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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _________)*
XM Satellite Radio Holdings Inc.
--------------------------------
(Name of Issuer)
Class A Common Stock, par value $.01 per share
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(Title of Class of Securities)
983759 10 1
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(CUSIP Number)
Randy S. Segal, Senior Vice President and General Counsel
American Mobile Satellite Corporation
10802 Parkridge Boulevard
Reston, VA 20191
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 8, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13(d)-1(f) or 240.13d-1(g), check
the following box |_|.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Potential persons who are to respond to the collection of information contained
in this form are not required to respond unless the form displays a currently
valid OMB control number.
<PAGE>
SCHEDULE 13D
<TABLE>
<CAPTION>
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CUSIP No. 983759 10 1 13D - Page 2
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<S> <C>
1 NAME OF REPORTING PERSON: American Mobile Satellite Corporation
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 93-0976127
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*: WC, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e): |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
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7 SOLE VOTING POWER: 18,072,176
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER: 0
EACH
REPORTING --------------------------------------------------------
PERSON
WITH 9 SOLE DISPOSITIVE POWER: 18,072,176
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER: 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON: 18,072,176
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 41.0%
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14 TYPE OF REPORTING PERSON*: CO
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
13D - Page 3
Item 1. Security and Issuer
This Statement relates to the Class A common stock, par value $.01 per
share ("Class A Stock"), of XM Satellite Radio Holdings Inc., a Delaware
corporation (the "Issuer"). The Issuer's principal executive offices are located
at 1250 23rd Street, N.W., Washington, DC 20037-1100.
Item 2. Identity and Background
This Statement is filed by American Mobile Satellite Corporation, a
Delaware corporation ("American Mobile"). American Mobile's business address is
10802 Parkridge Boulevard, Reston, Virginia 20191-5416.
American Mobile is a nationwide provider of wireless data, dispatch and
voice communications services.
Prior to October 8, 1999, American Mobile owned 6,689,250 shares of
Class B common stock, par value $.01 per share (the "Class B Stock"), of the
Issuer, which shares constituted substantially all of the then-outstanding
voting stock of the Issuer. On October 8, 1999, the Issuer completed an initial
public offering of 10,000,000 shares of Class A Stock (the "Offering"). As
described under Item 4 below, upon completion of the Offering, certain
outstanding convertible debt securities of the Issuer owned by American Mobile
converted into an aggregate of 11,182,926 shares of Class B Stock. As a result
of this conversion, as of October 8, 1999, American Mobile owned an aggregate of
17,872,176 shares of Class B Stock of the Issuer.
The Class B Stock may be converted, on a one-for-one basis, into shares
of Class A Stock under certain circumstances, as described under Item 4 below.
Class B Stock is substantially similar to Class A Stock, except that each share
of Class B Stock is entitled to three votes, while Class A Stock is entitled to
one vote per share.
In addition to the Class B Stock described above, American Mobile
purchased 200,000 shares of Class A Stock on October 8, 1999, as part of the
Offering.
This Statement covers the 200,000 shares of Class A Stock purchased by
American Mobile on October 8, 1999, as well as the 17,872,176 shares of Class B
Stock owned by American Mobile as of such date. (Collectively, such shares of
Class A Stock and Class B Stock are sometimes referred to in this Statement as
the "Securities.")
Information with respect to the executive officers and directors of
American Mobile, including name, business address, present principal occupation
or employment, and the name, principal business and address of any corporation
or other organization in which such employment is conducted, is listed on the
schedule attached hereto as Annex A, which is incorporated herein by reference.
None of American Mobile nor, to the best of its knowledge, any of its
executive officers or directors has, during the last five years, been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or been party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceedings was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
<PAGE>
13D - Page 4
To the best knowledge of American Mobile, all of its executive officers
and directors are United States citizens.
Item 3. Source and Amount of Funds or Other Consideration
Shares of Class B Stock
The 17,872,176 shares of Class B Stock owned by American Mobile as of
the date of this Statement were acquired for various consideration, over a
period of several years, prior to the consummation of the Offering, and prior to
the Issuer becoming subject to Section 12(g) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Set forth below is a summary of the
consideration paid by American Mobile for the shares of Class B Stock currently
owned by it.
In May 1997, American Mobile formed the Issuer and contributed $143,000
to the Issuer to establish the Issuer's original application for its FCC
license. Also in 1997, American Mobile provided the Issuer with $1.5 million as
a capital contribution. The funds used for these contributions came from the
working capital of American Mobile. At the same time in 1997, WorldSpace, Inc.,
a Maryland corporation unrelated to American Mobile ("WorldSpace"), acquired 20%
of the voting stock in the Issuer, and was also granted certain options to
acquire additional capital stock of the Issuer. Between May 1997 and July 1999,
WorldSpace provided additional funds to the Issuer, in the form of both equity
investments and loans, including loans represented by notes convertible into
stock of the Issuer.
In January 1999, American Mobile loaned the Issuer approximately $21.4
million, in exchange for shares of common stock of the Issuer and a note
convertible into additional shares of common stock of the Issuer. The funds used
for this loan were borrowed by American Mobile from Baron Asset Fund ("Baron"),
in exchange for a $21.5 million junior subordinated secured exchangeable note
(the "Baron Note") issued by American Mobile to Baron. The Baron Note is
exchangeable, under certain circumstances described under Item 4 below, into
shares of Class B Stock owned by American Mobile. The Baron Note accrues
interest at the rate of 6% per annum, with all interest payments deferred until
the maturity date, December 31, 2004. If the Baron Note is exchanged into shares
of Class A Stock pursuant to its terms, all interest accrued through the date of
such exchange will be extinguished.
On July 7, 1999, American Mobile acquired from XM Ventures, a trust
established by WorldSpace, all of WorldSpace's debt and equity interests in the
Issuer, other than a $75 million loan from WorldSpace to the Issuer, in exchange
for 8,614,244 shares of American Mobile's common stock, par value $.01 per share
(the "Exchange Transaction"). As a result of these transactions, WorldSpace
ceased to have any direct equity or debt interest in the Issuer. Concurrently
with this transaction, the Issuer issued $250 million of subordinated
convertible notes to several new strategic and financial investors other than
American Mobile, and the Issuer used $75 million of the proceeds from these
notes to repay the outstanding loan payable to WorldSpace.
