================================================================================
EXHIBIT 4.5
WARRANT AGREEMENT
___________________________________________
XM Satellite Radio Holdings Inc.
as Issuer
and
United States Trust Company of New York
as Warrant Agent
___________________________________________
March 15, 2000
___________________________________________
================================================================================
WARRANT AGREEMENT dated as of March 15, 2000 between XM Satellite
Radio Holdings Inc., ("Holdings"), and United States Trust Company of New York,
as Warrant Agent (the "Warrant Agent").
WHEREAS, Holdings proposes to issue common stock purchase warrants, as
hereinafter described (the "Warrants"), to purchase up to an aggregate of
__________ shares of Class A Common Stock, par value $.01 per share (the "Class
A Common Stock"), of Holdings (the Class A Common Stock issuable on exercise of
the Warrants being referred to herein as the "Warrant Shares"), in connection
with a private placement of an aggregate of $325,000,000 principal amount of the
14% Senior Secured Notes due 2010 (the "Notes") of XM Satellite Radio Inc., a
wholly-owned subsidiary of Holdings (the "Company") and one Warrant, each
Warrant entitling the holder thereof to purchase 8.024815 Warrant Shares. The
Notes and Warrants will be sold in Units, each Unit consisting of $1,000 in
aggregate principal amount of Notes and one Warrant.
WHEREAS, Holdings desires the Warrant Agent to act on behalf of
Holdings, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as defined below) and other matters as
provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Definitions.
---------- -----------
"144A Global Warrant" means a Global Warrant in the form of Exhibit A
hereto bearing the Global Warrant Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
number of the Warrants sold in reliance on Rule 144A.
"Affiliate" of any specified Person means (A) any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person and (B) any director, officer or
employee of such specified person. For purposes of this definition "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with") as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Warrant, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"Cedel" means Cedel Bank, SA.
"Definitive Warrant" means a certificated Warrant registered in the
name of the Holder thereof and issued in accordance with Section 3.6 hereof, in
the form of Exhibit A hereto except that such Warrant shall not bear the Global
Warrant Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Warrant" attached thereto.
"Depositary" means, with respect to the Warrants issuable or issued in
whole or in part in global form, the Person specified in Section 3.3 hereof as
the Depositary with respect to the Warrants, and any and all successors thereto
appointed as Depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
2
"Disinterested Director" means, in connection with any issuance of
securities that give rise to a determination of the Fair Market Value thereof,
each member of the Board of Directors of Holdings who is not an officer,
employee, director or other Affiliate of the party to whom Holdings is proposing
to issue the securities giving rise to such determination.
"Euroclear" means ▇▇▇▇▇▇ Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Global Warrant" means the Restricted Global Warrant, in the form of
Exhibit A hereto issued in accordance with Section 3.1 hereof.
"Global Warrant Legend" means the legend set forth in Section
3.6(f)(ii), which is required to be placed on all Global Warrants issued under
this Warrant Agreement.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Warrant through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of
Holdings by two Officers of Holdings, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of Holdings that meets the requirements of Section
13.04 and 13.05 of the Indenture.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Warrant Agent, that meets the requirements of
Section 13.04 and 13.05 of the Indenture. The counsel may be an employee of or
counsel to Holdings, any Subsidiary of Holdings or the Warrant Agent.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Private Placement Legend" means the legend set forth in Section
3.6(f)(i) to be placed on all Warrants issued under this Warrant Agreement
except where otherwise permitted by the provisions of this Warrant Agreement.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Restricted Definitive Warrant" means a Definitive Warrant bearing the
Private Placement Legend.
3
"Restricted Global Warrant" means a Global Warrant bearing the Private
Placement Legend.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
Section 2. Appointment of Warrant Agent. Holdings hereby appoints
----------------------------
the Warrant Agent to act as agent for Holdings in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
Section 3. Warrants Certificates.
---------------------
3.1. Form and Dating.
---------------
(a) General.
The Warrants and the Warrant Agent's certificate of authentication
shall be substantially in the form of Exhibits A hereto (the "Warrant
Certificates"). The Warrants may have notations, legends or endorsements
required by law, stock exchange rule or usage. Each Warrant shall be dated the
date of its authentication.
The terms and provisions contained in the Warrants shall constitute,
and are hereby expressly made, a part of this Warrant Agreement. Holdings and
the Warrant Agent, by their execution and delivery of this Warrant Agreement,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Warrant conflicts with the express provisions
of this Warrant Agreement, the provisions of this Warrant Agreement shall govern
and be controlling.
(b) Global Warrants.
Warrants issued in global form shall be substantially in the form of
Exhibits A attached hereto (including the Global Warrant Legend thereon and the
"Schedule of Exchanges of Interests in the Global Warrant" attached thereto).
Warrants issued in definitive form shall be substantially in the form of Exhibit
A attached hereto (but without the Global Warrant Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Warrant" attached thereto).
Each Global Warrant shall represent such of the outstanding Warrants as shall be
specified therein and each shall provide that it shall represent the number of
outstanding Warrants from time to time endorsed thereon and that the number of
outstanding Warrants represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Warrant to reflect the amount of any increase or
decrease in the number of outstanding Warrants represented thereby shall be made
by the Warrant Agent or the Warrant Custodian, at the direction of the Warrant
Agent, in accordance with instructions given by the Holder thereof as required
by Section 3.6 hereof.
4
3.2. Execution and Authentication. Two Officers shall sign the
----------------------------
Warrants for Holdings by manual or facsimile signature.
If an Officer whose signature is on a Warrant no longer holds that
office at the time a Warrant is authenticated, the Warrant shall nevertheless be
valid.
A Warrant shall not be valid until authenticated by the manual
signature of the Warrant Agent. The signature shall be conclusive evidence that
the Warrant has been authenticated under this Warrant Agreement.
The Warrant Agent shall, upon a written order of Holdings signed by
two Officers (a "Warrant Authentication Order"), authenticate Warrants for
original issue up to the number stated in the preamble hereto.
The Warrant Agent may appoint an authenticating agent acceptable to
Holdings to authenticate Warrants. An authenticating agent may authenticate
Warrants whenever the Warrant Agent may do so. Each reference in this Warrant
Agreement to authentication by the Warrant Agent includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
Holdings or an Affiliate of Holdings.
3.3. Warrant Registrar and Warrant Paying Agent. Holdings shall
------------------------------------------
maintain an office or agency where Warrants may be presented for registration of
transfer or for exchange ("Warrant Registrar") and an office or agency where
Warrants may be presented for exercise ("Warrant Paying Agent"). The Warrant
Registrar shall keep a register of the Warrants and of their transfer and
exchange. Holdings may appoint one or more co-Warrant Registrars and one or
more additional Warrant Paying Agents. The term "Warrant Registrar" includes
any co-Warrant Registrar and the term "Warrant Paying Agent" includes any
additional Warrant Paying Agent. Holdings may change any Warrant Paying Agent
or Warrant Registrar without notice to any Holder. Holdings shall notify the
Warrant Agent in writing of the name and address of any Agent not a party to
this Warrant Agreement. If Holdings fails to appoint or maintain another entity
as Warrant Registrar or Warrant Paying Agent, the Warrant Agent shall act as
such. Holdings or any of its Subsidiaries may act as Warrant Paying Agent or
Warrant Registrar.
Holdings initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Warrants.
Holdings initially appoints the Warrant Agent to act as the Warrant
Registrar and Warrant Paying Agent and to act as Warrant Custodian with respect
to the Global Warrants.
3.4. Holdings shall require each Warrant Paying Agent other than the
Warrant Agent to agree in writing that the Warrant Paying Agent will hold in
trust for the benefit of Holders or the Warrant Agent all money held by the
Warrant Paying Agent for the payment of Liquidated Damages, if any, on the
Warrants, and will notify the Warrant Agent of any default by Holdings in making
any such payment. While any such default continues, the Warrant Agent may
require a Warrant Paying Agent to pay all money held by it to the Warrant Agent.
Holdings at any time may require a Warrant Paying Agent to pay all money held by
it to the Warrant Agent. Upon payment over to the Warrant Agent, the Warrant
Paying Agent (if other than Holdings or a Subsidiary) shall have no further
liability for the money. If Holdings or a Subsidiary acts as Warrant Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Warrant Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to Holdings, the Warrant Agent shall serve
as Warrant Paying Agent for the Warrants.
