EXHIBIT 1.2
XM SATELLITE RADIO HOLDINGS INC.
2,000,000 Shares of Series B Convertible Redeemable Preferred Stock
UNDERWRITING AGREEMENT
January __, 2000
BEAR, XXXXXXX & CO. INC.
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
BANC OF AMERICA SECURITIES LLC
XXXXXXX XXXXX BARNEY INC.
2,000,000 Shares of Series B Convertible Redeemable Preferred Stock
XM SATELLITE RADIO HOLDINGS INC.
UNDERWRITING AGREEMENT
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January __, 2000
Bear, Xxxxxxx & Co. Inc.
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Banc of America Securities LLC
Xxxxxxx Xxxxx Barney Inc.
c/o 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 2,000,000
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shares (the "Firm Shares") of its Series B Convertible Redeemable Preferred
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Stock, par value $0.01 per share (the "Preferred Stock") and, for the sole
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purpose of covering over-allotments in connection with the sale of the Firm
Shares, at the option of the Underwriters, up to an additional 300,000 shares
(the "Additional Shares") of Preferred Stock. The Firm Shares and any
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Additional Shares purchased by the Underwriters are referred to herein as the
"Shares". The Shares are more fully described in the Registration Statement
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referred to below. Simultaneously with the offer and sale of the Shares
Preferred Stock hereunder, the Company is offering to the public 4,000,000
shares of its Class A Common Stock (the "Concurrent Offering").
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 registration statement on Form S-1 (No. 333-93529),
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and any amendments thereto, and related preliminary prospectuses for the
registration under the Securities Act of 1933, as amended (the "Securities
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Act"), of shares of Preferred Stock, which registration statement, as so
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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
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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 Preferred Stock (a "Rule 462(b)
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Registration
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Statement"), then, unless otherwise specified, any reference herein to the
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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 Underwriters).
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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 with the
Commission pursuant to Rule 424(b) of the Securities Act Regulations. The
Prospectus relating to the Shares, in the form in 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", except that if
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any revised prospectus or prospectus supplement shall be provided to the
Underwriters by the Company for use in connection with the offering and
sale of the Shares (the "Offering") which differs from the Prospectus
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(whether or not such revised prospectus or prospectus supplement is
required to be filed by the Company pursuant to Rule 424(b) of the
Securities Act Regulations), the term "Prospectus" shall refer to such
revised prospectus or prospectus supplement, as the case may be, from and
after the time it is first provided to the Underwriters for such use; and,
provided, further, that the term "Prospectus" shall be deemed to include
any wrapper or supplement thereto prepared in connection with the
distribution of any Reserved Shares (as defined in Section 2(f), below).
Any preliminary prospectus relating to the Shares, or prospectus subject to
completion relating to the Shares, included in the Registration Statement
or filed with the Commission pursuant to Rule 424 under the Securities Act
is hereafter called a "Preliminary Prospectus". All references in this
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Agreement to the Registration Statement, the Rule 462(b) Registration
Statement, a Preliminary Prospectus and the Prospectus, 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, and the Preliminary Prospectus 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 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, as
of the date hereof (unless the term "Prospectus" refers to a prospectus
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 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, does not and
will not include any untrue statement of a 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 representations and warranties in this Section (1)(b)
shall not apply to statements in or omissions from the Registration
Statement or Prospectus 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. Each Preliminary Prospectus and Prospectus 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
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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 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 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 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 under the caption "Use of
Proceeds" (any of the events set forth in clauses (x), (y) or (z), a
"Material 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 September 30, 1999, the Company had
the pro forma, pro forma as adjusted, and pro forma as further adjusted
capitalization as set forth in the Prospectus under the caption
"Capitalization" (subject in each case to the assumptions set forth under
such caption).
(e) Except as disclosed in the Prospectus, 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) Upon issuance and delivery of the Shares in accordance with this
Agreement, the Shares will be convertible at the option of the holder
thereof for shares of the Company's Class A Common Stock, par value $.01
per share (the "Class A Common Stock") in accordance with the Certificate
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of Designation of Voting Power, Designation Preferences and Relative,
Optional or Other Special Rights and Qualifications, Limitations and
Restrictions (the "Certificate of Designations") governing the Shares; the
shares of Class A Common Stock issuable upon any such conversion of Shares
have been duly authorized and reserved for issuance upon such conversion
and such shares of Class A Common Stock, when issued upon such conversion,
will be validly issued and will be fully paid and nonassessable and not
issued in violation of any preemptive or similar rights
(g) The Company has duly authorized and reserved for issuance such
shares of Class A Common Stock as may be payable as a dividend on the
Shares in accordance with the Certificate
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of Designations, and such shares of Class A Common Stock, when issued upon
such conversion, will be validly issued and will be fully paid and
nonassessable and not issued in violation of any preemptive or similar
rights.