Immediately after the Exchange Transaction, the Issuer reorganized its
capital structure and the shares of common stock of the Issuer owned by American
Mobile were exchanged on a one-for-one basis for shares of Class B Stock. As a
result, American Mobile owned 125 shares of Class B Stock of the Issuer, which
constituted 100% of the outstanding Class B Stock, and which were the only
shares of the Issuer's capital stock then outstanding. Also as part of this
reorganization, certain of the debt interests acquired by American Mobile in the
Exchange Transaction were exchanged for a single convertible note issued by the
Issuer, convertible into shares of the Issuer's Class B common stock.
<PAGE>
13D - Page 5
In September 1999, the Issuer effected a 53,514 for 1 stock split. As a
result, the 125 shares of Class B Stock then owned by American Mobile were
exchanged for 6,689,250 shares of Class B Stock.
On October 8, 1999, upon the completion of the Offering, all of the
convertible notes of the Issuer owned by American Mobile converted into
11,182,926 shares of Class B Stock. As a result of this conversion, as of
October 8, 1999, American Mobile owned an aggregate of 17,872,176 shares of
Class B Stock.
Shares of Class A Stock
American Mobile purchased 200,000 shares of Class A Stock of the Issuer
in the Offering. The consideration paid by American Mobile was $2,400,000, or
$12.00 per share, which was the initial public offering price in the Offering.
The source of such consideration was cash on hand.
To the best knowledge of American Mobile, the funds used by the persons
listed in Annex A to purchase the shares of Class A Stock specified in Item 5
below came from personal savings of such persons.
Item 4. Purpose of Transaction
The 17,872,176 shares of Class B Stock owned by American Mobile as of
the date of this Statement were acquired for various consideration, over a
period of several years, prior to the consummation of the Offering, and prior to
the Issuer becoming subject to Section 12(g) of the Exchange Act. These
transactions are described in detail in Item 3 above. American Mobile was the
initial, sole stockholder of the Issuer. The subsequent changes in American
Mobile's ownership interest in the Issuer, prior to the Offering, were effected
to maximize the potential future value to American Mobile and its stockholders
of its interest in the Issuer.
American Mobile purchased 200,000 shares of Class A Stock in the
Offering in order to demonstrate its commitment to the Issuer's long-term
business plans and objectives, and because American Mobile concluded that the
initial public offering price of the Offering represented an attractive
opportunity to increase its equity position in the Issuer. American Mobile also
noted that several of the other significant equity stakeholders in the Issuer
elected to similarly participate in the Offering.
Certain of American Mobile's rights with respect to the Issuer are
governed by a shareholders' agreement by and among the Issuer, American Mobile,
and certain other significant shareholders of the Issuer (the "Shareholders'
Agreement"). Pursuant to the Shareholders' Agreement, American Mobile currently
has four representatives on the Board of Directors of the Issuer, and also has
the right to approve one of the two independent members of the Board of
Directors of the Issuer. Certain other material provisions of the Shareholders'
Agreement are described in more detail in Item 6 below.
There are certain restrictions on American Mobile's ability to sell or
otherwise transfer the Securities. Under the Shareholders' Agreement, except for
affiliated transactions, American Mobile may not transfer any of its Class A
Stock or Class B Stock until the earlier of the date on which the Issuer begins
commercial operations, or October 8, 2000. Shares of Class B Stock are
transferable only upon conversion into shares of Class A Stock and, in certain
circumstances as described below, to Baron, which can transfer its shares of
Class B Stock only upon conversion into shares of Class A Stock.
<PAGE>
13D - Page 6
In addition, American Mobile has signed a "lock-up" agreement with
Bear, Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette Securities
Corporation, the lead underwriters for the Offering. Pursuant to this agreement,
American Mobile has agreed not to sell, offer to sell, contract to sell, pledge,
hypothecate, sell any option or contract to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of Class A Stock or securities
convertible into Class A Stock, for a period of 180 days after the effective
date of the registration statement filed by the Issuer in the Offering.
The Securities are also subject to certain pledge agreements and
related contingencies, as described below.
American Mobile has granted a first priority lien on all of the 200,000
shares of Class A Stock owned by it, as well as 16,557,262 shares of Class B
Stock owned by it, to its bank lenders, to secure American Mobile's obligations
under its term loan facility. American Mobile has also granted a second priority
lien on all such shares to Hughes Electronics Corporation, Singapore
Telecommunications, Ltd., and Baron Capital Partners, L.P., as guarantors of
American Mobile's term and revolving loan facilities, to secure American
Mobile's obligations under an agreement that requires American Mobile to
reimburse such guarantors in the event the guarantors are required to make any
payment under the bank facility guarantees.
In addition, American Mobile has granted a lien on the remaining
1,314,914 shares of Class B Stock owned by it to Baron to secure certain
obligations of American Mobile pursuant to the Baron Note. Under the terms of
the Baron Note, commencing on January 15, 2000, Baron may elect to exchange the
principal amount of the Baron Note (or any portion thereof) into an aggregate of
1,314,914 shares of Class B Stock of the Issuer owned by American Mobile.
American Mobile has granted Baron a lien on such shares of Class B Stock to
secure its obligation to Baron to deliver the required number of shares of Class
B Stock upon exchange of the Baron Note.
Except as described above in this Item 4 and below in Item 6, American
Mobile does not have any plans or proposals that relate to or would result in
any of the actions or events specified in clauses (a) through (j) of Item 4 of
Schedule 13D. Notwithstanding the foregoing, and subject to the restrictions
under the Shareholders' Agreement, American Mobile may determine to change its
investment intent with respect to the Issuer at any time in the future. American
Mobile intends to vote its shares as it deems appropriate from time to time. In
determining from time to time whether to sell its shares of the Issuer's Class A
Stock (and in what amounts) or to retain such shares, American Mobile will take
into consideration such factors as it deems relevant, including the business and
prospects of the Issuer, anticipated future developments concerning the Issuer,
existing and anticipated market conditions from time to time, general economic
conditions, regulatory matters, and other opportunities available to American
Mobile. American Mobile reserves the right to acquire additional securities of
the Issuer in the open market, in privately negotiated transactions (which may
be with the Issuer or with third parties) or otherwise, to dispose of all or a
portion of its holdings of securities of the Issuer or to change its intention
with respect to any or all of the matters referred to in this Item 4.
To the best knowledge of American Mobile, all shares identified in Item
5 below as beneficially owned by persons listed in Annex A were acquired by such
persons for investment purposes. Such persons may buy or sell shares of Class A
Stock in the future as they deem appropriate, but, to the best knowledge of
American Mobile, and except as otherwise indicated herein, such persons have no
present plan or proposal that relates to or would result in the actions or
events specified in clauses (a) through (j) of Item 4 of Schedule 13D.
