Stock Purchase Agreement - Sirius Satellite Radio Inc. and Blackstone Capital Partners III Merchant Banking Fund LP
EXECUTION COPY
EXHIBIT 99.1
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STOCK PURCHASE AGREEMENT
by and between
SIRIUS SATELLITE RADIO INC.
and
BLACKSTONE CAPITAL PARTNERS III MERCHANT BANKING FUND L.P.
Dated as of December 23, 1999
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS....................................................................1
1.1 Definitions...............................................................1
ARTICLE 2
PURCHASE AND SALE OF SECURITIES................................................6
2.1 Purchase and Sale of Securities...........................................6
2.2 Certificates of Designation...............................................6
2.3 Closing...................................................................6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................7
3.1 Corporate Existence and Power.............................................7
3.2 Subsidiaries..............................................................7
3.3 Corporate Authorization; No Contravention.................................7
3.4 Governmental Authorization; Third Party Consents..........................7
3.5 Binding Effect............................................................8
3.6 Capitalization of the Company.............................................8
3.7 SEC Filings; Financial Statements.........................................9
3.8 Absence of Certain Developments..........................................10
3.9 Compliance with Laws.....................................................10
3.10 Licenses................................................................10
3.11 Litigation..............................................................10
3.12 Intellectual Property...................................................10
3.13 Private Offering........................................................11
3.14 Rights Agreement........................................................11
3.15 Board Approval; Delaware GCL 203........................................11
3.16 Brokers or Finders......................................................12
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..............................12
4.1 Existence and Power......................................................12
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4.2 Authorization; No Contravention..........................................12
4.3 Governmental Authorization; Third Party Consents.........................12
4.4 Binding Effect...........................................................13
4.5 Purchase for Own Account.................................................13
4.6 Sufficient Funds.........................................................13
4.7 Brokers or Finders.......................................................13
ARTICLE 5
COVENANTS OF THE COMPANY......................................................14
5.1 Conduct of Business......................................................14
5.2 Indemnification of Brokerage.............................................14
5.3 Rule 144.................................................................14
5.4 Rights Agreement.........................................................14
ARTICLE 6
COVENANTS OF THE PURCHASER....................................................15
6.1 Indemnification of Brokerage.............................................15
6.2 Lock-Up Agreement........................................................15
6.3 Short Sales and Derivatives..............................................16
ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS TO CLOSE.............16
7.1 Representations and Covenants............................................16
7.2 Consents and Approvals...................................................16
7.3 Filing of Certificate of Designation.....................................16
7.4 Opinion of Counsel to the Company........................................16
7.5 HSR Act..................................................................17
7.6 No Claims................................................................17
ARTICLE 8
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO CLOSE................17
8.1 Representations and Covenants............................................17
8.2 Consents and Approvals...................................................17
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8.3 HSR Act..................................................................17
8.4 No Claims................................................................18
ARTICLE 9
REGISTRATION RIGHTS...........................................................18
9.1 Requested Registration...................................................18
9.2 Company Registration.....................................................19
9.3 Transferability..........................................................20
9.4 Expenses of Registration.................................................20
9.5 Registration Procedures..................................................20
9.6 Indemnification..........................................................22
ARTICLE 10
TERMINATION OF AGREEMENT......................................................23
10.1 Termination.............................................................24
10.2 Survival After Termination..............................................24
ARTICLE 11
MISCELLANEOUS.................................................................25
11.1 HSR Approval............................................................25
11.2 Expenses................................................................25
11.3 Notices.................................................................25
11.4 Successors and Assigns..................................................26
11.5 Amendment and Waiver....................................................26
11.6 Counterparts............................................................27
11.7 Headings................................................................27
11.8 GOVERNING LAW...........................................................27
11.9 Severability............................................................27
11.10 Entire Agreement.......................................................27
11.11 Further Assurances.....................................................27
11.12 Public Announcements...................................................27
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SCHEDULE 3.2 Subsidiaries of the Company
SCHEDULE 3.3 Defaults
SCHEDULE 3.4 Required Consents
SCHEDULE 3.6 Outstanding Options and Warrants
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SCHEDULE 3.11 Litigation
EXHIBIT A Form of Certificate of Designations of
9.2% Series D Junior Cumulative Convertible Preferred Stock
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of December 23, 1999 (this
"Agreement"), by and between SIRIUS SATELLITE RADIO INC., a Delaware corporation
(the "Company") and BLACKSTONE CAPITAL PARTNERS III MERCHANT BANKING FUND, L.P.,
a Delaware limited partnership ("BCP III", and together with its successors and
permitted assigns, the "Purchasers").
WHEREAS, the Company proposes to issue and sell to the Purchasers, and
the Purchasers propose to buy, for an aggregate purchase price of Two Hundred
Million Dollars ($200,000,000), 2,000,000 shares of 9.2% Series D Junior
Cumulative Convertible Preferred Stock, par value $.001 per share, of the
Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms shall have the meanings set
forth below:
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, Controls or is Controlled by, or is under common Control
with the Person specified.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Allocation Notice" has the meaning assigned to such term in Section
2.3(b).
"BCP III" has the meaning assigned to such term in the preamble.
"Beneficial Owner" shall mean, with respect to any securities, a Person
who beneficially owns such securities within the meaning of Rule 13d-3 under the
Exchange Act, and "beneficially owned" and "beneficial ownership" shall have
correlative meanings.
"Board of Directors" means the board of directors of the Company or any
duly authorized committee thereof.
"Broker" has the meaning assigned to such term in Section 3.16.
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"Business Day" means any day other than Saturday, Sunday or other day on
which commercial banks in the State of New York are authorized or required by
law or executive order to close.
"Bylaws" means the bylaws of the Company, as the same may have been
amended and in effect as of the Closing Date.
"Certificate of Incorporation" means the Amended and Restated Certificate
of Incorporation of the Company, as the same may have been amended and in effect
as of the Closing Date.
"Claims" means actions, causes of action, suits, claims, complaints,
demands, litigations or legal, administrative or arbitral proceedings.
"Closing" has the meaning assigned to such term in Section 2.3.
"Closing Date" has the meaning assigned to such term in Section 2.3.
"Commission" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means the common stock, par value $.001 per share, of the
Company, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"Company Options" has the meaning assigned to such term in Section 3.6.
"Contemplated Transaction" means the transaction contemplated by this
Agreement, including without limitation the purchase and sale of the Series D
Preferred Stock.
"Contractual Obligation" means, as to any Person, any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument to
which such Person is a party or by which it or any of its property is bound.
"Control" (including the terms "controlling," "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Convertible Subordinated Notes" means the Company's 8-3/4% Convertible
Subordinated Notes due 2009.
"Delaware GCL" means the Delaware General Corporation Law.
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"Demand Notice" has the meaning assigned to such term in Section 9.1(a).
"Dividend Shares" means any shares of Series D Preferred Stock issued as
in-kind dividends on (a) the Purchased Shares or (b) other shares of Series D
Preferred Stock issued as in-kind dividends.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
"Exercising Holder" has the meaning assigned to such term in Section
9.1(b).
"Existing Plans" has the meaning assigned to such term in Section 3.6.
"FCC" has the meaning assigned to such term in Section 3.8.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Governmental Authority" means the government of any nation, state, city,
locality or other political subdivision of any thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government or any international regulatory body
having or asserting jurisdiction over a Person, its business or its properties.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations of the Federal Trade Commission
thereunder.
"Holder" means a holder of shares of Series D Preferred Stock or Series D
Registrable Securities.
"Intellectual Property" has the meaning assigned to such term in Section
3.12.
"Licenses" has the meaning assigned to such term in Section 3.10.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other), restriction or other
security interest of any kind or nature whatsoever.
"Lock-up Period" has the meaning assigned to such term in Section 6.2.
"Lock-up Request" has the meaning assigned to such term in Section 6.2.
"Loral" means Loral Space & Communications, Ltd., a Bermuda corporation.
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"Material Adverse Effect" has the meaning assigned to such term in
Section 3.8.
"NASD" means the National Association of Securities Dealers, Inc.
"Offering" has the meaning assigned to such term in Section 6.2.
"Person" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Authority or other entity of any
kind.
"Prospectus" shall mean the prospectus included in any Registration
Statement (including without limitation a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and all other amendments and supplements to such
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
"Purchased Shares" has the meaning assigned to such term in Section 2.1.
"Purchasers" has the meaning assigned to such term in the preamble.
"Purchasers' Fee" has the meaning assigned to such term in Section 4.7.
"Registrable Securities" has the meaning assigned to such term in Section
9.1(c).
"Registration Expenses" means all expenses incurred by the Company in
compliance with Article 9, including without limitation all registration and
filing fees, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses and the expense of any special audit
incident to or required by any such registration.
"Registration Statement" shall mean any registration statement of the
Company under the Securities Act that covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the related Prospectus,
all amendments and supplements to such registration statement (including
post-effective amendments), all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"Required Consents" has the meaning assigned to such term in Section 3.4.
"Requirement of Law" means, as to any Person, the Certificate of
Incorporation and Bylaws or other organizational or governing documents of such
Person, and any law, treaty, rule, regulation, qualification, license or
franchise or determination (including, without
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limitation, those related to taxes) of an arbitrator or a court or other
Governmental Authority or of the NASD or the Nasdaq National Market or any
national securities exchange on which the Common Stock is listed or admitted to
trading, in each case applicable or binding upon such Person or any of its
property or to which such Person or any of its property is subject or pertaining
to the transactions contemplated hereby.
"Rights Agreement" has the meaning assigned to such term in Section
3.14(a).
"Rule 144" shall mean Rule 144 promulgated by the Commission under the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission.
"SEC Reports" means all proxy statements, registration statements,
reports and other documents filed or required to be filed by the Company or any
of its Subsidiaries with the Commission pursuant to the Securities Act or the
Exchange Act since December 31, 1998.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Seller's Fee" has the meaning assigned to such term in Section 3.16.
"Series A Preferred Stock" means the Company's 9.2% Series A Junior
Cumulative Convertible Preferred Stock, par value $.001 per share.
"Series B Preferred Stock" means the Company's 9.2% Series B Junior
Cumulative Convertible Preferred Stock, par value $.001 per share.
"Series C Preferred Stock" means the Company's 10 1/2% Series C
Convertible Preferred Stock, par value $.001 per share.
"Series C Warrants" has the meaning assigned to such term in Section 3.6.
"Series D Preferred Stock" means the Company's 9.2% Series D Junior
Cumulative Convertible Preferred Stock, par value $.001 per share, established
by the filing of the Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights thereof in the form attached
hereto as Exhibit A in the Office of the Secretary of State of Delaware.
"Series D Registrable Securities" shall mean the shares of Common Stock
into which shares of Series D Preferred Stock issued hereunder or by way of any
in-kind dividend have been or may be converted and any capital stock of the
Company issued as a dividend or other distribution with respect to, or in
exchange for or in replacement of, such shares of Common Stock, until, in the
case of any such share, (i) it is effectively registered under the Securities
Act and disposed of in accordance with the Registration Statement covering it or
(ii) it
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is distributed to the public by the holder thereof pursuant to Rule 144;
provided, however, that for purposes of Article 9 and Article 6, during the
period in which disposition of such securities would violate the terms of a
lock-up agreement, Series D Registrable Securities shall not include any shares
of Common Stock into which shares of Series D Preferred Stock that are subject
to such lock-up agreement may be converted.
"Subsidiary" means, in respect of any Person, any other Person which, at
the time as of which any determination is made, such Person or one or more of
its Subsidiaries has, directly or indirectly, voting control.
"Termination Date" has the meaning assigned to such term in Section
10.1(a).
"Transfer" means any sale, assignment, hypothecation, transfer or other
disposition. "Transferor" and "Transferee" shall have correlative meanings.
ARTICLE 2
PURCHASE AND SALE OF SECURITIES
2.1 Purchase and Sale of Securities. Subject to the terms set forth
herein and in reliance upon the representations set forth below, the Company
agrees to sell to the Purchasers, and the Purchasers agree collectively to
purchase from the Company, on the Closing Date, an aggregate of 2,000,000 shares
of Series D Preferred Stock for the aggregate purchase price of $200,000,000
(all of the shares of Series D Preferred Stock being purchased pursuant hereto
being referred to herein as the "Purchased Shares").
2.2 Certificates of Designation. The Series D Preferred Stock shall have
the powers, rights and preferences set forth in the form of Certificate of
Designation thereof attached hereto as Exhibit A.
2.3 Closing. (a) The purchase and issuance of the Purchased Shares shall
take place at a closing (the "Closing") to be held at the offices of Simpson
Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017-3954, at
10:00 A.M., local time, on the fifth Business Day after the conditions to
closing set forth in Articles 7 and 8 (other than those to be satisfied at the
Closing, which shall be satisfied or waived at the Closing) have been satisfied
or waived by the party entitled to waive such conditions or such other day as
may be mutually agreed to by the parties hereto (the "Closing Date").
(b) Not less than two Business Days prior to the Closing, the Purchasers
shall advise the Company in writing (the "Allocation Notice") of the names in
which to register the shares of Series D Preferred Stock to be purchased at the
Closing (which shall be the names of one or both of the Purchasers or their
nominees) and the number of shares to be purchased by each Purchaser (which
numbers, when added together, shall equal 2,000,000). At the Closing,
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the Company shall deliver to the Purchasers certificates representing the
Purchased Shares, duly registered in the name of each Purchaser or its nominee
(as set forth in the Allocation Notice), and the Purchasers shall deliver to the
Company the aggregate purchase price therefor by wire transfer of immediately
available funds to an account designated in writing by the Company to the
Purchasers at least two Business Days before the Closing.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers as follows:
3.1 Corporate Existence and Power. The Company (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware; (b) has all requisite corporate power and authority to own and
operate its property, to lease the property it operates as lessee and to conduct
the business in which it is engaged; and (c) has the corporate power and
authority to execute, deliver and perform its obligations under this Agreement.
The Company is duly qualified to do business as a foreign corporation in, and is
in good standing under the laws of, each jurisdiction in which the conduct of
its business or the nature of the property owned requires such qualification.
