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EXHIBIT 10.112
NOTE PURCHASE AGREEMENT
dated as of
April 2, 2001
between
Motient Corporation
and
Rare Medium Group, Inc.
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NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT is dated as of April 2, 2001 between
Motient Corporation, a Delaware corporation, and Rare Medium Group, Inc., a
Delaware corporation.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of 25% or more
of the equity of a Person shall, for the purposes of this Agreement, be deemed
to control the other Person.
"Bloomberg" means Bloomberg Financial Markets (or a comparable reporting
service of national reputation selected by the Company if Bloomberg Financial
Markets is not then reporting closing bid prices of such security).
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized by law to close.
"Capital Lease Obligations" means all monetary obligations of a Person
under any leasing or similar arrangement which, in accordance with GAAP, is
classified as a capital lease.
"Cash Equivalents" means:
(a) securities issued or fully guaranteed or insured by the United
States Government or any agency thereof and backed by the full faith and credit
of the United States having maturities of not more than twelve months from the
date of acquisition;
(b) certificates of deposit, time deposits, Eurodollar time
deposits, or banker's acceptances having in each case a tenor of not more than
six months, issued by any U.S. commercial bank having combined capital and
surplus of not less than $500,000,000 whose short term securities are rated both
A-1 or higher by Standard & Poor's Corporation and P-1 or higher by ▇▇▇▇▇'▇
Investors Services, Inc.;
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(c) commercial paper of an issuer rated either at least A-1 by
Standard & Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc. and/or P-1 by
▇▇▇▇▇'▇ Investors Service Inc. and in either case having a tenor of not more
than three months;
(d) repurchase agreements fully collateralized by securities issued
by United States Government agencies; and
(e) money market mutual funds invested in the instruments permitted
by clauses (a), (b), (c) and (d) above.
"CERCLA" has the meaning specified in the definition "Environmental
Laws".
"Change In Control" means (i) any person or group of persons (within the
meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
(other than any Shareholder Guarantor, Purchaser, AT&T Wireless Services, Inc.
or Motorola, Inc.) shall have beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said Act) of
more than 25% of the outstanding capital stock of the Company, (ii) during any
period of 24 consecutive calendar months, individuals who were directors of the
Company on the first day of such period shall cease to constitute a majority of
the board of directors of the Company (ignoring for this purpose replacements of
stockholder-designated directors by successor directors designated by the same
stockholder or group of stockholders) or (iii) the Company shall cease to own
all of the outstanding capital stock of Motient Holdings Inc., or (iv) any
Shareholder Guarantor, AT&T Wireless Services, Inc. or Motorola Inc. or any of
their respective Affiliates shall have beneficial ownership of a number of
shares of the outstanding capital stock of the Company equal to 105% or more of
the number of shares of capital stock of the Company beneficially owned by such
Person or any of such Person's Affiliates on the date hereof (as adjusted to
give effect to any stock split, combination, reorganization, recapitalization,
stock dividend, reclassification, stock distribution, merger, consolidation,
customary antidilution adjustment to the exercise price or conversion price of
any options, warrants, convertible securities or similar purchase or exchange
rights issued by the Company that are required to be made pursuant to the terms
of such instruments as originally issued, or similar event or transaction). For
purposes of calculating the number of shares of capital stock of the Company
owned by a Person or such Person's Affiliates as of the date hereof pursuant to
clause (iv) of this definition, such Person shall be deemed to own the maximum
total number of shares of capital stock of the Company issuable upon the
conversion, exchange or exercise of the Company Convertible Securities
beneficially owned by such Person or such Person's Affiliates as of the date
hereof, whether or not the same are immediately convertible, exchangeable or
exercisable.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Collateral" means all property with respect to which Liens are created
or purported to be created pursuant to the Pledge Agreement and the Second
Pledge Agreement, if any.
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"Commitment Period" shall mean the period commencing on the day after
the Initial Closing Date and expiring on the date that is ten (10) Business Days
prior to the Maturity Date.
"Communications Asset" means a terrestrial or satellite antenna,
licensed site, base station, communications ground segment, network operations
center or other telecommunications facility (other than a satellite).
"Company" means Motient Corporation, a Delaware corporation, and its
successors.
"Company Convertible Securities" means warrants, rights, options and
other securities to subscribe for or purchase shares of the capital stock of the
Company, and other securities convertible into or exchangeable for capital stock
of the Company.
"Company Group" means the Company and its Consolidated Subsidiaries.
"Consolidated Subsidiary" means at any date and with respect to any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial statements
if such statements were prepared as of such date.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), including, without limitation, any
obligation of that Person, whether or not contingent, (a) to purchase,
repurchase or otherwise acquire such primary obligations or any property
constituting direct or indirect security therefor, or (b) to advance or provide
funds (i) for the payment or discharge of any such primary obligation, or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, or (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold harmless
the holder of any such primary obligation against loss in respect thereof, or
(e) to purchase or otherwise acquire, or otherwise to assure a creditor against
loss in respect of any Indebtedness. For purposes of this definition, the amount
of any Contingent Obligation shall be deemed to be an amount equal to the
maximum reasonably anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Controlled Group" means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Company or any of its Subsidiaries pursuant to Section 414(b), (c), (m) or (o)
of the Code.
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"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Disclosure Schedule" means the Disclosure Schedule of even date
herewith attached hereto and hereby made part of this Agreement.
"Dollars" means United States dollars.
"Environmental Claim" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for injury to the
environment or threat to public health, personal injury (including sickness,
disease or death), property damage, natural resources damage, or otherwise
alleging liability or responsibility for damages (punitive or otherwise),
cleanup, removal, remedial or response costs, restitution, civil or criminal
penalties, injunctive relief, or other type of relief, resulting from or based
upon (a) the presence, placement, discharge, emission or release (including
intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental placements, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in or from property,
whether or not owned by the Company, or (b) any other circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all applicable federal, state, local and
foreign laws, statutes, common law duties, judicial decisions, rules,
regulations, ordinances, judgments and codes, together with all administrative
orders, requests, licenses, authorizations and permits of, and agreements with,
any Governmental Authorities, in each case relating to the environment, health
and safety or to emissions, discharges or releases, or the manufacture,
distribution, use, treatment, storage, disposal, transport or handling, of
pollutants, contaminants, wastes or toxic or hazardous substances; including, as
they may be amended from time to time, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air Act, the
Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the
Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act
and the Emergency Planning and the Community Right-to-Know Act of 1986.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Event" means (a) a Reportable Event with respect to a Qualified
Plan or a Multiemployer Plan; (b) a withdrawal by any member of the Controlled
Group from a Qualified Plan subject to Section 4063 of ERISA during a plan year
in which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA); (c) a complete or partial withdrawal by any member of the Controlled
Group from a Multiemployer Plan; (d) the filing of a notice of intent to
terminate, the treatment of a plan amendment as a termination under Section 4041
or 4041A of ERISA or the commencement of proceedings by the PBGC to terminate a
Qualified Plan or Multiemployer Plan subject to Title IV of ERISA; (e) a failure
to make required contributions to
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a Qualified Plan or Multiemployer Plan; (f) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Qualified
Plan or Multiemployer Plan; (g) the imposition of any liability under Title IV
of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon any member of the Controlled Group; (h) an application for a funding
waiver or any extension of any amortization period pursuant to Section 412 of
the Code with respect to any Qualified Plan; or (i) any member of the Controlled
Group engages in or otherwise becomes liable for a non-exempt prohibited
transaction.
"Event of Default" has the meaning set forth in Section 7.01.
"FCC" means the Federal Communications Commission or any successor
thereto.
"FCC Licenses" means the currently effective licenses identified in the
Company's public filings with the Securities and Exchange Commission, together
with each other material FCC license hereafter obtained by the Company or any
Subsidiary of the Company.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such other entity as may be in general use by significant
segments of the U.S. accounting profession, which are applicable to the
circumstances as of the date of determination.
"Government Approvals" means any authorizations, consents, approvals,
licenses (including FCC licenses), leases, rulings, permits, tariffs, rates,
certifications, exemptions, filings or registrations by or with any Governmental
Authority required to be obtained or held by the Company.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Hazardous Materials" means all those substances which are regulated by,
or which may form the basis of liability under, any Environmental Law, including
all substances identified under any Environmental Law as a pollutant,
contaminant, waste, solid waste, hazardous material, hazardous substance or
toxic substance, including petroleum or any petroleum derived substance or
byproduct.
"High-yield Subsidiaries" means Motient Holdings Inc., a Delaware
corporation, and its Subsidiaries.
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"Holdings Guaranty" means the guarantee by the Company of the
obligations of Motient Holdings Inc. under the Indenture, as provided in Article
12 of the Indenture.
"Indebtedness" of any Person means without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of capital assets; (c) all reimbursement
obligations with respect to surety bonds, letters of credit, bankers'
acceptances and similar instruments (in each case, whether or not matured),
excluding performance bonds, letters of credit and similar undertakings in the
ordinary course of business of the Company, to the extent that such undertakings
do not secure an obligation for borrowed money or the deferred purchase price of
a capital asset; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, excluding performance
bonds, letters of credit and similar undertakings in the ordinary course of
business of the Company, to the extent that such undertakings do not secure an
obligation for borrowed money or the deferred purchase price of a capital asset;
(e) all indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case with respect
to property acquired by the Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property); (f) all Capital Lease Obligations; (g)
all net obligations with respect to Rate Contracts; (h) sale-leaseback
financings; (i) all Contingent Obligations; and (j) all Indebtedness referred to
in paragraphs (a) through (i) above secured by any Lien upon or in property
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness and
(k) to the extent not otherwise included in (a) through (i) above, the guarantee
by such Person of any indebtedness referred to in paragraphs (a) through (i)
above of any other Person. For purposes of this definition, (y) any Indebtedness
of the Company to a Subsidiary of the Company and (z) any Indebtedness of a
Subsidiary of the Company to or from the Company or another Subsidiary of the
Company shall be excluded.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Indenture" means the Indenture, dated as of March 31, 1998, among
Motient Holdings Inc. (formerly, AMSC Acquisition Company, Inc.), the guarantors
named therein and State Street Bank and Trust Company as trustee.
"Initial Closing Date" shall mean the Business Day after the
satisfaction or waiver of the conditions applicable to the Initial Closing set
forth in Section 3.01 or at such other place, time or date as shall be mutually
agreed upon by the Company and the Purchaser.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, Contingent Obligation, time deposit
or otherwise (but not including any demand deposit).
"Investment Documents" means this Agreement, the Pledge Agreement, the
Second Pledge Agreement, if any, the Notes and all agreements, instruments and
documents executed
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and delivered in connection herewith and therewith, each as amended,
supplemented, waived or otherwise modified from time to time.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including, without limitation,
those created by, arising under or evidenced by any conditional sale or other
title retention agreement, the interest of a lessor under a Capital Lease
Obligation, any financing lease having substantially the same economic effect as
any of the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under the UCC or any
comparable law) and any contingent or other agreement to provide any of the
foregoing.
"Material Adverse Effect" means a material adverse change in, or a
material adverse effect upon, any of (a) the operations, business, properties,
condition (financial or otherwise) of the Company Group taken as a whole; (b)
the ability or prospective ability of the Company or any of its Subsidiaries to
perform under any Investment Document or any material Contractual Obligation;
(c) the legality, validity, binding effect or enforceability of any Investment
Document or (d) the perfection or priority of any Lien granted to the Purchaser
under the Pledge Agreement.
"Maturity Date" means the date that is 180 days after the Initial
Closing Date or if such date is not a Business Day, the next Business Day, or
such later date as may be determined by application of the proviso to the "XM
Share Price" definition; provided that, with respect to any portion of the
principal amount of any Note to be prepaid in accordance with Section 2.06,
"Maturity Date" means, unless the context otherwise requires, the scheduled date
of such prepayment of such portion of such principal amount as set forth in the
applicable prepayment notice.
"MSV Asset Sale Agreement" means the Amended and Restated Asset Sale
Agreement, dated January 8, 2001, between Motient Services Inc. and Mobile
Satellite Ventures LLC as the same may be amended, supplemented, restated or
otherwise modified from time to time, in each case, in a manner which would not
be reasonably expected to reduce the combined value of the Company's interests
in Mobile Satellite Ventures LLC and Motient Services Inc.
"Multiemployer Plan" means a "multiemployer plan" (within the meaning of
Section 4001(a)(3) of ERISA) to which any member of the Controlled Group makes,
is making, or is obligated to make contributions or has made, or been obligated
to make, contributions.
"Note" means either the Tranche A Note or the Tranche B Note, and
"Notes" means both the Tranche A Note and the Tranche B Note, as the context may
require, each of which shall be in the form of Exhibit A hereto.
"Notice of Lien" means any "notice of lien" or similar document intended
to be filed or recorded with any court, registry, recorder's office, central
filing office or Governmental
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Authority for the purpose of evidencing, creating, perfecting or preserving the
priority of a Lien securing obligations owing to a Governmental Authority.
"Notice of Purchase" has the meaning set forth in Section 2.01(b).
"Obligations" means the Notes and other Indebtedness, advances, debts,
liabilities, and obligations, owing by the Company to the Purchaser or any other
Person required to be indemnified under any Investment Document, of any kind or
nature, present or future, whether or not evidenced by any note, guaranty or
other instrument, arising under this Agreement, under any other Investment
Document, whether or not for the payment of money, whether arising by reason of
an extension of credit, loan, guaranty, indemnification or in any other manner,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" has the meaning set forth in Section 6.06.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which any member of the Controlled Group sponsors or maintains or to
which any member of the Controlled Group makes or is obligated to make
contributions and includes any Multiemployer Plan or Qualified Plan.
