[EXECUTION COPY]
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STOCK PURCHASE AGREEMENT
by and among
CD RADIO INC.,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
AND
LORAL SPACE & COMMUNICATIONS LTD.
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Dated: August 5, 1997
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS......................................................1
1.1 Definitions........................................1
ARTICLE 2 PURCHASE AND SALE OF SECURITIES..................................5
2.1 Purchase and Sale of Securities....................5
2.2 Closing............................................5
2.3 Satellite Contract.................................5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................6
3.1 Corporate Existence and Power......................6
3.2 Subsidiaries.......................................6
3.3 Corporate Authorization; No Contravention..........6
3.4 Governmental Authorization; Third Party Consents...7
3.5 Binding Effect.....................................7
3.6 Capitalization of the Company......................7
3.7 SEC Filings; Financial Statements..................7
3.8 Absence of Certain Developments....................8
3.9 Compliance with Laws...............................8
3.10 Licenses...........................................8
3.11 Litigation.........................................8
3.12 Intellectual Property..............................8
3.13 Private Offering...................................9
3.14 Broker's, Finder's or Similar Fees.................9
3.15 No Other Significant Stockholder...................9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..................9
4.1 Existence and Power................................9
4.2 Authorization; No Contravention....................9
4.3 Governmental Authorization; Third Party Consents...9
4.4 Binding Effect....................................10
4.5 Purchase for Own Account..........................10
4.6 Broker's, Finder's or Similar Fees................10
ARTICLE 5 COVENANTS OF THE COMPANY AND ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇..................11
5.1 Rule 144........................................11
5.2 Tag-Along Rights................................11
5.3 Preemptive Right................................12
ARTICLE 6 COVENANTS OF THE PURCHASER....................................13
ARTICLE 7 REGISTRATION RIGHTS...........................................14
7.1 Requested Registration..........................14
7.2 Company Registration............................14
7.3 Transferability.................................15
7.4 Expenses of Registration........................15
7.5 Registration Procedures.........................15
7.6 Indemnification.................................16
ARTICLE 8 MISCELLANEOUS ................................................18
8.1 Expenses........................................18
8.2 Notices.........................................18
8.3 Successors and Assigns..........................19
8.4 Amendment and Waiver............................19
8.5 Counterparts....................................20
8.6 Headings........................................20
8.7 Governing Law...................................20
8.8 Severability....................................20
8.9 Entire Agreement................................20
8.10 Further Assurances..............................20
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of August 5, 1997 (this
"Agreement"), among CD Radio Inc., a Delaware corporation (the "Company"), ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ and Loral Space & Communications Ltd., a Bermuda company (the
"Purchaser").
WHEREAS, the Company proposes to issue and sell to the
Purchaser, and the Purchaser proposes to buy, for an aggregate purchase price of
$25,000,000, a total of 1,905,488 shares of Common Stock, par value $.001 per
share, of the Company (the "Common Stock"); and
WHEREAS, simultaneously with the Closing (as defined in
Section 2.2), the Company and Space Systems/Loral, Inc. ("SS/L") intend to amend
that certain contract between the Company and SSL, respecting the purchase by
the Company from SS/L of satellites (the "Satellite Contract"), as contemplated
by Amendment No. 16 thereto, the form of which is set forth as Exhibit A hereto;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms shall have the
meanings set forth below:
"Affiliate" means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with the Person specified.
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Beneficial Owner" shall mean a Person who beneficially owns
any securities within the meaning of Rule 13d-3 under the Exchange Act, and
"beneficially owned" and "beneficial ownership" shall have correlative meanings.
"Business Day" means any day other than Saturday, Sunday or
other day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"Bylaws" means the bylaws of the Company, as the same may have
been amended and in effect as of the Closing Date.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company, as the same may have been amended and in effect as
of the Closing Date.
"Closing" has the meaning assigned to such term in Section
2.2.
"Closing Date" has the meaning assigned to such term in
Section 2.2.
"Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means the Common Stock, par value $.001 per
share, of the Company, or any other capital stock of the Company into which such
stock is reclassified or reconstituted.
"Comparable Stockholder" means ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and any other
Person who, together with its Affiliates, is (i) the Beneficial Owner of at
least the Threshold Percentage of the Common Stock, (ii) the Beneficial Owner of
at least the Threshold Percentage of the Convertible Preferred Stock, (iii) the
Beneficial Owner of at least the Threshold Percentage of any other class of
capital stock of the Company that is convertible into or exchangeable for Common
Stock or (iv) whose percentage beneficial ownership of the Common Stock, the
Convertible Preferred Stock and any other such class of capital stock of the
Company outstanding shall aggregate at least the Threshold Percentage.
