Preferred Stock Warrant Agreement - CD Radio Inc. and Libra Investments Inc.
PREFERRED STOCK WARRANT AGREEMENT
WHEREAS, pursuant to a letter agreement, dated as of August
29, 1996 (the "Letter Agreement"), between CD Radio Inc., a Delaware corporation
(the "Company") and Libra Investments, Inc. ("Libra"), the Company agreed to
issue to Libra a warrant (the "Libra Warrant"); and
WHEREAS the Company and Libra subsequently agreed that the
Libra Warrant should be issued as of April 9, 1997, and since that date Libra
has had full rights to the Libra Warrant issuable under the Letter Agreement;
and
WHEREAS the Company and Libra have agreed that the Company's
issuance to Libra of a warrant to purchase 177,178 shares of the Company's 10
1/2% Series C Convertible Preferred Stock ("Series C Preferred Stock"), upon the
terms set forth herein, shall be in full satisfaction of the Company's
obligation to issue the Libra Warrant pursuant to the Letter Agreement; and
WHEREAS Libra has requested, and the Company has agreed, that
in lieu of issuing to Libra a warrant to purchase the entire amount of shares of
Series C Preferred Stock, the Company shall issue warrants to purchase the same
aggregate number of shares to Libra and to certain individuals and entities
designated by Libra;
NOW THEREFORE this Warrant Agreement (the "Agreement"), dated
as of April 9, 1997, is made and entered into between the Company and
______________________________________________ (the "Warrantholder").
The Company hereby issues to the Warrantholder a Stock
Purchase Warrant as hereinafter described (the "Warrant") to purchase up to an
aggregate of ________ shares (subject to adjustment pursuant to Section 7
hereof) of Series C Preferred Stock (the "Shares").
Capitalized terms used herein and not otherwise defined shall
have the meanings specified from time to time in the Certificate of Designations
of the Series C Preferred Stock, as filed in the office of the Secretary of
State of Delaware (the "Certificate of Designations").
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In consideration of the foregoing and for the purpose of
defining the terms and provisions of the Warrant and the respective rights and
obligations thereunder, the Company and the Warrantholder hereby agree as
follows:
1. FORM AND TRANSFERABILITY OF WARRANT.
1.1 Form of Warrant. The text of the Warrant and of the form
of election to purchase Shares shall be substantially as set forth in Exhibit A
attached hereto. The price per Share and the number of Shares issuable upon
exercise of the Warrant are subject to adjustment upon the occurrence of certain
events, all as hereinafter provided. The Warrant shall be executed on behalf of
the Company by its Chairman and Chief Executive Officer, Chief Financial Officer
or other authorized officer.
The Warrant shall be dated as of the date of signature thereof
by the Company either upon initial issuance or upon division, exchange,
substitution or transfer.
1.2 Registration. The Warrant shall be numbered and shall be
registered on the books of the Company when issued.
1.3 Transfer. Subject to Section 10 hereof, the Warrant shall
be transferable on the books of the Company only upon delivery thereof duly
endorsed by the Warrantholder or by its duly authorized attorney or
representative, accompanied by proper evidence of succession, assignment or
authority to transfer and compliance with securities laws. Upon any registration
or transfer, the Company shall execute and deliver a new Warrant to the person
entitled thereto. The Warrant may be divided or combined, upon request to the
Company by the Warrantholder, into a certificate or certificates representing
the right to purchase the same aggregate number of Shares. Unless the context
indicates otherwise, the term "Warrant" shall include any and all warrants
outstanding pursuant to this Agreement, including those evidenced by a
certificate or certificates issued upon division, exchange, substitution or
transfer pursuant to this Agreement, and the term "Warrantholder" shall include
any holder of a Warrant.
1.4 Legend on Warrants and Shares. Each Warrant certificate
and certificate for Shares initially issued upon exercise of this Warrant shall
bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD,
EXCHANGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT."
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Any certificate issued at any time in exchange or substitution
for any certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act of 1933, as amended (the "Act"), of the securities
represented thereby) shall also bear the foregoing legend unless, in the opinion
of the Company's counsel, the securities represented thereby need no longer be
subject to such restrictions.