3.2 Subsidiaries. Except as set forth on Schedule 3.2, the Company has no
Subsidiaries and no interest or investments in any corporation, partnership,
limited liability company, trust or other entity or organization. Each
Subsidiary listed on Schedule 3.2 has been duly organized, is validly existing
and in good standing under the laws of the jurisdiction of its organization, has
the corporate power and authority to own its properties and to conduct its
business and is duly registered, qualified and authorized to transact business
and is in good standing in each jurisdiction in which the conduct of its
business or the nature of its properties requires such registration,
qualification or authorization. Except as disclosed on Schedule 3.2, all of the
issued and outstanding capital stock (or equivalent interests) of each
Subsidiary set forth on Schedule 3.2 has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company free and
clear of any Liens and there are no rights, options or warrants outstanding or
other agreements to acquire shares of capital stock (or equivalent interests) of
such Subsidiary.
3.3 Corporate Authorization; No Contravention. The execution, delivery
and performance by the Company of this Agreement and the Contemplated
Transaction, including, without limitation, the sale, issuance and delivery of
the Purchased Shares, (a) have been duly authorized by all necessary corporate
action of the Company; (b) do not contravene the terms of the Certificate of
Incorporation or Bylaws of the Company or the organizational documents of its
Subsidiaries; and (c) do not violate or result in any breach or contravention
of, or the creation of any Lien under, any material Contractual Obligation of
the Company or its Subsidiaries or any Requirement of Law applicable to the
Company or its Subsidiaries. Except as set forth on
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Schedule 3.3, no event has occurred and no condition exists which, upon notice
or the passage of time (or both), would constitute a default or change of
control under any indenture, mortgage, deed of trust, credit agreement, note or
other evidence of indebtedness or other material agreement of the Company or its
Subsidiaries or the Certificate of Incorporation or Bylaws or the organizational
documents of the Company's Subsidiaries.
3.4 Governmental Authorization; Third Party Consents. Except for the
approvals and consents as listed on Schedule 3.4 hereto (collectively, the
"Required Consents"), no approval, consent, exemption, authorization or other
action by, or notice to, or filing with, any Governmental Authority or any other
Person in respect of any Requirement of Law, Contractual Obligation or
otherwise, and no lapse of a waiting period under a Requirement of Law, is
necessary or required in connection with the execution, delivery or performance
(including, without limitation, (i) the sale, issuance and delivery of the
Purchased Shares, (ii) the payment of in-kind dividends on the Purchased Shares
and any Dividend Shares and (iii) the conversion of the Purchased Shares and any
Dividend Shares into shares of Common Stock) by the Company, or enforcement
against the Company, of this Agreement or the Contemplated Transaction. Other
than clearance under the HSR Act, the Company has obtained the irrevocable
consent or waiver of the necessary party or parties with respect to each of the
Required Consents.
3.5 Binding Effect. This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
the enforceability thereof may be limited by considerations of public policy and
subject to the effects of bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
3.6 Capitalization of the Company. The authorized capital stock of the
Company consists of (i) 200,000,000 shares of Common Stock, of which, as of
December 22, 1999 (a) 28,699,177 shares were issued and outstanding and (b)
34,277,302 shares were reserved for issuance upon (x) the exercise of
outstanding stock options or warrants to purchase Common Stock referred to on
Schedule 3.6 hereto and (y) the conversion of outstanding shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, shares
of Series C Preferred Stock issuable pursuant to warrants to purchase Series C
Preferred Stock and the Convertible Subordinated Notes, and (ii) 50,000,000
shares of Preferred Stock, of which, as of December 22, 1999 (a) 1,461,270
shares of Series A Preferred Stock were issued and outstanding, (b) 655,407
shares of Series B Preferred Stock were issued and outstanding and (c) 1,248,776
shares of Series C Preferred Stock were issued and outstanding. Each share of
Series A Preferred Stock and Series B Preferred Stock may be converted at any
time, at the option of the holder, unless previously redeemed, into a number of
shares of Common Stock calculated by dividing the $100 liquidation preference of
the Series A Preferred Stock and Series B Preferred Stock (without accrued and
unpaid dividends) by $30 (as adjusted from time to time in accordance with the
relevant certificate of designations as currently in effect). Each share of
Series C Preferred Stock may be converted at any time, at the option of the
holder, unless
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previously redeemed, into a number of shares of Common Stock calculated by
dividing the $100 liquidation preference of the Series C Preferred Stock
(without accrued and unpaid dividends) by $18 (as adjusted from time to time in
accordance with the relevant certificate of designations as currently in
effect). The Company has previously provided the Purchasers with a true and
correct list of all outstanding options or warrants to purchase shares of any
class or series of capital stock of the Company other than Series C Preferred
Stock and other than capital stock which may be purchased under the Existing
Plans (collectively, the "Company Options"), a true and correct list of all
outstanding options or warrants to purchase Series C Preferred Stock
(collectively, the "Series C Warrants") and a true and correct list of each of
the Company's stock option, incentive or other plans pursuant to which options
or warrants to purchase capital stock of the Company may be issued, including
any such plan adopted as of the date hereof but which remain subject to
stockholder approval (collectively, the "Existing Plans"). Except as set forth
above, there exists no options or warrants to purchase Series A Preferred Stock,
Series B Preferred Stock or any other series or class of preferred stock of the
Company. Except (a) as set forth in this Section 3.6, (b) shares of Common Stock
issued (i) pursuant to the exercise of outstanding Company Options or (ii) on
the conversion of outstanding shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Convertible Subordinated Notes or
shares of Series C Preferred Stock issuable upon the exercise of outstanding
Series C Warrants and (c) options granted under Existing Plans, on the Closing
Date there will be no shares of Common Stock or any other equity security of the
Company issuable upon conversion or exchange of any security of the Company nor
will there be any rights, options or warrants outstanding or other agreements to
acquire shares of capital stock of the Company nor will the Company be
contractually obligated to purchase, redeem or otherwise acquire any of its
outstanding shares of capital stock. The Company has not created any "phantom
stock," stock appreciation rights or other similar rights the value of which is
related to or based upon the price or value of the Common Stock, Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock. None of
the Company's outstanding debt or debt instruments provide voting rights with
respect to the Company to the holders thereof. Other than Loral, which has
irrevocably waived its rights in connection with the Contemplated Transaction,
no stockholder of the Company is entitled to any preemptive or similar rights to
subscribe for shares of capital stock of the Company in connection with the
Contemplated Transaction. All of the issued and outstanding shares of Common
Stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock are, and the Purchased Shares (when issued hereunder) after payment of the
purchase price therefor to the Company, will be, duly authorized, validly
issued, fully paid and nonassessable. In addition, all of the (a) Dividend
Shares and (b) shares of Common Stock issued upon conversion of the Purchased
Shares and any Dividend Shares, if and when issued, will be duly authorized,
validly issued, fully paid and nonassessable. The Company has reserved for
issuance the maximum number (subject to adjustment from time to time) of shares
of (x) Series D Preferred Stock issuable as in-kind dividends on the Purchased
Shares and any Dividend Shares and (y) Common Stock issuable upon conversion of
the Purchased Shares and any Dividend Shares.
3.7 SEC Filings; Financial Statements. (a) The Company has timely filed
all SEC Reports. The SEC Reports complied in all material respects with the
applicable
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requirements of the Securities Act or the Exchange Act, as applicable, and did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
in the SEC Reports, in light of the circumstances under which they were made,
not misleading.
(b) Each of the Company's financial statements (including, in each case,
any related notes) contained in the SEC Reports complied as to form in all
material respects with applicable published rules and regulations of the
Commission with respect thereto, was prepared in accordance with GAAP applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes to such financial statements) and fairly presented the financial
position of the Company and its Subsidiaries as at the respective dates and for
the periods indicated, except that the unaudited financial statements were
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount or effect.
3.8 Absence of Certain Developments. Since December 31, 1998, except as
described in the SEC Reports filed with the Commission prior to the date hereof,
there has been no material adverse change, or any development involving a
prospective material adverse change, in or affecting the business, management or
condition, financial or otherwise, of the Company and its Subsidiaries, taken as
a whole (a "Material Adverse Effect"). For purposes of this Agreement, "Material
Adverse Effect" shall include any material adverse change in or affecting the
technical feasibility of the Company's proposed satellite broadcast system
(including, without limitation, its terrestrial repeater transmitter network or
customer end-user components such as integrated circuits, adapters for existing
radios and antennas), existing or proposed Federal Communications Commission
("FCC") approvals and proposed agreements with one or more consumer electronics
manufacturers, in each case as may be required in connection with the Company's
planned operations as described in the SEC Reports filed as of the date hereof,
but shall not include any change or prospective change which principally affects
the date on which the Company will commence commercial operations but does not
do any of the following: (a) affect the underlying technical feasibility of the
Company's operations, (b) materially increase the total cost of achieving
commercial operability or (c) affect the timing of any FCC approval.
3.9 Compliance with Laws. None of the Company or its Subsidiaries is in
material violation of any Requirement of Law to which it is subject.
3.10 Licenses. The Company has no reason to believe that either (a) it
will not finally obtain any license, permit, franchise or other authorizations
(collectively, "Licenses") necessary for it to conduct its business as described
in the SEC Reports or (b) any such Licenses will not be obtained on a timely
basis. As of the date hereof, the Company and its Subsidiaries possess all
Licenses necessary to conduct their business as currently being conducted,
except for the failure to possess such Licenses as would not reasonably be
expected to result in a Material Adverse Effect.
<PAGE> 16
11
3.11 Litigation. Except as set forth on Schedule 3.11, there is no legal
action, suit, arbitration or other legal, administrative or other governmental
investigation, inquiry or proceeding pending or, to the best knowledge of the
Company, threatened against or affecting the Company or its Subsidiaries which,
if determined adversely to the Company, could reasonably be expected to have a
Material Adverse Effect.
3.12 Intellectual Property. The Company and its Subsidiaries own, free
and clear of all Liens, and have good and marketable title to, or hold adequate
licenses or otherwise possess all such rights as are necessary to use all
patents (and applications therefor), patent disclosures, trademarks, service
marks, trade names, copyrights (and applications therefor), inventions,
discoveries, processes, know-how, scientific, technical, engineering and
marketing data, formulae and techniques (collectively, "Intellectual Property")
used or proposed to be used in or necessary for the conduct of their business as
now conducted or as proposed to be conducted in the SEC Reports. The Company has
not received notice or otherwise has reason to know of any conflict or alleged
conflict with the rights of others pertaining to the Company's Intellectual
Property. To the best of the Company's knowledge, the business of the Company as
presently conducted and as proposed to be conducted in the SEC Reports does not
infringe upon or violate any Intellectual Property rights of others.
3.13 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Purchased Shares. No registration of the Purchased
Shares pursuant to the provisions of the Securities Act or any state securities
or "blue sky" laws will be required by the offer, sale, or issuance of the
Purchased Shares pursuant to this Agreement, assuming the accuracy of the
Purchasers' representation contained in Section 4.5.
3.14 Rights Agreement.
(a) The execution and delivery of this Agreement by the Company and the
consummation of the Contemplated Transaction (including, without limitation, the
payment of any in-kind dividends on the Purchased Shares and any Dividend Shares
and the issuance of Common Stock upon conversion of the Purchased Shares and any
Dividend Shares) does not and will not (i) result in the ability of any person
to exercise any Rights under the Rights Agreement, dated as of October 22, 1997,
between the Company and Continental Stock Transfer & Trust Company, as rights
agent (as amended, the "Rights Agreement"), (ii) enable or require the Rights
(as defined in the Rights Agreement) to separate from the shares of Common Stock
to which they are attached or to be triggered or become exercisable, (iii) cause
any "Distribution Date" or "Shares Acquisition Date" (as such terms are defined
in the Rights Agreement) to occur or (iv) prior to the Closing Date, cause any
Purchaser to "beneficially own" (as such term is defined in the Rights
Agreement) any shares of Common Stock.
(b) No "Distribution Date" or "Shares Acquisition Date" (as such terms
are defined in the Rights Agreement) has occurred or will occur as a result of
the Contemplated Transaction (including, without limitation, the payment of any
in-kind dividends on the
<PAGE> 17
12
Purchased Shares and any Dividend Shares and the issuance of Common Stock upon
conversion of the Purchased Shares and any Dividend Shares).
3.15 Board Approval; Delaware GCL 203
(a) The Board of Directors, at a meeting duly called and held, has
determined the Contemplated Transaction to be advisable and in the best
interests of the Company and its stockholders and has approved the Contemplated
Transaction.
(b) The Company has taken all action necessary to cause the restriction
contained in Section 203 of the Delaware GCL to be inapplicable to the
Contemplated Transaction and to approve the transactions which resulted in the
Purchasers becoming "interested stockholders" within the meaning of Section 203
of the Delaware GCL.
(c) The affirmative vote or consent of the holders of at least a majority
of the shares of Series A Preferred Stock and the holders of at least a majority
of the shares of Series B Preferred Stock, which has been obtained prior to the
execution and delivery of this Agreement, are the only votes of the holders of
any class or series of capital stock necessary to consummate the Contemplated
Transaction (including, without limitation, the payment of any in-kind dividends
on the Purchased Shares and any Dividend Shares and the issuance of Common Stock
upon conversion of the Purchased Shares and any Dividend Shares).
3.16 Brokers or Finders. The Company represents and warrants to the
Purchasers that, except for Merrill Lynch & Co., no broker, finder, agent or
similar intermediary (a "Broker") has acted on behalf of the Company or its
Subsidiaries in connection with this Agreement or the Contemplated Transaction,
and that, except for fees to Merrill Lynch & Co. (the "Seller's Fee"), which
fees have previously been disclosed to the Purchasers, there are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
therewith based on any agreement, arrangement or understanding with the Company
or any of its Subsidiaries or any action taken by the Company or any of its
Subsidiaries.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company as follows
as to itself:
4.1 Existence and Power. Such Purchaser (a) is duly organized and validly
existing as a limited partnership under the laws of the jurisdiction of its
formation and (b) has the requisite power and authority to execute, deliver and
perform its obligations under this Agreement.
<PAGE> 18
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4.2 Authorization; No Contravention. The execution, delivery and
performance by such Purchaser of this Agreement and the Contemplated Transaction
(a) have been duly authorized by all necessary action, (b) do not contravene the
terms of such Purchaser's organizational documents, or any amendment thereof,
and (c) do not violate, conflict with or result in any breach or contravention
of, or the creation of any Lien under, any Contractual Obligation of such
Purchaser or any Requirement of Law applicable to such Purchaser, except for
such violation, conflict, breach or Lien which will not result in a material
adverse effect on such Purchaser's ability to consummate the Contemplated
Transaction.
4.3 Governmental Authorization; Third Party Consents. Except for the
Required Consents, no approval, consent, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority or any other
Person in respect of any Requirement of Law, and no lapse of a waiting period
under a Requirement of Law, is necessary or required in connection with the
execution, delivery or performance by such Purchaser, or enforcement against
such Purchaser, of this Agreement or the consummation of the Contemplated
Transaction.
