PLEDGE AGREEMENT
Dated as of November __, 1997
from
CD RADIO INC.,
as Pledgor
to
IBJ XXXXXXXX BANK AND
TRUST COMPANY,
as Collateral Agent
TABLE OF CONTENTS
Page
----
1. Grant of Security Interest................................. 1
2. Security for Obligations................................... 2
3. Delivery of Pledged Collateral............................. 3
4. Representations and Warranties............................. 3
5. As to the Pledged Collateral............................... 5
6. Additional Shares.......................................... 6
7. Payment of Taxes and Claims................................ 7
8. Covenants and Agreements................................... 7
9. The Collateral Agent Appointed Attorney-in-Fact............ 9
10. The Collateral Agent May Perform........................... 9
11. The Collateral Agent's Duties.............................. 10
12. Events of Default.......................................... 10
13. Notice of Event of Default................................. 11
14. Remedies................................................... 11
15. Expenses................................................... 12
16. Repayment in Bankruptcy, etc............................... 12
17. No Segregation of Moneys; No Interest...................... 13
18. Continuing Security Interest; Termination.................. 13
19. Notices.................................................... 13
20. Other Provisions........................................... 13
PLEDGE AGREEMENT
PLEDGE AGREEMENT (this "Agreement"), dated as of November __,
1997, made by CD Radio Inc., a Delaware corporation (the "Pledgor"), to IBJ
Xxxxxxxx Bank and Trust Company, Trustee, as collateral agent (the "Collateral
Agent") for the holders (the "Holders") from time to time of the Notes (as
defined herein).
RECITALS
A. The Pledgor and IBJ Xxxxxxxx Bank and Trust Company, as
Trustee (in such capacity, the "Trustee"), have entered into that certain
indenture dated the date hereof (as amended, restated, supplemented or otherwise
modified from time to time, the "Indenture"; capitalized terms used herein
without definition are used herein as defined in the Indenture), pursuant to
which the Pledgor may issue up to $296,930,000 aggregate principal amount at
maturity of its 15% Senior Secured Discount Notes due 2007 (the "Notes").
B. The Pledgor is the owner of the issued and outstanding
capital stock described in Schedule I hereto (the "Pledged Shares") representing
100% of the issued and outstanding capital stock of Satellite CD Radio, Inc., a
Delaware corporation (the "Subsidiary").
C. The Pledgor has agreed to grant to the Collateral Agent the
assignment and security interest and make the pledge and assignment contemplated
by this Agreement.
In consideration of the premises, the agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in order to induce the Holders to purchase
the Notes, the Pledgor hereby covenants and agrees with the Collateral Agent for
its benefit and for the ratable benefit of the Holders.
1. Grant of Security Interest.
(a) The Pledgor hereby unconditionally assigns, pledges and
grants to the Collateral Agent for its benefit and the ratable benefit of the
Holders, a first priority security interest in and to all of the Pledgor's
right, title and interest in and to the following, whether now owned or existing
or hereafter arising or acquired and wheresoever located (collectively, the
"Pledged Collateral"):
(i) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares;
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(ii) all additional shares of issued and outstanding shares,
interests, participations, warrants or other equivalents (however
designated) of corporate stock ("Stock") of the Subsidiary from time to
time acquired by the Pledgor in any manner, and the certificates
representing such additional shares, and all dividends, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of
such shares; and
(iii) all Proceeds (as defined herein) of any and all of the
foregoing Pledged Collateral (including, without limitation, proceeds
that constitute property of the types described in clauses (i) and (ii)
above).
(b) As used herein, the term "Proceeds" shall have the meaning
assigned to such term under Article 9 of the Uniform Commercial Code from time
to time in effect in the State of New York (the "UCC"; provided that in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Collateral Agent's security interest
in any Pledged Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, the term "UCC" shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions) and, to the
extent not otherwise included, shall include, but not be limited to, (i) any
stock dividend or distribution in connection with any increase or reduction of
capital, reclassification, merger, consolidation, sale of assets, combination of
shares, stock split, spin-off or split-off; (ii) any option or other right,
whether as an addition to, in substitution of or in exchange for any Pledged
Shares or otherwise; (iii) distributions payable in property (whether real,
personal, tangible, intangible, or mixed property; collectively "Property") ;
(iv) dividends or distributions on dissolution, or in partial or total
liquidation, or from capital, capital surplus or paid-in surplus; (v) any and
all payments (in any form whatsoever) made or due and payable to the Pledgor
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Pledged Collateral
by any nation or government, any state or other political subdivision thereof,
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any court or
arbitrator (a "Governmental Body"); and (vi) any and all other amounts from time
to time paid or payable under or in connection with the Pledged Collateral.
2. Security for Obligations.
This Agreement secures the payment of all of the obligations
and liabilities of any kind of the Xxxxxxx under this Agreement, the Indenture
or the Notes, whether liquidated, unliquidated, direct, indirect, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured, and whether for principal, interest, fees, costs, expenses or
otherwise (whether arising or accruing before or after the occurrence of any
Event of Default (as defined herein) and whether discharged, stayed or otherwise
affected or allowed as a claim in any bankruptcy proceeding of the Subsidiary),
and all costs,
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fees and expenses of the Collateral Agent, the Trustee or the Holders (including
reasonable attorneys' fees and expenses and with respect to the Collateral
Agent, reasonable allocated costs and expenses of in-house counsel and legal
staff) in enforcing, preserving and protecting its rights against the Pledgor,
whether or not suit is instituted (as the foregoing obligations and liabilities
may be amended, increased, modified, renewed, refinanced, refunded or extended
from time to time) (collectively, the "Secured Obligations"), now or hereafter
existing, whether for principal, interest, fees, costs, expenses or otherwise.