(h) Except as disclosed in the Prospectus 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 (as such
term is defined in the Prospectus)).
(i) The Preferred Stock (including the Shares) is registered pursuant
to Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange
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Act"), and the Company has taken no action designed to, or likely to have
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the effect of, terminating the registration of the Preferred Stock under
the Exchange Act, nor has the Company received any notification that the
Commission is contemplating terminating such registration.
(j) 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.
(k) The statistical and market-related data included in the
Prospectus are based on or are derived from sources which the Company
believes to be reliable and accurate in all material respects.
(l) 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.
(m) 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
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the rules and regulations of the Federal Communications Commission (the
"FCC"), and environmental laws, statutes, ordinances, rules regulations,
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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. 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.
(n) 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, including without limitation the
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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
(1) which is disclosed in the Prospectus. 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 and regulations or such as may be
required by the National Association of Securities Dealers, Inc. (the
"NASD").
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(o) 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 and that is not so disclosed, or (x) except
as has been disclosed in the Prospectus could reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect.
(p) 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; 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; and every request of any securities authority
or agency of any jurisdiction for additional information has been complied
with in all material respects.
(q) 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
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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 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 (A), (B) or (C) above could
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reasonably be expected to result in a Material Adverse Effect.
(r) 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
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approval 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.
(s) Each of the Company and its subsidiaries has (i) good and
marketable title to all of the properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges,
encumbrances and restrictions, except such as are described in the
Prospectus 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 to engage in the business
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conducted by it in the manner described in the Prospectus, except as
described in the Prospectus 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.
(t) 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 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")
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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 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 or as could not reasonably be expected to have
a Material Adverse Effect.
(u) 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.
(v) 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 in
respect of all federal, state and foreign 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.
(w) 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 company" or a "subsidiary
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company" or an "affiliate" of a holding company within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(x) Except as disclosed in the Prospectus, 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.
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(y) 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.
(z) Except as disclosed in the Prospectus, 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.
(aa) 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 (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.
(bb) 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,
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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
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subsidiary is 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.
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(cc) Subsequent to the respective dates as of which information is
given in the Prospectus and up to the Closing Date, except as set forth in
the Prospectus, (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) 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 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.
(dd) KPMG LLP, who have 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,
are independent public or certified public accountants within the meaning
of Regulation S-X under the Securities Act and the Exchange Act.
(ee) The financial statements, together with the related notes,
included in the Prospectus 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 under the captions "Prospectus Summary--Summary
Consolidated Financial Data", "Selected Consolidated Financial Data" and
"Capitalization" fairly present the information set forth therein on a
basis consistent with that of the audited financial statements contained in
the Prospectus.
(ff) Except 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.
(gg) The statements (including the assumptions described therein)
included in the Prospectus (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
9
Company with a reasonable basis and reflect the Company's good faith
estimate of the matters described therein.
(hh) Each of the Company and its subsidiaries has implemented Year
2000 compliance programs designed to ensure that its computer systems and
applications will function properly beyond 1999. The Company believes that
adequate resources have been allocated for this purpose and expects the
Company's and its subsidiaries' Year 2000 date conversion programs to be
completed on a timely basis.
(ii) 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 $[_] 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 January [_], 2000 (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 300,000 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, 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
10
being herein sometimes referred to as the "Additional Closing Date"); provided,
-----------------------
however, that the Additional Closing 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.
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 or the Prospectus or for any additional information,
(iii) of the mailing or the delivery to the Commission for filing of the
Prospectus or any amendment of or supplement to the Registration Statement or
the Prospectus or any document to be filed pursuant to the Exchange Act during
any period when the Prospectus 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 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 (including any revised prospectus which the
Company proposes for use by the Underwriters in connection with the offering of
the Shares which differs from the prospectus filed with the Commission pursuant
to Rule 424(b) of the Securities Act Regulations, whether or not such revised
prospectus 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
11
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus 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
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 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 is
required to be delivered under the Securities Act, such number of copies of the
Prospectus 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.
