EXHIBIT 4.4
SECURITY AGREEMENT
Dated as of March 15, 2000
from
XM SATELLITE RADIO INC.,
as Pledgor
to
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Collateral Agent
===============================================================================
TABLE OF CONTENTS
Page
----
1. Grant of Security Interest............................................. 1
2. Security for Obligations............................................... 2
3. Delivery of Collateral................................................. 3
4. Representations and Warranties......................................... 3
5. As to the Collateral................................................... 5
6. Additional Shares...................................................... 6
7. Payment of Taxes and Claims............................................ 7
8. Covenants and Agreements............................................... 7
9. The Collateral Agent Appointed Attorney-in-Fact........................ 9
10. The Collateral Agent May Perform....................................... 9
11. The Collateral Agent's Duties.......................................... 9
12. Events of Default...................................................... 10
13. Notice of Event of Default............................................. 10
14. Remedies............................................................... 10
15. Expenses............................................................... 12
16. Repayment in Bankruptcy, etc........................................... 12
17. No Segregation of Moneys; No Interest.................................. 12
18. Continuing Security Interest; Termination.............................. 12
19. Notices................................................................ 13
20. Margin Regulations..................................................... 13
21. Other Provisions....................................................... 13
SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of March 15, 2000,
made by XM Satellite Radio Inc., a Delaware corporation (the "Pledgor"), to
United States Trust Company of New York, Trustee, as collateral agent (the
"Collateral Agent") for the holders (the "Holders") from time to time of the
Notes (as defined herein).
RECITALS
A. The Pledgor and United States Trust Company of New York, as
Trustee (in such capacity, the "Trustee"), have entered into that certain
indenture dated the date hereof (as amended, restated, supplemented or otherwise
modified from time to time, the "Indenture"; capitalized terms used herein
without definition are used herein as defined in the Indenture), pursuant to
which the Pledgor may issue up to $325,000,000 aggregate principal amount at
maturity of its 14% Senior Secured Notes due 2010 (the "Notes").
B. The Pledgor is the owner of the issued and outstanding capital
stock described in Schedule I hereto (the "Pledged Shares") representing 100% of
the issued and outstanding capital stock of XM Radio Inc., a Delaware
corporation (the "Subsidiary").
C. The Pledgor has agreed to grant to the Collateral Agent the
assignment and security interest and make the pledge and assignment contemplated
by this Agreement.
In consideration of the premises, the agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Holders to purchase the Notes,
the Pledgor hereby covenants and agrees with the Collateral Agent for its
benefit and for the ratable benefit of the Holders.
1. Grant of Security Interest.
---------------------------
(a) The Pledgor hereby unconditionally assigns, pledges and grants to the
Collateral Agent for its benefit and the ratable benefit of the Holders, a first
priority security interest in and to all of the Pledgor's right, title and
interest in and to the following, whether now owned or existing or hereafter
arising or acquired and wheresoever located (collectively, the "Collateral"):
(i) the Pledged Shares and the certificates representing the Pledged
Shares, and all dividends, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares;
(ii) all additional shares of issued and outstanding shares,
interests, participations, warrants or other equivalents (however
designated) of corporate stock ("Stock") of the Subsidiary from time to
time acquired by the Pledgor in any manner, and the certificates
representing such additional shares, and all dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares; and
(iii) all Proceeds (as defined herein) of any and all of the foregoing
Collateral (including, without limitation, proceeds that constitute
property of the types described in clauses (i) and (ii) above).
(b) As used herein, the term "Proceeds" shall have the meaning assigned to
such term under Article 9 of the Uniform Commercial Code from time to time in
effect in the State of New York (the "UCC"; provided that in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection
or priority of the Collateral Agent's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions) and, to the extent not otherwise
included, shall include, but not be limited to, (i) any stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spin-off or split-off; (ii) any option or other right, whether as
an addition to, in substitution of or in exchange for any Pledged Shares or
otherwise; (iii) distributions payable in property (whether real, personal,
tangible, intangible, or mixed property; collectively "Property"); (iv)
dividends or distributions on dissolution, or in partial or total liquidation,
or from capital, capital surplus or paid-in surplus; (v) any and all payments
(in any form whatsoever) made or due and payable to the Pledgor from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator (a "Governmental Body"); and (vi) any
and all other amounts from time to time paid or payable under or in connection
with the Collateral.
2. Security for Obligations.
------------------------
This Agreement secures the payment of all of the obligations and
liabilities of any kind of the ▇▇▇▇▇▇▇ under this Agreement, the Indenture or
the Notes, whether liquidated, unliquidated, direct, indirect, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured, and whether for principal, interest, fees, costs, expenses or
otherwise (whether arising or accruing before or after the occurrence of any
Event of Default (as defined herein) and whether discharged, stayed or otherwise
affected or allowed as a claim in any bankruptcy proceeding of the Subsidiary),
and all costs, fees and expenses of the Collateral Agent, the Trustee or the
Holders (including reasonable attorneys' fees and expenses and with respect to
the Collateral Agent, reasonable allocated costs and expenses of in-house
counsel and legal staff) in enforcing, preserving and protecting its rights
against the Pledgor, whether or not suit is instituted (as the foregoing
obligations and liabilities may be amended, increased, modified, renewed,
refinanced, refunded or extended from time to time) (collectively, the "Secured
Obligations"), now or hereafter existing, whether for principal, interest, fees,
costs, expenses or otherwise.
Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts that constitute part of the Secured
Obligations and would be owed by the Pledgor to the Collateral Agent, the
Trustee or the Holders under this Agreement, the Indenture
2
and the Notes but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding involving
the Pledgor.
3. Delivery of Collateral.
----------------------
(a) All certificates and other instruments at any time owned or acquired
by the Pledgor representing or evidencing the Pledged Shares shall be delivered
to and held by or on behalf of the Collateral Agent pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. Upon the occurrence and during
the continuance of an Event of Default (as defined herein), the Collateral Agent
shall have the right, upon written instructions from the Trustee and without
notice to the Pledgor, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Collateral. In
addition, upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right at any time to exchange certificates
or instruments representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations.
(b) If there shall occur a change in applicable law or regulations
regarding (i) the steps necessary to obtain and maintain a perfected security
interest in any Collateral or (ii) the ability to obtain a security interest
directly in any license granted by the Federal Communications Commission or
Governmental Body succeeding to the functions thereof (the "FCC"), or if there
is Collateral for which the foregoing procedures are not effective to perfect a
security interest, the Pledgor will immediately upon its becoming aware thereof
so notify the Collateral Agent and will deliver to the Collateral Agent an
Opinion of Counsel setting forth the steps necessary for the Collateral Agent to
obtain and maintain such a perfected security interest in the Collateral
affected by such change or for which the foregoing procedures are not effective
to perfect a security interest, and the Collateral Agent, instead of the actions
specified in this Section 3, shall take such other action, as specified in such
Opinion of Counsel, as will create and maintain such perfected security
interest.
(c) Upon the execution and delivery of this Agreement, the Pledgor will
file proper financing statements with the appropriate office or offices under
the Uniform Commercial Code in the State of New York, covering the Collateral
described in this Agreement and, thereafter, such renewals, amendments or
continuations thereof or such additional financing statements in such additional
offices in such jurisdictions or in the appropriate filing offices in such
additional jurisdictions as shall be required from time to time under the UCC in
order to perfect and to continue the perfection of the security interest in the
Collateral.
4. Representations and Warranties.
------------------------------
The Pledgor hereby represents and warrants to the Collateral Agent as
follows:
(a) Organization; Good Standing. The Pledgor is duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified and in good standing in every other jurisdiction where it is
doing business, except where the failure to be so qualified or maintain good
standing would not have a Material Adverse Effect (as defined
3
herein). The chief place of business and chief executive office of the Pledgor
are located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇.
(b) Corporate Power; Authorization. The execution, delivery and
performance by the Pledgor of this Agreement, and the consummation of the
transactions contemplated hereby, (i) are within the Pledgor's corporate
authority; (ii) have been duly authorized by all necessary or proper corporate
action; (iii) are not in contravention of any provision of the Pledgor's by-laws
or charter; (iv) will not violate any law or regulation, or any order or decree
of any court or governmental instrumentality to which the Pledgor or its
property is subject; and (v) will not conflict with or result in the breach or
termination of, constitute a default under, or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which the Pledgor is a party or by which the Pledgor or any of its
property is bound (except for such conflict, breach, termination, default or
acceleration as could not reasonably be expected to have a Material Adverse
Effect). Subject to Section 21(f) hereof, no authorization, approval or action
by, or notice to, or filing with, any governmental authority or regulatory body
is required under existing laws and regulations on the date hereof (i) for the
grant or perfection of the security interests contemplated hereby or for the
execution, delivery or performance of this Agreement by the Company, except as
may be set forth in Section 3 with respect to actions to be taken by the
Collateral Agent, the Trustee or a financial intermediary holding Collateral and
except for the filings referred to in Section 3(b) that may be required in the
future, or (ii) for the exercise by the Collateral Agent of the voting or other
rights provided for this Agreement or its rights and remedies in respect of the
Collateral pursuant to this Agreement, except (A) as may be required in
connection with the disposition of Collateral by laws affecting the offering and
sale of securities, generally, and (B) with respect to Pledged Shares, for
authorizations, approvals, notices and filings that may be required pursuant to
regulations of the FCC (as defined herein), or any successor laws or
regulations.
(c) Enforceability. This Agreement is the legal, valid and binding
obligation of the Pledgor enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights or insolvent corporations generally, and
except to the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
(d) Absence of Liens. It is the legal and beneficial owner of the
Collateral free and clear of all Liens other than the security interest created
by this Agreement. No effective financing statement or other instrument similar
in effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Collateral Agent
under this Agreement.
(e) Collateral. The Pledged Shares have been duly authorized and validly
issued and are fully paid and non-assessable. The Pledged Shares represent one
hundred percent (100%) of the total number of shares of the Subsidiary which are
issued and outstanding or for which the Subsidiary is obligated to issue after
giving effect to the issuance of all such shares.