"Contractual Obligation" means, as to any Person, any
agreement, undertaking, contract, indenture, mortgage, deed of trust or other
instrument to which such Person is a party or by which it or any of its property
is bound.
"Convertible Preferred Stock" means the Company's 5% Delayed
Convertible Preferred Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"GAAP" means generally accepted accounting principles.
"Governmental Authority" means the government of any nation,
state, city, locality or other political subdivision of any thereof, and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining
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to government or any International regulatory body having or asserting
jurisdiction over a Person, its business or its properties.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other), restriction
or other security interest of any kind or nature whatsoever.
"Operational Date" means the first date on which the Company's
two satellites are successfully launched and operational within the meaning of
the Satellite Contract.
"Person" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, Governmental Authority or other entity of
any kind.
"Prospectus" shall mean the prospectus included in any
Registration Statement (including without limitation a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"Purchased Shares" has the meaning assigned to such term in
Section 2.1.
"Registrable Securities" shall mean each of the Purchased
Shares and any capital stock of the Company issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
Purchased Shares, until, in the case of any such share, (i) it is effectively
registered under the Securities Act and disposed of in accordance with the
Registration Statement covering it, (ii) in the opinion of counsel to the
Company, it is saleable by the holder thereof pursuant to Rule 144(k), or (iii)
it is distributed to the public by the holder thereof pursuant to Rule 144;
provided, however, that for purposes of Sections 7.1, 7.2 and Article 6,
Registrable Securities shall not include any Purchased Shares that are subject
to a lock-up agreement during the period in which disposition of such Purchased
Shares would violate the terms of such lock-up agreement.
"Registration Expenses" means all expenses incurred by the
Company in compliance with Article 7, including without limitation all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses and the expense of any
special audit incident to or required by any such registration.
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"Registration Statement" shall mean any registration statement
of the Company under the Securities Act that covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the related
Prospectus, all amendments and supplements to such registration statement
(including post-effective amendments), all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
"Requirement of Law" means, as to any Person, the Certificate
of Incorporation and Bylaws or other organizational or governing documents of
such Person, and any law, treaty, rule, regulation, qualification, license or
franchise or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable or binding upon such Person or any of its
property or to which such Person or any of its property is subject or pertaining
to any or all of the transactions contemplated hereby.
"Rule 144" shall mean Rule 144 promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
"SEC Documents" means all proxy statements, registration
statements, reports and other documents filed or required to be filed by the
Company or any of its Subsidiaries with the Commission pursuant to the
Securities Act or the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Selling Expense" means all underwriting discounts and
commissions applicable to the sale of the Purchased Shares.
"Significant Stockholder" means ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and any other
Person who, together with its Affiliates, is (i) the Beneficial Owner of at
least 10% of the Common Stock, (ii) the Beneficial Owner of at least 10% of the
Convertible Preferred Stock, (iii) whose percentage beneficial ownership of the
Common Stock, the Convertible Preferred Stock and any other class of capital
stock of the Company that is convertible into, or exchangeable at the option of
the holder for, Common Stock shall aggregate at least 10% or (iv) is the
Beneficial Owner of at least the number of shares of Common Stock beneficially
owned by Loral and its Affiliates; provided that no Person shall be deemed a
"Significant Stockholder" under this clause (iv) at a time when Loral and its
Affiliates beneficially own less than 5% of the Common Stock. Notwithstanding
the foregoing, a Significant Stockholder shall not include any Person who holds
the capital stock of the Company solely as a passive investment.
"Subsidiary" means in respect of any Person any other Person
which, at the time as of which any determination is made, such Person or one or
more of its Subsidiaries has, directly or indirectly, voting control.
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"Threshold Percentage" means the lesser of (i) 10% and (ii)
the percentage of Common Stock then beneficially owned by the Purchaser and its
Affiliates.
"Transfer" means any sale, assignment, hypothecation, transfer
or other disposition. For purposes of Section 5.2, a "Transfer" shall not
include a gift or transfer by operation of law incident to a Person's death,
divorce, incapacity, bankruptcy or similar event, but only if and to the extent
the transferee agrees to be bound by the provisions of Section 5.2. "Transferor"
and "Transferee" shall have correlative meanings.
ARTICLE 2
PURCHASE AND SALE OF SECURITIES
2.1 Purchase and Sale of Securities. Subject to the terms
herein set forth and in reliance upon the representations set forth below, the
Company agrees to sell to the Purchaser, and the Purchaser agrees that it will
purchase from the Company, on the Closing Date, 1,905,488 shares of Common Stock
for the aggregate purchase price of $25,000,000 (all of the shares of Common
Stock being purchased pursuant hereto being referred to herein as the "Purchased
Shares").