Without limiting the generality of the foregoing, this Agreement secures the
payment of all amounts that constitute part of the Secured Obligations and would
be owed by the Pledgor to the Collateral Agent, the Trustee or the Holders under
this Agreement, the Indenture and the Notes but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Pledgor.
3. Delivery of Pledged Collateral.
(a) All certificates and other instruments at any time owned
or acquired by the Pledgor representing or evidencing the Pledged Shares shall
be delivered to and held by or on behalf of the Collateral Agent pursuant hereto
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. Upon the occurrence and during
the continuance of an Event of Default (as defined herein), the Collateral Agent
shall have the right, upon written instructions from the Trustee and without
notice to the Pledgor, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Pledged Collateral. In
addition, upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right at any time to exchange certificates
or instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations.
(b) If there shall occur a change in applicable law or
regulations regarding (i) the steps necessary to obtain and maintain a perfected
security interest in any Pledged Collateral or (ii) the ability to obtain a
security interest directly in any license granted by the Federal Communications
Commission or Governmental Body succeeding to the functions thereof (the "FCC"),
or if there is Pledged Collateral for which the foregoing procedures are not
effective to perfect a security interest, the Pledgor will immediately upon its
becoming aware thereof so notify the Collateral Agent and will deliver to the
Collateral Agent an Opinion of Counsel setting forth the steps necessary for the
Collateral Agent to obtain and maintain such a perfected security interest in
the Pledged Collateral affected by such change or for which the foregoing
procedures are not effective to perfect a security interest, and the Collateral
Agent, instead of the actions specified in this Section 3, shall take such other
action, as specified in such Opinion of Counsel, as will create and maintain
such perfected security interest.
(c) Upon the execution and delivery of this Agreement, the
Pledgor will file proper financing statements with the appropriate office or
offices under the Uniform
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Commercial Code in the State of New York, covering the Pledged Collateral
described in this Agreement and, thereafter, such renewals, amendments or
continuations thereof or such additional financing statements in such additional
offices in such jurisdictions or in the appropriate filing offices in such
additional jurisdictions as shall be required from time to time under the UCC in
order to perfect and to continue the perfection of the security interest in the
Pledged Collateral.
4. Representations and Warranties.
The Pledgor hereby represents and warrants to the Collateral
Agent as follows:
(a) Organization; Good Standing. The Pledgor is duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified and in good standing in every other jurisdiction
where it is doing business, except where the failure to be so qualified or
maintain good standing would not have a Material Adverse Effect (as defined
herein). The chief place of business and chief executive office of the Pledgor
are located at 0000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000.
(b) Corporate Power; Authorization. The execution, delivery
and performance by the Pledgor of this Agreement, and the consummation of the
transactions contemplated hereby, (i) are within the Pledgor's corporate
authority; (ii) have been duly authorized by all necessary or proper corporate
action; (iii) are not in contravention of any provision of the Pledgor's by-laws
or charter; (iv) will not violate any law or regulation, or any order or decree
of any court or governmental instrumentality to which the Pledgor or its
property is subject; and (v) will not conflict with or result in the breach or
termination of, constitute a default under, or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which the Pledgor is a party or by which the Pledgor or any of its
property is bound (except for such conflict, breach, termination, default or
acceleration as could not reasonably be expected to have a Material Adverse
Effect). Subject to Section 21(f) hereof, no authorization, approval or action
by, or notice to, or filing with, any governmental authority or regulatory body
is required under existing laws and regulations on the date hereof (i) for the
grant or perfection of the security interests contemplated hereby or for the
execution, delivery or performance of this Agreement by the Company, except as
may be set forth in Section 3 with respect to actions to be taken by the
Collateral Agent, the Trustee or a financial intermediary holding Pledged
Collateral and except for the filings referred to in Section 3(b) that may be
required in the future, or (ii) for the exercise by the Collateral Agent of the
voting or other rights provided for this Agreement or its rights and remedies in
respect of the Pledged Collateral pursuant to this Agreement, except (A) as may
be required in connection with the disposition of Pledged Collateral by laws
affecting the offering and sale of securities, generally, and (B) with respect
to Pledged Shares, for authorizations, approvals, notices and filings that may
be required pursuant to regulations of the FCC (as defined herein), or any
successor laws or regulations.
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(c) Enforceability. This Agreement is the legal, valid and
binding obligation of the Pledgor enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or similar law affecting creditors' rights or insolvent corporations generally,
and except to the extent that availability of the remedy of specific performance
or injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
(d) Absence of Liens. It is the legal and beneficial owner of
the Pledged Collateral free and clear of all Liens other than the security
interest created by this Agreement. No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any recording office, except such as may have been filed in favor of the
Collateral Agent under this Agreement.