4.4 Binding Effect. This Agreement has been duly executed and delivered
by such Purchaser and constitutes the legal, valid and binding obligation of
such Purchaser, enforceable against it in accordance with its terms, except as
the enforceability thereof may be limited by considerations of public policy and
subject to the effects of bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
4.5 Purchase for Own Account. The Purchased Shares are being acquired by
such Purchaser for its own account and with no intention of distributing or
reselling such Purchased Shares or any part thereof in any transaction that
would be in violation of the securities laws of the United States of America or
any state, without prejudice, however, to the rights of such Purchaser at all
times to sell or otherwise dispose of all or any part of such Purchased Shares
under an effective Registration Statement under the Securities Act or under an
exemption from said registration available under the Securities Act. Such
Purchaser understands and agrees that if such Purchaser should in the future
decide to dispose of any Purchased Shares, it may do so only in compliance with
the Securities Act and applicable state securities laws, as then in effect. Such
Purchaser agrees to the imprinting, so long as required by law, of a legend on
all certificates representing such Purchased Shares to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
<PAGE> 19
14
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS.
4.6 Sufficient Funds. The partners of each Purchaser are obligated, upon
notice, to provide sufficient funds to such Purchaser to purchase the Purchased
Shares in accordance with the terms of this Agreement and to perform its
obligations hereunder and on the Closing Date, each Purchaser will have
available funds sufficient to purchase the Purchased Shares in accordance with
the terms of this Agreement and to perform its obligations hereunder.
4.7 Brokers or Finders. The Purchasers represent and warrant to the
Company that, except for Bear, Stearns & Co. Inc., no Broker has acted on behalf
of the Purchasers or their Affiliates in connection with this Agreement or the
Contemplated Transaction, and that, except for fees to Bear, Stearns & Co. Inc.
(the "Purchasers' Fee"), which fees have previously been disclosed to the
Company, there are no brokerage commissions, finder's fees or similar fees or
commissions payable in connection therewith based on any agreement, arrangement
or understanding with the Purchasers or any of their Affiliates or any action
taken by the Purchasers or any of their Affiliates.
ARTICLE 5
COVENANTS OF THE COMPANY
5.1 Conduct of Business. From the date hereof through the Closing Date,
the Company and its Subsidiaries shall conduct their businesses in a manner such
that the representations and warranties contained in Article 3 shall continue to
be true and correct in all material respects on and as of the Closing Date
(except for representations and warranties made as of a specific date) as if
made on and as of the Closing Date. The Company shall give the Purchasers prompt
notice of any event, condition or circumstance occurring from the date hereof
through the Closing Date that would constitute a violation or breach of (i) any
representation or warranty, whether made as of the date hereof or as of the
Closing Date, or (ii) any covenant of the Company contained in this Agreement;
provided, however, that no such notification shall relieve or cure any such
breach or violation of any such representation, warranty or covenant or
otherwise affect the accuracy of any such representation or warranty for the
purposes of Section 7.1.
5.2 Indemnification of Brokerage. The Company agrees to pay the Seller's
Fee and to indemnify and hold harmless the Purchasers from any Claim for
commission or other compensation by any Broker claiming to have been employed by
or on behalf of the Company or any of its Subsidiaries and to bear the cost of
legal expenses incurred in defending against any such claim.
<PAGE> 20
15
5.3 Rule 144. The Company shall file all reports required to be filed by
it under the Securities Act and the Exchange Act and shall take such further
action as the Purchasers may reasonably request, all to the extent required to
enable the Purchasers to sell the Common Stock into which the Purchased Shares
may be converted pursuant to and in accordance with Rule 144. Such action shall
include, but not be limited to, making available adequate current public
information meeting the requirements of paragraph (c) of Rule 144.
5.4 Rights Agreement. On or before the Closing Date, the Company shall
amend its Rights Agreement to provide that none of the Purchasers shall be or
become an "Acquiring Person" (as that term is defined in the Rights Agreement)
by virtue of the acquisition and ownership by itself and the other Purchaser of
(i) Purchased Shares; (ii) additional shares of Series D Preferred Stock issued
as dividends upon the Purchased Shares or any Dividend Shares or; (iii) any
shares of Common Stock acquired upon conversion of any of the shares referred to
in clauses (i) or (ii); and (iv) a number of additional shares of Common Stock
equal to 1% of the total number shares of Common Stock outstanding at any time.
ARTICLE 6
COVENANTS OF THE PURCHASER
6.1 Indemnification of Brokerage. The Purchasers agree to pay the
Purchasers' Fee and to indemnify and hold harmless the Company from any Claim
for commission or other compensation by any Broker claiming to have been
employed by or on behalf of any Purchaser or any of its Affiliates, and to bear
the cost of legal expenses incurred in defending against any such claim.
6.2 Lock-Up Agreement. At any time prior to the earlier of (a) December
23, 2002 and (b) the date that the Purchasers cease collectively to Beneficially
Own 10% or more of the Common Stock, the Company and its underwriters, by
written notice from the Company and its lead underwriter to the Purchasers (a
"Lock-up Request"), given as provided herein on or after the time of the initial
filing with the Commission of any registration statement (other than a
registration statement relating to an offering described in Section 9.1) with
respect to any offering of Common Stock or securities convertible into Common
Stock (the "Offering"), may request that the Purchasers agree not to offer, sell
or transfer any of the Purchased Shares, Dividend Shares or Common Stock issued
upon any conversion of the Purchased Shares and/or Dividend Shares or engage in
any hedging or similar transactions with respect to the Purchased Shares,
Dividend Shares or Common Stock issued upon any conversion of the Purchased
Shares and/or Dividend Shares during the 180-day period (the "Lock-up Period")
beginning on a date specified in the Lock-up Request, which date may be as early
as five (5) Business Days prior to the closing date of the Offering (but no
later than the closing date of the Offering), and each Purchaser agrees to
consent to and be bound by the restrictions specified in any such Lock-up
Request; provided, however, that such a lock-up agreement with respect to any
Offering shall not
<PAGE> 21
16
prevent any Purchaser from selling Purchased Shares, Dividend Shares or Common
Stock issued upon any conversion of the Purchased Shares and/or Dividend Shares
which it is entitled to sell in such Offering pursuant to Section 9.2 if it
shall have made the request specified therein. The foregoing notwithstanding, no
Lock-up Request shall be effective and binding upon the Purchasers unless a
similar lock-up is imposed upon all other Persons beneficially owning 10% or
more of the Common Stock with respect to which the Company then has the power to
request or impose such lock-up. Any such lock-up imposed upon any other Person
shall be for the shorter of (i) the Lock-up Period and (ii) the maximum period
the Company has the right or power to impose upon such other Person. The Lock-up
Period may be terminated as to the Purchasers on written notice from either the
Company or the lead underwriter of the Offering, and automatically shall be
terminated immediately as to the Purchasers in the event it is terminated as to
any other Person (including the Company and its Affiliates) or any other Person
is otherwise released from any lock-up obligations with respect to the Offering.
The Company shall specify the expected effective date of any Offering by notice
to the Purchasers given not later than two (2) Business Days prior to the
beginning of the Lock-up Period. Each Purchaser shall cause each Person,
together with its Affiliates, to whom it Transfers, in one or a series of
related transactions, the equivalent of 1,000,000 or more shares of Common Stock
(assuming conversion of the Series D Preferred Stock) to execute and deliver to
the Company a letter agreement pursuant to which such transferee agrees (and to
cause each other Person to whom it Transfers any shares of Common Stock if,
after giving effect to such Transfer, such Person, together with its Affiliates,
would beneficially own 1,000,000 or more shares of Common Stock (assuming
conversion of Series D Preferred Stock) to execute and deliver to the Company a
similar letter agreement) to comply with the requirements of this Section 6.2
(including this sentence) to the same extent and subject to the same terms and
conditions as the Purchasers.
6.3 Short Sales and Derivatives. The Purchasers represent and warrant
that no Purchaser maintains a short position in the Common Stock nor
beneficially owns, directly or indirectly, any put, or any other instrument
intended to have the same economic effect as a put, on the Common Stock. Each
Purchaser represents that, at all times prior to the date which is the second
anniversary of the Closing Date, such Purchaser shall not maintain any short
position in the Common Stock or purchase any put, or any other instrument
intended to have the same economic effect as a put, on the Common Stock.
ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS TO CLOSE
The obligations of the Purchasers to enter into and complete the Closing
are subject to the fulfillment on or prior to the Closing Date of the following
conditions, any one or more of which may be waived by the Purchasers:
7.1 Representations and Covenants. The representations and warranties of
the Company contained in this Agreement shall be true and correct in all
material respects (other
<PAGE> 22
17
than those which are qualified as to materiality, Material Adverse Effect or
other similar term, which shall be true and correct in all respects) on and as
of the Closing Date with the same force and effect as though made on and as of
the Closing Date; the Company shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by the Company on or prior to the Closing Date; and
the Company shall have delivered to the Purchasers a certificate, dated the
Closing Date and signed by an executive officer of the Company, to the foregoing
effect.
7.2 Consents and Approvals. All Required Consents shall have been
obtained and be in full force and effect, and the Purchasers shall have been
furnished with evidence reasonably satisfactory to them that such Required
Consents have been granted and obtained.
7.3 Filing of Certificate of Designation. The Certificate of Designation
of the Series D Preferred Stock in the form attached hereto as Exhibit A shall
have been filed in the Office of the Secretary of State of Delaware in
accordance with Section 242 of the Delaware GCL.
7.4 Opinion of Counsel to the Company. The Purchasers shall have received
(i) the legal opinion of Simpson Thacher & Bartlett, counsel to the Company,
dated the Closing Date, addressed to the Purchasers, in a form reasonably
satisfactory to the Purchasers and (ii) the legal opinion of the General Counsel
of the Company, dated the Closing Date, addressed to the Purchasers in a form
reasonably satisfactory to the Purchasers.
7.5 HSR Act. Any Person required in connection with the Contemplated
Transaction to file a notification and report form in compliance with the HSR
Act shall have filed such form and the applicable waiting period with respect to
each such form (including any extension thereof by reason of a request for
additional information) shall have expired or been terminated.
7.6 No Claims. (a) No Claims shall be pending before any Governmental
Authority (including investigations instituted by the United States Department
of Justice or the Federal Trade Commission in connection with antitrust
regulations) to restrain or prohibit this Agreement or the consummation of the
Contemplated Transaction.
(b) No law, order, decree, rule or injunction shall have been enacted,
entered, promulgated or enforced by any Governmental Authority that prohibits or
makes illegal the consummation of any of the Contemplated Transaction.
<PAGE> 23
18
ARTICLE 8
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO CLOSE
The obligation of the Company to enter into and complete the Closing is
subject to the fulfillment on or prior to the Closing Date of the following
conditions, any one or more of which may be waived by the Company:
8.1 Representations and Covenants. The representations and warranties of
the Purchasers contained in this Agreement shall be true and correct in all
material respects (other than those which are qualified as to materiality,
Material Adverse Effect or other similar term, which shall be true and correct
in all respects) on and as of the Closing Date with the same force and effect as
though made on and as of the Closing Date; the Purchasers shall have performed
and complied in all material respects with all covenants and agreements required
by this Agreement to be performed or complied with by them on or prior to the
Closing Date; and the Purchasers shall have delivered to the Company a
certificate, dated the Closing Date and signed by a general partner of each
Purchaser, to the foregoing effect.
8.2 Consents and Approvals. All Required Consents shall have been
obtained and be in full force and effect.
8.3 HSR Act. Any Person required in connection with the Contemplated
Transaction to file a notification and report form in compliance with the HSR
Act shall have filed such form and the applicable waiting period with respect to
each such form (including any extension thereof by reason of a request for
additional information) shall have expired or been terminated.
8.4 No Claims. (a) No Claims shall be pending before any Governmental
Authority (including investigations instituted by the United States Department
of Justice or the Federal Trade Commission in connection with antitrust
regulations) to restrain or prohibit this Agreement or the consummation of the
Contemplated Transaction.
(b) No law, order, decree, rule or injunction shall have been enacted,
entered, promulgated or enforced by any Governmental Authority that prohibits or
makes illegal the consummation of the Contemplated Transaction.
ARTICLE 9
REGISTRATION RIGHTS
9.1 Requested Registration. (a) If, at any time after the date which is
the second anniversary of the Closing Date, the Company shall receive from
holders of Series D Registrable Securities or Purchased Shares representing, in
the aggregate, at least 50% of the Series D
<PAGE> 24
19
Registrable Securities (which calculation shall include all Series D Registrable
Securities then outstanding and all Series D Registrable Securities into which
all Purchased Shares then outstanding may be converted), a written request
(which shall specify whether the distribution will be made by means of an
underwriting) that the Company effect a registration (a "Demand Notice") with
respect to all or a part of the Series D Registrable Securities, which Demand
Notice shall request registration of not less than 1,000,000 shares (subject to
appropriate adjustments in the event of stock splits or similar events) of
Common Stock or registration of Common Stock in connection with a registered
offering involving anticipated aggregate proceeds of at least $50 million, the
Company will, as soon as practicable, use its reasonable best efforts to effect
such registration under the Securities Act (which shall be a "shelf"
Registration Statement pursuant to Rule 415 under the Securities Act (or a
successor provision), if so requested by the Holders of a majority of the Series
D Registrable Securities specified in the Demand Notice and if the Company is
eligible therefor at such time) as may be so requested and as would permit or
facilitate the sale and distribution of the Series D Registrable Securities as
are specified in such request. After the Company has effected three (3) such
registrations pursuant to this Section 9.1(a), the related Registration
Statements have been declared effective and the distribution contemplated
thereunder completed, the Company shall have no further obligation under this
Section 9.1(a).
(b) Notwithstanding any other provision of this Section 9.1, if the
Company shall furnish to Holders who have elected to exercise their rights under
Sections 9.1(a) (each, an "Exercising Holder") a certificate signed by the
President or the Chief Executive Officer of the Company stating that the
requested registration and offering would require the disclosure of material
non-public information and, in the good faith judgment of the Board of Directors
of the Company, such disclosure in a Registration Statement to be filed pursuant
to Section 9.1(a) would be seriously detrimental to the Company and its
stockholders and it is therefore desirable and in the best interests of the
Company to defer the filing of such Registration Statement, then the Company
shall have the right to defer such filing for a period of time after receipt of
such request; provided, however, that the Company may not make such a request
more than twice in any 12-month period and the aggregate period of time during
which the Company may defer such filing shall not exceed 90 days.