(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 effective date of the Registration
Statement (as defined in Rule 158(c) under the Securities Act).
(f) During the period of 90 days from the date of the
Prospectus, the Company will not, directly or indirectly, without the prior
written consent of Bear, Xxxxxxx & Co. Inc. and Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation, 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 or preferred stock of the Company or any securities
convertible into or exercisable or exchangeable for such Class A Common Stock or
preferred stock, except that the Company may issue (i) shares of Class A Common
Stock and options to purchase Class A 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 or (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
12
assigns of such recipients shall be bound by the lock-up agreement) for the
remainder of the 90-day lock-up period.
(g) During a period of three years from the date of the
Prospectus, 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.
(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 Commission shall have been complied with to the Underwriters'
reasonable satisfaction.
(j) The Company, during the period when the Prospectus 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) The Company shall file with the Commission and have declared
effective one or more registration statements on Form X-0, Xxxx X-0 or such
similar form as may be applicable at the time to register the shares of Class A
Common Stock issuable upon conversion of the Shares.
(l) The Company will effect and maintain the quotation of the
shares of Class A Common Stock issuable upon conversion of the Shares 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, the Prospectus 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, the Agreement Among Underwriters and the Selling
Agreement) 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 of Class A Common
Stock issuable upon conversion of the Shares for quotation on the Nasdaq, (d)
filing fees of the Commission and the NASD, (e) the cost of printing
certificates representing the Shares, (f) the cost and charges of any transfer
agent or registrar and (g) all costs and expenses of the Underwriters, including
the fees and disbursements of counsel for the Underwriters, in connection with
matters related to the Reserved Shares.
13
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
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 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 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.
(e) Since the dates as of which information is given in the
Prospectus, except as disclosed in the Prospectus with respect to the stock
split, (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, (ii) 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 balance sheet or notes thereto included in the
Prospectus. Since the date hereof and since the dates as of which information is
given in the Prospectus, there shall not have occurred any Material Adverse
Effect.
14
(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 Xxxxxx Xxxxxxx Xxxxxx Leader &
Xxxxxxxx L.L.P., 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 herein 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.
(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) Each of the (1) Shareholders' Agreement, dated July 7, 1999,
by and among the Company and the other parties thereto, (2) Technology Licensing
Agreement, dated June 7, 1999, by and among the Company and the other parties
thereto, (3) Technical Services Agreement, dated January 1, 1998, as amended,
between the Company and AMSC, (4) Satellite Purchase Contract for In-Orbit
Delivery, dated March 20, 1998, between the Company and Xxxxxx Space and
Communications International, Inc., (5) 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, (8) Operational Assistance Agreement, dated June 7,
15
1999, between the Company and DIRECTV, INC., (9) Operational Assistance
Agreement, dated June 7, 1999, between the Company and Clear Channel
Communications, Inc., (10) Operational Assistance Agreement, dated June 7, 1999,
between the Company and TCM, LLC. and (11) Agreement, dated August 18, 1999, as
amended on November 2, 1999, between LCC International 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.
(o) 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. and Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation 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.
(p) The Company shall have filed with the Secretary of State of
Delaware the Certificate of Designations which, in the sole judgment of the
Underwriters, the provisions of which shall be substantially identical in all
material respects to the "Description of Series B Preferred Stock" contained in
the Prospectus.
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 or the Prospectus, 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
16
expressly for use therein and (ii) with respect to any preliminary prospectus or
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 loss, claim, damage or liability of the Underwriters
results from an untrue statement or omission of a material fact contained in the
preliminary prospectus or 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, preliminary prospectus supplement or prospectus, 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 indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have
17
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. 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 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
18
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.
(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 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 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
19
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 which could have a Material Adverse Effect, other than as set forth
in the Prospectus, 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 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; 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.
(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 fourth paragraph
under the caption "Underwriting" in
20
the Prospectus concerning the proposed public offering price, discount and
concession; and (ii) the sixth paragraph under the caption "Underwriting" in the
Prospectus concerning transactions that stabilize, maintain, or otherwise affect
the price of the Preferred 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 related
Preliminary Prospectus or preliminary prospectus supplement or the Prospectus 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 and Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation,
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Syndicate Department,
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
00xx Xxxxxx, XX, Xxxxx 00, 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. 00000-0000,
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
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
--------
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.