2.2 Closing. The purchase and issuance of the Purchased Shares
shall take place at a closing (the "Closing") to be held at the offices of ▇▇▇▇,
Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, 1285 Avenue of the Americas, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, on the date hereof (the "Closing Date"). At the Closing, the
Company shall deliver to the Purchaser certificates representing the Purchased
Shares, duly registered in the name of the Purchaser or its nominee, and the
Purchaser shall deliver to the Company the aggregate purchase price therefor by
wire transfer of immediately available funds to an account designated in writing
by the Company to the Purchaser at least two Business Days before the Closing.
At or prior to the Closing, the Company shall have delivered
to the Purchaser an opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, in form
and substance reasonably satisfactory to the Purchaser, to the effect set forth
on Exhibit B hereto.
2.3 Satellite Contract. At the Closing, the Company and SS/L
shall also execute and deliver Amendment No. 16 to the Satellite Contract.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as
follows:
3.1 Corporate Existance and Power. The Company (a) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware; (b) has all requisite corporate power and
authority to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is engaged; and (c) has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement. The Company is duly qualified to do business as a foreign
corporation in, and is in good standing under the laws of, each jurisdiction in
which the conduct of its business or the nature of the property owned requires
such qualification.
3.2 Subsidiaries. Except as set forth on Schedule 3.2, the
Company has no Subsidiaries and no interest or investments in any corporation,
partnership, limited liability company, trust or other entity or organization.
Each Subsidiary listed on Schedule 3.2 has been duly organized, is validly
existing and in good standing under the laws of the jurisdiction of its
organization, has the power and authority (corporate or otherwise) to own its
properties and to conduct its business and is duly registered, qualified and
authorized to transact business and is in good standing in each jurisdiction in
which the conduct of its business or the nature of its properties requires such
registration, qualification or authorization. All of the issued and outstanding
capital stock (or equivalent interests) of each Subsidiary set forth on Schedule
3.2 has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company free and clear of any Liens and there
are no rights, options or warrants outstanding or other agreements to acquire
shares of capital stock (or equivalent interests) of such Subsidiary.
3.3 Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company of this Agreement and the transactions
contemplated hereby, including, without limitation, the sale, issuance and
delivery of the Purchased Shares, (a) have been duly authorized by all necessary
corporate action of the Company; (b) do not contravene the terms of the
Certificate of Incorporation or Bylaws or the organizational documents of its
Subsidiaries; and (c) do not violate, conflict with or result in any breach or
contravention of, or the creation of any Lien under, any
6
Contractual Obligation of the Company or any Requirement of Law applicable to
the Company or its Subsidiaries. No event has occurred and no condition exists
which, upon notice or the passage of time (or both), would constitute a default
under any indenture, mortgage, deed of trust, credit agreement, note or other
evidence of indebtedness or other material agreement of the Company or its
Subsidiaries or the Certificate of Incorporation or Bylaws or the organizational
documents of the Company's Subsidiaries.
3.4 Governmental Authorization; Third Party Consents. No
approval, consent, exemption, authorization or other action by, or notice to, or
filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, Contractual Obligation or otherwise, and no lapse of a
waiting period under a Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the sale, issuance and delivery of the Purchased Shares) by the
Company, or enforcement against the Company, of this Agreement, or the
transactions contemplated hereby.
3.5 Binding Effect. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance or transfer, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and by general principles of
equity.
3.6 Capitalization of the Company. The authorized capital
stock of the Company consists of (i) 200,000,000 shares of Common Stock, of
which 10,528,394 shares will be issued and outstanding on the Closing Date
(without giving effect to the issuance of the Purchased Shares) and 2,019,000
shares are reserved for issuance upon the exercise of outstanding stock options,
and (ii) 50,000,000 shares of Preferred Stock, of which 5,304,608 shares of
Convertible Preferred Stock will be issued and outstanding on the Closing Date.
The Convertible Preferred Stock is convertible into shares of Common Stock as
provided in Section 4(d) of the Certificate of Designations of the Convertible
Preferred Stock. Except as set forth in this Section 3.6, on the Closing Date
there will be no shares of Common Stock or any other equity security of the
Company issuable upon conversion or exchange of any security of the Company nor
will there be any rights, options or warrants outstanding or other agreements to
acquire shares of capital stock of the Company nor will the Company be
contractually obligated to purchase, redeem or otherwise acquire any of its
outstanding shares of capital stock. No stockholder of the Company is entitled
to any preemptive or similar rights to subscribe for shares of capital stock of
the Company. The issued and outstanding shares of Common Stock and Preferred
Stock, including, without limitation, the Purchased Shares, are all duly
authorized, and are (or, in the case of the Purchased Shares, after payment
therefor to the Company, will be) validly issued, fully paid and nonassessable.