(c) If the Company or any stockholder, other than an Exercising Holder,
wishes to offer any of its securities in connection with any registration
initiated pursuant to this Section 9.1, other than pursuant to any "piggy back"
or other similar registration rights granted by the Company prior to or as of
the date hereof, no such securities may be offered by the Company or such other
stockholder without the consent of the Holders of a majority of the Series D
Registrable Securities (referred to herein as "Registrable Securities")
specified in the Demand Notice related to such offering.
(d) In connection with any underwritten offering pursuant to this Section
9.1, Exercising Holders shall have the right to select the underwriter or
underwriters, which shall be a nationally recognized investment banking firm or
firms reasonably acceptable to the Company.
<PAGE> 25
20
9.2 Company Registration. (a) If the Company shall determine to register
any shares of Common Stock for the account of a security holder or holders or
otherwise (other than a registration relating solely to employee benefit plans,
or a registration relating solely to a merger, exchange offer or a transaction
of the type specified in Rule 145(a) under the Securities Act), the Company will
promptly deliver to each of the Holders a written notice of such proposed
transaction at least 20 Business Days prior to the filing of a Registration
Statement and include in such registration, and in any underwriting involved
therein, all the Registrable Securities specified in written requests made by
Holders within ten Business Days after receipt of the written notice from the
Company described above. Each Holder shall be entitled to have its shares
included in an unlimited number of registrations pursuant to this Section 9.2.
(b) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
9.2(a). In such event, the right of each Holder to registration pursuant to
Section 9.2(a) shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of the Registrable Securities in the underwriting
to the extent provided herein. If the Holders shall have elected to exercise
their rights under Section 9.2(a), they shall enter into an underwriting
agreement in customary form with the representative of the underwriter or
underwriters selected for underwriting by the Company. Notwithstanding any other
provision of this Section 9.2, if the representative determines and so advises
the Company in writing that marketing factors require a limitation on the number
of shares to be underwritten, the Company shall so advise the Holders. In such
an event, the number of Registrable Securities that may be included in the
registration and underwriting by the Holders shall be reduced, on a pro rata
basis (based on the number of shares of Common Stock held by each such Holder
(counting shares of Series D Preferred Stock on an as-converted-to-common basis)
and each other Person (other than the Company) registering shares under such
registration), by such minimum number of shares as is necessary to comply with
such limitation. If a Holder disapproves of the terms of any such underwriting,
it may elect to withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
9.3 Transferability. Each Transferee wishing to participate as a Holder
in any registration pursuant to Section 9.1 or 9.2 shall, prior thereto, execute
and deliver to the Company a letter agreement in form and substance satisfactory
to the Company pursuant to which such Transferee agrees (and to cause each other
Person to whom it assigns its registration rights under this Article 9 to
execute and deliver to the Company a similar letter agreement) to comply with
the requirements of this Article 9 (including this sentence) to the same extent
and subject to the same terms and conditions as the Purchaser.
9.4 Expenses of Registration. In connection with any registration
pursuant to Section 9.1 or Section 9.2, the Company shall pay all registration,
filing and NASD fees, all fees and expenses of complying with securities or
"blue sky" laws; provided, however, that each Holder shall pay its pro rata
share of any commissions, fees and disbursements of underwriters customarily
paid by sellers of securities (based on offering proceeds to be received by it).
In any
<PAGE> 26
21
registration pursuant to Section 9.1 or Section 9.2, the Company shall be
responsible for the fees and disbursements of counsel for the Company, one
counsel for the Holders, the Company's independent public accountants and any
expert retained by the Company in connection with any such registration and
premiums and other costs of policies of insurance against liabilities arising
out of the public offering of the Registrable Securities.
9.5 Registration Procedures. In the case of each registration effected by
the Company pursuant to this Article 9, the Company shall:
(a) furnish to the Exercising Holders prior to the filing of the
requisite Registration Statement copies of drafts of such Registration Statement
as is proposed to be filed (and give such holders and their counsel a reasonable
opportunity to comment on such documents), and thereafter such number of copies
of such Registration Statement, each amendment and supplement thereto (in each
case including all exhibits thereto), the Prospectus included in such
Registration Statement (including each preliminary prospectus) and such other
documents in such quantities as the Exercising Holders may reasonably request
from time to time in order to facilitate its distribution;
(b) notify the Exercising Holders promptly of any request by the
Commission for the amending or supplementing of such Registration Statement or
Prospectus or for additional information and promptly deliver to the Exercising
Holders and their counsel copies of any comments received by the SEC;
(c) notify the Exercising Holders, promptly after the Company shall
receive notice thereof, of the time when the Registration Statement becomes
effective or when any amendment or supplement or any prospectus forming a part
of the Registration Statement has been filed;
(d) advise the Exercising Holders promptly after the Company shall
receive notice or obtain knowledge of the issuance of any stop order by the
Commission suspending the effectiveness of any such Registration Statement or
amendment thereto or of the initiation or threatening of any proceeding for that
purpose, and promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal promptly if such stop order should be issued;
(e) use all reasonable efforts to register or qualify the Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
the Exercising Holders (or the managing underwriter, in the case of underwritten
offerings) reasonably request; provided that the Company shall not be required
to qualify to do business or become subject to service of process or taxation in
any jurisdiction in which it is not already so qualified or subject;
(f) use all reasonable efforts to cause the Registrable Securities
included in the Registration Statement to be listed on any securities exchange
or authorized for quotation on any national quotation system on which any of the
Common Stock is then listed;
<PAGE> 27
22
(g) notify the Exercising Holders, at any time when a prospectus relating
to the proposed sale is required to be delivered under the Securities Act, of
the happening of any event as a result of which the Prospectus included in such
Registration Statement or amendment contains an untrue statement of a material
fact or omits to state any material fact required to be stated therein in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and the Company will prepare a supplement or
amendment to such Prospectus so that, as thereafter delivered to the purchasers
of the Registrable Securities, such Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(h) enter into customary agreements (including without limitation, an
underwriting agreement in customary form) and take such other actions
(including, without limitation, making senior management of the Company
available to participate in road show presentations on a customary basis) as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities included in the Registration Statement;
(i) in the case of a Registration Statement filed pursuant to Section 9.1
involving a shelf Registration Statement, prepare and file with the Commission
such amendments and supplements to such shelf Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep such shelf
Registration Statement effective until the earlier of (i) the sale of all
Registrable Securities covered thereby or (ii) two years (exclusive of any
period during which the distribution is postponed pursuant to Section 9.1), and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all Registrable Securities covered by such Registration
Statement;
(j) make available, upon reasonable prior notice and during normal
business hours in New York City, for inspection by Exercising Holders, any
underwriter participating in any disposition pursuant to the Registration
Statement and any attorney, accountant or other agent retained by the Exercising
Holders or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and cause the
Company's officers, directors and employees, upon reasonable prior notice and
during normal business hours in New York City, to supply all relevant
information reasonably requested by the Exercising Holders or any such
underwriter, attorney, accountant or agent in connection with the Registration
Statement;
(k) request the Company's independent public accountants to provide to
the underwriters, if any, and the Exercising Holders, if permissible, a comfort
letter in customary form and covering such matters of the type customarily
covered by comfort letters to underwriters in connection with public offerings;
and
(l) cooperate and assist in any filings required to be made with the NASD
and in the performance of any due diligence investigation by any underwriter in
an underwritten offering.
<PAGE> 28
23
Each Exercising Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 9.5(g),
such Exercising Holder will forthwith discontinue disposition of Registrable
Securities pursuant to a Registration Statement until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
9.5(g), and, if so directed by the Company, such Exercising Holder will deliver
to the Company (at the Company's expense), all copies in its possession, other
than permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
9.6 Indemnification. (a) The Company will indemnify each Exercising
Holder, each of its officers and directors, and each Person controlling such
Exercising Holder within the meaning of Section 15 of the Securities Act and the
rules and regulations thereunder, with respect to each registration which has
been effected pursuant to this Article 9, and each underwriter, if any, and each
Person who controls any underwriter within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any Prospectus or other document (including any related
registration statement, notification or the like) incident to any such
registration or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the Securities Act or
any rule or regulation thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration and will reimburse such Exercising Holder, each of its officers and
directors, and each Person controlling such Exercising Holder, each such
underwriter and each Person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission based upon information furnished in writing to the Company
by such Exercising Holder with respect to such Exercising Holder and stated to
be specifically for use therein. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any indemnified
Exercising Holder and shall survive the transfer of the Registrable Securities
by the Exercising Holder.
(b) Each Exercising Holder will, if Registrable Securities held by it are
included in the securities as to which such registration is being effected,
indemnify the Company, each of its directors and officers and each underwriter,
if any, of the Company's securities covered by such a registration statement,
each Person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact with respect to such Exercising Holder contained
in any such registration statement, prospectus or other document made by such
Exercising Holder, or any omission (or alleged omission) to state therein a
material fact with respect to such Exercising Holder required to be stated
therein or necessary to make the
<PAGE> 29
24
statements by such Exercising Holder therein not misleading, and will reimburse
the Company and such other directors, officers, partners, persons, underwriters
or control Persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus or other document
in reliance upon and in conformity with information furnished in writing to the
Company by such Exercising Holder with respect to such Exercising Holder and
stated to be specifically for use therein; provided, however, that the
obligations of such Exercising Holder hereunder shall be limited to an amount
equal to the proceeds to such Exercising Holder of securities sold as
contemplated herein.
(c) If the indemnification provided for in this Section 9.6 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, liability, claim,
damage or expense, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
ARTICLE 10
TERMINATION OF AGREEMENT
10.1 Termination. This Agreement may be terminated prior to the Closing
as follows:
(a) by either the Purchasers or the Company if the Closing shall not
have occurred before the Termination Date (as defined below); provided, however,
that the right to terminate this Agreement under this Section 10.1(a) shall not
be available to any party whose failure to perform any covenant or obligation
under this Agreement or willful breach of a representation or warranty has been
the cause of or resulted in the failure of the Closing to occur on or before
such date. The "Termination Date" shall be March 31, 2000, unless the failure of
any condition to any party's obligation to consummate the Closing as of such
date shall be caused by the failure of any Governmental Authority to grant any
approval, authorization or consent required for consummation of the Contemplated
Transaction or the failure to expire of the applicable waiting periods under the
HSR Act, in which cases the Termination Date shall be June 30, 2000; or
<PAGE> 30
25
(b) at the election of the Purchasers, if prior to the Closing Date
there shall have been a breach of any of the Company's representations,
warranties, covenants or agreements, which breach would result in the failure to
satisfy any of the conditions set forth in Section 7.1, and such breach shall be
incapable of being cured or, if capable of being cured, shall not have been
cured within 30 days after written notice thereof shall have been received by
the Company;
(c) at the election of the Company, if prior to the Closing Date
there shall have been a breach of any of the Purchasers' representations,
warranties, covenants or agreements, which breach would result in the failure to
satisfy any of the conditions set forth in Section 8.1, and such breach shall be
incapable of being cured or, if capable of being cured, shall not have been
cured within 30 days after written notice thereof shall have been received by
the Purchasers;
(d) at the election of the Company or the Purchasers, if any legal
proceeding is commenced and pending by any Governmental Authority seeking to
prevent the consummation of the Closing or the Contemplated Transaction and the
Company or the Purchasers, as the case may be, reasonably and in good faith
deems it impracticable or inadvisable to proceed in view of such legal
proceeding; or
(e) at any time on or prior to the Closing Date, by mutual written
consent of the Company and the Purchasers.
If this Agreement so terminates, it shall become null and void and have
no further force or effect, except as provided in Section 10.2.
10.2 Survival After Termination. If this Agreement terminates pursuant to
Section 10.1 and the Contemplated Transaction is not consummated, this Agreement
shall become null and void and have no further force or effect, except that any
such termination shall be without prejudice to the rights of any party on
account of the nonsatisfaction of the conditions set forth in Articles 7 and 8
resulting from the intentional or willful breach or violation of the
representations, warranties, covenants or agreements of another party under this
Agreement. Notwithstanding anything in this Agreement to the contrary, the
provisions of Sections 5.2 and 6.1, this Section 10.2 and Sections 11.2, 11.8
and 11.10 shall survive any termination of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 HSR Approval. Promptly upon execution and delivery (and in any event
within five (5) Business Days of the date) of this Agreement, the Purchasers and
the Company shall prepare and file, or cause to be prepared and filed, with the
appropriate Governmental
<PAGE> 31
26
Authorities, a notification with respect to the Contemplated Transaction
pursuant to the HSR Act, supply all information requested by Governmental
Authorities in connection with the HSR Act notification and cooperate with each
other in responding to any such request.
11.2 Expenses. Each of the Company and each Purchaser shall pay its own
expenses incurred in connection with the negotiation, execution, delivery and
performance of this Agreement.
11.3 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, telecopied,
sent by reputable overnight courier or sent by certified, registered or express
mail, postage prepaid. Any such notice shall be deemed given if delivered
personally or telecopied, on the date of such delivery, if sent by reputable
overnight courier, on the first Business Day following the date of such sending,
or if sent by certified, registered or express mail, on the third Business Day
following the date of such mailing, as follows:
(a) if to the Company:
Sirius Satellite Radio Inc.
1221 Avenue of the Americas, 36th Floor
New York, New York 10020
Attention: Patrick L. Donnelly
Telecopy: (212) 584-5353
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: Gary L. Sellers
Telecopy: (212) 455-2502
(b) if to the Purchasers:
c/o Blackstone Capital Partners III Merchant Banking Fund L.P.
345 Park Avenue, 31st Floor
New York, New York 10154
Attention: Chinh Chu
Telecopy: (212) 583-5722
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
<PAGE> 32
27
New York, New York 10017-3954
Attention: Wilson S. Neely
Telecopy: (212) 455-2502
Any party may by notice given in accordance with this Section 11.3 designate
another address or person for receipt of notices hereunder.
11.4 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of the parties hereto.
No Person other than the parties hereto and their successors and permitted
assigns is intended to be a beneficiary of this Agreement. No party hereto may
assign its rights under this Agreement without the prior written consent of the
other party hereto; provided, however, that prior to the Closing, any Purchaser
may assign all or any portion of its rights hereunder (along with the
corresponding obligations) to any Affiliate of the Purchasers that is an
investment fund under common control with BCP III and to one other designated
investor (or group of affiliated investors under common control) reasonably
satisfactory to the Company if such assignee (i) agrees to be bound jointly and
severally hereunder, (ii) agrees that the representations and warranties made by
the Purchasers herein shall be deemed to have been made by such assignee and
(iii) executes a counterpart of this Agreement the execution of which shall
constitute such assignee's agreement to the terms of this Section 11.4.