5
3.5. Holder Lists. The Warrant Agent shall preserve in as current
------------
a form as is reasonably practicable the most recent list available to it of the
names and addresses of all Holders. If the Warrant Agent is not the Warrant
Registrar, Holdings shall furnish to the Warrant Agent at least seven Business
Days before each interest payment date and at such other times as the Warrant
Agent may request in writing, a list in such form and as of such date as the
Warrant Agent may reasonably require of the names and addresses of the Holders
of Warrants.
3.6. Transfer and Exchange.
---------------------
(a) Transfer and Exchange of Global Warrants.
A Global Warrant may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Warrants will be exchanged by Holdings for Definitive
Warrants if (i) Holdings delivers to the Warrant Agent notice from the
Depositary that it is unwilling or unable to continue to act as Depositary or
that it is no longer a clearing agency registered under the Exchange Act and, in
either case, a successor Depositary is not appointed by Holdings within 120 days
after the date of such notice from the Depositary or (ii) Holdings in its sole
discretion determines that the Global Warrants (in whole but not in part) should
be exchanged for Definitive Warrants and delivers a written notice to such
effect to the Warrant Agent; provided that in no event shall the Regulation S
Temporary Global Warrant be exchanged by Holdings for Definitive Warrants prior
to (x) the expiration of the Restricted Period and (y) the receipt by the
Warrant Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B)
under the Securities Act. Upon the occurrence of either of the preceding events
in (i) or (ii) above, Definitive Warrants shall be issued in such names as the
Depositary shall instruct the Warrant Agent. Global Warrants also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Warrant authenticated and delivered in exchange for, or in
lieu of, a Global Warrant or any portion thereof, pursuant to this Section 3.6
or Section 3.7 or 3.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Warrant. A Global Warrant may not be exchanged for
another Warrant other than as provided in this Section 3.6(a). However,
beneficial interests in a Global Warrant may be transferred and exchanged as
provided in Section 3.6(b) or (c) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Warrants.
The transfer and exchange of beneficial interests in the Global
Warrants shall be effected through the Depositary, in accordance with the
provisions of this Warrant Agreement and the Applicable Procedures. Beneficial
interests in the Restricted Global Warrants shall be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Warrants also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs, as
applicable:
(i) Transfer of Beneficial Interests in the Same Global
Warrant. Beneficial interests in any Restricted Global Warrant may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Warrant in
accordance with the transfer restrictions set forth in the Private
Placement Legend. Beneficial interests in any Unrestricted Global
Warrant may be transferred to Persons who take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Warrant. No
written orders or instructions shall be required to be delivered to
the Warrant Registrar to effect the transfers described in this
Section 3.6(b)(i).
6
(ii) All Other Transfers and Exchanges of Beneficial
Interests in Global Warrants. In connection with all transfers and
exchanges of beneficial interests that are not subject to Section
3.6(b)(i) above, the transferor of such beneficial interest must
deliver to the Warrant Registrar either (A) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
credit or cause to be credited a beneficial interest in another Global
Warrant in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with
the Applicable Procedures containing information regarding the
Participant account to be credited with such increase or (B) (1) a
written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing
the Depositary to cause to be issued a Definitive Warrant in an amount
equal to the beneficial interest to be transferred or exchanged and
(2) instructions given by the Depositary to the Warrant Registrar
containing information regarding the Person in whose name such
Definitive Warrant shall be registered to effect the transfer or
exchange referred to in (1) above. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in
Global Warrants contained in this Warrant Agreement and the Warrants,
or otherwise applicable provisions under the Securities Act, the
Warrant Agent shall adjust the number of the relevant Global
Warrant(s) pursuant to Section 3.6(g) hereof.
(iii) Transfer and Exchange of Beneficial Interests in the
Restricted Global Warrant for Beneficial Interests in the Unrestricted
Global Warrant. A beneficial interest in the Restricted Global
Warrant may be exchanged by any holder thereof for a beneficial
interest in an Unrestricted Global Warrant or transferred to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Warrant if the exchange or transfer complies with
the requirements of Section 3.6(b)(ii) above and:
(A) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Warrant
Registration Rights Agreement;
(B) the Warrant Registrar receives the following:
(1) if the holder of such beneficial interest in
the Restricted Global Warrant proposes to exchange such
beneficial interest for a beneficial interest in an
Unrestricted Global Warrant, a certificate from such
holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in
the Restricted Global Warrant proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an
Unrestricted Global Warrant, a certificate from such
holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Warrant Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
7
If any such transfer is effected pursuant to subparagraph (A) or (B)
above at a time when an Unrestricted Global Warrant has not yet been issued,
Holdings shall issue and, upon receipt of a Warrant Authentication Order in
accordance with Section 3.2 hereof, the Warrant Agent shall authenticate one or
more Unrestricted Global Warrants in an number equal to the number of beneficial
interests transferred pursuant to subparagraph (A) or (B) above.
Beneficial interests in an Unrestricted Global Warrant cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Warrant.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Warrants.
(i) Beneficial Interests in Restricted Global Warrants to
Restricted Definitive Warrants. If any holder of a beneficial
interest in a Restricted Global Warrant proposes to exchange such
beneficial interest for a Restricted Definitive Warrant or to transfer
such beneficial interest to a Person who takes delivery thereof in the
form of a Restricted Definitive Warrant, then, upon receipt by the
Warrant Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to exchange such beneficial
interest for a Restricted Definitive Warrant, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other
than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to
Holdings or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
8
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(c) thereof,
the Warrant Agent shall cause the amount of the applicable Global Warrant
to be reduced accordingly pursuant to Section 3.6(g) hereof, and Holdings
shall execute and the Warrant Agent shall authenticate and deliver to the
Person designated in the instructions a Definitive Warrant in the
appropriate amount. Any Definitive Warrant issued in exchange for a
beneficial interest in a Restricted Global Warrant pursuant to this Section
3.6(c) shall be registered in such name or names and in such authorized
amount or amounts as the holder of such beneficial interest shall instruct
the Warrant Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Warrant Agent shall deliver such
Definitive Warrants to the Persons in whose names such Warrants are so
registered. Any Definitive Warrant issued in exchange for a beneficial
interest in a Restricted Global Warrant pursuant to this Section 3.6(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Warrants to
Unrestricted Definitive Warrants. A holder of a beneficial interest in
a Restricted Global Warrant may exchange such beneficial interest for
an Unrestricted Definitive Warrant or may transfer such beneficial
interest to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Warrant only if:
(A) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Warrant
Registration Rights Agreement;
(B) the Warrant Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to exchange such
beneficial interest for a Definitive Warrant that does not
bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a Definitive Warrant that does not
bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to
the Warrant Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Warrants to
Unrestricted Definitive Warrants. If any holder of a beneficial
interest in an Unrestricted Global Warrant proposes to exchange such
beneficial interest for a Definitive Warrant or to transfer such
beneficial interest to a Person who takes delivery thereof in the form
of a
9
Definitive Warrant, then, upon satisfaction of the conditions set forth in
Section 3.6(b)(ii) hereof, the Warrant Agent shall order the amount of the
applicable Global Warrant to be reduced accordingly pursuant to Section
3.6(g) hereof, and Holdings shall execute and, upon receipt of a Warrant
Authentication Order, the Warrant Agent shall authenticate and deliver to
the Person designated in the instructions a Definitive Warrant in the
appropriate amount. Any Definitive Warrant issued in exchange for a
beneficial interest pursuant to this Section 3.6(c)(iii) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Warrant Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Warrant Agent shall deliver such
Definitive Warrants to the Persons in whose names such Warrants are so
registered. Any Definitive Warrant issued in exchange for a beneficial
interest pursuant to this Section 3.6(c)(iii) shall not bear the Private
Placement Legend.
(d) Transfer and Exchange of Definitive Warrants for Beneficial Interests.
(i) Restricted Definitive Warrants to Beneficial Interests in
Restricted Global Warrants. If any Holder of a Restricted Definitive
Warrant proposes to exchange such Warrant for a beneficial interest in a
Restricted Global Warrant or to transfer such Restricted Definitive
Warrants to a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Warrant, then, upon receipt by the Warrant
Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Warrant proposes
to exchange such Warrant for a beneficial interest in a Restricted
Global Warrant, a certificate from such Holder in the form of Exhibit
C hereto, including the certifications in item (2)(b) thereof; or
(B) if such Restricted Definitive Warrant is being transferred
to a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof,
the Warrant Agent shall cancel the Restricted Definitive Warrant, increase
or cause to be increased the number of, in the case of clause (A) above,
the appropriate Restricted Global Warrant and in the case of clause (B)
above, the 144A Global Warrant.
