CANADIAN SATELLITE RADIO HOLDINGS INC. SHAREHOLDERS AGREEMENT
EXHIBIT
10.5
EXECUTION
VERSION
THIS
SHAREHOLDERS AGREEMENT is
made
as of the 17th
day of
November, 2005 between Canadian Satellite Radio Holdings Inc., a corporation
incorporated under the laws of the Province of Ontario (the “Corporation”),
Canadian Satellite Radio Inc., a corporation incorporated under the laws
of
Canada (“CSR”),
Canadian Satellite Radio Investments Inc., a corporation existing under the
laws
of the
Province of Ontario
(“CSR
InvestCo”),
XM
Satellite Radio Holdings Inc., a Delaware corporation (“XM
Holdings”), and
any
person who is permitted by this Agreement to become a party after the date
hereof and becomes a party hereto by executing an acknowledgement in the
form
annexed hereto as Schedule
A
(each,
an “Additional
Party”).
RECITALS:
WHEREAS
the
parties hereto other than the Corporation and CSR together currently own,
directly or indirectly, all of the issued and outstanding shares in the capital
of the Corporation, with CSR InvestCo owning at least two thirds of such
shares
and the other parties hereto owning no more than one third of such
shares;
AND
WHEREAS
the
Corporation owns all of the issued and outstanding shares of its operating
subsidiary, CSR;
AND
WHEREAS the
parties have entered into this Agreement to record their agreement as to
the
manner in which the Corporation’s affairs are to be conducted and to grant
certain rights and obligations with respect to the ownership of the shares
of
the Corporation;
NOW
THEREFORE THIS AGREEMENT WITNESSES that
in
consideration of the premises and the mutual covenants and agreements herein
contained the parties hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS
AND PRINCIPLES OF INTERPRETATION
1.1 Definitions
Whenever
used in this Agreement, the following words and terms have the meanings set
out
below:
| (a) |
“Act”
means the Business
Corporations Act
(Ontario), as the same may be amended from time to
time;
|
| (b) |
“affiliate”
has the meaning ascribed to such term in the Act;
|
| (c) |
“Agreement”
means this Shareholders Agreement and all attached schedules and
all
instruments supplemental to or in amendment or confirmation of
this
Agreement;
|
| (d) |
“arm’s
length”
has the meaning that it has for purposes of the Income
Tax Act
(Canada);
|
| (e) |
“Articles”
means the articles of incorporation of the Corporation, as amended
from
time to time, the form of which that will be in effect immediately
following the Initial Public Offering (or if no Initial Public
Offering
has occurred, by December 16, 2005) is set forth as Exhibit
1
hereto;
|
| (f) |
“Bitove”
means ▇▇▇▇ ▇▇▇▇▇▇, a Canadian citizen residing in Toronto;
|
| (g) |
“Bitove
Affiliates”
means Bitove’s Family Members or a custodian, trustee (including an RRSP,
RIF, ▇▇▇ or similar retirement or investment fund) or other fiduciary
for
Bitove and/or his Family Members or a corporation wholly owned
by Bitove
and/or other Bitove Affiliates;
|
| (h) |
“Board”
means the board of directors of CSR or the Corporation, as applicable;
|
| (i) |
“Business
Day”
means any day except Saturday, Sunday or any statutory holiday
in the
Province of Ontario;
|
| (j) |
“Capital
Stock”
means, with respect to any Person, any and all shares of the Person
issued
or issuable upon the exercise of any warrants, options, or any
other
rights to acquire shares (however designated, whether voting or
non-voting) of such Person, whether now outstanding or issued subsequent
hereto, including, without limitation, all series and classes of
common
stock and preferred stock.
|
| (k) |
“Class
A Shares”
means Class A Subordinate Voting Shares in the capital of the Corporation
and includes the Class A Subordinate Voting Shares of the Corporation
currently issued, as well as any additional Class A Subordinate
Voting
Shares in the capital of the Corporation that may hereafter be
issued, the
terms of which are described in the Articles, including having
one (1)
vote per share;
|
| (l) |
“Class
B Shares”
means Class B Voting Shares in the capital of the Corporation and
includes
the Class B Voting Shares of the Corporation currently issued,
as well as
any additional Class B Voting Shares in the capital of the Corporation
that may hereafter be issued, the terms of which are described
in the
Articles, including having one (1) vote per share and each three
(3) Class
B Voting Shares being convertible into one (1) Class A
Share;
|
| (m) |
“Class
C Shares” means
Class C Shares in the capital of the Corporation that may hereafter
be
issued, the terms of which are described in the constating documents
of
the Corporation.
|
| (n) |
“CRTC”
mean the Canadian Radio-television and Telecommunications
Commission;
|
| (o) |
“CSR
InvestCo Change of Control”
means Bitove and Bitove Affiliates holding, directly or indirectly,
less
than 50.01% of the voting rights of CSR InvestCo or less than the
lower of
(x) 33-1/3% of the equity of CSR InvestCo or (y) 50%
of the number of shares of
CSR InvestCo that Bitove and Bitove Affiliates own
on the date hereof (as adjusted for any recapitalization), treating
in the
case of both (x) and (y) any portion of the equity of or shares
in
CSR
InvestCo subject to a Hedge as not being held by Bitove or Bitove
Affiliates.
|
| (p) |
“Family
Members”
means, in respect of an individual, any parent, spouse, child,
spouse of a
child, grandchild and/or sibling;
|
| (q) |
“Hedge”
means a forward sale, swap, cap or collar agreements, or other
agreement
or arrangement designed to protect against fluctuations in the
value of
equity or shares or under which a counterparty or person other
than Bitove
or Bitove Affiliates has the primary economic interest in such
equity or
shares or any appreciation in the value
thereof;
|
| (r) |
“Independent,”
with reference to a director, means an “independent”
director meeting all corporate governance requirements for independence
of
each stock exchange on which the Shares are then listed or proposed
to be
listed, and all independence requirements of each regulatory agency
with
corporate governance rules or regulations binding on the Corporation,
and
with reference to a director or other individual,
meets the following requirements: (i) owns less than 5% of the
shares of
any Shareholder; (ii) is not an officer or employee of the Corporation
or
CSR; and (iii) is not an associate, officer, director, principal,
partner
or employee of any Shareholder;
|
| (s) |
“Initial
Debt Offering”
shall mean the Corporation’s or CSR’s first offering of its debt
securities that closes on or before March 1, 2006 and is pursuant
to any
of the following: a prospectus filed under applicable Canadian
securities
laws in respect of which a (final) receipt has been obtained and/or
a
registration statement that has been declared effective under the
United
States Securities Act of 1933, as amended (the “Securities
Act”)
or an offering memorandum under Rule 144A of the Securities
Act;
|
| (t) |
“Initial
Public Offering”
shall mean the Corporation’s first public offering of its securities that
closes on or before March 1, 2006 and is pursuant to any of the
following:
a prospectus filed under applicable Canadian securities laws in
respect of
which a (final) receipt has been obtained and/or a registration
statement
that has been declared effective under the Securities Act or
any other equity financing or other public offering of securities
(including a reverse take-over) directly or indirectly involving
the
Corporation that has been duly authorized by the Corporation’s Board in
which the aggregate offering proceeds equals or exceeds Cdn$50,000,000,
accompanied by the listing of the Class A Shares on the Toronto
Stock
Exchange, the Nasdaq National Market or the New York Stock
Exchange;
|
| (u) |
“Parties”
means, collectively, the Shareholders, the Corporation, CSR and
any
Additional Party, and “Party”
means any one of them;
|
| (v) |
“Permitted
Additional Securities”
means (i) any options, shares or other securities issued or issuable
to employees, directors, officers or consultants under a Stock
Plan,
(ii) any options, warrants, shares or other securities issued or
issuable to suppliers or business partners for consideration other
than
cash as part of a commercial arrangement in the ordinary course
of the
Corporation’s or CSR’s satellite radio business (which shall be understood
to include without limitation any facets of the satellite radio
business
as conducted by XM Holdings), (iii) any securities issued as a
dividend or distribution on all of the Shares, (iv) any securities
issuable to XM Holdings, General Motors of Canada Limited (“GM
Canada”)
or any other original equipment manufacturer (whether directly
or to a
trust for the benefit of such manufacturer), all as contemplated
by a
Share Issuance Agreement dated on or about the date hereof, among
the
Corporation, CSR and XM Holdings (the “Share
Issuance Agreement”),
(v) any securities issued in the Initial Public Offering including
any
over-allotment option relating thereto, (vi) securities issued
to CSR
InvestCo in transactions resulting in the cash contribution referred
to in
clause (i) of the definition of the Required Equity Funding Date
and (vii)
securities listed on the schedule of Shares or rights to purchase
Shares
granted prior to the Required Equity Funding Date as to which XM
Holdings
has agreed in writing would be included in Permitted Additional
Securities;
|
| (w) |
“Person”
includes any individual, partnership, corporation, joint venture,
limited
liability company, association, trust, unincorporated organization,
or
government or agency or political subdivision
thereof;
|
| (x) |
“Required
Equity Funding Date” means
the date immediately after the Corporation has issued Capital Stock
for
consideration, in cash, of at least Cdn $65,000,000, which shall
include
(i) at least Cdn $15,000,000 in cash contributed by or on behalf
of CSR
InvestCo, either after the date of this Agreement or before the
date of
this Agreement for the procurement of property and services for
CSR’s
satellite radio business, and (ii) at least Cdn $50,000,000 in
net cash
proceeds from a public offering of Class A Shares. For greater
certainty,
any over-allotment option and any securities issued upon exercise
of such
over-allotment option in connection with a public offering shall
(1) be
deemed to be part of the public offering and to have taken place
on the
same date as the initial closing of the public offering in the
event that
the net cash proceeds of such over-allotment option, when added
to the net
cash proceeds of the Class A Shares sold at the initial closing
of the
offering, causes the sum of such net cash proceeds to equal or
exceed Cdn
$50,000,000, and (2) be deemed not to be part of the public offering
and to have taken place subsequent to the date of the initial closing
of
the public offering in the event that the net cash proceeds of
the Class A
Shares sold at the initial closing of the offering equals or exceeds
Cdn$50,000,000.