2. TERMS OF WARRANTS; EXERCISE OF WARRANTS.
2.1 Exercise of Warrants. Subject to the terms of this
Agreement, the Warrantholder shall have the right, at any time during the
five-year period ending at 5:00 P.M., New York City time, on April 9, 2002 (the
fifth anniversary of the date hereof) (the "Termination Date"), to purchase from
the Company up to the number of fully paid and nonassessable Shares which the
Warrantholder may at the time be entitled to purchase pursuant to this
Agreement, upon surrender to the Company, at its principal office, of the
certificate evidencing the Warrant to be exercised, together with the purchase
form annexed thereto duly filled in and signed, and upon payment to the Company
of the Warrant Price (as defined in and determined in accordance with the
provisions of Sections 6 and 7 hereof) for the number of Shares in respect of
which such Warrant is then exercised. Payment of the aggregate Warrant Price
shall be made in cash or by certified or cashier's check or by wire transfer of
funds or by surrender of Warrants for cashless exercise as provided in Section
6.
Upon such surrender of the Warrant and payment of the Warrant
Price, the Company shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of the Warrantholder and in such name or
names as the Warrantholder may designate, a certificate or certificates for the
number of full Shares so purchased upon the exercise of the Warrant, together
with cash, as provided in Section 8 hereof, in respect of any fractional Shares
otherwise issuable upon such surrender. Such certificate or certificates shall
be deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Shares as of the date
of surrender of the Warrant and payment of the Warrant Price, as aforesaid,
notwithstanding that the certificates representing such Shares shall not
actually have been delivered or that the stock transfer books of the Company
shall then be closed. The Warrant shall be exercisable, at the election of the
Warrantholder, either in full or from time to time in part and, in the event
that a certificate evidencing the Warrant is exercised in respect of less than
all of the Shares specified therein at any time prior to the Termination Date, a
new certificate evidencing the remaining portion of the Warrant shall be issued
by the Company.
2.2 Special Limitation on Exercise. Notwithstanding any
other provision contained herein, the Warrant shall under no circumstances be
exercisable by any Warrantholder or Warrantholders that is or are a "person" or
a member of a "group" within the meaning of Regulation 13D under the Securities
Exchange Act of 1934, as
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amended (the "Exchange Act"), for securities, when taken together with all other
securities beneficially owned by such Warrantholder or Warrantholders,
representing or convertible into securities representing "beneficial ownership"
within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act of more than
4.99% of the Company's outstanding Common Stock.
2.3 No Accrual of Dividends. For the avoidance of doubt, it is
hereby agreed that no dividends on the Shares or shares of any other class of
securities issuable hereunder shall accrue for the benefit of the Warrantholder
unless and until such Shares or shares of such class of securities are actually
issued.
3. PAYMENT OF TAXES.
The Company shall pay all documentary stamp taxes, if any,
attributable to the initial issuance of the Shares to the Warrantholder;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any secondary transfer of the Warrant
or the Shares.
4. MUTILATED OR MISSING WARRANTS.
In case the certificate or certificates evidencing the Warrant
shall be mutilated, lost, stolen or destroyed, the Company shall, at the request
of the Warrantholder, issue and deliver in exchange and substitution for and
upon cancellation of the mutilated certificate or certificates, or in lieu of
and in substitution for the certificate or certificates lost, stolen or
destroyed, a new Warrant certificate or certificates of like tenor and
representing an equivalent right or interest, but only upon receipt of evidence
satisfactory to the Company of such loss, theft or destruction of such Warrant
and of a bond of indemnity, if requested, also satisfactory to the Company in
form and amount, at the applicant's cost. Applicants for such a substitute
Warrant certificate shall also comply with such other reasonable regulations and
pay such other reasonable charges as the Company may prescribe.
5. RESERVATION OF SHARES.
The Company shall at all times keep reserved so long as the
Warrant remains outstanding, out of its authorized Series C Preferred Stock,
such number of Shares as shall be subject to purchase under the Warrant, or out
of the authorized shares of any other class of securities which may be purchased
upon exercise of this Warrant, such number of shares of such other class as may
be so purchased.
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6. WARRANT PRICE; METHODS OF EXERCISE.
6.1 Price. The price per Share (the "Warrant Price") at which
Shares shall be purchasable upon the exercise of the Warrant shall be as set
forth in Appendix 1 attached hereto, subject to further adjustment pursuant to
Section 7 hereof.
6.2 Cashless Exercise. In addition to the exercise of all or a
portion of this Warrant by the payment of the Warrant Price as provided in
Subsection 2.1, and in lieu of any such payment, the Warrantholder may exercise
the Warrant in full or in part by surrendering the Warrant certificate in
exchange for a number of Shares equal to the product obtained by multiplying (a)
the number of Shares as to which this Warrant is then being exercised multiplied
by (b) a number equal to (i) the Derived Market Price, as defined below, minus
the Warrant Price, divided by (ii) the Derived Market Price. For the purposes of
this Subsection 6.2, the term "Derived Market Price" shall mean the product
obtained by multiplying (x) the per-share closing price, on the trading day
immediately preceding the date of exercise, of the Common Stock on the principal
stock exchange on which it is listed or, if not so listed, on the principal
market on which it is traded, by (y) the number of shares of Common Stock into
which a Share, if issued hereunder upon the date of cashless exercise and
immediately converted into Common Stock, could be converted.
7. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES.
7.1 The number and kind of securities purchasable upon the
exercise of the Warrants and the Warrant Price shall be subject to adjustment
from time to time upon the happening of certain events, as follows:
(a) In case the Company shall (i) subdivide its
outstanding shares of Series C Preferred Stock, (ii) combine
its outstanding shares of Series C Preferred Stock or (iii)
issue by reclassification of its Series C Preferred Stock
other securities of the Company, the number of Shares
purchasable upon exercise of the Warrants immediately prior
thereto shall be adjusted so that the Warrantholder shall be
entitled to receive the kind and number of shares or other
securities of the Company which it would have owned or would
have been entitled to receive after the happening of any of
the events described above, had the Warrants been exercised
immediately prior to the happening of such event or any record
date with respect thereto. Any adjustment made pursuant to
this paragraph (a) shall become effective immediately after
the effective date of such event retroactive to the record
date, if any, for such event.
(b) No adjustment in the number of Shares purchasable
hereunder shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%)
in the number of Shares
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then purchasable upon the exercise of a Warrant; provided,
however, that any adjustments which by reason of this
paragraph (b) are not required to be made immediately shall be
carried forward and taken into account in any subsequent
adjustment.
(c) Whenever the number of Shares purchasable upon
the exercise of a Warrant is adjusted as herein provided, the
Warrant Price payable upon exercise of a Warrant shall be
adjusted by multiplying such Warrant Price immediately prior
to such adjustment by a fraction, of which the numerator shall
be the number of Shares purchasable upon the exercise of a
Warrant immediately prior to such adjustment and of which the
denominator shall be the number of Shares so purchasable
immediately thereafter. Such adjustment shall be made to all
Warrant Prices set forth in Appendix 1 attached hereto.
(d) Whenever the number of Shares purchasable upon
the exercise of a Warrant or the Warrant Price is adjusted as
herein provided, the Company shall cause to be promptly mailed
to the Warrantholder by first class mail, postage prepaid,
notice of such adjustment or adjustments and a certificate of
a firm of independent public accountants selected by the Board
of Directors of the Company (who my be the regular accountants
employed by the Company) setting forth the number of Shares
purchasable upon the exercise of a Warrant and the Warrant
Price after such adjustment, a brief statement of the facts
requiring such adjustment and the computation by which such
adjustment was made.
(e) For the purpose of this Subsection 7.1, the term
"Series C Preferred Stock" shall mean (i) the class of stock
designated as the Series C Preferred Stock of the Company at
the date of this Agreement or (ii) any other class of stock
resulting from successive changes or reclassifications of such
Series C Preferred Stock. In the event that at any time, as a
result of an adjustment made pursuant to this Section 7, the
Warrantholder shall become entitled to purchase any securities
of the Company other than shares of Series C Preferred Stock,
thereafter the number of such other securities so purchasable
upon exercise of the Warrant and the Warrant Price of such
securities 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 Shares contained in this
Section 7.
(f) For the avoidance of doubt, it is hereby agreed
that with respect to any Shares issued upon exercise of the
Warrant, adjustments to the Conversion Price pursuant to
Section 6(f) of the Certificate of Designations, as well as
analogous adjustments pursuant to the terms of
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any New Security, shall be calculated as if such Shares had
been issued upon exercise of the Warrant immediately prior to
the making of such adjustment.
7.2 No Adjustment for Dividends. Except as provided in
Subsection 7.1 and subject to Subsection 2.3, no adjustment in respect of any
dividends shall be made during the term of the Warrant or upon the exercise of
the Warrant.
7.3 Preservation of Purchase Rights Upon Reclassification,
Consolidation, etc. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property, assets or business of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall provide by agreement that the
Warrantholder shall have the right thereafter upon payment of the Warrant Price
in effect immediately prior to such action to purchase upon exercise of the
Warrant the kind and amount of shares and/or other securities, cash and property
which he would have owned or have been entitled to receive after the happening
of such consolidation, merger, sale or conveyance had the Warrant been exercised
immediately prior to such action. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 7 and in Appendix 1 attached hereto. The provisions
of this Subsection 7.3 shall similarly apply to successive consolidations,
mergers, sales or conveyances.