(e) Pledged Collateral. The Pledged Shares have been duly
authorized and validly issued and are fully paid and non-assessable. The Pledged
Shares represent one hundred percent (100%) of the total number of shares of the
Subsidiary which are issued and outstanding or for which the Subsidiary is
obligated to issue after giving effect to the issuance of all such shares.
(f) Security Interest. This Agreement and the pledge of the
Pledged Collateral pursuant hereto create a valid and perfected first priority
security interest in the Pledged Collateral in favor of the Collateral Agent,
securing the payment of all of the Secured Obligations, and all filings and
other actions necessary or desirable as may be required by the Trustee or the
Holders to perfect and protect such security interest have been duly taken.
5. As to the Pledged Collateral.
(a) So long as no event or circumstance which constitutes a
Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement or the Indenture; provided, however, that
the Pledgor shall not exercise or refrain from exercising any such
right without the consent of the Collateral Agent if, in the Collateral
Agent's judgment, such action or inaction would have a Material Adverse
Effect (as defined herein) on the fair market value of any of the
Pledged Collateral including, without limitation, the validity,
priority or perfection of the security interests granted hereby or the
remedies of the Collateral Agent hereunder.
(ii) Any and all dividends and other distributions
(whether or not in cash) paid or payable, and certificates, instruments
and other Property received, receivable or otherwise distributed in
respect of, or in exchange for, Pledged
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Collateral, shall be, and shall be forthwith delivered to the
Collateral Agent to be held as Pledged Collateral and shall, if
received by the Pledgor, be received in trust for the benefit of the
Trustee and the Holders, be segregated from the other Property of the
Pledgor, and be forthwith delivered to the Collateral Agent, as Pledged
Collateral in the same form as so received (with any necessary
endorsement). Any cash dividends or distributions delivered to or
otherwise held by the Collateral Agent pursuant to this Section 5, and
any other cash constituting Pledged Collateral delivered to the
Collateral Agent, shall be invested, at the written direction of the
Pledgor by the Collateral Agent in Cash Equivalents.
(iii) The Collateral Agent shall execute and deliver (or
cause to be executed and delivered) to the Pledgor all such proxies and
other instruments as the Pledgor may reasonably request for the purpose
of enabling the Pledgor to exercise the voting and other rights which
it is entitled to exercise pursuant to subsection (i) or (ii) above.
(b) Upon the occurrence and during the continuance of a
Default (except as provided below), at the Collateral Agent's option and
following written notice by the Collateral Agent to the Pledgor:
(i) all rights of the Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to
exercise pursuant to Section 5(a)(i) shall cease, provided, however,
that the Pledgor shall be entitled to exercise such rights without the
prior consent of the Collateral Agent if such rights are to be
exercised to vote in favor of a transaction which is reasonably
expected to cure the Default, not result in another Default and not
result in a Material Adverse Effect. Except as provided in the prior
sentence, after the occurrence and during the continuance of an Event
of Default, all such voting and other consensual rights shall thereupon
become vested in the Collateral Agent, who shall thereupon have the
sole right to exercise such voting and other consensual rights, subject
to the satisfaction of any regulatory requirements. Effective upon the
occurrence and during the continuance of an Event of Default, the
Pledgor hereby appoints the Collateral Agent the Pledgor's true and
lawful attorney-in-fact and grants to the Collateral Agent an
IRREVOCABLE PROXY to vote the Pledged Collateral in any manner the
Collateral Agent deems advisable for or against all matters submitted
or which may be submitted to a vote of shareholders. The
power-of-attorney granted hereby is coupled with an interest and shall
be irrevocable; and
(ii) the provisions of Section 5(a)(ii) shall continue
in full force and effect, except that no dividends or distributions may
be paid to the Pledgor.
As used in this Agreement, the term "Material Adverse Effect"
shall mean an effect resulting from any circumstance or event of whatever nature
(including any adverse determination in any litigation) which does, or could
reasonably be expected to, materially and adversely (a) impair the validity or
enforceability of any of the Indenture or the Notes or the Collateral Agent's,
the Trustee's or any Holder's rights or remedies with respect thereto;
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(b) cause a Default; (c) affect the business, property, business prospects,
operations, or financial or other condition of the Subsidiary or Pledgor; or (d)
impair or affect the Pledged Collateral or the Collateral Agent's Liens on the
Pledged Collateral or the priority of such Liens.
(c) In the event that all or any part of the securities or
instruments constituting the Pledged Collateral are lost, mutilated, destroyed
or wrongfully taken while such securities or instruments are in the possession
of the Collateral Agent, the Pledgor agrees that it will cause the delivery of
new securities or instruments in place of the lost, mutilated, destroyed or
wrongfully taken securities or instruments upon request therefor by the
Collateral Agent without the necessity of any indemnity bond or other security
other than the Collateral Agent's agreement or indemnity therefor customary for
security agreements similar to this Agreement.
6. Additional Shares.
(a) The Pledgor agrees that it will cause the Subsidiary not
to issue any Stock of any kind.