|
| (y) |
“Shareholder”
means each of the following, to the extent that it is an owner
of Shares:
CSR InvestCo and XM Holdings and the Additional Parties, and “Shareholders”
means all of such Persons
collectively;
|
| (z) |
“Shares”
means Class A Shares, Class B Shares and Class C Shares, as applicable,
of
the Corporation, provided that for purposes of any formula where
the
number of Class B Shares is added to the number of Class A Shares
and
Class C Shares to arrive at a total number of Shares, (1) since each
three (3) Class B Shares are convertible into one (1) Class A Share,
the
Class B Shares shall be treated as on an as-converted to Class
A Shares
basis (for greater certainty, the number of Class B Shares effectively
shall be divided by three (3) before being added to the number
of Class A
Shares, and (2) since each Class C Share is economically equivalent
to a Class A Share (even though non-voting and non-convertible
into Class
A Shares), each Class C Share shall be counted the same as a Class
A
Share);
|
| (aa) |
“Stock
Plan”
means any incentive plan established by the Corporation or CSR
and
approved by the Board and, if required by applicable rules or regulations
(including without limitation those of a stock
exchange on which the Shares are then listed or proposed to be
listed), by
the shareholders of the Corporation and includes for greater certainty
the
Corporation’s existing stock option plan;
|
| (bb) |
“Takeover
Restrictions”
means any restrictions under the Securities Act (Ontario) that
would limit
CSR InvestCo’s ability to purchase additional Class A Shares without
making an offer to purchase all of the Class A
Shares.
|
| (cc) |
“Transfer”
means any disposition, transfer, sale, exchange, assignment, gift,
bequest, disposition, mortgage, charge, pledge, encumbrance, grant
of
security interest, or any arrangement by which possession, legal
title or
beneficial ownership passes, directly or indirectly, from one person
or
entity to another, or to the same person or entity in a different
capacity, whether or not voluntary and whether or not for value,
and
includes any agreement to effect the
foregoing.
|
1.2 Additional
Definitions
Unless
there is something inconsistent in the subject matter or context, or unless
otherwise provided in this Agreement, all other words and terms used in this
Agreement that are defined in the Act have the meanings set out in the
Act.
1.3 Certain
Rules of Interpretation
In
this
Agreement:
| (a) |
Consent
-
Whenever a provision of this Agreement requires an approval or
consent and
such approval or consent is not delivered within the applicable
time
limit, then, unless otherwise specified, the Party whose consent
or
approval is required is conclusively deemed to have withheld its
approval
or consent.
|
| (b) |
Governing
Law
-
This Agreement shall be governed by and construed in accordance
with the
laws of the Province of Ontario, without regard to the province’s conflict
of law provisions, and each of the Parties irrevocably agrees to
submit to
the exclusive jurisdiction of the courts of such province for and
in
connection with any proceedings relating to this
Agreement.
|
| (c) |
Headings
-
Headings of articles and sections are inserted for convenience
of
reference only and do not affect the construction or interpretation
of
this Agreement.
|
| (d) |
Including
-
Where the word “including” or the word “includes” is used in this
Agreement, it means “including (or includes) without
limitation”.
|
| (e) |
Number
and Gender
-
Unless the context otherwise requires, words importing the singular
include the plural and vice versa and words importing gender include
all
genders.
|
| (f) |
Severability
-
If, in any jurisdiction, any provision of this Agreement or its
application to any Party or circumstance is restricted, prohibited
or
unenforceable, such provision is, as to such jurisdiction, ineffective
only to the extent of such restriction, prohibition or unenforceability
without invalidating the remaining provisions of this Agreement
and
without affecting the validity or enforceability of such provision
in any
other jurisdiction or without affecting its application to other
Parties
or circumstances.
|
| (g) |
Time
-
Time is of the essence in the performance of the Parties’ respective
obligations.
|
| (h) |
Time
Periods
-
Unless otherwise specified, time periods within or following which
any
payment is to be made or act is to be done are calculated by excluding
the
day on which the period commences and including the day on which
the
period ends and by extending the period to the following Business
Day if
the last day of the period is not a Business
Day.
|
| (i) |
Currency
-
Unless otherwise indicated all dollar amounts referred to in this
Agreement, including the symbol “$”, refer to lawful money of
Canada.
|
ARTICLE 2
PURPOSE
AND SCOPE
2.1 Compliance
with Agreement
Each
Shareholder agrees to vote and act as a shareholder of the Corporation to
fulfil
the provisions of this Agreement and in all other respects to comply with,
and
use all reasonable efforts to cause the Corporation to comply with, this
Agreement. The Shareholders further undertake that they will use their influence
as Shareholders to cause such meetings of the Corporation to be held,
resolutions passed, by-laws enacted, agreements and other documents signed
and
acts or things performed or done as may be necessary or desirable to ensure
that
the provisions of this Agreement are implemented and given full force and
effect. Each of the Corporation and CSR undertakes to carry out and be bound
by
the provisions of this Agreement to the full extent that it has the capacity
and
power at law to do so.
2.2 Canadian
Ownership
Notwithstanding
any other provisions of this Agreement, including those relating to share
transfers, the Corporation and CSR will act to ensure that all requirements
relating to the ownership and control of broadcasting undertakings as set
out in
the Broadcasting
Act
(Canada)
and related regulations, rules and regulatory policies, directions and decisions
in effect from time to time and the terms of licenses granted to the Corporation
or CSR by the CRTC or Industry Canada (the “Restrictions”),
are
complied with at all times, including as required by the Broadcasting
Act
(Canada)
and including the establishment of an independent programming committee of
CSR
that meets regulatory approval and such other mechanisms that will ensure
the
Corporation and CSR are controlled in fact by Canadian entities. The Corporation
and CSR will act to ensure that, other than the issuance of Shares to XM
Holdings under the Share Issuance Agreement dated on or about the date hereof,
no transfer or issuance of Shares or other securities of the Corporation
or CSR
shall be permitted if such transfer or issuance would cause CSR, after giving
effect to the issuance of the Shares to XM Holdings under the Share Issuance
Agreement, to cease to be a “qualified corporation” in the context of “The
Direction to the CRTC (Ineligibility of Non-Canadians)” dated April 8, 1997 or
the equivalent under successor legislation, regulation, rules or regulatory
policies, directions or decisions and unless such Transfer is in compliance
with
the Investment
Canada Act
(Canada). The Corporation and CSR will act to ensure that XM Holdings shall
not
be required by the Restrictions or the constating documents of the Corporation
(unless XM Holdings is then the only non-Canadian) to sell, transfer or divest
any of the Shares acquired under the Share Issuance Agreement without violation
of the Restrictions, and in each instance when there is a proposed transfer
or
issuance of Class B Shares to XM Holdings that the Corporation or XM Holdings
reasonably concludes might be prohibited by the Restrictions but would not
be
prohibited if the Shares to be transferred or issued were Class A Shares,
the
Parties shall use all reasonable efforts and take such reasonable actions
to
permit XM Holdings to acquire Class A Shares in lieu of the Class B Shares.
