Customer Credit Agreement - XM Satellite Radio Holdings Inc. and Boeing Capital Services Corp.
EXECUTION COPY
LOAN #4010-7
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CUSTOMER CREDIT AGREEMENT
dated as of
December 5, 2001
between
XM SATELLITE RADIO HOLDINGS INC.
and
BOEING CAPITAL SERVICES CORPORATION
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TABLE OF CONTENTS
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PAGE
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ARTICLE I DEFINITIONS...............................................................1
SECTION 1.01. DEFINED TERMS................................................1
SECTION 1.02. TERMS GENERALLY.............................................10
SECTION 1.03. ACCOUNTING TERMS; GAAP......................................11
ARTICLE II LOAN PROVISIONS.........................................................11
SECTION 2.01. THE COMMITMENT..............................................11
SECTION 2.02. TERMINATION AND OF THE COMMITMENT...........................12
SECTION 2.03. REQUEST FOR LOAN............................................12
SECTION 2.04. RECORDS; PROMISSORY NOTES...................................12
SECTION 2.05. FUNDING OF THE LOAN.........................................13
SECTION 2.06. REPAYMENT OF THE LOAN.......................................13
SECTION 2.07. PREPAYMENT OF THE LOAN......................................13
SECTION 2.08. INTEREST....................................................14
SECTION 2.09. ALTERNATE RATE OF INTEREST..................................14
SECTION 2.10. INCREASED COSTS.............................................15
SECTION 2.11. BREAK FUNDING PAYMENTS......................................16
SECTION 2.12. TAXES.......................................................16
SECTION 2.13. PAYMENTS GENERALLY..........................................17
SECTION 2.14. MITIGATION OBLIGATIONS......................................18
ARTICLE III REPRESENTATIONS AND WARRANTIES.........................................18
SECTION 3.01. ORGANIZATION; POWERS........................................18
SECTION 3.02. AUTHORIZATION; ENFORCEABILITY...............................18
SECTION 3.03. COMPLIANCE WITH LAWS AND AGREEMENTS.........................18
SECTION 3.04. ERISA.......................................................19
SECTION 3.05. LITIGATION AND ENVIRONMENTAL MATTERS........................19
SECTION 3.06. COLLATERAL..................................................19
SECTION 3.07. SECURITY DOCUMENTS..........................................19
SECTION 3.08. TAXES.......................................................20
SECTION 3.09. USE OF PROCEEDS.............................................20
SECTION 3.10. SATELLITE PURCHASE AGREEMENT AND SPA ASSIGNMENT.............20
SECTION 3.11. GOVERNMENTAL APPROVALS; NO CONFLICTS........................20
ARTICLE IV CONDITIONS..............................................................20
SECTION 4.01. EFFECTIVE DATE..............................................20
SECTION 4.02. ADDITIONAL CONDITIONS TO EFFECTIVE DATE.....................22
SECTION 4.03. TERMINATION OF THE COMMITMENT...............................23
ARTICLE V AFFIRMATIVE COVENANTS....................................................23
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION..................23
SECTION 5.02. NOTICES OF MATERIAL EVENTS..................................25
SECTION 5.03. EXISTENCE; CONDUCT OF BUSINESS..............................25
SECTION 5.04. BOOKS AND RECORDS; INSPECTION RIGHTS........................25
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SECTION 5.05. MAINTENANCE OF PROPERTIES...................................26
SECTION 5.06. INSURANCE...................................................26
SECTION 5.07. COMPLIANCE WITH LAWS........................................27
SECTION 5.08. PAYMENT OF OBLIGATIONS......................................27
SECTION 5.09. FURTHER ASSURANCES..........................................27
SECTION 5.10. USE OF PROCEEDS.............................................28
ARTICLE VI NEGATIVE COVENANTS......................................................28
SECTION 6.01. FUNDAMENTAL CHANGES.........................................28
SECTION 6.02. LIENS.......................................................28
SECTION 6.03. AMENDMENT OF SATELLITE PURCHASE AGREEMENT; ASSIGNMENT OF
SPA ASSIGNMENT..............................................29
SECTION 6.04. DISPOSITION OF COLLATERAL...................................29
SECTION 6.05. SUBSIDIARIES................................................29
ARTICLE VII EVENTS OF DEFAULT......................................................29
SECTION 7.01. EVENTS OF DEFAULT...........................................29
ARTICLE VIII MISCELLANEOUS.........................................................33
SECTION 8.01. NOTICES.....................................................33
SECTION 8.02. WAIVERS; AMENDMENTS.........................................34
SECTION 8.03. EXPENSES; INDEMNITY; DAMAGE WAIVER..........................34
SECTION 8.04. SUCCESSORS AND ASSIGNS......................................35
SECTION 8.05. SURVIVAL....................................................37
SECTION 8.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS....................37
SECTION 8.07. SEVERABILITY................................................37
SECTION 8.08. RIGHT OF SETOFF.............................................37
SECTION 8.09. GOVERNING LAW; JURISDICTION; ETC............................37
SECTION 8.10. WAIVER OF JURY TRIAL........................................38
SECTION 8.11. HEADINGS....................................................39
SECTION 8.12. TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY...........39
SCHEDULE I - Litigation
SCHEDULE II - Environmental Matters
SCHEDULE III - Qualifications to Financial Statements SCHEDULE IV - Subsidiaries
EXHIBIT A - Form of Notice of Borrowing
EXHIBIT B - Form of Opinion of Special Regulatory Counsel to the Customer and XM
EXHIBIT C - Form of Opinion of Special New York and Delaware Counsel to the
Customer and XM
EXHIBIT D - Form of Security Agreement
EXHIBIT E - Form of SPA Assignment
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This CUSTOMER CREDIT AGREEMENT dated as of December 5, 2001
(this "AGREEMENT") is entered into between XM SATELLITE RADIO HOLDINGS INC., a
corporation incorporated under the laws of Delaware (the "CUSTOMER"), and BOEING
CAPITAL SERVICES CORPORATION, a corporation incorporated under the laws of
Delaware (together with its successors and any other Person that shall become a
party hereto as a Lender pursuant to Section 8.04, the "LENDER").
