Terms Agreement - Sirius Satellite Radio Inc., Morgan Stanley & Co. Inc. and UBS Warburg LLC
EXECUTION COPY
SIRIUS SATELLITE RADIO INC.
(A Delaware corporation)
$175,000,000
3 1/2% Convertible Notes due 2008
TERMS AGREEMENT
May 20, 2003
To: Sirius Satellite Radio Inc.
1221 Avenue of the Americas, 36th Floor
New York, New York 10020
Ladies and Gentlemen:
This is a Terms Agreement referenced in the Form
Underwriting Agreement filed on January 3, 2003 on Form 8-K as Exhibit 1.1 to
Registration Statement No. 333-64344. The terms of the Form Underwriting
Agreement are hereby incorporated herein. We understand that Sirius Satellite
Radio Inc., a Delaware corporation (the "Company"), proposes to issue and sell
$175,000,000 principal amount of its 3 1/2% Convertible Notes due 2008 (the
"Underwritten Securities"). The Underwritten Securities are convertible into
shares of the Company's common stock, par value $.001 per share (the
"Underlying Securities"). Subject to the terms and conditions set forth or
incorporated by reference herein, Morgan Stanley & Co. Incorporated and UBS
Warburg LLC (the "Underwriters") severally and not jointly offer to purchase
the number of Underwritten Securities opposite their names set forth below at
the purchase price set forth below, and some or all of the Option Underwritten
Securities set forth below, to the extent any Underwritten Securities or
Option Underwritten Securities are purchased in accordance with the terms
hereof.
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Principal Amount of
Underwriter Underwritten Securities
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Morgan Stanley & Co. Incorporated........................... $140,000,000
UBS Warburg LLC............................................. $ 35,000,000
The Underwritten Securities shall have the following terms:
3 1/2% Convertible Notes Due 2008
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Title: 31/2% Convertible Notes due 2008
Rank: The notes will be senior unsecured
debt and will rank on a parity with
all of the Company's existing and
future senior unsecured debt and prior
to all of the Company's subordinated
debt.
Aggregate principal amount: $175,000,000
Aggregate principal amount The Underwriters have an option to
of Option Underwritten purchase up to an additional
Securities: $26,250,000 principal amount of
Underwritten Securities (the "Option
Underwritten Securities") at the public
offering price, less an underwriting
discount, within 30 days from the
Closing Date to cover over-allotments.
Initial public offering price: 100% of the principal amount and
accrued interest, if any, from the
Closing Date.
Purchase price: 96.5% of the principal amount, plus
accrued interest, if any, from the
Closing Date.
Underlying Securities: 724.6377 shares of common stock, par
value $.001 per share, of the Company
for each $1,000 principal amount of
the Underwritten Securities.
Indenture: Indenture to be dated as of May 23,
2003 between the Company and The Bank
of New York, as amended by the First
Supplemental Indenture to be dated as
of May 23, 2003.
Selling concession: $21.00 per $1,000 principal amount of
the Underwritten Securities.
Listing requirements for the Nasdaq National Market
Underlying Securities:
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Lock-up provisions: For a period for 90 days from the
Closing Date, the Company and certain
of its executive officers will not,
without the prior written consent of
Morgan Stanley & Co. Incorporated, (1)
offer, pledge, sell, contract to sell,
sell any option or contract to
purchase, purchase any option or
contract to sell, grant any option,
right or warrant to purchase, lend, or
otherwise transfer or dispose of,
directly or indirectly, any shares of
common stock or any securities
convertible into or exercisable or
exchangeable for common stock or (2)
enter into any swap or other
arrangement that transfers to another,
in whole or in part, any of the
economic consequences of ownership of
the common stock, whether any such
transaction described in clause (1) or
(2) above is to be settled by delivery
of common stock or such other
securities, in cash or otherwise. The
foregoing sentence shall not apply to
(a) the sale of any Underwritten
Securities to the Underwriters
pursuant to the Form Underwriting
Agreement and this Terms Agreement or
(b) transactions relating to shares of
common stock or other securities
acquired in open market transactions
after the completion of the Public
Offering. In addition, without the
prior written consent of Morgan
Stanley & Co. Incorporated on behalf
of the Underwriters, none of such
officers will, during the period
commencing on the date hereof and
ending on August 20, 2003, make any
demand for or exercise any right with
respect to, the registration of any
shares of common stock or any security
convertible into or exercisable or
exchangeable for common stock. Such
officers will also agree and consent
to the entry of stop transfer
instructions with the Company's
transfer agent and registrar against
the transfer of the such officers'
shares of common stock except in
compliance with the foregoing
restrictions.
Comfort letter: The Company shall cause the
Accountant's Comfort Letter and the
Bring-down Comfort Letter referenced
in, respectively Section 5(g) and
Section 5(h) of the Form Underwriting
Agreement to be delivered, except that
such letters will be delivered by
Ernst & Young LLP in lieu of Arthur
Andersen LLP.
Additional Representations of The Company represents and warrants to
the Company: and agrees with each of the Underwriters
that there are no contracts,
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agreements or understandings between
the Company and any person granting
such person the right to require the
Company to file a registration
statement under the Securities Act
with respect to any securities of the
Company or to require the Company to
include such securities with the
Underwritten Securities registered
pursuant to the Registration
Statement.