The
Corporation and CSR acknowledge and agree that the covenants and agreements
in
this Section may limit the Corporation’s ability to issue shares of the
Corporation or CSR to other non-Canadian investors through the Required Equity
Funding Date, and that they will include provisions in the Articles, obtain
agreements from other non-Canadian investors or take other actions as may
be
necessary such that in the event of a violation of the Restrictions or CSR
ceasing to be a “qualified corporation” as described above, the Corporation will
be able to take such actions as may be necessary, including preventing
non-Canadians from voting their shares and to the extent permitted by applicable
law, requiring non-Canadians to sell, transfer or divest their ownership
interests in the Corporation as needed (in each case such non-Canadian investors
to be selected in inverse order as provided in the Articles, and the Corporation
will ensure that XM Holdings is registered first so that it will be the last
non-Canadian that can be prevented from voting or required to sell under
the
Articles) so that XM Holdings can receive and retain the Shares acquired
under
the Share Issuance Agreement without violation of the Restrictions.
2.3 Conflict
with Articles or By-laws
In
the
event of any conflict between the provisions of this Agreement and the
provisions of the Articles or the by-laws of the Corporation or CSR, the
provisions of this Agreement shall prevail, and the Shareholders shall take
such
steps as are required to amend the Articles and by-laws of the Corporation
or
CSR so as to ensure conformity with the terms of this Agreement.
2.4 No
Indirect Public Offerings
Unless
otherwise agreed in writing by each of CSR InvestCo and XM Holdings, neither
CSR
InvestCo nor any other Person through which Bitove owns Shares shall undertake
any public offering of securities prior to an initial (and subsequent) public
offering(s) of Class A Shares by the Corporation in which the aggregate gross
proceeds to the Corporation equals or exceeds Cdn$50 million, accompanied
by the
listing of the Class A Shares on the Toronto Stock Exchange, the Nasdaq National
Market or the New York Stock Exchange.
2.5 OEM
Stakeholders
The
Parties agree that pursuant to a Share Issuance Agreement dated on or about
the
date hereof General Motors of Canada Limited (“GM
Canada”)
will
acquire Shares representing a 7% fully diluted economic interest in the
Corporation as of the date hereof (as defined and with
dilution protection as described therein until the Required Equity Funding
Date), subject to GM Canada entering into or being a party to a distribution
agreement with CSR. The
Parties also agree that upon
issuance of stock to GM Canada, the Corporation, XM Holdings, GM Canada and
CSR
InvestCo will be entering into a Director Nomination Agreement on customary
terms and conditions under which GM Canada will be entitled to nominate one
of
the directors of the Corporation for as long as GM Canada owns either
(i) at least 5% of the outstanding
Shares (treating
all Shares as a single class of Class A Shares on an as-converted basis,
including counting each Class C Share as one Class A Share) or
(ii) at least 50% of the number of Shares GM Canada acquires pursuant to a
Share Issuance Agreement (as adjusted for any recapitalization prior to the
Required Equity Funding Date).
The
Parties acknowledge that the Corporation is or will be entering into a
settlement with the trustee named therein under which an option to purchase,
for
nominal consideration and for a period not to exceed 60 days, Class A Shares
representing 3% of the fully diluted economic equity interest in the Corporation
as of the date hereof (as defined and with
dilution protection as described therein until the Required Equity Funding
Date)
is being
or will be deposited into the trust created by such settlement to be assigned
upon instructions by XM to one or more automotive
distribution partners that are expected to become distributors of CSR’s services
in Canada (“OEM
Stakeholders”),
in
whole or in parts, subject
to such OEM
Stakeholders entering
into or being parties to distribution agreements with CSR.
ARTICLE 3
MANAGEMENT
OF THE CORPORATION
3.1 Board
of Directors
of CSR and the Corporation
| (a) |
Unless
otherwise permitted by applicable Canadian law, a majority of Board
members of the Corporation, at least 80 percent of Board members
of CSR
and the Chairman of the Board of each of CSR and the Corporation
shall be
“Canadians” (as defined under “The Direction to the CRTC (Ineligibility of
Non-Canadians)” dated April 8, 1997) (the “Residency
Requirements”).
|
| (b) |
The
Board of the Corporation initially shall be comprised of nine members.
The
Board of CSR shall be comprised of five members. For as
long as CSR InvestCo owns at least 33-1/3% of the outstanding Shares
(treating
all Shares as a single class of Class A Shares on an as-converted
basis,
including counting each Class C Share as one Class A Share) and
has not undergone a CSR InvestCo Change of Control, CSR
InvestCo shall
be entitled to: (i) nominate a total of three of the nine directors
of the
Corporation and four of the five directors of CSR; (ii) increase
the size
of the Board of the Corporation to 12 members; and (iii) nominate
six of
the 12 directors of the Corporation if the size of the Board has
been
increased to 12 members. If CSR InvestCo owns less than 33-1/3%
of the
outstanding Shares (treating
all Shares as a single class of Class A Shares on an as-converted
basis,
including counting each Class C Share as one Class A Share) but
owns either (i) at least 15% of the outstanding Shares (treating
all Shares as a single class of Class A Shares on an as-converted
basis,
including counting each Class C Share as one Class A Share) or
(ii) at least 50% of the number of Shares CSR InvestCo owns on the
date hereof (as adjusted for any recapitalization or additional
capital
contribution prior to the Required Equity Funding Date) and has
not
undergone a CSR InvestCo Change of Control, CSR InvestCo will be
entitled
to nominate three directors of the Corporation and four of the
five
directors of CSR. For as long as XM Holdings owns either (i) at least
10% of the outstanding Shares (treating
all Shares as a single class of Class A Shares on an as-converted
basis,
including counting each Class C Share as one Class A Share) or
(ii) at least 50% of the number of Shares XM Holdings owns on the
date hereof (as adjusted for any recapitalization prior to the
Required
Equity Funding Date and all Shares acquired pursuant to a Share
Issuance
Agreement dated on or about the date hereof) XM Holdings will be
entitled
to nominate two of the directors of the Corporation and one of
the five
directors of CSR. GM
Canada will be entitled to nominate one of the directors of the
Corporation upon becoming a holder of Shares as provided in Section
2.5.
At least three of the directors of the Corporation will be Independent
directors of recognized expertise and stature reasonably acceptable
to CSR
InvestCo (so long as CSR InvestCo has not undergone a CSR InvestCo
Change
of Control) and to XM Holdings and meeting
all corporate governance requirements of each stock exchange on
which the
Shares are then listed or proposed to be listed, and of each regulatory
agency with corporate governance rules or regulations binding on
the
Corporation, including any requirement that they be
“financially literate” within the meaning of Canadian securities laws. For
the initial Board of the
Corporation, CSR InvestCo will only nominate three of the six directors
it
is entitled to nominate under this paragraph. All
nominees
for either Board shall have a personal and professional reputation,
qualifications and experience suitable to serving as a director
in a
company that will become publicly listed in the near future and
a
willingness and ability to devote time and resources to fulfill
his or her
duties as a member of the Board.
Fulfillment of the Residency Requirements shall be accomplished
solely by
the appointment of the nominees of CSR InvestCo and the Independent
directors and not XM Holdings or GM
Canada.
|
Each
Shareholder shall vote its Shares to elect the directors nominated in accordance
with this Agreement.