The Customer has requested that the Lender make a loan to it
in an aggregate principal amount not exceeding Thirty Five Million Dollars
($35,000,000). The Lender is prepared to make the loan upon the terms and
conditions hereof, and, accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms have the meanings specified below:
"ADJUSTED LIBOR RATE" means, for any Interest Period for any
Eurodollar Loan, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the LIBOR Rate for such Interest Period.
"AGREEMENT" has the meaning assigned to such term in the
Preamble.
"AFFILIATE" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"APPLICABLE MARGIN" means, for any day during any period set
forth in the schedule below, with respect to the Loan, the applicable margin per
annum set forth below under the caption "Margin":
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PERIOD MARGIN
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Effective Date to second anniversary of Effective Date 3.5%
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Second anniversary of Effective Date to Maturity Date 4.5%
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"BOARD" means the Board of Governors of the Federal Reserve
System of the United States of America.
"BREAK FUNDING COSTS" means, with respect to the Customer's
failure to pay any principal of the Loan on any date it is obligated to do so,
other than on the last day of an Interest Period therefor (including as a result
of an Event of Default), or to borrow, continue or prepay the Loan on the date
specified in any notice delivered pursuant hereto, the compensation to be
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paid by the Customer to the Lender for the loss, cost and expense attributable
to such event in accordance with Section 2.11.
"BUSINESS DAY" means any day (a) that is not a Saturday,
Sunday or other day on which commercial banks in New York City are authorized or
required by law to remain closed and (b) if such day relates to a borrowing of,
a payment or prepayment of principal of or interest on, a continuation or
conversion of or into, or an Interest Period for, a Eurodollar Loan, or to a
notice by the Customer with respect to any such borrowing, payment, prepayment,
continuation, conversion, or Interest Period, that is also a day on which
dealings in Dollar deposits are carried out in the London interbank market.
"CAPITAL LEASE OBLIGATIONS" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"CHANGE IN LAW" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by the Lender (or,
for purposes of Section 2.10(b), by any lending office of the Lender or by the
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COLLATERAL" means the following:
(a) all rights, title and interest of Customer in and to the
Ground Spare Satellite Bus under the Ground Spare Satellite Bus
Provisions of the Satellite Purchase Agreement, as assigned to the
Customer in accordance with the SPA Assignment;
(b) all rights, title and interest of the Customer in, to and
under the Ground Spare Satellite Bus Provisions of the Satellite
Purchase Agreement and the SPA Assignment; and
(c) all rights, title and interest of the Customer in and to
the proceeds of insurance maintained pursuant to Section 5.06 in
respect of which the Lender is required by Section 5.06(b) to be named
as co-loss payee,
in each case whether acquired by the Customer as of the Effective Date or at any
time thereafter.
"COMMITMENT" means the Commitment of the Lender to make the
Loan hereunder, expressed as an amount representing the maximum aggregate amount
of the Loan to be made by the Lender hereunder. The amount of the Commitment is
$35,000,000.
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"CONSOLIDATED" refers to the consolidation of accounts in
accordance with GAAP.
"CONTROL" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a Person
(whether through the ability to exercise voting power, by contract or
otherwise); PROVIDED that, in any event, any Person that, directly or
indirectly, owns securities, partnership interests, membership interests or
other equity interests having 50% or more of the voting power for the election
of directors or other governing bodies of a Person will be deemed to control
such other Person. "CONTROLLING" and "CONTROLLED" have meanings correlative
thereto.
"CUSTOMER" has the meaning assigned to such term in the
Preamble.
"DEFAULT" means any event or condition that upon notice, lapse
of time or both would, unless cured or waived, become an Event of Default.
"DEFAULT INTEREST PERIOD" means, during any period in which
any principal of the Loan or any other amount under this Agreement is not paid
when due, each successive period as the Lender shall from time to time choose;
PROVIDED that (a) no such period shall exceed three months' duration and (b) the
first such period shall commence as of the date on which such principal or other
amount became due and each succeeding period shall commence upon the expiry of
the immediately preceding period.
"DISCLOSED MATTERS" means the actions, suits and proceedings
disclosed in Schedule I, the environmental matters disclosed in Schedule II, and
the qualifications to the Customer's financial statements disclosed in Schedule
III.
"DOLLARS" or "$" refers to lawful money of the United States
of America.
"EFFECTIVE DATE" means the date on which the conditions
specified in Section 4.01 and Section 4.02 are satisfied (or waived in
accordance with Section 8.02).
"ENVIRONMENTAL LAWS" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or
otherwise, of the Customer or any Subsidiary directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
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"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Customer, is treated as a single employer
under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the thirty (30) day notice period is
waived); (b) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (d) the incurrence by the Customer or any of
its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Customer or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Customer or any of its ERISA Affiliates of
any liability with respect to the withdrawal or partial withdrawal from any Plan
or Multiemployer Plan; or (g) the receipt by the Customer or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Customer or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"EURODOLLAR", when used in reference to the Loan, refers to
whether the Loan is bearing interest at a rate determined by reference to the
Adjusted LIBOR Rate.
