EXHIBIT 1.2
XM SATELLITE RADIO HOLDINGS INC.
7,500,000 Shares of Class A Common Stock
UNDERWRITING AGREEMENT
February 28, 2001
BEAR, XXXXXXX & CO. INC.
7,500,000 Shares of Class A Common Stock
XM SATELLITE RADIO HOLDINGS INC.
UNDERWRITING AGREEMENT
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February 28, 2001
Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
XM Satellite Radio Holdings Inc., a corporation organized and existing
under the laws of Delaware (the "Company"), proposes, subject to the terms and
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conditions stated herein, to issue and sell to the several underwriters named in
Schedule I hereto (collectively, the "Underwriters") an aggregate of 7,500,000
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shares (the "Firm Shares") of its Class A common stock, par value $0.01 per
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share (the "Common Stock") and, for the sole purpose of covering over-allotments
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in connection with the sale of the Firm Shares, at the option of the
Underwriters, up to an additional 1,125,000 shares (the "Additional Shares") of
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Common Stock. The Firm Shares and any Additional Shares purchased by the
Underwriters are referred to herein as the "Shares". The Shares are more fully
described in the Registration Statement referred to below. Simultaneously with
the offer and sale of the Shares hereunder, the Company is offering to the
public $125,000,000 in aggregate principal amount of 7.75% Convertible Notes
due 2006 (the "Concurrent Offering").
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1. Representations and Warranties of the Company. The Company
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represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a shelf registration statement on
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Form S-3 (No. 333-47570), as amended by Amendment No. 1 to
Registration Statement on Form S-3 and related prospectus for the
registration under the Securities Act of 1933, as amended (the
"Securities Act"), of securities of the Company, including shares
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of Common Stock, which registration statement, as so amended, has
been declared effective by the Commission and copies of which have
heretofore been delivered to the Underwriters. The registration
statement, as amended at the time it became effective, including
the exhibits and information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to
Rule 430A under the Act, is hereinafter referred to as the
"Registration Statement". If the Company has filed or is required
pursuant to the terms hereof to file a registration statement
pursuant to Rule 462(b) under the Securities Act registering
additional shares of Common Stock (a "Rule 462(b) Registration
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Statement"), then, unless otherwise specified, any reference
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herein to the term "Registration Statement" shall be deemed to
include such Rule 462(b) Registration Statement. Other than a Rule
462(b) Registration Statement, which became effective upon filing,
no other document with respect to the Registration Statement has
heretofore been filed with the Commission (other than prospectuses
filed pursuant to Rule 424(b) of the rules and regulations of the
Commission under the Securities Act (the "Securities Act
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Regulations"), each in the form heretofore delivered to the
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Underwriters). No stop order suspending the effectiveness of either
the Registration Statement or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that
purpose has been initiated or, to the Company's knowledge,
threatened by the Commission. The Company, if required by the
Securities Act Regulations, proposes to file the Prospectus
Supplement with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations. The Prospectus, in the form in which it
was filed with the Commission in the Registration Statement
pursuant to Rule 415 of the Securities Act Regulations, is
hereinafter referred to as the "Prospectus". The Prospectus
Supplement relating to the Shares for use in connection with the
offering and sale of the Shares (the "Offering"), in the form in
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which it is to be filed with the Commission pursuant to Rule 424(b)
of the Securities Act Regulations, is hereinafter referred to as
the "Prospectus Supplement". Any preliminary prospectus supplement
relating to the Shares or prospectus supplement subject to
completion relating to the Shares included in the Registration
Statement or filed with the Commission pursuant to Rule 424(b)
under the Securities Act is hereafter called a "Preliminary
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Prospectus Supplement". All references in this Agreement to the
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Registration Statement, the Rule 462(b) Registration Statement, the
Prospectus, a Preliminary Prospectus Supplement and the Prospectus
Supplement, or any amendments or supplements to any of the
foregoing, shall be deemed to include any copy thereof filed with
the Commission pursuant to its Electronic Data Gathering, Analysis
and Retrieval System ("XXXXX").
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(b) The Registration Statement and the Prospectus, at the
time the Registration Statement became effective and as of the
Closing Date referred to in Section 2 hereof, the Prospectus
Supplement, as of the date hereof and as of the Closing Date, and
the Preliminary Prospectus Supplement as of the date thereof,
complied and comply in all material respects with the requirements
of the Securities Act and the Securities Act Regulations, and the
Company's Current Report on Form 8-K, dated February 22, 2001 (the
"Form 8-K"), as of the date thereof, complied and comply in all
material respects with the requirements of the Securities Exchange
Act, as amended (the "Exchange Act"), and each of the foregoing did
not and as of the Closing Date do not contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading. The Prospectus Supplement, as of the date hereof
(unless the term "Prospectus Supplement" refers to a prospectus
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supplement which has been provided to the Underwriters by the
Company for use in connection with the offering of the Shares which
differs from the Prospectus Supplement filed with the Commission
pursuant to Rule 424(b) of the Securities Act Regulations, in which
case at the time it is first provided to the Underwriters for such
use) and on the Closing Date, and the Form 8-K as of the date
hereof and as of the Closing Date, do not and will not include any
untrue statement of a
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material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
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representations and warranties in this Section (1)(b) shall not
apply to statements in or omissions from the Registration Statement
or Prospectus Supplement made in reliance upon and in conformity
with information relating to any Underwriter furnished to the
Company in writing by any Underwriter expressly for use in the
Registration Statement or the Prospectus Supplement. Each
Preliminary Prospectus Supplement and Prospectus Supplement and
Form 8-K filed as part of the Registration Statement, as part of
any amendment thereto or pursuant to Rule 424 under the Securities
Act Regulations, if filed by electronic transmission pursuant to
Regulation S-T under the Securities Act, was identical to the copy
thereof delivered to the Underwriters for use in connection with
the offer and sales of the Shares (except as may be permitted by
Regulation S-T under the Securities Act). There are no contracts or
other documents required to be described in the Prospectus
Supplement or Form 8-K or to be filed as exhibits to the
Registration Statement under the Securities Act that have not been
described or filed therein as required, and there are no business
relationships or related-party transactions involving the Company
or any of its subsidiaries or any other person required to be
described in the Prospectus Supplement or Form 8-K that have not
been described therein as required.
(c) Each of the Company and its subsidiaries (i) has been
duly organized and is validly existing as a corporation in good
standing under the laws of its respective jurisdiction of
incorporation, (ii) has all requisite corporate power and authority
to carry on its business as it is currently being conducted and as
described in the Prospectus Supplement and Form 8-K and to own,
lease and operate its properties, and (iii) is duly qualified and
in good standing as a foreign corporation authorized to do business
in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification
except, with respect to clauses (i) (as it relates to good
standing) and (iii), where the failure to be so qualified or in
good standing does not and could not reasonably be expected to (x)
individually or in the aggregate, result in a material adverse
effect on the properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of the
Company and its subsidiaries, taken as a whole, (y) interfere with
or adversely affect the issuance or marketability of the Shares
pursuant hereto or (z) in any manner draw into question the
validity of this Agreement or the transactions described in the
Prospectus Supplement under the caption "Use of Proceeds" (any of
the events set forth in clauses (x), (y) or (z), a "Material
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Adverse Effect").