<PAGE>
13D - Page 7
Item 5. Interest in Securities of the Issuer
After giving effect to the issuance of 10,000,000 shares of Class A
Stock by the Issuer in the Offering, and based on information provided to
American Mobile by the Issuer (the "Available Data"), there were 26,194,471
shares of Class A Stock of the Issuer outstanding on October 8, 1999.
As of October 8, 1999, American Mobile beneficially owned 200,000
shares of Class A Stock, which represents approximately 0.76% of the Class A
Stock outstanding. Subject to the restrictions and agreements described in Item
4 above, American Mobile has the sole power to vote (or to direct the vote) and
the sole power to dispose (or to direct the disposition) of these shares.
American Mobile acquired these shares in the Offering.
American Mobile also beneficially owns 17,872,176 shares of Class B
Stock. The Issuer's Class B Stock is convertible into Class A Stock on a
one-for-one basis. Class B Stock is entitled to three votes for each share, and
Class A Stock is entitled to one vote per share. Because the Class B Stock is
currently convertible into Class A Stock, under Rule 13d-3 under the Exchange
Act, American Mobile is deemed to beneficially own the shares of Class A Stock
that can be acquired upon conversion of the Class B Stock. Subject to the
restrictions and agreements described in Item 4 above, American Mobile has the
sole power to vote (or to direct the vote) and the sole power to dispose (or to
direct the disposition) of these shares.
On a fully converted basis, as of the date of this Statement, American
Mobile is deemed to beneficially own an aggregate of 18,072,176 shares of Class
A Stock, which represents approximately 41.0% of the Issuer's Class A Stock
outstanding after issuance of the 17,872,176 shares of Class A Stock upon
conversion of the Class B Stock owned by American Mobile.
As described above in Item 4, 16,557,262 of the shares of Class B Stock
owned by American Mobile, and all of the 200,000 shares of Class A Stock owned
by American Mobile, are pledged to American Mobile's bank lenders and
guarantors, to secure American Mobile's obligations under its term and revolving
credit facilities. In addition, 1,314,914 of the shares of Class B Stock owned
by American Mobile are pledged to Baron to secure American Mobile's obligations
under the Baron Note.
To the best knowledge of American Mobile, only the following executive
officers and directors of American Mobile beneficially own shares of Class A
Stock of the Issuer:
<TABLE>
<S> <C>
Robert L. Goldsmith 3,600 shares
Billy J. Parrott 6,000 shares
Gary M. Parsons 24,716 shares
Walter V. Purnell, Jr. 10,000 shares
Andrew A. Quartner 15,000 shares
Randy S. Segal 26,757 shares
Jack A. Shaw 26,757 shares
</TABLE>
In each case, the number of shares of Class A Stock owned by the
persons listed above constitutes less than 1% of the outstanding Class A Stock
of the Issuer. Of the shares set forth above, all such shares are beneficially
owned directly or indirectly by the persons named, except that all of the shares
indicated for each of Ms. Segal and Mr. Shaw represent shares of Class A Stock
which such persons have the right to acquire pursuant to options which are
exercisable currently, and 10,000 of the shares of Class A Stock indicated for
Mr. Parsons are owned jointly by Mr. Parsons and his wife. In addition, 14,716
of the shares of Class A Stock owned by Mr. Parsons are subject to the Issuer's
right to repurchase such shares if Mr. Parsons' service as Chairman of the Board
of Directors of the Issuer ends
<PAGE>
13D - Page 8
prior to the first anniversary of the date the shares were issued to Mr.
Parsons. Mr. Parsons also owns options exercisable for 267,570 shares of Class A
Stock, which options are not exercisable within 60 days. Except as set forth
above, to the best knowledge of American Mobile, no executive officer or
director of American Mobile beneficially owns any shares of Class A Stock of the
Issuer or has the right to acquire such shares. American Mobile expressly
disclaim beneficial ownership of the shares of Class A Stock shown as owned by
the persons identified in the above table.
American Mobile may be deemed to comprise a group (within the meaning
of Section 13(d)(3) of the Exchange Act) with the following entities by virtue
of the Shareholders' Agreement: (1) General Motors Corporation ("General
Motors"); (2) DIRECTV Enterprises, Inc. ("DIRECTV"); (3) Clear Channel
Investments, Inc. ("Clear Channel"); (4) Columbia XM Radio Partners, L.L.C.
("Columbia"); (5) Telcom-XM Investors, L.L.C. ("Telcom"); and (6) Madison
Dearborn Capital Partners III, L.P. ("M-D Capital Partners"), Madison Dearborn
Special Equity III, L.P. ("M-D Special Equity"), and Special Advisors Fund I,
L.L.C. ("Special Advisors," and, together with M-D Capital Partners and M-D
Special Equity, "Madison Dearborn"). American Mobile expressly disclaims
beneficial ownership of the shares of Class A Stock of the Issuer held by
General Motors, DIRECTV, Clear Channel, Columbia, Telcom, or Madison Dearborn,
and the filing of this Statement by American Mobile shall not be construed as an
admission by American Mobile that it is, for purposes of Section 13(d) of the
Exchange Act, the beneficial owner of any of the shares of Class A Stock of the
Issuer held by General Motors, DIRECTV, Clear Channel, Columbia, Telcom or
Madison Dearborn.
Based solely upon the Available Data, American Mobile believes that, as
of October 8, 1999 (the closing date of the Offering), General Motors, DIRECTV,
Clear Channel, Columbia, Telcom and Madison Dearborn beneficially owned the
number of shares of Class A Stock of the Issuer set forth in the table below,
constituting in each case that percentage of the Class A Stock of the Issuer
outstanding on October 8, 1999 set forth in the table.
<TABLE>
<CAPTION>
Name of Beneficial Owner Number of Shares Percentage
<S> <C> <C> <C>
General Motors 11,106,504 (1) 30.03%
DIRECTV 5,553,252 (2) 17.58%
Clear Channel 8,329,877 31.80%
Columbia 2,776,626 10.60%
Telcom 2,696,626 10.29%
M-D Capital Partners 2,702,200 10.31%
M-D Special Equity 58,247 *
Special Advisors 16,179 *
------------------
* Less than 1%
</TABLE>
(1) Includes 10,786,504 shares of Class A Stock issuable upon conversion of
Series A convertible preferred stock of the Issuer, 5,393,252 of which are
owned by DIRECTV, an indirect subsidiary of General Motors. The shares of
Class A Stock issuable upon conversion of the Series A convertible
preferred stock were deemed to be outstanding for the purpose of computing
the percentage of the Class A Stock owned by General Motors, but not for
the purpose of computing the percentage of Class A Stock owned by any other
person.