"EVENT OF DEFAULT" has the meaning assigned to such term in
Article VII.
"EXCLUDED TAXES" means, with respect to the Lender or any
other recipient of any payment to be made by or on account of any obligation of
the Customer hereunder, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States of America, or by the jurisdiction under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of the Lender, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction in which the Customer is
located, and (c) any Taxes that would not have been imposed but for the
activities of the recipient in the jurisdiction imposing such Tax which are not
related to this Agreement or any of the other Loan Documents or the transactions
contemplated by the Loan Documents, including the execution and delivery of the
Loan Documents and the administration of the provisions or exercise of rights
and remedies under the Loan Documents.
"GAAP" means generally accepted accounting principles in the
United States of America.
"GOVERNMENT APPROVALS" means all authorizations, consents,
approvals, licenses, rulings, permits, certifications, exemptions, filings or
registrations by or with a Governmental Authority required by applicable
requirements of law to be obtained or held by the Customer or an Affiliate
thereof in connection with (a) the due execution, delivery and performance by
the
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Customer of its obligations, and the exercise of its rights under this
Agreement, the Security Documents, the SPA Assignment and any other agreement
entered into from time to time relating to the Satellite and (b) the grant of
Liens created by the Security Documents and the validity, enforceability and
perfection thereof and the exercise by the Lender of its rights and remedies
thereunder.
"GOVERNMENTAL AUTHORITY" means any international body or any
nation or government, any state of political subdivision thereof, any central
bank (or similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any corporation or other entity
owned or controlled, through stock or capital or otherwise, by any of the
foregoing.
"GROUND SPARE SATELLITE BUS" means the Satellite, except for
the Ground Spare Satellite Payload.
"GROUND SPARE SATELLITE BUS PROVISIONS OF THE SATELLITE
PURCHASE AGREEMENT" means all of the provisions of the Satellite Purchase
Agreement which pertain to the purchase and sale of the Ground Spare Satellite
Bus and which have been assigned to the Customer from XM pursuant to and in
accordance with the terms of the SPA Assignment.
"GROUND SPARE SATELLITE PAYLOAD" means the following
components of the Satellite: (i) all hardware above the four-point interface
above the bus module; and (ii) all antenna structures, deployment mechanisms and
reflectors.
"GUARANTEE" of or by any Person (the "GUARANTOR") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; PROVIDED, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"HAZARDOUS MATERIALS" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
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"HEDGING AGREEMENT" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"HOLDINGS INDENTURE" means the indenture dated March 6, 2001,
relating to the 7.75% convertible subordinated notes issued by the Customer.
"INDEBTEDNESS" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INDEMNITEE" has the meaning assigned to such term in
Section 8.03(b).
"INFORMATION" has the meaning assigned to such term in
Section 8.12(b).
"INSURED PARTIES" means the Customer, the Lender and such
other Persons providing finance to the Customer as the Customer may designate.
"INTEREST PAYMENT DATE" means (a) with respect to the Loan,
the last day of each Interest Period therefor, and (b) the Maturity Date.
"INTEREST PERIOD" means the period commencing on the date of
the Loan and ending on the numerically corresponding day in the calendar month
that is three months thereafter, and each three month period thereafter;
PROVIDED, that (i) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (ii) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest
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Period and (iii) if any Interest Period would otherwise end after the Maturity
Date, such Interest Period shall end on the Maturity Date.
"LENDER" has the meaning assigned to such term in the
Preamble.
"LIBOR RATE" means, for any Interest Period for any Eurodollar
Loan, the rate appearing on Page 3750 of the Telerate News Service (or on any
successor or substitute page of such Service, or any successor to or substitute
for such Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the Lender from time to
time for purposes of providing quotations of interest rates applicable to Dollar
deposits in the London interbank market) at approximately 11:00 a.m., London
time, two (2) Business Days prior to the commencement of such Interest Period,
as the rate for the offering of Dollar deposits with a maturity comparable to
such Interest Period. If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such financial
reporting service or other information as shall be selected by the Lender with
the Customer's approval (which approval shall not be unreasonably withheld or
delayed).
"LIEN" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor under
any conditional sale agreement, capital lease or title retention agreement (or
any financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"LOAN DOCUMENTS" means, collectively, this Agreement and the
Security Documents.
"LOAN" means the loan made by the Lender to the Customer
pursuant to this Agreement.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, assets, operations, prospects or condition, financial or
otherwise, of XM, the Customer and their Subsidiaries taken as a whole, (b) the
ability of XM or the Customer to perform any of its respective obligations under
this Agreement or any of the other Loan Documents to which they are party, (c)
the value of the Collateral or the validity, enforceability or priority of the
Liens contemplated under the Security Documents, or (d) the ability of the
Lender to exercise any of its rights and/or remedies available under this
Agreement or any of the other Loan Documents.
"MATERIAL INDEBTEDNESS" means Indebtedness (other than the
Loan), of the Customer or XM or obligations under one or more Hedging Agreements
in each case in an aggregate principal amount exceeding $5,000,000 and includes,
without limitation, the Holdings Indenture and the XM Indenture. For purposes of
determining Material Indebtedness, the "PRINCIPAL AMOUNT" of the obligations of
any Person in respect of any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that such Person
would be required to pay if such Hedging Agreement were terminated at such time.
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"MATURITY DATE" means the earliest to occur of (a) the fifth
anniversary of the Effective Date, (b) the Deferred Payment Date under the
Ground Spare Satellite Bus Provisions of the Satellite Purchase Agreement, and
(c) five (5) Business Days prior to the date on which the Customer proposes to
have the Satellite shipped to the Sea Launch launch processing facility pursuant
to Article 8.2(h) of the Ground Spare Satellite Bus Provisions of the Satellite
Purchase Agreement.