"Pledge Agreement" means the Pledge Agreement of even date herewith
between Company and the Purchaser.
"Principal Subsidiary" means at any time any Subsidiary of the Company,
except Subsidiaries which at such time have been designated by the Company (by
notice to the Purchaser, which may be amended from time to time) as nonmaterial
and which, if aggregated and considered as a single subsidiary, would not meet
the definition of a "significant subsidiary" contained as of the date hereof in
Regulation S-X of the Securities and Exchange Commission.
"Purchaser" means Rare Medium Group, Inc., a Delaware corporation, and
its successors and permitted assigns.
"Qualified Plan" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and which
any member of the Controlled Group sponsors, maintains, or to which it makes or
is obligated to make contributions or has made contributions at any time during
the immediately preceding period covering at least five (5) plan years, but
excluding any Multiemployer Plan.
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"Rate Contracts" means interest rate and currency swap agreements, cap,
floor and collar agreements, interest rate insurance, currency spot and forward
contracts and other agreements or arrangements designed to provide protection
against fluctuations in interest or currency exchange rates; provided that such
agreements or arrangements are documented under master netting agreements.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA or the regulations thereunder, a withdrawal from a Plan described in
Section 4063 of ERISA, or a cessation of operations described in Section 4062(e)
of ERISA.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject; in
any case, non-compliance with which by the Company or any of its Subsidiaries
could reasonably be expected to have a Material Adverse Effect.
"Responsible Officer" means, with respect to any Person, the Chief
Executive Officer, the President or a duly authorized Senior Vice President or
Vice President or, with respect to financial matters, the Chief Financial
Officer or the Treasurer, of such Person.
"Revolving Credit Agreement" means the Credit Agreement dated as of
March 31, 1998, among the Company, Motient Holdings Inc., the agents and the
other lenders party thereto, as in effect on the date hereof, without giving
effect to any amendment, supplement, restatement or other modification thereto
or waiver thereunder effected without the prior written consent of the Purchaser
(which consent shall not be unreasonably withheld, conditioned or delayed).
"Shareholder Guarantors" means ▇▇▇▇▇▇ Electronics Corporation, a
Delaware corporation, Singapore Telecommunications Ltd., a corporation organized
under the laws of Singapore and Baron Capital Partners, L.P., a Delaware limited
partnership.
"Senior Notes" means the 12 1/4% Senior Notes due 2008 of Motient
Holdings Inc.
"Subsidiary" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Subordinated Indebtedness" means Indebtedness of the Company that is
subordinate in right of payment to the Notes at least to the same extent that
the Holdings Guaranty is subordinate to "Senior Indebtedness" as provided in the
Indenture.
"Term Credit Agreement" means the Term Credit Agreement dated as of
March 31, 1998, among the Company, the agents and the other lenders party
thereto, as in effect on the date hereof, without giving effect to any
amendment, supplement, restatement or other modification
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thereto or waiver thereunder effected without the prior written consent of the
Purchaser (which consent shall not be unreasonably withheld, conditioned or
delayed).
"Tranche A Note" shall have the meaning set forth in Section 2.01.
"Tranche B Note" shall have the meaning set forth in Section 2.01.
"Transferee Subsidiary" means a Subsidiary of the Company to which there
is transferred, directly or indirectly, any property, assets or securities of
the Company or any other Subsidiary of the Company, other than solely property,
assets or securities of a High-yield Subsidiary.
"UCC" means the Uniform Commercial Code as in effect in any
jurisdiction.
"Unfunded Pension Liabilities" means the excess of a Plan's accrued
benefits, as defined in Section 3(23) of ERISA, over the current value of that
Plan's assets, as defined in Section 3(26) of ERISA.
"United States" means the United States of America, including the States
and the District of Columbia, but excluding its territories and possessions.
"Vendor Financing Indebtedness" means Indebtedness incurred by a member
of the Company Group the proceeds of which are utilized solely to acquire
ground-based Communications Assets.
"Volume Weighted Average Price" means, for any security as of any date,
the volume weighted average prices of such security (as reported in Bloomberg)
or, if no sale price is reported for such security by Bloomberg, the average of
the per share bid prices of any market makers for such security as reported in
the "pink sheets" by the National Quotation Bureau, Inc. If the Volume Weighted
Average Price cannot be calculated for such security on such date on any of the
foregoing bases, the Volume Weighted Average Price of such security on such date
shall be the fair market value as reasonably determined by an investment banking
firm selected by the Purchaser and reasonably acceptable to the Company, with
the costs of such appraisal to be borne by the Company.
"Withdrawal Liabilities" means, as of any determination date, the
aggregate amount of the liabilities, if any, pursuant to Section 4201 of ERISA
if the Controlled Group made a complete withdrawal from all Multiemployer Plans
and any increase in contributions pursuant to Section 4243 of ERISA.
"XM" means XM Satellite Radio Holdings, Inc., a Delaware corporation.
"XM Shares" means shares of Class A Common Stock and Class B Common
Stock, par value $.01 per share, of XM.
"XM Stock Payment Valuation" means 95% of the XM Share Price.
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"XM Share Maximum" means (A) if the Second Closing shall not have
occurred, 3,000,000 or (B) if the Second Closing shall have occurred, 5,000,000,
in each case as appropriately adjusted to give effect to any stock split,
combination, reorganization, recapitalization, stock dividend, reclassification,
stock distribution, merger, consolidation or similar event or transaction.
"XM Share Price" means, as of any date, the average of the Volume
Weighted Average Price, as reported by Bloomberg, of the XM Shares for the ten
(10) consecutive trading days ending on the trading day immediately preceding
such determination date; provided that in the event that there is a material
adverse event regarding XM or its operations that is publicly reported during
such measurement period (either through a press release or through a filing with
the Securities and Exchange Commission) the "XM Share Price" will instead be
measured by the ten (10) consecutive trading days immediately following the date
on which the release or report is made.
SECTION 1.02. OTHER DEFINED TERMS; ACCOUNTING. Certain other defined
terms used in this Agreement are defined in the text of the Agreement and shall
have the meanings given such terms therein. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with GAAP as in effect
from time to time, applied on a basis consistent (except for changes concurred
in by the Company's independent public accountants) with the most recent audited
consolidated or combined financial statements of the Company and its
Consolidated Subsidiaries, delivered to the Purchaser.
ARTICLE 2
TERMS OF THE NOTES
SECTION 2.01. PURCHASE AND SALE. (a) The Purchaser agrees, subject to
the terms and conditions set forth herein, to purchase from the Company for the
sum of $25,000,000 and Company agrees to issue and sell to the Purchaser, on the
Initial Closing Date, a promissory note in the original principal amount of
$25,000,000 (the "Tranche A Note"), subject to the satisfaction or waiver of the
conditions precedent specified in Section 3.01 hereof and in accordance with the
procedures specified in this Article 2.
(b) During the Commitment Period, the Company may elect upon prior
written notice to the Purchaser as provided herein, to issue and sell to the
Purchaser and the Purchaser agrees, subject to the terms and conditions set
forth herein, to purchase from the Company, on the Second Closing Date, for an
amount equal to the lesser of (i) $25,000,000 and (ii) the excess, if any, of
(A) the XM Share Price as of the Second Closing Date multiplied by 5,000,000
over (B) $25,000,000 (the "Tranche B Amount"), a second promissory note in the
original principal amount equal to the Tranche B Amount (the "Tranche B Note"),
subject to the satisfaction or waiver of the conditions precedent specified in
Section 3.02 hereof and in accordance with the procedures specified in this
Article 2. The Company shall give the Purchaser irrevocable
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telephonic notice, confirmed immediately in writing (a "Notice of Purchase")
during the Commitment Period of its intent to issue and sell the Tranche B Note,
specifying (i) the proposed date of the Second Closing, which date shall be a
Business Day that is at least 10 Business Days after the date that the Notice of
Purchase was delivered to the Purchaser.
(c) The closing of the purchase and sale of the Tranche A Note (the
"Initial Closing") shall take place at the offices of Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four Times Square, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00 a.m. (New
York City time) on the Initial Closing Date.
(d) If the Company elects to issue and sell to the Purchaser the
Tranche B Note pursuant to Section 2.01(b), the closing of the purchase and sale
of the Tranche B Note (the "Second Closing") shall take place at the offices of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four Times Square, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
at 10:00 a.m. (New York City time) on the date that is the later of (y) the date
specified in the Notice of Purchase or (z) the date that is 2 Business Days
after the satisfaction or waiver of the conditions applicable to the Second
Closing set forth in Section 3.02 (other than those conditions that by their
nature are to be satisfied at the Second Closing) or at such other place, time
or date as shall be mutually agreed upon by the Company and the Purchaser (the
"Second Closing Date").
SECTION 2.02. PAYMENT. Subject to the conditions set forth in Article 3,
not later than 12:00 Noon (New York City time) on each of the Initial Closing
Date and the Second Closing Date, the Purchaser shall pay the full purchase
price for the Tranche A Note or the Tranche B Note, as the case may be (after
deducting the amounts referred to in the following sentence), in Federal or
other funds immediately available in New York City, to the Company by wire
transfer of immediately available funds to an account specified by the Company.
The amount to be paid on the Initial Closing Date and the Second Closing Date
shall be equal to the purchase price for the Tranche A Note or the Tranche B
Note, as the case may be, less (i) the Tranche A Funding Fee and the Tranche B
Funding Fee, respectively, and (ii) an estimate of the amount of unreimbursed
out-of-pocket expenses referred to in Section 9.03. On each of the Initial
Closing Date and the Second Closing Date, the Company shall deliver to the
Purchaser the documents, certificates and other items required to be delivered
to the Purchaser pursuant to Sections 3.01 and 3.02, as the case may be.
SECTION 2.03. NOTES. Each Note shall be payable to the order of the
Purchaser and be in the form attached hereto as Exhibit A.
SECTION 2.04. MATURITY OF NOTES. Any Notes outstanding on the Maturity
Date (together with accrued interest thereon) shall be due and payable on such
date.
SECTION 2.05. INTEREST; FUNDING FEES. (a) The Notes shall bear interest
on the outstanding principal amount thereof, for each day from the principal
amount of the date such Note is issued until it becomes due, at a rate per annum
of 12.5%. Interest shall be computed on the basis of a year of 360 days and 12
thirty day months, and paid for the actual number of days elapsed (including the
first day but excluding the last day). Any overdue principal of or interest
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on any Note shall bear interest, payable on demand, for each day until paid at a
rate per annum of 14%.
(b) In addition to the interest which the Company shall pay as set
forth above, the Company shall pay to the Purchaser, as compensation for the
purchase of the Notes, (i) a funding fee of $500,000 on the Initial Closing Date
(the "Tranche A Funding Fee") and (ii) a funding fee equal to 0.02 multiplied by
the principal amount of the Tranche B Note on the Second Closing Date, if any
(the "Tranche B Funding Fee").
SECTION 2.06. OPTIONAL PREPAYMENTS. The Company may, upon at least 15
days notice to the Purchaser, prepay any Note in whole at any time, or from time
to time in part in amounts aggregating $5,000,000 or any larger multiples of
$1,000,000, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment, subject to the Purchaser's right to
effect an Optional Exchange, in accordance with Section 2.09, at any time prior
to the close of business on the day immediately preceding the date of
prepayment. The date of such prepayment shall be referred to herein as the
"Prepayment Date".
SECTION 2.07. GENERAL PROVISIONS AS TO PAYMENTS. (a) In the sole
discretion of the Company, subject to the Purchaser's right to effect an
Optional Exchange, in accordance with Section 2.09, at any time prior to the
close of business on the day immediately preceding the Prepayment Date, the
Company may pay the principal of and interest on the Notes on the Maturity Date
(or on a Prepayment Date) in (i) cash, (ii) XM Shares or (iii) any combination
thereof; provided, that the Company shall not have the right to make any such
payment in the form of XM Shares to the extent that such payment would otherwise
require a filing under the HSR Act (as defined below) unless and until the
applicable waiting period under such Act has expired or terminated. To the
extent that any XM Shares are delivered to the Purchaser as payment of principal
and interest under this Agreement, the number of XM Shares so delivered shall be
equal to the aggregate amount of principal and interest to be paid through such
delivery of XM Shares divided by the XM Stock Payment Valuation, using the XM
Share Price calculated as of the Maturity Date, or the Prepayment Date, as the
case may be.
(b) The Company shall, on or prior to the date which is 15 days
prior to the Maturity Date or any Prepayment Date, deliver a notice to the
Purchaser at the address or facsimile number of the Purchaser referred to in
Section 9.01. Such notice shall state the relative portions of the repayment
amount to be paid in cash and XM Shares.
(c) The Company shall make any cash payment of principal of and
interest on the Notes not later than 12:00 Noon (New York City time) on the date
when due, in Federal or other funds immediately available in New York City, to
the Purchaser at its address referred to in Section 9.01. Whenever any payment
of principal of, or interest on the Notes shall be due on a day which is not a
Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day. If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon shall be payable for such
extended time.
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(d) On the Maturity Date or any Prepayment Date, if the Company
elects to pay all or part of the principal of and interest on the Notes in XM
Shares, the Company shall deliver to XM, irrevocable instructions (i) to convert
into Class A Common Stock that number of XM Shares to be paid as principal and
interest as of such date and to register such shares in such names as the
Purchaser shall designate, and (ii) return to the Purchaser as Collateral (as
defined in the Pledge Agreement) a stock certificate representing that number of
shares of Class B Common Stock equal to the excess, if any, of (a) the number of
shares of Class A Common Stock delivered to Purchaser or its designee as payment
on such dates over (b) the number of shares of Class B Common Stock represented
by the stock certificate surrendered to pay such amounts. If such instructions
are delivered on the Maturity Date or the Prepayment Date, as the case may be,
such principal and interest shall be deemed to have been paid on such Maturity
Date or Prepayment Date, as the case may be. Company shall thereafter use
commercially reasonable efforts to cause XM to deliver certificates representing
such shares to the Purchaser as soon as possible thereafter.