(b) Without derogating from paragraph (a) of this Section 6,
in the event that, during the term of this Agreement:
(i) any stock dividend, stock split, reclassification,
readjustment, or other change is declared or made in the capital
structure of the Subsidiary, all new, substituted, and additional
shares, or other securities, issued by reason of any such change and
received by the Pledgor (directly or indirectly) or to which the
Pledgor shall be entitled shall be promptly delivered or otherwise
transferred to the Collateral Agent, together with undated stock powers
endorsed in blank by the Pledgor, and shall thereupon constitute
additional Pledged Collateral to be held by the Collateral Agent under
the terms of this Agreement; and
(ii) any subscriptions, warrants or any other rights or
options shall be issued in connection with the Pledged Shares, all new
stock or other securities acquired through such subscriptions,
warrants, rights or options, and all additional shares of capital stock
of the Subsidiary or any successor in interest thereto from time to
time acquired by the Pledgor (directly or indirectly) in any manner
whatsoever (including, without limitation, any shares of preferred
stock issued by the Subsidiary) together with appropriate powers by the
Pledgor, shall be promptly delivered or otherwise transferred to the
Collateral Agent and shall thereupon constitute Pledged Collateral to
be held by the Collateral Agent under the terms of this Agreement.
7. Payment of Taxes and Claims.
The Pledgor shall make payment of (i) all taxes, assessments,
license fees, levies and other charges of Governmental Bodies imposed upon it
which if unpaid, could reasonably be expected to have a Material Adverse Effect
or become a Lien on the Property
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of the Pledgor, unless and to the extent only that such taxes, assessments,
charges, license fees, levies and other charges shall be contested in good faith
and by appropriate proceedings diligently conducted by the Pledgor and the
Collateral Agent has received prompt notice of such contest, (ii) all taxes,
assessments, license fees, levies and other charges of Governmental Bodies on
any of the Pledged Collateral before any penalty or interest accrues thereon,
unless and to the extent only that such taxes, assessments, charges, license
fees, levies and other charges shall be contested in good faith and by
appropriate proceedings diligently conducted by the Pledgor and the Collateral
Agent has received prompt notice of such contest, before any penalty or interest
accrues thereon, and (iii) all claims (including, without limitation, claims for
labor, services, materials and supplies) for sums materially adversely affecting
the Pledged Collateral, which have become due and payable and which by law have
or may become a Lien upon any of the Pledged Collateral prior to the time when
any penalty or fine shall be incurred with respect thereto, unless and to the
extent such claim is being contested in good faith and by appropriate
proceedings diligently conducted by the Pledgor, the Collateral Agent has
received prompt notice of such contest, any proceeding to place a lien on the
Pledged Collateral or to enforce a lien on the Pledged Collateral has been
stayed and such contest is not reasonably expected to have a Material Adverse
Effect.
8. Covenants and Agreements.
The Pledgor covenants and agrees that on and after the date
hereof until the Payment in full of the Secured Obligations and the termination
and discharge of the Indenture, unless the Collateral Agent shall otherwise
consent in writing:
(a) At any time and from time to time, upon the reasonable
request of the Collateral Agent, and at the sole expense of the Pledgor, the
Pledgor shall promptly do, file, record, execute and deliver any and all such
further notices, instruments and documents and will take such further action as
may be reasonably deemed necessary or desirable in the judgment of the
Collateral Agent and its counsel to obtain, protect and perfect the security
interests granted hereby and enforce and give effect to the rights, remedies and
powers hereunder, including, without limitation, and the recording or filing of
all instruments and documents reasonably necessary to perfect and protect the
perfection of the security interests granted hereby under Articles 8 or 9 of the
Uniform Commercial Code in effect in any applicable jurisdiction. In connection
therewith, the Collateral Agent is hereby irrevocably authorized and empowered
as the Pledgor's attorney-in-fact, solely to make, at the Collateral Agent's
option, all filings and to give all other notices as it shall reasonably deem
necessary with respect to any of the Pledged Collateral, all of which may be
done with or without the signature of the Pledgor. The Pledgor agrees that the
foregoing power constitutes a power coupled with an interest which shall survive
until the Payment in full of all of the Secured Obligations. The Pledgor agrees
to reimburse the Collateral Agent on demand for any actual and reasonable
expenses (including reasonable attorneys' fees and expenses with respect to the
Collateral Agent, including reasonable allocated costs and expenses of in-house
counsel and legal staff) incurred by the Collateral Agent in connection with
such matters and, until such reimbursement, such expenses shall be a part of the
Secured Obligations.
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(b) The Pledgor shall defend its ownership interest in and to
the Collateral and the Collateral Agent's security interest in and to the
Pledged Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to the interests of the
Collateral Agent.
(c) The Pledgor shall, at all times, maintain or cause to be
maintained accurate books and records with respect to the Pledged Collateral,
and shall furnish to the Collateral Agent such information concerning such
Pledged Collateral as the Collateral Agent may from time to time reasonably
request. The Collateral Agent and its designees are hereby given the right, at
the Pledgor's expense, to inspect and copy, following prior notice to the
Pledgor and during regular business hours, or the Pledgor shall furnish the
Collateral Agent with copies of, all records and documents reasonably required
by the Collateral Agent relating to the Pledged Collateral.