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(d) All of the outstanding shares of capital stock of the
Company have been duly authorized, validly issued, and are fully
paid and nonassessable and were not issued in violation of any
preemptive or similar rights. The Shares, when issued, delivered
and sold in accordance with this Agreement, will be duly authorized
and validly issued, fully paid and nonassessable, and will not have
been issued in violation of or subject to any preemptive or similar
rights. At December 31, 2000, the Company had the actual, as
adjusted, and as further
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adjusted capitalization as set forth in the Prospectus Supplement
under the caption "Capitalization" (subject in each case to the
assumptions set forth under such caption).
(e) Except as disclosed in the Prospectus Supplement or Form
8-K, all of the outstanding capital stock of, or other ownership
interests in, the Company's subsidiaries is owned by the Company,
free and clear of any security interest, claim, lien, limitation on
voting rights or encumbrance; and all such securities have been
duly authorized, validly issued, and are fully paid and
nonassessable and were not issued in violation of any preemptive or
similar rights.
(f) Except as disclosed in the Prospectus Supplement or Form
8-K there are not currently, and will not be as a result of the
Offering, any outstanding subscriptions, rights, warrants, calls,
commitments of sale or options to acquire or instruments
convertible into or exchangeable for, any capital stock or other
equity interest of the Company or any of its subsidiaries (other
than options issued pursuant to the Company's 1998 Shares Award
Plan and Employee Stock Purchase Plan).
(g) The Common Stock (including the Shares) is registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934
(the "Exchange Act") and is listed for quotation on the Nasdaq
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National Market System ("Nasdaq"), and the Company has taken no
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action designed to, or likely to have the effect of, terminating
the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from Nasdaq, nor has the Company
received any notification that the Commission or Nasdaq is
contemplating terminating such registration or listing.
(h) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under
this Agreement and to consummate the transactions contemplated
hereby, including, without limitation, the corporate power and
authority to issue, sell and deliver the Shares as provided herein
and the corporate power to effect the Use of Proceeds as described
in the Prospectus Supplement.
(i) The statistical and market-related data included in the
Prospectus Supplement and Form 8-K are based on or are derived from
sources which the Company believes to be reliable and accurate in
all material respects.
(j) This Agreement has been duly and validly authorized,
executed and delivered by the Company and is the legal, valid and
binding agreement of the Company, enforceable against the Company
in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity, and except insofar as indemnification and
contribution provisions may be limited by applicable law or
equitable principles.
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(k) Neither the Company nor any of its subsidiaries is, nor
after giving effect to the Offering and the Concurrent Offering
will be, (i) in violation of its certificate of incorporation or
bylaws, (ii) in default in the performance of any bond, debenture,
note, indenture, mortgage, deed of trust or other agreement or
instrument to which it is a party or by which it is bound or to
which any of its properties is subject, or (iii) in violation of
any local, state or federal law, statute, ordinance, rule,
regulation, requirement, judgment or court decree (including,
without limitation, the Communications Act of 1934 (the
"Communications Act") and the rules and regulations of the Federal
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Communications Commission (the "FCC"), and environmental laws,
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statutes, ordinances, rules regulations, judgments or court
decrees) applicable to the Company or any of its subsidiaries or
any of their assets or properties (whether owned or leased) other
than, in the case of clauses (ii) and (iii), any default or
violation that (A) could not reasonably be expected to have a
Material Adverse Effect or (B) which is disclosed in the Prospectus
Supplement or Form 8-K. There exists no condition that, with
notice, the passage of time or otherwise, would constitute a
default under any such document or instrument, except as disclosed
in the Prospectus or Prospectus Supplement.
(l) None of (i) the execution, delivery or performance by
the Company of this Agreement, (ii) the issuance and sale of the
Shares and (iii) consummation by the Company of the transactions
contemplated hereby and in the Prospectus Supplement, including
without limitation the Concurrent Offering, violate, conflict with
or constitute a breach of any of the terms or provisions of, or a
default under (or an event that with notice or the lapse of time,
or both, would constitute a default), or require consent under, or
result in the imposition of a lien on any properties of the Company
or any of its subsidiaries, or an acceleration of any indebtedness
of the Company or any of its subsidiaries pursuant to, (A) the
certificate of incorporation or bylaws of the Company or any of its
subsidiaries, (B) any bond, debenture, note, indenture, mortgage,
deed of trust, contract or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the
Company or its subsidiaries or their properties is or may be bound,
(C) any statute, rule or regulation applicable to the Company or
any of its subsidiaries or any of their assets or properties or (D)
any judgment, order or decree of any court or governmental agency
or authority having jurisdiction over the Company or any of its
subsidiaries or any of their assets or properties, other than, in
the case of clause (B) above, any default or violation that (1)
could not reasonably be expected to have a Material Adverse Effect
or (2) which is disclosed in the Prospectus Supplement or Form 8-K.
No consent, approval, authorization or order of, or filing,
registration, qualification, license or permit of or with, (i) any
court or governmental agency, body or administrative agency or (ii)
any other person is required for (A) the execution, delivery and
performance by the Company of this Agreement, (B) the issuance and
sale of the Shares and the transactions contemplated hereby and
thereby, including without limitation the Concurrent Offering,
except such as have been obtained and made under the Securities Act
and state securities or Blue Sky laws
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and regulations or such as may be required by the National
Association of Securities Dealers, Inc. (the "NASD").
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(m) There is (i) no action, suit or proceeding before or by
any court, arbitrator or governmental agency, body or official,
domestic or foreign, now pending or, to the best knowledge of the
Company or any of its subsidiaries, threatened or contemplated to
which the Company or any of its subsidiaries is a party or to which
the business or property of the Company or any of its subsidiaries
is subject, (ii) no statute, rule, regulation or order that has
been enacted, adopted or issued by any governmental agency or that
has been proposed by any governmental body or (iii) no injunction,
restraining order or order of any nature by a federal or state
court or foreign court of competent jurisdiction to which the
Company or any of its subsidiaries is or may be subject or to which
the business, assets, or property of the Company or any of its
subsidiaries are or may be subject, that, in the case of clauses
(i), (ii) and (iii) above, (w) is required to be disclosed in the
Prospectus Supplement and that is not so disclosed, or (x) except
as has been disclosed in the Prospectus Supplement or Form 8-K
could reasonably be expected to, individually or in the aggregate,
result in a Material Adverse Effect.
(n) No action has been taken and no statute, rule,
regulation or order has been enacted, adopted or issued by any
governmental agency that prevents the issuance of the Shares or
prevents or suspends the use of the Prospectus Supplement; no
injunction, restraining order or order of any kind by a federal or
state court of competent jurisdiction has been issued that prevents
the issuance of the Shares, prevents or suspends the sale of the
Shares in any jurisdiction referred to in Section 1(c) hereof or
that could adversely affect the consummation of the transactions
contemplated by this Agreement or the Prospectus Supplement; and
every request of any securities authority or agency of any
jurisdiction for additional information has been complied with in
all material respects.
