii) the total number of shares of Preferred Stock to be redeemed
and, if fewer than all the shares held by such Holder are to be redeemed, the
number of such shares to be redeemed from such Holder; (iii) the Redemption
Price (whether to be paid in cash or shares of Common Stock); (iv) the place or
places where certificates for such shares are to be surrendered for payment of
the Redemption Price and delivery of certificates representing shares of Common
Stock (if the Issuer so chooses); (v) that dividends on the shares to be
redeemed will cease to accrue on such Redemption Date unless the Issuer defaults
in the payment of the Redemption Price; and (vi) the name of any bank or trust
company, if any, performing the duties of Redemption Agent. Redemption Notice
shall be given by first-class mail to each record Holder of the shares to be
redeemed, at such holder's address as the same appears on the books of the
Issuer.
10.38 "Redemption Notice Date" means the date the Redemption Notice is
first mailed or delivered to any Holder.
10.39 "Redemption Price" means that price established for redemption of the
Preferred Stock established in Section 5.1(b) hereof.
10.40 "Special Conversion Date" is as defined in Section 4.3, above.
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<PAGE>
10.41 "Special Conversion Price" is the higher of (a) the Market Value of
the Common Stock and (b) $ per share, which amount, in the case of this
clause (b), shall be adjusted each time that the conversion price is adjusted so
that the ratio of such amount (as so adjusted) to the conversion price (as so
adjusted) equals the ratio of $ to the initial conversion price.
10.42 "Subsidiary" means, with respect to any person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other Subsidiaries of such person or a combination
thereof.
10.43 The "Transfer Agent" shall be as established pursuant to Article 11
hereof.
10.44 "Trading Day" means any business day on which the Nasdaq National
Stock Market (or any U.S. national securities exchange or quotation system on
which the Common Stock is then listed) is open for the transaction of business.
10.45 "Voting Stock" means with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
11. Transfer Agent and Registrar
The duly appointed Transfer Agent and registrar for the Preferred
Stock shall be BankBoston, N.A. The Issuer may, in its sole discretion, remove
the Transfer Agent in accordance with the agreement between the Issuer and the
Transfer Agent; provided that the Issuer shall appoint a successor transfer
agent who shall accept such appointment prior to the effectiveness of such
removal.
12. Other Provisions
12.1 With respect to any notice to a Holder of shares of the Preferred
Stock required to be provided hereunder, neither failure to mail such notice,
nor any defect therein or in the mailing thereof, to any particular Holder shall
affect the sufficiency of the notice or the validity of the proceedings referred
to in such notice with respect to the other Holders or affect the legality or
validity of any distribution, rights, warrant, reclassification, consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up, or the
vote upon any such action. Any notice which was mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether or not
the Holder receives the notice.
12.2 Shares of Preferred Stock issued and reacquired will be retired and
canceled promptly after reacquisition thereof and, upon compliance with the
applicable requirements of Delaware law, have the status of authorized but
unissued shares of preferred stock of the Issuer undesignated as to series and
may with any and all other authorized but unissued shares of preferred stock of
the Issuer be designated or redesignated and issued or reissued, as the case may
be, as part of any series of preferred stock of the Issuer except that any
issuance or reissuance of shares of Preferred Stock must be in compliance with
this Certificate of Designation.
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<PAGE>
12.3 In the Issuer's discretion, no fractional shares of Common Stock or
securities representing fractional shares of Common Stock will be issued upon
conversion, redemption, or as dividends payable in the Preferred Stock. Any
fractional interest in a share of Common Stock resulting from conversion,
redemption, or dividend payment will be paid in cash based on the last reported
sale price of the Common Stock on the Nasdaq National Stock Market (or any
national securities exchange or authorized quotation system on which the Common
Stock is then listed) at the close of business on the trading day next preceding
the date of conversion or such later time as the Issuer is legally and
contractually able to pay for such fractional shares.
12.4 The shares of Preferred Stock shall be issuable in whole shares.
12.5 All notices periods referred to herein shall commence on the date of
the mailing of the applicable notice.
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<PAGE>
IN WITNESS WHEREOF, XM Satellite Radio Holdings Inc. caused this
Certificate to be signed this [ ] day of [ ], 2000.
XM SATELLITE RADIO HOLDINGS INC.
By:
Name: Heinz Stubblefield
Title: Chief Financial Officer
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<PAGE>
January 21, 2000
Board of Directors
XM Satellite Radio Holdings Inc.