"MINIMUM INSURANCE THRESHOLD" means, with respect to the
insurance required to be procured and maintained under Section 5.06(a) of this
Agreement, an amount equal to at least the aggregate principal amount of the
Loan, together with any accrued and unpaid interest, fees and other amounts that
the Customer is obligated to pay in accordance with the terms of this Agreement.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"NEGOTIATION PERIOD" has the meaning assigned to such term in
Section 2.09(a).
"NOTICE OF BORROWING" means a notice substantially in the form
of EXHIBIT A.
"PARTICIPANT" has the meaning assigned to such term in
Section 8.04(c).
"OTHER TAXES" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
"PERMITTED LIENS" means:
(a) Liens created pursuant to the terms of the Loan
Documents;
(b) Liens imposed by law for taxes that are not yet due or
are being contested in compliance with Section 5.08;
(c) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not
overdue by more than thirty (30) days or are being contested in
compliance with Section 5.08;
(d) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
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(e) cash deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
letters of credit, performance bonds and other obligations of a like
nature, in each case in the ordinary course of business;
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of the Customer or any
Subsidiary; and
(g) Liens imposed pursuant to Article 5.7 of the Ground Spare
Satellite Bus Provisions of the Satellite Purchase Agreement;
PROVIDED that the term "Permitted Lien" shall not include any Lien securing
Indebtedness.
"PERSON" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Customer or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"POST-DEFAULT RATE" has the meaning assigned to such term in
Section 2.08(b).
"RELATED PARTIES" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"RESPONSIBLE OFFICER" means, as to the Customer, the
secretary, the assistant secretary, the chief financial officer, the general
counsel or such other Person designated by the foregoing.
"SATELLITE" means the Ground Spare Satellite, as such term is
defined in the Satellite Purchase Agreement.
"SATELLITE MANUFACTURER" means Boeing Satellite Systems
International.
"SATELLITE PURCHASE AGREEMENT" means the Third Amended and
Restated Satellite Purchase Agreement dated May 15, 2001 between XM and the
Satellite Manufacturer for the manufacture of three Boeing Satellite Systems 702
satellites designated XM3, including the Satellite.
"SECURITY AGREEMENT" means a Security Agreement between the
Customer and the Lender dated as of December 5, 2001, substantially in the form
attached hereto as EXHIBIT D.
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"SECURITY DOCUMENTS" means, collectively, the Security
Agreement and all Uniform Commercial Code financing statements or comparable
instruments as may be required or desirable pursuant to the terms of applicable
law, required by the Security Agreement to be filed with respect to the security
interests in personal property and fixtures created pursuant to the Security
Agreement and such other agreements and documents as shall be necessary to
provide the Lender with valid, enforceable and perfected first priority security
interests in the Collateral.
"SPA ASSIGNMENT" means the Assignment Agreement between the
Customer and XM dated as of December 5, 2001, substantially in the form attached
hereto as EXHIBIT E.
"SUBSIDIARY" means, with respect to any Person (the "PARENT")
at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is, as of
such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent. Unless
otherwise specified, "Subsidiary" means a Subsidiary of the Customer.
"SUBSTITUTE BASIS" has the meaning given to such term in
Section 2.09(a).
"SUPPLEMENTAL INDENTURE" means the supplemental indenture
dated as of December 5, 2001 amending the terms of the XM Indenture.
"TAXES" means any and all present or future taxes, fees,
levies, imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
"TRANSACTIONS" means the execution, delivery and performance
by the Customer and XM of this Agreement and the other Loan Documents to which
they are a party, the borrowing of the Loan and the use of the proceeds thereof.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"XM" means XM Satellite Radio Inc., a Delaware corporation.
"XM INDENTURE" means the indenture dated as of March 15, 2000
relating to the 14% senior secured notes due 2010 issued by XM.
SECTION 1.02. TERMS GENERALLY. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation".
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The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.03. ACCOUNTING TERMS; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; PROVIDED
that, if the Customer notifies the Lender that the Customer requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Lender notifies the Customer that the
Lender requests an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith.
ARTICLE II
LOAN PROVISIONS
SECTION 2.01. THE COMMITMENT.
(a) THE LOAN. The Lender agrees, subject to the terms hereof,
and satisfaction of the conditions precedent contained in Sections 4.01 and
4.02, to make the Loan to the Customer on the date specified in a Notice of
Borrowing delivered pursuant to Section 2.03 in an aggregate principal amount
equal to the Commitment. Amounts prepaid or repaid in respect of the Loan may
not be reborrowed.
(b) BORROWING. The Customer shall give the Lender notice of
the borrowing hereunder as provided in Section 2.03 by delivering a Notice of
Borrowing; PROVIDED that such borrowing shall be made on a single date and in
the amount not exceeding the Commitment.
(c) PURPOSE. The Customer shall, subject to the terms and
conditions hereof, use the Loan solely to pay amounts owed to XM pursuant to the
SPA Assignment or arising as a result of the rights, duties and obligations of
the Ground Spare Satellite Bus Provisions of the Satellite Purchase Agreement
assumed from XM under the terms of the SPA Assignment.