(f) Security Interest. This Agreement and the pledge of the Collateral
pursuant hereto create a valid and perfected first priority security interest in
the Collateral in favor of the
4
Collateral Agent, securing the payment of all of the Secured Obligations, and
all filings and other actions necessary or desirable as may be required by the
Trustee or the Holders to perfect and protect such security interest have been
duly taken.
5. As to the Collateral.
--------------------
(a) So long as no event or circumstance which constitutes a Default shall
have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Collateral or any part thereof
for any purpose not inconsistent with the terms of this Agreement or the
Indenture; provided, however, that the Pledgor shall not exercise or
refrain from exercising any such right without the consent of the
Collateral Agent if, in the Collateral Agent's judgment, such action or
inaction would have a Material Adverse Effect (as defined herein) on the
fair market value of any of the Collateral including, without limitation,
the validity, priority or perfection of the security interests granted
hereby or the remedies of the Collateral Agent hereunder.
(ii) Any and all dividends and other distributions (whether or not in
cash) paid or payable, and certificates, instruments and other Property
received, receivable or otherwise distributed in respect of, or in exchange
for, Collateral, shall be, and shall be forthwith delivered to the
Collateral Agent to be held as Collateral and shall, if received by the
Pledgor, be received in trust for the benefit of the Trustee and the
Holders, be segregated from the other Property of the Pledgor, and be
forthwith delivered to the Collateral Agent, as Collateral in the same form
as so received (with any necessary endorsement). Any cash dividends or
distributions delivered to or otherwise held by the Collateral Agent
pursuant to this Section 5, and any other cash constituting Collateral
delivered to the Collateral Agent, shall be invested, at the written
direction of the Pledgor by the Collateral Agent in Cash Equivalents.
(iii) The Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to exercise the voting and other rights which it is
entitled to exercise pursuant to subsection (i) or (ii) above.
(b) Upon the occurrence and during the continuance of a Default (except as
provided below), at the Collateral Agent's option and following written notice
by the Collateral Agent to the Pledgor:
(i) all rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant
to Section 5(a)(i) shall cease, provided, however, that the Pledgor shall
be entitled to exercise such rights without the prior consent of the
Collateral Agent if such rights are to be exercised to vote in favor of a
transaction which is reasonably expected to cure the Default, not result in
another Default and not result in a Material Adverse Effect. Except as
provided in the prior sentence, after the occurrence and during the
continuance of an Event of Default, all such
5
voting and other consensual rights shall thereupon become vested in the
Collateral Agent, who shall thereupon have the sole right to exercise such
voting and other consensual rights, subject to the satisfaction of any
regulatory requirements. Effective upon the occurrence and during the
continuance of an Event of Default, the Pledgor hereby appoints the
Collateral Agent the Pledgor's true and lawful attorney-in-fact and grants
to the Collateral Agent an IRREVOCABLE PROXY to vote the Collateral in any
manner the Collateral Agent deems advisable for or against all matters
submitted or which may be submitted to a vote of shareholders. The power-
of-attorney granted hereby is coupled with an interest and shall be
irrevocable; and
(ii) the provisions of Section 5(a)(ii) shall continue in full force
and effect, except that no dividends or distributions may be paid to the
Pledgor.
As used in this Agreement, the term "Material Adverse Effect" shall
mean an effect resulting from any circumstance or event of whatever nature
(including any adverse determination in any litigation) which does, or could
reasonably be expected to, materially and adversely (a) impair the validity or
enforceability of any of the Indenture or the Notes or the Collateral Agent's,
the Trustee's or any Holder's rights or remedies with respect thereto; (b) cause
a Default; (c) affect the business, property, business prospects, operations, or
financial or other condition of the Subsidiary or Pledgor; or (d) impair or
affect the Collateral or the Collateral Agent's Liens on the Collateral or the
priority of such Liens.
(c) In the event that all or any part of the securities or instruments
constituting the Collateral are lost, mutilated, destroyed or wrongfully taken
while such securities or instruments are in the possession of the Collateral
Agent, the Pledgor agrees that it will cause the delivery of new securities or
instruments in place of the lost, mutilated, destroyed or wrongfully taken
securities or instruments upon request therefor by the Collateral Agent without
the necessity of any indemnity bond or other security other than the Collateral
Agent's agreement or indemnity therefor customary for security agreements
similar to this Agreement.
6. Additional Shares.
------------------
(a) The Pledgor agrees that it will cause the Subsidiary not to issue any
Stock of any kind.