3.7 SEC Filings; Financial Statements. The Company has timely
filed and made available to the Purchaser all SEC Reports filed with the
Commission since January 1, 1997. The SEC Reports complied in all material
respects with the applicable requirements of the Securities Act or the Exchange
7
Act, as applicable and did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements in the SEC Reports, in light of the circumstances
under which they were made, not misleading. Each of the Company's financial
statements (including, in each case, any related notes) contained in the SEC
Reports, complied as to form in all material respects with applicable published
rules and regulations of the Commission with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements)
and fairly presented the financial position of the Company and its Subsidiaries
as at the respective dates and for the periods indicated, except that the
unaudited financial statements were subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount or
effect.
3.8 Absence of Certain Developments. Since December 31, 1996,
except as set forth in the SEC Reports delivered to the Purchaser, there has
been no material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
condition, financial or otherwise, of the Company and its Subsidiaries, or in
their assets, liabilities, properties, business or prospects.
3.9 Compliance with Laws. None of the Company or its
Subsidiaries is in material violation of any Requirement of Law to which it is
subject.
3.10 Licenses. The Company has no reason to believe that
either (i) it will not finally obtain any license, permit, franchise or other
authorizations necessary for it to conduct its business as described in the SEC
Reports or (ii) such license, permit, franchise or authorization will not be
obtained on a timely basis.
3.11 Litigation. Except with respect to certain filings made
with the Federal Communications Commission by Primosphere, there is no legal
action, suit, arbitration or other legal, administrative or other governmental
investigation, inquiry or proceeding pending, or to the best knowledge of the
Company, threatened against or affecting the Company or its Subsidiaries or any
of their properties, assets, business or prospects.
3.12 Intellectual Property. The Company and its Subsidiaries
own, free and clear of all Liens, and has good and marketable title to, or holds
adequate licenses or otherwise possesses all such rights as are necessary to use
all patents (and applications therefor), patent disclosures,
8
trademarks, service marks, trade names, copyrights (and applications therefor),
inventions, discoveries, processes, know-how, scientific, technical, engineering
and marketing data, formulae and techniques used or proposed to be used, in or
necessary for the conduct of its business as now conducted or as proposed to be
conducted in the SEC Reports (collectively, "Intellectual Property"). The
Company has not received notice or otherwise has reason to know of any conflict
or alleged conflict with the rights of others pertaining to the Intellectual
Property described in this Section 3.12. To the best of the Company's knowledge,
the business of the Company as presently conducted and as proposed to be
conducted in the SEC Reports does not infringe upon or violate any Intellectual
Property rights of others.
3.13 Private Offering. No form of general solicitation or
general advertising was used by the Company or its representatives in connection
with the offer or sale of the Purchased Shares. No registration of the Purchased
Shares pursuant to the provisions of the Securities Act or any state securities
or "blue sky" laws will be required by the offer, sale, or issuance of the
Purchased Shares pursuant to this Agreement, assuming the accuracy of the
Purchaser's representation contained in Section 4.5.
3.14 Broker's, Finder's or Similar Fees. There are no
brokerage commissions, finder's fees or similar fees or commissions payable in
connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Company or any action taken by the
Company, except for a fee payable to ▇▇▇▇▇▇▇▇▇▇ & Partners, Inc., which shall be
the responsibility of the Company.
3.15 No Other Significant Stockholder. On the Closing Date,
there is no Significant Stockholder other than ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the
Company as follows:
4.1 Existence and Power. The Purchaser (a) is duly organized
and validly existing under the laws of the jurisdiction of its formation and (b)
has the requisite power and authority to execute, deliver and perform its
obligations under this Agreement.
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4.2 Authorization; No Contravention. The execution, delivery
and performance by the Purchaser of this Agreement and the transactions
contemplated hereby, including, without limitation, the purchase of the
Purchased Shares, (a) have been duly authorized by all necessary action, (b) do
not contravene the terms of the Purchaser's organizational documents, or any
amendment thereof, and (c) do not violate, conflict with or result in any breach
or contravention of, or the creation of any Lien under, any Contractual
Obligation of such Purchaser or any Requirement of Law applicable to the
Purchaser except for such violation, conflict, breach or Lien which will not
result in a material adverse effect on the Purchaser's ability to consummate the
transactions contemplated under this Agreement.