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(d) SECURITY. All obligations of the Customer under this
Agreement shall be secured by the Collateral as set forth in the Security
Documents from and after the date of execution thereof, as provided below,
subject to the condition that if the Loan to be so secured shall be repaid in
full, the Lender shall release the Collateral from the security interest created
therein. The Customer shall enter into, or shall cause XM to enter into, as the
case may be, on or before the Effective Date:
(i) the SPA Assignment, providing for a partial assignment of
the Satellite Purchase Agreement from XM to the Customer such that all
rights of XM relating to the purchase and sale of the Ground Spare
Satellite Bus under the Satellite Purchase Agreement shall have been
assigned to the Customer; and
(ii) the Security Documents, including the Security Agreement,
granting to the Lender a valid Lien in or on all Collateral, which Lien
shall be subject to no prior Liens, shall be perfected at all times on
and after the Effective Date and shall be otherwise in accordance with
the terms hereof, and as a condition to the Effective Date the Lender
shall be satisfied by receipt of legal opinions or other evidence that
such grant is not void or subject to avoidance if the Customer becomes
the subject of an insolvency proceeding.
SECTION 2.02. TERMINATION AND OF THE COMMITMENT.
(a) SCHEDULED TERMINATION. Unless previously terminated, the
Commitment shall terminate upon disbursement of the Loan on the date specified
by Customer in the Notice of Borrowing.
(b) EFFECT OF TERMINATION. The termination of the Commitment
shall be permanent.
SECTION 2.03. REQUEST FOR LOAN. To request the Loan, the Customer shall
notify the Lender of such request by delivery of a Notice of Borrowing in a form
reasonably acceptable to the Lender and signed by the Customer not later than
11:00 a.m. New York City time, three (3) Business Days before the date of the
proposed Loan.
SECTION 2.04. RECORDS; PROMISSORY NOTES.
(a) MANNER OF PAYMENT. Any prepayment or repayment of the Loan
shall be applied in the order of the remaining duration of its Interest Periods
(the portion of the Loan with the shortest remaining Interest Period to be
repaid first).
(b) MAINTENANCE OF RECORDS BY THE LENDER. The Lender shall
maintain in accordance with its usual practice records evidencing the
indebtedness of the Customer to the Lender resulting from the Loan in which it
shall record (i) the amount of any principal or interest due and payable or to
become due and payable from the Customer hereunder and (ii) the amount of any
sum received by the Lender hereunder.
(c) EFFECT OF ENTRIES. The entries made in the records
maintained pursuant to paragraph (b) of this Section shall be PRIMA FACIE
evidence of the existence and amounts of the
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obligations recorded therein; PROVIDED that the failure of the Lender to
maintain such records or any error therein shall not in any manner affect the
obligation of the Customer to repay the Loan in accordance with the terms of
this Agreement.
(d) PROMISSORY NOTES. The Lender may request that the Loan be
evidenced by a promissory note. In such event, the Customer shall prepare,
execute and deliver to the Lender a promissory note payable to the Lender and in
a form approved by the Lender. Thereafter, the Loan evidenced by such promissory
note and interest thereon shall at all times (including after assignment
pursuant to Section 8.04) be represented by a promissory note in such form
payable to the payee named therein (or, if such promissory note is a registered
note, to such payee and its registered assigns).
SECTION 2.05. FUNDING OF THE LOAN. The Lender will make the Loan
available to the Customer on the proposed date thereof by wire transfer of
immediately available funds to the account of the Customer designated by it in
the Notice of Borrowing PROVIDED that the conditions precedent set forth in
Sections 4.01 and 4.02 have been satisfied as of the date of the proposed
borrowing.
SECTION 2.06. REPAYMENT OF THE LOAN. The Customer hereby unconditionally
promises to pay to the Lender the unpaid principal amount of the Loan, together
with any accrued and unpaid interest, on the Maturity Date.
SECTION 2.07. PREPAYMENT OF THE LOAN.
(a) OPTIONAL PREPAYMENTS. The Customer may, upon five (5)
Business Days prior written notice to the Lender prepay the Loan, in whole or in
part, without premium or penalty, in amounts of at least five million Dollars
($5,000,000) or any whole number multiple of one million Dollars ($1,000,000) in
excess thereof; PROVIDED that interest on the amount of such prepayment, accrued
to the date of prepayment, together with any Break Funding Costs and any accrued
and unpaid fees and other amounts due and payable under this Agreement shall be
paid in full on the date of prepayment. The portion of the Loan prepaid in
accordance with this Section 2.07(a) may not be reborrowed.
(b) MANDATORY PREPAYMENTS. If any of the Ground Spare
Satellite Bus Provisions of the Satellite Purchase Agreement are terminated for
any reason, then (A) the Customer shall promptly notify the Lender of such
event, and (B) the Customer shall prepay, without penalty the Loan in full,
together with (i) interest thereon accrued to the date of prepayment, (ii) any
applicable Break Funding Costs and (iii) any fees and other amounts due and
payable under this Agreement.
(c) NOTICES, ETC. The Customer shall notify the Lender by
telephone (confirmed by telecopy) of any prepayment hereunder not later than
11:00 a.m., New York City time, five (5) Business Days before the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date, the principal amount of the Loan or the portion thereof to be
prepaid and, in the case of a mandatory prepayment, a reasonably detailed
calculation of the amount of such prepayment. Each partial prepayment of the
Loan shall be in an amount that would be permitted as provided in Section
2.07(a), except as necessary to apply fully the
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required amount of a mandatory prepayment. Prepayments shall be accompanied by
any applicable Break Funding Costs, unpaid fees and other amounts owing under
this Agreement and accrued interest to the extent required by Section 2.08 and
shall be made in the manner specified in Section 2.04(a).
SECTION 2.08. INTEREST.
(a) RATE. The Loan shall bear interest during each Interest
Period therefor at a rate per annum equal to the Adjusted LIBOR Rate for such
Interest Period PLUS the Applicable Margin.