(b) Without derogating from paragraph (a) of this Section 6, in the event
that, during the term of this Agreement:
(i) any stock dividend, stock split, reclassification, readjustment,
or other change is declared or made in the capital structure of the
Subsidiary, all new, substituted, and additional shares, or other
securities, issued by reason of any such change and received by the Pledgor
(directly or indirectly) or to which the Pledgor shall be entitled shall be
promptly delivered or otherwise transferred to the Collateral Agent,
together with undated stock powers endorsed in blank by the Pledgor, and
shall thereupon constitute additional Collateral to be held by the
Collateral Agent under the terms of this Agreement; and
6
(ii) any subscriptions, warrants or any other rights or options shall
be issued in connection with the Pledged Shares, all new stock or other
securities acquired through such subscriptions, warrants, rights or
options, and all additional shares of capital stock of the Subsidiary or
any successor in interest thereto from time to time acquired by the Pledgor
(directly or indirectly) in any manner whatsoever (including, without
limitation, any shares of preferred stock issued by the Subsidiary)
together with appropriate powers by the Pledgor, shall be promptly
delivered or otherwise transferred to the Collateral Agent and shall
thereupon constitute Collateral to be held by the Collateral Agent under
the terms of this Agreement.
7. Payment of Taxes and Claims.
---------------------------
The Pledgor shall make payment of (i) all taxes, assessments, license
fees, levies and other charges of Governmental Bodies imposed upon it which if
unpaid, could reasonably be expected to have a Material Adverse Effect or become
a Lien on the Property of the Pledgor, unless and to the extent only that such
taxes, assessments, charges, license fees, levies and other charges shall be
contested in good faith and by appropriate proceedings diligently conducted by
the Pledgor and the Collateral Agent has received prompt notice of such contest,
(ii) all taxes, assessments, license fees, levies and other charges of
Governmental Bodies on any of the Collateral before any penalty or interest
accrues thereon, unless and to the extent only that such taxes, assessments,
charges, license fees, levies and other charges shall be contested in good faith
and by appropriate proceedings diligently conducted by the Pledgor and the
Collateral Agent has received prompt notice of such contest, before any penalty
or interest accrues thereon, and (iii) all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums
materially adversely affecting the Collateral, which have become due and payable
and which by law have or may become a Lien upon any of the Collateral prior to
the time when any penalty or fine shall be incurred with respect thereto, unless
and to the extent such claim is being contested in good faith and by appropriate
proceedings diligently conducted by the Pledgor, the Collateral Agent has
received prompt notice of such contest, any proceeding to place a lien on the
Collateral or to enforce a lien on the Collateral has been stayed and such
contest is not reasonably expected to have a Material Adverse Effect.
8. Covenants and Agreements.
------------------------
The Pledgor covenants and agrees that on and after the date hereof
until the Payment in full of the Secured Obligations and the termination and
discharge of the Indenture, unless the Collateral Agent shall otherwise consent
in writing:
(a) At any time and from time to time, upon the reasonable request of the
Collateral Agent, and at the sole expense of the Pledgor, the Pledgor shall
promptly do, file, record, execute and deliver any and all such further notices,
instruments and documents and will take such further action as may be reasonably
deemed necessary or desirable in the judgment of the Collateral Agent and its
counsel to obtain, protect and perfect the security interests granted hereby and
enforce and give effect to the rights, remedies and powers hereunder, including,
without limitation, and the recording or filing of all instruments and documents
reasonably necessary to perfect and protect the perfection of the security
interests granted hereby under Articles 8 or 9 of the Uniform Commercial Code in
effect in any applicable jurisdiction. In
7
connection therewith, the Collateral Agent is hereby irrevocably authorized and
empowered as the Pledgor's attorney-in-fact, solely to make, at the Collateral
Agent's option, all filings and to give all other notices as it shall reasonably
deem necessary with respect to any of the Collateral, all of which may be done
with or without the signature of the Pledgor. The Pledgor agrees that the
foregoing power constitutes a power coupled with an interest which shall survive
until the Payment in full of all of the Secured Obligations. The Pledgor agrees
to reimburse the Collateral Agent on demand for any actual and reasonable
expenses (including reasonable attorneys' fees and expenses with respect to the
Collateral Agent, including reasonable allocated costs and expenses of in-house
counsel and legal staff) incurred by the Collateral Agent in connection with
such matters and, until such reimbursement, such expenses shall be a part of the
Secured Obligations.
(b) The Pledgor shall defend its ownership interest in and to the
Collateral and the Collateral Agent's security interest in and to the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to the interests of the Collateral Agent.
(c) The Pledgor shall, at all times, maintain or cause to be maintained
accurate books and records with respect to the Collateral, and shall furnish to
the Collateral Agent such information concerning such Collateral as the
Collateral Agent may from time to time reasonably request. The Collateral Agent
and its designees are hereby given the right, at the Pledgor's expense, to
inspect and copy, following prior notice to the Pledgor and during regular
business hours, or the Pledgor shall furnish the Collateral Agent with copies
of, all records and documents reasonably required by the Collateral Agent
relating to the Collateral.
(d) The Pledgor shall not further hypothecate, assign, pledge, encumber,
transfer, sell or otherwise dispose of, or grant any option with respect to, or
create or suffer to exist a security interest in, or a Lien on, the Collateral
or any portion thereof, except for the pledge, assignment and security interest
created by this Agreement in favor of the Collateral Agent and except as
contemplated by Article 12 of the Indenture. The inclusion of "Proceeds" of the
Collateral under the security interest granted herein shall not be deemed a
consent by the Collateral Agent to any sale or other disposition of any
Collateral except as expressly permitted herein.