21
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: _______________________________
Name: _____________________________
Title: ____________________________
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
Acting severally on behalf of themselves and the
several Underwriters named in Schedule I hereto
BEAR, XXXXXXX & CO. INC.
By:______________________
Name:
Title:
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES CORPORATION
By:______________________
Name:
Title:
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
--------------------------------------------------------------------------------
Bear, Xxxxxxx & Co. Inc. ................................................. [_]
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ..................... . [_]
Banc of America Securities LLC ............................................ [_]
Xxxxxxx Xxxxx Barney Inc. ................................................. [_]
Total ............................................................. 2,000,000
Exhibit A
Form of Opinion of Xxxxx & Xxxxxxx LLP
1. Each of XM Satellite Radio Holdings Inc. (the "Company") and its
-------
subsidiaries is duly organized and validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, and has all
requisite corporate power and authority to carry on its business as it is being
conducted and as described in the Prospectus and to own, lease and operate its
properties, and 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 where the failure to be so qualified or in good standing would not,
singly or in the aggregate, have a Material Adverse Effect.
2. 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 under the
Delaware General Corporation Law. The authorized, issued and outstanding
capital stock of the Company conforms in all respects to the description thereof
set forth in the Prospectus.
3. All of the issued and outstanding capital stock of, or other
ownership interests in, the Company's subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable and were not issued in
violation of or subject to any preemptive or similar rights under the Delaware
General Corporation Law or known to us, after reasonable inquiry, and, are owned
by the Company of record and, to our knowledge, after reasonable inquiry, free
and clear of any security interest, claim, lien, limitation on voting rights or
encumbrance. There are not, to our knowledge, currently, and will not be
following 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
stock option plan).
4. Upon the issuance and delivery of the Preferred Stock in
accordance with the Underwriting Agreement, the Preferred Stock will be
convertible at the option of the holder thereof for shares of Class A Common
Stock in accordance with the Certificate of Designation of Voting Power,
Designation Preferences and Relative, Optional or Other Special Rights and
Qualifications, Limitations and Restrictions (the "Certificate of Designations")
governing the Preferred Stock. The shares of Class A Common Stock issuable upon
any such conversion of Preferred Stock have been duly authorized and reserved
for issuance upon such conversion and such shares of Class A Common Stock, when
issued upon such conversion, will be validly issued and will be fully paid and
nonassessable and not issued in violation of any preemptive or similar rights.
5. The Company has duly authorized and reserved for issuance such
shares of Class A Common Stock as may be payable as a dividend on the Preferred
Stock in accordance with the Certificate of Designations, and such shares of
Class A Common Stock, when issued upon such conversion, will be validly issued
and will be fully paid and nonassessable and not issued in violation of any
preemptive or similar rights.
6. The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Underwriting Agreement
and to consummate the transactions contemplated thereby and in the Prospectus,
including, without limitation, the corporate power and authority to issue, sell
and deliver the Shares as provided herein and therein.
5. The Underwriting Agreement has been duly and validly authorized,
executed and delivered by the Company and, assuming due execution by the other
parties hereto, is the legally valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
6. The Registration Statement has become effective under the Act and,
to the best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Act and no proceedings therefor
have been initiated or threatened by the Commission; and any required filing of
the Prospectus pursuant to Rule 424(b) under the Act has been made in accordance
with Rule 424(b) and 430A under the Act.
7. The Registration Statement, Preliminary Prospectus and Prospectus
comply as to form in all material respects with the requirements for
registration statements on Form S-1 under the Securities Act and the Securities
Act Regulations; it being understood, however, that such counsel need not
express an opinion with respect to the financial statements, schedules and other
financial data included in the Registration Statement, Preliminary Prospectus or
Prospectus. To such counsel's knowledge, there are no contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein, and, to such
counsel's knowledge, the descriptions thereof or references thereto are correct
in all material respects.