(o) There is (i) no significant unfair labor practice
complaint pending against the Company or any of its subsidiaries
nor, to the best knowledge of the Company, threatened against any
of them, before the National Labor Relations Board, any state or
local labor relations board or any foreign labor relations board,
and no significant grievance or significant arbitration proceeding
arising out of or under any collective bargaining agreement is so
pending against the Company or any of its subsidiaries nor, to the
best knowledge of the Company, threatened against any of them, (ii)
no significant strike, labor dispute, slowdown or stoppage pending
against the Company or any of its subsidiaries nor, to the best
knowledge of the Company, threatened against the Company or any of
its subsidiaries and (iii) to the best knowledge of the Company, no
union representation question existing with respect to the
employees of the Company or any of its subsidiaries that, in the
case of clauses (i), (ii) or (iii) above, could reasonably be
expected to result in a Material Adverse Effect. To the best
knowledge of the Company, no collective bargaining organizing
activities are taking place with respect to the Company or any of
its subsidiaries. None of the Company or any of its
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subsidiaries has violated (A) any federal, state or local law or
foreign law relating to discrimination in hiring, promotion or pay
of employees, (B) any applicable wage or hour laws or (C) any
provision of the Employee Retirement Income Security Act of 1974,
as amended, and the regulations and published interpretations
thereunder (collectively, "ERISA"), which in the case of clause
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(A), (B) or (C) above could reasonably be expected to result in a
Material Adverse Effect.
(p) None of the Company or any of its subsidiaries has
violated any environmental, safety or similar law or regulation
applicable to it or its business or property relating to the
protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), lacks any permit, license or other approval
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required of it under applicable Environmental Laws or is violating
any term or condition of such permit, license or approval, which
could reasonably be expected to, either individually or in the
aggregate, have a Material Adverse Effect.
(q) Each of the Company and its subsidiaries has (i) good
and marketable title to all of the properties and assets described
in the Prospectus Supplement or Form 8-K as owned by it, free and
clear of all liens, charges, encumbrances and restrictions, except
such as are described in the Prospectus Supplement or Form 8-K or
as would not have a Material Adverse Effect, (ii) peaceful and
undisturbed possession of its properties under all material leases
to which it is a party as lessee, (iii) all licenses, certificates,
permits, authorizations, approvals, franchises and other rights
from, and has made all declarations and filings with, all federal,
state and local authorities, all self-regulatory authorities and
all courts and other tribunals (each an "Authorization") necessary
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to engage in the business conducted by it in the manner described
in the Prospectus Supplement or Form 8-K, except as described in
the Prospectus Supplement or Form 8-K or where failure to hold such
Authorizations would not, individually or in the aggregate, have a
Material Adverse Effect and (iv) no reason to believe that any
governmental body or agency is considering limiting, suspending or
revoking any such Authorization. Except where the failure to be in
full force and effect would not have a Material Adverse Effect, all
such Authorizations are valid and in full force and effect, and
each of the Company and its subsidiaries is in compliance in all
material respects with the terms and conditions of all such
Authorizations and with the rules and regulations of the regulatory
authorities having jurisdiction with respect thereto. All material
leases to which the Company or any of its subsidiaries is a party
are valid and binding, and no default by the Company or any
subsidiary has occurred and is continuing thereunder and, to the
best knowledge of the Company and its subsidiaries, no material
defaults by the landlord are existing under any such lease that
could reasonably be expected to result in a Material Adverse
Effect.
(r) Each of the Company and its subsidiaries owns, possesses
or has the right to employ all patents, patent rights, licenses
(including all FCC, state, local or other regulatory licenses),
inventions, copyrights, know-how (including
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trade secrets and other unpatented and/or unpatentable proprietary
or confidential information, software, systems or procedures),
trademarks, service marks and trade names, inventions, computer
programs, technical data and information (collectively, the
"Intellectual Property") presently employed by it in connection
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with the businesses now operated by it or that are proposed to be
operated by it or its subsidiaries free and clear of and without
violating any right, claimed right, charge, encumbrance, pledge,
security interest, restriction or lien of any kind of any other
person and none of the Company or any of its subsidiaries has
received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing, except as
(1) disclosed in the Prospectus Supplement or Form 8-K or (2) as
could not reasonably be expected to have a Material Adverse Effect.
To the best knowledge of the Company, the use of the Intellectual
Property in connection with the business and operations of the
Company and its subsidiaries does not infringe on the rights of any
person, except as disclosed in the Prospectus Supplement or Form 8-
K or as could not reasonably be expected to have a Material Adverse
Effect.
(s) None of the Company or any of its subsidiaries or, to
the best knowledge of the Company, any of their respective
officers, directors, partners, employees, agents or affiliates or
any other person acting on behalf of the Company or any of its
subsidiaries has, directly or indirectly, given or agreed to give
any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier,
official or employee of any governmental agency (domestic or
foreign), instrumentality of any government (domestic or foreign)
or any political party or candidate for office (domestic or
foreign) or other person who was, is or may be in a position to
help or hinder the business of the Company or any of its
subsidiaries (or assist the Company or any of its subsidiaries in
connection with any actual or proposed transaction), which (i)
might subject the Company or any of its subsidiaries, or any other
individual or entity, to any damage or penalty in any civil,
criminal or governmental litigation or proceeding (domestic or
foreign), (ii) if not given in the past, might have had a material
adverse effect on the assets, business or operations of the Company
or any of its subsidiaries or (iii) if not continued in the future,
might have a Material Adverse Effect.
(t) All material tax returns required to be filed by the
Company and each of its subsidiaries in all jurisdictions have been
so filed. All taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due or claimed to be
due from such entities or that are due and payable have been paid,
other than those being contested in good faith and for which
adequate reserves have been provided or those currently payable
without penalty or interest. To the knowledge of the Company, there
are no material proposed additional tax assessments against the
Company, the assets or property of the Company or any of its
subsidiaries. The Company has made adequate charges, accruals and
reserves in the applicable financial statements included in the
Prospectus Supplement and Form 8-K in respect of all federal, state
and foreign
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income and franchise taxes for all periods as to which the tax
liability of the Company or any of its consolidated subsidiaries
has not been finally determined.
(u) None of the Company or any of its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940,
as amended (the "Investment Company Act") or (ii) a "holding
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company" or a "subsidiary company" or an "affiliate" of a holding
company within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
(v) Except as disclosed in the Prospectus Supplement or Form
8-K, there are no holders of securities of the Company or any of
its subsidiaries who, by reason of the execution by the Company of
this Agreement to which it is a party or the consummation by the
Company or any of its subsidiaries of the transactions contemplated
hereby, have the right to request or demand that the Company or any
of its subsidiaries register under the Securities Act or analogous
foreign laws and regulations securities held by them, other than
such that have been duly waived.
(w) Each of the Company and its subsidiaries maintains a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences thereto.
(x) Except as disclosed in the Prospectus Supplement or Form
8-K, each of the Company and its subsidiaries maintains insurance
covering its properties, operations, personnel and businesses. Such
insurance insures against such losses and risks as are adequate in
accordance with customary industry practice to protect the Company
and its subsidiaries and their respective businesses. None of the
Company or any of its subsidiaries has received notice from any
insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to
continue such insurance. All such insurance is outstanding and duly
in force on the date hereof, subject only to changes made in the
ordinary course of business, consistent with past practice, which
do not, singly or in the aggregate, materially alter the coverage
thereunder or the risks covered thereby. The Company has no reason
to believe that it or any subsidiary will not be able (a) to renew
its existing insurance coverage as and when such policies expire or
(b) to obtain comparable coverage from similar institutions as may
be necessary or appropriate to conduct its business as now
conducted or as presently contemplated and at a cost that would not
result in a Material Adverse Effect.