SECTION 2.08. EXTENSION OF MATURITY DATE. If the Company wishes to
extend the Maturity Date then in effect, the Company shall give written notice
to the Purchaser not less than 30 days prior to the Maturity Date then in
effect, whereupon the Purchaser will use its reasonable efforts to respond to
such request in writing, whether affirmatively or negatively, as it may elect in
its sole discretion, within 15 days after it receives such notice from the
Company. If the Company receives an affirmative response in writing from the
Purchaser within such 15 day period, then the Maturity Date shall be extended
for 30 days (but in no event later than November 20, 2001). If the Purchaser
does not reply to such request than the Purchaser shall be deemed to have
responded negatively.
SECTION 2.09. EXCHANGE RIGHTS.
(a) The following terms shall have the following meanings for
purposes of this Section 2.09:
(i) "Exchanged Amount" means the amount of the principal of
and interest on the Notes elected by the Purchaser to be exchanged pursuant to
this Section 2.09; provided that the Exchanged Amount cannot be less than
$100,000 and thereafter must be in multiples of at least $100,000; provided
further that if the Purchaser elects to exchange a Note in its entirety, then
the Exchange Amount shall be the entire amount of the outstanding principal and
accrued but unpaid interest on such Note as of the Exchange Date.
(ii) "Exchange Date" means the date specified in the Notice
of Exchange, or if no date is specified therein, the Business Day following the
date that the Notice of Exchange is faxed or otherwise delivered to the Company;
provided, however, that the Exchange Date shall be no sooner than 1 Business Day
after the date of delivery (by facsimile or otherwise) of the Notice of Exchange
and any Notice of Exchange delivered to the Company on a day which is not a
Business Day shall be deemed delivered as of the next following Business Day.
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(iii) "Exchange Price" means (i) with respect to the Tranche A
Note, $10.41 and (ii) with respect to the Tranche B Note, an amount equal to the
XM Share Price as of the Second Closing Date multiplied by 1.5.
(b) Exchange at the Option of the Purchaser. Subject to the
limitations set forth in Section 2.09(o), the Purchaser may, at any time and
from time to time prior to the Maturity Date, exchange (an "Optional Exchange")
all or a portion of the principal of and/or accrued interest on the Notes into a
number of XM Shares equal to the number determined by dividing the Exchanged
Amount by the Exchange Price; provided, that with respect to any Note or portion
thereof for which a prepayment notice has been delivered to the Purchaser in
accordance with Section 2.06, such exchange right shall terminate on the
Business Day immediately preceding the Prepayment Date; provided, further, that
such exchange right shall not be exercisable prior to June 30, 2001 unless the
Company elects to prepay all or any portion of any Note in accordance with
Section 2.06, in which case such exchange right shall be exercisable at any time
following the giving of an optional prepayment notice in accordance with Section
2.06 and prior to the close of business on the day immediately preceding the
Prepayment Date.
(c) Mechanics of Exchange. In order to effect an Optional Exchange,
the Purchaser shall fax (or otherwise deliver) a copy of the fully executed
Notice of Exchange substantially in the form of Exhibit B (the "Notice of
Exchange") to the Company. Simultaneously with or prior to the delivery of such
Notice of Exchange, the Purchaser shall provide telephonic notice to the Company
of its delivery of such Notice of Exchange. Upon receipt by the Company of a
facsimile copy of a Notice of Exchange from the Purchaser, the Company shall
promptly send, via facsimile, a confirmation to the Purchaser stating that the
Notice of Exchange has been received. Promptly following the faxing (or other
delivery) of the Notice of Exchange, the Purchaser shall surrender or cause to
be surrendered to the Company, the Note, along with a copy of the Notice of
Exchange.
(d) Company's Obligations Upon Exchange. Subject to Section 2.09(o),
upon the delivery of a Notice of Exchange, the Company shall, as soon as
practicable but in any event no later than the later of (a) the Exchange Date
and (b) the date of surrender of the applicable Note(s) (the "Delivery Period"),
deliver (x) to XM, irrevocable instructions, in form reasonably acceptable to
the Purchaser, to convert into Class A Common Stock and to register in such
names as Purchaser shall designate, that number of XM Shares deliverable upon
such Optional Exchange along with the assets and securities contemplated by
Section 2.09(k) and (y) to the Purchaser, a new Note in the same form as the
exchanged Note representing the balance of the principal amount hereof not being
exchanged, if any.
(e) Taxes. The issuance of certificates for XM Shares upon the
exchange of any Note shall be made without charge to the Purchaser or for any
tax in respect of the issuance of such certificates, and such certificates shall
be issued in the respective names of, or in such names as may be directed by,
the holder or holders of the converted Note; provided, however, that in the
event that certificates for XM Shares are to be issued in a name other than the
name of the holder of the Note exchanged, such Note, when surrendered for
exchange, shall be accompanied by an instrument of transfer, in form
satisfactory to the Company, duly executed by the registered
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holder thereof or his duly authorized attorney; and provided, further, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificates in a
name other than that of the holder of the exchanged Note, and the Company shall
not be required to issue or deliver such certificates unless or until the person
or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid or is not applicable.
(f) No Fractional Shares. No fractional XM Shares are to be
delivered upon the exchange of a Note, but the Company shall instead round up to
the next whole number the number of XM Shares to be delivered upon such
exchange.
(g) HSR. Prior to any exchange pursuant to this Section 2.09 and any
payment of principal and interest in XM Shares pursuant to Section 2.07, the
Purchaser and the Company shall cooperate in good faith (A) to determine if a
filing is required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976 or any successor law, and regulations and rules issued pursuant to that Act
or any successor law (the "HSR Act") in connection with such exchange or
payment. The Purchaser shall and the Company shall, or if the Company is not the
ultimate parent entity of XM, then the Company shall use its commercially
reasonable efforts to cause the ultimate parent entity to, make the required
filings under the HSR Act as promptly as practicable after a determination is
made that such a filing is necessary. The Company shall, or if the Company is
not the ultimate parent entity of XM then the Company shall use its commercially
reasonable efforts to cause the ultimate parent entity to take all actions
reasonably requested by the Purchaser to cause the early termination of any
applicable waiting period under the HSR Act. Notwithstanding anything in this
Agreement to the contrary, if the Purchaser determines that filings under the
HSR Act are required, the Company shall not be obligated to deliver any XM
Shares pursuant to this Section 2.09 to the extent, but only to the extent, that
such delivery would require such filing, until the date that is 2 Business Days
following the expiration or termination of any applicable waiting period under
the HSR Act, but the Company shall remain obligated to deliver the maximum
number of XM shares as would not require expiration or termination of a waiting
period under the HSR Act. The Company shall pay all filing fees and other costs
and expenses in connection with any such required filings under the HSR Act. As
used in this paragraph, the term "ultimate parent entity" shall have the meaning
given such term in the regulations promulgated under the HSR Act.
(h) Reclassifications, Reorganizations, Consolidations or Mergers.
In the event of any capital reorganization of XM, any reclassification of the
stock of XM (other than a change in par value or from par value to no par value
or from no par value to par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), or any consolidation or merger
of XM with or into another entity (where XM is not the surviving corporation or
where there is a change in, exchange or conversion of, or distribution with
respect to, the XM Shares), the Notes shall after such reorganization,
reclassification, consolidation, or merger be exchangeable for the kind and
number of shares of stock or other securities or property of XM or of the
successor entity resulting from such consolidation or surviving such merger, if
any, to which the holder of the number of XM Shares deliverable (immediately
prior to the time of such reorganization,
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reclassification, consolidation or merger) upon exchange of the Notes would have
been entitled upon such reorganization, reclassification, consolidation or
merger. The provisions of this clause shall similarly apply to successive
reorganizations, reclassifications, consolidations, or mergers.
(i) Subdivision or Combinations of XM Shares. If XM at any time or
from time to time after the Initial Closing Date subdivides (by any stock split,
stock dividend, recapitalization, reorganization, reclassification or otherwise)
the outstanding XM Shares into a greater number of shares, then, after the date
of record for effecting such subdivision, the Exchange Price in effect
immediately prior to such subdivision shall be proportionately reduced. If XM at
any time or from time to time after the Initial Closing Date combines (by
reverse stock split, recapitalization, reorganization, reclassification or
otherwise) the outstanding XM Shares into a smaller number of shares, then,
after the date of record for effecting such combination, the Exchange Price in
effect immediately prior to such combination shall be proportionately increased.
(j) Certain Issuances of XM Common Stock. If XM shall, at any time
or from time to time after the Initial Closing Date, issue, or pursuant to
Section 2.09(k) is deemed to have issued, any XM Shares without consideration or
for consideration per share less than the closing per share price of XM Shares
on the NASDAQ on the trading day immediately preceding the date of such issuance
or deemed issuance (the "Closing Price"), then such Exchange Price shall
forthwith be lowered to a price equal to the price obtained by multiplying:
(a) the Exchange Price in effect immediately prior to the
issuance, or deemed issuance, of such XM Shares; by
(b) a fraction of which (x) the denominator shall be the
number of XM Shares outstanding on a fully-diluted basis immediately
after such issuance and (y) the numerator shall be the sum of (i) the
number of XM Shares outstanding on a fully-diluted basis immediately
prior to such issuance and (ii) the number of additional XM Shares which
the aggregate consideration for the number of XM Shares so issued, or
deemed issued, would purchase at the Closing Price.
For purposes of this Section 2.09, "fully diluted basis" shall be
determined in accordance with the treasury stock method of computing fully
diluted earnings per share in accordance with GAAP.
(k) For purposes of determining the adjusted Exchange Price under
Section 2.09(j), the following provisions shall be applicable:
(i) Issuance of Rights or Options. If XM in any manner
issues or grants any warrants, rights or options, whether or not immediately
exercisable, to subscribe for or to purchase XM Shares, or other securities
convertible into or exchangeable for XM Shares ("Convertible Securities") (such
warrants, rights and options to purchase XM Shares or Convertible Securities are
hereinafter referred to as "Options"), and the price per share for which XM
Shares are issuable upon the exercise of such Options is less than the Closing
Price in effect on the date of issuance or grant of such Options, then the
maximum total number of XM Shares
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that are issuable upon the exercise of all such Options shall, as of the date of
the issuance or grant of such Options, be deemed to be outstanding and to have
been issued by XM for such price per share. For purposes of the preceding
sentence, the "price per share for which XM Shares are issuable upon the
exercise of such Options" is determined by dividing (i) the total amount, if
any, received or receivable by XM as consideration for the issuance or granting
of all such Options, plus the minimum aggregate amount of additional
consideration, if any, payable to XM upon the exercise of all such Options,
plus, in the case of Convertible Securities issuable upon the exercise of such
Options, the minimum aggregate amount of additional consideration payable upon
the conversion or exchange thereof at the time such Convertible Securities first
become convertible or exchangeable, by (ii) the maximum total number of XM
Shares issuable upon the exercise of all such Options (assuming full conversion
of Convertible Securities, if applicable). No further adjustment to the Exchange
Price shall be made upon the actual issuance of such XM Shares upon the exercise
of such Options or upon the conversion or exchange of Convertible Securities
issuable upon exercise of such Options.
(ii) Issuance of Convertible Securities. If XM in any manner
issues or sells any Convertible Securities, whether or not immediately
convertible (other than where such Convertible Securities are issuable upon the
exercise of Options for which an adjustment was made pursuant to Section
2.09(k)(i)) and the price per share for which XM Shares are issuable upon such
conversion is less than the Closing Price in effect on the date of issuance of
such Convertible Securities, then the maximum total number of XM Shares issuable
upon the conversion of all such Convertible Securities shall, as of the date of
the issuance of such Convertible Securities, be deemed to be outstanding and to
have been issued by XM for such price per share. For the purposes of the
preceding sentence, the "price per share for which XM Shares are issuable upon
such conversion or exchange" is determined by dividing (i) the total amount, if
any, received or receivable by XM as consideration for the issuance or sale of
all such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to XM upon the conversion thereof at the time
such Convertible Securities first become convertible, by (ii) the maximum total
number of XM Shares issuable upon the conversion of all such Convertible
Securities. No further adjustment to the Exchange Price shall be made upon the
actual issuance of such XM Shares upon conversion or exchange of such
Convertible Securities, and if any such issuance or sale of such Convertible
Securities is made upon exercise of any Options for which adjustments of the
Exchange Price had been or are to be made pursuant to other provisions of this
Section 2.09, no further adjustment of the Exchange Price shall be made by
reason of such issuance or sale.
(iii) Change in Option Price or Conversion Rate. If there is a
change at any time in (i) the amount of additional consideration payable to XM
upon the exercise of any Options; (ii) the amount of additional consideration,
if any, payable to XM upon the conversion of any Convertible Securities; or
(iii) the rate at which any Convertible Securities are convertible into XM
Shares (other than under or by reason of customary provisions designed to
protect against dilution), the Exchange Price in effect at the time of such
change shall be readjusted to the Exchange Price which would have been in effect
at such time if such Options or Convertible Securities still outstanding had
provided for such changed additional consideration or changed conversion rate,
as the case may be, at the time initially granted, issued or sold.