4.3 Governmental Authorization; Third Party Consents. No
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, and no lapse of a waiting period under a Requirement of Law,
is necessary or required in connection with the execution, delivery or
performance by the Purchaser, or enforcement against the Purchaser, of this
Agreement (including, without limitation, the purchase of the Purchased Shares)
or the transactions contemplated hereby.
4.4 Binding Effect. This Agreement has been duly executed and
delivered by the Purchaser and constitutes the legal, valid and binding
obligation of the Purchaser, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally or by
general principles of equity.
4.5 Purchase for Own Account. The Purchased Shares to be
acquired by the Purchaser pursuant to this Agreement are being acquired for its
own account and with no intention of distributing or reselling such Purchased
Shares or any part thereof in any transaction that would be in violation of the
securities laws of the United States of America or any state, without prejudice,
however, to the rights of the Purchaser at all times to sell or otherwise
dispose of all or any part of such Purchased Shares under an effective
registration statement under the Securities Act or under an exemption from said
registration available under the Securities Act. The Purchaser understands and
agrees that if the Purchaser should in the future decide to dispose of any part
of such Purchased Shares, it may do so only in compliance with the Securities
Act and applicable state securities laws, as then in effect. The Purchaser
agrees to the imprinting, so long as required by law, of a legend on all
certificates representing such Purchased Shares to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED FOR SALE,
SOLD OR
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OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
4.6 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable to any third
party in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Purchaser or any action taken
by the Purchaser.
ARTICLE 5
COVENANTS OF THE COMPANY AND ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
5.1 Rule 144. The Company hereby covenants and agrees with the
Purchaser that it shall file all reports required to be filed by it under the
Securities Act and the Exchange Act and shall take such further action as the
Purchaser may reasonably request, all to the extent required to enable the
Purchaser to sell the Purchased Shares pursuant to and in accordance with Rule
144 adopted by the Commission under the Securities Act (as such rule may be
amended from time to time) ("Rule 144") or any similar rule or regulation
hereafter adopted by the Commission. Such action shall include, but not be
limited to, making available adequate current public information meeting the
requirements of paragraph (c) of Rule 144.
5.2. Tag-Along Rights.
(1) In the event any Significant Stockholder intends to
Transfer shares of Common Stock having a fair market value (together with all
shares of Common Stock Transferred by such Person in the preceding six months)
exceeding $100,000, such Significant Stockholder (the "Selling Stockholder")
shall notify the Purchaser, in writing, of such proposed Transfer and its terms
and conditions. Within ten (10) Business Days of the date of such notice, the
Purchaser shall irrevocably notify the Selling Stockholder if it elects to
participate in such Transfer (a "Participation Notice"). If the Purchaser shall
fail to notify the Selling Stockholder within such ten (10) Business Day period,
it shall be deemed to have waived its rights hereunder. If the Purchaser shall
have delivered a Participation Notice, it shall have the right to sell, at the
same price and on the same terms and conditions as the Selling Stockholder, an
amount of shares of Common Stock equal to the shares of Common Stock the third
party actually proposes to purchase multiplied by a fraction, the numerator of
which
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shall be the number of shares of Common Stock owned by the Purchaser and the
denominator of which shall be the aggregate number of shares of Common Stock
owned by the Selling Stockholder and the Purchaser. Nothing contained herein
shall obligate the Selling Stockholder to consummate the proposed Transfer or
limit the Selling Stockholder's right to amend or modify the terms of the
proposed Transfer in any respect; provided that the Purchaser is offered the
opportunity to participate in the proposed Transfer on such amended or modified
term. Notwithstanding the foregoing, this Section 5.2 shall not apply to any
Transfer if at the date thereof Purchaser and its Subsidiaries collectively
shall beneficially own fewer than 190,500 shares of Common Stock.
(2) The Company shall not issue or sell any shares of Common
Stock, Convertible Preferred Stock or any other class of capital stock which is
convertible into or exchangeable for Common Stock to any Person if such issuance
or sale would result in such Person becoming a Significant Stockholder unless
and until such Person shall have delivered to the Company and the Purchaser a
written agreement stating that such Person agrees to be bound by the provisions
of Section 5.2 of this Agreement.