(b) DEFAULT INTEREST. Notwithstanding the foregoing, if any
principal of or interest on the Loan or any fee or other amount payable by the
Customer hereunder is not paid when due, whether at stated maturity, upon
acceleration, by mandatory prepayment or otherwise, such overdue amount shall
bear interest, after as well as before judgment, at a rate per annum equal to 2%
PLUS the rate otherwise applicable to the Loan as provided above (the
"POST-DEFAULT RATE").
(c) PAYMENT OF INTEREST. Accrued interest on the Loan shall be
payable in arrears on each Interest Payment Date. Interest shall also be payable
and on the date of any prepayment of the Loan pursuant to Section 2.07 for all
or a portion of the Loan so prepaid, as the case may be, and upon payment
(including prepayment in full thereof).
(d) COMPUTATION. All interest hereunder shall be computed on
the basis of a year of 360 days, and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day). The
applicable Adjusted LIBOR Rate shall be determined by the Lender, and such
determination shall be conclusive absent manifest error.
SECTION 2.09. ALTERNATE RATE OF INTEREST. If prior to the commencement
of any Interest Period for the Loan the Lender determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBOR Rate for such Interest Period then
the Lender shall give notice thereof to the Customer by telephone or telecopy as
promptly as practicable thereafter and:
(a) during the fifteen (15) day period next succeeding the
date of any such notice (the "NEGOTIATION PERIOD"), the Lender and the Customer
will negotiate in good faith for the purpose of agreeing upon an alternative,
mutually acceptable basis (the "SUBSTITUTE BASIS") for determining the rate of
interest to be applicable to the Loan or amounts for such Interest Period or
Default Interest Period, as the case may be;
(b) if at the expiry of the Negotiation Period, Lender and the
Customer have agreed upon a Substitute Basis, such Substitute Basis shall be
retroactive to, and take effect from, the beginning of such Interest Period or
Default Interest Period, as the case may be;
(c) if at the expiry of the Negotiation Period, a Substitute
Basis shall not have been agreed upon as aforesaid the Lender shall notify the
Customer of the cost to the Lender (as determined by it in good faith) of
funding and maintaining the Loan for such Interest Period or its respective
amount for such Default Interest Period; and the interest payable to the Lender
on
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the Loan or such amount for such Interest Period or Default Interest Period
shall be a rate per annum equal to the Applicable Margin above the cost to such
Lender of funding and maintaining the Loan or such amount for such Interest
Period or Default Interest Period as so notified by such Lender (or, if a
Default Interest Period is in effect, as to any principal of the Loan or, to the
extent permitted by applicable law, other amount payable to such Lender on or in
respect of the Loan, at a rate per annum equal to 2% PLUS the Applicable Margin
above such cost); and
(d) the procedures specified in clauses (a), (b) and (c) above
shall apply to each Interest Period or Default Interest Period for the Loan or
such amounts succeeding the first Interest Period or Default Interest Period to
which they were applied unless and until the Lender shall determine that the
condition referred to in the lead-in clause of this Section 2.09 no longer
exists and so notifies the Customer, whereupon interest on the Loan or such
amounts shall again be determined in accordance with the provisions of Section
2.08 commencing on the first day of the Interest Period or Default Interest
Period for the Loan or such amounts next succeeding the date of such notice.
SECTION 2.10. INCREASED COSTS.
(a) INCREASED COSTS GENERALLY. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
account of, or credit extended by, the Lender (except any such reserve
requirement reflected in the Adjusted LIBOR Rate); or
(ii) impose on the Lender or the London interbank market any
other condition affecting this Agreement or the Loan;
and the result of any of the foregoing shall be to increase the cost to the
Lender of making or maintaining the Loan or to reduce the amount of any sum
received or receivable by the Lender hereunder (whether of principal, interest
or otherwise), then the Customer will pay to the Lender such additional amount
or amounts as will compensate the Lender for such additional costs incurred or
reduction suffered.
(b) CAPITAL REQUIREMENTS. If the Lender determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on the Lender's capital or on the capital of the
Lender's holding company, if any, as a consequence of this Agreement or the Loan
made by the Lender to a level below that which the Lender or the Lender's
holding company could have achieved but for such Change in Law (taking into
consideration the Lender's policies and the policies of the Lender's holding
company with respect to capital adequacy), then from time to time the Customer
will pay to the Lender such additional amount or amounts as will compensate the
Lender or the Lender's holding company for any such reduction suffered.
(c) CERTIFICATES FROM THE LENDER. A certificate of the Lender
setting forth the amount or amounts necessary to compensate the Lender or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Customer and
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shall be conclusive absent manifest error. The Customer shall pay the Lender the
amount shown as due on any such certificate within ten (10) days after receipt
thereof.
(d) DELAY IN REQUESTS. Failure or delay on the part of the
Lender to demand compensation pursuant to this Section shall not constitute a
waiver of the Lender's right to demand such compensation.
SECTION 2.11. BREAK FUNDING PAYMENTS. In the event of (a) the payment of
any principal of the Loan other than on the last day of an Interest Period
therefor (including as a result of an Event of Default), or (b) the failure to
borrow, continue or prepay the Loan on the date specified in any notice
delivered pursuant hereto, then, in any such event, the Customer shall
compensate the Lender for the loss, cost and expense attributable to such event.