8. None of (A) the execution, delivery or performance by the Company
of the Underwriting Agreement, (B) the issuance and sale of the Shares, (C) the
consummation of the Concurrent Offering or (D) the consummation by the Company
of the transactions described in the Prospectus under the caption "Use of
Proceeds" violates, conflicts with or constitutes 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 requires consent under, or
will result in the imposition of a lien or encumbrance 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, (i) the certificate of
incorporation or bylaws of the Company or any of its subsidiaries, (ii) 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 any of them or their property is or may be bound identified to
such counsel as material, (iii) any statute, rule of regulation applicable to
the Company or any of its subsidiaries, or (iv) 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 known to
such counsel, and except in the case of clauses (ii), (iiii) and (iv) for such
violations, conflicts, breaches, defaults, consents, impositions of liens or
accelerations that (x) would not, singly or in the aggregate, have a Material
Adverse Effect or (y) are disclosed in the Prospectus. No consent, approval,
authorization or order of, or filing, registration, qualification, license or
permit of or with, (a) any court or governmental agency, body or administrative
agency (b) or any other person is required for (1) the execution, delivery and
performance by the Company of the Underwriting Agreement, (2) the issuance and
sale of the Shares, (3) the consummation of the Concurrent Offering or (4)
consummation by the Company of the transactions described in the Prospectus
except (i) such as have been obtained and made or have been disclosed in the
Prospectus or (ii) where the failure to obtain such consents or waivers would
not, singly or in the aggregate, have a Material Adverse Effect. To the best of
such counsel's knowledge, after reasonable inquiry, no consents or waivers from
any other person are required for the execution, delivery and performance by the
Company of the Underwriting Agreement, the issuance and sale of the Shares,
other than such consents and waivers as have been obtained or are being applied
for.
ii
9. 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, or (ii) a
"holding 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.
10. Except as set forth in the Underwriting Agreement or in the
Prospectus, to such counsel's knowledge, after reasonable inquiry there are no
holders of any securities of the Company who, by reason of the execution by the
Company of the Underwriting Agreement or the consummation by the Company of the
transactions contemplated thereby, have the right to request or demand that the
Company register under the Act securities held by them.
11. To the knowledge of such counsel, after reasonable inquiry, no
search of courts having been made, there is (i) no action, suit, investigation
or proceeding before or by any court, arbitrator or governmental agency, body or
official, domestic or foreign, now pending, or threatened or contemplated to
which any of the Company or any of its subsidiaries is or may be a party or to
which the business or property of any of the Company or any of its subsidiaries
is or may be 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 of competent jurisdiction to which any of
the Company or any of its subsidiaries is or may be subject has been issued
that, in the case of clauses (i), (ii) and (iii) above, (w) is required to be
disclosed in the Prospectus and that is not so disclosed or, (x) could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, except as disclosed in the Prospectus; or (y) might
interfere with, adversely affect or in any manner question the validity of the
issuance and sale of the Shares or any of the other transactions contemplated by
the Underwriting Agreement.
12. The statements contained in the Prospectus under the captions
"Risk FactorsLarge payment obligations under our distribution agreement with
General Motors may prevent us from becoming profitable", "Management's
Discussion and Analysis of Financial Condition and Results of
OperationsLiquidity and Capital ResourcesFunds Required for XM Radio Through
Commencement of Commercial OperationsSources of Funds", "Management's Discussion
and Analysis of Financial Condition and Results of OperationsLiquidity and
Capital ResourcesFunds Required for XM Radio Following Commencement of
Commercial Operations" "Management", "Certain Relationships and Related Party
Transactions", "Principal Stockholders", "Description of Capital Stock",
"Description of Series B Preferred Stock" and "Certain United States Federal Tax
Consequences", in each case, insofar as such statements constitute summaries of
the legal matters, documents or proceedings referred to therein, fairly present
the information required with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein in all material
respects.
We have participated in conferences with officers and other
representatives of the Company, representatives of the independent certified
public accountants of the Company and the Underwriters and their representatives
at which the contents of the Registration Statement, Preliminary Prospectus and
Prospectus and related matters were discussed and, although we have not
undertaken to investigate or verify independently, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement, Preliminary Prospectus or Prospectus
(except as indicated above), on the basis of the foregoing, no facts have come
to our attention which led us to believe that the Registration Statement,
Preliminary Prospectus and Prospectus, as of its date or the Closing Date,
contained an untrue statement of a material fact or omitted to state any fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances
iii
under which they were made, not misleading (except as to financial statements
and related notes, the financial statement schedules and other financial and
statistical data included therein).
iv
Exhibit B
Form of Opinion of Xxxxxx Xxxxxxx Xxxxxx Leader & Xxxxxxxx L.L.P.