(2) Includes 5,393,252 shares of Class A Stock issuable upon conversion of
Series A convertible preferred stock of the Issuer. The shares of Class A
Stock issuable upon conversion of the Series A convertible preferred stock
were deemed to be outstanding for the purpose of computing the percentage
of the Class A Stock owned by DIRECTV, but not for the purpose of computing
the percentage of Class A Stock owned by any other person.
<PAGE>
13D - Page 9
Except for the transactions reported in this Statement, American Mobile
has not engaged in any other transactions in the Issuer's Class A Stock within
the past 60 days.
To the best knowledge of American Mobile, no executive officer or
director has effected any transactions in the Class A Stock within the past 60
days, except that the following persons purchased shares of Class A Stock, in
the amounts indicated below, in the Offering, at a purchase price of $12.00 per
share:
<TABLE>
<S> <C>
Robert L. Goldsmith 3,600 shares
Billy J. Parrott 6,000 shares
Gary M. Parsons 10,000 shares
Walter V. Purnell, Jr. 10,000 shares
Andrew A. Quartner 15,000 shares
</TABLE>
A trust for the benefit of the minor children of Gary M. Parsons,
Chairman of the Board of Directors of American Mobile and the Issuer, has
acquired a minority membership interest in each of Columbia and Telcom and a
minority participatory interest in each of M-D Capital Partners and M-D Special
Equity. Mr. Parsons disclaims beneficial ownership of these interests.
Based solely upon the information set forth in the Issuer's Prospectus,
dated October 5, 1999, and on the Available Data, American Mobile believes that:
(1) on October 8, 1999, each of General Motors and DIRECTV acquired from the
Issuer in a private placement 5,393,252 shares of the Issuer's Series A
convertible preferred stock upon conversion of $50,000,000 principal amount
(plus accrued interest) of convertible subordinated notes previously issued to
each of General Motors and DIRECTV by the Issuer, at a conversion price of
approximately $9.52 per share, and (2) on October 8, 1999, each of General
Motors and DIRECTV acquired 160,000 shares of the Issuer's Class A Stock in the
Offering, at a purchase price of $12.00 per share, the initial public offering
price of the Class A Stock.
Based solely upon the information set forth in the Issuer's Prospectus,
dated October 5, 1999, and on the Available Data, American Mobile believes that:
(1) on October 8, 1999, Clear Channel acquired from the Issuer in a private
placement 8,089,877 shares of Class A Stock upon conversion of $75,000,000
principal amount (plus accrued interest) of a convertible subordinated note
previously issued to Clear Channel by the Issuer, at a conversion price of
approximately $9.52 per share, and (2) on October 8, 1999, Clear Channel
acquired 240,000 shares of the Issuer's Class A Stock in the Offering, at a
purchase price of $12.00 per share, the initial public offering price of the
Class A Stock.
Based solely upon the information set forth in the Issuer's Prospectus,
dated October 5, 1999, and on the Available Data, American Mobile believes that:
(1) on October 8, 1999, each of Columbia and Telcom acquired from the Issuer in
a private placement 2,696,626 shares of Class A Stock upon conversion of
$25,000,000 principal amount (plus accrued interest) of convertible subordinated
notes previously issued to each of Columbia and Telcom by the Issuer, at a
conversion price of approximately $9.52 per share, and (2) on October 8, 1999,
Columbia acquired 80,000 shares of the Issuer's Class A Stock in the Offering,
at a purchase price of $12.00 per share, the initial public offering price of
the Class A Stock.
Based solely upon the information set forth in the Issuer's Prospectus,
dated October 5, 1999, and on the Available Data, American Mobile believes that:
(1) on October 8, 1999, M-D Capital Partners acquired from the Issuer in a
private placement 2,622,200 shares of Class A Stock upon conversion of
$24,310,000 principal amount (plus accrued interest) of convertible subordinated
notes previously issued to M-D Capital Partners by the Issuer, at a conversion
price of approximately $9.52 per share, and (2) on October 8, 1999, M-D Capital
Partners acquired 80,000 shares of the Issuer's Class A Stock in the Offering,
at a purchase price of $12.00 per share, the initial public offering price of
the Class A Stock.
<PAGE>
13D - Page 10
Based solely upon the information set forth in the Issuer's Prospectus,
dated October 5, 1999, and on the Available Data, American Mobile believes that
on October 8, 1999, M-D Special Equity acquired from the Issuer in a private
placement 58,247 shares of Class A Stock upon conversion of $540,000 principal
amount (plus accrued interest) of convertible subordinated notes previously
issued to M-D Special Equity by the Issuer, at a conversion price of
approximately $9.52 per share.
Based solely upon the information set forth in the Issuer's Prospectus,
dated October 5, 1999, and on the Available Data, American Mobile believes that
on October 8, 1999, Special Advisors acquired from the Issuer in a private
placement 16,179 shares of Class A Stock upon conversion of $150,000 principal
amount (plus accrued interest) of convertible subordinated notes previously
issued to Special Advisors by the Issuer, at a conversion price of approximately
$9.52 per share.
American Mobile does not know of any other person having the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, the shares of Class A Stock of the Issuer beneficially owned
by American Mobile.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer
Shareholders' Agreement
Set forth below is a description of certain material provisions of the
Shareholders' Agreement:
Governance Provisions. The Issuer's board of directors consists of nine
members, four of whom are selected by American Mobile, including the Issuer's
Chairman and President and Chief Executive Officer, three of whom are selected
by certain other shareholders, and two independent directors, one of whom must
be approved by American Mobile, and one of whom must be approved by a majority
of certain other shareholders. Following receipt of approval of the FCC to
transfer control of the Issuer from American Mobile to a diffuse group of
shareholders, the Issuer's board of directors will consist of nine members,
three of whom will be selected by American Mobile, three of whom will be
selected by certain other shareholders, two of whom will be independent
directors of recognized industry experience and stature whose nominations must
be approved by American Mobile and a majority of certain other shareholders, and
one of whom will be the Issuer's President and Chief Executive Officer. The
foregoing board rights are subject to the parties to the Shareholders' Agreement
maintaining their original investment or certain minimum share percentages in
the Issuer.