(d) The Pledgor shall not further hypothecate, assign, pledge,
encumber, transfer, sell or otherwise dispose of, or grant any option with
respect to, or create or suffer to exist a security interest in, or a Lien on,
the Pledged Collateral or any portion thereof, except for the pledge, assignment
and security interest created by this Agreement in favor of the Collateral Agent
and except as contemplated by Article 12 of the Indenture. The inclusion of
"Proceeds" of the Pledged Collateral under the security interest granted herein
shall not be deemed a consent by the Collateral Agent to any sale or other
disposition of any Pledged Collateral except as expressly permitted herein.
(e) The Pledgor shall promptly notify the Collateral Agent of
any change occurring in or to the Pledged Collateral, of a change in the
Pledgor's mailing address, of any material change in any fact or circumstance
warranted or represented by the Pledgor in this Agreement or furnished to the
Collateral Agent, or if any Default or Event of Default hereunder shall occur.
(f) The Pledgor shall not, without the prior written consent
of the Collateral Agent, sign or file or authorize the signing or filing of any
document, financing statement or instrument creating or perfecting, or
purporting to create or perfect, any Lien or other encumbrance on all or any
part of its Pledged Collateral except in favor of the Collateral Agent as
required hereby and except as contemplated in Article 12 of the Indenture.
(g) The security interest granted hereby constitutes and shall
at all times constitute a perfected continuing first priority security interest
in the Pledged Collateral.
9. The Collateral Agent Appointed Attorney-in-Fact.
Effective upon the occurrence and during the continuance of an
Event of Default, the Pledgor hereby irrevocably appoints the Collateral Agent
its attorney-in-fact, with full authority in the place and stead of the Pledgor
and in the name of the Pledgor or otherwise, from time to time in the Collateral
Agent's discretion, to take any action and to
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execute any instrument which the Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation:
(a) to ask, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Pledged Collateral and/or extend
the time of payment, arrange for payment in installments, or otherwise
modify the terms of, or release, any Pledged Collateral or obligations,
without otherwise discharging or affecting the Secured Obligations, the
Pledged Collateral or the security interests granted by this Agreement,
(b) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable
for the collection of any of the Pledged Collateral or otherwise to
enforce the rights of the Collateral Agent with respect to any of the
Pledged Collateral, and
(c) to receive, indorse and collect any drafts or other
instruments and documents made payable to the Pledgor in connection
with clause (a) above or representing any dividend or other
distribution in respect of the Pledged Collateral or any part thereof
and to give full discharge for the same.
The power-of-attorney granted hereby is coupled with an interest and shall be
irrevocable.
10. The Collateral Agent May Perform.
If the Pledgor fails to perform any agreement contained herein
or make payment of any amount required hereunder, the Collateral Agent may
itself perform, or cause performance of, or provide payment for the performance
thereof, and the reasonable expenses of the Collateral Agent incurred in
connection therewith shall be payable by the Pledgor under Section 15 of this
Agreement and any such payment made shall be deemed an advance by the Collateral
Agent to the Pledgor, payable on demand together with interest at the interest
rate then payable under the Indenture.
11. The Collateral Agent's Duties.
The powers conferred on the Collateral Agent hereunder are
solely to protect its interest in the Pledged Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe custody of any
Pledged Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Collateral Agent shall have no duty as to any
Pledged Collateral, including the filing of any financing or continuation
statements relating to the Pledged Collateral. The Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Pledged Collateral in its possession if the Pledged Collateral is accorded
treatment substantially equal to that which the Collateral Agent accords its own
Property, it being understood that the Collateral Agent shall not be under any
obligation to (a) ascertain or take action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
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Collateral, whether or not the Collateral Agent has or is deemed to have
knowledge of such matters, or (b) take any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Pledged Collateral,
but may do so at its option, and all reasonable expenses incurred in connection
therewith shall be for the sole account of the Pledgor, and shall be added to
the Secured Obligations.
12. Events of Default.
If any of the following events shall occur, then an "Event of
Default" has occurred hereunder:
(a) If the Pledgor fails to fully and punctually pay, perform
or observe any debt, obligation or liability of the Pledgor under this Agreement
or the Indenture; or
(b) If any representation or warranty made herein or the
Indenture or in any certificate, report or other document furnished by the
Pledgor in connection with this Agreement or the Indenture shall prove to have
been false in any material respect upon the date when made or deemed to have
been made or repeated; or
(c) If the Pledgor shall fail to observe or perform any term,
covenant or agreement contained in Sections 8(a), 8(d) or 8(f) of this
Agreement; or
(d) If the Pledgor shall fail to perform or observe any other
term, covenant or agreement on its part to be performed or observed pursuant to
this Agreement and such failure shall have continued unremedied for a period of
thirty (30) days after the Pledgor shall become aware of such failure; or
(e) The occurrence and continuance of an Event of Default
under and as defined in the Indenture.
13. Notice of Event of Default.
The Pledgor agrees to notify the Collateral Agent of the
occurrence of an Event of Default promptly upon its obtaining knowledge thereof.
14. Remedies.
Upon the occurrence and during the continuation of an Event of
Default, the Collateral Agent may upon written instructions from the Trustee,
subject to regulatory requirements, exercise any and all remedies and other
rights provided under this Agreement and by applicable law, including, without
limitation, the following:
(a) The Collateral Agent may exercise in respect of the
Pledged Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured party
upon default under the UCC (whether or not the UCC applies to the affected
Pledged Collateral) and also may without notice, except as
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specified below, sell, lease, assign, grant an option or options to purchase or
otherwise dispose of the Pledged Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's board or at any of
the Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable. The Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to the Pledgor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. The Collateral Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned.