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(iv) Treatment of Expired Options and Unexercised Convertible
Securities. If, in any case, the total number of XM Shares issuable upon
exercise of any Option or upon conversion or exchange of any Convertible
Securities is not, in fact, issued and the rights to exercise such Option or to
convert or exchange such Convertible Securities shall have expired or
terminated, the Exchange Price then in effect shall be readjusted to the
Exchange Price which would have been in effect at the time of such expiration or
termination if such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination (other than in respect of
the actual number of XM Shares issued upon exercise or conversion thereof), had
never been issued.
(v) Calculation of Consideration Received. If any XM Shares,
Options or Convertible Securities are issued for cash, the consideration
received therefor for purposes of this Section 2.09 shall be the amount received
by XM therefor before deduction of commissions, underwriting discounts or
allowances or other expenses paid or incurred by XM in connection with such
issuance. In case any XM Shares, Options or Convertible Securities are issued
for a consideration part or all of which shall be other than cash, the amount of
the consideration other than cash received by XM shall be the fair market value
of such consideration. The fair market value of any consideration other than
cash or publicly traded securities shall be determined in good faith by the
mutual agreement of the Company and the Purchaser. If the Company and the
Purchaser are unable to reach such agreement within a reasonable period, the
fair market value of such consideration shall be determined by an independent
investment bank or a "Big Five" independent public accounting firm, in either
case of nationally recognized standing in the valuation of businesses similar to
the business of XM, which shall be mutually acceptable to the Company and the
Purchaser. The determination of such investment bank or public accounting firm
shall be final and binding upon the Company and the Purchaser.
(vi) Exceptions to Adjustment of Exchange Price. No
adjustment to the Exchange Price shall be made (i) upon the grant or conversion
or exercise of any Options or Convertible Securities issued and outstanding, or
committed to be issued, as of the date hereof; (ii) upon the grant or conversion
or exercise of any capital stock, Options or Convertible Securities which may be
issued or granted after the date hereof under any stock option, stock incentive
or other employee benefit plan of XM in effect as of the date hereof or which
becomes effective after the date hereof, so long as such stock option, stock
incentive or other employee benefit plan is approved by the board of directors
of XM; (iii) upon issuance of XM Shares, Options or Convertible Securities in a
firm commitment underwritten public offering other than any pro rata offering to
existing stockholders of XM or any Subsidiary of XM; (iv) upon the issuance or
grant of any capital stock, Options, or Convertible Securities to financial
institutions, financial syndicates or lessors in connection with bona fide
commercial credit arrangements, equipment financings, or similar transactions
for primarily other than equity financing purposes; (v) upon the issuance or
grant of any capital stock, Options, or Convertible Securities in connection
with a strategic alliance, partnership or similar commercial arrangement; (vi)
upon the issuance or grant of any capital stock, Options, or Convertible
Securities in connection with an acquisition of another Person by XM by merger
or purchase of all or substantially all of the capital stock of such Person or
purchase of all or substantially all of the assets of such Person;
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(vii) customary antidilution adjustments to the exercise price or conversion
price of any Options or Convertible Securities issued by XM and outstanding as
of the date hereof that are required to be made pursuant to the terms of such
instruments as originally issued; (viii) issuance of capital stock, Options or
Convertible Securities in transactions in which the Purchaser is offered the
opportunity to participate on substantially similar terms; and (ix) any issuance
of capital stock, Options or Convertible Securities which the Purchaser is
entitled to receive under section 2.09(l) on exchange of the Notes.
(l) Distribution of Assets. If after the Initial Closing Date, XM
shall declare or make any dividend or other distribution of its assets
(including cash) or securities issued by it or any other person to the holders
of XM Shares, then, in connection with any full or partial exchange of a Note
after the date of such Note but prior to the Maturity Date, the Purchaser shall
be entitled to receive the amount of such assets or securities which, if such
exchange had been made immediately prior to the record date for such dividend or
distribution, would have been payable to the Purchaser in respect of the XM
Shares which it would have received in such exchange. If XM distributes as a
dividend or otherwise to the holders of XM Shares Options or Convertible
Securities and such Options or Convertible Securities are not exercisable for a
period of at least 30 consecutive days following the Maturity Date, then upon
demand by the Purchaser and delivery of the exercise price therefor by the
Purchaser to the Company, the Company shall exercise such Options or Convertible
Securities, or any portion thereof requested by the Purchaser, and, upon the
full or partial exchange of the Notes pursuant to this Section 2.09, the Company
shall deliver to the Purchaser the property received upon the exercise of such
Options or Convertible Securities attributable to the Options or Convertible
Securities received by the Company in respect of the number of XM Shares
delivered to the Purchaser in such exchange; provided, that if any such Options
or Convertible Securities are not transferable by holders of XM Shares that
receive such Options or Convertible Securities, the Company shall, upon the
request of the Purchaser and the receipt from the Purchaser of the exercise
price therefor, exercise such Options or Convertible Securities and (to the
extent that it is legally able to do so) deliver to the Purchaser the property
received upon the exercise of such Options or Convertible Securities which is
attributable to the Options or Convertible Securities received by the Company in
respect of the number of XM Shares transferred to the Purchaser pursuant to this
Section 2.09 (and to the extent that it is not legally able to do so, hold the
same and cooperate reasonably with the Purchaser (at the Purchaser's expense) to
remove any legal limitations on such transfer). If, as of the Maturity Date, the
Purchaser has delivered to the Company the exercise price to exercise Options or
Convertible Securities pursuant to the immediately preceding sentence and the
number of Options or Convertible Securities so exercised exceeds the number
attributable to the number of XM Shares received by the Purchaser in full or
partial exchange of the Notes, the Company shall deliver to the Purchaser, at
the Company's election, either (i) the amount of the exercise price delivered by
Purchaser to the Company and used to exercise Options or Convertible Securities
not attributable to XM Shares delivered to the Purchaser in full or partial
exchange of the Notes or (ii) any consideration received by the Company upon any
such exercise of such Options or Convertible Securities and not already
delivered to the Purchaser, or, if such consideration may not legally be
transferred by the Company, an agreement by the Company to transfer such
consideration once the Purchaser removes any legal limitations on such transfer.
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(m) Notice of Adjustment. Within 20 Business Days after the
occurrence of any event which requires any adjustment of the Exchange Price or
any other event described in subsections (h), (i), (j), (k) or (l) above, the
Company shall give written notice thereof to the Purchaser. Such notice shall
describe such event in reasonable detail and shall state the Exchange Price
resulting from such adjustment and shall set forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. Such
calculation shall be certified by a Responsible Officer of the Company.
(n) No Further Interest. If the Purchaser exchanges a Note in its
entirety pursuant to this Section 2.09, then such Note shall be deemed to be
paid in full and no further interest shall accrue thereunder.
(o) XM Share Limitations. If at any time, the sum of (i) the
aggregate number of XM Shares paid to, exchanged with or otherwise transferred
to the holders of the Notes pursuant to the Notes, and (ii) the number of XM
Shares on which the lien created by the Pledge Agreement has been foreclosed,
exceeds the XM Share Maximum, the Purchaser shall have no further rights to
exchange all or any portion of the Notes for XM Shares pursuant to this Section
2.09, and in lieu of such transfer of XM Shares to the Purchaser, the Company
shall, on such date as the XM Shares are required to be transferred in exchange
for the Notes, pay to the Purchaser an amount in cash equal to the principal
amount of and accrued interest on the balance of the Notes not so exchanged due
to such XM Share Maximum.
(p) Minimum Adjustment of Exchange Price. No adjustment of the
Exchange Price shall be made in an amount of less than 1% of the Exchange Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exchange Price.
SECTION 2.10. XM SHAREHOLDERS AGREEMENT; REGISTRATION RIGHTS. (a) With
respect to any XM Shares received by the Purchaser from the Company, the
Purchaser hereby agrees (i) that the Purchaser is bound to the terms of that
certain letter entitled Lock-Up Agreement dated February 28, 2001 from Company
to Bear, ▇▇▇▇▇▇▇ & Co., Inc., and (ii) to execute a joinder agreement to become
a party to that certain Amended and Restated Shareholders Agreement, dated
August 8, 2000, among XM, the Company and the other parties thereto.
(b) With respect to any XM Shares transferred to the Purchaser from
the Company pursuant to this Agreement, the Company hereby transfers the
registration rights of the Company associated with such XM Shares (other than
its demand registration rights) to the Purchaser to the full extent permitted
under the Registration Rights Agreement, dated August 8, 2000, among XM, the
Company and the other parties named therein (the "XM Registration Agreement").
In addition, if the Purchaser receives at least 3 million XM Shares (as such
number shall be appropriately adjusted for the events and transactions referred
to in the definition of "XM Share Maximum") upon prepayment, exercise of its
exchange rights or otherwise pursuant to this Agreement, and there is not in
effect on the 180th day following delivery to the Purchaser of the
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3,000,000th share referred to above an effective registration statement under
the Securities Act of 1933 which permits the public resale of all such XM Shares
by the Purchaser, then the Company shall thereupon transfer to the Purchaser one
of its "demand" registration rights under Section 2.1(f) of the XM Registration
Agreement. The Company shall not transfer, encumber or exercise such demand
registration right prior to the earlier of (x) the transfer to the Purchaser of
such demand registration rights or (y) such time that all Obligations in respect
of the Notes shall have been satisfied in full and less than 3 million XM Shares
shall have been delivered in connection therewith (upon repayment, exercise of
Optional Exchanges or otherwise).
SECTION 2.11. RIGHT TO PARTICIPATE. (a) So long as any Note is
outstanding, the Company shall not (x) issue, sell or exchange, agree or offer
to issue, sell or exchange, or reserve or set aside for issuance, sale or
exchange, grant any option to purchase, issue any security convertible into or
exchangeable or exercisable for or otherwise dispose of, any shares of capital
stock of the Company or XM or any security or other right that represents the
right to acquire or receive, directly or indirectly, any capital stock of the
Company or XM or (y) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
any capital stock of the Company or XM, whether any such transaction described
in (x) or (y) above is to be settled by delivery of capital stock or such other
securities or other rights, in cash or otherwise ("Offered Securities"), unless
in each such case the Company shall have first complied with this Section 2.11.
The Company shall deliver to the Purchaser a written notice of any proposed or
intended issuance, sale or exchange of Offered Securities (the "Offer"), which
Offer shall (i) identify and describe the Offered Securities, (ii) describe the
price and other terms upon which they are to be issued, sold or exchanged, and
the number or amount of the Offered Securities to be issued, sold or exchanged
and (iii) include an offer to issue and sell to or exchange with the Purchaser
the Offered Securities upon identical terms or upon terms more favorable to the
Purchaser than the terms of the proposed sale, issuance or exchange of the
Offered Securities.
(b) To accept an Offer, in whole or in part, the Purchaser must
deliver a written notice to the Company within 15 days following receipt of the
Offer, stating that the Purchaser accepts the Offer (the "Notice of
Acceptance"). In such an event, the Company and the Purchaser shall consummate
the purchase and sale of the Offered Securities on the terms and conditions set
forth in the Offer.
(c) The Company shall have 60 days from the expiration of the period
set forth in Section 2.11(b) above to issue, sell or exchange the Offered
Securities if the Purchaser has not given a Notice of Acceptance within the time
period set forth in Section 2.11(b) (the "Refused Securities"), but only upon
terms and conditions that are not more favorable, in the aggregate, to the
acquiring person or persons or less favorable to the Company than those set
forth in the Offer.
(d) Any Offered Securities not acquired by the Purchaser or other
persons in accordance with this Section 2.11 above may not be issued, sold or
exchanged until they are again offered to the Purchaser under the procedures
specified in this Section 2.11.
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(e) The term "Offered Securities" shall not include (in all cases as
adjusted for stock dividends, stock splits, recapitalizations and similar
events): (i) the grant or conversion or exercise of any options, warrants,
convertible securities or other similar purchase or exchange rights issued and
outstanding, or committed to be issued, as of the date of this Agreement; (ii)
the grant or conversion or exercise of any options, warrants, convertible
securities or other similar purchase or exchange rights which may be issued or
granted after the date of this Agreement under any stock option, stock incentive
or other employee benefit plan of the Company in effect as of the date of this
Agreement or which becomes effective after the date of this Agreement, so long
as such stock option, stock incentive or other employee benefit plan is approved
by the Board of Directors of the Company; and (iii) customary antidilution
adjustments to the exercise or conversion price of any options, warrants,
convertible securities or other similar purchase or exchange rights issued by
the Company and described in clauses (i) or (ii) that are required to be made
pursuant to the terms of such instruments as originally issued.
ARTICLE 3
CONDITIONS
SECTION 3.01. INITIAL CLOSING. The Initial Closing hereunder shall occur
upon satisfaction of the following conditions:
(a) All representations and warranties made by the Company in this
Agreement or in the Pledge Agreement or otherwise made in writing in connection
herewith or therewith shall be true and correct on and as of the Initial Closing
Date with the same force and effect as though such representations and
warranties had been made at and as of the Initial Closing Date. All of the
agreements, terms, covenants and conditions required by this Agreement to be
complied with and performed by the Company shall have been complied with and
performed.
(b) No material adverse change shall have occurred in the business,
operations, properties or condition (financial or otherwise) of the Company, and
no other event shall have occurred which creates a possibility of materially
adversely affecting the ability of the Company to perform and comply with all
terms, conditions and agreements to be performed or complied with by the Company
under this Agreement or the Pledge Agreement or the transactions contemplated
hereby and thereby. No actions, suits, claims, arbitrations, litigation, or
proceedings or investigations before or by any arbitrator or Governmental
Authority shall have been instituted or threatened to restrain, prohibit,
invalidate or otherwise affect the transactions contemplated by this Agreement.