1250 23rd Street, N.W.
Suite 57
Washington, DC 20037-1100
Ladies and Gentlemen:
We are acting as special counsel to XM Satellite Radio Holdings Inc.,
a Delaware corporation (the "Company"), in connection with its registration
statement on Form S-1, as amended (the "Registration Statement"), filed with the
Securities and Exchange Commission relating to the proposed public offering of
up to 4,600,000 shares (the "Common Shares") of the Company's Class A common
stock, par value $.01 per share ("Class A Common Stock"), and 2,300,000 shares
(the "Preferred Shares" and together with the Common Shares, the "Shares") of
the Company's Series B convertible redeemable preferred stock, par value $.01
per share (the "Series B Preferred Stock"), all of which Shares are to be sold
by the Company. Also registered on the Registration Statement are an
indeterminate number of shares of Class A Common Stock issuable as dividends on
the Preferred Shares (the "Dividend Shares"), upon conversion of part or all of
the Preferred Shares (the "Conversion Shares") or upon mandatory redemption of
part or all of the Preferred Shares (the "Redemption Shares"). This opinion
letter is furnished to you at your request to enable you to fulfill the
requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R. (S) 229.601(b)(5),
in connection with the Registration Statement.
For purposes of this opinion letter, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. Restated Certificate of Incorporation of the Company, as
certified by the Secretary of State of the State of Delaware on
January 21, 2000 and as certified by the Secretary of the Company
on the date hereof as being complete, accurate and in effect (the
"Certificate of Incorporation").
<PAGE>
3. The Restated Bylaws of the Company, as certified by the Secretary
of the Company on the date hereof as being complete, accurate,
and in effect.
4. The proposed form of the Certificate of Designation relating to
the Series B Preferred Stock (the "Certificate of Designation"),
filed as Exhibit 4.2 to the Registration Statement.
5. The proposed form of Underwriting Agreement, relating to the
offering of the Common Shares, among the Company and the several
Underwriters to be named therein, for whom Donaldson, Lufkin &
Jenrette, Bear, Stearns & Co. Inc., C. E. Unterberg, Towbin and
Salomon Smith Barney Inc. will act as representatives, filed as
Exhibit 1.1 to the Registration Statement (the "Common Shares
Underwriting Agreement").
6. The proposed form of Underwriting Agreement, relating to the
offering of the Preferred Shares, among the Company and the
several Underwriters to be named therein, for whom Bear, Stearns
& Co. Inc., Donaldson, Lufkin & Jenrette, Banc of America
Securities LLC and Salomon Smith Barney Inc. will act as
representatives, filed as Exhibit 1.2 to the Registration
Statement (the "Preferred Shares Underwriting Agreement").
7. Resolutions of the Board of Directors of the Company adopted at
meetings held on December 22, 1999, and January 6, 2000, as
certified by the Secretary of the Company on the date hereof as
being complete, accurate, and in effect, relating to the issuance
and sale of the Common Shares and arrangements in connection
therewith.
8. Resolutions of the Board of Directors of the Company adopted at a
meeting held on January 6, 2000, as certified by the Secretary of
the Company on the date hereof as being complete, accurate, and
in effect, and form of resolutions of the Board of Directors of
the Company (the "Designations Resolutions"), relating to the
issuance and sale of the Preferred Shares, the approval, adoption
and authorization of the filing of the Certificate of Designation
and arrangements in connection therewith.
In our examination of the aforesaid documents, we have assumed the
genuineness of all signatures, the legal capacity of all natural persons, the
accuracy
<PAGE>
and completeness of all documents submitted to us, the authenticity of all
original documents, and the conformity to authentic original documents of all
documents submitted to us as copies (including telecopies). This opinion letter
is given, and all statements herein are made, in the context of the foregoing.
This opinion letter is based as to matters of law solely on the
Delaware General Corporation Law, as amended. We express no opinion herein as
to any other laws, statutes, ordinances, rules, or regulations. As used herein,
the term "Delaware General Corporation Law, as amended" includes the statutory
provisions contained therein, all applicable provisions of the Delaware
Constitution and reported judicial decisions interpreting these laws.