(e) The Pledgor shall promptly notify the Collateral Agent of any change
occurring in or to the Collateral, of a change in the Pledgor's mailing address,
of any material change in any fact or circumstance warranted or represented by
the Pledgor in this Agreement or furnished to the Collateral Agent, or if any
Default or Event of Default hereunder shall occur.
(f) The Pledgor shall not, without the prior written consent of the
Collateral Agent, sign or file or authorize the signing or filing of any
document, financing statement or instrument creating or perfecting, or
purporting to create or perfect, any Lien or other encumbrance on all or any
part of its Collateral except in favor of the Collateral Agent as required
hereby and except as contemplated in Article 12 of the Indenture.
(g) The security interest granted hereby constitutes and shall at all
times constitute a perfected continuing first priority security interest in the
Collateral.
8
9. The Collateral Agent Appointed Attorney-in-Fact.
-----------------------------------------------
Effective upon the occurrence and during the continuance of an Event
of Default, the Pledgor hereby irrevocably appoints the Collateral Agent its
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time in the Collateral
Agent's discretion, to take any action and to execute any instrument which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation:
(a) to ask, demand, collect, ▇▇▇ for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral and/or extend the time of payment, arrange for
payment in installments, or otherwise modify the terms of, or release, any
Collateral or obligations, without otherwise discharging or affecting the
Secured Obligations, the Collateral or the security interests granted by this
Agreement,
(b) to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of the Collateral Agent
with respect to any of the Collateral, and
(c) to receive, indorse and collect any drafts or other instruments and
documents made payable to the Pledgor in connection with clause (a) above or
representing any dividend or other distribution in respect of the Collateral or
any part thereof and to give full discharge for the same.
The power-of-attorney granted hereby is coupled with an interest and
shall be irrevocable.
10. The Collateral Agent May Perform.
--------------------------------
If the Pledgor fails to perform any agreement contained herein or make
payment of any amount required hereunder, the Collateral Agent may itself
perform, or cause performance of, or provide payment for the performance
thereof, and the reasonable expenses of the Collateral Agent incurred in
connection therewith shall be payable by the Pledgor under Section 15 of this
Agreement and any such payment made shall be deemed an advance by the Collateral
Agent to the Pledgor, payable on demand together with interest at the interest
rate then payable under the Indenture.
11. The Collateral Agent's Duties.
-----------------------------
The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral, including the filing
of any financing or continuation statements relating to the Collateral. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which the Collateral Agent
accords its own Property, it being
9
understood that the Collateral Agent shall not be under any obligation to (a)
ascertain or take action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Collateral Agent has or is deemed to have knowledge of such matters, or (b)
take any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral, but may do so at its option, and all
reasonable expenses incurred in connection therewith shall be for the sole
account of the Pledgor, and shall be added to the Secured Obligations.
12 Events of Default.
-----------------
If any of the following events shall occur, then an "Event of Default"
has occurred hereunder:
(a) If the Pledgor fails to fully and punctually pay, perform or observe
any debt, obligation or liability of the Pledgor under this Agreement or the
Indenture; or
(b) If any representation or warranty made herein or the Indenture or in
any certificate, report or other document furnished by the Pledgor in connection
with this Agreement or the Indenture shall prove to have been false in any
material respect upon the date when made or deemed to have been made or
repeated; or
(c) If the Pledgor shall fail to observe or perform any term, covenant or
agreement contained in Sections 8(a), 8(d) or 8(f) of this Agreement; or
(d) If the Pledgor shall fail to perform or observe any other term,
covenant or agreement on its part to be performed or observed pursuant to this
Agreement and such failure shall have continued unremedied for a period of
thirty (30) days after the Pledgor shall become aware of such failure; or
(e) The occurrence and continuance of an Event of Default under and as
defined in the Indenture.
13. Notice of Event of Default.
--------------------------
The Pledgor agrees to notify the Collateral Agent of the occurrence of
an Event of Default promptly upon its obtaining knowledge thereof.
14. Remedies.
--------
Upon the occurrence and during the continuation of an Event of
Default, the Collateral Agent may upon written instructions from the Trustee,
subject to regulatory requirements, exercise any and all remedies and other
rights provided under this Agreement and by applicable law, including, without
limitation, the following:
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party upon default under the UCC
(whether or not the UCC applies to the affected Collateral) and also may without
notice, except as specified below, sell, lease, assign, grant an
10
option or options to purchase or otherwise dispose of the Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange,
broker's board or at any of the Collateral Agent's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Collateral Agent may deem commercially reasonable. The Pledgor agrees that, to
the extent notice of sale shall be required by law, at least ten days' notice to
the Pledgor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
(b) Any cash held by the Collateral Agent as Collateral and all cash
proceeds received by the Collateral Agent in respect of any sale of, collection
from or other realization upon all or any part of the Collateral may, in the
discretion of the Collateral Agent, be held by the Collateral Agent as
Collateral for, and then or at any time thereafter applied (after the payment of
any amounts payable to the Collateral Agent pursuant to Section 15 hereof) in
whole or in part by the Collateral Agent for the ratable benefit of the Holders
against all or any part of the Secured Obligations. Any surplus of such cash or
cash proceeds held by the Collateral Agent and remaining after payment of all of
the Secured Obligations shall be paid over to the Pledgor or to whomsoever may
be lawfully entitled to receive such surplus.