(c) All approvals, licenses, authorizations, consents, filings and
registrations of or with all Governmental Authorities and other Persons which
shall be necessary in connection with the execution, delivery, performance and
validity of this Agreement, the Tranche A Note and the Pledge Agreement, and the
transactions contemplated hereby and thereby shall have been obtained, shall be
in form and substance reasonably satisfactory to the Purchaser and counsel to
the Purchaser, shall have been delivered to the Purchaser and shall be in full
force and effect at and as of the Initial Closing Date.
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(d) the Company shall have obtained all consents, releases and
approvals necessary to enter into the Pledge Agreement in the form of Exhibit C
(the "Pledge Agreement") including all consents, releases and approvals
necessary to remove all Liens from 3,000,000 XM Shares held by the Company; all
such consents, releases and approvals (including releases addressed to and for
the benefit of the Purchaser) shall be in form and substance satisfactory to the
Purchaser and its counsel; and
(e) the Company shall have delivered the following to the Purchaser:
(i) a certificate of a Responsible Officer of the Company
certifying as to the Company's compliance with the conditions set forth in
clauses (a), (b) and (c) of this Section 3.01;
(ii) a duly executed Tranche A Note dated as of the Initial
Closing Date complying with the provisions of Section 2.03;
(iii) the Pledge Agreement duly executed by the Company;
(iv) certificate(s) representing 3,000,000 XM Shares along
with duly executed blank stock powers and an irrevocable letter to XM in the
form attached hereto as Exhibit D;
(v) an opinion of (A) ▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., counsel to
the Company, substantially in the form of Exhibit E hereto and (B) an opinion of
▇▇▇▇▇ ▇. ▇▇▇▇▇, general counsel of the Company, substantially in the form of
Exhibit F hereto;
(vi) UCC termination statements duly executed by all
applicable Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements disclosed in such
search (other than any such financing statements in respect of Permitted Liens;
(vii) UCC financing statements, duly executed by the Company
with respect to the Collateral, for filing in all jurisdictions as may be
necessary or, in the opinion of Purchaser, desirable to perfect the security
interests created in such Collateral pursuant to the Pledge Agreement under the
UCC;
(viii) a copy of the financial statements of the Company
referred to in Section 4.10(a), certified by a Responsible Officer of the
Company; and
(ix) all other documents the Purchaser may reasonably request
relating to the existence of the Company (including, without limitation, a
certificate of good standing of the Company), any of the Company's Subsidiaries,
the corporate authority for and the validity of this Agreement, the Notes, the
Pledge Agreement and any other matters relevant hereto, all in form and
substance reasonably satisfactory to the Purchaser.
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SECTION 3.02. SECOND CLOSING. The Second Closing hereunder shall occur
upon satisfaction of the following conditions:
(a) the Initial Closing shall have occurred;
(b) the Purchaser shall have received a Notice of Purchase;
(c) all representations and warranties made by the Company in this
Agreement or in the Pledge Agreement and Second Pledge Agreement or otherwise
made in writing in connection herewith or therewith shall be true and correct
(without giving effect to any limitation as to "materiality" or "Material
Adverse Effect" set forth therein) on and as of the Second Closing Date with the
same force and effect as though such representations and warranties had been
made at and as of the Second Closing Date, except where the failure of such
representations and warranties to be true and correct (without giving effect to
any limitation as to "materiality" or "Material Adverse Effect" set forth
therein) would not, individually or in the aggregate, have a Material Adverse
Effect. All of the agreements, terms, covenants and conditions required by this
Agreement to be complied with and performed by the Company shall have been
complied with and performed;
(d) no material adverse change shall have occurred in the business,
operations, properties or condition (financial or otherwise) of the Company, and
no other event shall have occurred which creates a possibility of materially
adversely affecting the ability of the Company to perform and comply with all
terms, conditions and agreements to be performed or complied with by the Company
under this Agreement or the Pledge Agreement or the transactions contemplated
hereby and thereby. No actions, suits, claims, arbitrations, litigation, or
proceedings or investigations before or by any arbitrator or Governmental
Authority shall have been instituted or threatened to restrain, prohibit,
invalidate or otherwise affect the transactions contemplated by this Agreement;
(e) all approvals, licenses, authorizations, consents, filings and
registrations of or with all Governmental Authorities and other Persons which
shall be necessary in connection with the execution, delivery, performance and
validity of this Agreement, the Notes and the Pledge Agreement, and the
transactions contemplated hereby and thereby shall have been obtained, shall be
in form and substance reasonably satisfactory to the Purchaser and counsel to
the Purchaser, shall have been delivered to the Purchaser and shall be in full
force and effect at and as of the Second Closing Date;
(f) the Company shall have obtained all consents, releases and
approvals (including releases addressed to and for the benefit of the Purchaser)
necessary to remove all Liens from an additional 2,000,000 XM Shares held by the
Company and to enter into a second pledge agreement in the form of Exhibit C
hereto (the "Second Pledge Agreement") with respect to such shares; all such
consents, approvals and releases shall be in form and substance satisfactory to
the Purchaser and its counsel;
(g) the Pledge Agreement shall be in full force and effect;
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(h) no Default or Event of Default shall have occurred and be
continuing on the Second Closing Date;
(i) the Purchaser shall have received an opinion of (A) ▇▇▇▇▇ &
▇▇▇▇▇▇▇, L.L.P., counsel to the Company, substantially in the form of Exhibit E
hereto and (B) an opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇, general counsel of the Company,
substantially in the form of Exhibit F hereto;
(j) the Purchaser shall have received the Notice of Purchase as
required by Section 2.01(b) hereof; and
(k) the Company shall have delivered the following to the Purchaser:
(i) a certificate of a Responsible Officer of the Company
certifying as to the Company's compliance with the conditions set forth in
clauses (c), (d) and (e) of this Section 3.02;
(ii) the Second Pledge Agreement duly executed by the
Company;
(iii) UCC Financing statements, duly executed by the Company
with respect to the Collateral, for filing in all jurisdictions as may be
necessary or, in the opinion of the Purchaser, desirable to perfect the security
interest in such Collateral pursuant to the Second Pledge Agreement;
(iv) a duly executed Tranche B Note dated as of the Second
Closing Date complying with the provisions of Section 2.03;
(v) certificate(s) representing 2,000,000 XM Shares along
with duly executed blank stock powers; and
(iv) all other documents the Purchaser may reasonably request
relating to the existence of the Company, any of the Company's Subsidiaries, the
corporate authority for and the validity of this Agreement, the Notes, the
Pledge Agreement or any other matters relevant hereto, all in form and substance
reasonably satisfactory to the Purchaser; and
(l) the Purchaser shall have consented in writing to the consummation of
the Second Closing.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to the Purchaser, as of the date of
this Agreement and the Initial Closing Date, that, except as set forth in the
section (if any) of the Disclosure Schedule corresponding to the Section heading
below:
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SECTION 4.01. CORPORATE EXISTENCE AND POWER. Each of the Company and its
Principal Subsidiaries (a) is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted; (c) is duly qualified as a foreign corporation, licensed and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification; and (d) is in compliance with all Requirements of Law except, in
the case of clauses (c) and (d), where the failure to be so qualified or in
compliance could not reasonably be expected to have a Material Adverse Effect.
SECTION 4.02. CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by each of the Company and its Subsidiaries of any
Investment Document to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (a) contravene the terms of
such Person's certificate of incorporation, bylaws or other organizational
document; (b) upon receipt of the consents, releases and approvals described in
Section 3.02(f) on or prior to the Second Closing Date, if the Second Closing
were to occur, conflict with or result in any breach or contravention of, or the
creation of any Lien under, any indenture, agreement, lease, instrument,
Contractual Obligation, injunction, order, decree or undertaking to which such
Person is a party; or (c) violate any Requirement of Law.
SECTION 4.03. GOVERNMENT APPROVALS. All material Government Approvals
heretofore required to be obtained have been duly obtained, were validly issued,
are in full force and effect, are not subject to appeal and are held in the name
of, or for the benefit of, the appropriate Persons. There is no proceeding
pending or, to the best knowledge of the Company, threatened against the Company
or any of its Subsidiaries, or any property of the Company or any of its
Subsidiaries, which seeks, or may reasonably be expected, to rescind, terminate,
materially adversely modify or suspend any of the FCC Licenses. There has not
occurred any event that would make unlikely the delivery or issuance as
anticipated of, and when and as needed all such Government Approvals. No such
Government Approval already obtained is subject to any restriction, condition,
limitation or other provision that would have a Material Adverse Effect. The
information set forth in each application submitted by the Company or any of its
Subsidiaries in connection with each such Government Approval is accurate and
complete in all material respects taken as a whole, except for statements or
omissions which could not reasonably be expected to affect adversely the
validity of such Government Approvals. No other material consent, approval or
authorization of, or declaration or filing with, any other Person is required in
connection with the execution, delivery, performance, validity or enforceability
of this Agreement or any other Investment Document.
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SECTION 4.04. BINDING EFFECT. This Agreement and each other Investment
Document to which the Company or any of its Subsidiaries is a party constitute
the legal, valid and binding obligations of such Person, enforceable against
such Person in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
SECTION 4.05. LITIGATION. Except for matters arising after the date
hereof which could not reasonably be expected to have a Material Adverse Effect,
there are no actions, suits, proceedings, claims or disputes pending, or to the
best knowledge of the Company, threatened or contemplated at law, in equity, in
arbitration or before any Governmental Authority, against the Company or any of
its Subsidiaries or any of their respective properties which: (a) purport to
affect or pertain to this Agreement, or any Investment Document, or any of the
transactions contemplated hereby or thereby; or (b) if determined adversely to
the Company or any of its Subsidiaries, could have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery and performance of this Agreement or any other
Investment Document, or directing that the transactions provided for herein or
therein not be consummated as herein or therein provided.
SECTION 4.06. NO DEFAULT. Upon receipt of the consents, releases and
approvals described in Section 3.02(f) on or prior to the Second Closing Date,
if the Second Closing were to occur, no Default or Event of Default exists or
would result from the incurring of Obligations by the Company or any of its
Subsidiaries under any Investment Document. Neither the Company nor any of its
Subsidiaries is in default under or with respect to any Contractual Obligation
in any respect which, individually or together with all such defaults, could
have a Material Adverse Effect.
SECTION 4.07. ERISA COMPLIANCE. (a) Section 4.07 of the Disclosure
Schedule lists all Plans maintained or sponsored by the Company or to which
either of them is obligated to contribute, and separately identifies Plans
intended to be Qualified Plans and Multiemployer Plans. All written descriptions
thereof provided to the Purchaser are true and complete in all material
respects. Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state law,
including all requirements under the Code or ERISA for filing reports (which are
true and correct in all material respects as of the date filed), and benefits
have been paid in accordance with the provisions of the Plan. Each Qualified
Plan has been determined by the IRS to qualify under Section 401 of the Code,
and to the best knowledge of the Company nothing has occurred which would cause
the loss of such qualification.
(b) There is no outstanding liability under Title IV of ERISA with
respect to any Plan maintained or sponsored by any member of the Controlled
Group (as to which the Company is or may be liable), nor with respect to any
Plan to which any member of the Controlled Group contributes or is obligated to
contribute (wherein the Company is or may be liable). No Plan
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maintained or sponsored by the Company provides medical or other welfare
benefits or extends coverage relating to such benefits beyond the date of a
participant's termination of employment with the Company, except to the extent
required by Section 4980B of the Code and at the sole expense of the participant
or the beneficiary of the participant to the fullest extent permissible under
such Section of the Code. The Company has complied in all material respects with
the notice and continuation coverage requirements of Section 4980B of the Code.
(c) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Plan maintained or sponsored by the Company or to which the
Company is obligated to contribute. There are no pending or, to the best
knowledge of the Company, threatened claims, actions or lawsuits, other than
routine claims for benefits in the usual and ordinary course, asserted or
instituted against (i) any Plan maintained or sponsored by the Company or its
assets, (ii) any member of the Controlled Group with respect to any Qualified
Plan of the Company, or (iii) any fiduciary with respect to any Plan for which
the Company may be directly or indirectly liable, through indemnification
obligations or otherwise. The Company has not incurred and does not reasonably
expect to incur (i) any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 of ERISA with respect to a Multiemployer Plan or (ii) any
liability under Title IV of ERISA (other than premiums due and not delinquent
under Section 4007 of ERISA) with respect to a Plan. The Company has not
transferred any Unfunded Pension Liability outside of the Controlled Group or
otherwise engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
(d) The Company has not engaged, directly or indirectly, in a
non-exempt prohibited transaction (as defined in Section 4975 of the Code or
Section 406 of ERISA) in connection with any Plan, which transaction could have
a Material Adverse Effect.
SECTION 4.08. TITLE TO PROPERTY. Each of the Company and its
Subsidiaries has good record and marketable title in fee simple to or valid
leasehold interests in all real property used in its business, except for such
defects in title as could not, individually or in the aggregate, have a Material
Adverse Effect. Such real property is free and clear of all Liens or rights of
others, except Permitted Liens.
SECTION 4.09. TAXES. Each of the Company and its Subsidiaries has filed
all Federal and other material tax returns and reports required to be filed and
have paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP and no Notice of Lien has been filed or
recorded. There is no proposed tax assessment against the Company or any of its
Subsidiaries which would, if the assessment were made, have a Material Adverse
Effect.
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SECTION 4.10. FINANCIAL CONDITION.