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(y) None of the Company or any of its subsidiaries has (i)
taken, directly or indirectly, any action designed to, or that
might reasonably be expected to, cause or result in stabilization
or manipulation of the price of any security of the Company or any
of its subsidiaries to facilitate the sale or resale of the Shares
or (ii) since the date of the Preliminary Prospectus Supplement (A)
sold, bid for, purchased or paid any person any compensation for
soliciting purchases of, the Shares or (B) paid or agreed to pay to
any person any compensation for soliciting another to purchase any
other securities of the Company or any of its subsidiaries.
(z) The Company and its subsidiaries and any "employee
benefit plan" (as defined under ERISA) established or maintained by
the Company, its subsidiaries or their "ERISA Affiliates" (as
----------------
defined below) are in compliance in all material respects with
ERISA. "ERISA Affiliate" means, with respect to the Company or a
subsidiary, any member of any group of organizations described in
Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations
thereunder (the "Code") of which the Company or such subsidiary is
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a member. No "reportable event" (as defined under ERISA) has
occurred or is reasonably expected to occur with respect to any
"employee benefit plan" established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates. No "employee
benefit plan" established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates, if such "employee
benefit plan" were terminated, would have any "amount of unfunded
benefit liabilities" (as defined under ERISA). Neither the Company,
its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any
"employee benefit plan" or (ii) Sections 412, 4971, 4975 or 4980B
of the Code. Each "employee benefit plan" established or maintained
by the Company, its subsidiaries or any of their ERISA Affiliates
that is intended to be qualified under Section 401(a) of the Code
is so qualified and nothing has occurred, whether by action or
failure to act, which would cause the loss of such qualification.
(aa) Subsequent to the respective dates as of which
information is given in the Prospectus Supplement and up to the
Closing Date, except as set forth in the Prospectus Supplement or
Form 8-K, (i) none of the Company or any of its subsidiaries has
incurred any liabilities or obligations, direct or contingent, that
are material, individually or in the aggregate, to the Company and
its subsidiaries taken as a whole, nor entered into any transaction
not in the ordinary course of business, (ii) none of the Company or
any of its subsidiaries has incurred any liabilities or
obligations, direct or contingent, that will be material to the
Company and its subsidiaries taken as a whole, (iii) there has not
been, singly or in the aggregate, any change or development that
could reasonably be expected to result in a Material Adverse
Effect, (iv) except for the dividend consisting of shares of Class
A common stock awarded to the holders of the Company's Series B
preferred stock on February 1, 2001, there has been no dividend or
distribution of any kind declared, paid or made by the Company or
any of its subsidiaries on any class of its capital stock, (v)
there has been no change in accounting methods or practices
(including any change in depreciation or amortization policies or
rates) by the Company or any of its subsidiaries, (vi) there has
been no revaluation by
10
the Company or any of its subsidiaries of any of their assets,
(vii) there has been no increase in the salary or other
compensation payable or to become payable by the Company or any of
its subsidiaries to any of their officers, directors, employees or
advisors, nor any declaration, payment or commitment or obligation
of any kind for the payment by the Company or any of its
subsidiaries of a bonus or other additional salary or compensation
to any such person, (viii) there has been no amendment or
termination of any material contract, agreement or license to which
the Company or any subsidiary is a party or by which it is bound,
(ix) there has been no waiver or release of any material right or
claim of the Company or any subsidiary, including any write-off or
other compromise of any material account receivable of the Company
or any subsidiary, and (x) there has been no material change in
pricing or royalties set or charged by the Company or any
subsidiary to their respective customers or licensees or in pricing
or royalties set or charged by persons who have licensed
Intellectual Property Rights to the Company or any of its
subsidiaries.
(bb) KPMG LLP, who has expressed their opinion with respect
to the financial statements (which term as used in this Agreement
includes the related notes thereto) and supporting schedules
included in the Prospectus Supplement and Form 8-K, are independent
public or certified public accountants within the meaning of
Regulation S-X under the Securities Act and the Exchange Act.
(cc) The financial statements, together with the related
notes, included in the Prospectus Supplement and Form 8-K present
fairly in all material respects the consolidated financial position
of the Company and its subsidiaries as of and at the dates
indicated and the results of their operations and cash flows for
the periods specified. Such financial statements have been prepared
in conformity with generally accepted accounting principles applied
on a consistent basis throughout the periods involved, except as
may be expressly stated in the related notes thereto. The financial
data set forth in the Prospectus Supplement and Form 8-K under the
captions "Summary--Summary Consolidated Financial Data," "Selected
Consolidated Financial Data" and "Capitalization," and the
financial data schedule set forth in the Registration Statement
fairly present the information set forth therein on a basis
consistent with that of the audited financial statements contained
in the Form 8-K.
(dd) Except as pursuant to this Agreement, there are no
contracts, agreements or understandings between the Company and any
other person that would give rise to a valid claim against the
Company or any of the Underwriters for a brokerage commission,
finder's fee or like payment in connection with the issuance,
purchase and sale of the Shares.
(ee) The statements (including the assumptions described
therein) included in the Prospectus Supplement and Form 8-K (i) are
within the coverage of Rule 175(b) under the Securities Act to the
extent such data constitute forward looking statements as defined
in Rule 175(c) and (ii) were made by the Company
11
with a reasonable basis and reflect the Company's good faith
estimate of the matters described therein.
(ff) Each certificate signed by any officer of the Company
and delivered to the Underwriters or counsel for the Underwriters
shall be deemed to be a representation and warranty by the Company
to the Underwriters as to the matters covered thereby.
The Company acknowledges that each of the Underwriters and, for
purposes of the opinions to be delivered to the Underwriters pursuant to Section
6 hereof, counsel to the Company and counsel to the Underwriters, will rely upon
the accuracy and truth of the foregoing representations and hereby consents to
such reliance.
2. Purchase, Sale and Delivery of the Shares.
-----------------------------------------
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Company, at a purchase
price of $9.6525 per share, the number of Firm Shares set forth opposite the
respective names of the Underwriters in Schedule I hereto plus any additional
number of Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the office of Xxxxxx &
Xxxxxxx, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx, 00000, or at such
other place as shall be agreed upon by the Underwriters and the Company, at
10:00 A.M. on March 6, 2001 (unless postponed in accordance with the provisions
of Section 9 hereof) after the determination of the public offering price of the
Firm Shares, or such other time not later than ten business days after such date
as shall be agreed upon by the Underwriters and the Company (such time and date
of payment and delivery being herein called the "Closing Date"). Payment shall
------------
be made to the Company by wire transfer in same day funds, against delivery to
the Underwriters of certificates for the Shares to be purchased by them.
Certificates for the Firm Shares shall be registered in such name or names and
in such authorized denominations as the Underwriters may request in writing at
least two full business days hours prior to the Closing Date. The Company will
permit the Underwriters to examine and package such certificates for delivery at
least one full business day prior to the Closing Date.