3.2 Removal
and Replacement of Nominees
Any
Shareholder entitled to nominate and elect a director may require the removal
of
any such director by notice to such director, the other Shareholders and
to each
of CSR and the Corporation. Any vacancy occurring on a Board by reason of
the
death, disqualification, inability to act, resignation or removal of any
director may be filled only by a further nominee of the Shareholder or
Shareholders whose nominee’s departure caused such vacancy, so as to maintain a
Board consisting of the nominees specified in Section 3.1.
3.3 Meetings
of Board
Each
Board shall meet at least once in every quarter during the term of this
Agreement, and the Chairman shall call a special meeting of the applicable
Board
upon the request of any director nominated by a Shareholder.
3.4 Notice
of Meetings
In
addition to any notice required by the By-laws, CSR or the Corporation, as
applicable, shall notify each director nominated by a Shareholder, in writing,
of the intended date of any meeting of a Board at least 5 Business Days prior
to
the date of such intended meeting unless such requirement is waived by the
Shareholder nominating such director. If any director nominated by a Shareholder
notifies CSR or the Corporation, as applicable, in writing, on or before
the day
immediately preceding the day of the intended meeting, requesting a delay
of the
intended meeting, CSR or the Corporation, as applicable, shall delay the
intended meeting at least three calendar days from the day originally scheduled
for the intended meeting or such earlier date as may be contained in such
notice. Notice of a Board meeting to a director nominated by a Shareholder
shall
be accompanied by an agenda together with copies of any documents to be
considered at such meeting.
3.5 Quorum
A
quorum
for meetings of a Board consists of a majority of the members of the Board,
provided that: (i) to the extent required by applicable law or regulation,
a
majority of directors present and entitled to vote are resident Canadians
who
are either Independent members of the Board or (so
long
as CSR InvestCo has not undergone a CSR InvestCo Change of Control) nominees
of CSR
InvestCo;
(ii) at
any time when XM Holdings has the right under this Agreement to nominate
one or
more directors, at least one director present and entitled to vote is a nominee
of XM Holdings; and (iii) at any time when CSR InvestCo has the right under
this
Agreement to nominate one or more directors, at least one director present
and
entitled to vote is a nominee of CSR InvestCo. If a quorum is not obtained
at
any meeting, the meeting shall be adjourned and may be reconvened upon two
business days written notice to the directors, at which reconvened meeting
the
quorum is a majority of the directors for the purposes of all business set
forth
in the agenda for the original adjourned meeting, provided that, to the extent
required by applicable law or regulation, a majority of directors present
and
entitled to vote at the reconvened meeting are resident Canadians who are
either
Independent members of the Board or (so
long
as CSR InvestCo has not undergone a CSR InvestCo Change of Control) nominees
of CSR
InvestCo.
3.6 Committees
of the Board
Representation
on committees of the Board shall be in accordance with the rules and regulations
of any stock
exchange on which the Shares are then listed or proposed to be listed, and
all
independence requirements of each regulatory agency with corporate governance
rules or regulations binding on the Corporation. In addition, all members
of the
audit
committee shall be Independent and
will
be “financially literate” within the meaning of Canadian securities
laws.
To the
extent required by the terms of CSR’s licence from the CRTC, the Board of CSR
will have a programming committee with the powers and responsibilities specified
in such licence.
3.7 Telephone
Meetings
Any
or
all directors may participate in a meeting of a Board or any committee thereof
by means of such telephone, electronic or other communication facilities
as
permit all Persons participating in the meeting to hear and communicate with
each other simultaneously, and a director participating in such a meeting
by
such means is deemed to be present at the meeting.
3.8 Annual
Budget
The
annual operating plan in any financial year of and in respect of CSR and
the
Corporation shall be subject to the approval of the Board of each of CSR
and the
Corporation, respectively.
ARTICLE 4
SPECIAL
CONSENT RIGHTS
Except
to
the extent the following covenants and provisions of this Article 4 are waived
in writing in any instance by each Party holding consent rights, each of
the
Corporation and CSR covenants and agrees that (1) for
as
long as XM Holdings owns either (i) at least 10% of the outstanding Shares
(treating
all Shares as a single class of Class A Shares on an as-converted basis,
including counting each Class C Share as one Class A Share) or
(ii) at least 50% of the number of Shares XM Holdings owns on the date
hereof (as adjusted for any recapitalization prior to the Required Equity
Funding Date and all Shares acquired pursuant to a Share Issuance Agreement
dated on or about the date hereof) (the “XM
Ownership Threshold”),
the
prior
written consent of XM Holdings shall be required, and (2) if
CSR
InvestCo owns less than 33-1/3% of the outstanding Shares (treating
all Shares as a single class of Class A Shares on an as-converted basis,
including counting each Class C Share as one Class A Share) but
owns
either (i) at least 15% of the outstanding Shares (treating
all Shares as a single class of Class A Shares on an as-converted basis,
including counting each Class C Share as one Class A Share) or
(ii) at least 50% of the number of Shares CSR InvestCo owns on the date
hereof (as adjusted for any recapitalization or additional capital contribution
prior to the Required Equity Funding Date) (the “CSR
InvestCo Ownership Threshold”)
and
has not undergone a CSR InvestCo Change of Control, the
prior
written consent of CSR InvestCo shall be required, in each case for the
following actions:
| (a) |
Any
merger or consolidation or sale, transfer, assignment, conveyance
or other
disposition to a third party of all or substantially all of the
property
and assets of the Corporation, CSR or any direct or indirect subsidiary
of
the Corporation or CSR;
|
| (b) |
the
dissolution or winding-up of the Corporation, CSR or any direct
or
indirect subsidiary of the Corporation or CSR or adoption of a
plan of
liquidation for the Corporation, CSR or any direct or indirect
subsidiary
of the Corporation or CSR;
|
| (c) |
the
making of loans or advances to, transferring properties (other
than in the
ordinary course of business) to, or guaranteeing any debt of any
other
person in any amount by the Corporation or CSR (other than in connection
with the Initial Debt Offering or a credit facility to be provided
to the
Corporation or CSR by XM Holdings), which loans, advances, transfers
and
guarantees would exceed USD $1.0 million in the aggregate at any
time
outstanding;
|
| (d) |
the
authorization or filing of articles of amendment or articles of
amalgamation for the Corporation or
CSR;
|
| (e) |
any
action or transaction not in the ordinary course of the Corporation’s or
CSR’s satellite radio business, which shall be understood to include
without limitation any facets of the satellite radio business as
conducted
by XM Holdings;
|
| (f) |
the
issuance of shares of CSR to any Person other than the
Corporation;
|
| (g) |
the
incurrence
of any indebtedness for borrowed money or the issuance of any debt
securities by the Corporation or CSR,
other than under a credit facility provided to the Corporation
or CSR by
XM Holdings, the Initial Debt offering, intercompany indebtedness
and
working capital facilities not to exceed USD $5.0 million (“Excluded
Debt Issuances”),
which when combined with all incurrences of any indebtedness for
borrowed
money and issuances of debt securities by the Corporation or CSR
within
the preceding two years other than Excluded Debt Issuances, would
exceed USD $50.0 million in the aggregate;
|
| (h) |
the
issuance of Class A Shares, Class B Shares or other equity securities
(or
securities convertible into equity securities) by the Corporation
other
than Permitted
Additional Securities (or Shares issued upon exercise or conversion
of the
same) and Shares issued upon conversion by XM Holdings of amounts
at any
time outstanding under
a credit facility provided to the Corporation or CSR by XM Holdings
which,
when combined with all other equity issuances by the Corporation
issued
within the preceding two years, other than Permitted
Additional Securities (or Shares issued upon exercise or conversion
of the
same) and Shares issued upon conversion by XM Holdings of amounts
at any
time outstanding under
a credit facility provided to the Corporation or CSR by XM
Holdings,
would exceed Cdn $50.0 million in the aggregate;
and
|
| (i) |
any
transaction between the Corporation or CSR and a Shareholder or
an
affiliate of a Shareholder involving aggregate consideration in
excess of
Cdn $1.0 million.