Additional Covenants of the The Company covenants with each of the
Company: Underwriters whether or not the
transactions contemplated in this
Agreement are consummated or this
Agreement is terminated, to pay or
cause to be paid all expenses incident
to the performance of its obligations
under this Agreement, including: (i)
the cost of printing or producing any
Blue Sky or Legal Investment
memorandum in connection with the
offer and sale of the Underwritten
Securities under state securities laws
and all expenses in connection with
the qualification of the Securities
for offer and sale under state
securities laws as provided in Section
3(f) of the Form Underwriting
Agreement, including filing fees and
the reasonable fees and disbursements
of counsel for the Underwriters in
connection with such qualification and
in connection with the Blue Sky or
Legal Investment memorandum, (ii) the
cost of printing certificates
representing the Underwritten
Securities, (iii) the costs and
charges of any transfer agent,
registrar or depositary, (iv) the
document production charges and
expenses associated with printing this
Agreement and (v) all other costs and
expenses incident to the performance
of the obligations of the Company
hereunder for which provision is not
otherwise made in this Section. It is
understood, however, that except as
provided in Sections 4, 6 and 7 of the
Form Underwriting Agreement,
"Additional Covenants of the Company"
and "Additional Termination
Provisions" below, the Underwriters
will pay all of their costs and
expenses, including fees and
disbursements of their counsel, stock
transfer taxes payable on resale of
any of the Underwritten Securities by
them and any advertising expenses
connected with any offers they may
make.
Additional Conditions of The obligations of the Underwriters to
Underwriters' Obligations: purchase and pay for the Underwritten
Securities pursuant this Terms
Agreement are subject to the following
further conditions: subsequent to
execution and delivery of this Terms
Agreement and prior to the Closing
Date there
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shall not have occurred any change, or
any development involving a
prospective change, in the condition,
financial or otherwise, or in the
earnings, business or operations of
the Company and its subsidiaries,
taken as a whole, from that set forth
in the Prospectus (exclusive of any
amendments or supplements thereto
subsequent to the date of this
Agreement) that, in Morgan Stanley &
Co. Incorporated's judgment, is
material and adverse and that makes
it, in Morgan Stanley & Co.
Incorporated's judgment, impracticable
to market the Underwritten Securities
on the terms and in the manner
contemplated in the Prospectus.
Additional Termination The Underwriters may terminate this
Provisions: Terms Agreement, by notice to the
Company at any time at or prior to the
Closing Date if (i) trading is
suspended or materially limited on, or
by, as the case may be, any of the
Chicago Board of Options Exchange, the
Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) a
material disruption in securities
settlement, payment or clearance
services in the United States shall
have occurred, or (iii) there shall
have occurred any outbreak or
escalation of hostilities, or any
change in financial markets or any
calamity or crisis that, in Morgan
Stanley & Co. Incorporated's judgment,
is material and adverse and which,
singly or together with any other
event specified in this clause (iii),
makes it, in Morgan Stanley & Co.
Incorporated's judgment, impracticable
or inadvisable to proceed with the
offer, sale or delivery of the
Underwritten Securities on the terms
and in the manner contemplated in the
Prospectus.
If this Terms Agreement shall be
terminated by any Underwriters, or any
of them, because of any failure or
refusal on the part of the Company to
comply with the terms or to fulfill
any of the conditions of this Terms
Agreement, or if for any reason the
Company shall be unable to perform its
obligations under this Terms
Agreement, the Company will reimburse
the Underwriters or such Underwriters
as have so terminated this Terms
Agreement with respect to themselves,
severally, for all out-of-pocket
expenses (including the fees and
disbursements of their counsel)
reasonably incurred by such
Underwriters in connection with this
Terms Agreement or the offering
contemplated
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hereunder.
Additional Indemnification Provisions: The Company agrees to indemnify and hold
harmless each affiliate of an
Underwriter within the meaning of Rule
405 under the 1933 Act.
Other Terms: This Terms Agreement may be signed in
counterparts, each of which shall be an
original, with the same effect as if
the signatures thereto and hereto were
upon the same instrument.
Notices: All notices and other communications
hereunder shall be in writing and
shall be deemed to have been duly
given if mailed or transmitted by any
standard form of telecommunication.
Notices to the Underwriters shall be
directed to Morgan Stanley & Co.
Incorporated, 1585 Broadway, New York,
NY 10036, Attention: Global Capital
Markets Syndicate Desk; notices to the
Company shall be directed to the
Company at 1221 Avenue of the
Americas, 36th Floor, New York, New
York 10020, Attention: Patrick L.
Donnelly, Executive Vice President,
General Counsel and Secretary.
Closing Date and location: May 23, 2003
10:00 a.m.
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
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Please accept this offer by signing a copy of this Terms Agreement
in the space set forth below and returning the signed copy to us.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED,
UBS WARBURG LLC,
by MORGAN STANLEY & CO. INCORPORATED
---------------------------------
Name:
Title:
Accepted:
SIRIUS SATELLITE RADIO INC.,
by
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Patrick L. Donnelly
Executive Vice President,
General Counsel and Secretary
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