(a) The audited consolidated statements of financial position of the
Company and its Subsidiaries as of December 31, 1999, and the related
consolidated statements of loss, stockholders' equity and cash flows for the
fiscal year ended on that date and the unaudited consolidated financial
statements of the Company and its Subsidiaries as of December 31, 2000 included
in the draft dated March 23, 2001 of the Company's Annual Report on Form 10-K
delivered to the Purchaser: (i) were prepared in accordance with GAAP
consistently applied throughout the periods covered thereby, except as otherwise
expressly noted therein, (ii) fairly present, in all material respects, the
financial condition of the Company and its Subsidiaries as of the date thereof
and results of operations for the period covered thereby and (iii) show all
material Indebtedness and other liabilities, direct or contingent, of the
Company and its consolidated Subsidiaries as of the date thereof (including
liabilities for taxes and material commitments); except with respect to (i) and
(ii), that the Company's independent auditors have advised the Company that they
intend to include a "going concern" qualification in the opinion of the auditors
to be included with the financial statements to be included in the Company's
Annual Report on Form 10-K. The unaudited consolidated balance sheet of the
Company as of February 28, 2001, attached hereto as Section 4.10(a) of the
Disclosure Schedule, reflects all liabilities of the Company and its
Subsidiaries as of such date in accordance with GAAP consistently applied
throughout the period covered thereby.
(b) Since December 31, 2000, there has been no Material Adverse
Effect and since February 28, 2001, there has been no material increase in the
liabilities of the Company and its Subsidiaries.
SECTION 4.11. ENVIRONMENTAL MATTERS. The operations of the Company and
each of its Subsidiaries comply in all material respects with all Environmental
Laws. The Company and each of its Subsidiaries have obtained all licenses,
permits, authorizations and registrations required under any Environmental Law
("Environmental Permits") necessary for its operations to comply in all material
respects with Environmental Laws, and all such Environmental Permits are in full
force and effect, and the Company and each of its Subsidiaries are in material
compliance with all terms and conditions of such Environmental Permits. None of
the Company, any of its Subsidiaries or any of their present or, to the
knowledge of the Company, past property or operations is subject to any
outstanding written order from or agreement with any Governmental Authority or
other Person, nor subject to any judicial or administrative proceeding,
respecting any Environmental Law, Environmental Claim or Hazardous Material.
There are no conditions or circumstances which may give rise to any
Environmental Claim arising from the operations of the Company or its
Subsidiaries, including Environmental Claims associated with any operations of
the Company or its Subsidiaries, with a potential liability in excess of
$5,000,000 in the aggregate. Without limiting the generality of the foregoing,
the Company and its Subsidiaries have met all notification requirements under
Title III of the Superfund Amendments and Reauthorization Act of 1986 or any
other Environmental Law.
SECTION 4.12. REGULATED ENTITIES. None of the Company, any Person
controlling the Company, or any Subsidiary thereof, is (a) an "Investment
Company" within the meaning of the
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Investment Company Act of 1940; or (b) subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code or any other Federal or state
statute or regulation limiting its ability to incur Indebtedness.
SECTION 4.13. SUBSIDIARIES. As of the Closing Date, except as disclosed
in Company's reports filed with the Securities and Exchange Commission since
January 1, 2000 (the "SEC Reports"), the Company does not have any Subsidiaries
and has no equity investments in any other corporation or entity.
SECTION 4.14. INSURANCE. The properties of the Company and its
Subsidiaries are insured with financially sound and reputable insurance
companies, in such amounts, with such deductibles and covering such risks as is
customarily carried on by companies engaged in similar businesses and owning
similar properties in localities where the Company or such Subsidiary operates.
SECTION 4.15. BUSINESS. The Company and its Subsidiaries have not
conducted any business other than as described in the SEC Reports. Neither the
business nor the properties of the Company and its Subsidiaries are or have been
affected by any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy or other casualty (whether or not covered by insurance) which has had a
Material Adverse Effect.
SECTION 4.16. COLLATERAL; PROPERTY. All contracts and all property now
owned by the Company are held by it free and clear of all Liens other than
Permitted Liens. The Company has good, marketable and valid title in and to all
of the Collateral now owned by it, in each case free and clear of all Liens
other than Permitted Liens.
SECTION 4.17. PLEDGE AGREEMENT. The Pledge Agreement creates in favor of
the Purchaser, for the benefit of the Purchaser, legal, valid and enforceable
Liens on or in all of the Collateral to the extent provided in the Pledge
Agreement. All filings, recordations, registrations and other actions necessary
to perfect such Liens have been duly effected, and, to the extent that such
Liens may legally be given and be effective and enforceable, each Lien created
by the Pledge Agreement constitutes a perfected Lien on or in all right, title,
estate and interest of the Company in the Collateral covered thereby, prior and
superior to all other Liens except Permitted Liens arising by operation of law,
and all necessary and appropriate consents to the creation and perfection of
such Liens have been obtained.
SECTION 4.18. USE OF PROCEEDS. The proceeds to be received by the
Company upon the issuance and sale of the Notes shall be used by the Company for
working capital, to pay the fees and expenses contemplated by this Agreement and
25% of the net proceeds from the sale of the Notes shall be used to pay down
debt under the Term Credit Agreement. The Company shall not use any portion of
the proceeds of any Notes for the purpose of purchasing or carrying any
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"margin stock" (as defined in Regulation U of the Board of Governors of the
Federal Reserve System) or for any other purpose in violation of any applicable
statute or regulation, or of the terms and conditions of this Agreement.
SECTION 4.19. DISCLOSURE. The information (including, without
limitation, the information in the SEC Reports) furnished in writing at or prior
to the Initial Closing Date by the Company to the Purchaser in connection with
this Agreement and the transactions contemplated hereby is true, complete and
accurate in every material respect or based on reasonable estimates on the date
as of which such information is stated or certified and is not incomplete by
omitting to state any material fact necessary to make such information (taken as
a whole) not misleading in light of the circumstances under which such
information was made. There is no fact known to the Company on the date as of
which this representation and warranty is made or the Initial Closing Date that
has not been disclosed in writing to the Purchaser which could reasonably be
expected to have a Material Adverse Effect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants that:
SECTION 5.01. CORPORATE EXISTENCE AND POWER. The Purchaser (a) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation; and (b) is in compliance with all
Requirements of Law except, in the case of clause (b) where the failure to be so
qualified or in compliance could not reasonably be expected to have a Material
Adverse Effect.
SECTION 5.02. CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by the Purchaser of any Investment Document to which it
is a party have been duly authorized by all necessary corporate action and do
not and will not: (a) contravene the terms of the Purchaser's certificate of
incorporation or bylaws; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any indenture, agreement,
lease, instrument, Contractual Obligation, injunction, order, decree or
undertaking to which the Purchaser is a party; or (c) violate any Requirement of
Law.
SECTION 5.03. GOVERNMENT APPROVALS. All material Government Approvals
required for the execution, delivery and performance by the Purchaser of the
Investment Documents have been duly obtained, were validly issued, are in full
force and effect, are not subject to appeal and are held in the name of, or for
the benefit of, the appropriate Persons. No other material consent, approval or
authorization of, or declaration or filing with, any other Person is required to
be made or obtained by the Purchaser in connection with the execution, delivery
or performance by the Purchaser of this Agreement, the validity or
enforceability as to the Purchaser of this Agreement or any other Investment
Document.
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SECTION 5.04. BINDING EFFECT. This Agreement and each other Investment
Document to which the Purchaser is a party constitute the legal, valid and
binding obligations of the Purchaser, enforceable against the Purchaser in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
SECTION 5.05. INVESTMENT COMPANY. The Purchaser is not an Investment
Company, as such term is defined in the Investment Company Act of 1940, as
amended.
SECTION 5.06. AVAILABILITY OF FUNDS. The Purchaser has sufficient funds
to purchase the Notes pursuant to this Agreement.
SECTION 5.07. ACQUISITION FOR INVESTMENT. The Purchaser is acquiring the
Notes and, upon exchange of the Notes, the XM Shares (collectively, the
"Securities") for its own account, for investment and not with a view to, or for
sale in connection with, the distribution thereof in a manner which would
violate the Securities Act of 1933, as amended (the "Securities Act").
SECTION 5.08. ACCREDITED INVESTOR STATUS. The Purchaser is an
"accredited investor," as that term is as defined in Rule 501(a) of Regulation D
under the Securities Act. The Purchaser has sufficient knowledge and experience
in financial and business matters so as to be capable of evaluating the merits
and risks of its investment in the Securities and is capable of bearing the
economic risks of such investment. The Purchaser understands that its investment
in the Securities involves a significant degree of risk.
SECTION 5.09. INFORMATION. The Purchaser and its advisors have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by the Purchaser or its advisors. The Purchaser and
its advisors have been afforded the opportunity to ask questions of the
Company's management concerning the Company and the Securities.
SECTION 5.10. GOVERNMENT REVIEW. The Purchaser understands that no
Governmental Entity has passed upon or made any recommendation or endorsement of
the Securities.
SECTION 5.11. SALE OR TRANSFER. The Purchaser understands that (i)
except as provided in Section 2.10(b) hereof, the sale or re-sale of the XM
Shares has not been and is not being registered under the Securities Act or any
applicable state securities laws, and the XM Shares may not be sold or otherwise
transferred unless (A) the XM Shares are sold or transferred pursuant to an
effective registration statement under the Securities Act, or (B) sold or
otherwise transferred in a transaction exempt from such registration
requirements, in which case, if requested by XM, the Purchaser shall have
delivered to XM an opinion of counsel (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions)
reasonably satisfactory to the XM to the effect that the XM Shares to be sold or
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transferred may be sold or transferred without registration under the Securities
Act (provided that such legal opinion need not be delivered to XM in connection
with any sale pursuant to Rule 144); (ii) any sale of such XM Shares made in
reliance on Rule 144 may be made only in accordance with the terms of such Rule
and further, if such Rule is not applicable, any sale of such XM Shares under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with another exemption under the Securities Act or
the rules and regulations of the SEC thereunder; and (iii) neither the Company
nor any other Person is under any obligation to register such XM Shares under
the Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (other than pursuant to Section 2.10(b)
hereof).
(b) The Purchaser understands that (i) the sale or re-sale
of the Notes has not been and is not being registered under the Securities Act
or any applicable state securities laws, and the Notes may not be sold or
otherwise transferred except in a transaction not requiring registration under,
or not subject to, Section 5 of the Securities Act; and (ii) neither the Company
nor any other Person is under any obligation to register the Notes under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
SECTION 5.12. RESIDENCY. The Purchaser maintains its principal executive
offices in the State of New York.
ARTICLE 6
COVENANTS
The Company agrees that, so long as the Purchaser has any Commitment
hereunder or any amount payable hereunder or under any Note remains unpaid:
SECTION 6.01. CONDUCT OF BUSINESS; PRESERVATION OF CORPORATE EXISTENCE.
The Company shall, and shall cause each of its Subsidiaries: (a) to engage in
business of the same general type as now conducted by the Company and its
Subsidiaries (including Motient Communications Inc. and Motient Services Inc.);
(b) to preserve and maintain in full force and effect its corporate existence
and good standing under the laws of its State or jurisdiction of incorporation;
(c) to preserve and maintain in full force and effect all rights, privileges,
qualifications, permits, licenses and franchises necessary or desirable in the
normal conduct of its business; (d) to use its reasonable efforts, in the
ordinary course and consistent with past practice, to preserve its business
organization and preserve the goodwill and business of the customers, suppliers
and others having business relations with it; and (e) to preserve or renew all
of its registered trademarks, trade names and service marks, the
non-preservation of which could have a Material Adverse Effect.; provided that
the Company may transfer the assets of Motient Services, and take the actions
incidental thereto, in each case as required by the MSV Asset Sale Agreement.
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SECTION 6.02. MAINTENANCE OF PROPERTY. The Company shall maintain, and
shall cause each of its Principal Subsidiaries and Subsidiaries, respectively,
to maintain, and preserve all its property which is used or useful in its
business in good working order and condition, ordinary wear and tear excepted.
SECTION 6.03. COMPLIANCE WITH LAWS. The Company shall comply, and shall
cause each of its Subsidiaries to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it or
its business (including the Federal Fair Labor Standards Act and ERISA), except
such as may be contested in good faith or as to which a bona fide dispute may
exist.
SECTION 6.04. PLEDGE AGREEMENT AND SECOND PLEDGE AGREEMENT. The Company
shall at all times ensure that (i) the Pledge Agreement and, if applicable, the
Second Pledge Agreement, creates in favor of the Purchaser, as the secured party
thereunder, legal, valid and enforceable Liens on or in all Collateral covered
thereby; (ii) all filings, recordations, registrations and other actions
necessary or desirable to perfect the Liens created or purported to be created
by the Pledge Agreement and, if applicable, the Second Pledge Agreement, have
been duly effected; (iii) each Lien created by the Pledge Agreement and, if
applicable, the Second Pledge Agreement, constitutes a perfected Lien on or in
all right, title, estate and interest of the Company, as applicable, in the
Collateral, prior and superior to all Liens other than Permitted Liens arising
by operation of law; and (iv) all necessary and appropriate consents to the
creation and perfection of the Liens created or purported to be created by the
Pledge Agreement and, if applicable, the Second Pledge Agreement, have been
obtained.
SECTION 6.05. GOVERNMENT APPROVALS. The Company shall, and shall cause
each of its Subsidiaries to, comply with the terms of and maintain in full force
and effect all material FCC Licenses, and all amendments thereto, and shall, and
shall cause each of its Subsidiaries to, obtain, maintain and comply with the
terms of all other Government Approvals which are necessary under applicable
laws and regulations in connection with the Company's or such Subsidiary's
business. No such Government Approval shall be subject to any restriction,
condition, limitation or other provision that would have a Material Adverse
Effect.