1. Except as set forth in the Prospectus, the (i) the FCC has
granted XM Satellite Radio Holdings Inc. (the "Company") all material
-------
authorizations needed to construct, launch, and operate a satellite radio
service and offer a subscription service on a non-common carrier basis, and (ii)
the FCC has assigned XM two orbital locations at 85 degrees X.X. and 105 degrees
X.X. for XM Radio's two satellites and the frequency band 2332.5-2345 MHz to
provide such satellite radio service.
2. Except for such FCC consents, approvals, authorizations or orders
that have already been obtained, no material consent, approval, authorization or
order of the FCC is required to be obtained by the Company or its subsidiaries
under the Communications Laws for the consummation of the transactions
contemplated under the Underwriting Agreement, except that, from time to time,
the Company and its subsidiaries may be required to obtain certain
authorizations that would be required in the ordinary course of business.
3. The execution and delivery of the Underwriting Agreement, and the
consummation of the transactions contemplated thereunder, by the Company do not
and will not violate any material provision of the Communications Laws.
4. The statements set forth in the Prospectus under the captions
"Risk Factors--Failure to comply with FCC requirements could damage our
business," "Risk Factors--If the challenge to our FCC license is successful, our
business could be harmed" and "Business--Regulatory Matters," insofar as such
statements constitute a summary of material (a) legal matters, (b) documents, or
(c) proceedings under the Communications laws, fairly present the information
contained under such captions in light of the circumstances in which they were
made.
5. Except as set forth in the Prospectus, to our knowledge, there is
no investigation or complaint before the FCC pending or threatened in writing
that is specifically directed against or in respect of the Company or its
subsidiaries, or any of the FCC licenses held by the Company or its subsidiaries
that would reasonably be expected to result in the revocation of any material
FCC authorizations or otherwise to materially impair the operations of the
Company or its subsidiaries.
Exhibit C
XM Satellite Radio Holdings Inc.
0000 00/xx/ Xxxxxx, XX, Xxxxx 00
Xxxxxxxxxx, X.X. 00000-0000
Lock-Up Agreement
Bear, Xxxxxxx & Co. Inc.
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned understands that Bear, Xxxxxxx & Co. Inc. and Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation, as representatives of the several
underwriters (the "Underwriters"), propose to enter into an Underwriting
------------
Agreement with XM Satellite Radio Holdings Inc., a Delaware corporation (the
"Company"), providing for the public offering of the Company's Series B
-------
Convertible Redeemable Preferred Stock, par value $.01 per share, pursuant to a
Registration Statement on Form S-1 (File No. 333-93529). The undersigned wishes
to facilitate the Offering and recognizes that the Offering will be of benefit
to the undersigned.
In consideration of the foregoing and in order to induce you to act as
Underwriters in connection with the Offering, the undersigned hereby agrees, for
the benefit of the Company and the Underwriters, that during the period
beginning from the date hereof and continuing to and including the date 90 days
after the date of the final prospectus relating to the Offering, the undersigned
will not, directly or indirectly, without the prior written consent of Bear,
Xxxxxxx & Co. Inc. and Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation,
offer, sell, contract to sell, swap, make any short sale, pledge, establish an
open "put equivalent position" within the meaning of Rule 16a-1(h) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), grant any
------------
option to purchase or otherwise dispose (or publicly announce the undersigned's
intention to do any of the foregoing) of, directly or indirectly, any shares of
the Company's Class A Common Stock, par value $.01 per share (the "Common
Stock"), or other capital stock of the Company, or any securities convertible
into, or exercisable or exchangeable for, any shares of Common Stock or other
capital stock of the Company that the undersigned currently beneficially owns
(within the meaning of Rule 13d-3 under the Exchange Act), directly or
indirectly, or may beneficially own, directly or indirectly, in the future;
provided that the foregoing shall not prohibit the exercise of options pursuant
to the Company's 1998 Shares Award Plan.