(ii) Restricted Definitive Warrants to Beneficial Interests in
Unrestricted Global Warrants. A Holder of a Restricted Definitive Warrant
may exchange such Warrant for a beneficial interest in an Unrestricted
Global Warrant or transfer such Restricted Definitive Warrant to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Warrant only if:
(A) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Warrant Registration Rights
Agreement;
(B) the Warrant Registrar receives the following:
(1) if the Holder of such Definitive Warrants proposes to
exchange such Warrants for a beneficial interest in the
Unrestricted
10
Global Warrant, a certificate from such Holder in the form
of Exhibit C hereto, including the certifications in item
(1)(c) thereof; or
(2) if the Holder of such Definitive Warrants proposes
to transfer such Warrants to a Person who shall take
delivery thereof in the form of a beneficial interest in the
Unrestricted Global Warrant, a certificate from such Holder
in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to
the Warrant Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 3.6(d)(ii), the Warrant Agent shall cancel the Definitive
Warrants and increase or cause to be increased the number of the
Unrestricted Global Warrant.
(iii) Unrestricted Definitive Warrants to Beneficial Interests in
Unrestricted Global Warrants. A Holder of an Unrestricted Definitive
Warrant may exchange such Warrant for a beneficial interest in an
Unrestricted Global Warrant or transfer such Definitive Warrants to a
Person who takes delivery thereof in the form of a beneficial interest
in an Unrestricted Global Warrant at any time. Upon receipt of a
request for such an exchange or transfer, the Warrant Agent shall
cancel the applicable Unrestricted Definitive Warrant and increase or
cause to be increased the number of one of the Unrestricted Global
Warrants.
If any such exchange or transfer from a Definitive Warrant to a
beneficial interest is effected pursuant to subparagraphs (ii)(B) or (iii)
above at a time when an Unrestricted Global Warrant has not yet been issued,
Holdings shall issue and, upon receipt of a Warrant Authentication Order in
accordance with Section 3.2 hereof, the Warrant Agent shall authenticate one
or more Unrestricted Global Warrants in a number equal to the number of
Definitive Warrants so transferred.
(e) Transfer and Exchange of Definitive Warrants for Definitive
Warrants.
Upon request by a Holder of Definitive Warrants and such Holder's
compliance with the provisions of this Section 3.6(e), the Warrant Registrar
shall register the transfer or exchange of Definitive Warrants. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Warrant Registrar the Definitive Warrants duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Warrant Registrar duly executed by such Holder or by his attorney, duly
authorized in writing. In addition, the requesting Holder shall provide any
additional certifications, documents and information, as applicable, required
pursuant to the following provisions of this Section 3.6(e).
(i) Restricted Definitive Warrants to Restricted Definitive
Warrants. Any Restricted Definitive Warrant may be transferred to and
registered in the name of Persons who take delivery thereof in the
form of a Restricted Definitive Warrant if the Warrant Registrar
receives the following:
11
(A) if the transfer will be made pursuant to Rule 144A
under the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item
(2) thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications, certificates
and Opinion of Counsel required by item (3) thereof, if
applicable.
(ii) Restricted Definitive Warrants to Unrestricted Definitive
Warrants. Any Restricted Definitive Warrant may be exchanged by the
Holder thereof for an Unrestricted Definitive Warrant or transferred
to a Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Warrant if:
(A) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(B) the Warrant Registrar receives the following:
(1) if the Holder of such Restricted Definitive
Warrants proposes to exchange such Warrants for an
Unrestricted Definitive Warrant, a certificate from such
Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive
Warrants proposes to transfer such Warrants to a Person who
shall take delivery thereof in the form of an Unrestricted
Definitive Warrant, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (B),
if the Warrant Registrar so requests, an Opinion of Counsel
in form reasonably acceptable to Holdings to the effect
that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the
Securities Act.
(iii) Unrestricted Definitive Warrants to Unrestricted Definitive
Warrants. A Holder of Unrestricted Definitive Warrants may transfer
such Warrants to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Warrant. Upon receipt of a request to
register such a transfer, the Warrant Registrar shall register the
Unrestricted Definitive Warrants pursuant to the instructions from the
Holder thereof.
(f) Legends.
12
The following legends shall appear on the face of all Global Warrants
and Definitive Warrants issued under this Warrant Agreement unless specifically
stated otherwise in the applicable provisions of this Warrant Agreement.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each
Global Warrant and each Definitive Warrant (and all Warrants
issued in exchange therefor or substitution thereof) shall bear
the legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
(A) OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO XM
SATELLITE RADIO HOLDINGS INC., (2) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (4)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (5) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT (AN "IAI") THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE WARRANT AGENT, AND, IN THE CASE OF ANY TRANSFER TO ANY IAI OF
SECURITIES ENTITLING THE HOLDER TO PURCHASE 10,000 OR FEWER SHARES OF CLASS
A COMMON STOCK, AN OPINION OF COUNSEL IF XM SATELLITE RADIO HOLDINGS INC.
SO REQUESTS OR (6) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (AND BASED ON AN OPINION
OF COUNSEL IF HOLDINGS SO REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES
TO APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THAT IT WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Warrant or
Definitive Warrant issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to
this Section 3.6 (and all Warrants issued in exchange therefor or
substitution thereof) shall not bear the Private Placement
Legend.
(ii) Global Warrant Legend. Each Global Warrant shall bear a
legend in substantially the following form:
13
THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT
OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON
UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 3.7 OF THE WARRANT
AGREEMENT, (II) THIS GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE BUT NOT IN
PART PURSUANT TO SECTION 3.6(a) OF THE WARRANT AGREEMENT, (III) THIS GLOBAL
NOTE MAY BE DELIVERED TO THE WARRANT AGENT FOR CANCELLATION PURSUANT TO
SECTION 3.11 OF THE WARRANT AGREEMENT AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
HOLDINGS.
(g) Cancellation and/or Adjustment of Global Warrants.
At such time as all beneficial interests in a particular Global
Warrant have been exchanged for Definitive Warrants or a particular Global
Warrant has been redeemed, repurchased or canceled in whole and not in part,
each such Global Warrant shall be returned to or retained and canceled by the
Warrant Agent in accordance with Section 3.11 hereof. At any time prior to such
cancellation, if any beneficial interest in a Global Warrant is exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Warrant or for Definitive Warrants, the
amount of Warrants represented by such Global Warrant shall be reduced
accordingly and an endorsement shall be made on such Global Warrant by the
Warrant Agent or by the Depositary at the direction of the Warrant Agent to
reflect such reduction; and if the beneficial interest is being exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Warrant, such other Global Warrant shall
be increased accordingly and an endorsement shall be made on such Global Warrant
by the Warrant Agent or by the Depositary at the direction of the Warrant Agent
to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, Holdings
shall execute and the Warrant Agent shall authenticate Global Warrants
and Definitive Warrants upon Holdings' order or at the Warrant
Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Warrant or to a Holder of a Definitive Warrant
for any registration of transfer or exchange, but Holdings may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 3.10) hereof.
(iii) All Global Warrants and Definitive Warrants issued upon any
registration of transfer or exchange of Global Warrants or Definitive
Warrants shall be the duly authorized, executed and issued warrants
for Class A Common Stock of Holdings, not subject to any preemptive
rights, and entitled to the same benefits under this Warrant
Agreement, as the Global Warrants or Definitive Warrants surrendered
upon such registration of transfer or exchange.
(iv) Prior to due presentment for the registration of a transfer
of any Warrant, the Warrant Agent, any Agent and Holdings may deem and
treat the Person in whose
14
name any Warrant is registered as the absolute owner of such Warrant
for the purpose of receiving payment of principal of and interest on
such Warrants and for all other purposes, and none of the Warrant
Agent, any Agent or Holdings shall be affected by notice to the
contrary.
(v) The Warrant Agent shall authenticate Global Warrants and
Definitive Warrants in accordance with the provisions of Section 3.2
hereof.
3.7. All certifications, certificates and Opinions of Counsel
required to be submitted to the Warrant Registrar pursuant to this Section 3.6
to effect a registration of transfer or exchange may be submitted by facsimile.