(c) In addition, the Company hereby grants to the Underwriters the
option to purchase up to 1,125,000 Additional Shares at the same purchase price
per share to be paid by the Underwriters to the Company for the Firm Shares as
set forth in this Section 2, for the sole purpose of covering over-allotments in
the sale of Firm Shares by the Underwriters. This option may be exercised at any
time, in whole or in part, on or before the thirtieth day following the date of
the Prospectus Supplement, by written notice by the Underwriters to the Company.
Such notice shall set forth the aggregate number of Additional Shares as to
which the option is being exercised and the date and time, as reasonably
determined by the Underwriters, when the Additional Shares are to be delivered
(such date and time being herein sometimes referred to as the "Additional
----------
Closing Date"); provided, however, that the Additional Closing
------------ -------- -------
12
Date shall not be earlier than the Closing Date or earlier than the second full
business day after the date on which the option shall have been exercised nor
later than the eighth full business day after the date on which the option shall
have been exercised (unless such time and date are postponed in accordance with
the provisions of Section 9 hereof). Certificates for the Additional Shares
shall be registered in such name or names and in such authorized denominations
as the Underwriters may request in writing at least two full business days prior
to the Additional Closing Date. The Company will permit the Underwriters to
examine and package such certificates for delivery at least one full business
day prior to the Additional Closing Date.
(d) The number of Additional Shares to be sold to each Underwriter
shall be the number which bears the same ratio to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto (or such number
increased as set forth in Section 9 hereof) bears to the total number of Firm
Shares being purchased from the Company, subject, however, to such adjustments
to eliminate any fractional shares as the Underwriters in their sole discretion
shall make.
(e) Payment for the Additional Shares shall be made by wire
transfer in same day funds each payable to the order of the Company at the
office of Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx,
00000, or such other location as may be mutually acceptable, upon delivery of
the certificates for the Additional Shares to the Underwriters.
3. Offering. Upon the Underwriters' authorization of the release of
--------
the Firm Shares, the Underwriters propose to offer the Shares for sale to the
public upon the terms set forth in the Prospectus Supplement.
4. Covenants of the Company. The Company covenants and agrees with
------------------------
each of the Underwriters that:
(a) The Company will notify the Underwriters immediately (and, if
requested by the Underwriters, will confirm such notice in writing)
(i) when any post-effective amendment to the Registration Statement
becomes effective, (ii) of any request by the Commission for any
amendment of or supplement to the Registration Statement, the
Prospectus Supplement or Form 8-K or for any additional information,
(iii) of the mailing or the delivery to the Commission for filing of
the Prospectus Supplement or any amendment of or supplement to the
Registration Statement, or the Prospectus Supplement or any document
to be filed pursuant to the Exchange Act during any period when the
Prospectus Supplement is required to be delivered under the Securities
Act, (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of the initiation, or the
threatening, of any proceedings therefor, (v) of the receipt of any
comments or inquiries from the Commission, and (vi) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for that purpose. If the
Commission shall propose or enter a stop order at any time, the
13
Company will make every reasonable effort to prevent the issuance of
any such stop order and, if issued, to obtain the lifting of such
order as soon as possible. The Company will not file any post-
effective amendment to the Registration Statement or any amendment of
or supplement to the Prospectus Supplement (including any revised
prospectus supplement which the Company proposes for use by the
Underwriters in connection with the offering of the Shares which
differs from the prospectus supplement filed with the Commission
pursuant to Rule 424(b) of the Securities Act Regulations, whether or
not such revised prospectus supplement is required to be filed
pursuant to Rule 424(b) of the Securities Act Regulations) to which
the Underwriters or Underwriters' Counsel (as hereinafter defined)
shall reasonably object, will furnish the Underwriters with copies of
any such amendment or supplement a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file any
such amendment or supplement or use any such prospectus supplement to
which the Underwriters or counsel for the Underwriters shall
reasonably object.
(b) If any event shall occur as a result of which the Prospectus
Supplement or Form 8-K would, in the judgment of the Underwriters or
the Company, include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it shall be necessary at
any time to amend or supplement the Prospectus Supplement or the
Registration Statement to comply with the Securities Act or the
Securities Act Regulations, the Company will notify the Underwriters
promptly and prepare and file with the Commission an appropriate
amendment or supplement (in form and substance satisfactory to the
Underwriters) which will correct such statement or omission or which
will effect such compliance.
(c) The Company has delivered to the Underwriters a signed copy of
the Registration Statement as originally filed, including exhibits,
and all amendments thereto, and the Company will promptly deliver to
each of the Underwriters, from time to time during the period that the
Prospectus Supplement is required to be delivered under the Securities
Act, such number of copies of the Prospectus Supplement and the
Registration Statement, and all amendments of and supplements to such
documents, if any, as the Underwriters may reasonably request.
(d) The Company will endeavor in good faith, in cooperation with
the Underwriters, to qualify the Shares for offering and sale under
the securities laws relating to the offering or sale of the Shares of
such jurisdictions as the Underwriters may designate and to maintain
such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be
obligated in connection therewith to qualify as a foreign corporation
or to execute a general consent to service of process.
14
(e) The Company will make generally available (within the meaning
of Section 11(a) of the Securities Act) to its security holders and to
the Underwriters as soon as practicable, but not later than 45 days
after the end of its fiscal quarter in which the first anniversary
date of the effective date of the Registration Statement occurs (or if
such fiscal quarter is the Company's fourth fiscal quarter, not later
than 90 days after the end of such quarter), an earnings statement (in
form complying with the provisions of Rule 158 of the Securities Act
Regulations) covering a period of at least twelve consecutive months
beginning after the date of the Prospectus Supplement.
(f) During the period of 90 days from the date of the Prospectus
Supplement, the Company will not, directly or indirectly, without the
prior written consent of Bear, Xxxxxxx & Co. Inc., offer, sell,
contract to sell, grant any option to purchase, pledge or otherwise
dispose (or announce any offer, sale, contract to sell, grant of an
option to purchase, pledge or other disposition) of any shares of
Class A Common Stock of the Company or any securities convertible into
or exercisable or exchangeable for such Class A Common Stock, except
that the Company may issue (i) shares of Class A Common Stock and
options to purchase Common Stock under its 1998 Shares Award Plan and
Employee Stock Purchase Plan, (ii) shares of Class A Common Stock upon
exercise of warrants to purchase Class A Common Stock or conversion of
notes and other convertible securities that were issued and
outstanding on the date of the Prospectus Supplement, (iii) shares of
Class A Common Stock in connection with strategic relationships and
acquisitions of businesses, technologies and products complementary to
those of the Company, so long as the recipients of such shares with
respect to clause (iii) agree to be bound by a lock-up agreement
substantially in the form of Exhibit C hereto (which shall provide
that any transferees and assigns of such recipients shall be bound by
the lock-up agreement) for the remainder of the 90-day lock-up period
or (iv) shares of Class A common stock to satisfy its obligations, if
any, to pay a dividend on any of its capital stock or interest on any
of its debt securities, in each case, in accordance with the terms of
such security.
(g) During a period of three years from the date of the Prospectus
Supplement, the Company will furnish to the Underwriters copies of (i)
all reports to its stockholders; and (ii) all reports, financial
statements and proxy or information statements filed by the Company
with the Commission or any national securities exchange.
(h) The Company will apply the proceeds from the sale of the
Shares as set forth under "Use of Proceeds" in the Prospectus
Supplement.