5.3. Preemptive Right.
(i) If at any time after the date hereof and prior to the
first anniversary of the Operational Date, the Company proposes to issue Common
Stock of any kind (including any warrants, options or securities or units
comprising securities convertible into or exchangeable for Common Stock or
rights to acquire the same) of the Company, other than (i) pursuant to an
underwritten public offering, (ii) pursuant to an employee or non-management
director stock option plan, stock bonus plan, stock purchase plan or other
management equity program or plan or (iii) securities issuable upon exercise of
previously issued warrants, options or other rights to acquire Common Stock or
upon conversion of previously issued securities convertible into Common Stock,
then the Company shall:
(1) give written notice setting forth in reasonable detail (a)
the terms and provisions of the securities proposed to be issued (the "Proposed
Securities"); (b) the price and other terms of the proposed sale of such
securities; (c) the amount of such securities proposed to be issued; and (d)
such other information as the Purchaser may reasonably request in order to
evaluate the proposed issuance; and
(2) offer to issue to the Purchaser a portion of the Proposed
Securities equal to a percentage determined by dividing (x) the number of shares
of Common Stock held by the Purchaser, by (y) the total number of shares of
Common Stock then outstanding.
The Purchaser must exercise its purchase rights hereunder within ten (10)
Business Days after receipt of such notice from the Company.
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(ii) Upon the expiration of the offering period described
above, or if the Purchaser shall default in paying for or purchasing the
Proposed Securities on the terms offered by the Company, the Company will be
free to sell such Proposed Securities that the Purchaser has not elected to
purchaser during the ninety (90) days following such expiration on terms and
conditions no more favorable to the purchasers thereof than those offered to the
Purchaser. Any Proposed Securities offered or sold by the Company after such 90
day period must be reoffered to the Purchaser pursuant to this Section 5.3.
(iii) The election by the Purchaser not to exercise its
preemptive rights under this Section 5.3 in any one instance shall not affect
its right (other than in respect of a reduction in its percentage holders) as to
any subsequent proposed issuance. Any sale of such securities by the Company
without first giving the Purchaser the rights described in this Section 5.3
shall be void and of no force and effect.
ARTICLE 6
COVENANTS OF THE PURCHASER
The Company and its underwriters, by written notice
from the Company and its lead underwriter to the Purchaser (a "Lock-up
Request"), given as
provided herein on or after the time of the initial filing with the Commission
of any registration statement (other than a registration statement relating to
an offering described in Section 7.1 with respect to any offering of Common
Stock or securities convertible into Common Stock (the "Offering"), may request
that the Purchaser agree not to offer, sell or transfer any of the Purchased
Shares, or engage in any hedging transactions with respect to the Purchased
Shares, during the 180-day period (the "Lock-up Period") beginning on a date
specified in the Lock-up Request, which date may be as early as five (5)
business days prior to the expected effective date (but no later than the
effective date) with respect to the registration statement for the Offering, and
the Purchaser agrees to consent to and be bound by the restrictions specified in
any such Lock-up Request; provided, however, that (a) such a lock-up agreement
with respect to any Offering shall not prevent Purchaser from selling Purchased
Shares which it is entitled to sell in such Offering pursuant to Section 7.2 if
it shall have made the request specified therein, (b) the Purchaser's Lock-Up
Period shall not be greater than the shortest similar period to which any
Comparable Stockholder is requested to agree by the lead underwriter of such
Offering, and (c) the Purchaser shall be obligated to consent to and be bound by
a total of by no more than two such lock-up agreements with respect to Offerings
actually declared effective by the Commission. The Company shall specify the
expected effective date of any Offering by notice to the Purchaser given not
later than two (2) Business Days prior to the beginning of the Lock-up Period.
The Purchaser shall cause each Person to whom it Transfers, in one or a series
of related transactions, 500,000 or more shares of Common Stock to execute and
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deliver to the Company a letter agreement pursuant to which such transferee
agrees (and to cause each other Person to whom it Transfers any shares of Common
Stock if, after giving effect to such Transfer, such Person, together with its
Affiliates, would beneficially own 500,000 or more shares of Common Stock to
execute and deliver to the Company a similar letter agreement) to comply with
the requirements of this Article 6 (including this sentence) to the same extent
and subject to the same terms and conditions as the Purchaser.
ARTICLE 7
REGISTRATION RIGHTS
7.1 Requested Registration. If the Company shall receive from
the Purchaser, at any time following the Operational Date, a written request
(which shall specify whether the distribution will be made by means of an
underwriting) that the Company effect any registration with respect to all or a
part of the Purchased Shares that constitute Registrable Securities (a "Demand
Notice"), which Demand Notice shall request registration of not less than
500,000 shares of Common Stock or all remaining shares of Common Stock then held
by the Purchaser, the Company will, as soon as practicable, use its diligent
best efforts to effect such registration as may be so requested and as would
permit or facilitate the sale and distribution of the Purchased Shares as are
specified in such request. After the Company has effected one (1) such
registration pursuant to this Section 7.1 and such registration has been
declared effective and the distribution contemplated thereunder completed, the
Company shall have no further obligation under this Section 7.1. Notwithstanding
the foregoing, if the Company shall furnish to the Purchaser a certificate
signed by the President or the Chief Executive Officer of the Company stating
that in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its stockholders for such
registration statement to be filed and it is therefore desirable and in the best
interests of the Company to defer the filing of such registration statement,
then the Company shall have the right to defer such filing for a period of not
more than 90 days after receipt of the request of the Purchaser; provided
however, that the Company may not utilize this right more than once in any
twelve month period.