7.4 Par Value of Shares. Before taking any action that would
cause an adjustment reducing the Warrant Price below the then par value of the
Shares of Series C Preferred Stock issuable upon exercise of the Warrant, the
Company will take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue fully paid
and non-assessable shares of Series C Preferred Stock at such adjusted Warrant
Price.
7.5 Statement on Warrant Certificates. Irrespective of any
adjustments in the Warrant Price or the number of securities purchasable upon
the exercise of the Warrant, the Warrant certificate or certificates theretofore
or thereafter issued may continue to express the same price and number of
securities as are stated in the similar Warrant certificates initially issuable
pursuant to this Agreement. However, the Company may at any time in its sole
discretion (which shall be conclusive) make any change in the form of the
Warrant certificate that it may deem appropriate and that does not affect the
substance thereof; and any Warrant certificate thereafter issued, whether upon
registration or transfer of, or in exchange or substitution for, an outstanding
Warrant certificate, may be in the form so changed.
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8. FRACTIONAL INTERESTS.
The Warrant shall not be exercisable for fractional Shares. If
any fraction of a share of Series C Preferred Stock would, but for the
provisions of this Section 8, be issuable on the exercise of the Warrant (or a
specified portion thereof), the Company shall, in lieu thereof, pay an amount in
cash equal to the then Current Market Price multiplied by such fraction. For
purposes of this Agreement, the term "Current Market Price" shall mean (i) if
the Series C Preferred Stock is traded on a national securities exchange, the
average for the 20 consecutive trading days immediately preceding the date in
question of the daily per-share closing prices of the Series C Preferred Stock
on the principal stock exchange on which it is listed, (ii) if the Series C
Preferred Stock is not traded on a national securities exchange but is traded in
the over-the-counter market or on the National Market or SmallCap Market of the
National Association of Securities Dealers, Inc., the average per-share closing
price of the Series C Preferred Stock on the 20 consecutive trading days
immediately preceding the date in question, as reported by such market or by an
equivalent generally accepted reporting service, or (iii) if the Series C
Preferred Stock is not so listed or traded, but the Common Stock is so listed or
traded, the average for the 20 consecutive trading days immediately preceding
the date in question of the daily per-share closing prices of the Common Stock
on the principal stock exchange on which it is listed or, if not so listed, on
the principal market on which it is traded, multiplied by the number of shares
of Common Stock into which a share of Series C Preferred Stock is then
convertible.
9. COMPANY RIGHT TO REDEEM.
9.1 Proportional Redemption. If the Company exercises any
right to redeem, repurchase or retire any security issuable upon exercise of
this Warrant, the Company may, at its option, upon not less than 30 days' nor
more than 60 days' notice given to each Warrantholder, call for redemption a
percentage of the Warrants held by each such Warrantholder equal to the
percentage of the total number of outstanding shares or other units of such
security being redeemed, repurchased or retired at a per-share redemption price
equal to (i) the per-share redemption or purchase price of such other shares or
units being redeemed, repurchased or retired, minus (ii) an amount equal to that
part of the per-share redemption or repurchase price that is attributable to the
dividends accrued and unpaid on such shares or units, if any, whether or not
declared, to the redemption date, and further minus (iii) the Warrant Price at
the date of redemption.
9.2 Redemption in General. In the event the Company exercises
its right to redeem the Warrants, such Warrants will be exercisable until the
close of business on the Business Day immediately preceding the date fixed for
redemption in such notice (the "Call Date"). If any Warrant called for
redemption is not exercised by such time, such Warrant shall cease to be
exercisable and the holder thereof shall be entitled to receive only the
redemption price specified in Subsection 9.1. Payment of the redemption price
will be made by the Company in cash upon presentation and surrender
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of the Warrant Certificates representing such Warrants to the Company at its
address specified in Section 13 herein.
10. NO RIGHTS AS STOCKHOLDER; NOTICES TO WARRANTHOLDER.
Nothing contained in this Agreement or in any of the Warrants
shall be construed as conferring upon the Warrantholder or its transferees any
rights whatsoever as a stockholder of the Company, including the right to vote,
to receive dividends, to consent or to receive notices as a stockholder in
respect of any meeting of stockholders for the election of directors of the
Company or any other matter. If, however, at any time prior to the expiration of
the Warrant and prior to its exercise, any of the following events shall occur:
(a) any action which would require an adjustment
pursuant to Subsection 7.1 or 7.3; or
(b) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger
or sale of its property, assets and business, as an entirety)
shall be proposed;
then in any one or more of said events, the Company shall give notice in writing
of such event to the Warrantholder as provided in Section 13 hereof at least ten
(10) days prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled to any
relevant dividend, distribution, subscription rights or other rights or for the
determination of stockholders entitled to vote on such proposed dissolution,
liquidation or winding up, or otherwise make appropriate arrangements in
connection with the consummation of any such transaction to permit exercise of
the Warrant contemporaneously therewith. Such notice shall specify such record
date or the date of closing the transfer books, as the case may be. The
Warrantholder shall also have the right to receive any notices delivered to
holders of the Shares in their capacity as such.
11. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.
(a) The Warrantholder agrees that prior to making any
disposition of any of the Warrants or Shares, the
Warrantholder shall give written notice to the Company
describing briefly the manner in which any such proposed
disposition is to be made; and no such disposition shall be
made except pursuant to an effective registration statement or
in a transaction exempt from any registration requirements of
the Act, and no such disposition shall be made if the Company
has notified the Warrantholder that, in the reasonable opinion
of counsel to the Company or of counsel to the Warrantholder
reasonably acceptable to the Company, a registration statement
or other notification or post-effective amendment
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thereto (hereinafter collectively a "Registration Statement")
under the Act is required with respect to such disposition and
no such Registration Statement has been filed by the Company
with, and declared effective, if necessary, by, the Securities
and Exchange Commission (the "Commission").
(b) During all periods on and after February 15, 1998
in which Shares issuable upon exercise of this Warrant are
convertible into shares of the Company's Common Stock, the
Company shall use its best efforts to ensure that shares of
the Company's Common Stock issued or issuable upon conversion
of the Shares issued or issuable upon exercise of this Warrant
(the "Registrable Securities") are registered for resale
pursuant to a shelf registration on Form S-3, unless (i) the
Company is not eligible to file such Form S-3, or (ii) such
Registrable Securities may be sold pursuant to an applicable
exemption from the registration requirements of the Act.
(c) Without limiting the Company's obligations
pursuant to paragraph (b) above, if, at any time after
February 15, 1998, (i) there is not in effect a shelf
registration on Form S-3 covering the resale of Registrable
Securities issued or issuable upon conversion of the Shares
issued or issuable upon exercise of the Warrants (each such
conversion or exercise being a "Registration Event"), and (ii)
the Registrable Securities may not be resold pursuant to an
applicable exemption from the registration requirements of the
Act, then upon the written request of those holders which own
or are entitled to purchase (either indirectly through
ownership of the Warrants or directly through ownership of the
Shares) a majority of such Registrable Securities
(collectively, the "Requesting Holders"), requesting that the
Company effect the registration under the Securities Act of
all or part of the Registrable Securities, the Company will
use its best efforts to effect the registration under the
Securities Act of such Registrable Securities which the
Company has been requested to register; provided, however,
that the Company shall be obligated to effect registration
pursuant to this paragraph (c) no more than one time. Without
limiting the foregoing, the Company will, as expeditiously as
possible:
(i) prepare and file with the Commission not
later than thirty (30) days after the Company's
receipt of the request therefor from the Requesting
Holders the requisite registration statement to
effect such registration and use its best efforts to
cause such registration statement to become
effective;
(ii) prepare and file with the Commission
such amendments and supplements to such registration
statement and
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any prospectus used in connection therewith as may be
necessary to maintain the effectiveness of such
registration statement and to comply with the
provisions of the Act with respect to the disposition
of all Registrable Securities covered by such
registration statement, in accordance with the
intended methods of disposition thereof, until the
earlier of (A) such time as all of such securities
have been disposed of in accordance with the intended
methods of disposition by the seller or sellers
thereof set forth in such registration statement and
(B) 120 days after such registration statement has
become effective;
(iii) promptly notify each holder of
Registrable Securities: (A) when such registration
statement, or any amendment or supplement thereto,
has been filed and has become effective; (B) of any
written request by the Commission for amendments or
supplements to such registration statement; (C) of
the initiation of any proceeding with respect to, or
the issuance by the Commission of, any stop order
suspending the effectiveness of such registration
statement; and (D) of the receipt of notification
with respect to the suspension of the qualification
of any Registrable Securities for sale under the
applicable securities or Blue Sky laws of any
jurisdiction;
(iv) furnish to each seller of Registrable
Securities covered by such registration statement
such number of conformed copies of such registration
statement and of each amendment and supplement
thereto, such number of copies of the prospectus
contained in such registration statement and such
other documents as such seller may reasonably request
to facilitate the disposition of its Registrable
Securities;
(v) use its best efforts to register or
qualify all Registrable Securities covered by such
registration statement under such other securities or
Blue Sky laws of such jurisdictions as each holder
thereof shall reasonably request; and
(vi) use its best efforts to cause all
Registrable Securities covered by such registration
statement to be listed, upon official notice of
issuance, on any securities exchange on which any of
the securities of the same class as the Registrable
Securities are then listed.