Based upon, subject to and limited by the foregoing, we are of the
opinion that:
(a) following (i) final action of the Board of Directors of the
Company approving the Common Shares Underwriting Agreement and the price of the
Common Shares, (ii) execution and delivery by the Company of the Common Shares
Underwriting Agreement, (iii) effectiveness of the Registration Statement, (iv)
issuance of the Common Shares pursuant to the terms of the Common Shares
Underwriting Agreement and (v) receipt by the Company of the consideration for
the Common Shares specified in the resolutions of the Board of Directors and the
Common Shares Underwriting Agreement, the Common Shares will be validly issued,
fully paid, and nonassessable;
(b) following (i) final action of the Board of Directors of the
Company approving the Preferred Shares Underwriting Agreement and authorizing
and establishing the Series B Preferred Stock (including action of the Board of
Directors approving the pricing terms of the Preferred Shares and adopting the
Designations Resolutions), in accordance with the terms of the Certificate of
Incorporation, the Bylaws, the Certificate of Designation and applicable law,
(ii) execution and delivery by the Company of the Preferred Shares Underwriting
Agreement, (iii) filing of the Certificate of Designation with the Secretary of
State of the State of Delaware, (iv) effectiveness of the Registration
Statement, (v) issuance of the Preferred Shares pursuant to the terms of the
Preferred Shares Underwriting Agreement and (vi) receipt by the Company of the
consideration for the Preferred Shares specified in the resolutions of the Board
of Directors of the Company and the Preferred Shares Underwriting Agreement, the
Preferred Shares will be validly issued, fully paid, and nonassessable;
(c) following (i) final action of the Board of Directors of the
Company declaring dividends on the Preferred Shares in the form of, and
authorizing the issuance of, Dividend Shares in accordance with the terms of the
Certificate of Incorporation, the Bylaws, the Certificate of Designation and
applicable law, and (ii) the issuance and delivery of certificates for the
Dividend
<PAGE>
Shares in accordance with the terms of such final board action, the Dividend
Shares will be validly issued, fully paid, and nonassessable;
(d) following (i) final action of the Board of Directors adopting the
Designations Resolutions and (ii) conversion of Preferred Shares into Conversion
Shares in accordance with the terms of the Certificate of Incorporation, the
Bylaws, the Certificate of Designation and applicable law, the Conversion Shares
will be validly issued, fully paid, and nonassessable; and
(e) following (i) final action of the Board of Directors adopting the
Designations Resolutions and authorizing the redemption of, and the issuance of
the Redemption Shares in exchange for, Preferred Shares in accordance with the
terms of the Certificate of Incorporation, the Bylaws, the Certificate of
Designation and applicable law and (ii) the redemption of Preferred Shares in
exchange for Redemption Shares, and the issuance and delivery of certificates of
such Redemption Shares, in accordance with the terms of such final board action,
the Redemption Shares will be validly issued, fully paid, and nonassessable.
This opinion letter has been prepared for your use in connection with
the Registration Statement and speaks as of the date hereof. We assume no
obligation to advise you of any changes in the foregoing subsequent to the
delivery of this opinion letter.
We hereby consent to the filing of this opinion letter as Exhibit 5.1
to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the prospectus constituting a part of the
Registration Statement. In giving this consent, we do not thereby admit that we
are an "expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
HOGAN & HARTSON L.L.P.
<PAGE>
[LETTERHEAD OF XM SATELLITE RADIO]
EXHIBIT 10.27
January 12, 1999
PERSONAL AND CONFIDENTIAL
Mr. Stephen R. Cook
2 Barrone Court
Greer, SC 29850
Dear Stephen:
XM Satellite Radio Inc ("XM") is pleased to offer you the position of Senior
Vice President of Sales & Marketing, reporting directly to me. Your start date
will be February 22, 1999, or as otherwise agreed. You will be responsible for
ensuring that XM achieves its goals in the areas of sales and marketing,
subscriber acquisition, advertising revenue, brand equity and awareness, among
other areas.
The position offers the following:
Annual Base Salary: You will receive an annual base salary of $235,000, minus
- ------------------
applicable withholding taxes. (I am sure you are aware that the quotation of an
annual salary is for purposes of communication and is not intended to imply a
specific condition or length of employment.)
Discretionary Bonus: Your annual on-target bonus potential (at 100% of plan)
- -------------------
will be equal to 35% or of your annual base compensation, minus applicable
withholding taxes, based upon agreed performance measures. Bonus calculations
will be based on a calendar year. The awarding of a discretionary bonus is in
recognition of performance and should not be construed as conferring upon you
the right to a future discretionary bonus, nor does it imply a specific
condition or length of employment commitment.