The loss to the Lender attributable to any such event shall be deemed to equal
an amount determined by the Lender to be equal to the excess, if any, of (i) the
amount of interest that the Lender would pay for a deposit equal to the
principal amount of the Loan for the period from the date of such payment or
failure to the last day of the then current Interest Period for the Loan (or, in
the case of a failure to borrow or continue, the duration of the Interest Period
that would have resulted from such borrowing or continuation) if the interest
rate payable on such deposit were equal to the Adjusted LIBOR Rate for such
Interest Period, OVER (ii) the amount of interest that the Lender would earn on
such principal amount for such period if the Lender were to invest such
principal amount for such period at the interest rate that would be bid by the
Lender (or an affiliate of the Lender) for Dollar deposits from other banks in
the eurodollar market at the commencement of such period. A certificate of the
Lender setting forth any amount or amounts that the Lender is entitled to
receive pursuant to this Section shall be delivered to the Customer and shall be
conclusive absent manifest error. The Customer shall pay the Lender the amount
shown as due on any such certificate within ten (10) Business Days after receipt
thereof.
SECTION 2.12. TAXES.
(a) PAYMENTS FREE OF TAXES. Any and all payments by or on
account of any obligation of the Customer hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; PROVIDED that if the Customer shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Customer shall make such
deductions and (iii) the Customer shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) PAYMENT OF OTHER TAXES BY THE CUSTOMER. In addition, the
Customer shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.
(c) INDEMNIFICATION BY THE CUSTOMER. The Customer shall
indemnify the Lender, within ten (10) Business Days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by the Lender and any
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penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Customer by the Lender shall be conclusive absent manifest error.
(d) EVIDENCE OF PAYMENTS. As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by the Customer to a Governmental
Authority, the Customer shall deliver to the Lender the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Lender.
(e) TAXATION OF LENDER. Notwithstanding any provision of this
Agreement to the contrary, the Lender shall be either (a) a United States person
under Section 7701(a)(30) of the Code for United States federal income purposes
and shall deliver to the Customer, at the time or times prescribed by applicable
law or reasonably requested by the Customer, a properly completed and executed
Internal Revenue Service Form W-9 (or any subsequent versions thereof or
successors thereto), or (b) entitled to an exemption from withholding tax under
the laws of the United States of America, or any treaty with the United States
of America, or any treaty to which the United States of America is a party, with
respect to payments under any Loan Documents and shall deliver to the Customer,
at the time or times prescribed by applicable law or reasonably requested by the
Customer, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding.
SECTION 2.13. PAYMENTS GENERALLY.
(a) PAYMENTS BY THE CUSTOMER. The Customer shall make each
payment required to be made by it hereunder (whether of principal, interest or
fees, or under Section 2.10, 2.11 or 2.12, or otherwise) or under any other Loan
Document (except to the extent otherwise provided therein) prior to 12:00 noon,
New York City time, on the date when due, in immediately available funds,
without set-off or counterclaim. Any amounts received after such time on any
date may, in the discretion of the Lender, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest thereon.
All such payments shall be made to the Lender by wire transfer to:
Chase Manhattan Bank,
New York, New York
ABA: 021000021
Account Number: 910-2-604668
Account Name: Boeing Capital Services Corporation
Reference: XM Satellite Radio
or at such other location as the Lender may specify by prior written notice to
the Customer, except as otherwise expressly provided in the relevant Loan
Document. If any payment hereunder shall be due on a day that is not a Business
Day, the date for payment shall be extended to the next succeeding Business Day
and, in the case of any payment accruing interest, interest thereon shall be
payable for the period of such extension. All payments hereunder or
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under any other Loan Document (except to the extent otherwise provided therein)
shall be made in Dollars.
(b) APPLICATION OF INSUFFICIENT PAYMENTS. If at any time
insufficient funds are received by and available to the Lender to pay fully all
amounts of principal, interest and fees then due hereunder, such funds shall be
applied (i) first, to pay interest and fees then due hereunder, and (ii) second,
to pay principal then due hereunder.
SECTION 2.14. MITIGATION OBLIGATIONS. If the Lender requests
compensation under Section 2.10, or if the Customer is required to pay any
additional amount to the Lender or any Governmental Authority for account of the
Lender pursuant to Section 2.12, then the Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Loan hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of the Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.10 or 2.12, as the case may be, in the future and (ii) would not subject the
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to the Lender. The Customer hereby agrees to pay all reasonable
costs and expenses incurred by the Lender in connection with any such
designation or assignment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Customer represents and warrants to the Lender that:
SECTION 3.01. ORGANIZATION; POWERS. The Customer is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted, and is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required.
SECTION 3.02. AUTHORIZATION; ENFORCEABILITY. The Transactions are within
the Customer's organizational powers and have been duly authorized by all
necessary corporate action. This Agreement has been duly executed and delivered
by the Customer and constitutes, and each of the Security Documents when
executed and delivered will constitute, a legal, valid and binding obligation of
the Customer, enforceable in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the enforcement of
creditors' rights and (b) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
SECTION 3.03. COMPLIANCE WITH LAWS AND AGREEMENTS. The Customer is in
compliance in all material respects with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property.
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SECTION 3.04. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $100,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $100,000 the fair market value of
the assets of all such underfunded Plans.
SECTION 3.05. LITIGATION AND ENVIRONMENTAL MATTERS.
(a) ACTIONS, SUITS AND PROCEEDINGS. There are no actions,
suits or proceedings by or before any arbitrator or Governmental Authority now
pending against or, to the knowledge of the Customer, threatened against or
affecting the Customer (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than the Disclosed Matters) or (ii) that involve this Agreement or
the Transactions.
(b) ENVIRONMENTAL MATTERS. Except for the Disclosed Matters
and except with respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, the Customer (i) has not failed to comply with any Environmental Law or
to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has not become subject to any
Environmental Liability, (iii) has not received notice of any claim with respect
to any Environmental Liability or (iv) does not know of any basis for any
Environmental Liability.