(b) Any cash held by the Collateral Agent as Pledged
Collateral and all cash proceeds received by the Collateral Agent in respect of
any sale of, collection from or other realization upon all or any part of the
Pledged Collateral may, in the discretion of the Collateral Agent, be held by
the Collateral Agent as Pledged Collateral for, and then or at any time
thereafter applied (after the payment of any amounts payable to the Collateral
Agent pursuant to Section 15 hereof) in whole or in part by the Collateral Agent
for the ratable benefit of the Holders against all or any part of the Secured
Obligations. Any surplus of such cash or cash proceeds held by the Collateral
Agent and remaining after payment of all of the Secured Obligations shall be
paid over to the Pledgor or to whomsoever may be lawfully entitled to receive
such surplus.
(c) The Pledgor acknowledges and agrees that the Collateral
Agent may elect, with respect to the offer or sale of any or all of the Pledged
Collateral, to conduct such offer and sale in such a manner as to avoid the need
for registration or qualification of the Pledged Collateral or the offer and
sale thereof under any federal or state securities laws and that the Collateral
Agent is authorized to comply with any limitation or restriction in connection
with such sale as counsel may advise the Collateral Agent is necessary in order
to avoid any violation of applicable law, including, without limitation,
compliance with such procedures as may restrict the number of prospective
bidders and purchasers, require that such prospective bidders and purchasers
have certain qualifications, and restrict such prospective bidders and
purchasers to Persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Pledged Collateral, or in order to obtain any required approval
of the sale or of the purchaser by any Governmental Body. The Pledgor further
acknowledges and agrees that any such transaction may be at prices and on terms
less favorable than those which may be obtained through a public sale and not
subject to such restrictions and agrees that, notwithstanding the foregoing, the
Collateral Agent is under no obligation to conduct any such public sale and may
elect to impose any or all of the foregoing restrictions, or any other
restrictions which may be necessary or desirable in order to avoid any such
registration or qualification, at its sole discretion or with the consent or
direction of the parties entitled to give direction pursuant to the
Intercreditor Agreement, and that any such offer and sale shall, taking into
account the possible restrictions on such offer and sale described in this
subsection (c), be conducted in a commercially reasonable manner.
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(d) The Pledgor hereby expressly waives and covenants not to
assert any appraisement, valuation, extension, redemption or similar laws, now
or at any time hereafter in force, which might delay, prevent or otherwise
impede the performance or enforcement of this Agreement.
15. Expenses.
The Pledgor will upon demand make payment to the Collateral
Agent of any and all reasonable out-of-pocket sums, costs and expenses, which
the Collateral Agent may pay or incur pursuant to the provisions of this
Agreement or in perfecting, defending, protecting or enforcing this Agreement or
the security interests granted herein or in enforcing Payment of all of the
Secured Obligations or otherwise in connection with the provisions hereof,
including, but not limited to court costs, reasonable collection charges,
reasonable travel expenses, and reasonable attorneys' fees (including with
respect to the Collateral Agent, the reasonable allocated costs and expenses of
in-house counsel and legal staff) all of which together with interest at the
highest rate then payable under the Indenture, shall be part of the Secured
Obligations.
16. Repayment in Bankruptcy, etc.
Notwithstanding anything to the contrary contained in this
Agreement, if, at any time or times subsequent to the payment of all or any part
of the Secured Obligations, the Collateral Agent shall be required to repay any
amounts previously paid by or on behalf of the Subsidiary or the Pledgor in
reduction thereof by virtue of an order of any court having jurisdiction
thereof, including, without limitation, as a result of an adjudication that such
amounts constituted preferential payments or fraudulent conveyances, the Pledgor
unconditionally agrees to make payment to the Collateral Agent within 10 days
after demand of the amount of such repayment, together with interest on such
amount from the date of such repayment by the Collateral Agent to the date of
payment to the Collateral Agent at the default interest rate set forth in the
Indenture.
17. No Segregation of Moneys; No Interest.
No moneys or any other property received by the Collateral
Agent hereunder need be segregated in any manner except to the extent required
by law, and any such moneys or other Property may be deposited under such
general conditions as may be prescribed by law applicable to the Collateral
Agent, and the Collateral Agent shall not be liable for any interest thereon.
18. Continuing Security Interest; Termination.
(a) This Agreement shall create a continuing perfected first
security interest in the Pledged Collateral and shall (i) remain in full force
and effect until the payment in full of all of the Secured Obligations, (ii) be
binding upon the Pledgor, its successors and assigns and (iii) inure, together
with the rights and remedies of the Collateral Agent hereunder, to
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the benefit of the Collateral Agent, the Trustee and the Holders and their
respective successors, transferees and assigns.
(b) Notwithstanding anything to the contrary in this Section
18, upon (a) satisfaction by the Trustee of the conditions set forth in Article
Four of the Indenture, upon the satisfaction and discharge of the Indenture, (b)
the payment in full of all Secured Obligations or (c) the defeasance of the
Notes and the Indenture as provided in Section 1302 of the Indenture, the
security interests created under this Agreement shall terminate and the
Collateral Agent shall, at the request and expense of the Pledgor, cause to be
assigned, transferred and delivered, against receipt but without recourse,
warranty or representation whatsoever, any remaining Pledged Collateral, to or
on the order of the Pledgor, and shall execute and deliver to the Pledgor an
instrument or instruments acknowledging the release of such Pledged Collateral
from the Lien of this Agreement.