|
ARTICLE 5
DEALING
WITH SHARES
5.1 Restrictions
on Transfer of Shares
| (a) |
Notwithstanding
any provision in this Agreement and without limiting the powers
of the
Board of the Corporation under the Articles to restrict the issue,
transfer and voting of Shares, the Corporation shall not issue
Shares to
any person and a Shareholder may not Transfer any Shares unless
such
issuance or transfer has received all required approvals of the
CRTC and
of any other regulatory authority having jurisdiction.
|
| (b) |
Except
as may otherwise be agreed in writing by CSR InvestCo (so
long as CSR InvestCo has not undergone a CSR InvestCo Change of
Control)
and XM Holdings, and except for the transfers discussed in Section
5.4,
Section 5.5 and Section 5.6, no Shareholder shall Transfer any
Shares, or
any of its rights or obligations under this Agreement, to any Person,
except as specifically permitted by this Agreement and only in
accordance
with the terms of this Agreement. The Corporation shall not be
required:
(A) to Transfer on its books any Shares, nor (B) to treat as the
owner of
the Shares, or otherwise to accord voting or dividend rights to,
any
transferee to whom the Shares have been Transferred in contravention
of
this Agreement.
|
| (c) |
Notwithstanding
any other term of this Agreement, every Transfer of Shares held
by a
Shareholder to an Affiliate of such Shareholder is subject to the
condition that
the proposed transferee, if not already bound by the terms of this
Agreement, first agrees, in writing, to become a party to and be
bound by
the terms of this Agreement by signing an acknowledgment substantially
in
the form annexed hereto as Schedule
“A”.
|
| (d) |
In
the event that any Shareholder files for protection from creditors
under
the Bankruptcy
and Insolvency Act
(Canada), the Companies’
Creditors Arrangement Act
(Canada), Chapter 11 of the U.S. Bankruptcy Code or similar process,
this
Agreement shall remain in force, but all restrictions on share
Transfers
imposed by this Agreement shall no longer be in force (except for
corporate and regulatory
restrictions).
|
5.2 Endorsement
on Certificates
In
addition to such legends as may be required by applicable securities laws
or the
Articles, share certificates of the Corporation that are issued to the
Shareholders shall bear the following language either as an endorsement or
on
the face of such share certificate:
“The
shares represented by this certificate are subject to all the terms and
conditions of a Shareholders Agreement made November 17, 2005 as it may be
amended from time to time, which agreement contains, among other things,
restrictions on the right of the holder hereof to transfer or sell the shares.
A
copy of such agreement is on file at the registered office of the
Corporation.”
5.3 Pre-Emptive
Rights
| (a) |
Other
than Shares to be issued in the Initial Public Offering, and subject
to
the Restrictions and applicable regulatory approvals, if any additional
Shares or options, rights, warrants or other instruments to purchase
Shares or securities convertible into or exchangeable for Shares
(collectively referred to in this Section as “Additional
Securities”),
are to be issued by the Corporation for cash, the Corporation shall
first
offer to each of CSR
InvestCo (so long as CSR InvestCo has not undergone a CSR InvestCo
Change
of Control and owns a number of Shares at least equal to the CSR
InvestCo
Ownership Threshold) and
to XM Holdings (to the extent permitted by applicable Canadian
laws and so
long as XM Holdings owns a number of Shares at least equal to the
XM
Ownership Threshold), such portion of the Additional Securities
as will
enable them to continue to hold the same percentage (on a fully
diluted
basis) of Shares (treating all Shares as a single class of Class
A Shares
on an as-converted basis, including counting each Class C Share
as one
Class A Share) following the issuance of the Additional Securities
as held
by CSR InvestCo and XM Holdings prior to the issuance of the Additional
Securities, by written notice (the “Pre-Emptive
Rights Notice”)
given to it of the Corporation’s intention to issue Additional Securities
and the number and purchase price of such Additional Securities
to be so
issued; provided, however, that CSR InvestCo, to the extent it
wishes to
purchase Additional Securities consisting of Class A Shares or
rights to
purchase Class A Shares, shall be permitted to purchase a combination
of
Class A Shares and Class B Shares (or rights to purchase the same)
that
most nearly approximates the voting percentage then held by CSR
InvestCo
(the “Voting
Equivalent Shares”).
Each of CSR
InvestCo and
XM Holdings shall have 10 Business Days from the date the Pre-Emptive
Rights Notice is given to give a notice to the Corporation of its
intention to purchase all or any of the Additional Securities to
which it
is entitled and shall indicate in such notice the maximum number
of
Additional Securities that it is willing to purchase. The transaction
of
purchase and sale by the Corporation of Additional Securities shall
be
completed on the date specified by the Board, provided that such
date
shall not be more than 45
days after the date of the Pre-Emptive Rights Notice.
|
| (b) |
The
Corporation may issue Additional Securities without complying with
the
provisions of subsection (a)
of
this Section 5.3:
|
| (i) |
if
such Additional Securities are Permitted Additional Securities;
or
|
| (ii) |
if
the application of Section 5.3(a)
is
waived in writing by CSR InvestCo and XM Holdings.
|
| (c) |
Subject
to Section 5.3(b)(i) and despite Section 5.3(a), if applicable
Canadian
laws change so as to permit XM Holdings to hold greater than 33-1/3%
of
the Shares (treating all Shares as a single class of Class A Shares
on an
as-converted basis, including counting each Class C Share as one
Class A
Share), then after such date if any Additional Securities which
XM
Holdings would be permitted to purchase under applicable Canadian
laws
(collectively referred to in this Section as “Law
Change Additional Securities”)
are to be issued, the Corporation shall, subject to applicable
regulatory
requirements, first offer 50% of such Law Change Additional Securities
to
XM Holdings and the other 50% to CSR InvestCo by written notice
given to
it of the Corporation’s intention to issue Law Change Additional
Securities and the number and purchase price of such Law Change
Additional
Securities to be so issued, provided, however, that CSR InvestCo,
to the
extent it wishes to purchase Law Change Additional Securities consisting
of Class A Shares or rights to purchase Class A Shares, shall be
permitted
to purchase the Voting Equivalent Shares. XM Holdings and CSR InvestCo
shall have 10 Business Days from the date such notice is given
to give a
notice to the Corporation of its intention to purchase all or any
of the
Law Change Additional Securities offered to it pursuant to this
Section to
which it is entitled and shall indicate in such notice the maximum
number
of Law Change Additional Securities offered to it pursuant to this
Section
that it is willing to purchase.
|
5.4 Permitted
Transfers
| (a) |
CSR
InvestCo may,
after giving notice to the Corporation, Transfer all or any part
of the
Shares owned by CSR
InvestCo:
|
| (i) |
to
a Bitove Affiliate who agrees to be bound by and become a party
to this
Agreement in accordance with Section 5.1; or
|
| (ii) |
into
the public market through a broker or underwriter in compliance
with
applicable securities laws
(provided, that if only one class of Shares is publicly traded,
any Shares
not of the publicly traded class shall first be converted to the
publicly
traded class of Shares prior to being transferred).
|
provided,
in the
case of (i) above, the transferee agrees to be bound by, and become a party
to,
this Agreement in accordance with Section 5.1.
| (b) |
XM
Holdings may, after giving notice to the Corporation, Transfer
all or any
part of the Shares of the Corporation owned by
it:
|
| (i) |
to
any affiliate of XM Holdings that agrees to be bound by and become
a party
to this Agreement in accordance with Section 5.1;
or
|
| (ii) |
into
the public market through a broker or underwriter in compliance
with
applicable securities laws.
|
| (c) |
Section
5.5 of this Agreement shall not apply to any transfer permitted
under
Section 5.4(a)(i)
or Section 5.4 (b)(i), and Section 5.6 of this Agreement shall
not apply
to any transfer permitted under paragraphs (a)
or
(b). For greater certainty, Section 5.5 of this Agreement shall
apply to
any transfer permitted under Section 5.4(a)(ii) or Section
5.4(b)(ii).