(d) If, at any time after February 15, 1998, (i)
there is not in effect a shelf registration on Form S-3
covering the resale of Registrable
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Securities issued or issuable upon conversion of the Shares
issued or issuable upon exercise of the Warrants (each such
conversion or exercise being a "Registration Event"), and (ii)
the Registrable Securities may not be resold pursuant to an
applicable exemption from the registration requirements of the
Act, and the Company proposes at any time after a Registration
Event has occurred and is continuing to effect a registration
of Common Stock of the Company under the Securities Act (other
than a registration on Form S-4 or Form S-8 promulgated by the
Commission, or any successor or similar forms thereto),
whether for sale for the account of the Company or for the
account of any holder of securities of the Company (other than
Registrable Securities) (each, a "Piggyback Registration"), it
will each such time give prompt written notice (a "Notice of
Piggyback Registration") to all holders of Registrable
Securities of its intention to do so and shall include a
description of the intended method of disposition of such
securities. Upon the written request of any such holder made
within fifteen (15) days after receipt of a Notice of
Piggyback Registration (which request shall specify the
Registrable Securities intended to be disposed of by such
holder and the intended method of disposition thereof), the
Company shall use its best efforts to include in the
registration statement relating to such Piggyback Registration
all Registrable Securities which the Company has been so
requested to register. No registration effected under this
paragraph (d) shall relieve the Company of its obligations to
effect a requested registration under paragraph (c) of this
Section.
(e) The Company shall not be obligated under this
Agreement to keep any registration statement effective beyond
the date that is one year after the date this Warrant is
exercised in full or has expired.
(f) All fees, disbursements and out-of-pocket
expenses in connection with the filing of any registration
statement under paragraphs (b), (c) or (d) of this Section and
in complying with applicable securities and Blue Sky laws
shall be borne by the Company, provided, however, that any
expenses of the Warrantholder or Holder, including but not
limited to attorneys' fees and underwriters or brokers'
discounts and commissions, shall be borne by the
Warrantholder. The Company at its expense will supply the
Warrantholder and any Holder with copies of such registration
statement and the prospectus or offering circular included
therein and other related documents in such quantities as may
be reasonably requested by the Warrantholder or Holder.
(g) In addition to any other restrictions on transfer
set forth herein, this Warrant shall be subject to any
restrictions on transfer applicable in accordance with its
terms to the security issuable upon its
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exercise, to the same extent as such restriction applies to
such other security.
12. INDEMNIFICATION.
In connection with any registration statement filed pursuant
to Section 11 hereof, the Company on the one hand, and the Warrantholder and the
Holders of Shares, on the other hand, shall have the same indemnification
obligations to each other, including exceptions therefrom and notification
requirements with respect thereto, as are set forth in Section 1.5(e) of the
Preferred Stock Investment Agreement, dated as of October 23, 1996, between CD
Radio Inc. and the parties listed as Investors on Schedule I attached thereto,
as amended on March 7, 1997 and March 14, 1997.
13. NOTICES.
Any notice pursuant to this Agreement by the Company or by the
Warrantholder shall be in writing and shall be deemed to have been duly given if
delivered or mailed by certified mail, return receipt requested --
(a) If to the Warrantholder, at its address set forth
at the foot of this Agreement;
(b) If to the Company: CD Radio Inc., Sixth Floor,
1001 22nd Street, N.W., Washington, D.C. 20037.
Each party hereto may from time to time change the address to
which notices to it are to be delivered or mailed hereunder by notice in
accordance herewith to the other party.
14. SUCCESSORS.
All the covenants and provisions of this Agreement by or for
the benefit of the Company or the Warrantholder shall bind and inure to the
benefit of their respective successors and assigns hereunder.
15. MERGER OR CONSOLIDATION OF THE COMPANY.
The Company shall not merge or consolidate with or into any
other corporation or sell any or substantially all of its property to another
corporation, unless the provisions of Subsection 7.3 are complied with.