(c) The Pledgor acknowledges and agrees that the Collateral Agent may
elect, with respect to the offer or sale of any or all of the Collateral, to
conduct such offer and sale in such a manner as to avoid the need for
registration or qualification of the Collateral or the offer and sale thereof
under any federal or state securities laws and that the Collateral Agent is
authorized to comply with any limitation or restriction in connection with such
sale as counsel may advise the Collateral Agent is necessary in order to avoid
any violation of applicable law, including, without limitation, compliance with
such procedures as may restrict the number of prospective bidders and
purchasers, require that such prospective bidders and purchasers have certain
qualifications, and restrict such prospective bidders and purchasers to Persons
who will represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such Collateral,
or in order to obtain any required approval of the sale or of the purchaser by
any Governmental Body. The Pledgor further acknowledges and agrees that any
such transaction may be at prices and on terms less favorable than those which
may be obtained through a public sale and not subject to such restrictions and
agrees that, notwithstanding the foregoing, the Collateral Agent is under no
obligation to conduct any such public sale and may elect to impose any or all of
the foregoing restrictions, or any other restrictions which may be necessary or
desirable in order to avoid any such registration or qualification, at its sole
discretion or with the consent or direction of the parties entitled to give
direction pursuant to the Intercreditor Agreement, and that any such offer and
sale shall, taking into account the possible restrictions on such offer and sale
described in this subsection (c), be conducted in a commercially reasonable
manner.
(d) The Pledgor hereby expressly waives and covenants not to assert any
appraisement, valuation, extension, redemption or similar laws, now or at any
time hereafter in
11
force, which might delay, prevent or otherwise impede the performance or
enforcement of this Agreement.
15. Expenses.
--------
The Pledgor will upon demand make payment to the Collateral Agent of
any and all reasonable out-of-pocket sums, costs and expenses, which the
Collateral Agent may pay or incur pursuant to the provisions of this Agreement
or in perfecting, defending, protecting or enforcing this Agreement or the
security interests granted herein or in enforcing Payment of all of the Secured
Obligations or otherwise in connection with the provisions hereof, including,
but not limited to court costs, reasonable collection charges, reasonable travel
expenses, and reasonable attorneys' fees (including with respect to the
Collateral Agent, the reasonable allocated costs and expenses of in-house
counsel and legal staff) all of which together with interest at the highest rate
then payable under the Indenture, shall be part of the Secured Obligations.
16. Repayment in Bankruptcy, etc.
----------------------------
Notwithstanding anything to the contrary contained in this Agreement,
if, at any time or times subsequent to the payment of all or any part of the
Secured Obligations, the Collateral Agent shall be required to repay any amounts
previously paid by or on behalf of the Subsidiary or the Pledgor in reduction
thereof by virtue of an order of any court having jurisdiction thereof,
including, without limitation, as a result of an adjudication that such amounts
constituted preferential payments or fraudulent conveyances, the Pledgor
unconditionally agrees to make payment to the Collateral Agent within 10 days
after demand of the amount of such repayment, together with interest on such
amount from the date of such repayment by the Collateral Agent to the date of
payment to the Collateral Agent at the default interest rate set forth in the
Indenture.
17. No Segregation of Moneys; No Interest.
-------------------------------------
No moneys or any other property received by the Collateral Agent
hereunder need be segregated in any manner except to the extent required by law,
and any such moneys or other Property may be deposited under such general
conditions as may be prescribed by law applicable to the Collateral Agent, and
the Collateral Agent shall not be liable for any interest thereon.
18. Continuing Security Interest; Termination.
-----------------------------------------
(a) This Agreement shall create a continuing perfected first security
interest in the Collateral and shall (i) remain in full force and effect until
the payment in full of all of the Secured Obligations, (ii) be binding upon the
Pledgor, its successors and assigns and (iii) inure, together with the rights
and remedies of the Collateral Agent hereunder, to the benefit of the
Collateral Agent, the Trustee and the Holders and their respective successors,
transferees and assigns.
(b) Notwithstanding anything to the contrary in this Section 18, upon (a)
satisfaction by the Trustee of the conditions set forth in Article Four of the
Indenture, upon the satisfaction and discharge of the Indenture, (b) the payment
in full of all Secured Obligations or (c) the
12
defeasance of the Notes and the Indenture as provided in Section 8.02 of the
Indenture, the security interests created under this Agreement shall terminate
and the Collateral Agent shall, at the request and expense of the Pledgor, cause
to be assigned, transferred and delivered, against receipt but without recourse,
warranty or representation whatsoever, any remaining Collateral, to or on the
order of the Pledgor, and shall execute and deliver to the Pledgor an instrument
or instruments acknowledging the release of such Collateral from the Lien of
this Agreement.