|
5.5 Right
of First Refusal
| (a) |
To
the extent permitted by applicable Canadian laws, if any Shareholder
(a
“Selling
Shareholder”)
receives from a third party (the “Third
Party”),
acting as principal and dealing at arm’s length with the Selling
Shareholder, a bona fide written offer (the “Third
Party Offer”)
to purchase for cash all or any of the Shares of the Corporation
then
owned by the Selling Shareholder, which Third Party Offer the Selling
Shareholder wishes to accept (subject
to compliance with the provisions of this Section 5.5), or if the
Selling
Shareholder wishes to sell into the public market all or any of
the Shares
of the Corporation then owned by the Selling Shareholder, then
such
Selling Shareholder shall deliver a notice in writing (the “Notice
of Sale”)
to the other Shareholders (“Other
Shareholders”)
offering to sell to the Other Shareholders the Shares proposed
to be sold
by the Selling Shareholder (the “Offered
Shares”)
at the same price and in all other respects on the same terms and
conditions as provided in the Third Party Offer (except that the
Notice of
Sale shall be deemed to contain the provisions of Section 6.1)
or proposed sale into the public market. The offer contained in
the Notice
of Sale shall be irrevocable except with the consent of the Other
Shareholders and shall be open for acceptance for a period of 10
Business
Days after the date upon which the Notice of Sale was delivered
to the
Other Shareholders (the “Acceptance
Period”).
|
| (b) |
Upon
the Notice of Sale being given, the Other Shareholders have the
right to
purchase all, or less than all, of the Offered Shares in proportion
to the
numbers of Shares (treating all Shares as a single class of Class
A Shares
on an as-converted basis, including counting each Class C Share
as one
Class A Share) then held by the Other Shareholders or such other
proportions that they may agree upon. Such right to purchase such
Offered
Shares shall be subject to the Restrictions and shall not apply
to the
extent such right would conflict with the requirements of the
Restrictions; provided, however, that if XM Holdings is prevented
from
purchasing Offered Shares by the Restrictions or could not purchase
such
Offered Shares without triggering a requirement under the Takeover
Restrictions to offer to purchase all Class A Shares, XM Holdings
shall
have the right to assign its right to purchase Offered Shares to
a Person
that would be able to purchase such Offered Shares without such
a conflict
or requirement, subject to the consent of CSR InvestCo (so
long as CSR InvestCo has not undergone a CSR InvestCo Change of
Control)
not to be unreasonably withheld; and provided, further, that if
CSR
InvestCo could not purchase such Offered Shares without triggering
a
requirement under the Takeover Restrictions to offer to purchase
all Class
A Shares, CSR InvestCo shall have the right to assign its right
to
purchase Offered Shares to a Person that would be able to purchase
such
Offered Shares without such a requirement, subject to the consent
of XM
Holdings not to be unreasonably
withheld.
|
| (c) |
Within
the Acceptance Period, but subject to paragraph (b), each of the
Other
Shareholders may give to the Selling Shareholder a notice in writing
(an
“Acceptance
Notice”)
accepting in full or in part the offer contained in the Notice
of
Sale.
|
| (d) |
If
any of the Other Shareholders gives an Acceptance Notice within
the
Acceptance Period confirming its agreement to purchase all or less
than
all of the Offered Shares, the sale of the Offered Shares to such
Other
Shareholder shall be completed within 20 Business Days of the expiry
of
the Acceptance Period. An Other Shareholder that gives an Acceptance
Notice may not exercise its rights pursuant to Section 5.6 hereof.
If the
Selling Shareholder does not receive
an
Acceptance Notice from
the Other Shareholders within the Acceptance Period confirming
their
agreement to purchase all of the Offered Shares, the right of the
Other
Shareholders to purchase the Offered Shares not the subject of
an
Acceptance Notice shall cease and the Selling Shareholder may,
within 30
Business Days after the Acceptance Period, sell the Offered Shares
to the
Third Party at the price and upon the terms and conditions specified
in
the Third Party Offer or into the public market (for greater certainty,
if
the Third Party Offer or Notice of Sale sets forth a price or terms
determined by reference to the market price, the sale of the Offered
Shares may be at a similarly determined price or terms even though
the
market price may have changed prior to the sale), as
applicable.
|
5.6 Co-Sale
Rights
| (a) |
Subject
to Section 5.5(d)
and the condition in Section 5.6(c),
if any Shareholder (a “Co-Sale
Shareholder”)
receives a Third Party Offer that it wishes to accept, then, prior
to the
acceptance of the Third Party Offer, the Co-Sale Shareholder shall
notify
the other Shareholders of such proposed sale and the terms of such
proposed sale and the Co-Sale Shareholder shall, if required by
the other
Shareholders, obtain from the Third Party within five (5) days
of the
receipt of such notice a bona fide offer addressed to the other
Shareholders, on terms and conditions at least as favourable as
those
contained in the Third Party Offer, to purchase from the other
Shareholders (the “Co-Sale
Offer”):
(i) that number of Shares (treating all Shares as a single class
of Class
A Shares on an as-converted basis, including counting each Class
C Share
as one Class A Share) that is the same proportion of the total
number of
Shares held by the other Shareholders as the number of Shares proposed
to
be sold by the Co-Sale Shareholder pursuant to the Third Party
Offer bears
to the total number of Shares then held by the Co-Sale Shareholder,
or
(ii) if the Third Party Offer relates to a limited number of Shares
only,
such limited number of Shares (treating all Shares as a single
class of
Class A Shares on an as-converted basis, including counting each
Class C
Share as one Class A Share) multiplied by the quotient of X/Y,
where X is
equal to the total number of Shares then held by the other Shareholders
and Y is equal to sum of all Shares held by the
Shareholders.
|
| (b) |
The
Co-Sale Shareholder as applicable shall deliver the Co-Sale Offer
to the
other Shareholders, together with a copy of the Third Party Offer.
The
Co-Sale Offer shall be irrevocable and shall be open for acceptance
by the
other Shareholders for five (5) days after the delivery thereof
to the
other Shareholders.
|
| (c) |
The
Co-Sale Shareholder and the other Shareholders wishing to make
transfers
under this Section 5.6 shall be permitted to make a transfer to
which this
Section 5.6
shall apply only if the purchaser of Shares is a credit worthy
Canadian
and qualified corporation in good standing that is not a competitor
to XM
Holdings and is reasonably acceptable to each of the
Shareholders.
|
5.7 Minimum
Ownership Thresholds
The
provisions of Section 5.3 through 5.6 shall cease to apply to (i) CSR InvestCo
when it holds a number of Shares less than the CSR InvestCo Ownership Threshold
or there has been a CSR InvestCo Change of Control, (ii) XM Holdings when
it
holds a number of Shares less than the XM Ownership Threshold, and (iii)
any
other Shareholder when such Shareholder no longer holds at least 5% of the
outstanding Shares (treating all Shares as a single class of Class A Shares
on
an as-converted basis, including counting each Class C Share as one Class
A
Share).
5.8 Lock-up
If
requested in writing by the underwriters or agents for an Initial Public
Offering of the Corporation, each Shareholder shall agree not to Transfer
any of
its securities of the Corporation without the consent of such underwriters
or
agents, for a period not to exceed 180 days following the effective date
of such
Initial Public Offering;
provided,
however,
that
the Corporation shall have used its best efforts to obtain agreements from
all
persons holding in excess of 1% of the capital stock of the Corporation on
a
fully diluted, as-converted basis (counting
each Class C Share as one Class A Share)
and all
executive officers and directors of the Corporation not to sell publicly
their
shares of the Corporation under the circumstances and pursuant to the terms
set
forth in this Section.
5.9 Regulatory
Approvals
Notwithstanding
any time period otherwise specified in Section 5.3, Section 5.5, or Section
5.6
in respect of the closing date for the purchase and sale of Shares, such
closing
date shall be automatically extended for such period of time as shall be
necessary to receive the necessary approval of the purchase and sale of Shares
as contemplated by the applicable Section of the Agreement by the CRTC and
by
any other regulatory authority having jurisdiction. If such approvals are
not
obtained within 180 days of submission of an application, the Corporation
or any
Shareholder who is purchasing or selling shares may elect not to close. Each
of
the Shareholders who is purchasing or selling shares and the Corporation
agrees
to use commercially reasonable efforts to obtain all such CRTC and other
regulatory approvals and to co-operate in the provision of information to
obtain
such approvals.