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<PAGE>
<PAGE>
16. REPRESENTATIONS UPON EXERCISE.
Upon exercise of the Warrant, unless the exercise is a
cashless exercise, the Company shall be entitled, as a condition to acceptance
of the Warrant Price and the delivery of certificates representing the Shares,
to require the Warrantholder to elect to do one of the following: (i) to
represent that it is an Accredited Investor as defined under the Act and is
acquiring the Shares for investment, or (ii) to elect a simultaneous exercise of
the Warrant and conversion of the Shares acquired thereby, and if the Common
Stock issuable upon such conversion is not then registered under the Act, to
represent that it is acquiring such Common Stock for investment, or (iii) to
furnish to the Company an opinion of counsel, reasonably satisfactory to the
Company and its counsel, that exercise of the Warrant by the Warrantholder is a
transaction exempt from the registration requirements of the Act.
17. APPLICABLE LAW.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements and
made to be performed entirely within such state.
18. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give any
person or corporation other than the Company and the Warrantholder any legal or
equitable right, remedy or claim under this Agreement, and this Agreement shall
be for the sole and exclusive benefit of the Company and the Warrantholder.
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<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.
CD RADIO INC.
By:____________________________
Andrew J. Greenebaum
Chief Financial Officer
Warrantholder:
_____________________________________________
By:__________________________________________
Address:_____________________________________
_____________________________________
_____________________________________
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<PAGE>
<PAGE>
APPENDIX 1
SCHEDULE OF ADJUSTMENTS TO WARRANT PRICE
The price per Share (the "Warrant Price") at which Shares
shall be purchasable upon exercise of the Warrant shall be as set forth below,
subject to further adjustment pursuant to Section 7 of the Agreement:
When the date of exercise is on or after Then the Warrant Price shall be
December 1, 1997 but before the $68.47
date immediately below
January 1, 1998 but before the $68.35
date immediately below
February 1, 1998 but before the $68.23
date immediately below
March 1, 1998 but before the date $68.12
immediately below
April 1, 1998 but before the date $68.00
immediately below
May 1, 1998 but before the date $67.88
immediately below
June 1, 1998 but before the date $67.76
immediately below
July 1, 1998 but before the date $67.65
immediately below
August 1, 1998 but before the date $67.53
immediately below
September 1, 1998 but before the $67.41
date immediately below
October 1, 1998 but before the $67.29
date immediately below
November 1, 1998 but before the $67.17
date immediately below
December 1, 1998 but before the $67.03
date immediately below
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<PAGE>
<PAGE>
When the date of exercise is on or after Then the Warrant Price shall be
January 1, 1999 but before the $66.89
date immediately below
February 1, 1999 but before the $66.75
date immediately below
March 1, 1999 but before the date $66.61
immediately below
April 1, 1999 but before the date $66.47
immediately below
May 1, 1999 but before the date $66.33
immediately below
June 1, 1999 but before the date $66.19
immediately below
July 1, 1999 but before the date $66.05
immediately below
August 1, 1999 but before the date $65.90
immediately below
September 1, 1999 but before the $65.76
date immediately below
October 1, 1999 but before the $65.62
date immediately below
November 1, 1999 but before the $65.48
date immediately below
December 1, 1999 but before the $65.32
date immediately below
January 1, 2000 but before the $65.15
date immediately below
February 1, 2000 but before the $64.99
date immediately below
March 1, 2000 but before the date $64.82
immediately below
April 1, 2000 but before the date $64.66
immediately below
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<PAGE>
<PAGE>
When the date of exercise is on or after Then the Warrant Price shall be
May 1, 2000 but before the date $64.49
immediately below
June 1, 2000 but before the date $64.33
immediately below
July 1, 2000 but before the date $64.16
immediately below
August 1, 2000 but before the date $64.00
immediately below
September 1, 2000 but before the $63.84
date immediately below
October 1, 2000 but before the $63.67
date immediately below
November 1, 2000 but before the $63.51
date immediately below
December 1, 2000 but before the $63.34
date immediately below
January 1, 2001 but before the $63.15
date immediately below
February 1, 2001 but before the $62.97
date immediately below
March 1, 2001 but before the date $62.78
immediately below
April 1, 2001 but before the date $62.59
immediately below
May 1, 2001 but before the date $62.40
immediately below
June 1, 2001 but before the date $62.21
immediately below
July 1, 2001 but before the date $62.02
immediately below
August 1, 2001 but before the date $61.84
immediately below
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<PAGE>
<PAGE>
When the date of exercise is on or after Then the Warrant Price shall be
September 1, 2001 but before the $61.65
date immediately below
October 1, 2001 but before the $61.48
date immediately below
November 1, 2001 but before the $61.27
date immediately below
December 1, 2001 but before the $61.08
date immediately below
January 1, 2002 but before the $60.87
date immediately below
February 1, 2002 but before the $60.66
date immediately below
March 1, 2002 but before the date $60.45
immediately below
April 1, 2002 $60.24
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<PAGE>
<PAGE>
EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") AND NEITHER THE SECURITIES NOR ANY
INTEREST THEREIN MAY BE SOLD, EXCHANGED, HYPOTHECATED,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT.