Conversion of Class B Stock to Class A Stock. The Class B Stock owned
by American Mobile is convertible into Class A Stock, on a one-for-one basis, at
any time at American Mobile's discretion. In addition, under the Shareholders'
Agreement, the holders of a majority of the outstanding shares of Class A Stock,
which must include at least 20% of the public holders of the Class A Stock, may
require conversion by American Mobile. This conversion will not be effected,
however, if the FCC does not approve the transfer of control of the Issuer from
American Mobile to a diffuse group of shareholders.
<PAGE>
13D - Page 11
Non-Competition. American Mobile has agreed not to compete with the
Issuer in the satellite radio business in the United States for so long as
American Mobile holds 5% of the Issuer's common stock and for a period of three
years following any transfer which results in American Mobile owning less than
5% of the Issuer's common stock.
Restrictions on Transfer of Securities. As described in Item 4 above,
except for affiliated transactions, American Mobile may not transfer any of its
Class A Stock or Class B Stock until the earlier of the date on which the Issuer
begins commercial operations, or October 8, 2000. Shares of Class B Stock are
transferable only upon conversion into shares of Class A Stock and, in certain
circumstances as described in Item 4 above, to Baron, which can transfer its
shares only upon conversion into shares of Class A Stock.
Registration Rights Agreement
In addition to the contracts and agreements described above and in Item
4 above, American Mobile has certain registration rights with respect to the
Securities, pursuant to a registration rights agreement, dated July 7, 1999 (the
"Registration Rights Agreement"), by and among the Issuer, American Mobile,
Baron, and certain other stockholders named therein. Commencing July 7, 2000,
American Mobile and the other stockholders that are party to the Registration
Rights Agreement are entitled to demand registration with respect to their Class
A Stock, including shares issuable upon conversion of other securities. American
Mobile is entitled to make two demands. These rights are subject to the Issuer's
right to defer the timing of a demand registration and an underwriters' right to
cut back shares in an underwritten offering. In certain instances if a demand
registration is cut back by more than 75% of the number of shares originally
requested to be registered, then the party requesting registration shall be
entitled to one additional demand registration request. In addition to these
demand rights, following the Issuer's commencement of commercial operation,
parties to the Registration Rights Agreement may request registration of at
least $25.0 million of Class A Stock. Parties to the Registration Rights
Agreement also have rights to include their Class A Stock in registered
offerings initiated by the Issuer, other than an offering for high yield debt.
Other than the Shareholders' Agreement, Registration Rights Agreement
and the other agreements described in Item 4 above, there are no contracts,
arrangements, understandings, or relationships between American Mobile or, to
the best of its knowledge, any executive officer or director of American Mobile,
and any other person with respect to any securities of the Issuer, including any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any securities of the Issuer, finder's fees, joint ventures, loan
or option arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits
Exhibit 1 Shareholders' Agreement, dated as of July 7, 1999, by and
among the Issuer, American Mobile, Baron Asset Fund, Clear
Channel Investments, Inc., Columbia XM Radio Partners, LLC,
DIRECTV, 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. (incorporated by reference to Exhibit 99.2
to American Mobile's registration statement on Form S-3 (File
No. 333-81459)).
Exhibit 2 Registration Rights Agreement, dated July 7, 1999, by and
among the Issuer, American Mobile, the Baron Asset Fund series
of Baron Asset Fund, and the holders of Series A subordinated
convertible notes of the Issuer named in such agreement
(incorporated by
<PAGE>
13D - Page 12
reference to Exhibit 99.3 to American Mobile's registration
statement on Form S-3 (File No. 333-81459)).
Exhibit 3 $21,500,000 Junior Subordinated Secured Exchangeable Note,
dated January 15, 1999, issued by American Mobile to Baron
Asset Fund (the "Baron Note") (filed herewith).
Exhibit 3a Amendment, dated July 7, 1999, to the Baron Note (filed
herewith).
<PAGE>
13D - Page 13
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Statement is true,
complete and correct.
AMERICAN MOBILE SATELLITE CORPORATION
By: /s/ Randy S. Segal
Name: Randy S. Segal
Title: Senior Vice President and General
Counsel
Date: October 18, 1999
<PAGE>
13D - Page 14
ANNEX A
DIRECTORS OF AMERICAN MOBILE
<TABLE>
<CAPTION>
Present Principal
Name and Business Address Occupation or Employment
- ------------------------- ------------------------
<S> <C>
Douglas I. Brandon Vice President - External Affairs & Law
AT&T Wireless Services, Inc. AT&T Wireless Services, Inc.
1150 Connecticut Avenue, N.W.
4th Floor
Washington, DC 20036
Billy J. Parrott President and Chief Executive Officer
Antifire, Inc. Antifire, Inc.
276 Fifth Avenue
Suite 301
New York, NY 10001
Gary M. Parsons Chairman of the Board of Directors
American Mobile Satellite Corporation American Mobile Satellite Corporation
10802 Parkridge Boulevard
Reston, VA 20191
Walter V. Purnell, Jr. President and Chief Executive Officer
American Mobile Satellite Corporation American Mobile Satellite Corporation
10802 Parkridge Boulevard
Reston, VA 20191
Andrew A. Quartner Corporate Counsel
Nextlink Communications, Inc. Nextlink Communications, Inc.
1730 Rhode Island Avenue, N.W.
Suite 1000
Washington, DC 20036
Jack A. Shaw Chairman and Chief Executive Officer
Hughes Network Systems Hughes Network Systems
11717 Exploration Lane
Germantown, MD 20876
</TABLE>
<PAGE>
13D - Page 15
EXECUTIVE OFFICERS OF AMERICAN MOBILE
<TABLE>
<CAPTION>
Name and Business Address
(all business addresses are Present Principal
American Mobile Satellite Corporation Occupation or Employment
10802 Parkridge Boulevard (all with American Mobile
Reston, VA 20191) Satellite Corporation)
- ---------- ----- ----------------------
<S> <C>
Robert L. Goldsmith Executive Vice President and
Chief Operating Officer
Gary M. Parsons Chairman of the Board
Walter V. Purnell, Jr. President and Chief Executive Officer
Randy S. Segal Senior Vice President and
General Counsel
W. Bartlett Snell Senior Vice President and Chief
Financial Officer
</TABLE>
<PAGE>
EXHIBIT 3
JUNIOR SUBORDINATED SECURED EXCHANGEABLE NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR
COMPLIANCE IS NOT REQUIRED.