Notwithstanding the foregoing, if the undersigned is an individual, he or
she may transfer shares of Common Stock (or any securities convertible into,
exercisable for, or exchangeable for Common Stock) by gift, will, or intestate
succession to his or her immediate family or to a trust the beneficiaries of
which are exclusively the undersigned and/or a member or members of his or her
immediate family (for purposes of this paragraph, "immediate family" shall mean
spouse, lineal descendant, father, mother, brother or sister of the transferor);
provided, however, that in any such case it shall be a condition to the transfer
that (i) each transferee execute an agreement stating that the transferee is
receiving and holding the shares of Common Stock (or any securities convertible
into, exercisable for, or exchangeable for Common Stock) subject to the
provisions of this Agreement, and there shall be no further transfer of such
shares of Common Stock (or any securities convertible into, exercisable for, or
exchangeable for Common Stock) except in accordance with this Agreement (and
(ii) that each transferee certifies in writing to Bear, Xxxxxxx & Co. Inc. and
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation that such transferee is in
compliance with the terms of this agreement as if such transferee had been bound
by this agreement from the original date of this agreement.
The undersigned confirms that the undersigned understands that the
Underwriters and the Company will rely upon the representations set forth in
this Agreement in proceeding with the Offering. The undersigned further
confirms that the agreements of the undersigned are irrevocable and shall be
binding upon the undersigned's heirs, legal representatives, successors and
assigns. The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of
securities of the Company held by the undersigned except in compliance with this
Agreement.
Very truly yours,
By:________________________
Name:
Title:
Dated: January ___, 2000
ii
Exhibit D
Individuals Delivering a Lock-Up Agreement Pursuant to Section 6(l)
Xxx Xxxxxx
Xxxxxxx Xxxx
Xxxxxxxxx Xxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxx
Xxxx X. Xxxxxxx
Xxxx Xxxxxx
Xx. Xxxxxxx Xxxxxxxxx
Xxxxx X. Xxxxx
Xxxx Xxxx
Xx. Xxxxxxxx Xxxxx
Xxxxx Xxxxxxxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxx
Exhibit E
Lock-Up Agreement
Bear, Xxxxxxx & Co. Inc.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned understands that Bear, Xxxxxxx & Co. Inc. and Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation, as representatives of the several
underwriters (the "Underwriters"), propose to enter into an Underwriting
------------
Agreement with XM Satellite Radio Holdings Inc., a Delaware corporation (the
"Company"), providing for the public offering of the Company's Series B
-------
Convertible Redeemable Preferred Stock, par value $.01 per share, pursuant to a
Registration Statement on Form S-1 (File No. 333-93529). The undersigned is a
holder of securities of the Company and wishes to facilitate the Offering and
recognizes that the Offering will be of benefit to the undersigned.
In consideration of the foregoing and in order to induce you to act as
Underwriters in connection with the Offering, the undersigned hereby agrees, for
the benefit of the Company and the Underwriter, that during the period beginning
from the date hereof and continuing to and including the date 90 days after the
date of the final prospectus relating to the Offering, the undersigned will not,
directly or indirectly, without the prior written consent of Bear, Xxxxxxx & Co.
Inc. and Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, offer, sell,
contract to sell, swap, make any short sale, pledge, establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), grant any option to
------------
purchase or otherwise dispose (or publicly announce the undersigned's intention
to do any of the foregoing) of, directly or indirectly, any shares of the
Company's Class A Common Stock, par value $.01 per share (the "Common Stock"),
or other capital stock of the Company, or any securities convertible into, or
exercisable or exchangeable for, any shares of Common Stock or other capital
stock of the Company that the undersigned currently beneficially owns (within
the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, or
may beneficially own, directly or indirectly, in the future; provided that the
foregoing shall not prohibit conversion of the Company's Series A subordinated
convertible notes or Class B common stock into Common Stock.
The undersigned confirms that the undersigned understands that the
Underwriters and the Company will rely upon the representations set forth in
this Agreement in proceeding with the Offering. The undersigned further
confirms that the agreements of the undersigned are irrevocable and shall be
binding upon the undersigned's heirs, legal representatives, successors and
assigns. The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of
securities of the Company held by the undersigned except in compliance with this
Agreement.
Very truly yours,
By:__________________________
Name:
Title:
Dated: January __, 2000
Exhibit F
Stockholders Delivering a Lock-Up Agreement Pursuant to Section 6(m)
American Mobile Satellite Corporation
Clear Channel Investments, Inc.
Columbia XM Radio Partners L.L.C.
DIRECTV Enterprises, Inc.
General Motors Corporation
Madison Dearborn Capital Partners III, L.P.
Madison Dearborn Special Equity III, L.P.
Special Advisors Fund I, LLC
Telecom-XM Investors, L.L.C.