3.8. Replacement Warrants. If any mutilated Warrant is surrendered
--------------------
to the Warrant Agent or Holdings and the Warrant Agent receives evidence to its
satisfaction of the destruction, loss or theft of any Warrant, Holdings shall
issue and the Warrant Agent, upon receipt of a Warrant Authentication Order,
shall authenticate a replacement Warrant if the Warrant Agent's requirements are
met. If required by the Warrant Agent or Holdings, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Warrant Agent
and Holdings to protect Holdings, the Warrant Agent, any Agent and any
authenticating agent from any loss that any of them may suffer if a Warrant is
replaced. Holdings may charge for its expenses in replacing a Warrant.
Every replacement Warrant is an additional warrant of Holdings and
shall be entitled to all of the benefits of this Warrant Agreement equally and
proportionately with all other Warrants duly issued hereunder.
3.9. Outstanding Warrants. The Warrants outstanding at any time
--------------------
are all the Warrants authenticated by the Warrant Agent except for those
canceled by it, those delivered to it for cancellation, those reductions in the
interest in a Global Warrant effected by the Warrant Agent in accordance with
the provisions hereof, and those described in this Section as not outstanding.
Except as set forth in Section 3.9 hereof, a Warrant does not cease to be
outstanding because Holdings or an Affiliate of Holdings holds the Warrant.
If a Warrant is replaced pursuant to Section 3.7 hereof, it ceases to
be outstanding unless the Warrant Agent receives proof satisfactory to it that
the replaced Warrant is held by a bona fide purchaser.
3.10. Treasury Warrants. In determining whether the Holders of the
-----------------
required amount of Warrants have concurred in any direction, waiver or consent,
Warrants owned by Holdings, or by any Person directly or indirectly controlling
or controlled by or under direct or indirect common control with Holdings, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Warrant Agent shall be protected in relying on any such
direction, waiver or consent, only Warrants that the Warrant Agent knows are so
owned shall be so disregarded.
3.11. Temporary Warrants. Until certificates representing Warrants
------------------
are ready for delivery, Holdings may prepare and the Warrant Agent, upon receipt
of a Warrant Authentication Order, shall authenticate temporary Warrants.
Temporary Warrants shall be substantially in the form of certificated Warrants
but may have variations that Holdings considers appropriate for temporary
Warrants and as shall be reasonably acceptable to the Warrant Agent. Without
unreasonable delay, Holdings shall prepare and the Warrant Agent shall
authenticate definitive Warrants in exchange for temporary Warrants.
15
Holders of temporary Warrants shall be entitled to all of the benefits
of this Warrant Agreement.
3.12. Cancellation. Holdings at any time may deliver Warrants to
------------
the Warrant Agent for cancellation. The Warrant Registrar and Warrant Paying
Agent shall forward to the Warrant Agent any Warrants surrendered to them for
registration of transfer, exchange or payment. The Warrant Agent and no one
else shall cancel all Warrants surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall destroy canceled
Warrants (subject to the record retention requirement of the Exchange Act).
Certification of the destruction of all canceled Warrants shall be delivered to
Holdings. Holdings may not issue new Warrants to replace Warrants that it has
paid or that have been delivered to the Warrant Agent for cancellation.
3.13. Separation.
----------
(a) Notwithstanding the provisions of this Section 3, until
Separated (as defined herein) each Warrant Certificate will be held by the
Trustee, as custodian for the registered holders of each Note or Note in global
form, and will be registered in the name of the registered holder of such Note
initially in the amount specified to the Warrant Agent by Holdings. Such holder
may, at any time, on or after the Separation Date (as defined herein), at its
option, by notice to the Unit Agent, elect to separate and/or separately
transfer the Notes and the Warrants represented by such Note or Notes in global
form containing a Warrant, in whole or in part, for a definitive Warrant
Certificate or Warrant Certificates or a beneficial interest in a Global Warrant
evidencing the underlying Warrants and for a Note or Notes or a beneficial
interest in a Global Note of a like aggregate principal amount at maturity of
authorized denominations (such surrender and exchange being referred to herein
as a "Separation" and the related Warrants being referred to as "Separated");
provided that no delay or failure on the part of the Trustee or the Warrant
Agent to exchange such Warrant Certificate and Note or Notes shall affect the
Separation of the Notes and the Warrants or their separate transferability.
Prior to Separation, record ownership of the Warrants will be evidenced by the
certificates for Units or a Global Unit registered in the names of the holders
of the Unit or Global Unit, which certificates or Global Unit will include a
Warrant substantially in the form set forth in the Unit Agreement, and the right
to receive or exercise Warrants will be transferable only in connection with the
transfer of such Units or a beneficial interest in a Global Unit.
(b) All Units and Global Units containing a Warrant presented for
Separation shall be duly endorsed by the registered holder or holders thereof or
by the duly appointed legal representative thereof or by a duly authorized
attorney, and in the case of transfer, which signature shall be a medallion
guaranteed by an institution which is a member of a Securities Transfer
Association recognized signature guarantee program. Upon notice from the
Trustee of a Separation, the Warrant Agent shall, with respect to Definitive
Warrants, deliver (or cause to be delivered) the Warrant Certificate or Warrant
Certificates executed by Holdings and countersigned by the Warrant Agent in the
name of such registered holder or holders or such transferee or transferees or
shall, with respect to Global Warrants, deliver (or cause to be delivered) a
Global Warrant (CUSIP ▇▇▇▇▇▇▇▇▇) executed by Holdings and countersigned by the
Warrant Agent in the name of the Depositary or its nominee for such aggregate
number of Warrants (or, with respect to a Global Warrant, increasing the number
of Warrants represented thereby in such amount) as shall equal one Warrant for
each $1,000 principal amount at maturity of Notes so exchanged for Separation,
bearing numbers or other distinguishing symbols not contemporaneously
outstanding, to the person or persons entitled thereto. Upon registration of
transfer or exchange of a Warrant Certificate, the Warrant Agent shall
countersign and deliver by certified mail a new Warrant Certificate to the
persons entitled thereto.
(c) No service charge shall be made for registration of transfer or
exchange upon surrender of any Warrant Certificate at the office of the Warrant
Agent maintained for that purpose.
16
Holdings may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration,
transfer or exchange of Warrant Certificates.
Section 4. Separation of Warrants; Terms of Warrants; Exercise of
------------------------------------------------------
Warrants.
--------
4.1. The Notes and Warrants will not be separately transferable
until the close of business on the earliest to occur of (i) 180 days from the
date of issuance, (ii) such earlier date Bear, ▇▇▇▇▇▇▇ & Co. Inc. may determine,
(iii) the occurrence of a Change of Control (as defined in the Indenture) the
commencement of the Exchange Offer and (v) the effectiveness of the shelf
registration statement relating to the Notes (the earliest of such dates, the
"Separation Date"), at which time such Warrants shall become separately
transferable. Subject to the terms of this Agreement, each Warrant holder shall
have the right, which may be exercised during the period commencing at the
opening of business on the Separation Date and until 5:00 p.m., New York City
time on March 15, 2010 (the "Exercise Period"), to receive from Holdings the
number of fully paid and nonassessable Warrant Shares which the holder may at
the time be entitled to receive on exercise of such Warrants and payment of the
exercise price (the "Exercise Price") then in effect for such Warrant Shares;
provided that holders shall be able to exercise their Warrants only if a
registration statement relating to the Warrant Shares is then in effect, or the
exercise of such Warrants is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and such securities
are qualified for sale or exempt from qualification under the applicable
securities laws of the states in which the various holders of the Warrants or
other persons to whom it is proposed that the Warrant Shares be issued on
exercise of the Warrants reside. Each holder may exercise its right, during the
Exercise Period, to receive Warrant Shares on a net basis, such that, without
the exchange of any funds, the holder tenders Notes having an aggregate
principal amount at maturity, plus accrued and unpaid interest, if any thereon,
to the date of exercise equal to the Exercise Price of the Warrants being
exercised by such holder. Each Warrant not exercised prior to 5:00 p.m., New
York City time, on March 15, 2010 (the "Expiration Date") shall become void and
all rights thereunder and all rights in respect thereof under this agreement
shall cease as of such time. No adjustments as to dividends will be made upon
exercise of the Warrants.