$21,500,000
January 15, 1999
FOR VALUE RECEIVED, American Mobile Satellite Corporation, a Delaware
corporation (the "Company"), promises to pay to the order of Baron Asset Fund on
behalf of The Baron Asset Fund Series, or its registered assigns (the "Holder"),
the principal sum of $21,500,000 or such lesser amount as shall then equal the
outstanding principal amount hereof, together with interest from the date of
issuance of this Note on the unpaid principal balance hereof at a rate equal to
six percent (6%) per annum, computed on the basis of the actual number of days
elapsed and a year of 365 days. All unpaid principal, together with any accrued
but unpaid interest and other amounts payable hereunder, shall be due and
payable on September 30, 2006 (the "Maturity Date"). Interest on this Note shall
accrue on a quarterly basis on January 1, April 1, July 1 and October 1, (each
an "Interest Accrual Date") with the first such Interest Accrual Date being
April 1, 1999; provided, however, that right to accrued interest on this Note is
subject to Section 7(b) herein.
This Note is issued pursuant to the Note Purchase Agreement (the "Purchase
Agreement") dated as of January 15, 1999 by and between the Company and the
Holder.
The following is a statement of the rights of the Holder and the conditions
to which this Note is subject, and to which the Holder hereof, by the acceptance
of this Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms
have the following meanings:
(a) "Business Day" means any day other than a Saturday, Sunday or
other day on which the national or state banks located in the State of New York
are authorized to be closed.
(b) "Exchange Price" has the meaning set forth in Section 7(a) hereof.
(c) "Obligations" means the principal, interest and other amounts
payable under this Note.
(d) "Senior Debt" shall mean the principal of (and premium, if any),
unpaid interest on and fees, expenses, costs of enforcement and other amounts
due in connection with (a) all outstanding indebtedness of the Company for money
borrowed (other than this Note) for the payment of which the Company is
responsible or liable, or the payment of which the Company has guaranteed,
whether such indebtedness is outstanding as of the date hereof or thereafter
created, incurred, assumed or guaranteed by the Company, unless in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding it is specifically provided that such indebtedness is not superior
in right of payment to this Note, (b) capital lease obligations determined in
accordance with generally accepted accounting principles, (c) any obligation of
the Company to reimburse banks pursuant to letters of credit extended by such
banks, advances made
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<PAGE>
by such banks and other credit arrangements entered into with such banks in
connection with tax-exempt obligations issued for the benefit of the Company,
and (d) renewals extensions, modifications and refundings of any such
indebtedness or obligations, provided however, that Senior Debt shall not mean
the principal of (and premium, if any), unpaid interest on and fees, expenses,
costs of enforcement and other amounts due in connection with any such
indebtedness that is expressly subordinated to this Note.
(e) "XM" means XM Satellite Radio Holdings, Inc., a corporation
organized under the laws of the State of Delaware.
(f) "XM Common Stock" means the common stock of XM, having a par value
of $0.10 per share.
(g) "XM Convertible Note" means the Convertible Note, dated as of
January 15, 1999, for a principal amount of up to $806,050, issued by XM to the
Company.
(h) "XM Note Shares" means the shares of XM Common Stock issuable upon
exercise of the conversion rights under the XM Convertible Note.
(i) "XM Owned Shares" means the 23.6502 shares of XM Common Stock
owned by the Company.
2. Exchange Event. The occurrence of any of the following shall
constitute an "Exchange Event" under this Note:
(a) Failure to Pay. The Company shall fail to pay (i) when due
any principal payment on this Note or (ii) any interest or other payment
required under the terms of this Note within five Business Days of its due date;
(b) Breaches of Covenants. The Company shall fail to observe
or to perform any other covenant, obligation, condition or agreement contained
in this Note, and such failure shall continue for 30 days.
(c) Voluntary Bankruptcy or Insolvency Proceedings. The
Company shall (i) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian of itself or of all or a substantial part of
its property, (ii) be unable, or admit in writing its inability, to pay its
debts generally as they mature, (iii) make a general assignment for the benefit
of its or any of its creditors, (iv) be dissolved or liquidated in full or in
part, (v) become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding
commenced against it or (vii) take any action for the purpose of effecting any
of the foregoing;
(d) Involuntary Bankruptcy or Insolvency Proceedings.
Proceedings for the appointment of a receiver, trustee, liquidator or custodian
of the Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered, or such case or proceeding shall not
be dismissed or discharged within 45 days of commencement; or
(e) Event of Default on Senior Debt. A default in the payment
of principal premium, if any, or interest with respect to Senior Debt.
17
<PAGE>
3. Rights of Holder Upon Exchange Event. Upon the occurrence or
existence of any Exchange Event, the Note shall automatically be exchanged for
the XM Owned Shares and XM Note Shares, and all rights, title and interest in
the Collateral shall be transferred to Holder.
4. Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all of the Company's Senior
Debt.
(a) Event of Default on Senior Debt. No payments by the
Company on account of principal or interest on this Note shall be made unless
full payment of amounts then due for principal, premium, if any, and interest on
Senior Debt has been made or duly provided for in money or money's worth. No
payment by the Company on account of principal or interest on this Note shall be
made if, at the time of such payment or immediately after giving effect thereto,
(i) there shall exist a default in the payment of principal, premium, if any, or
interest with respect to any Senior Debt, or (ii) there shall have occurred an
event of default (other than a default in the payment of principal, premium, if
any, or interest) with respect to any Senior Debt, as defined therein or in the
instrument under which the same is outstanding, permitting the holders thereof,
or any trustee under any such instrument, to accelerate the maturity thereof,
and such event of default shall not have been cured or waived or shall not have
ceased to exist. Nothing in this Section 4(a) shall be deemed to restrict the
Holder's exchange rights set forth in Section 2(e).
(b) Insolvency Proceedings. If there shall occur any
receivership, insolvency, assignment for the benefit of creditors, bankruptcy,
reorganization, or arrangements with creditors (whether or not pursuant to
bankruptcy or other insolvency laws), sale of all or substantially all of the
assets, dissolution, liquidation, or any other marshaling of the assets and
liabilities of the Company, no amount shall be paid by the Company in respect of
the principal of, interest on or other amounts due with respect to this Note at
the time outstanding, unless and until the principal of (premium, if any),
interest on, and any fees and expenses relating to, the Senior Debt then
outstanding shall be paid in full.