11.5 Amendment and Waiver.
(a) No failure or delay on the part of the Company or the Purchasers in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
the Purchasers at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any provision of
this Agreement and any waiver of any provision of this Agreement shall be
effective only if it is made or given in writing and signed by the Company and
the Purchasers.
11.6 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, all of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
11.7 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
11.8 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND THE DUTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND
<PAGE> 33
28
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
11.9 Severability. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
11.10 Entire Agreement. This Agreement, together with the schedules and
exhibits hereto, and the letter agreement (the "Letter Agreement"), dated as of
the date hereof, among the Company, the Purchasers, Apollo Investment Fund IV,
L.P. and Apollo Overseas Partners IV, L.P., is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein or therein. This Agreement, together with the schedules and exhibits
hereto, and the Letter Agreement, supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
11.11 Further Assurances. Each of the parties shall execute such
documents and take, or cause to be taken, all appropriate action, and shall do
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the Contemplated
Transaction and obtaining any consents, exemptions, authorizations, or other
actions by, or giving any notices to, or making any filings with, any
Governmental Authority or any other Person.
11.12 Public Announcements. Except to the extent required by law or the
regulations of any national securities exchange or the Nasdaq National Market,
no party hereto will issue or make any reports, statements or releases to the
public with respect to this Agreement or the Contemplated Transaction without
consulting the others, and, during the period from the date hereof until thirty
(30) days after the Closing Date, without the approval of the other parties
(such approval not to be unreasonably withheld).
(Signature page to follow)
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized as
of the date first above written.
SIRIUS SATELLITE RADIO INC.
By: /s/ Patrick L. Donnelly
-----------------------------------------
Name: Patrick L. Donnelly
Title: Senior Vice President and
General Counsel
BLACKSTONE CAPITAL PARTNERS III MERCHANT
BANKING FUND L.P.
By: Blackstone Management Associates III L.L.C., its
General Partner
By: /s/ Chinh Chu
--------------------------------------------
Name: Chinh Chu
Title: Member
<PAGE> 35
EXHIBIT A
SIRIUS SATELLITE RADIO INC.
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF
9.2% SERIES D JUNIOR CUMULATIVE CONVERTIBLE PREFERRED STOCK
-----------------
PURSUANT TO SECTION 151(g) OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
-----------------
Sirius Satellite Radio Inc. (the "Corporation"), a corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify that pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, the Board of Directors of the
Corporation (the "Board of Directors"), in a duly convened meeting thereof on
December 19, 1999, adopted the following resolution, which resolution remains in
full force and effect as of the date hereof:
WHEREAS, the Board of Directors is authorized, within the limitations and
restrictions stated in the Certificate of Incorporation of the Corporation, to
fix by resolution or resolutions the designation of each series of Preferred
Stock of the Corporation (the "Preferred Stock") and the powers, preferences and
relative, participating, optional or other special rights and the
qualifications, limitations or restrictions thereof, including, without limiting
the generality of the foregoing, such provisions as may be desired concerning
voting, redemption, dividends, dissolution or distribution of assets, conversion
or exchange, and such other subjects or matters as may be fixed by resolutions
of the Board of Directors under the General Corporation Law of the State of
Delaware; and
WHEREAS, it is the desire of the Board of Directors of the Corporation,
pursuant to its authority as aforesaid, to authorize and fix the terms of a
series of Preferred Stock and the number of shares constituting such series;
NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized such
series of Preferred Stock on the terms and with the provisions herein set forth:
1. Number of Shares; Designation. A total of 10,700,000 shares of
Preferred Stock, par value $0.001 per share, of the Corporation are hereby
designated as 9.2% Series D Junior Cumulative Convertible Preferred Stock (the
"Series D Preferred Stock").
2. Rank. The Series D Preferred Stock shall, with respect to payment
of dividends, redemption payments and rights upon liquidation, dissolution or
winding up of the
<PAGE> 36
2
affairs of the Corporation, (x) rank senior and prior to the Common Stock, par
value $.001 per share, of the Corporation (the "Common Stock") and any other
class or series of capital stock of the Corporation that by its terms ranks
junior to the Series D Preferred Stock as to payment of dividends, redemption
payments and rights upon liquidation, dissolution or winding up of the affairs
of the Corporation, (y) rank on a parity with the Corporation's 9.2% Series A
Junior Cumulative Convertible Preferred Stock (the "Series A Preferred Stock"),
9.2% Series B Junior Cumulative Convertible Preferred Stock (the "Series B
Preferred Stock") and all Parity Dividend Stock (as defined in Section 3(a)) and
all Parity Liquidation Stock (as defined in Section 5(b)), and (z) rank junior
to the Corporation's 10 1/2% Series C Convertible Preferred Stock ("Series C
Preferred Stock") and all Senior Dividend Stock (as defined in Section 3(c)),
all Senior Liquidation Stock (as defined in Section 5(b)) and to any class or
series of capital stock of the Corporation (other than the Common Stock),
whether currently issued or issued in the future, that does not by its terms
expressly provide that it ranks on a parity with or junior to the Series D
Preferred Stock as to dividends and rights upon liquidation, dissolution or
winding-up of the Corporation (which shall include, for purposes of the
foregoing, any entity with which the Corporation may be merged or consolidated
or to which all or substantially all the assets of the Corporation may be
transferred or which transfers all or substantially all of its assets to the
Corporation).
3. Dividends. (a)(1) The holders of the issued and outstanding shares of
the Series D Preferred Stock shall be entitled to receive, as and when declared
by the Board of Directors, out of funds legally available therefor in the case
of dividends paid in cash, cumulative dividends at the annual rate per share of
9.2% of the sum of (x) the Liquidation Preference (defined in Section 5 hereof)
and (y) all unpaid dividends, if any, whether or not declared, from the date of
issuance of the shares of Series D Preferred Stock (the "Closing Date") to the
applicable dividend payment date. Dividends on shares of Series D Preferred
Stock shall be payable annually initially on November 15, 2000 and each
November 15 thereafter (each, a "Dividend Payment Date"), except that if any
Dividend Payment Date is not a business day then the Dividend Payment Date shall
be on the first immediately succeeding business day (as used herein, the term
"business day" shall mean any day except a Saturday, Sunday or day on which
banking institutions are legally authorized to close in The City of New York).
(2) If any dividend payable on any Dividend Payment Date is not declared
or paid on such Dividend Payment Date, as provided in Section 3(a)(1), in full
in cash or in additional shares of Series D Preferred Stock, then the amount of
such unpaid dividend ("Default Dividends") shall be accumulated. Any Default
Dividends shall, from the Dividend Payment Date on which such dividends accrued,
accrue dividends until paid, compounded annually, at a rate equal to 15% per
annum. Default Dividends shall be payable in shares of Series D Preferred Stock,
but not in cash.
(3) Dividends on the Series D Preferred Stock may be paid, in the sole
discretion of the Board of Directors, either in (i) cash, (ii) shares of Series
D Preferred Stock or (iii) any combination of cash or shares of Series D
Preferred Stock, and the issuance of the requisite number of such shares of
Series D Preferred Stock (such number determined as provided in the
<PAGE> 37
3
next sentence) pursuant to (ii) or (iii) shall constitute full payment of any
such dividend; provided that the dividends paid on the Series D Preferred Stock
on any Dividend Payment Date shall be paid, respectively, in a proportion of
cash and "pay-in-kind" dividends equal to the proportion of cash and
"pay-in-kind" dividends paid (i) in the aggregate to the holders of Series A
Preferred Stock and Series B Preferred Stock and (ii) to the holders of each
other series of Parity Dividend Stock (whether now outstanding or subsequently
issued) that provides for the payment of dividends in cash or "in-kind", at the
option of the Corporation, in each case on the date closest to such Dividend
Payment Date. Shares of Series D Preferred Stock issued to pay dividends shall
be valued at their Liquidation Preference. All dividend payments paid with
respect to shares of Series D Preferred Stock shall be paid pro rata to the
holders entitled thereto. All shares of Series D Preferred Stock issued as a
dividend with respect to shares of Series D Preferred Stock shall thereupon be
duly authorized, validly issued, fully paid and non-assessable. In no event
shall an election by the Board of Directors to pay dividends, in full or in
part, in cash or in shares of Series D Preferred Stock in lieu of payment, in
full or in part, in cash preclude the Board of Directors from electing any such
alternative in respect of all or any portion of any subsequent dividend. The
Corporation shall not issue fractional shares of Series D Preferred Stock upon
payment of any dividends in shares of Series D Preferred Stock and any amount of
fractional shares of Series D Preferred Stock otherwise issuable upon the
payment of any dividend in shares of Series D Preferred Stock shall be paid in
cash.
(4) Dividends to be paid on a Dividend Payment Date shall be paid to the
holders of record of shares of the Series D Preferred Stock as they appear on
the stock register of the Corporation at the close of business on such record
dates (each, a "Dividend Payment Record Date"), which shall be not more than 40
days nor fewer than 10 days preceding each Dividend Payment Date thereof, as
shall be fixed by the Board of Directors of the Corporation. Default Dividends
shall be declared and paid at any time as of which funds legally available
therefor are available to the Corporation, without reference to any regular
Dividend Payment Date, to the holders of record on such date, not exceeding 40
days nor fewer than 10 days preceding the date on which dividends in arrears
will be paid, as may be fixed by the Board of Directors of the Corporation.
Holders of shares of the Series D Preferred Stock shall be entitled to receive
dividends in preference to and in priority over dividends upon the Common Stock
and any other series or class of the Corporation's capital stock that ranks
junior as to dividends to the Series D Preferred Stock ("Junior Dividend Stock")
and shall be on a parity as to dividends with the Series A Preferred Stock, the
Series B Preferred Stock and any series or class of the Corporation's capital
stock that does not rank senior or junior as to dividends with the Series D
Preferred Stock (together with the Series A Preferred Stock and the Series B
Preferred Stock, "Parity Dividend Stock"). The holders of shares of the Series D
Preferred Stock shall not be entitled to any dividends in excess of full
cumulative dividends (including Default Dividends), as herein provided.
(b) No dividends, other than dividends payable solely in Common Stock,
Junior Dividend Stock, or warrants or other rights to acquire such Common Stock
or Junior Dividend Stock, shall be paid or declared and set apart for payment
on, and no purchase, redemption or other acquisition shall be made by the
Corporation or any entity directly or indirectly controlled
<PAGE> 38
4
by the Corporation of, any Common Stock or Junior Dividend Stock unless and
until (i) all accrued and unpaid dividends on the Series D Preferred Stock shall
have been paid and (ii) proper provision shall have been made such that holders
of shares of Series D Preferred Stock are offered the opportunity to elect
(each, a "Payout Election"), in lieu of the Conversion Price adjustment referred
to in Section 6(f)(ii), Section 6(f)(iii) or Section 6(f)(iv), as the case may
be, to participate in such dividend, purchase, redemption or other acquisition
pro rata with the holders of Common Stock or Junior Dividend Stock, as the case
may be, as if each share of Series D Preferred Stock had been converted as of
the record date for such dividend or immediately prior to such purchase,
redemption or other acquisition, as the case may be, at the Conversion Price
then in effect (without any requirement that any such shares of Series D
Preferred Stock actually be so converted). Each Payout Election shall be made
upon the affirmative vote or consent of holders of a majority of the total
number of shares of Series D Preferred Stock then outstanding and shall be
effective as to and binding upon all such shares. So long as a sufficient amount
of cash, assets, evidences of indebtedness or securities are set aside for
payment to the holders of Series D Preferred Stock as of the payment date for
such dividend or the date for such purchase, redemption or acquisition, payment
need not be made to the holders of Series D Preferred Stock on such date but may
be made at any time up to the tenth Business Day following such date.
(c) If at any time the Corporation issues any class or series of capital
stock ranking senior and prior to the Series D Preferred Stock with respect to
the payment of dividends ("Senior Dividend Stock") and fails to pay or declare
and set apart for payment accrued and unpaid dividends on such Senior Dividend
Stock, in whole or in part, then (except to the extent allowed by the terms of
the Senior Dividend Stock) no dividend paid in cash shall be paid or declared
and set apart for payment on the Series D Preferred Stock unless and until all
accrued and unpaid dividends with respect to the Senior Dividend Stock shall
have been paid or declared and set apart for payment, without interest. Except
as provided in Section 3(d) below, no dividends paid in cash shall be paid or
declared and set apart for payment on any Parity Dividend Stock for any period
unless the Corporation has paid or declared and set apart for payment, or
contemporaneously pays or declares and sets apart for payment, on the Series D
Preferred Stock all accrued and unpaid dividends for all dividend payment
periods terminating on or prior to the date of payment of such dividends. Except
as provided in Section 3(d) below, no dividends paid in cash shall be paid or
declared and set apart for payment on the Series D Preferred Stock for any
period unless the Corporation has paid or declared and set apart for payment, or
contemporaneously pays or declares and sets apart for such payment, on any
Parity Dividend Stock all accrued and unpaid dividends for all dividend payment
periods terminating on or prior to the date of payment of such dividends.
(d) If at any time the Corporation has failed to pay accrued dividends on
any shares of Series D Preferred Stock on any Dividend Payment Date or any
Parity Dividend Stock on a stated payment date, as the case may be, the
Corporation shall not:
(i) purchase any shares of the Series D Preferred Stock or Parity
Dividend Stock (except for a consideration payable in Common Stock or
Junior Dividend
<PAGE> 39
5
Stock) or redeem fewer than all of the shares of the Series D Preferred
Stock and Parity Dividend Stock then outstanding except for (x) the
repurchase or redemption of shares of the Series D Preferred Stock made
pro rata among the holders of the shares of the Series D Preferred Stock
then outstanding and (y) the repurchase or redemption made pro rata with
respect to all shares of the Series D Preferred Stock and Parity Dividend
Stock then outstanding so that the amounts repurchased or redeemed shall
in all cases bear to each other the same ratio that, at the time of the
repurchase or redemption, the required redemption payments on the shares
of the Series D Preferred Stock and the other Parity Dividend Stock then
outstanding, respectively, bear to each other, or
(ii) permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase any Common Stock, Junior
Dividend Stock, shares of the Series D Preferred Stock or Parity Dividend
Stock, except to the same extent that the Corporation could purchase such
shares.