WARRANT TO PURCHASE _________ SHARES
Of 10 1/2% Series C Delayed Convertible Preferred Stock
VOID AFTER 5:00 P.M., NEW YORK CITY TIME, ON APRIL 9, 2002.
CD RADIO INC.
This certifies that, for value received,
_________________________, the registered holder hereof or assigns (the
"Warrantholder") is entitled to purchase from CD Radio Inc., a Delaware
corporation (the "Company"), at any time before the expiration time and date
shown above, at an initial purchase price per share of $68.47 (the "Warrant
Price"), the number of shares shown above in accordance with the Warrant
Agreement referred to below. The number of shares purchasable upon exercise of
this Warrant and the Warrant Price shall be subject to adjustment from time to
time as set forth in the Warrant Agreement and Appendix 1 thereto.
This Warrant may be exercised in whole or in part by
presentation of this Warrant with the Purchase Form on the reverse side hereof
duly executed and simultaneous payment of the Warrant Price (subject to
adjustment) at the principal office of the Company. Payment of such price shall
be made at the option of the Warrantholder in cash or by certified or cashier's
check or as otherwise specified in the Warrant Agreement.
This Warrant is issued under and in accordance with a
Preferred Stock Warrant Agreement dated as of April 9, 1997 (the "Warrant
Agreement") between the Company and the Warrantholder and is subject to the
terms and provisions contained in the Warrant Agreement, to all of which the
Warrantholder and any transferee of this Warrant by acceptance hereof consents.
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<PAGE>
<PAGE>
Upon any partial exercise of this Warrant, there shall be
signed and issued to the Warrantholder a new Warrant in respect of the shares as
to which this Warrant shall not have been exercised. This Warrant may be
endorsed at the office of the Company by surrender of this Warrant properly
endorsed for one or more new Warrants of the same aggregate number of Units as
were evidenced by the Warrant or Warrants exchanged. No fractional interests
will be issued upon the exercise of rights to purchase hereunder, but the
Company shall pay the cash value of any fraction upon the exercise of one or
more warrants, subject to the Warrant Agreement. This Warrant is transferable at
the office of the Company in the manner and subject to the limitations set forth
in the Warrant Agreement.
This Warrant does not entitle any Warrantholder hereof to any
of the rights of a stockholder of the Company.
DATED: _________________, 1997.
By:___________________________
Andrew J. Greenebaum
Chief Financial Officer
-21-
<PAGE>
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the within Warrant for, and to purchase
thereunder, ___________ shares (the "Shares") provided for therein, and requests
that certificates be issued in the name of:
--------------------------------------------------------------------------------
(Please Print Name, Address and Taxpayer Identification Number)
--------------------------------------------------------------------------------
and, if said number of Shares shall not be all the Shares purchasable hereunder,
that a new Warrant certificate for the balance of the shares purchasable under
the within Warrant be registered in the name of the undersigned Warrantholder or
his Assignee as below indicated and delivered to the address stated below:
The undersigned:
|_| elects to pay the full Warrant Price in cash or by certified check or
wire funds transfer
|_| elects "cashless exercise" pursuant to Subsection 6.2 of the Warrant
Agreement
Dated:_____________ _____________________________
Signature of Warrantholder
or Assigns
Name of Warrantholder or Assigns:______________________________________________
(Please Print)
Address: ___________________________________________________________________
___________________________________________________________________
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<PAGE>
<PAGE>
Signature Guaranteed: The above signature must correspond with the
name as written upon the face of the Warrant
in every particular, without alteration or
enlargement or any change whatever, unless this
Warrant has been assigned. Signature guarantee
is required if certificates are to be
registered in the name of any person other
than the name written upon the face of the
Warrant.
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<PAGE>
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
--------------------------------------------------------------------------------
(Name and Address of Assignee Must Be Printed or Typewritten)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Taxpayer Identification Number of Assigns)
the within Warrant, hereby irrevocably consisting and appointing ____________
Attorney to transfer said Warrant on the books of the Company, with full power
of substitution in the premises.
Dated:____________________ ____________________________________
Signature of Registered Holder
Signature Guaranteed: The signature of this
assignment must correspond with the
name as it appears upon the face of
the within Warrant certificate in
every particular, without alteration
or enlargement or any change
whatever.
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