(c) Subrogation. Subject to the payment in full of all Senior
Debt, the Holder of this Note shall be subrogated to the rights of the holder(s)
of such Senior Debt (to the extent of the payments or distributions made to the
holder(s) of such Senior Debt) pursuant to the provisions of this Section 4 to
receive payments and distributions of assets of the Company applicable to the
Senior Debt until the principal of and interest on this Note is paid in full and
no such payments or distributions to the Holder of assets of the Company
otherwise distributable to the holders of Senior Debt shall, as between the
Company, its creditors other than the holders of Senior Debt, and the Holder, be
deemed to be a payment by the Company to the Holder of or on account of the
Note. It is understood that the provisions of this Section 4(c) are and are
intended solely for the purpose of defining the relative rights of the Holder,
on the one hand, and the holders of Senior Debt, on the other hand.
(d) No Impairment. Nothing contained in this Section 4 shall
impair, as between the Company and the Holder, the obligation of the Company,
subject to the terms and conditions hereof, to pay to the Holder the principal
hereof and interest hereon as and when the same become due and payable, or shall
prevent the Holder of this Note, upon default hereunder, from exercising all
rights, powers and remedies otherwise provided herein or by applicable law.
(e) Reliance of Holders of Senior Debt. The Holder, by its
acceptance hereof, shall be deemed to acknowledge and agree that the foregoing
subordination provisions are, and are intended to be, an inducement to and a
consideration of each holder of Senior Debt, whether such Senior Debt was
created or acquired before or after the creation of the indebtedness evidenced
by this Note, and each such holder of Senior Debt shall be deemed conclusively
to have relied on such subordination provisions in acquiring and holding, or in
continuing to hold, such Senior Debt.
18
<PAGE>
5. Collateral.
(a) To secure the Company's payment and performance of the
Obligations and to secure the Company's prompt, full and faithful performance
and observance of all of the provisions under this Note and the Note Purchase
Agreement, the Company (i) hereby grants the Holder a security interest in all
of the Company's right, title and interest in and to the XM Owned Shares and the
XM Convertible Note including any right to XM Note Shares exchangeable therefor
(collectively, the "Collateral"), and (ii) delivers herewith, the stock
certificates representing the XM Owned Shares with stock powers executed in
blank and the XM Convertible Note.
(b) The Company covenants and agrees with Holder that: (a) the
security interest granted under this Note is in addition to any other security
interest from time to time held by the Holder; (b) the Holder may realize upon
all or part of any Collateral in any order it desires and any realization by any
means upon any Collateral will not bar realization upon any other Collateral;
and (c) the security interest created is a continuing security interest and will
cover and secure all Obligations both present and future of the Company to
Holder pursuant to this Note. The Company further covenants and agrees to take
all actions requested by the Holder to establish or perfect the security
interest granted under this Note.
6. Prepayment. This Note may be prepaid as a whole or in part at any
time prior to the Maturity Date upon at least ten Business Days prior written
notice to the Holder. Any such prepayment shall be applied first to the payment
of expenses due under this Note, second to interest accrued on this Note and
third, if the amount of prepayment exceeds the amount of all such expenses and
accrued interest, to the payment of principal of this Note.
7. Exchange.
(a) Exchange for XM Common Stock. The Holder, at its option,
may, on two Business Days prior written notice (each an "Exchange Notice"), on
one or more occasions any time after the earlier of an Exchange Event and
January 15, 2000, and on or prior to repayment in full of principal, interest
and any other amounts due and owing hereunder (each an "Exchange Date"),
exchange all of the principal then outstanding on this Note, or a portion
thereof in an amount not less than $250,000 (and if greater than $250,000, in
increments of $1,000 above such amount), for (i) XM Owned Shares, (ii) XM Note
Shares issued to the Company on or prior to such Exchange Date, or (iii) rights
to XM Note Shares issuable to the Company, at an exchange rate of $875,000
principal amount for each one (1) share of XM Owned Shares or XM Note Shares
issued or issuable to the Company (the "Exchange Price"). Any principal
exchanged under this Section 7(a) shall be exchanged first for, and to the
extent of, XM Owned Shares, second for XM Note Shares issued to the Company, if
any, and then for the XM Note. Upon full exchange of this Note, the Company
shall be forever released from all its obligations and liabilities under this
Note. If, on the Maturity Date, the Company has not received a timely Exchange
Notice for the then outstanding principal amount under this Note, the Company
may, at its option, (x) require the Holder to exchange such remaining principal
for XM Owned Shares and/or XM Note Shares pursuant to the terms set forth in
this Section 7 in full satisfaction of all Obligations hereunder, or (y) repay
all remaining principal and accrued interest due as of the Maturity Date. Upon
such exchange or repayment pursuant to the immediately preceding sentence, the
Company shall be forever released from all its obligations and liabilities under
this Note.
(b) Mechanics and Effect of Exchange. This Section 7(b) shall
apply to any partial exchange of this Note other than in connection with the
exercise by the Company of its option under Section 7(a)(x) above. On any
exchange covered by this Section 7(b), the Company shall transfer to the Holder
(i) the XM Owned Shares, XM Note Shares or XM Convertible Note for which a
portion of this Note is exchanged and (ii) a replacement promissory note having
identical terms to this Note, except that the principal amount thereof shall
equal the difference between (x) the principal amount of this Note immediately
prior to such exchange minus (y) the portion of such
19
<PAGE>
principal amount exchanged for XM Owned Shares, XM Note Shares or XM Convertible
Note. Upon exchange of this Note pursuant to this Section 7(b), the Holder shall
surrender this Note, duly endorsed, at the principal office of the Company. At
its expense, the Company shall, as soon as practicable thereafter, deliver to
such Holder at such principal office a certificate or certificates for the
number of XM Owned Shares or XM Note Shares held by the Company to which the
Holder shall be entitled upon such exchange, together with any other securities
and property to which the Holder is entitled upon such exchange under the terms
of this Note. The Holder's right to all accrued interest relating to the portion
of the principal amount exchanged pursuant to this Section 7(b) shall be
extinguished upon such exchange.
(c) Interest on XM Convertible Note. Interest, if any, paid in
cash by XM under the XM Convertible Note shall be allocated and paid to the
Company to the extent such interest accrued before any Exchange Date relating to
the XM Convertible Note, and to the Holder to the extent such interest accrued
after any such Exchange Date.
8. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 10 and 11 hereof, the rights and obligations of the
Company and the Holder of this Note shall be binding upon and benefit the
successors, assigns, heirs, administrators and transferees of the parties.