Unless and until all dividends unpaid in respect of prior dividend
payment periods on shares of the Series D Preferred Stock and any Parity
Dividend Stock at the time outstanding have been paid in full or a sum
sufficient for such payment is declared and set apart, as provided in the
paragraph (c), all dividends accrued by the Corporation upon shares of the
Series D Preferred Stock or Parity Dividend Stock shall be declared pro rata
with respect to all shares of the Series D Preferred Stock and Parity Dividend
Stock then outstanding, so that the amounts of any dividends declared on shares
of the Series D Preferred Stock and on the Parity Dividend Stock shall in all
cases bear to each other the same ratio that, at the time of the declaration,
all unpaid dividends in respect of prior dividend payment periods on shares of
the Series D Preferred Stock and the other Parity Dividend Stock, respectively,
bear to each other.
4. Redemption. (a)(1) Optional Redemption. Except as provided in
subsection (a)(2) of this Section 4 or in Section 9, shares of the Series D
Preferred Stock shall not be redeemable prior to December 23, 2004. From and
after December 23, 2004, subject to the restrictions in Section 3 above, the
Corporation may redeem shares of Series D Preferred Stock, in whole or in part,
at the option of the Corporation, to the extent it has funds legally available
therefor at a redemption price of 100% of the Liquidation Preference thereof
plus accrued and unpaid dividends, if any, whether or not declared, to the date
of redemption. Notwithstanding the foregoing, the Company (x) may only elect to
redeem the Series D Preferred Stock if it elects to redeem an equivalent
proportion of each of the Series A Preferred Stock, the Series B Preferred Stock
and each other series of Parity Stock (which are, at the time of redemption,
redeemable at the option of the Company) on a pro-rata basis and (y) shall elect
to redeem an equivalent portion of the Series D Preferred Stock if it elects to
redeem any portion of the Series A Preferred Stock, the Series B Preferred Stock
or any other series of Parity Stock.
(2) Special Redemption. From and after December 23, 2002 and prior to
December 23, 2004, the Corporation, at its option, may redeem shares of Series D
Preferred Stock, in whole or in part, in the sole discretion of the Board of
Directors, to the extent it has
<PAGE> 40
6
funds legally available therefor, at the redemption price of 100% of the
Liquidation Preference thereof, plus an amount equal to the accrued and unpaid
dividends thereon, if any, whether or not declared, to the redemption date, if
the Current Market Price of the Common Stock on the date of the notice of
redemption (described below) equals or exceeds $68.00 per share; provided that
the Closing Price of the Common Stock on the trading day immediately preceding
the date of such notice of redemption equals or exceeds $68.00 per share. As
used herein, the "Current Market Price" for a given date shall mean the average
Closing Price of the Common Stock as reported in The Wall Street Journal or, at
the election of the Corporation, other reputable financial news source, for the
20 consecutive trading days immediately preceding such date. The $68.00 per
share benchmark shall be subject to adjustment upon the occurrence of certain
events in the same manner as the Conversion Price (defined herein) shall be
subject to adjustment as set forth in Section 6(f) hereof. For purposes of this
paragraph, the Current Market Price shall be deemed to be less than $68.00 per
share at any time during which the Common Stock is not listed, quoted or
admitted to trading on either the New York Stock Exchange, Inc. (the "NYSE"),
the American Stock Exchange ("AMEX") or The Nasdaq Stock Market, Inc.'s National
Market ("Nasdaq"). As used herein, the "Closing Price" of any security on any
day means the last reported sale price regular way on such day or, in the case
no such sale takes place on such day, the average of the reported closing bid
and asked prices regular way of the Common Stock, in each case on the NYSE or,
if not listed or admitted to trading on such exchange, as quoted on AMEX or
Nasdaq.
(3) Mandatory Redemption. On November 15, 2011, the Corporation shall
redeem all outstanding shares of Series D Preferred Stock, to the extent it has
funds legally available therefor, at the redemption price of 100% of the
Liquidation Preference thereof, plus an amount equal to the dividends unpaid
thereon, if any, whether or not declared, to the redemption date.
(4) Payment of Redemption Price. (a) The amount of the redemption price
on any shares of Series D Preferred Stock redeemed, on any redemption set forth
herein, that is allocable to the Liquidation Preference thereon shall be paid in
cash (to the extent funds are legally available therefor) and any unpaid
dividends to be paid on the shares of Series D Preferred Stock redeemed on such
redemption date may be paid in cash (to the extent funds are legally available
therefor) or shares of Series D Preferred Stock, or any combination thereof, in
the sole discretion of the Board of Directors as provided in Section 3(a)(3)
hereof.
(b) Not less than 15 days nor more than 45 days (such date as fixed by
the Board of Directors of the Corporation is referred to herein as the
"Redemption Record Date") prior to the date fixed for any redemption of shares
of the Series D Preferred Stock pursuant to this Section 4, a notice specifying
the time and place of the redemption and the number of shares to be redeemed
shall be given by first class mail, postage prepaid, to the holders of record on
the Redemption Record Date of the shares of the Series D Preferred Stock to be
redeemed at their respective addresses as the same shall appear on the books of
the Corporation, calling upon each holder of record to surrender to the
Corporation on the redemption date at the place designated in the notice such
holder's certificate or certificates representing the number of shares specified
in the notice of redemption. Neither failure to mail such notice, nor any defect
therein or in the
<PAGE> 41
7
mailing thereof, to any particular holder shall affect the sufficiency of the
notice or the validity of the proceedings for redemption with respect to the
other holders. Any notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the holder receives
the notice. On or after the redemption date, each holder of shares of Series D
Preferred Stock to be redeemed shall present and surrender such holder's
certificate or certificates for such shares to the Corporation at the place
designated in the redemption notice and thereupon the redemption price of the
shares, and any unpaid dividends thereon to the redemption date, shall be paid
to or on the order of the person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered certificate shall be
canceled. In case fewer than all the shares represented by any such certificate
are redeemed, a new certificate shall be issued representing the unredeemed
shares.
(c) If a notice of redemption has been given pursuant to this Section 4
and if, on or before the redemption date, the funds (or shares of Series D
Preferred Stock if any dividends are to be paid in shares of Series D Preferred
Stock), necessary for such redemption (including all dividends on the shares of
Series D Preferred Stock to be redeemed that will accrue to the redemption date)
shall have been set aside by the Corporation, separate and apart from its other
funds (or reserved and authorized for issuance if any dividends are to be paid
in shares of Series D Preferred Stock), in trust for the pro rata benefit of the
holders of the shares of Series D Preferred Stock so called for redemption,
then, notwithstanding that any certificates for such shares of Series D
Preferred Stock have not been surrendered for cancellation, on the redemption
date dividends shall cease to accrue on the shares of the Series D Preferred
Stock to be redeemed, and at the close of business on the date on which such
funds have been segregated and set aside by the Corporation as provided in this
Section 4(c), the holders of such shares shall cease to be stockholders with
respect to those shares, shall have no interest in or claims against the
Corporation by virtue thereof and shall have no voting or other rights with
respect thereto, except the conversion rights provided in subsection (d) of this
Section 4 and Section 6 below and the right to receive the moneys payable (or
shares of Series D Preferred Stock issued if any dividends are to be paid in
shares of Series D Preferred Stock) upon such redemption, without interest
thereon, upon surrender (and endorsement, if required by the Corporation) of
their certificates, and the shares of Series D Preferred Stock evidenced thereby
shall no longer be outstanding. Subject to applicable escheat laws, any moneys
so set aside (or shares of Series D Preferred Stock authorized and reserved if
any dividends are to be paid in shares of Series D Preferred Stock) by the
Corporation and unclaimed at the end of two years from the redemption date shall
revert to the general funds of the Corporation (or be released from the
reservation thereof in the case of shares of Series D Preferred Stock), after
which reversion the holders of such shares so called for redemption shall look
only to the general funds of the Corporation for the payment of the redemption
price, without interest. Any interest accrued on funds so deposited shall belong
to the Corporation and be paid thereto from time to time.
(d) If a notice of redemption has been given pursuant to this Section 4
and any holder of shares of Series D Preferred Stock shall, prior to the close
of business on the business day immediately preceding the redemption date, give
written notice to the Corporation pursuant to Section 6 below of the conversion
of any or all of the shares to be redeemed held by the holder
<PAGE> 42
8
(accompanied by a certificate or certificates for such shares, duly endorsed or
assigned to the Corporation, and any necessary transfer tax payment, as required
by Section 6 below), then such redemption shall not become effective as to such
shares to be converted and such conversion shall become effective as provided in
Section 6 below, whereupon any funds deposited by the Corporation for the
redemption of such shares shall (subject to any right of the holder of such
shares to receive the dividend payable thereon as provided in Section 6 below)
immediately upon such conversion be returned to the Corporation or, if then held
in trust by the Corporation, shall automatically and without further corporate
action or notice be discharged from the trust.
(e) In every case of redemption of fewer than all of the outstanding
shares of the Series D Preferred Stock pursuant to this Section 4, the shares to
be redeemed shall be selected pro rata, provided that only whole shares shall be
selected for redemption.
5. Liquidation. (a) In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, the holders of the
Series D Preferred Stock shall be entitled to receive $100.00 per share (the
"Liquidation Preference"), plus an amount equal to the accrued and unpaid
dividends thereon, if any, whether or not declared, to the payment date.
(b) In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation, the holders of shares of Series D Preferred
Stock (i) shall not be entitled to receive the Liquidation Preference of the
shares held by them until payment in full or provision has been made for the
payment of all claims of creditors of the Corporation and the liquidation
preference of any class or series of capital stock ranking senior to the Series
D Preferred Stock with respect to redemption rights and rights upon liquidation,
dissolution or winding up of the affairs of the Corporation ("Senior Liquidation
Stock" and together with the Senior Dividend Stock, the "Senior Stock"), plus
accrued and unpaid dividends thereon, if any, whether or not declared, to the
payment date, shall have been paid in full and (ii) shall be entitled to receive
the Liquidation Preference of such shares held by them, plus accrued and unpaid
dividends thereon, if any, whether or not declared, to the payment date, in
preference to and in priority over any distributions upon the Common Stock and
any other series or class of the Corporation's capital stock that ranks junior
to the Series D Preferred Stock as to redemption rights and rights upon
liquidation, dissolution or winding up of the affairs of the Corporation
("Junior Liquidation Stock" and together with the Junior Dividend Stock, the
"Junior Stock"). Upon payment in full of the Liquidation Preference to which the
holders of shares of the Series D Preferred Stock are entitled, the holders of
shares of the Series D Preferred Stock shall not be entitled to any further
participation in any distribution of assets by the Corporation. Subject to
clause (i) above, if the assets of the Corporation are not sufficient to pay in
full the Liquidation Preference payable to the holders of shares of the Series D
Preferred Stock and the liquidation preference payable to the holders of any
series or class of the Corporation's capital stock, outstanding on the date
hereof or hereafter issued, that ranks on a parity with the Series D Preferred
Stock as to redemption rights and rights upon liquidation, dissolution or
winding up of the affairs of the Corporation ("Parity Liquidation Stock" and
together with the Parity Dividend Stock, the "Parity Stock"), the holders of all
such shares shall share ratably in proportion to the full respective
preferential amounts payable on such shares in any distribution.
<PAGE> 43
9
(c) For the purposes of this Section 5, neither the sale of all or
substantially all of the assets of the Corporation nor the consolidation or
merger of the Corporation with or into any other entity shall be deemed to be a
voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation, unless such sale, consolidation or merger shall be in connection
with a plan of liquidation, dissolution or winding up of the Corporation.
6. Optional Conversion. (a) Holders of shares of Series D Preferred Stock
may, at any time, convert shares of Series D Preferred Stock, unless previously
redeemed, into a number of shares of Common Stock calculated by dividing the
Liquidation Preference (without unpaid dividends) by $34.00, subject to
adjustment as described below in Section 6(f) (the "Conversion Price"). If more
than one share of Series D Preferred Stock shall be surrendered for conversion
at one time by the same record holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares of Series D Preferred Stock so surrendered. In the case of
shares of Series D Preferred Stock called for redemption, conversion rights
shall expire at the close of business on the business day immediately preceding
the redemption date. The holders of shares of Series D Preferred Stock that
convert such shares into shares of Common Stock shall be entitled to receive any
accrued and unpaid dividends thereon, if any, whether or not declared, and such
dividends shall be payable in cash or shares of Common Stock (valued at the
Conversion Price), or any combination thereof, in the sole discretion of the
Board of Directors.
(b) Any holder of shares of Series D Preferred Stock electing to convert
the shares or any portion thereof in accordance with Section 6(a) above shall
give written notice to the Corporation (which notice may be given by facsimile
transmission) that such holder elects to convert the same and shall state
therein the number of shares of Series D Preferred Stock to be converted and the
name or names in which such holder wishes the certificate or certificates for
shares of Common Stock to be issued. Promptly thereafter, the holder shall
surrender the certificate or certificates of shares of Series D Preferred Stock
to be converted, duly endorsed, at the office of the Corporation or any transfer
agent for such shares, or at such other place designated by the Corporation,
provided that the Corporation shall at all times maintain an office or agency in
The City of New York for such purposes. The Corporation shall, immediately upon
receipt of such notice, issue and deliver to or upon the order of such holder,
against delivery of the certificates representing the shares of Series D
Preferred Stock that have been converted, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled (in the
number(s) and denomination(s) designated by such holder), and the Corporation
shall deliver to such holder a certificate or certificates for the number of
shares of Series D Preferred Stock that such holder has not elected to convert.
The conversion right with respect to any shares of Series D Preferred Stock
shall be deemed to have been exercised at the date upon which the certificates
therefor (and the payment required by Section 6(d), if applicable), shall have
been so delivered, and the person or persons entitled to receive the Common
Stock issuable upon conversion shall be treated for all purposes as the record
holder or holders of such Common Stock upon that date.
<PAGE> 44
10
(c) No fractional shares of Common Stock shall be issued upon conversion
of shares of Series D Preferred Stock. Instead of any fractional share of Common
Stock otherwise issuable upon conversion of any shares of Series D Preferred
Stock, the Corporation shall pay a cash adjustment in respect of such fraction
in an amount equal to the same fraction of the Closing Price of the Common Stock
at the close of business on the day of conversion. In the absence of a Closing
Price, the Board of Directors shall in good faith determine the current market
price on such basis as it reasonably considers appropriate and such current
market price shall be used to calculate the cash adjustment; provided that in no
case shall the Closing Price be less than the Conversion Price then in effect.