4.2. In order to exercise all or any of the Warrants represented by
a Warrant Certificate, (i) in the case of Definitive Warrants, the holder
thereof must surrender for exercise the Warrant Certificate to Holdings at the
office of the Warrant Agent at its New York corporate trust office set forth in
Section 6 hereof, (ii) in the case of a book-entry interest in a Global Warrant,
the exercising Participant whose name appears on a securities position listing
of the Depositary as the holder of such book-entry interest must comply with the
Depositary's procedures relating to the exercise of such book-entry interest in
such Global Warrant and (iii) in the case of both Global Warrants and Definitive
Warrants, the holder thereof or the Participant, as applicable, must deliver to
Holdings at the office of the Warrant Agent the form of election to purchase on
the reverse thereof duly filled in and signed, which signature shall be a
medallion guaranteed by an institution which is a member of a Securities
Transfer Association recognized signature guarantee program, and upon payment to
the Warrant Agent for the account of Holdings of the Exercise Price, which is
set forth in the form of Warrant Certificate as adjusted as herein provided, for
the number of Warrant Shares in respect of which such Warrants are then
exercised. Payment of the aggregate Exercise Price shall be made (i) in cash, by
wire transfer or by certified or official bank check payable to the order of
Holdings or (ii) on a net basis in the manner provided in Section 4.1 hereof.
4.3. Subject to the provisions of Section 5 hereof, upon compliance
with clause (b) above, Holdings shall deliver or cause to be delivered with all
reasonable dispatch, to or upon the written order of the holder and in such name
or names as the Warrant holder or Participant may designate, a certificate or
certificates for the number of whole Warrant Shares issuable upon the exercise
of such Warrants or other securities or property to which such holder is
entitled hereunder, together with cash as
17
provided in Section 9 hereof; provided that if any consolidation, merger or
lease or sale of assets is proposed to be effected by Holdings as described in
Section 8.13 hereof, or a tender offer or an exchange offer for shares of Class
A Common Stock shall be made, upon such surrender of Warrants and payment of the
Exercise Price as aforesaid, Holdings shall, as soon as possible, but in any
event not later than two business days thereafter, deliver or cause to be
delivered the full number of Warrant Shares issuable upon the exercise of such
Warrants in the manner described in this sentence or other securities or
property to which such holder is entitled hereunder, together with cash as
provided in Section 9 hereof. Such certificate or certificates shall be deemed
to have been issued and any person so designated to be named therein shall be
deemed to have become a holder of record of such Warrant Shares as of the date
of the surrender of such Warrants and payment of the Exercise Price.
4.4. Subject to the provisions of Section 4 hereof, the Warrants
shall be exercisable, at the election of the holders thereof, either in full or
from time to time in part. If less than all the Warrants represented by a
Definitive Warrant are exercised, such Definitive Warrant shall be surrendered
and a new Definitive Warrant of the same tenor and for the number of Warrants
which were not exercised shall be executed by Holdings and delivered to the
Warrant Agent and the Warrant Agent shall countersign the new Definitive
Warrant, registered in such name or names as may be directed in writing by the
holder, and shall deliver the new Definitive Warrant to the Person or Persons
entitled to receive the same. The Warrant Agent shall make such notations on
Schedule A to each Global Warrant as are required to reflect any change in the
number of Warrants represented by such Global Warrant resulting from any
exercise in accordance with the terms hereof.
4.5. All Warrant Certificates surrendered upon exercise of Warrants
shall be canceled by the Warrant Agent. Such canceled Warrant Certificates
shall then be disposed of by the Warrant Agent in a manner satisfactory to
Holdings. The Warrant Agent shall account promptly to Holdings with respect to
Warrants exercised and concurrently pay to Holdings all monies received by the
Warrant Agent for the purchase of the Warrant Shares through the exercise of
such Warrants.
4.6. The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the holders
during normal business hours at its office. Holdings shall supply the Warrant
Agent from time to time with such numbers of copies of this Agreement as the
Warrant Agent may request.
Section 5. Payment of Taxes. Holdings will pay all documentary stamp
----------------
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants; provided, however, that Holdings shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and Holdings shall not be required
to issue or deliver such Warrant Certificate unless or until the person or
persons requesting the issuance thereof shall have paid to Holdings the amount
of such tax or shall have established to the satisfaction of Holdings that such
tax has been paid.
Section 6. Reservation of Warrant Shares.
-----------------------------
6.1. Holdings will at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized but unissued
Class A Common Stock or its authorized and issued Class A Common Stock held in
its treasury, for the purpose of enabling it to satisfy any obligation to issue
Warrant Shares upon exercise of Warrants, the maximum number of shares of Class
A Common Stock which may then be deliverable upon the exercise of all
outstanding Warrants.
18
6.2. Holdings or, if appointed, the transfer agent for the Class A
Common Stock (the "Transfer Agent") and every subsequent transfer agent for any
shares of Holdings' capital stock issuable upon the exercise of any of the
rights of purchase aforesaid will be irrevocably authorized and directed at all
times to reserve such number of authorized shares as shall be required for such
purpose. Holdings will keep a copy of this Agreement on file with the Transfer
Agent and with every subsequent transfer agent for any shares of Holdings'
capital stock issuable upon the exercise of the rights of purchase represented
by the Warrants. The Warrant Agent is hereby irrevocably authorized to
requisition from time to time from such Transfer Agent the stock certificates
required to honor outstanding Warrants upon exercise thereof in accordance with
the terms of this Agreement. Holdings will supply such Transfer Agent with duly
executed certificates for such purposes and will provide or otherwise make
available any cash which may be payable as provided in Section 9. Holdings will
furnish such Transfer Agent a copy of all notices of adjustments and
certificates related thereto, transmitted to each Holder pursuant to Section 10
hereof.
6.3. Before taking any action which would cause an adjustment
pursuant to Section 8 hereof to reduce the Exercise Price below the then par
value (if any) of the Warrant Shares, Holdings will take any corporate action
which may, in the opinion of its counsel (which may be counsel employed by
Holdings), be necessary in order that Holdings may validly and legally issue
fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
6.4. Holdings covenants that all Warrant Shares which may be issued
upon exercise of Warrants will, upon issue, be fully paid, nonassessable, free
of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof.
Section 7. Obtaining Stock Exchange Listings. Holdings will from time
---------------------------------
to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets within the United States of
America, if any, on which other shares of Class A Common Stock are then listed.
Section 8. Adjustment of Exercise Price and Number of Warrant Shares
---------------------------------------------------------
Issuable. The Exercise Price and the number of Warrant Shares issuable upon the
--------
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 8. For purposes of this
Section 8 "Common Stock" means shares now or hereafter authorized of any class
of common stock of Holdings and any other stock of Holdings, however designated,
that has the right (subject to any prior rights of any class or series of
preferred stock) to participate in any distribution of the assets or earnings of
Holdings without limit as to per share amount.
8.1. Adjustment for Change in Capital Stock. If Holdings (i) pays
--------------------------------------
a dividend or makes a distribution on its Common Stock in shares of its Common
Stock, (ii) subdivides its outstanding shares of Common Stock into a greater
number of shares, (iii) combines its outstanding shares of Common Stock into a
smaller number of shares, (iv) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock or (v) issues by
reclassification of its Common Stock any shares of its capital stock; then the
Exercise Price in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of Holdings
which he would have owned immediately following such action if such Warrant had
been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, after an adjustment, a holder of a Warrant upon exercise of it may receive
shares of two or more classes of capital stock of Holdings, Holdings shall
determine the allocation of the adjusted Exercise Price between the classes of
capital stock. After such allocation, the exercise privilege and the
19
Exercise Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Section 8. Such adjustment shall be made successively whenever any event listed
above shall occur.
8.2. Adjustment for Rights Issue. If Holdings distributes any
---------------------------
rights, options or warrants to all holders of its Common Stock entitling them
for a period expiring within 45 days after the record date mentioned below to
purchase shares of Common Stock at a price per share less than the Fair Market
Value (as defined herein) per share on that record date, the Exercise Price
shall be adjusted in accordance with the formula:
O + N x P
-----
E' = E x M
-----------
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Class A Common Stock outstanding on the record
date (including the number of shares of Class A Common Stock issuable
upon exercise, conversion or exchange of securities outstanding and
vested on the date hereof convertible or exchangeable for Class A
Common Stock on the date hereof).
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the Fair Market Value per share of Class A Common Stock on the record
date.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the Exercise Price shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares actually issued.