SECTION 6.06. LIMITATION ON LIENS. The Company shall not, and shall not
permit any other member of the Company Group to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of its property or assets, whether now owned or hereafter acquired, or
offer or agree to do so, other than the following ("Permitted Liens"):
(a) any Lien securing Indebtedness identified in Schedule 6.06
hereto;
(b) any Lien in favor of the Purchaser created under any Investment
Document;
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(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, unless the same are
being contested in good faith by appropriate proceedings and adequate reserves
in accordance with GAAP are maintained, provided that no Notice of Lien has been
filed or recorded;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary course
of business which do not secure Indebtedness and are not delinquent or remain
payable without penalty;
(e) Liens (other than any Lien imposed by ERISA) on the property of
any member of the Company Group incurred, or pledges or deposits required, in
connection with workmen's compensation, unemployment insurance and other social
security legislation;
(f) Liens on the property of any member of the Company Group
securing (i) the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, and (ii) obligations on surety and appeal
bonds, and (iii) other obligations of a like nature incurred in the ordinary
course of business which do not secure Indebtedness, provided that all such
Liens in the aggregate could not cause a Material Adverse Effect;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company Group;
(h) Liens on any asset which is the subject of a capital lease
securing Indebtedness incurred or assumed for the purpose of financing all or
any part of the cost of acquiring such asset, provided that (x) such Lien
attaches concurrently with or within 30 days after the acquisition thereof, and
(y) the sum of the aggregate principal amount of such Indebtedness secured by
such Liens shall not exceed $15,000,000;
(i) Liens on contract rights under subscriber equipment leases sold,
pledged or otherwise transferred pursuant to any bona fide financing of such
leases; and
(j) Liens to secure Vendor Financing Indebtedness permitted by
Section 6.08(j) provided that such Liens cover only the assets acquired with
such Vendor Financing Indebtedness.
SECTION 6.07. DISPOSITION OF ASSETS, CONSOLIDATIONS AND MERGERS. The
Company shall not, and shall not permit any Subsidiary to, directly or
indirectly, (i) sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of transactions) any of its assets, business or
property (including accounts and notes receivable (with or without recourse),
equipment sale-leaseback transactions or the Company's interest in Mobile
Satellite Ventures LLC (but not, for the avoidance of doubt, any dilution of
such interest arising out of additional capital contributions by others to
Mobile Satellite Ventures LLC)) or (ii) merge or consolidate with any other
Person, or enter into any agreement to do any of the foregoing described in
clauses
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(i) or (ii) except for the following; provided that immediately after giving
effect to any of the following, no Default or Event of Default would exist:
(a) sales, transfers, or other dispositions of inventory, or used,
worn-out or surplus property, or property of no further use to the Company and
its Subsidiaries, all in the ordinary course of business;
(b) sales, transfers, or other dispositions of equipment in the
ordinary course of business to the extent that such equipment is exchanged for
credit against the purchase price of similar replacement equipment or the
proceeds of such sale are reasonably promptly applied to the purchase price of
such replacement equipment;
(c) sales, transfers, or other dispositions of communications
services, capacity or equipment pursuant to the customer contracts providing for
the sale of communications services, capacity or equipment in the ordinary
course of business;
(d) sales, transfers or other dispositions pursuant to bona fide
sale-leaseback financings in which the lease gives rise solely to Capital Lease
Obligations; provided, however, that any such sales, transfers or other
dispositions are not permitted with any assets of the communications network;
and provided further that the aggregate amount of all liabilities in respect of
all such Capital Lease Obligations arising out of bona fide sale-leaseback
transactions, as determined in accordance with GAAP, shall not exceed $5,000,000
at any one time outstanding;
(e) sales, transfers, or other dispositions of assets in the
ordinary course of business having a fair market value not exceeding $500,000
per item or $1,000,000 in the aggregate in any fiscal year (excluding sales,
transfers and dispositions theretofore approved in accordance with the terms
hereof in such fiscal year);
(f) sales, transfers or other dispositions of contract rights under
subscriber equipment leases pursuant to any bona fide financing of such leases;
(g) non-exclusive licenses of technology and other intangible
assets, excluding spectrum licenses;
(h) sales of mobile earth terminals and related equipment, and other
inventory;
(i) any Subsidiary of the Company may merge, consolidate or combine
with or into, or transfer (for no consideration) assets to the Company; provided
that the Company shall be the continuing or surviving corporation; and provided,
further, that no High-yield Subsidiary shall merge, consolidate or combine with
or into the Company or any Subsidiary that is not a High-yield Subsidiary.
(j) any High-yield Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise),
to another High-yield Subsidiary; and
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(l) the sale of assets by Motient Services Inc. to Mobile Satellite
Ventures LLC as required by and in accordance with the MSV Asset Sale Agreement.
SECTION 6.08. INVESTMENTS. Neither the Company nor any other member of
the Company Group will make or acquire any Investment in any Person other than:
(a) Investments in Persons which are Subsidiaries on the date
hereof; provided, that the aggregate amount of all Investments made in
High-yield Subsidiaries shall not exceed the outstanding principal amount of the
Tranche A Note and, if applicable, after the Second Closing, the sum of
outstanding principal amounts of the Notes;
(b) Investments in Mobile Satellite Ventures LLC;
(c) Cash Equivalents; and
(d) any Investment not otherwise permitted by the foregoing clauses
of this Section if, immediately after such Investment is made or acquired, the
aggregate net book value of all Investments permitted by this clause (d) does
not exceed $10,000,000.
SECTION 6.09. TRANSACTIONS WITH AFFILIATES. Except where such Affiliate
is a member of the Company Group other than a High-yield Subsidiary, the Company
will not, and will not permit any Subsidiary to, directly or indirectly, (i) pay
any funds to or for the account of any Affiliate, (ii) make any investment in
any Affiliate (whether by acquisition of stock or indebtedness, by loan,
advance, transfer of property, guarantee or other agreement to pay, purchase or
service, directly or indirectly, any Indebtedness, or otherwise), (iii) lease,
sell, transfer or otherwise dispose of any assets, tangible or intangible, to
any Affiliate, or (iv) except in the ordinary course of business consistent with
past practice, participate in, or effect, any other transaction with any
Affiliate, except in each case on an arm's-length basis on terms at least as
favorable to the Company or such Subsidiary as could have been obtained from a
third party that was not an Affiliate or as otherwise expressly approved in
writing by the Purchaser and except that the Company may make Investments in
High-yield Subsidiaries that are permitted by clause (a) of Section 6.08.
SECTION 6.10. RESTRICTED PAYMENTS. The Company will not declare or make
any dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of its capital
stock or purchase, redeem or otherwise acquire for value (or permit any member
of the Company Group to do so) any shares of its capital stock or any warrants,
rights or options to acquire such shares, now or hereafter outstanding.
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SECTION 6.11. LIMITATION ON INDEBTEDNESS. The Company shall not, and
shall not permit any Subsidiary (other than Mobile Satellite Ventures LLC and
subsidiaries of Mobile Satellite Ventures LLC) to, create, incur, assume,
guaranty, suffer to exist, or otherwise become or remain directly or indirectly
liable with respect to, any Indebtedness, except for:
(a) accounts payable to trade creditors for goods and services and
current operating liabilities (not the result of the borrowing of money)
incurred in the ordinary course of the Company's or the Subsidiary's business,
as the case may be, in accordance with customary terms and paid within the
specified time, unless contested in good faith by appropriate proceedings and
reserved for in accordance with GAAP;
(b) income taxes payable and deferred taxes;
(c) accrued expenses and deferred income;
(d) Indebtedness under the Senior Notes in an aggregate principal
amount not to exceed $335,000,000 and Contingent Obligations of the Company and
of Motient Holdings Inc.'s Subsidiaries in respect thereof (such Contingent
Obligations of the Company to be subordinated to the same extent that the
Holdings Guaranty is subordinate in right of payment to the Notes as
acknowledged in Section 9.10);
(e) Indebtedness under the Term Credit Agreement and the Revolving
Credit Agreement;
(f) Contingent Obligations incurred in connection with any lease
financing of mobile equipment used in Company's business, not exceeding
$10,000,000 in the aggregate in principal amount;
(g) Indebtedness outstanding on the date hereof and identified on
the financial statements of the Company referred to in Section 4.10(a);
(h) Indebtedness incurred to finance in-orbit insurance in an
aggregate amount outstanding at any time not to exceed $6,000,000;
(i) Vendor Financing Indebtedness in an aggregate amount outstanding
at any time not to exceed $10,000,000;
(j) any other Indebtedness incurred after the date hereof; provided
that the aggregate outstanding principal amount of all such Indebtedness shall
not at any time exceed $15,000,000; and
(k) Indebtedness represented by Rate Contracts.
SECTION 6.12. ADDITIONAL LIMITATION ON INDEBTEDNESS OF THE COMPANY AND
TRANSFEREE SUBSIDIARIES. Company shall not, and shall not permit any Transferee
Subsidiary to,
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create, incur, assume, guaranty, suffer to exist or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness, except for:
(a) Indebtedness permitted by clause (g) of Section 6.11;
(b) Subordinated Indebtedness;
(c) Indebtedness incurred under financing commitments with Motorola
Inc. in accordance with the terms of such commitments in effect on the date
hereof; provided that the aggregate amount of Indebtedness permitted to be
incurred by this clause (c) shall not exceed $20,000,000;
(d) Indebtedness under the Revolving Credit Agreement in an
aggregate amount outstanding at any time not to exceed $78,000,000; and
(e) Indebtedness permitted by clause (i) of Section 6.11.
SECTION 6.08. AMENDING CONVERSION PROVISIONS. The Company shall not vote
any of its XM Shares in favor of a proposal to amend, alter, repeal or otherwise
modify, or consent to the amendment, alteration, repeal or other modification
of, or waive any right or obligation under, any provision of (a) the Amended and
Restated Shareholders Agreement, dated as of August 8, 2000, by and among XM,
the Company and other parties named therein, or (b) the Certificate of
Incorporation of XM, in each case relating to the conversion of Class B Common
Stock of XM into Class A Common Stock of XM.
ARTICLE 7
DEFAULTS
SECTION 7.01. EVENTS OF DEFAULT. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Company shall fail to pay any principal of any Note when due
or any interest, any fees or any other amount payable hereunder within two
Business Days of the date when due;
(b) the Company shall fail to observe or perform any covenant
contained in Article 6;
(c) the Company shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a) or
(b) above) for 20 days after notice thereof has been given to the Company by the
Purchaser;
(d) any representation, warranty, certification or statement made by
the Company or a Subsidiary of the Company in this Agreement or any other
Investment Document or in any certificate, financial statement or other document
delivered pursuant to this Agreement shall prove to have been incorrect in any
material respect when made (or deemed made);
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(e) the Company or any Subsidiary of the Company shall fail to make
any payment in respect of (x) any obligation under the Term Credit Agreement or
the Revolving Credit Agreement or (y) any other Indebtedness or Contingent
Obligation having an aggregate principal and face amount of more than
$5,000,000, in each case when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure continues after
the applicable grace period or notice period, if any, specified in the document
relating thereto;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Indebtedness or Contingent Obligation (x)
under the Term Credit Agreement or the Revolving Credit Agreement or (y) any
other Indebtedness or Contingent Obligation of the Company or any Subsidiary of
the Company having an aggregate principal or face amount of more than $5,000,000
or enables (or, with the giving of notice or lapse of time or both, would
enable) the holder of any such Indebtedness or Contingent Obligation or any
Person acting on such holder's behalf to accelerate the maturity thereof;
(g) the Company or any Principal Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Company or any Principal Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 60 days; or an order for relief shall be entered against the Company
or any Principal Subsidiary under the federal bankruptcy laws as now or
hereafter in effect;
(i) (1) any member of the Controlled Group shall fail to pay when
due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under a Multiemployer Plan; (2)
any member of the Controlled Group shall fail to satisfy its contribution
requirements under Section 412(c)(11) of the Code, whether or not it has sought
a waiver under Section 412(d) of the Code; (3) in the case of an ERISA Event
involving the withdrawal from a Plan of a "substantial employer" (as defined in
Section 4001(a)(2) or Section 4062(e) of ERISA), the withdrawing employer's
proportionate share of that Plan's Unfunded Pension Liabilities is more than
$5,000,000 or 10% of its net worth, if greater; (4) in the case of an ERISA
Event involving the complete or partial withdrawal from a Multiemployer Plan,
the
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withdrawing employer has incurred a withdrawal liability in an aggregate amount
exceeding $5,000,000 or 10% of its net worth, if greater; (5) in the case of an
ERISA Event not described in clause (3) or (4), the Unfunded Pension Liabilities
of the relevant Plan or Plans exceed $5,000,000 or 10% of its net worth, if
greater; (6) a Plan that is intended to be qualified under Section 401(a) of the
Code shall lose its qualification, and the loss can reasonably be expected to
impose on any member of the Controlled Group liability (for additional taxes, to
Plan participants, or otherwise) in the aggregate amount of $5,000,000 or 10% of
its net worth, if greater or more; (7) the commencement or increase of
contributions to, the adoption of, or the amendment of a Plan by, any member of
the Controlled Group shall result in a net increase in unfunded liabilities to
the Company or an ERISA Affiliate in excess of $5,000,000 or 10% of net worth,
if greater; or (8) the occurrence of any combination of events listed in clauses
(3) through (7) that involves a net increase in aggregate Unfunded Pension
Liabilities and unfunded liabilities in excess of $5,000,000 or 10% of its net
worth, if greater;
(j) one or more final judgments, orders or decrees shall be entered
against the Company or any member of the Company Group involving in the
aggregate a liability (not fully covered by insurance and as to which the
insurer has not acknowledged liability) more than an amount equal to the greater
of (i) $5,000,000 and (ii) 10% of the Company's net worth, and the same shall
remain unvacated, undischarged, unstayed or unbonded pending appeal for a period
of 60 days after the entry thereof; or
(k) any non-monetary judgment, order or decree shall be rendered
against the Company or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect, and enforcement proceedings shall
have been commenced by any Person upon such judgment or order which shall remain
unstayed for any period of 10 consecutive days or more; or
(l) (i) any provision of the Pledge Agreement or the Second Pledge
Agreement shall for any reason cease to be valid and binding on or enforceable
against the Company, if the effect thereof may materially deprive the Purchaser
of the benefits of the Collateral covered thereby, or the Company shall so state
in writing or bring an action to limit its obligations or liabilities
thereunder;
(ii) the Pledge Agreement or the Second Pledge Agreement
shall for any reason (other than pursuant to, or contemplated by, the terms
thereof) cease to create a valid security interest in the Collateral purported
to be covered thereby or such security interest shall for any reason cease to be
a perfected and (except for Permitted Liens arising by operation of law) first
priority security interest; (iii) any of the outstanding Obligations of the
Company hereunder shall not be Secured Obligations (as defined in the Pledge
Agreement); or (iv) there shall occur an event of loss which, together with all
other events of loss since the date hereof, results in a reduction in the value
(as determined in the reasonable opinion of the Purchaser) of the Collateral of
$2,500,000 net of any cash proceeds received by the Company in respect of such
event or events of loss; or
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(m) the FCC or any other Governmental Authority shall revoke or fail
to renew any material FCC License or any other material license, permit or
franchise of the Company or any of its Subsidiaries; the Company or any
Subsidiary shall for any reason lose any material FCC License or any other
material license, permit or franchise; or the Company or any Subsidiary shall
suffer the imposition of any restraining order, escrow, suspension or impound of
funds in connection with any proceeding (judicial or administrative) with
respect to any material FCC License or any other material license, permit or
franchise;
(n) there shall occur and be continuing a Material Adverse Effect;
or
(o) there shall occur a Change in Control;
then, and in every such event, the Purchaser may (i) by notice to the Company
terminate the commitment to purchase the Tranche B Note and such commitment
shall thereupon terminate, and (ii) by notice to the Company declare the Notes
(together with accrued interest thereon) to be, and the Notes shall thereupon
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Company;
provided that in the case of any of the Events of Default specified in clause
(g) or (h) above with respect to the Company, without any notice to the Company
or any other act by the Company or any other person, the commitment to purchase
the Tranche B Note shall thereupon terminate and the Notes (together with
accrued interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company.