Stock Option Plan: A recommendation will be made to the Board of Directors of XM
- -----------------
that you are granted employee stock options to purchase one share of XM stock,
at a strike price of $875,000 per share. Your one share option will vest on a
schedule of one-third on each anniversary date in 1999, 2000; and 2001. The
granting of stock options is wholly discretionary in recognition of performance
or anticipated performance and does not create any obligation on the part of XM
to maintain your employment through any part of the vesting schedule or to grant
additional options in the future.
Signing Bonus: XM will provide you with a $50,000 signing bonus, payable at the
- -------------
first month's paycheck.
Relocation: In order for you to be a full and contributing member of XM's senior
- ----------
executive team, it is our mutual understanding that you will relocate to D.C. In
consideration of this understanding, XM will provide a full relocation package
to you that will include reimbursement of all reasonable and customary moving
expenses. In addition, XM will reimburse your double living expenses prior to
and during your move, capped at $20,000.
Employment Agreement: In the event your employment is terminated for any reason,
- --------------------
other than for cause, you will receive a lump sum severance payment, subject to
applicable taxes, equal to
<PAGE>
Stephen R. Cook
January 14, 1999
Page 2
one year's base salary. In consideration of this severance payment, XM shall
receive a confidentiality undertaking and a release of potential claims.
Employee Benefits: XM generally observes 11 holidays per year and you will be
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provided four (4) weeks (20 working days) of paid vacation. On the first day of
the month following your date of hire, you will become eligible for our group
medical, dental, short-term disability, long-term disability, life insurance and
flexible-spending plan. You will become eligible for our 401(k) plan at the
closest registration period occurring one month (20 workdays) after your hire
date. Benefits programs are reviewed from time to time and may be changed at the
discretion of XM.
Eligibility to Work in the U.S: The Immigration Reform and Control Act requires
- ------------------------------
employers to verify eligibility of all personnel for employment in the United
States. The Human Resources Department would be happy to assist you in the
preparation of the necessary paperwork to complete this vertification.
This offer letter is the complete offer for employment and may not be amended or
altered in any way by oral statements, and can only be altered by a written
amendment signed by an officer of XM.
I hope to soon count you as a member of our executive team. I would truly enjoy
working with someone who shares our enthusiasm and conviction.
Your signature at the bottom of this page indicates your acceptance of this
offer. Please sign both originals, retaining one copy for your files and
returning the other to Celeste M. Moy, Vice President/Deputy General Counsel. As
I am sure you are aware, time is of the essence to meet our availability before
Christmas in the year 2000, so please advise us of your decision by Friday,
February 12, 1999. Feel free to contact me or Kathy Ventura if you have any
further questions regarding this offer.
Sincerely.
/s/ Hugh Panero
Hugh Panero
CEO - XM
I accept this offer.
/s/ Stephen R. Cook 2/5/99
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Stephen R. Cook (Date)
2/23/99
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Start Date
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EXHIBIT 12.1
XM SATELLITE RADIO HOLDINGS INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
($ IN THOUSANDS)
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RATIO OF EARNINGS (LOSS) TO FIXED CHARGES
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December 15,
1992 (Date of
Year Ended Nine Months Ended Inception) to
December 31, September 30, September 30,
1997 1998 1998 1999 1999
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<S> <C> <C> <C> <C>
Fixed charges:
Capitalized Interest....................................... 1,901 11,824 7,311 14,715 28,440
Interest expensed.......................................... 549 -- -- 8,409 8,958
Amortized premiums, discounts, and capitalized
expenses related to indebtedness......................... 65 1,321 114 477 1,863
Portion of rent expense representative of Interest (1)..... -- 76 58 145 221
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Total fixed charges...................................... $ 2,515 13,221 7,483 23,746 39,482
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Earnings:
Loss before income taxes................................... $ (1,659) (16,167) (11,989) (25,767) (43,593)
Fixed charges, less capitalized interest................... $ 614 1,397 172 9,031 11,042
Earnings (loss) adjusted for fixed charges................. $ (1,045) (14,770) (11,817) (16,736) (32,551)
Ratio of earnings (loss) to fixed charges.................... -- -- -- -- --
Deficiency in earnings to cover fixed charges................ $ 3,560 27,991 19,300 40,482 72,033
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(1) One-third of rent expense is deemed to be representative of interest.