19. Notices.
All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telecopy, telex or cable
communication) and mailed, telegraphed, telecopied, telexed, cabled or delivered
to it, if to the Pledgor, addressed to it at CD Radio Inc., Sixth Floor, 0000
00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Attention: Chief Executive Officer,
if to the Collateral Agent, at the address of the Trustee specified in the
Indenture, or as to any party at such other address as shall be designated by
such party in a written notice to each other party. All such notices and other
communications shall, when mailed, telegraphed, telecopied, telexed or cabled,
be effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
cable company, respectively.
20. Margin Regulations.
The Pledgor shall take such steps as may be necessary so that
it shall comply with Regulations G, U and X (in so far as Regulation X applies
to Regulations G and U) promulgated by the Board of Governors of the Federal
Reserve System, in each case as in effect from time to time and to the extent
such Regulations are at the time applicable to the Notes issued by the Pledgor.
21. Other Provisions.
(a) Except as expressly provided in this Agreement, the
Pledgor hereby waives presentment, demand for payment, notice of default,
nonperformance and dishonor, protest and notice of protest of or in respect of
this Agreement, the Indenture, the Notes or the Secured Obligations, notice of
acceptance of this Agreement and reliance hereupon by the Collateral Agent and
notice of any sale of collateral security or any default of any sort.
(b) The Pledgor waives all errors or omissions of the
Collateral Agent in connection with the administration of Security Interest
created hereby and the Pledged
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Collateral, except errors or omissions which constitute gross negligence or
willful misconduct.
(c) The Pledgor agrees that the Collateral Agent, the Trustee
or the Holders may at any time, without notice to or consent of the Pledgor, and
without in any manner affecting the liability of the Pledgor hereunder, amend,
modify or waive any term or condition of the Indenture, the Notes, the
Intercreditor Agreement and any of the other Secured Obligations and any
collateral security therefor and otherwise deal with Pledgor as if this
Agreement did not exist.
(d) The Pledgor is not relying upon the Collateral Agent to
provide to the Pledgor any information concerning the Subsidiary, including,
without limitation, information which might have a Material Adverse Effect, and
the Pledgor has made arrangements satisfactory to the Pledgor to obtain from the
Subsidiary on a continuing basis such information concerning the Subsidiary as
the Pledgor may desire.
(e) In addition to all other rights it may have at law or
otherwise, upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent, is hereby authorized at any time and from time to
time, without notice, to set-off against any and all obligations which the
Collateral Agent may owe to the Subsidiary or the Pledgor, of any kind or
nature, and the Pledgor shall continue to be liable to the Collateral Agent for
any deficiency with interest at the applicable interest rate forth in the
Indenture or the Notes.
(f) Notwithstanding anything to the contrary contained in the
Indenture or in any other agreement, instrument or document executed by the
Pledgor and delivered to the Collateral Agent, the Collateral Agent will not
take any action pursuant to any document referred to above which would
constitute or result in any assignment of any FCC license or any change of
control (whether de jure or de facto) of the Pledgor or the Subsidiary if such
assignment of any FCC license or change of control would require, under then
existing law, the prior approval of the FCC without first obtaining such prior
approval of the FCC. Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, subject to terms and conditions of
this Agreement, the Pledgor agrees to take any action which the Collateral Agent
may reasonably request in order to obtain from the FCC such approval as may be
necessary to enable the Collateral Agent to exercise and enjoy, the full rights
and benefits granted to the Collateral Agent by this Agreement and the other
documents referred to above, including specifically, at the cost and expense of
the Pledgor, the use of its best efforts to assist in obtaining approval of the
FCC for any action or transaction contemplated by this Agreement for which such
approval is or shall be required by law, and specifically, without limitation,
upon request, to prepare, sign and file with the FCC the assignor's or
transferor's portion of any application or applications for consent to the
assignment of license or transfer of control necessary or appropriate under the
FCC's rules and regulations for approval of (i) any sale or other disposition of
the Pledged Collateral by or on behalf of the Collateral Agent, or (ii) any
assumption by the Collateral Agent of voting rights in the Pledged Collateral
effected in accordance with the terms of this Agreement. It is understood and
agreed that all foreclosure and related actions will be made in accordance with
the Communications Act of 1934, as amended, and the rules and
16
regulations promulgated thereunder, as from time to time in effect (the
"Communications Act") and other applicable FCC regulations and published
policies and decisions.