19. Notices.
-------
All notices and other communications provided for hereunder shall be
in writing (including telegraphic, telecopy, telex or cable communication) and
mailed, telegraphed, telecopied, telexed, cabled or delivered to it, if to the
Pledgor, addressed to it at XM Satellite Radio Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: Chief Executive Officer, if to the Collateral
Agent, at the address of the Trustee specified in the Indenture, or as to any
party at such other address as shall be designated by such party in a written
notice to each other party. All such notices and other communications shall,
when mailed, telegraphed, telecopied, telexed or cabled, be effective when
deposited in the mails, delivered to the telegraph company, transmitted by
telecopier, confirmed by telex answerback or delivered to the cable company,
respectively.
20. Margin Regulations.
------------------
The Pledgor shall take such steps as may be necessary so that it shall
comply with Regulations G, U and X (in so far as Regulation X applies to
Regulations G and U) promulgated by the Board of Governors of the Federal
Reserve System, in each case as in effect from time to time and to the extent
such Regulations are at the time applicable to the Notes issued by the Pledgor.
21. Other Provisions.
-----------------
(a) Except as expressly provided in this Agreement, the Pledgor hereby
waives presentment, demand for payment, notice of default, nonperformance and
dishonor, protest and notice of protest of or in respect of this Agreement, the
Indenture, the Notes or the Secured Obligations, notice of acceptance of this
Agreement and reliance hereupon by the Collateral Agent and notice of any sale
of collateral security or any default of any sort.
(b) The Pledgor waives all errors or omissions of the Collateral Agent in
connection with the administration of Security Interest created hereby and the
Collateral, except errors or omissions which constitute gross negligence or
willful misconduct.
(c) The Pledgor agrees that the Collateral Agent, the Trustee or the
Holders may at any time, without notice to or consent of the Pledgor, and
without in any manner affecting the liability of the Pledgor hereunder, amend,
modify or waive any term or condition of the Indenture, the Notes, the
Intercreditor Agreement and any of the other Secured Obligations and any
collateral security therefor and otherwise deal with Pledgor as if this
Agreement did not exist.
13
(d) The Pledgor is not relying upon the Collateral Agent to provide to the
Pledgor any information concerning the Subsidiary, including, without
limitation, information which might have a Material Adverse Effect, and the
Pledgor has made arrangements satisfactory to the Pledgor to obtain from the
Subsidiary on a continuing basis such information concerning the Subsidiary as
the Pledgor may desire.
(e) In addition to all other rights it may have at law or otherwise, upon
the occurrence and during the continuance of an Event of Default, the Collateral
Agent, is hereby authorized at any time and from time to time, without notice,
to set-off against any and all obligations which the Collateral Agent may owe to
the Subsidiary or the Pledgor, of any kind or nature, and the Pledgor shall
continue to be liable to the Collateral Agent for any deficiency with interest
at the applicable interest rate forth in the Indenture or the Notes.
(f) Notwithstanding anything to the contrary contained in the Indenture or
in any other agreement, instrument or document executed by the Pledgor and
delivered to the Collateral Agent, the Collateral Agent will not take any action
pursuant to any document referred to above which would constitute or result in
any assignment of any FCC license or any change of control (whether de jure or
de facto) of the Pledgor or the Subsidiary if such assignment of any FCC license
or change of control would require, under then existing law, the prior approval
of the FCC without first obtaining such prior approval of the FCC. Upon the
occurrence of an Event of Default or at any time thereafter during the
continuance thereof, subject to terms and conditions of this Agreement, the
Pledgor agrees to take any action which the Collateral Agent may reasonably
request in order to obtain from the FCC such approval as may be necessary to
enable the Collateral Agent to exercise and enjoy, the full rights and benefits
granted to the Collateral Agent by this Agreement and the other documents
referred to above, including specifically, at the cost and expense of the
Pledgor, the use of its best efforts to assist in obtaining approval of the FCC
for any action or transaction contemplated by this Agreement for which such
approval is or shall be required by law, and specifically, without limitation,
upon request, to prepare, sign and file with the FCC the assignor's or
transferor's portion of any application or applications for consent to the
assignment of license or transfer of control necessary or appropriate under the
FCC's rules and regulations for approval of (i) any sale or other disposition of
the Collateral by or on behalf of the Collateral Agent, or (ii) any assumption
by the Collateral Agent of voting rights in the Collateral effected in
accordance with the terms of this Agreement. It is understood and agreed that
all foreclosure and related actions will be made in accordance with the
Communications Act of 1934, as amended, and the rules and regulations
promulgated thereunder, as from time to time in effect (the "Communications
Act") and other applicable FCC regulations and published policies and decisions.