(i) If the Company elects to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00
P.M., New York City time, on the date of this Agreement, no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission, and all
requests for additional information on the part of the
15
Commission shall have been complied with to the Underwriters'
reasonable satisfaction.
(j) The Company, during the period when the Prospectus Supplement
is required to be delivered under the Securities Act or the Exchange
Act, will file all documents required to be filed with the Commission
pursuant to Sections 13, 14 or 15 of the Exchange Act within the time
periods required by the Exchange Act and the rules and regulations
thereunder.
(k) [Intentionally Omitted.]
(l) The Company will effect and maintain the quotation of the
shares of Class A Common Stock issuable upon conversion of the Notes
on the Nasdaq National Market.
5. Payment of Expenses. Whether or not the transactions contemplated
-------------------
in this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (a)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereto (including all
exhibits thereto), any Preliminary Prospectus Supplement, the Prospectus
Supplement and the Form 8-K and any amendments or supplements thereto
(including, without limitation, fees and expenses of the Company's accountants
and counsel), the underwriting documents (including this Agreement and the
Agreement Among Underwriters and the Selling Agreement, if any) and all other
documents related to the public offering of the Shares (including those supplied
to the Underwriters in quantities as hereinabove stated), (b) the issuance,
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (c) the qualification of the Shares under state
or foreign securities or Blue Sky laws, including the costs of printing and
mailing a preliminary and final "Blue Sky Memorandum" and the fees of counsel in
connection therewith and such counsel's disbursements in relation thereto, (d)
listing of the Shares for quotation on the Nasdaq, (e) filing fees of the
Commission and the NASD, (f) the cost of printing certificates representing the
Shares and (g) the cost and charges of any transfer agent or registrar.
6. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6, "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to the Underwriters or to Xxxxxx &
Xxxxxxx ("Underwriters' Counsel") pursuant to this Section 6 of any material
---------------------
misstatement or omission, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
(a) Prior to the Closing Date the Registration Statement shall
have become effective, and on the Closing Date, no stop order
suspending the
16
effectiveness of the Registration Statement shall have been issued
under the Securities Act or proceedings therefor initiated or, to the
Company's knowledge, threatened by the Commission. The Prospectus
Supplement shall have been filed or transmitted for filing with the
Commission pursuant to Rule 424(b) of the Securities Act Regulations
within the prescribed time period, and prior to Closing Date the
Company shall have provided evidence satisfactory to the Underwriters
of such timely filing or transmittal.
(b) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the date
hereof and on the Closing Date with the same force and effect as if
made on and as of the date hereof and the Closing Date, respectively.
The Company shall have performed or complied with all of the
agreements herein contained and required to be performed or complied
with by it at or prior to the Closing Date.
(c) The Prospectus Supplement shall have been printed and copies
distributed to the Underwriters not later than 10:00 a.m., New York
City time, on the second business day following the date of this
Agreement or at such later date and time as to which the Underwriters
may agree, and no stop order suspending the qualification or exemption
from qualification of the Shares in any jurisdiction referred to in
Section 4(d) shall have been issued and no proceeding for that purpose
shall have been commenced or shall be pending or threatened.
(d) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the
issuance of the Shares; no action, suit or proceeding shall have been
commenced and be pending against or affecting or, to the best
knowledge of the Company, threatened against, the Company or any of
its subsidiaries before any court or arbitrator or any governmental
body, agency or official that (i) could reasonably be expected to
result in a Material Adverse Effect or (ii) has not been disclosed in
the Prospectus Supplement or Form 8-K.
(e) Since the dates as of which information is given in the
Prospectus Supplement, (i) there shall not have been any material
adverse change, or any development that is reasonably likely to result
in a material adverse change, in the capital stock or the long-term
debt, or material increase in the short-term debt, of the Company or
any of its subsidiaries from that set forth in the Prospectus
Supplement or Form 8-K, (ii) except for the dividend consisting of
shares of Class A Common Stock awarded to the holders of the Company's
Series B preferred stock on February 1, 2000, no dividend or
distribution of any kind shall have been declared, paid or made by the
Company or any of its subsidiaries on any class of its capital stock,
(iii) neither the Company nor any of its subsidiaries shall have
incurred any liabilities or obligations, direct or contingent, that
are material, individually or in the aggregate, to the Company and its
subsidiaries, taken as a whole, and that are required to be disclosed
on a balance sheet or notes thereto in accordance with generally
accepted accounting principles and are not disclosed on the latest
17
balance sheet or notes thereto included in the Prospectus Supplement
or Form 8-K. Since the date hereof and since the dates as of which
information is given in the Prospectus Supplement, there shall not
have occurred any Material Adverse Effect.
(f) The Underwriters shall have received (1) a certificate, dated
the Closing Date, signed on behalf of the Company by each of the
Company's Chief Executive Officer and Chief Financial Officer in form
and substance reasonably satisfactory to the Underwriters, confirming,
as of the Closing Date, the matters set forth in paragraphs (a)
through (e) of this Section 6 and that, as of the Closing Date, the
obligations of the Company to be performed hereunder on or prior
thereto have been duly performed in all material respect and (2) a
certificate, dated the Closing Date, signed by the Company's
Secretary, in form and substance reasonably satisfactory to the
Underwriters.
(g) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to
the Underwriters and counsel to the Underwriters, of Xxxxx & Xxxxxxx
L.L.P., counsel for the Company, to the effect set forth in Exhibit A
hereto.
(h) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to
the Underwriters and counsel to the Underwriters, of ShawPittman,
counsel for the Company, to the effect set forth in Exhibit B hereto.
(i) The Underwriters shall have received an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to the
Underwriters, of Xxxxxx & Xxxxxxx, counsel to the Underwriters,
covering such matters as are customarily covered in such opinions.
(j) Xxxxxx & Xxxxxxx shall have been furnished with such
documents, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass
upon the matters referred to in this Section 6 and in order to
evidence the accuracy, completeness or satisfaction in all material
respects of any of the representations, warranties or conditions here-
in contained.
(k) At the time this Agreement is executed and at the Closing Date
the Underwriters shall have received from KPMG LLP, independent public
accountants for the Company and its subsidiaries, dated as of the date
of this Agreement and as of the Closing Date, customary comfort
letters addressed to the Underwriters in form and substance
satisfactory to the Underwriters and counsel to the Underwriters with
respect to the financial statements and certain financial information
of the Company and its subsidiaries contained in the Prospectus
Supplement and Form 8-K.
18
(l) At the time this Agreement is executed, the Underwriters shall
have received a "lock-up" agreement, substantially in the form
attached as Exhibit C hereto, from each of the officers and directors
of the Company identified on Exhibit D hereto.
(m) At the time this Agreement is executed, the Underwriters shall
have received a "lock-up" agreement, substantially in the form
attached as Exhibit E hereto, from each of the stockholders of the
Company identified on Exhibit F hereto.
(n) At the time this Agreement is executed, the Underwriters shall
have received a "lock-up" agreement, substantially in the form
attached as Exhibit G hereto, from Motient Corporation.
(o) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq.
(p) At the time this Agreement is executed and at the Closing
Time, the NASD shall not have withdrawn, or given notice of an
intention to withdraw, its approval of the fairness of the
underwriting terms and arrangements of the Offering of the Shares by
the Underwriters.