7.2 Company Registration. (a) If the Company shall determine
to register any of its equity securities for the account of a security holder or
holders, other than a registration relating solely to employee benefit plans, or
a registration relating solely to a Commission Rule 145 transaction, or a
registration on any registration form which does not permit secondary sales or
does not include substan-tially the same information as would be required to be
included in a registration statement covering the sale of Purchased Shares, the
Company will promptly give to the Purchaser a written notice thereof and include
in such registration,
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and in any underwriting involved therein, all the Purchased Shares that
constitute Registrable Securities specified in a written request made by the
Purchaser within ten Business Days after receipt of the written notice from the
Company described above. The Purchaser shall be entitled to have its shares
included in an unlimited number of registrations pursuant to Section 7.2.
(b) If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise the Purchaser as a part of the written notice given pursuant to Section
7.2(a). In such event, the right of the Purchaser to registration pursuant to
this Section 7.2(a) shall be conditioned upon the Purchaser's participation in
such underwriting and the inclusion of the Purchaser's shares of Common Stock in
the underwriting to the extent provided herein. If the Purchaser shall have
elected to exercise its rights under this Section 7.2(a), it shall enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for underwriting by the Company.
Notwithstanding any other provision of this Section 7.2, if the representative
determines and so advises the Company in writing that marketing factors require
a limitation on the number of shares to be underwritten, the Company shall so
advise the Purchaser. In such an event, the number of Purchased Shares that may
be included in the registration and underwriting by the Purchaser shall be
reduced, on a pro rata basis (based on the number of shares held by the
Purchaser and each other Person (other than the Company) registering shares
under such registration), by such minimum number of shares as is necessary to
comply with such limitation. If the Purchaser disapproves of the terms of any
such underwriting, it may elect to withdraw therefrom by written notice to the
Company and the underwriter. Any Purchased Shares excluded or withdrawn from
such underwriting shall be withdrawn from such registration.
7.3 Transferability . The registration rights granted pursuant
to this Article 7 shall be assignable, in whole or in part, to any transferee of
the Purchased Shares; provided, however, that the rights granted under Section
7.1 shall be assignable only to a Transferee who, after giving effect to such
Transfer, beneficially owns at least 500,000 shares of Common Stock.
7.4 Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Article 7 shall be borne by the Company, and all Selling
Expenses shall be borne by the Purchaser.
7.5 Registration Procedures. In the case of each registration
effected by the Company pursuant to Article 7, the Company will:
(a) furnish to the Purchaser prior to the filing of the
requisite Registration Statement copies of drafts of such Registration Statement
as is proposed to
15
be filed, and thereafter such number of copies of such registration statement,
each amendment and supplement thereto (in each case including all exhibits
thereto), the Prospectus included in such registration statement (including each
preliminary prospectus) and such other documents in such quantities as the
Purchaser may reasonably request from time to time in order to facilitate its
distribution;
(b) notify the Purchaser promptly of any request by the
Commission for the amending or supplementing of such Registration Statement or
Prospectus or for additional information;
(c) advise the Purchaser promptly after the Company shall
receive notice or obtain knowledge of the issuance of any stop order by the
Commission suspending the effectiveness of any such Registration Statement or
amendment thereto or of the initiation or threatening of any proceeding for that
purpose, and promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal promptly if such stop order should be issued;
(d) use all reasonable efforts to register or qualify the
Purchased Shares under such other securities or blue sky laws of such
jurisdictions as the Purchaser (or the managing underwriter, in the case of
underwritten offerings) reasonably requests; provided that the Company shall not
be required to qualify to do business or become subject to service of process or
taxation in any jurisdiction in which it is not already so qualified or subject;
(e) use all reasonable efforts to cause the Purchased Shares
included in the registration statement to be listed on a securities exchange or
authorized for quotation on a national quotation system on which any of the
Common Stock is then listed;
(f) notify the Purchaser, at any time when a prospectus
relating to the proposed sale is required to be delivered under the Securities
Act, of the happening of any event as a result of which the Prospectus included
in such registration statement or amendment contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and the Company will prepare a supplement or
amendment to such Prospectus so that, as thereafter delivered to the purchasers
of the Purchased Shares, such Prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
to make the statements therein, in light of the circumstances under which they
were made, not misleading; and
(g) enter into customary agreements (including without
limitation, an underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Purchased Shares included in the registration statement.