8.3. Adjustment for Other Distributions. If Holdings distributes
----------------------------------
to all holders of its Common Stock any of its assets or debt securities or any
rights or warrants to purchase debt securities, assets or other securities of
Holdings, the Exercise Price shall be adjusted in accordance with the formula:
E' = E x M - F
-----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
20
M = the Fair Market Value per share of Class A Common Stock on the record
date mentioned below.
F = the fair market value on the record date of the assets, securities,
rights or warrants to be distributed in respect of one share of Common
Stock as determined in good faith by the Board of Directors of
Holdings (the "Board of Directors").
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This Section 8.3 does not apply to cash dividends or cash
distributions paid out of consolidated current or retained earnings as shown on
the books of Holdings prepared in accordance with generally accepted accounting
principles. Also, this Section 8.3 does not apply to rights, options or warrants
referred to in Section 8.2 hereof.
8.4. Adjustment for Common Stock Issue. If Holdings issues shares of
---------------------------------
Common Stock for a consideration per share less than the Fair Market Value per
share on the date Holdings fixes the offering price of such additional shares,
the Exercise Price shall be adjusted in accordance with the formula:
P
-
E' = E x O + M
-------
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares of Class A Common Stock outstanding immediately
prior to the issuance of such additional shares (including the number
of shares of Class A Common Stock issuable upon exercise, conversion
or exchange of securities outstanding and vested on the date hereof
convertible or exchangeable for Class A Common Stock on the date
hereof).
P = the aggregate consideration received for the issuance of such
additional shares.
M = the Fair Market Value per share of Class A Common Stock on the date of
issuance of such additional shares.
A = the number of shares of Class A Common Stock outstanding immediately
after the issuance of such additional shares (including the number of
shares of Class A Common Stock issuable upon exercise, conversion or
exchange of securities outstanding and vested on the date hereof
convertible or exchangeable for Class A Common Stock on the date
hereof).
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This Section 8.4 does not apply to:
21
(i) any of the transactions described in Sections 8.2 and 8.3
hereof,
(ii) the exercise of warrants, or the conversion or exchange of
other securities convertible or exchangeable for Common Stock,
(iii) Common Stock issued to Holdings' employees under bona fide
employee benefit plans adopted by the Board of Directors and approved
by the holders of Common Stock when required by law, if such Common
Stock would otherwise be covered by this subsection (d) (but only to
the extent that the aggregate number of shares excluded hereby and
issued after the date of this Warrant Agreement shall not exceed 15%
of the Common Stock outstanding at the time of the adoption or
amendment of each such plan, exclusive of antidilution adjustments
thereunder),
(iv) Common Stock upon the exercise of rights or warrants issued
to the holders of Common Stock,
(v) Common Stock issued to shareholders of any person which
merges into Holdings in proportion to their stock holdings of such
person immediately prior to such merger, upon such merger, or
(vi) the issuance of shares of Common Stock pursuant to rights,
options or warrants which were originally issued in a Non-Affiliate
Sale (as defined below) together with one or more other securities as
part of a unit at a price per unit.
8.5. Adjustment for Convertible Securities Issue. If Holdings issues
-------------------------------------------
any securities convertible into or exchangeable for Common Stock (other than
securities issued in transactions described in Sections 8.2 and 8.3 hereof for a
consideration per share of Common Stock initially deliverable upon conversion or
exchange of such securities less than the Fair Market Value per share on the
date of issuance of such securities, the Exercise Price shall be adjusted in
accordance with this formula:
P
-
E' = E x O + M
-----
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares of Class A Common Stock outstanding immediately
prior to the issuance of such securities (including the number of
shares of Class A Common Stock issuable upon exercise, conversion or
exchange of securities outstanding and vested on the date hereof
convertible or exchangeable for Class A Common Stock on the date
hereof).
P = the aggregate consideration received for the issuance of such
securities.
M = the Fair Market Value per share of Class A Common Stock on the date of
issuance of such securities.
22
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the initial conversion or exchange
rate.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange of
such securities have not been issued when such securities are no longer
outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion or exchange of such securities.
This Section 8.5 does not apply to convertible securities issued to
shareholders of any person which merges into Holdings, or with a subsidiary of
Holdings, in proportion to their stock holdings of such person immediately prior
to such merger, upon such merger.
8.6. Consideration Received. For purposes of any computation
----------------------
respecting consideration received pursuant to Sections 8.4 and 8.5 hereof the
following shall apply:
(i) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided
that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred Holdings for any underwriting of
the issue or otherwise in connection therewith;
(ii) in the case of the issuance of shares of Common Stock for
a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors (irrespective of
the accounting treatment thereof), whose determination shall be
conclusive, and described in a Board resolution which shall be filed
with the Warrant Agent;
(iii) in the case of the issuance of securities convertible into
or exchangeable for shares, the aggregate consideration received
therefor shall be deemed to be the consideration received by Holdings
for the issuance of such securities plus the additional consideration,
if any, to be received by Holdings upon the conversion or exchange
thereof (the consideration in each case to be determined in the same
manner as provided in clauses (1) and (2) of this subsection); and
(iv) in the case of the issuance of shares of Common Stock
pursuant to rights, options or warrants, which rights, options or
warrants were originally issued together with one or more other
securities as part of a unit, the consideration shall be deemed to be
(i) the fair value of such rights, options or warrants at the time of
issuance thereof as determined in good faith by the Board of Directors
whose determination shall be conclusive and described in a Board
resolution which shall be filed with the Warrant Agent plus (ii) the
additional consideration, if any, to be received by Holdings upon the
exercise, conversion or exchange thereof (as determined in the same
manner as provided in clause (1) and (2) of this subsection).
8.7. Fair Market Value. For purposes of this Agreement Fair Market
-----------------
Value means: (A) the average over the 20 trading days ending on the date
immediately preceding the date of such determination of the last reported sale
price, or, if no such sale takes place on any such day, the closing
23
bid price, in either case as reported for consolidated transactions on the
principal national securities exchange (including the NASDAQ National Market) on
which such security is listed or admitted for trading; provided, however, that
if any event that results in an adjustment of the Exercise Price occurs during
the period beginning on the first day of such 20-day period and ending on the
date immediately preceding the date of determination, the Fair Market Value as
determined pursuant to the foregoing will be appropriately adjusted to reflect
the occurrence of such event or (B) if such security is not listed on any
exchange or admitted for trading on the NASDAQ Stock Market, the Fair Market
Value shall be (1) in connection with a sale to a party that is not an Affiliate
of Holdings in an arm's length transaction (a "Non-Affiliate Sale"), the price
per security at which such security is sold and (2) in connection with any sale
to an Affiliate of Holdings, (a) the last price per security at which such
security was sold in a Non-Affiliate Sale within the three-month period
preceding such date of determination or (b) if clause (a) is not applicable, the
fair market value of such security determined in good faith by (i) a majority of
the Board of Directors of Holdings, including a majority of the Disinterested
Directors, and approved in a board resolution delivered to the Warrant Agent or
(ii) a nationally recognized investment banking, appraisal or valuation firm,
which is not an Affiliate of Holdings, in each case, taking into account, among
other factors deemed relevant by the Board of Directors or such investment
banking, appraisal or valuation firm, the trading price and volume of such
security on any national securities exchange or automated quotation system on
which such security is traded.
8.8. When De Minimis Adjustment May Be Deferred. No adjustment in
------------------------------------------
the Exercise Price need be made unless the adjustment would require an increase
or decrease of at least 1.0% in the Exercise Price. Any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 8 shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.
8.9. When No Adjustment Required. No adjustment need be made for a
---------------------------
transaction referred to Sections 8.1, 8.2, 8.3, 8.4 or 8.5 hereof, if Warrant
holders are to participate in the transaction on a basis and with notice that
the Board of Directors determines to be fair and appropriate in light of the
basis and notice on which holders of Class A Common Stock participate in the
transaction. No adjustment need be made for (i) rights to purchase Class A
Common Stock pursuant to a Holdings plan for reinvestment of dividends or
interest, (ii) a change in the par value or no par value of the Class A Common
Stock. To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the cash. Interest will not accrue on the cash.
8.10. Notice of Adjustment. Whenever the Exercise Price is adjusted,
--------------------
Holdings shall provide the notices required by Section 10 hereof.