(q) Each of the (1) Amended and Restated Shareholders' Agreement,
dated August 8, 2000, by and among the Company and the other parties
thereto, (2) Technology Licensing Agreement, dated January 1, 1998, by
and among the Company and the other parties thereto as amended on June
7, 1999, (3) Technical Services Agreement, dated January 1, 1998, as
amended, between the Company and Motient Corporation, (4) Satellite
Purchase Contract for In-Orbit Delivery, dated March 20, 1998, between
the Company and Xxxxxx Space and Communications International, Inc.,
(5) Amended and Restated Agreement, dated November 2, 1998, by and
between the Company and STMicroelectronics Srl, (6) Distribution
Agreement, dated June 7, 1999, between the OnStar Division of General
Motors Corporation and the Company, (7) Operational Assistance
Agreement, dated June 7, 1999, between the Company and DIRECTV, INC.,
(8) Operational Assistance Agreement, dated June 7, 1999, between the
Company and Clear Channel Communications, Inc., (9) Operational
Assistance Agreement, dated June 7, 1999, between the Company and TCM,
LLC., (10) Agreement, dated August 18, 1999, as amended on November 2,
1999 and July __, 2000, between LCC International and the Company and
(11) Joint Development Agreement, dated February 16, 2000, between
Sirius Satellite Radio, Inc. and the Company, shall be in full force
and effect, and no party to any such agreement shall have given any
notice of termination or amendment of any material provision thereof,
or of any intention to terminate or amend any material provision
thereof, to any other party, and no event shall have occurred which
would prevent any party from substantially performing its obligations
under such agreements.
19
(r) All opinions, certificates, letters and other documents
required by this Section 6 to be delivered by the Company will be in
compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Underwriters. The Company
will furnish the Underwriters with such conformed copies of such
opinions, certificates, letters and other documents as Bear, Xxxxxxx &
Co. Inc. shall reasonably request. Prior to the Closing Date, the
Company shall have furnished to the Underwriters such further
information, certificates and documents as the Underwriters may
reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to the
Underwriters or to Underwriters' Counsel pursuant to this Section 6 shall not be
in all material respects reasonably satisfactory in form and substance to the
Underwriters and to Underwriters' Counsel, all obligations of the Underwriters
hereunder may be canceled by the Underwriters at, or at any time prior to, the
Closing Date and the obligations of the Underwriters to purchase the Additional
Shares may be canceled by the Underwriters at, or at any time prior to, the
Additional Closing Date. Notice of such cancellation shall be given to the
Company in writing, or by telephone, telecopy, telex or telegraph, confirmed in
writing.
7. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act against any and all losses, liabilities,
claims, damages and expenses whatsoever as incurred (including but not
limited to attorneys' fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any
and all amounts paid in settlement of any claim or litigation), joint
or several, to which they or any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or any amendment thereof,
or any related Preliminary Prospectus Supplement or the Prospectus
Supplement or Form 8-K, or in any supplement thereto or amendment
thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such
-------- -------
case (i) to the extent but only to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any
Underwriter expressly for use therein and (ii) with respect to any
preliminary prospectus supplement to the extent that any such loss,
claim, damage or liability results from the fact that an Underwriter
sold Shares to a person as to whom it shall be established that there
was not sent or given, at or prior to written confirmation of such
sale, a copy of the prospectus or prospectus supplement as then
amended or supplemented in any case where such delivery is required by
the Securities Act if the Company has previously furnished copies
thereof in sufficient quantity to such Underwriter and with sufficient
time to effect a recirculation pursuant to Rule 461 under the
Securities Act and the
20
loss, claim, damage or liability of the Underwriters results from an
untrue statement or omission of a material fact contained in the
preliminary prospectus supplement which was identified in writing
prior to the effective date of the registration statement to such
underwriter and corrected in the prospectus or prospectus supplement
as then amended, and such correction would have cured the defect
giving rise to such loss, claim, damage or liability. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company and each other person, if any,
who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, against any and
all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become
subject under the Securities Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement, as originally filed or any amendment
thereof, or any related preliminary prospectus supplement or
prospectus supplement, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any
Underwriter expressly for use therein; provided, however, that in no
-------- -------
case shall any Underwriter be liable or responsible for any amount in
excess of the underwriting discount applicable to the Shares purchased
by such Underwriter hereunder. This indemnity will be in addition to
any liability which any Underwriter may otherwise have, including
under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection,
notify each party against whom indemnification is to be sought in
writing of the commencement thereof (but the failure so to notify an
indemnifying party shall not relieve it from any liability which it
may have under this Section 7 except to the extent that it has been
prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is
brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume
the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified
party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless
(i) the employment of such counsel shall have been authorized in
writing by the
21
indemnifying parties in connection with the defense of such action,
(ii) the indemnifying parties shall not have employed counsel to take
charge of the defense of such action within a reasonable time after
notice of commencement of the action, or (iii) such indemnified party
or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which
case the indemnifying party or parties shall not have the right to
direct the defense of such action on behalf of the indemnified party
or parties), in any of which events such fees and expenses shall be
borne by the indemnifying parties. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable
for any settlement of any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably
-------- -------
withheld.
8. Contribution. In order to provide for contribution in
------------
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, officers of the Company who signed the Registration
Statement and directors of the Company) as incurred to which the Company and one
or more of the Underwriters may be subject, in such proportions as is
appropriate to reflect the relative benefits received by the Company and the
Underwriters from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 7
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and the
Underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other hand shall be deemed to be in
the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and (y) the underwriting discounts and commissions received by
the Underwriters, respectively, in each case as set forth in the table on the
cover page of the Prospectus Supplement. The relative fault of the Company and
the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8, (i) in no case shall any Underwriter be liable or
responsible for
22
any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) of this Section 8. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties, notify each party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
provided, however, that such consent was not unreasonably withheld.
-------- -------
9. Default by an Underwriter.
-------------------------
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares
hereunder, and if the Firm Shares or Additional Shares with respect to
which such default relates do not (after giving effect to
arrangements, if any, made by the Underwriters pursuant to Subsection
(b) below) exceed in the aggregate 10% of the number of Firm Shares or
Additional Shares, the Firm Shares or Additional Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase shall be purchased by the non-defaulting Underwriters in
proportion to the respective proportions which the numbers of Firm
Shares set forth opposite their respective names in Schedule I hereto
bear to the aggregate number of Firm Shares set forth opposite the
names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of the
Firm Shares or Additional Shares, as the case may be, the Underwriters
may in their discretion arrange for themselves or for another party or
parties (including any non-defaulting Underwriter or Underwriters who
so agree) to purchase such Firm Shares or Additional Shares, as the
case may be, to which such default relates on the terms contained
herein. In the event that within five calendar days after such a
default the Underwriters do not arrange for the purchase of the Firm
Shares or Additional Shares, as the case may be, to which such default
relates as provided in this Section 9, this Agreement, or in the case
of a default with respect to the Additional Shares, the obligations of
the Underwriters to purchase and of the Company to sell the Additional
Shares, shall thereupon terminate, without liability on the part of
the Company with respect thereto (except in each case as provided in
Section 5, 7(a) and 8 hereof) or the Underwriters, but nothing in this
Agreement shall relieve a defaulting Underwriter or Underwriters of
its or their liability, if any, to the other Underwriters and the
Company for damages occasioned by its or their default hereunder.