(d) If a holder converts shares of Series D Preferred Stock, the
Corporation shall pay any documentary, stamp or similar issue or transfer tax
due on the issue of Common Stock upon the conversion or due upon the issuance of
a new certificate or certificates for any shares of Series D Preferred Stock not
converted. The holder, however, shall pay any such tax that is due because any
such shares of the Common Stock or of the Series D Preferred Stock are issued in
a name other than the name of the holder.
(e) The Corporation shall reserve out of its authorized but unissued
Common Stock held in treasury enough shares of Common Stock to permit the
conversion of all of the then-outstanding shares of Series D Preferred Stock.
For the purposes of this Section 6(e), the full number of shares of Common Stock
then issuable upon the conversion of all then- outstanding shares of Series D
Preferred Stock shall be computed as if at the time of computation all
outstanding shares of Series D Preferred Stock were held by a single holder. The
Corporation shall from time to time, in accordance with the laws of the State of
Delaware and its certificate of incorporation, increase the authorized amount of
its Common Stock if at any time the authorized amount of its Common Stock
remaining unissued shall not be sufficient to permit the conversion of all
shares of Series D Preferred Stock at the time outstanding. All shares of Common
Stock issued upon conversion of the shares of Series D Preferred Stock shall be
validly issued, fully paid and nonassessable.
(f) The Conversion Price shall be subject to adjustment as follows:
(i) In case the Corporation shall (A) pay a dividend on any class of its
capital stock in shares of its Common Stock, (B) subdivide its outstanding
shares of Common Stock into a greater number of shares or (C) combine its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior thereto shall be adjusted (as
provided below) so that the holders of any shares of Series D Preferred
Stock thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock which such holder would have owned or have
been entitled to receive immediately following such action had such shares
of Series D Preferred Stock been converted immediately prior to such time.
The Conversion Price as adjusted shall be determined by multiplying the
Conversion Price at which the shares of Series D Preferred Stock were
theretofore convertible by a fraction of which the denominator shall be the
number of shares of Common Stock outstanding immediately
<PAGE> 45
11
following such action and of which the numerator shall be the number of
shares of Common Stock outstanding immediately prior thereto. Such
adjustment shall be made whenever any event listed above shall occur and
shall become effective retroactively immediately after the record date in
the case of a dividend and immediately after the effective date in the case
of a subdivision or combination.
(ii) In case the Corporation shall issue rights or warrants to any Person
(including holders of its Common Stock) entitling such Person or Persons to
subscribe for or purchase shares of Common Stock at a price per share less
than the Current Market Price per share of Common Stock on the date the
Corporation commits or agrees to such issuance, or in case the Corporation
shall issue to any Person (including holders of its Common Stock) other
securities convertible into or exchangeable for Common Stock for a
consideration per share of Common Stock deliverable upon conversion or
exchange thereof less than the Current Market Price on the date the
Corporation commits or agrees to such issuance, then the Conversion Price in
effect immediately prior thereto shall be adjusted as provided below so that
the Conversion Price therefor shall be equal to the price determined by
multiplying (A) the Conversion Price at which shares of Series D Preferred
Stock were theretofore convertible by (B) a fraction of which (x) the
denominator shall be the sum of (1) the number of shares of Common Stock
outstanding on the date of issuance of the convertible or exchangeable
securities, rights or warrants and (2) the number of additional shares of
Common Stock offered for subscription or purchase, or issuable upon such
conversion or exchange, and (y) the numerator shall be the sum of (1) the
number of shares of Common Stock outstanding on the date of issuance of such
convertible or exchangeable securities, rights or warrants and (2) the
number of additional shares of Common Stock which the aggregate offering
price of the number of shares of Common Stock so offered would purchase at
the Current Market Price per share of Common Stock. Such adjustment shall be
made whenever such convertible or exchangeable securities, rights or
warrants are issued, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
securities. However, upon the expiration of any right or warrant to purchase
Common Stock, the issuance of which resulted in an adjustment in the
Conversion Price pursuant to this Section 6(f)(ii), if any such right or
warrant shall expire and shall not have been exercised, the Conversion Price
shall be recomputed immediately upon such expiration and effective
immediately upon such expiration shall be increased to the price it would
have been (but reflecting any other adjustments to the Conversion Price made
pursuant to the provisions of this Section 6(f) after the issuance of such
rights or warrants) had the adjustment of the Conversion Price made upon the
issuance of such rights or warrants been made on the basis of offering for
subscription or purchase only that number of shares of Common Stock actually
purchased upon the exercise of such rights or warrants. No further
adjustment shall be made upon exercise of any right, warrant, convertible
security or exchangeable security if any adjustment shall have been made
upon issuance of such security. The foregoing notwithstanding, no adjustment
shall be made pursuant to this subparagraph (ii) with respect to any
particular dividend or other event with respect to which a Payout Election
is made.
<PAGE> 46
12
(iii) In case the Corporation shall pay a dividend to all holders of its
Common Stock (including any dividend paid in connection with a consolidation
or merger in which the Corporation is the continuing corporation) of any
shares of capital stock of the Corporation or its subsidiaries (other than
Common Stock) or evidences of its indebtedness or assets or cash (excluding
dividends or distributions in connection with the liquidation, dissolution
or winding up of the Corporation) or rights or warrants to subscribe for or
purchase any of its securities or those of its subsidiaries or securities
convertible or exchangeable for Common Stock (excluding those securities
referred to in Section 6(f)(ii) above), then in each such case the
Conversion Price in effect immediately prior thereto shall be adjusted as
provided below so that the Conversion Price thereafter shall be equal to the
price determined by multiplying (A) the Conversion Price in effect on the
record date mentioned below by (B) a fraction, the numerator of which shall
be the Current Market Price per share of Common Stock on the record date
mentioned below less the then fair market value (as determined by the Board
of Directors, whose good faith determination shall be conclusive) as of such
record date of the cash, assets, evidences of indebtedness or securities so
paid with respect to one share of Common Stock, and the denominator of which
shall be the Current Market Price per share of Common Stock on such record
date; provided, however, that in the event the then fair market value (as so
determined) so paid with respect to one share of Common Stock is equal to or
greater than the Current Market Price per share of Common Stock on the
record date mentioned above, in lieu of the foregoing adjustment, adequate
provision shall be made so that each holder of shares of the Series D
Preferred Stock shall have the right to receive the amount and kind of
assets, evidences of indebtedness, or securities such holder would have
received had such holder converted each such share of Series D Preferred
Stock immediately prior to the record date for such dividend. Such
adjustment shall be made whenever any such payment is made, and shall become
effective retroactively immediately after the record date for the
determination of stockholders entitled to receive the payment. The foregoing
notwithstanding, no adjustment shall be made pursuant to this subparagraph
(iii) with respect to any particular dividend or other event with respect to
which a Payout Election is made.
(iv) In case the Corporation shall purchase, redeem or otherwise acquire
any shares of Common Stock at a price per share greater than the Current
Market Price per share of Common Stock on the date of such event, or in case
the Corporation shall purchase, redeem or otherwise acquire other securities
convertible into or exchangeable for Common Stock (other than the Series A
Preferred Stock, the Series B Preferred Stock and the Series C Preferred
Stock) for a consideration per share of Common Stock into which such
security is convertible or exchangeable greater than the per share Current
Market Price on the date of such event, then the Conversion Price in effect
immediately prior thereto shall be adjusted as provided below so that the
Conversion Price therefor shall be equal to the price determined by
multiplying (A) the Conversion Price at which shares of Series D Preferred
Stock were theretofore convertible by (B) a fraction of which (x) the
denominator shall be the Current Market Price per share on the date of such
event, and (y) the numerator shall be the Current Market Price per share on
the date of such
<PAGE> 47
13
event less the difference between (1) the consideration paid by the
Corporation per share of Common Stock (or, in the case of securities
convertible into or exchangeable for Common Stock, the consideration per
share of Common Stock into which such security is convertible or
exchangeable) purchased, redeemed or acquired in such event and (2) the
Current Market Price per share on the date of such event. Such adjustment
shall be made whenever such Common Stock is issued or sold, and shall become
effective immediately after the issuance or sale of such securities. The
foregoing notwithstanding, no adjustment shall be made pursuant to this
subparagraph (iv) with respect to any particular purchase, redemption or
acquisition with respect to which a Payout Election is made.
(v) In case the Corporation shall issue or sell any shares of Common
Stock at a price per share more than 15% below (or, in the case of any
issuance or sale to an affiliate (as defined in the rules of the Securities
and Exchange Commission promulgated under the Securities Exchange Act of
1934, as amended) of the Corporation, any amount below) the Current Market
Price per share of Common Stock on the date the Corporation commits or
agrees to such sale or issuance, then the Conversion Price in effect
immediately prior thereto shall be adjusted as provided below so that the
Conversion Price therefor shall be equal to the price determined by
multiplying (A) the Conversion Price at which shares of Series D Preferred
Stock were theretofore convertible by (B) a fraction of which (x) the
denominator shall be the sum of (1) the number of shares of Common Stock
outstanding on the date of issuance or sale of such shares of Common Stock
and (2) the number of additional shares of Common Stock offered for sale or
subject to issuance, and (y) the numerator shall be the sum of (1) the
number of shares of Common Stock outstanding on the date of issuance or sale
of such shares of Common Stock and (2) the number of additional shares of
Common Stock which the aggregate offering price of the number of shares of
Common Stock so offered or issued would purchase at the Current Market Price
per share of Common Stock. Such adjustment shall be made whenever such
Common Stock is issued or sold, and shall become effective immediately after
the issuance or sale of such securities; provided, however, that the
provisions of this subparagraph shall not apply to (1) shares of Common
Stock issued upon conversion of shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock, or
(2) shares of Common Stock issued upon conversion, exercise or exchange of
any security with respect to which an adjustment to the Conversion Price was
made in accordance with clause (ii) above at the time of issuance of such
security, or (3) shares of Common Stock issued in a bona fide public
offering to or through a nationally recognized investment banking firm in
which affiliates (as defined in the rules of the Securities and Exchange
Commission promulgated under the Securities Exchange Act of 1934, as
amended) of the Corporation purchase less than 25% of the shares in such
offering.
(vi) No adjustment in the Conversion Price shall be required unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Price then in effect; provided, however, that any adjustments
that by reason of this Section 6(f)(vi) are not required to be made shall be
carried forward and taken into account in any
<PAGE> 48
14
subsequent adjustment. All calculations under this Section 6(f) shall be
made to the nearest cent.
(vii) In the event that, at any time as a result of an adjustment made
pursuant to Section 6(f)(i) through 6(f)(vi) above, the holder of any share
of Series D Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of the Corporation other than shares
of the Common Stock, thereafter the number of such other shares so
receivable upon conversion of any share of Series D Preferred Stock shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in Section 6(f)(i) through 6(f)(vi) above, and the other
provisions of this Section 6 with respect to the Common Stock shall apply on
like terms to any such other shares.
(viii) Whenever the Conversion Price is adjusted, as herein provided, the
Corporation shall promptly file with the transfer agent for the Series D
Preferred Stock, or, if there is no transfer agent, the Corporation shall
promptly send to each holder of record by first class mail, postage
pre-paid, a certificate of an officer of the Corporation setting forth the
Conversion Price after the adjustment and setting forth a brief statement of
the facts requiring such adjustment and a computation thereof. The
certificate shall be conclusive evidence of the correctness of the
adjustment. The Corporation shall promptly cause a notice of the adjusted
Conversion Price to be mailed to each registered holder of shares of Series
D Preferred Stock.
(ix) In case of any reclassification of the Common Stock, any
consolidation of the Corporation with, or merger of the Corporation into,
any other entity, any merger of another entity into the Corporation (other
than a merger that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the
Corporation), any sale or transfer of all or substantially all of the assets
of the Corporation or any compulsory share exchange pursuant to which share
exchange the Common Stock is converted into other securities, cash or other
property, then lawful provision shall be made as part of the terms of such
transaction whereby the holder of each share of Series D Preferred Stock
then outstanding shall have the right thereafter, during the period such
share of Series D Preferred Stock shall be convertible, to convert such
share only into the kind and amount of securities, cash and other property
receivable upon the reclassification, consolidation, merger, sale, transfer
or share exchange by a holder of the number of shares of Common Stock of the
Corporation into which a share of Series D Preferred Stock would have been
convertible immediately prior to the reclassification, consolidation,
merger, sale, transfer or share exchange. The Corporation, the person formed
by the consolidation or resulting from the merger or which acquires such
assets or which acquires the Corporation's shares, as the case may be, shall
make provisions in its certificate or articles of incorporation or other
constituent document to establish such rights and such rights shall be
clearly provided for in the definitive transaction documents relating to
such transaction. The certificate or articles of incorporation or other
constituent document shall provide for adjustments, which, for
<PAGE> 49
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events subsequent to the effective date of the certificate or articles of
incorporation or other constituent document, shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Section 6. The
provisions of this Section 6(f)(ix) shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share
exchanges.
(g) The Corporation from time to time may reduce the Conversion Price by
any amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period. Whenever the Conversion Price is so
reduced, the Corporation shall mail to holders of record of the Series D
Preferred Stock a notice of the reduction at least 15 days before the date the
reduced Conversion Price takes effect, stating the reduced Conversion Price and
the period it will be in effect. A voluntary reduction of the Conversion Price
does not change or adjust the Conversion Price otherwise in effect for purposes
of paragraph 6(f) above.
7. Status of Shares. All shares of the Series D Preferred Stock that are
at any time redeemed pursuant to Section 4 above or converted or exchanged
pursuant to Section 6 above and all shares of the Series D Preferred Stock that
are otherwise reacquired by the Corporation and subsequently canceled by the
Board of Directors of the Corporation shall have the status of authorized but
unissued shares of Preferred Stock, without designation as to series, subject to
reissuance by the Board of Directors of the Corporation as shares of any one or
more other series.
8. Voting Rights. Except as set forth below or otherwise required by law,
holders of shares of the Series D Preferred Stock shall have no voting rights.
(a) So long as any shares of the Series D Preferred Stock are
outstanding, each share of Series D Preferred Stock shall entitle the holder
thereof to notice of and to vote, in person or by proxy, at any special or
annual meeting of stockholders, on all matters entitled to be voted on by
holders of Common Stock and any other series or class of Voting Stock voting
together as a single class with all other shares entitled to vote thereon. With
respect to any such vote, each share of Series D Preferred Stock shall entitle
the holder thereof to cast that number of votes per share as is equal to the
number of votes that such holder would be entitled to cast had such holder
converted its shares of Series D Preferred Stock into shares of Common Stock as
of the record date for determining the stockholders of the Corporation eligible
to vote on any such matters.