SECTION 7.02. NOTICE OF DEFAULT. The Company shall give notice to the
Purchaser promptly upon becoming aware of any Event of Default.
ARTICLE 8
TAXES
SECTION 8.01. TAXES. (a) For the purposes of this Section 8.01 , the
following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Company, as the case may be, pursuant to this Agreement or under any Note, and
all liabilities with respect thereto, excluding (i) in the case of the
Purchaser, taxes imposed on its income, and franchise or similar taxes imposed
on it, by a jurisdiction under the laws of which the Purchaser is organized or
in which its principal executive office is located and (ii) any United States
withholding tax imposed on such payments but only to the extent that the
Purchaser is subject to United States withholding tax at the time the Purchaser
first becomes a party to this Agreement.
"Other Taxes" means any present or future stamp or documentary taxes and
any other excise or property taxes, or similar charges or levies, which arise
from any payment made
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pursuant to this Agreement or under any Note or from the execution or delivery
of, or otherwise with respect to, this Agreement or any Note.
(b) Any and all payments by the Company to or for the account of the
Purchaser hereunder or under any Note shall be made without deduction for any
Taxes or Other Taxes; provided that, if the Company shall be required by law to
deduct any Taxes or Other Taxes from any such payments, (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Purchaser (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Company shall make such
deductions, (iii) the Company shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law and (iv)
the Company shall furnish to the Purchaser, at its address referred to in
Section 9.01 , the original or a certified copy of a receipt evidencing payment
thereof.
(c) The Company agrees to indemnify the Purchaser for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section) paid by the Purchaser and any liability (including penalties,
interest and expenses, other than those resulting from any act or failure to act
by the Purchaser) arising therefrom or with respect thereto. This
indemnification shall be paid within 15 days after the Purchaser makes demand
therefor.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party at its address
or facsimile number set forth on the signature pages hereof. Each such notice,
request or other communication shall be effective (i) if given by facsimile
transmission, when transmitted to the facsimile number specified in this Section
and confirmation of receipt is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Purchaser
under Article 2 or Article 9 shall not be effective until received.
SECTION 9.02. NO WAIVERS. No failure or delay by Purchaser in exercising
any right, power or privilege hereunder or under any Note shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 9.03. EXPENSES; INDEMNIFICATION. (a) The Company shall pay (i)
out-of-pocket expenses of the Purchaser, including reasonable fees and
disbursements of counsel for the
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Purchaser, in connection with the preparation, negotiation and administration of
this Agreement, any waiver or consent hereunder or any amendment hereof or any
Default or alleged Default hereunder and (ii) if an Event of Default occurs, all
reasonable out-of-pocket expenses incurred by the Purchaser, including (without
duplication) the reasonable fees and disbursements of outside counsel, in
connection with such Event of Default and collection, bankruptcy, insolvency and
other enforcement proceedings resulting therefrom; provided, that the Company
shall not be required to reimburse the Purchaser for more than $50,000 in legal
fees and expenses in connection with the preparation and negotiation of this
Agreement.
(b) The Company agrees to indemnify the Purchaser, its respective
affiliates and the respective directors, officers, agents and employees of the
foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, the reasonable fees and disbursements of
counsel, which may be incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding (whether or not such
Indemnitee shall be designated a party thereto) brought or threatened relating
to or arising out of this Agreement or any actual or proposed use of proceeds of
Notes hereunder; provided that no Indemnitee shall have the right to be
indemnified hereunder for such Indemnitee's own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
SECTION 9.04. AMENDMENTS AND WAIVERS. Any provision of this Agreement or
the Notes may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Company and the Purchaser.
SECTION 9.05. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
otherwise transfer any of its rights under this Agreement without the prior
written consent of the Purchaser.
SECTION 9.06. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement
and each Note shall be governed by and construed in accordance with the laws of
the State of New York. The Company hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Company irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum.
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SECTION 9.07. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 9.08. WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE
PURCHASER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.09. CONFIDENTIALITY. The Purchaser agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all non-public information provided to it by the Company or any of its
Subsidiaries in connection with this Agreement or any other Investment Document
and neither it nor any of its Affiliates shall use any such information for any
purpose or in any manner other than pursuant to the terms contemplated by this
Agreement, except to the extent such information (a) was or becomes generally
available to the public other than as a result of a disclosure by the Purchaser,
or (b) was or becomes available on a non-confidential basis from a source other
than the Company, provided that such source is not bound by a confidentiality
agreement with the Company known to the Purchaser; provided, further, that the
Purchaser may disclose such information (A) at the request of any regulatory
authority or in connection with an examination of the Purchaser by any such
authority; (B) pursuant to subpoena or other court process; (C) when required to
do so in accordance with the provisions of any applicable law; (D) at the
express direction of any other agency of any State of the United States of
America or of any other jurisdiction in which the Purchaser conducts its
business; and (E) to the Purchaser's independent auditors and legal counsel.
Neither party will issue a press release disclosing matters with respect to this
Agreement or the transactions contemplated hereby without giving the other a
reasonable opportunity to review and comment thereon.
SECTION 9.10. SENIOR INDEBTEDNESS; SUBSIDIARY GUARANTIES. The parties
hereto agree that the Notes and all Obligations in respect thereof constitute
"Senior Indebtedness" of the Company within the meaning of the Indenture and,
accordingly, shall rank pari passu with all other unsubordinated Indebtedness of
the Company and that the Obligations of the Company with respect to the Holdings
Guaranty is subordinated in right of payment, to the extent and in the manner
provided in the Indenture, to the prior payment in full of all Obligations in
respect of the Notes. The Company will cause each domestic Subsidiary of the
Company which becomes a Subsidiary after the date of this Agreement to guaranty
the Notes pursuant to a guaranty agreement in form and substance reasonably
satisfactory to the Purchaser; provided that the foregoing shall not apply to
the High-yield Subsidiaries.
SECTION 9.11. NO SHORT SALES. During any Short Sale Prohibition Period,
the Purchaser shall comply, and shall cause its Subsidiaries to comply, with
Section 16(c) of the Securities Exchange Act of 1934, as amended, with respect
to transactions in the capital stock of
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XM to the same extent as if Section 16(c) of the Securities Exchange Act of
1934, as amended, applied by its terms to the Purchaser and its Subsidiaries.
For purposes of this Section 9.11, a "Short Sale Prohibition Period" means:
(a) in connection with any payment to the Purchaser in XM Shares
pursuant to Section 2.07 hereof, each period of time commencing on the later of
(i) the date of the Purchaser's receipt of the notice described in Section
2.07(b) and (ii) the date that is 10 consecutive trading days prior to the
trading day immediately preceding the Maturity Date or date of prepayment
referred to in such notice, and ending on the Maturity Date or date of
prepayment, as the case may be; and
(b) in connection with the Second Closing, the period of time
commencing on the later of (i) the date of the Purchaser's receipt of the Notice
of Purchase pursuant to Section 2.01(b) hereof and (ii) the date that is 10
consecutive trading days prior to the trading day immediately prior to the
Second Closing Date, and (ii) ending on the Second Closing Date.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
MOTIENT CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President and Chief Executive Officer
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
RARE MEDIUM GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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LIST OF EXHIBITS
EXHIBIT A - FORM OF NOTE
EXHIBIT B - FORM OF NOTICE OF EXCHANGE
EXHIBIT C - FORM OF PLEDGE AGREEMENT
EXHIBIT D - FORM OF IRREVOCABLE LETTER
EXHIBIT E - FORM OF ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. OPINION
EXHIBIT F - FORM OF ▇▇▇▇▇ ▇. ▇▇▇▇▇, ESQ. OPINION
51
EXHIBIT A
FORM OF NOTES
THIS NOTE AND THE SHARES OF CLASS A COMMON STOCK OF XM SATELLITE RADIO HOLDINGS,
INC. ("XM SHARES") THAT MAY BE RECEIVED UPON THE PAYMENT OR EXCHANGE OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE SECURITIES LAWS. EXCEPT AS OTHERWISE SET FORTH
HEREIN OR IN THE NOTE PURCHASE AGREEMENT, DATED AS OF APRIL 2, 2001 (THE "NOTE
PURCHASE AGREEMENT"), BETWEEN THE CORPORATION AND THE PURCHASER PARTY THERETO,
NEITHER THIS NOTE NOR ANY XM SHARES MAY BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED,
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR SUCH SECURITIES UNDER THE ACT OR SUCH LAWS OR IN A TRANSACTION EXEMPT FROM,
OR NOT SUBJECT TO, SUCH REGISTRATION REQUIREMENTS IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE NOTE PURCHASE AGREEMENT. A COPY OF THE NOTE
PURCHASE AGREEMENT IS AVAILABLE UPON REQUEST TO THE SECRETARY OF THE CORPORATION
FOR INSPECTION AT THE OFFICES OF THE CORPORATION.
TERM NOTE
New York, New York
[DATE]
For value received, MOTIENT CORPORATION, a Delaware corporation (the
"Company"), promises to pay to the order of RARE MEDIUM GROUP, INC. or its
assigns (the "Purchaser"), the principal sum of $___________[Insert $25,0000,000
for the Tranche A Note][Insert principal amount of the Tranche B Note as
determined pursuant to Section 2.01(b) of the Note Purchase Agreement for the
Tranche B Note] to the Company pursuant to the Note Purchase Agreement referred
to below on the Maturity Date provided for in the Note Purchase Agreement. The
Company promises to pay interest on the unpaid principal amount of such Note on
the dates and at the rate or rates provided for in the Note Purchase Agreement
referred to below. All such payments of principal and interest shall be made in
lawful money of the United States in Federal or other immediately available
funds at the office of Purchaser, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
This note is one of the Notes referred to in the Note Purchase Agreement
dated as of April 2, 2001 between Motient Corporation and Rare Medium Group,
Inc. (as the same may be amended from time to time, the "Note Purchase
Agreement"). Terms defined in the Note Purchase Agreement are used herein with
the same meanings. Reference is made to the Note Purchase Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
MOTIENT CORPORATION
By
------------------------------------
Name:
Title:
52
EXHIBIT B
FORM OF NOTICE OF EXCHANGE
NOTICE OF EXCHANGE
The undersigned hereby irrevocably elects to exchange (the "Exchange")
$__________ of the principal amount of the [Tranche A Note/Tranche B Note] dated
________, 2001 (the "Note"), plus all accrued and unpaid interest on such
principal amount (i.e., $_________) for shares of Common Stock of XM Satellite
Radio Holdings, Inc. as of the date written below according to the conditions
set forth in the Note Purchase Agreement dated April 2, 2001 between Motient
Corporation and Rare Medium Group, Inc. If securities are to be issued in the
name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. No fee will be charged to the
holder of the Note for any exchange except as provided herein or in the Note
Purchase Agreement.
The undersigned represents and warrants that all offers and sales by the
undersigned of the securities deliverable to the undersigned upon exchange of
the Note shall be made pursuant to registration of the Common Stock under the
Securities Act of 1933, as amended (the "Act"), or pursuant to an exemption from
registration under the Act.
In the event of partial exercise, please reissue an appropriate Note for the
principal balance which shall not have been converted.
Exchange Date:
---------------------------
Applicable Exchange
Price:
----------------------
Number of Shares
to be Issued:
---------------
[HOLDER OF NOTE BEING EXCHANGED]
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ACKNOWLEDGED AND AGREED:
MOTIENT CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title: Date:
------------------------------------- ------------------------