23
(c) In the event that the Firm Shares or Additional Shares to
which the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as
aforesaid, the Underwriters or the Company shall have the right to
postpone the Closing Date or Additional Closing Date, as the case may
be, for a period not exceeding five business days, in order to effect
whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus Supplement or in any other documents and
arrangements, and the Company agrees to file promptly any amendment or
supplement to the Registration Statement or the Prospectus Supplement
which, in the opinion of Underwriters' Counsel, may thereby be made
necessary or advisable. The term "Underwriter" as used in this
Agreement shall include any party substituted under this Section 9
with like effect as if it had originally been a party to this
Agreement with respect to such Firm Shares or Additional Shares.
10. Survival of Representations and Agreements. All representations
------------------------------------------
and warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors, or any controlling person of the Company, and shall
survive delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8, 11(d) and 12 hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
----------------------------------------
(a) This Agreement shall become effective upon the execution and
delivery of a counterpart hereof by each of the parties hereto.
(b) The Underwriters shall have the right to terminate this
Agreement at any time prior to the Closing Date or the obligations of
the Underwriters to purchase the Additional Shares at any time prior
to the Additional Closing Date, as the case may be, if on or prior to
such date, (i) the Company shall have failed, refused or been unable
to perform in any material respect any agreement on its part to be
performed hereunder, (ii) any other condition to the obligations of
the Underwriters hereunder as provided in Section 6 is not fulfilled
when and as required in any material respect, (iii) in the judgment of
the Underwriters any changes of circumstance shall have occurred since
the respective dates as of which information is given in the
Prospectus Supplement which could have a Material Adverse Effect,
other than as set forth in the Prospectus Supplement or Form 8-K, or
(iv) (A) any domestic or international event or act or occurrence has
materially adversely affected, or in the opinion of the Underwriters
will in the immediate future materially adversely affect, the market
for the Company's securities or for securities in general; or (B)
trading in securities generally on the New York Stock Exchange
("NYSE") or quotations on the Nasdaq shall have been suspended or
----
materially limited, or minimum or maximum prices for trading shall
have been established, or maximum ranges for prices for securities
shall have been required, on such exchange, or by such exchange or
other regulatory body or governmental authority having jurisdiction;
or (C) a banking moratorium shall have been declared by federal or
state authorities, or a moratorium in foreign exchange trading by
major international banks or persons shall have been declared; or (D)
there is an
24
outbreak or escalation of armed hostilities involving the United
States on or after the date hereof, or if there has been a declaration
by the United States of a national emergency or war, the effect of
which shall be, in the Underwriters' judgment, to make it inadvisable
or impracticable to proceed with the offering, sale and delivery of
the Firm Shares or the Additional Shares, as the case may be, on the
terms and in the manner contemplated by the Prospectus Supplement; or
(E) there shall have been such a material adverse change in general
economic, political or financial conditions or if the effect of
international conditions on the financial markets in the United States
shall be such as, in the Underwriters' judgment, makes it inadvisable
or impracticable to proceed with the offering, sale and delivery of
the Firm Shares or the Additional Shares, as the case may be, on the
terms and in the manner contemplated by the Prospectus Supplement.
(c) Any notice of termination pursuant to this Section 11 shall be
by telephone, telecopy, telex, or telegraph, confirmed in writing by
letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than pursuant to Section 9(b) or 11(b)
hereof), or if the sale of the Shares provided for herein is not
consummated because any condition to the obligations of the
Underwriters set forth herein is not satisfied or because of any
refusal, inability or failure on the part of the Company to perform
any agreement herein or comply with any provision hereof, the Company
will, subject to demand by the Underwriters, reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable
fees and expenses of their counsel), incurred by the Underwriters in
connection herewith.
12. Underwriters' Information. The Company and the Underwriters
-------------------------
severally acknowledge that the statements set forth in (i) the third paragraph
under the caption "Underwriting" in the Prospectus Supplement concerning the
proposed public offering price, discount and concession; and (ii) the seventh
paragraph under the caption "Underwriting" in the Prospectus Supplement
concerning transactions that stabilize, maintain, or otherwise affect the price
of the Common Stock, constitute the only information furnished in writing by or
on behalf of any Underwriter expressly for use in the Registration Statement, as
originally filed or in any amendment thereof, any Preliminary Prospectus
Supplement or the Prospectus Supplement or in any amendment thereof or
supplement thereto, as the case may be.
13. Notices. All communications hereunder, except as may be otherwise
-------
specifically provided herein, shall be in writing and, if sent to the
Underwriters shall be mailed, delivered, telegraphed or telecopied and confirmed
in writing to the Underwriters, c/o Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Finance Department, telecopy
number: (000) 000-0000, with a copy to Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxxx, telecopy number
(000) 000-0000, and if sent to the Company, shall be mailed, delivered or
telexed, telegraphed or telecopied and confirmed in writing to XM Satellite
Radio Holdings Inc., 0000 Xxxxxxxxx Xxxxx, XX, Xxxxxxxxxx, X.X. 00000-0000,
Attention: Chief Financial Officer, telecopy number: (000) 000-0000, with a copy
to Xxxxx & Xxxxxxx L.L.P., 000 Xxxxxxxxxx Xxxxxx XX, Xxxxxxxxxx, X.X. 00000,
Attention: Xxxxx Xxxxxxx, telecopy number (000) 000-0000; provided, however,
-------- -------
that any notice pursuant to Sections 7 or 8 shall be mailed, delivered,
telegraphed or telecopied and confirmed in writing.
25
14. Parties. This Agreement shall inure solely to the benefit of,
-------
and shall be binding upon, the Underwriters, the Company and the controlling
persons, directors, officers, employees and agents referred to in Section 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares from any of the Underwriters.
15. Construction. This Agreement shall be construed in accordance
------------
with the internal laws of the State of New York applicable to agreements made
and to be performed within New York, without giving any effect to any provisions
thereof relating to conflicts of law. TIME IS OF THE ESSENCE IN THIS AGREEMENT.
16. Captions. The captions included in this Agreement are included
--------
solely for convenience of reference and are not to be considered a part of this
Agreement.
17. Counterparts. This Agreement may be executed in various
------------
counterparts which together shall constitute one and the same instrument.
If the foregoing correctly sets forth the understanding among the
Underwriters and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
XM SATELLITE RADIO HOLDINGS INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
-------------------------------
Title: Senior Vice President, General
------------------------------
Counsel and Secretary
---------------------
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
Acting severally on behalf of themselves and the
several Underwriters named in Schedule I hereto
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Senior Managing Director
26
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
------------------- ----------------------
Bear, Xxxxxxx & Co. Inc.............................. 5,700,000
Banc of America Securities LLC ...................... 225,000
Xxxx Xxxxxxxx Incorporated .......................... 225,000
Xxxxxxx, Sachs & Co. ................................ 225,000
Xxxxxx, Brothers Inc. ............................... 225,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated .. 225,000
Xxxxxxx Xxxxx Barney, Inc. .......................... 225,000
X.X. Xxxxxxxxx, Towbin .............................. 225,000
Wit SoundView Corporation ........................... 225,000
---------
Total...................................... 7,500,000
Schedule I - I
27