8.11. Voluntary Reduction. Holdings from time to time may reduce
-------------------
the Exercise Price by any amount for any period of time, if the period is at
least 20 days and if the reduction is irrevocable during the period; provided
that in no event may the Exercise Price be less than the par value of a share of
Class A Common Stock. Whenever the Exercise Price is reduced, Holdings shall
mail to Warrant holders a notice of the reduction. Holdings shall mail the
notice at least 15 days before the date the reduced Exercise Price takes effect.
The notice shall state the reduced Exercise Price and the period in which it
will be in effect. A reduction of the Exercise Price does not change or adjust
the Exercise Price otherwise in effect for purposes of Sections 8.1, 8.2, 8.3,
8.4 and 8.5 hereof.
8.12. Notice of Certain Transactions. If (i) Holdings takes any
------------------------------
action that would require an adjustment in the Exercise Price pursuant to
Sections 8.1, 8.2, 8.3, 8.4 and 8.5 hereof and if Holdings does not arrange for
Warrant holders to participate pursuant to Section 8.9 hereof, (ii) Holdings
takes any action that would require a supplemental Warrant Agreement pursuant to
Section 8.13 hereof or (iii) there is a liquidation or dissolution of Holdings,
then Holdings shall mail to Warrant holders a notice
24
stating the proposed record date for a dividend or distribution or the proposed
effective date of a subdivision, combination, reclassification, consolidation,
merger, transfer, lease, liquidation or dissolution. Holdings shall mail the
notice at least 15 days before such date. Failure to mail the notice or any
defect in it shall not affect the validity of the transaction.
8.13. Reorganization of Holdings. Immediately after the Effective
--------------------------
Time, Holdings consolidates or merges with or into, or transfers or leases all
or substantially all its assets to, any person, upon consummation of such
transaction the Warrants shall automatically become exercisable for the kind and
amount of securities, cash or other assets which the holder of a Warrant would
have owned immediately after the consolidation, merger, transfer or lease if the
holder had exercised the Warrant immediately before the effective date of the
transaction. Concurrently with the consummation of such transaction, the
corporation formed by or surviving any such consolidation or merger if other
than Holdings, or the person to which such sale or conveyance shall have been
made, shall enter into a supplemental Warrant Agreement so providing and further
providing for adjustments which shall be as nearly equivalent as may be
practical to the adjustments provided for in this Section 8.13. The successor
company shall mail to Warrant holders a notice describing the supplemental
Warrant Agreement. If the issuer of securities deliverable upon exercise of
Warrants under the supplemental Warrant Agreement is an affiliate of the formed,
surviving, transferee or lessee corporation, that issuer shall join in the
supplemental Warrant Agreement. If this Section 8.13 applies, Sections 8.1, 8.2,
8.3, 8.4 and 8.5 hereof do not apply.
8.14. Holdings Determination Final. Any determination that
----------------------------
Holdings or the Board of Directors must make pursuant to Section 8.1, 8.2, 8.3,
8.4, 8.5, 8.6, 8.7d or 8.8 hereof is conclusive.
8.15. Warrant Agent's Disclaimer. The Warrant Agent has no duty to
--------------------------
determine when an adjustment under this Section 8 should be made, how it should
be made or what it should be. The Warrant Agent has no duty to determine whether
any provisions of a supplemental Warrant Agreement under Section 8.13 hereof are
correct. The Warrant Agent makes no representation as to the validity or value
of any securities or assets issued upon exercise of Warrants. The Warrant Agent
shall not be responsible for the Holdings' failure to comply with this Section
8.
8.16. When Issuance or Payment May Be Deferred. In any case in
----------------------------------------
which this Section 8 shall require that an adjustment in the Exercise Price be
made effective as of a record date for a specified event, Holdings may elect to
defer until the occurrence of such event (i) issuing to the holder of any
Warrant exercised after such record date the Warrant Shares and other capital
stock of Holdings, if any, issuable upon such exercise over and above the
Warrant Shares and other capital stock of Holdings, if any, issuable upon such
exercise on the basis of the Exercise Price and (ii) paying to such holder any
amount in cash in lieu of a fractional share pursuant to Section 9 hereof;
provided that Holdings shall deliver to such holder a due ▇▇▇▇ or other
appropriate instrument evidencing such holder's right to receive such additional
Warrant Shares, other capital stock and cash upon the occurrence of the event
requiring such adjustment.
8.17. Adjustment in Number of Shares. Upon each adjustment of the
------------------------------
Exercise Price pursuant to this Section 8, each Warrant outstanding prior to the
making of the adjustment in the Exercise Price shall thereafter evidence the
right to receive upon payment of the adjusted Exercise Price that number of
shares of Class A Common Stock (calculated to the nearest hundredth) obtained
from the following formula:
N' = N x E
-----
E'
25
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously issuable upon exercise of a
Warrant by payment of the Exercise Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
8.18. Form of Warrants. Irrespective of any adjustments in the
----------------
Exercise Price or the number or kind of shares purchasable upon the exercise of
the Warrants, Warrants theretofore or thereafter issued may continue to express
the same price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
Section 9. Fractional Interests.
--------------------
Holdings shall not be required to issue fractional Warrant Shares on
the exercise of Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same holder, the number of full Warrant
Shares which shall be issuable upon the exercise thereof shall be computed on
the basis of the aggregate number of Warrant Shares purchasable on exercise of
the Warrants so presented. If any fraction of a Warrant Share would, except for
the provisions of this Section 9, be issuable on the exercise of any Warrants
(or specified portion thereof), Holdings shall pay an amount in cash equal to
the Exercise Price on the day immediately preceding the date the Warrant is
presented for exercise, multiplied by such fraction.
Section 10. Notices to Warrant Holders. Upon any adjustment of the
--------------------------
Price pursuant to Section 8, Holdings shall promptly thereafter (i) cause to be
filed with the Warrant Agent a certificate of a firm of independent public
accountants of recognized standing selected by the Board of Directors of
Holdings (who may be the regular auditors of Holdings) setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculations are based and
setting forth the number of Warrant Shares (or portion thereof) issuable after
such adjustment in the Exercise Price, upon exercise of a Warrant and payment of
the adjusted Exercise Price, which certificate shall be conclusive evidence of
the correctness of the matters set forth therein, and (ii) cause to be given to
each of the registered holders of the Warrant Certificates at his address
appearing on the Warrant register written notice of such adjustments by first-
class mail, postage prepaid. Where appropriate, such notice may be given in
advance and included as a part of the notice required to be mailed under the
other provisions of this Section 10.
In case:
(a) Holdings shall authorize the issuance to all holders of shares of
Class A Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants; or
(b) Holdings shall authorize the distribution to all holders of shares
of Class A Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in shares of Common Stock or distributions
referred to in Section 8.1 hereof); or
26
(c) of any consolidation or merger to which Holdings is a party and for
which approval of any shareholders of Holdings is required, or of the conveyance
or transfer of the properties and assets of Holdings substantially as an
entirety, or of any reclassification or change of Common Stock issuable upon
exercise of the Warrants (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 subdivision
or combination), or a tender offer or exchange offer for shares of Common Stock;
or
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of Holdings; or
(e) Holdings proposes to take any action (other than actions of the
character described in Section 8.1 which would require an adjustment of the
Exercise Price pursuant to Section 8, then Holdings shall cause to be filed with
the Warrant Agent and shall cause to be given to each of the registered holders
of the Warrant Certificates at his address appearing on the Warrant register, at
least 20 days (or 10 days in any case specified in clauses (a) or (b) above)
prior to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, by first-class mail, postage
prepaid, a written notice stating (i) the date as of which the holders of record
of shares of Common Stock to be entitled to receive any such rights, options,
warrants or distribution are to be determined, or (ii) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common Stock,
or (iii) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up. The failure to give the notice required by this Section 10 or any defect
therein shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant Certificates
shall be construed as conferring upon the holders thereof the right to vote or
to consent or to receive notice as shareholders in respect of the meetings of
shareholders or the election of Directors of Holdings or any other matter, or
any rights whatsoever as shareholders of Holdings.