9. Waiver and Amendment. The waiver or failure of the Company or the
Holder to exercise in any respect any right provided in this Note on a
particular occasion shall not be deemed a waiver of such right on any other
occasion or a waiver of any other right. To be effective, a waiver must be in
writing and be signed by the party that is entitled to the benefit of the right
that is being waived. No amendment or modification of this Note shall be made or
deemed effective unless in writing and executed and delivered by the party
against whom enforcement of such amendment or modification is sought.
10. Transfer of this Note or Securities Issuable on Exchange Hereof.
This Note may not be transferred in violation of the restrictive legend set
forth at the head hereof. Each new Note issued upon transfer of this Note shall
bear a legend as to the applicable restrictions on transferability in order to
ensure compliance with the Securities Act, unless in the opinion of counsel for
the Company such legend is not required in order to ensure compliance with the
Securities Act. The Company may issue stop transfer instructions to its transfer
agent in connection with such restrictions. Subject to the foregoing, transfers
of this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company. Prior to presentation of this Note for
registration of transfer, the Company shall treat the registered holder hereof
as the owner and holder of this Note for the purpose of receiving all payments
of principal and interest hereon and for all other purposes whatsoever, whether
or not this Note shall be overdue, and the Company shall not be affected by
notice to the contrary.
11. Assignment by the Company. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part, by the Company, without the prior written
consent of the Holder.
12. Treatment of Note. To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
13. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier, personal delivery or facsimile
transmission at the respective addresses or facsimile number of the parties as
set forth below:
20
<PAGE>
If to the Company:
American Mobile Satellite Corporation
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
Attention: Randy Segal, Esq.
Fax No.: (703) 758-6134
If to Holder:
The Baron Asset Fund Series
c/o Baron Asset Fund
767 Fifth Avenue, 49th Floor
New York, New York 10153
Attention: Linda Martinson, Esq.
Fax No.: (212) 583-2014
Any party hereto may by notice so given change its address or facsimile
number for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
14. Expenses; Waivers. If action is instituted to collect this Note,
the Company promises to pay all costs and expenses, including, without
limitation, reasonable attorneys' fees and costs, incurred in connection with
such action. The Company hereby waives notice of default, presentment or demand
for payment, protest or notice of nonpayment or dishonor and all other notices
or demands relative to this instrument.
15. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflict of laws provisions
of the State of New York or of any other state. In the event of any dispute
among or between any of the parties to this Note arising out of the terms of
this Note, the parties hereby consent to the exclusive jurisdiction of the
federal and state courts located in the State of New York for resolution of such
dispute, and agree not to contest such exclusive jurisdiction or seek to
transfer any action relating to such dispute to any other jurisdiction.
21
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
AMERICAN MOBILE SATELLITE
CORPORATION
By: /s/Randy S. Segal
-----------------
Name: Randy S. Segal
Title: Vice President
22
EXHIBIT 3a
AMENDMENT NO. 1 TO JUNIOR SUBORDINATED SECURED EXCHANGEABLE NOTE AND
CONSENT
This Amendment No. 1 to Junior Subordinated Secured Exchangeable Note
and Consent (this "Amendment") is entered into as of the 7th day of July between
American Mobile Satellite Corporation, a Delaware corporation (the "Company"),
and Baron Asset Fund (the "Holder"), on behalf of The Baron Asset Fund Series, a
business trust organized under the laws of the Commonwealth of Massachusetts.
RECITALS
WHEREAS, the Company issued a Junior Subordinated Secured Exchangeable
Note (the "Note") dated January 15, 1999 in the principal amount of $21,500,000
in favor of the Holder;
WHEREAS, the Company and the Holder mutually desire to amend the terms
of the Note as set forth in this Amendment;
NOW, THEREFORE, in consideration of the premises and the covenants set
forth herein, the parties agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Note.
2. Maturity. The words "on September 30, 2006" appearing in the first
paragraph of the Note shall be deleted and the following phrase substituted
therefor:
"(a) on December 31, 2004, or (b) by reason of
automatic extension without any action by any party, if XM
Satellite Radio Holdings Inc. ("XM Holdings") issues High
Yield Debt (as defined in the Exchange, Amendment and
Recapitalization Agreement dated as of July 7, 1999 between XM
Holdings and the Company (the "Recapitalization Agreement"))
prior to June 30, 2001, on the first Business Day (as defined
in the Recapitalization Agreement) following the date that is
six (6) months from the maturity date of such High Yield Debt
or, following such first issuance, any other High Yield Debt
issued prior to June 30, 2002, unless this Note is otherwise
exchanged in accordance with the terms hereof."
3. XM Common Stock.
(a) All references to "XM Common Stock" in the Note shall be
deleted and the words "XM Class B Common Stock" shall be substituted therefor.
Furthermore, the definition of "XM Common Stock" in Section 1(f) of the Note
shall be deleted in its entirety and the following shall be substituted
therefor:
"'XM Class B Common Stock' means the Class B common
stock of XM Holdings, having a par value of $0.01 per share,
or, in the event that the Company shall, at
23
<PAGE>
the relevant time, have converted the XM Class B Common Stock
held by it to XM Class A Common Stock, all references to 'XM
Class B Common Stock' shall be deemed to mean the Class A
Common Stock."
(b) A new definition of "XM Class A Common Stock" shall be
added to Section 1 of the Note as follows:
"'XM Class A Common Stock' means the Class A common stock
of XM Holdings, having a par value of $0.01 per share."
4. Consent. Pursuant to Section 2(l) of the Note Purchase Agreement
dated as of January 15, 1999 between the Company and the Holder, the Holder
hereby consents to the amendments to the XM Convertible Note contained in
Section 2.2 of the Exchange, Amendment and Recapitalization Agreement dated as
of July 7, 1999 between XM Holdings and the Company.
5. Miscellaneous: Except as specifically amended hereby, all terms and
provisions of the Note shall remain in full force and effect. This Amendment may
be executed in one or more counterparts, each of which shall be deemed an
original, and all of which, when taken together, shall be deemed to constitute
one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized directors,
officers or representatives as of the day and year first above written.
AMERICAN MOBILE SATELLITE
CORPORATION
By: /s/Randy Segal
--------------
Name: Randy Segal
Title: Senior Vice President
BARON ASSET FUND, on behalf of
THE BARON ASSET FUND SERIES
By: /s/Ronald Baron
---------------
Name: Ronald Baron
Title: Chairman & CEO
25
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