(g) the Pledgor agrees to indemnify and hold harmless the Collateral
Agent, the Trustee, and the Holders, the respective affiliates of the Collateral
Agent, the Trustee, and the Holders, and the respective officers, directors,
employees, agents (including, without limitation each of their counsel), and
controlling persons of the Collateral Agent, the Trustee, and the Holders and
each such affiliate (each, an "Indemnified Party") from and against any and all
claims, actions and suits whether groundless or otherwise, and from and against
any and all liabilities, losses, damages and costs and expenses (including,
without limitation, the reasonable fees and disbursements of counsel and with
respect to the Collateral Agent, reasonably allocated costs and expenses of in-
house counsel and legal staff) of every nature and character arising out
14
of or in connection with any actual or threatened claim, litigation,
investigation or proceeding relating to the Indenture, the Notes or this
Agreement or the transactions contemplated hereby (other than any such actions
or expenses resulting from the gross negligence or willful misconduct of the
Collateral Agent, the Trustee or the Holders), in each case including, without
limitation, the reasonable fees and disbursements of counsel and allocated costs
of in-house counsel and legal staff incurred in connection with any such
investigation, litigation or other proceeding whether or not such Indemnified
Party is a party thereto, and the Pledgor agrees to reimburse each Indemnified
Party, upon demand, for all out-of-pocket costs and expenses (including, without
limitation, the reasonable fees and disbursements of counsel and with respect to
the Collateral Agent, reasonably allocated costs and expenses of in-house
counsel and legal staff) incurred in connection with any of the foregoing. In
litigation, or the preparation therefor, the Collateral Agent, the Trustee and
the Holders shall be entitled to select their own counsel and, in addition to
the foregoing indemnity, the Pledgor agrees to pay promptly the reasonable fees
and expenses of such counsel. If, and to the extent that the obligations of the
Pledgor under this Section 21(g) are unenforceable for any reason, the Pledgor
hereby agrees to make the maximum contribution to the payment in satisfaction of
such obligations which is permissible under applicable law.
The Pledgor shall not make any claim against any Indemnified Party for
any special, indirect or consequential damages in respect of any breach or
wrongful conduct (whether the claim therefor is based in contract, tort or duty
imposed by law) in connection with, arising out of or in any way related to the
transactions contemplated by, and the relationship established by the Indenture,
the Notes, or any act, omission or event occurring in connection therewith, and
the Pledgor hereby waives, releases and agrees not to ▇▇▇ upon any such claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in the Pledgor's favor.
The covenants contained in this Section 21(g) shall survive payment or
satisfaction in full of all other of the Secured Obligations.
(h) The Pledgor hereby appoints ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as its legally authorized process
agent to accept service on behalf of the Pledgor.
(i) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York. The Pledgor agrees that any suit for the
enforcement of this Agreement may be brought in the courts of the State of New
York or any federal court sitting therein and consents to the nonexclusive
jurisdiction of such court and service of process in any such suit being made
upon the Pledgor by mail to ▇▇▇▇▇ & ▇▇▇▇▇▇▇ at the address specified in Section
21(h). The Pledgor hereby waives any objection that it may now or hereafter
have to the venue of any such suit or any such court or that such suit is
brought in an inconvenient court.
(j) This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Agreement it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against whom enforcement is sought.
15
(k) This Agreement and any other documents executed in connection herewith
express the entire understanding of the parties with respect to the transactions
contemplated hereby. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated, except as provided in Section 21(m).
(l) the Pledgor hereby waives its right to a jury trial with respect to
any action or claim arising out of any dispute in connection with this
Agreement, or any of the other loan documents, any rights or obligations
hereunder or thereunder or the performance of such rights and obligations.
Except as prohibited by law, the Pledgor hereby waives any right it
may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Pledgor (a) certifies
that no agent or representative of the Collateral Agent, the Trustee or any
Holder has represented, expressly or otherwise, that the Collateral Agent, the
Trustee or such Holder, as the case may be, would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that the
Trustee, the Holders and the Collateral Agent have been induced to enter into
this Agreement and Indenture among other things, the waivers and certifications
contained herein.
(m) Any consent or approval required or permitted by this Agreement to be
given by the Collateral Agent may be given, and any term of this Agreement, may
be amended, and the performance or observance by the Pledgor of any terms of
this Agreement, or the continuance of any Default or Event of Default may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Pledgor and the
written consent of the Collateral Agent. No waiver shall extend to or affect
any obligation not expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of the Collateral Agent, the
Trustee or any Holder in exercising any right shall operate as a waiver thereof
or otherwise be prejudicial thereto. No notice to or demand upon the Pledgor
shall entitle the Pledgor to other or further notice or demand in similar or
other circumstances.
(n) Notwithstanding the foregoing, this Agreement may be amended, revised
and supplemented, as contemplated by Section 9.02 of the Indenture, to assign
and pledge to the Custodian for the benefit of the Holders and the equal and
ratable benefit of the secured parties a security interest in the Collateral.
Any such amendment, revision or supplement shall comply with the provisions of
Section 9.02 of the Indenture.
(o) The Pledgor hereby waives any and all rights against immunity from
jurisdiction, attachment (both before and after judgment) and execution to which
it might be entitled.
(p) The provisions of this Agreement are severable and if any one clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
16
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly
executed and delivered as of the date hereof.
XM SATELLITE RADIO INC.
By:_________________________
Name:
Title:
Accepted and Agreed to:
UNITED STATES TRUST COMPANY OF NEW YORK
as Collateral Agent
By:____________________________
Name:
Title:
Schedule I
Pledged Shares
100 shares of common stock, par value $.01 per share, of XM Radio Inc.