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7.6 Indemnification
(a) The Company will indemnify the Purchaser, each of its
officers and directors, and each person controlling the Purchaser within the
meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, with respect to each registration which has been effected pursuant
to this Article 7, and each underwriter, if any, and each person who controls
any underwriter within the meaning of Section 15 of the Securities Act and the
rules and regulations thereunder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any Prospectus or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the Securities Act or
any rule or regulation thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse the Purchaser,
each of its officers and directors, and each person controlling the Purchaser,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission based upon written information furnished to the
Company by the Purchaser with respect to the Purchaser and stated to be
specifically for use therein.
(b) The Purchaser will, if Purchased Shares held by it are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers and each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act and the rules
and regulations thereunder, against all claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact with respect to the Purchaser
contained in any such registration statement, prospectus or other document made
by the Purchaser, or any omission (or alleged omission) to state therein a
material fact with respect to the Purchaser required to be stated therein or
necessary to make the statements by the Purchaser therein not misleading, and
will reimburse the Company and such other directors, officers, partners,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus or other document in reliance upon and in conformity with
17
written information furnished to the Company by the Purchaser with respect to
the Purchaser and stated to be specifically for use therein; provided, however,
that the obligations of the Purchaser hereunder shall be limited to an amount
equal to the proceeds to the Purchaser of securities sold as contemplated
herein.
(c) If the indemnification provided for in this Section 7.6 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(d) Unless Purchaser is at the time an Affiliate of the
Company, the Purchaser shall not be required, in connection with any
underwriting arrangements entered into in connection with any registration, to
provide any information, representations or warranties or covenants with respect
to the Company, its business or operations, and the Purchaser shall not be
required to provide any indemnification with respect to any registration
statement except as specifically provided in 7.6(b) hereof. Nothing in this
Section 7.6(d) shall create, or be deemed to create, any obligation on the part
of Purchaser to provide at any time any information, representations or
warranties or covenants with respect to the Company, its business or operations,
or any indemnification with respect to any registration statement other than as
specifically provided in Section 7.6(b).
ARTICLE 8
MISCELLANEOUS
8.1 Expenses. Each of the Company and Purchaser shall pay its
own expenses incurred in connection with the negotiation, execution, delivery
and performance of this Agreement.
8.2 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered
18
personally, telecopied or sent by certified, registered or express mail, postage
prepaid. Any such notice shall be deemed given if delivered personally or
telecopied, on the date of such delivery or sent by reputable overnight courier,
on the first business day following the date of such mailing, as follows:
(a) if to the Company:
CD Radio Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Purchaser:
Loral Space & Communications Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Citicorp Center
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may by notice given in accordance with this Section 8.2 designate
another address or person for receipt of notices hereunder.
8.3 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties hereto. No Person other than the parties hereto and
19
their successors and permitted assigns is intended to be a beneficiary of this
Agreement. No party hereto may assign its rights under this Agreement without
the prior written consent of the other party hereto provided, however, that the
Purchaser may freely assign to a wholly-owned direct or indirect Subsidiary if
Purchaser shall unconditionally guarantee all payment obligations of such
Subsidiary under this Agreement.
8.4 Amendment and Waiver.
(a) No failure or delay on the part of the Company or the
Purchaser in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Purchaser at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement and any waiver of any provision of this Agreement
shall be effective only if it is made or given in writing and signed by the
Company and the Purchaser.
8.5 Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, all of which
when so executed shall be deemed to be an original and both of which taken
together shall constitute one and the same agreement.
8.6 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
8.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF.
8.8 Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
20
8.9 Entire Agreement. This Agreement, together with the
exhibits hereto, is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, together with the schedules hereto, supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
8.10 Further Assurances. Each of the parties shall execute
such documents and take, or cause to be taken, all appropriate action, and shall
do or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and obtaining any consents,
exemptions, authorizations, or other actions by, or giving any notices to, or
making any filings with, any Governmental Authority or any other Person
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective officers hereunto
duly authorized as of the date first above written.
CD RADIO INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chairman & CEO
LORAL SPACE & COMMUNICATIONS LTD
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
21
Schedule 3.2
Subsidiaries of the Company
Jurisdiction of
Name Incorporation
---- -----------------
Satellite CD Radio, Inc. Delaware