(b) So long as any shares of the Series D Preferred Stock are
outstanding, in addition to any vote or consent of stockholders required by law
or by the Corporation's Certificate of Incorporation, the affirmative vote or
consent of the holders of at least a majority of the shares of Series D
Preferred Stock at any time issued and outstanding, acting as a single class,
given in person or by proxy at any meeting called for such purpose, shall be
necessary for effecting or validating:
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16
(i) any reclassification of the Series D Preferred Stock or any
amendment, alteration or repeal (including as a result of a merger or
consolidation involving the Corporation or otherwise by operation of law)
of any of the provisions of the Certificate of Incorporation or By-laws
of the Corporation which adversely affects the voting powers, rights or
preferences of the holders of the shares of Series D Preferred Stock;
provided that any amendment of the provisions of the Corporation's
Certificate of Incorporation so as to authorize or create, or to increase
the authorized amount of, the Junior Stock shall not be deemed to affect
adversely the voting powers, rights or preferences of the holders of
shares of Series D Preferred Stock;
(ii) the authorization or creation of, or the increase in the
authorized amount of, or the issuance of any shares of any class or
series of Senior Stock or any security convertible into shares of any
class or series of Senior Stock (other than any shares of Series C
Preferred Stock issued as a dividend in respect of issued and outstanding
shares of Series C Preferred Stock and upon exercise of existing warrants
to purchase Series C Preferred Stock);
(iii) the authorization or creation of, or the increase in the
authorized amount of, or the issuance of any shares of any class or
series of stock or any security convertible into shares of any class or
series of Parity Stock (other than (x) shares of Series D Preferred Stock
issued pursuant to the Stock Purchase Agreement, dated as of December 23,
1999, by and among the Corporation and the other parties thereto (the
"Stock Purchase Agreement"), (y) any shares of Series A Preferred Stock
or Series B Preferred Stock issued as a dividend in respect of issued and
outstanding shares of Series A Preferred Stock or Series B Preferred
Stock and (z) any shares of Series D Preferred Stock issued as a dividend
in respect of shares referred to in clause (x) or in respect of shares
referred to in this clause (z));
(iv) the merger or consolidation of the Corporation with or into
any other entity, unless the resulting corporation will thereafter have
no class or series of shares and no other securities either authorized or
outstanding ranking prior to, or on a parity with, shares of Series D
Preferred Stock in the payment of dividends or the distribution of its
assets on liquidation, dissolution or winding up; provided, however, that
no such vote or consent of the holders of Series D Preferred Stock shall
be required if prior to the time when such merger or consolidation is to
take effect, and regardless of whether such merger or consolidation would
constitute a Change of Control (as defined in Section 9), a Change of
Control Offer (as defined in Section 9) is made for all shares of Series
D Preferred Stock at the time outstanding in accordance with Section 9;
and
(v) the application of any funds, property or assets of the
Corporation or any of its subsidiaries to the purchase, redemption,
sinking fund or other
<PAGE> 51
17
retirement of any shares of any class of Junior Stock, or the
declaration, payment or making of any dividend or distribution (in cash,
property or obligations) on any shares of any class of Junior Stock,
other than a dividend or dividends payable solely in Common Stock or
Junior Stock, unless the holders of Series D Preferred Stock shall have
been offered the opportunity to make a Payout Election with respect to
such event.
In connection with any right to vote pursuant to Section 8(b), each holder of
shares of Series D Preferred Stock shall have one vote for each share held. The
above notwithstanding, and subject to Section 8(a), no consent of holders of
Series D Preferred Stock shall be required for the creation of any indebtedness
of any kind of the Corporation.
(c) The term "Voting Stock" means any class or classes of capital stock,
or securities convertible into or exchangeable for any class of capital stock,
of the Corporation pursuant to which the holders thereof have the general power
under ordinary circumstances to vote with respect to the election of at least a
majority of the Board of Directors of the Corporation, irrespective of whether
or not, at the time, stock of any other class or classes shall have, or might
have, voting power by reason of the happening of any contingency.
9. Change of Control. (a) In the event of a Change of Control (the date
of such event being the "Change of Control Date"), the Corporation shall notify
the holders of the Series D Preferred Stock in writing of such event promptly
upon the Corporation becoming aware that a Change of Control is expected to
occur or has occurred and shall, pursuant to Section 9(b), make an offer to
purchase (the "Change of Control Offer") all of the then outstanding shares of
Series D Preferred Stock at a purchase price of 101% of the Liquidation
Preference thereof, payable in cash, plus any unpaid dividends thereon, if any,
whether or not declared, to the date such shares are purchased, payable in cash;
provided that, if in the event of such Change of Control the Corporation has
insufficient funds or financial flexibility to consummate a Change of Control
Offer to the holders of the Series D Preferred Stock and a change of control
offer to all other holders of Parity Stock entitled to such offer, the
Corporation shall make a Change of Control Offer to the holders of the Series D
Preferred Stock and a change of control offer to such other holders of Parity
Stock on a pro-rata basis.
(b) Subject to the provisions of Section 9(e), within 30 days following
the Change of Control Date, the Corporation shall send, by first class mail,
postage prepaid, a notice to each holder of Series D Preferred Stock at such
holder's address as it appears on the stock books of the Corporation, which
notice shall govern the terms of the Change of Control Offer. The notice to the
holders shall contain all instructions and materials necessary to enable such
holders to tender their shares of Series D Preferred Stock pursuant to the
Change of Control Offer. Such notice shall state:
(i) that a Change of Control has occurred, that the Change of
Control Offer is being made pursuant to this Section 9 and that all
shares of Series D Preferred Stock validly tendered and not withdrawn
will be accepted for payment;
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(ii) the purchase price (plus the amount of unpaid dividends, if
any) and the purchase date (the "Change of Control Payment Date") which
shall be a date no earlier than 30 days nor later than 60 days from the
date such notice is mailed, other than as may be required by law (the
"Initial Date") or, if any of the Corporation's 15% Senior Secured
Discount Notes due 2007, 14-1/2% Senior Secured Notes due 2009 or 8-3/4%
Convertible Subordinated Notes due 2009 (together, the "Outstanding
Notes") remain outstanding, the later of the Initial Date and a date that
is not more than 30 days following the date the Corporation sends notice
pursuant to Section 9(e) that it has satisfied all of the Senior
Obligations (as defined below);
(iii) that any shares of Series D Preferred Stock not tendered
will remain outstanding on the same terms and will continue to accrue
dividends;
(iv) that, unless the Corporation defaults in making payment
therefor, any share of Series D Preferred Stock tendered and accepted for
payment pursuant to the Change of Control Offer shall cease to accrue
dividends after the Change of Control Payment Date;
(v) that holders electing to have any shares of Series D Preferred
Stock purchased pursuant to a Change of Control Offer will be required to
surrender the certificate or certificates representing such shares,
properly endorsed for transfer together with such customary documents as
the Corporation and the transfer agent may reasonably require, in the
manner and at the place specified in the notice prior to the close of
business on the business day prior to the Change of Control Payment Date;
(vi) that holders shall be entitled to withdraw their election if
the Corporation receives, not later than five business days prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the holder, the number of shares of
Series D Preferred Stock the holder delivered for purchase and a
statement that such holder is withdrawing his election to have such
shares of Series D Preferred Stock purchased;
(vii) that holders whose shares of Series D Preferred Stock are
purchased only in part will be issued a new certificate representing the
unpurchased shares of Series D Preferred Stock; and
(viii) the circumstances and relevant facts regarding such Change
of Control.
(c) The Corporation shall comply with any securities laws and
regulations, to the extent such laws and regulations are applicable to the
repurchase of the Series D Preferred Stock in connection with a Change of
Control Offer.
<PAGE> 53
19
(d) On the Change of Control Payment Date, the Corporation shall (x)
accept for payment the shares of Series D Preferred Stock validly tendered
pursuant to the Change of Control Offer, (y) pay to the holders of shares so
accepted the purchase price therefor (plus the amount of unpaid dividends, if
any) and (z) cancel and retire each surrendered certificate (subject to issuing
a new certificate representing the unpurchased shares of Series D Preferred
Stock). Unless the Corporation defaults in the payment for the shares of Series
D Preferred Stock tendered pursuant to the Change of Control Offer, dividends
shall cease to accrue with respect to the shares of Series D Preferred Stock
tendered and all rights of holders of such tendered shares shall terminate,
except for the right to receive payment therefor, on the Change of Control
Payment Date.
(e) If the purchase of Series D Preferred Stock under this Section 9
would violate or constitute a default under (i) the Outstanding Notes or the
respective indentures relating thereto (the "Indentures"), or (ii) the indenture
or indentures or other agreement or agreements under which there may be issued
or outstanding from time to time other indebtedness of the Company ("Other
Agreements") in an aggregate principal amount not exceeding $450 million (less
the amount, if any, of indebtedness issued to replace, refinance or refund the
Outstanding Notes) because the Corporation has not satisfied all of its
obligations under such Other Agreements arising from the Change of Control
(collectively, "Senior Obligations"), then, notwithstanding anything to the
contrary contained above, prior to complying with the foregoing provisions, the
Corporation shall use its best efforts to satisfy the Senior Obligations as
promptly as possible or to obtain the requisite consents under the Indentures
and Other Agreements necessary to permit the repurchase of the Series D
Preferred Stock required by this Section 9. Until the requirements of the
immediately preceding sentence are satisfied, the Corporation shall not be
obligated to make any Change of Control Offer. Within 15 days following the date
the Corporation has satisfied all of the Senior Obligations or obtained such
requisite consents or waivers, the Corporation shall send, by first class mail,
postage prepaid, a notice to each holder of Series D Preferred Stock at such
holder's address as it appears on the stock books of the Corporation that the
Corporation has satisfied all of the Senior Obligations or obtained such
requisite consents or waivers, and such notice shall state the date the Senior
Obligations were satisfied or waived and the Change of Control Payment Date.
(f) For the purposes of this Section 9, "Change of Control" means the
occurrence of any of the following events: (i) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934 (the "Exchange Act")) is or becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 40% of the total
outstanding Voting Stock of the Corporation; (ii) the Corporation consolidates
with or merges with or into another person or conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any person, or
any person consolidates with or merges with or into the Corporation, in any such
event, pursuant to a transaction in which the outstanding voting stock of the
Corporation is converted into or exchanged for cash, securities or other
property, other than, at all times when the Outstanding
<PAGE> 54
20
Notes are outstanding, those transactions that are not deemed a "Change of
Control" under the terms of the Indentures; (iii) during any consecutive
two-year period, individuals who at the beginning of such period constituted the
Board of Directors of the Corporation (together with any new directors whose
election to such Board of Directors, or whose nomination for election by the
stockholders of the Corporation, was approved by a vote of 662/3% of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Corporation then in office; or (iv) the Corporation is
liquidated or dissolved or a special resolution is passed by the stockholders of
the Corporation approving the plan of liquidation or dissolution, other than, at
all times when the Outstanding Notes are outstanding, those transactions that
are not deemed a "Change of Control" under the terms of the Indentures;
provided, however, that no transaction or event shall be deemed to be a "Change
of Control" for purposes of this Section 9 if (1) the Corporation notifies the
Purchasers in writing at least five, and not more than fifteen, days in advance
of the date such transaction or event will become effective that all of the
outstanding shares of Common Stock are to be converted pursuant thereto solely
into the right to receive, for each share of Common Stock so converted, cash
and/or shares of Qualifying Acquiror Common Stock (as defined below) (valued at
the Current Market Price as of the date of such notice) together having a value
in excess of $35.70, (2) the Corporation shall have declared and paid all
dividends on the Series A Preferred Stock, Series B Preferred Stock and Series D
Preferred Stock, whether or not theretofore declared or undeclared, to the date
of the Change of Control and the holders thereof shall have been given
reasonable opportunity to convert, prior to such Change of Control, any shares
of Series A Preferred Stock, Series B Preferred Stock or Series D Preferred
Stock so issued as a dividend, and (3) immediately following such event the
number of shares of Qualifying Acquiror Common Stock into which shares of Series
D Preferred Stock shall have been converted (together with, if shares of Series
D Preferred Stock are to remain outstanding, any shares of Qualifying Acquiror
Common Stock into which all outstanding shares of Series D Preferred Stock would
be convertible) would represent both (A) less than 5% of the total number of
shares of Qualifying Acquiror Common Stock outstanding immediately after such
event and (B) less than one third of the number of shares of Qualifying Acquiror
Common Stock that would be Publicly Traded immediately after such event. For
purposes of this Section 9, the term "Qualifying Acquiror Common Stock" means
the common stock of any corporation if listed on or admitted to trading on the
NYSE, AMEX or Nasdaq, and the term "Publicly Traded" means shares of such
Qualifying Acquiror Common Stock that are both (1) held by persons who are
neither officers, directors or Affiliates of such corporation nor the
"beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange
Act) of 5% or more of the total number of shares then issued and outstanding,
and (2) not "restricted securities" (as such term is defined in Rule 144 of the
Securities Act of 1933, as amended).
(g) The Corporation shall not engage in any transaction of the type
referred to in clause (ii) of paragraph (f) above (other than one which is not a
"Change of Control" by virtue of application of the proviso to paragraph (f)
above) unless (i) if the Corporation shall be the surviving or continuing entity
of such transaction, the Corporation shall, after consummation thereof, have
sufficient funds to perform its obligations under this Section 9, and (ii) if
the
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21
Corporation shall not be the surviving or continuing entity of such transaction,
proper and adequate provision shall be made, in the definitive documentation
providing for such transaction or otherwise, to ensure that the surviving or
continuing corporation of such transaction shall expressly assume the
Corporation's obligations under this Section 9 and shall have sufficient funds
to perform its obligations under this Section 9.
10. Sinking Fund Redemption. The shares of the Series D Preferred Stock
are not subject to sinking fund requirements.
<PAGE> 56
22
IN WITNESS WHEREOF, Sirius Satellite Radio Inc. has caused this
Certificate to be duly executed on its behalf by its undersigned duly authorized
officer this ___th day of ________, 2000.
SIRIUS SATELLITE RADIO INC.
By:
-------------------------------------
Name: Patrick L. Donnelly
Title: Secretary