(g) the Pledgor agrees to indemnify and hold harmless the
Collateral Agent, the Trustee, and the Holders, the respective affiliates of the
Collateral Agent, the Trustee, and the Holders, and the respective officers,
directors, employees, agents (including, without limitation each of their
counsel), and controlling persons of the Collateral Agent, the Trustee, and the
Holders and each such affiliate (each, an "Indemnified Party") from and against
any and all claims, actions and suits whether groundless or otherwise, and from
and against any and all liabilities, losses, damages and costs and expenses
(including, without limitation, the reasonable fees and disbursements of counsel
and with respect to the Collateral Agent, reasonably allocated costs and
expenses of in-house counsel and legal staff) of every nature and character
arising out of or in connection with any actual or threatened claim, litigation,
investigation or proceeding relating to the Indenture, the Notes or this
Agreement or the transactions contemplated hereby (other than any such actions
or expenses resulting from the gross negligence or willful misconduct of the
Collateral Agent, the Trustee or the Holders), in each case including, without
limitation, the reasonable fees and disbursements of counsel and allocated costs
of in-house counsel and legal staff incurred in connection with any such
investigation, litigation or other proceeding whether or not such Indemnified
Party is a party thereto, and the Pledgor agrees to reimburse each Indemnified
Party, upon demand, for all out-of-pocket costs and expenses (including, without
limitation, the reasonable fees and disbursements of counsel and with respect to
the Collateral Agent, reasonably allocated costs and expenses of in-house
counsel and legal staff) incurred in connection with any of the foregoing. In
litigation, or the preparation therefor, the Collateral Agent, the Trustee and
the Holders shall be entitled to select their own counsel and, in addition to
the foregoing indemnity, the Pledgor agrees to pay promptly the reasonable fees
and expenses of such counsel. If, and to the extent that the obligations of the
Pledgor under this Section 21(g) are unenforceable for any reason, the Pledgor
hereby agrees to make the maximum contribution to the payment in satisfaction of
such obligations which is permissible under applicable law.
The Pledgor shall not make any claim against any Indemnified
Party for any special, indirect or consequential damages in respect of any
breach or wrongful conduct (whether the claim therefor is based in contract,
tort or duty imposed by law) in connection with, arising out of or in any way
related to the transactions contemplated by, and the relationship established by
the Indenture, the Notes, or any act, omission or event occurring in connection
therewith, and the Pledgor hereby waives, releases and agrees not to xxx upon
any such claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in the Pledgor's favor.
The covenants contained in this Section 21(g) shall survive
payment or satisfaction in full of all other of the Secured Obligations.
(h) The Pledgor hereby appoints Xxxxxxxx, Xxxxxxx Xxxxxx &
Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attn: Xxxxxxxx X. Xxxxxxxx,
as its legally authorized process agent to accept service on behalf of the
Pledgor.
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(i) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York. The Pledgor agrees that any
suit for the enforcement of this Agreement may be brought in the courts of the
State of New York or any federal court sitting therein and consents to the
nonexclusive jurisdiction of such court and service of process in any such suit
being made upon the Pledgor by mail to ______________________________ at the
address specified in Section 21(h). The Pledgor hereby waives any objection that
it may now or hereafter have to the venue of any such suit or any such court or
that such suit is brought in an inconvenient court.
(j) This Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when so executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
(k) This Agreement and any other documents executed in
connection herewith express the entire understanding of the parties with respect
to the transactions contemplated hereby. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
Section 21(m).
(l) the Pledgor hereby waives its right to a jury trial with
respect to any action or claim arising out of any dispute in connection with
this Agreement, or any of the other loan documents, any rights or obligations
hereunder or thereunder or the performance of such rights and obligations.
Except as prohibited by law, the Pledgor hereby waives any right it may have to
claim or recover in any litigation referred to in the preceding sentence any
special, exemplary, punitive or consequential damages or any damages other than,
or in addition to, actual damages. The Pledgor (a) certifies that no agent or
representative of the Collateral Agent, the Trustee or any Holder has
represented, expressly or otherwise, that the Collateral Agent, the Trustee or
such Holder, as the case may be, would not, in the event of litigation, seek to
enforce the foregoing waivers and (b) acknowledges that the Trustee, the Holders
and the Collateral Agent have been induced to enter into this Agreement and
Indenture among other things, the waivers and certifications contained herein.
(m) Any consent or approval required or permitted by this
Agreement to be given by the Collateral Agent may be given, and any term of this
Agreement, may be amended, and the performance or observance by the Pledgor of
any terms of this Agreement, or the continuance of any Default or Event of
Default may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Pledgor and the written consent of the Collateral Agent. No waiver shall extend
to or affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of the Collateral
Agent, the Trustee or any Holder in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon
the Pledgor shall entitle the Pledgor to other or further notice or demand in
similar or other circumstances.
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(n) Notwithstanding the foregoing, this Agreement may be
amended, revised and supplemented, as contemplated by Section 1205 of the
Indenture, to assign and pledge to the Custodian for the benefit of the Holders
and the equal and ratable benefit of the Secured Parties a security interest in
the Pledged Collateral. Any such amendment, revision or supplement shall comply
with the provisions of Section 1205 of the Indenture.
(o) The Pledgor hereby waives any and all rights against
immunity from jurisdiction, attachment (both before and after judgment) and
execution to which it might be entitled.
(p) The provisions of this Agreement are severable and if any
one clause or provision hereof shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction, and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
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IN WITNESS WHEREOF, the Pledgor has caused this Agreement to
be duly executed and delivered as of the date hereof.
CD RADIO INC.
By:
------------------------------------
Name:
Title:
Accepted and Agreed to:
IBJ XXXXXXXX BANK AND TRUST COMPANY
as Collateral Agent
By:
--------------------------------
Name:
Title:
Schedule I
Pledged Shares