ARTICLE 6
ARRANGEMENTS
REGARDING DISPOSITIONS
6.1 Closing
The
following provisions apply to any Transfer of Shares pursuant to this Agreement:
| (a) |
The
Transfer shall be completed at the Corporation’s registered office on the
date specified for closing. At such time, the transferor(s) shall
Transfer
to the transferee(s) good title to the Shares being transferred
free and
clear of all liens, charges and encumbrances and deliver to the
transferee(s) certificates and other documents of title evidencing
ownership of the Shares being transferred, duly endorsed in blank
for
transfer by the holders of record. In addition, if the transferor
is
disposing of all or substantially all of its Shares, the transferor(s)
shall deliver to the Corporation all records, accounts and other
documents
in its possession belonging to the Corporation and the resignations
and
releases of its nominees on the Board, all such resignations to
be
effective no later than the time of delivery. The transferee(s)
shall
deliver to the transferor(s) full payment of the purchase price
(subject
to any escrow or holdback requirement) payable for the Shares being
transferred.
|
| (b) |
If,
at the time of closing, a transferor fails to complete the subject
transaction of purchase and sale, the transferee shall have the
right, if
not in default under this Agreement, without prejudice to any other
rights
that it may have, upon payment of that part of the purchase price
payable
to the transferor at the time of closing to the credit of the transferor
in the main branch of the Corporation’s bank, to execute and deliver, on
behalf of and in the name of the transferor, such deeds, transfers,
share
certificates, resignations or other documents that may be necessary
to
complete the subject transaction and the transferor hereby irrevocably
appoints the transferee its attorney in that behalf. Such appointment
and
power of attorney, being coupled with an interest, shall not be
revoked by
the insolvency or bankruptcy of the transferor and the transferor
hereby
ratifies and confirms and agrees to ratify and confirm all that
the
transferee may lawfully do or cause to be done by virtue of such
appointment and power.
|
6.2 Repayment
of Debt
| (a) |
In
the event that at the time of the sale of any Shares under any
provision
of this Agreement, the vendor thereof is indebted to the Corporation
or
any affiliate thereof, the vendor shall assign and set over to
the
Corporation or such affiliate and shall direct the purchaser to
pay to the
Corporation or such affiliate, if requested by the Corporation
to do so,
the purchase price of such Shares to the extent required to discharge
the
vendor’s indebtedness to the Corporation or such
affiliate.
|
| (b) |
In
the event that at the time of the sale of any Shares under any
provision
of this Agreement, the Corporation or any affiliate thereof is
indebted to
the vendor, the Corporation or such affiliate shall pay all such
indebtedness to the vendor (unless it otherwise agrees in writing
and
other than any indebtedness under a credit facility to be provided
to the
Corporation or CSR by XM Holdings) at the time of closing herein
provided
for.
|
ARTICLE 7
INSPECTION
RIGHTS AND REPORTING
7.1 Inspection
Subject
to the requirements of applicable Canadian securities laws, the Corporation
and
CSR shall permit the Shareholders and any agents or representatives thereof
to
visit and inspect the properties of each of the Corporation and CSR, to examine
and make abstracts from any of each of the Corporation’s and CSR’s books and
records (including agreements, licences, and similar documents) at any
reasonable time and as often as the Shareholders or such agents or
representatives may reasonably request, and to discuss the business, operations,
prospects, assets, properties, and condition (financial or otherwise) of
the
Corporation and CSR with any of the officers, directors, employees, agents,
or
representatives of the Corporation or CSR.
7.2 Books
and Records
Each
of
the Corporation and CSR shall keep and maintain adequate and proper books
and
records of account, in which complete entries are made in accordance with
generally accepted accounting principles consistently applied and in accordance
with all applicable laws, rules, and regulations, reflecting all financial
and
other transactions of the Corporation and CSR normally or customarily included
in books and records of account of companies engaged in the same or similar
businesses and activities as the Corporation or CSR. All financial statements
that the Corporation and CSR shall prepare and deliver pursuant to this
Agreement (i) shall be true, correct, and complete in all material
respects, (ii) shall be in accordance with the books and records of CSR in
all material respects, (iii) subject, in the case of quarterly financial
statements, to year-end adjustments, which shall not, in the aggregate, be
material, shall present fairly the financial position of the Corporation
and CSR
as of the respective dates and the results of operations and changes in
financial positions of the Corporation and CSR for the respective periods
indicated, and (iv) shall have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis.
7.3 Inspection
Rights
| (a) |
The
Corporation and CSR shall furnish to the Shareholders: as soon
as
available and in any event within ninety (90) days after the end
of each
fiscal year of the Corporation and CSR, a copy of the audited balance
sheet of each of the Corporation and CSR as of the end of such
fiscal year
and the related audited statements of income, stockholders' equity,
and
changes in financial condition for such fiscal year, all prepared
in
reasonable detail and in accordance with the requirements of
Section 7.2 hereof, and certified by independent certified public
accountants of recognized international standing as presenting
fairly the
financial position of each of the Corporation and CSR and approved
by the
Board of Directors of the Corporation and CSR; and as soon as available
and in any event within forty-five (45) days after the end of each
fiscal
quarter of CSR (other than the last quarter of each fiscal year),
a copy
of the unaudited balance sheet of each of the Corporation and CSR
as of
the end of such quarter and the related unaudited statements of
income,
stockholders' equity, and changes in financial condition of each
of the
Corporation and CSR for the periods commencing at the end of the
previous
quarter and ending at the end of such quarter and commencing at
the
beginning of the fiscal year and ending at the end of such quarter,
in
each case including footnotes and setting forth in comparative
form the
corresponding figures for the corresponding period of the preceding
fiscal
year and the figures for such period set forth in the operating
plan and
budget delivered by the Corporation and CSR pursuant to paragraph
(b)(iv),
all prepared in reasonable detail and duly certified by the chief
financial officer of each of the Corporation and CSR as having
been
prepared in accordance with the requirements of Section 7.2
hereof.
|
| (b) |
The
Corporation and CSR shall furnish to the Shareholders, subject
to the
requirements of applicable Canadian securities
laws:
|
| (i) |
promptly
after the commencement thereof, notice of all actions, suits, and
proceedings before or by any court, other governmental authority,
or
arbitrator affecting the Corporation, CSR or any of their
Subsidiaries;
|
| (ii) |
promptly
upon the occurrence of a material adverse change in the business,
operations, prospects, assets, properties, or condition (financial
or
otherwise) of the Corporation or CSR, a statement of the chief
financial
officer of the Corporation and CSR setting forth the details thereof
and
the action that the Corporation or CSR proposes to take with respect
thereto;
|
| (iii) |
promptly
after the sending or filing thereof, copies of all financial statements
and reports that the Corporation or CSR sends to its stockholders
and
copies of all regular, periodic, and special reports which the
Corporation
or CSR files with any governmental
authority;
|
| (iv) |
as
soon as available and in any event no later than forty-five (45)
days
prior to the first day of each fiscal year of the Corporation and
CSR, an
annual operating plan and budget (including cash flow data) for
the
Corporation and CSR for such fiscal year, each prepared in reasonable
detail, as each such operating plan and budget has been approved
by the
Board of Directors of the Corporation and
CSR;
|
| (v) |
as
soon as available and in any event no later the sixtieth (60th) day
of each fiscal year, an updated five-year business plan for the
Corporation and CSR, each prepared in reasonable detail, as each
such
updated business plan has been approved by the Board of Directors
of the
Corporation and CSR; and
|
| (vi) |
promptly
upon receipt of a reasonable good faith request from the Shareholders
therefor, such other information respecting the business, operations,
prospects, assets, properties or condition (financial or otherwise)
of CSR
as the Shareholders from time to time reasonably may
request.
|
ARTICLE 8
GENERAL
8.1 Application
of this Agreement
The
terms
of this Agreement shall apply mutatis
mutandis
to any
Shares that may hereafter be issued by the Corporation to the Shareholders
and
to any shares or other securities:
| (a) |
resulting
from the conversion, reclassification, redesignation, subdivision,
consolidation of other change to the Shares held by the Shareholders;
or
|
| (b) |
of
the Corporation or any successor body corporate that may be received
by
the Shareholders on a merger, amalgamation, arrangement or other
reorganization of or including the
Corporation;
|
and
prior
to any action referred to in (a) or (b) above being taken the Parties shall
give
due consideration to any changes that may be required to this Agreement in
order
to give effect to the intent of this Section 8.1.