Section 11. Merger, Consolidation or Change of Name of Warrant Agent. Any
--------------------------------------------------------
corporation into which the Warrant Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Warrant Agent shall be a party, or any corporation succeeding to the
business of the Warrant Agent, shall be the successor to the Warrant Agent
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor warrant agent under the provisions of
Section 14. In case at the time such successor to the Warrant Agent shall
succeed to the agency created by this Agreement, and in case at that time any of
the Warrant Certificates shall have been countersigned but not delivered, any
such successor to the Warrant Agent may adopt the countersignature of the
original Warrant Agent; and in case at that time any of the Warrant Certificates
shall not have been countersigned, any successor to the Warrant Agent may
countersign such Warrant Certificates either in the name of the predecessor
Warrant Agent or in the name of the successor to the Warrant Agent; and in all
such cases such Warrant Certificates shall have the full force and effect
provided in the Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any
27
of the Warrant Certificates shall not have been countersigned, the Warrant Agent
may countersign such Warrant Certificates either in its prior name or in its
changed name, and in all such cases such Warrant Certificates shall have the
full force and effect provided in the Warrant Certificates and in this
Agreement.
Section 12. Warrant Agent. The Warrant Agent undertakes the duties and
-------------
obligations imposed by this Agreement upon the following terms and conditions,
by all of which Holdings and the holders of Warrants, by their acceptance
thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of Holdings and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of
Holdings to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by Holdings.
(c) The Warrant Agent may consult at any time with counsel satisfactory
to it (who may be counsel for Holdings) and the Warrant Agent shall incur no
liability or responsibility to Holdings or to any holder of any Warrant
Certificate in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
Holdings or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(e) Holdings agrees to pay to the Warrant Agent reasonable compensation
for all services rendered by the Warrant Agent in the execution of this
Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement and to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including judgments,
costs and counsel fees, for anything done or omitted by the Warrant Agent in the
execution of this Agreement except as a result of its gross negligence or bad
faith.
(f) Holdings shall indemnify the Warrant Agent against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Warrant
Agreement, including the costs and expenses of enforcing this Warrant Agreement
against Holdings (including this Section 12(f)) and defending itself against any
claim (whether asserted by Holdings or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except to the extent any such loss, liability or expense may
be attributable to its negligence or bad faith. The Warrant Agent shall notify
Holdings promptly of any claim for which it may seek indemnity. Failure by the
Warrant Agent to so notify Holdings shall not relieve Holdings of its
obligations hereunder. Holdings shall defend the claim and the Warrant Agent
shall cooperate in the defense. The Warrant Agent may have separate counsel and
Holdings shall pay for reasonable fees and expenses of such counsel. Holdings
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld. All rights of action under this Agreement or under
any of the Warrants may be enforced by the Warrant Agent without the possession
of any of the Warrant Certificates or the production thereof at any trial or
other proceeding
28
relative thereto, and any such action, suit or proceeding instituted by the
Warrant Agent shall be brought in its name as Warrant Agent and any recovery of
judgment shall be for the ratable benefit of the registered holders of the
Warrants, as their respective rights or interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or
employee of it, may buy, sell or deal in any of the Warrants or other securities
of Holdings or become pecuniarily interested in any transaction in which
Holdings may be interested, or contract with or lend money to Holdings or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for Holdings or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for Holdings,
and its duties shall be determined solely by the provisions hereof. The Warrant
Agent shall not be liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own gross negligence or bad faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Warrant Agent shall not
be accountable with respect to the validity or value or the kind or amount of
any Warrant Shares or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or with respect to whether
any such Warrant Shares or other securities will when issued be validly issued
and fully paid and nonassessable, and makes no representation with respect
thereto.
Section 13. Change of Warrant Agent. If the Warrant Agent shall become
-----------------------
incapable of acting as Warrant Agent, Holdings shall appoint a successor to such
Warrant Agent. If Holdings shall fail to make such appointment within a period
of 30 days after it has been notified in writing of such incapacity by the
Warrant Agent or by the registered holder of a Warrant Certificate, then the
registered holder of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Pending
appointment of a successor to such Warrant Agent, either by Holdings or by such
a court, the duties of the Warrant Agent shall be carried out by Holdings. The
holders of a majority of the unexercised Warrants shall be entitled at any time
to remove the Warrant Agent and appoint a successor to such Warrant Agent. Such
successor to the Warrant Agent need not be approved by Holdings or the former
Warrant Agent. After appointment the successor to the Warrant Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent without further act or deed; but the
former Warrant Agent shall deliver and transfer to the successor to the Warrant
Agent any property at the time held by it hereunder and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Failure to
give any notice provided for in this Section 13, however, or any defect therein,
shall not affect the legality or validity of the appointment of a successor to
the Warrant Agent.
Section 14. Registration. Holders shall be able to exercise their
------------
Warrants only if a registration statement relating to the Warrant Shares is then
in effect, or the exercise of such Warrants is exempt from the registration
requirements of the Securities Act, and such securities are qualified for sale
or exempt from qualification under the applicable securities laws of the states
in which the various holders of the Warrants or other persons to whom it is
proposed that the Warrant Shares be issued on exercise of the Warrants reside.
29
Section 15. Reports.
-------
(a) Whether or not required by the rules and regulations of the
Securities and Exchange Commission (the "Commission "), so long as any Warrants
are outstanding, Holdings shall furnish to the Warrant Agent and the holders of
Warrants (i) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and 10-K
if Holdings were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by Holdings'
certified independent accountants and (ii) all current reports that would be
required to be filed with the Commission on Form 8-K if Holdings were required
to file such reports. In addition, whether or not required by the rules and
regulations of the Commission, Holdings shall file a copy of all such
information and reports with the Commission for public availability (unless the
Commission shall not accept such a filing) and make such information available
to securities analysts and prospective investors upon request.
(b) Holdings shall provide the Warrant Agent with a sufficient number of
copies of all such reports that the Warrant Agent may be required to deliver to
the holders of the Warrants under this Section 15.
Section 16. Notices to Holdings and Warrant Agent. Any notice or demand
-------------------------------------
authorized by this Agreement to be given or made by the Warrant Agent or by the
registered holder of any Warrant Certificate to or on Holdings shall be
sufficiently given or made when and if deposited in the mail, first class or
registered, postage prepaid, addressed (until another address is filed in
writing by Holdings with the Warrant Agent), as follows:
XM Satellite Radio Holdings Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
In case Holdings shall fail to maintain such office or agency or shall fail
to give such notice of the location or of any change in the location thereof,
presentations may be made and notices and demands may be served at the principal
office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by Holdings or by the
registered holder(s) of any Warrant Certificate to the Warrant Agent shall be
sufficiently given when and if deposited in the mail, first-class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Warrant Agent with Holdings) to the Warrant Agent as follows:
United States Trust Company of New York
▇▇▇ ▇▇▇▇ ▇▇/▇▇/ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Division
Section 17. Supplements and Amendments. From time to time, Holdings and
--------------------------
the Warrant Agent, without consent of the holders of the Warrants, may amend or
supplement the Warrant Agreement for certain purposes, including curing defects
or inconsistencies or making changes that do not materially adversely affect the
rights of any holder. Any amendment or supplement to the Warrant Agreement that
has a material adverse effect on the interests of the holders of the Warrants
requires the written consent of the holders of a majority of the then
outstanding Warrants. The consent of each holder of the Warrants is required for
any amendment pursuant to which the Exercise Price would be increased
30
or the number of Warrant Shares purchasable upon exercise of Warrants would be
decreased (other than pursuant to adjustments provided for in the Warrant
Agreement as generally described above).
Section 18. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of Holdings or the Warrant Agent shall bind and
inure to the benefit of their respective successors and assigns hereunder.
Section 19. Termination. This Agreement shall terminate at 5:00 p.m.,
-----------
New York City time on April 1, 2008. Notwithstanding the foregoing, this
Agreement will terminate on any earlier date if all Warrants have been
exercised. The provisions of Section 19 shall survive such termination.
Section 20. Governing Law. This Agreement and each Warrant Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of New York and for all purposes shall be construed in accordance with the
internal laws of said State.
Section 21. Benefits of This Agreement. Nothing in this Agreement shall
--------------------------
be construed to give to any person or corporation other than Holdings, the
Warrant Agent and the registered holders of the Warrant Certificates any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of Holdings, the Warrant Agent and
the registered holders of the Warrant Certificates.
Section 22. Counterparts. This Agreement may be executed in any number
------------
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
[Signature Page Follows]
31
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the day and year first above written.
XM Satellite Radio Holdings Inc.
By:_________________________________
Name:
Title:
United States Trust Company of New York
By: ___________________________________
Name:
Title:
32