8.2 Confidentiality
| (a) |
“Confidential
Information” includes, but is not limited to any information which any
party hereto considers to be of a proprietary and confidential
nature and
includes, without limitation, know-how, data, process, technique,
program,
design, formula, marketing, advertising, financial, sales, customer
or
programming matter, compositions, drawings, diagrams, computer
programs,
studies, work in process, visual demonstrations, concepts, and
other data,
whether oral, written, graphic, or electronic form, which may be
exchanged
between the parties. For the purposes of this Agreement, “Confidential
Information” shall include, without limitation, the existence or contents
of this Agreement. Confidential Information does not include the
following
information: (i) information which is now or which hereafter becomes
publicly known or available through no act or failure on the part
of the
receiving party; (ii) information which is actually known to the
receiving
party at the time of the receipt of such Confidential Information
without
obligation of confidentiality; and (iii) information which is hereafter
furnished to the receiving party by a third party without obligation
of
confidentiality.
|
| (b) |
Each
party hereto will not use the Confidential Information of the other
party
for any purpose other than to perform this Agreement, will not
disclose
the Confidential Information of another party hereto to third parties,
except:
|
| (i) |
to
those third parties who have a need to know such information in
order for
the receiving party to perform this Agreement, and who have executed
a
written non-disclosure agreement with substantially similar protections
to
those contained herein; will protect the Confidential Information
of the
other parties hereto with at least the same degree of care as it
uses in
protecting its own confidential information; and will not copy
the
Confidential Information of any other party hereto without first
getting
the other’s written consent; or
|
| (ii) |
disclosure
as may be required by law, regulation, court of government agency
of
competent jurisdiction (however, if required to make such a disclosure,
the receiving party agrees to give the disclosing party prompt
notice
prior to disclosure and make a reasonable effort to assist disclosing
party in obtaining a protective order or in redacting specified
information to the extent reasonably permitted by applicable law
or
regulation).
|
These
obligations remain in effect after expiry or termination of this
Agreement.
| (c) |
After
termination or expiry of the term of this Agreement, any party
hereto may
require any other party hereto to return immediately
or, as the applicable parties may agree, destroy all copies of
its
Confidential Information the other then has and certify to it the
other
has taken these steps.
|
| (d) |
In
the event of breach of the confidentiality provisions of this Agreement
by
the receiving party, it acknowledges that the disclosing party
will be
irreparably harmed, and that the disclosing party shall, in addition
to
any other available remedies, be entitled to obtain equitable relief
to
prevent further disclosures without resorting to the dispute resolution
procedures set forth below.
|
8.3 Undertaking
The
Parties undertake to sign and complete all such deeds, documents, resolutions,
minutes and other instruments and to do all such acts as are necessary to
give
full effect to the terms, conditions and restrictions contemplated by this
Agreement and to make them binding on the Parties as well as on third parties
who are not privy to the terms hereof.
8.4 Notices
Any
notice, consent or approval required or permitted to be given in connection
with
this Agreement (in this Section referred to as a “Notice”) must be in writing
and is sufficiently given if delivered (whether in person, by courier service
or
other personal method of delivery), or if transmitted by fax:
| (a) |
in
the case of a Notice to the Corporation
at:
|
▇▇▇▇▇
▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Trust Tower, BCE Place
▇▇▇
▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention:
Legal Department
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
| (b) |
in
the case of a Notice to CSR InvestCo
at:
|
▇▇▇▇▇
▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Trust Tower, BCE Place
▇▇▇
▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention:
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
| (c) |
in
the case of a Notice to XM Holdings
at:
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Executive
Vice
President, General Counsel
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Vice
President,
International Operations
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
| (d) |
in
the case of any other Shareholder, at the address contained in
the records
of the Corporation with respect to such
Shareholder.
|
Any
Notice made or given by personal delivery shall be conclusively deemed to
have
been given on the day of actual delivery thereof and, if made or given by
courier, on the second Business Day following the deposit thereof with the
courier and, if made or given by fax, on the day of transmittal thereof
(provided the original copy is immediately forwarded by courier).
8.5 Amendment
No
amendment, supplement or modification of this Agreement and, unless otherwise
specified, no waiver, consent or approval by any Party, is binding unless
approved by the Corporation’s Board, and approved in writing by CSR InvestCo and
XM Holdings, and any amendment, supplement, modification, waiver, consent
or
approval so approved shall be binding upon each of the Parties.
8.6 Execution
and Delivery
This
Agreement may be executed by the Parties in counterparts and may be executed
and
delivered by fax, and all such counterparts and facsimiles together constitute
one agreement.
8.7 Benefit
of the Agreement
This
Agreement enures to the benefit of and is binding upon the respective heirs,
executors, administrators, successors and permitted assigns of the
Parties.
8.8 Assignment
Except
as
expressly provided in this Agreement, none of the Parties to this Agreement
may
assign its rights, benefits, remedies and obligations under this Agreement
without the prior written consent of the Corporation, CSR and CSR InvestCo
(so
long as CSR InvestCo has not undergone a CSR InvestCo Change of Control)
and XM
Holdings other than in a transfer permitted under Section 5.4(a)(i) or (ii)
or
Section 5.4 (b)(i) and upon the transferee entering into an agreement reasonably
acceptable to the Parties to be bound by this Agreement.
The
rights granted under Article 4 are personal to XM Holdings and to CSR InvestCo
and shall not be assignable or otherwise transferable other
than in a transfer permitted under Section 5.4(a)(i) or (ii) or Section 5.4
(b)(i) and upon the transferee entering into an agreement reasonably acceptable
to the Parties to be bound by this Agreement.
8.9 Termination
This
Agreement terminates upon the first to occur of:
| (a) |
the
date the Agreement is replaced by a new agreement between the
Parties;
|
| (b) |
the
date this Agreement is terminated by the written approval of all
Shareholders;
|
| (c) |
the
date that the Corporation is wound-up, liquidated or dissolved,
whether
voluntarily or involuntarily; and
|
| (d) |
that
date that one Person becomes the beneficial owner of all of the
Shares;
|
except
that the provisions of Section 5.8 continue upon a termination of this
Agreement.
[The
remainder of this page is intentionally left blank.]
Counterpart
Signature Page To Shareholder Agreement
IN
WITNESS OF WHICH the Parties have duly executed this Agreement.
| |
|
|
| Date: | By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ |
|
Name: ▇▇▇▇
▇. ▇▇▇▇▇▇
|
||
|
Title: Chairman
and CEO
|
||
|
CANADIAN
SATELLITE RADIO INVESTMENTS INC.
|
||
| |
|
|
| Date: | By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ |
|
Name: ▇▇▇▇
▇. ▇▇▇▇▇▇
|
||
|
Title: President
|
||
|
XM
SATELLITE RADIO HOLDINGS INC.
|
||
| |
|
|
| Date: | By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
|
Name: ▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
||
|
Title: Chairman
|
||
|
CANADIAN
SATELLITE RADIO INC.
|
||
| |
|
|
| Date: | By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ |
|
Name: ▇▇▇▇
▇. ▇▇▇▇▇▇
|
||
|
Title: Chairman
and CEO
|
||
SCHEDULE
“A”
FORM
OF JOINDER
|
To:
|
The
parties to the Shareholders Agreement (the “Agreement”)
made as of the [
] day
of [
],
2005 between Canadian Satellite Radio Holdings Inc. (the “Corporation”),
Canadian Satellite Radio Inc. and certain shareholders of the Corporation
specified therein.
|
The
undersigned, ,
having
purchased certain shares of the Corporation [previously held by ],
in
consideration of the approval by the Board of Directors of the Corporation
of
the transfer [or issuance] of such shares to the undersigned and other good
and
valuable consideration (receipt of which is hereby acknowledged), hereby
agrees
to be an Additional Party to and bound by all of the provisions of the
Shareholders Agreement as if the undersigned were an original party
thereto.
DATED
at
____________________ ,
this
__________
day of
__________
,
200 .
SIGNED,
SEALED AND
DELIVERED )
in
the
presence
of
)
)
_______________________________________
)
_________________________________
OR
l
Per: ______________________________c/