(c) DISCLOSED MATTERS. Since the date of this Agreement, there
has been no change in the status of the Disclosed Matters that, individually or
in the aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
SECTION 3.06. COLLATERAL. From and after the Effective Date, (a) the
Customer shall have good, marketable and valid title in and to all of the
Collateral, free and clear of any Liens other than Permitted Liens and (b) no
mortgage or financing statement or other instrument or recordation covering all
or any part of such Collateral shall be on file in any recording office other
than any such filing in connection with the Liens created under the Security
Documents or Permitted Liens.
SECTION 3.07. SECURITY DOCUMENTS. From and after the Effective Date, the
Security Documents shall create in favor of the Lender legal, valid and
enforceable Liens on or in all of the Collateral. All filings, recordations,
registrations and other actions requested by the Lender to perfect such Liens
shall have been duly performed on or before the Effective Date and each Lien
created by the Security Documents shall constitute a perfected Lien on or before
the Effective Date and at all times thereafter on or in all right, title, estate
and interest of the Customer in the Collateral covered thereby having the
perfection and priority required by
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Section 2.01(d), and all necessary and appropriate consents to such creation and
perfection of such Liens of each of the parties to the Security Documents shall
have been obtained on or before the date of execution of the Security Documents
and at all times thereafter.
SECTION 3.08. TAXES. The Customer has timely filed or caused to be filed
all Tax returns and reports required to have been filed and has paid or caused
to be paid all Taxes required to have been paid by it, except (a) Taxes that are
being contested in good faith by appropriate proceedings and for which such
Person has set aside on its books adequate reserves in accordance with GAAP or
(b) to the extent that the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.09. USE OF PROCEEDS. The proceeds of the Loan are being used
solely for the purposes set forth in Section 5.10.
SECTION 3.10. SATELLITE PURCHASE AGREEMENT AND SPA ASSIGNMENT. As of the
date hereof, each of the Satellite Purchase Agreement, the SPA Assignment and
the Ground Spare Satellite Bus Provisions of the Satellite Purchase Agreement is
in full force and effect. Neither the Customer nor XM is in default in the
performance of any covenant or obligation set out in the Satellite Purchase
Agreement, the SPA Assignment or the Ground Spare Satellite Bus Provisions of
the Satellite Purchase Agreement, as applicable. To the best knowledge of the
Customer, no other party to the Satellite Purchase Agreement, the SPA Assignment
or the Ground Spare Satellite Bus Provisions of the Satellite Purchase Agreement
is in default in the performance of any covenant or obligation set out in any
Satellite Purchase Agreement, the SPA Assignment, or the Ground Spare Satellite
Bus Provisions of the Satellite Purchase Agreement.
SECTION 3.11. GOVERNMENTAL APPROVALS; NO CONFLICTS. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except for (i) such as have
been obtained or made and are in full force and effect and (ii) filings and
recordings in respect of the Liens created pursuant to the Security Documents,
(b) will not violate any applicable law or regulation or the operating agreement
or other organizational documents of the Customer or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Customer or assets, or
give rise to a right thereunder to require any payment to be made by any such
Person, and (d) except for the Liens created pursuant to the Security Documents,
will not result in the creation or imposition of any Lien on any asset of the
Customer.
ARTICLE IV
CONDITIONS
SECTION 4.01. EFFECTIVE DATE. The obligation of the Lender to make the
Loan hereunder shall not become effective until the date on which the Lender
shall have received each of the following documents, each of which shall be
satisfactory to the Lender in form and substance (or
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such condition shall have been waived in accordance with Section 8.02) and each
of the conditions in Section 4.02 have been satisfied (or waived in accordance
with Section 8.02):
(a) EXECUTED COUNTERPARTS. From the Customer, a counterpart
of this Agreement signed on behalf of the Customer.
(b) SPA ASSIGNMENT AND SATELLITE PURCHASE AGREEMENT AMENDMENT.
From the Customer, a duly executed version of (i) the SPA Assignment
together with the written consent of any third party that is required
for the effective assignment of the Satellite Purchase Agreement to the
Customer, and (ii) a duly executed version of that certain amendment to
the Satellite Purchase Agreement dated December 5, 2001 pertaining to,
among other things, the granting by the Customer of a security interest
in the Satellite in accordance with Section 2.01(d).
(c) SUPPLEMENTAL INDENTURE. From XM and the other parties
thereto, a duly executed version of the Supplemental Indenture.
(d) SECURITY AGREEMENT. From the Customer, a counterpart of
the Security Agreement and duly executed copies of any filings required
to be made in accordance with the terms thereof or such other evidence
satisfactory to the Lender that such filings shall have been duly made
in the appropriate filing offices to perfect the security interests
contemplated thereby in accordance with the priority contemplated in
Section 2.01(d).
(e) OPINIONS OF COUNSEL. The following legal opinions, each
dated the Effective Date and addressed to the Lender:
(i) the opinion of Shaw Pittman, special
regulatory counsel to the Customer and XM substantially in the
form of EXHIBIT B and covering such matters as the Lender may
reasonably request; and
(ii) the opinion of Hogan & Hartson LLP, special
New York and Delaware counsel to the Customer and XM,
substantially in the form of EXHIBIT C and covering such
matters as the Lender may reasonably request.
(f) ORGANIZATIONAL DOCUMENTS. Certified copies of (i) the
certificate of incorporation and by-laws of the Customer, (ii) good
standing certificates and (iii) all corporate authority for the
Customer (including all necessary action of the board of directors or
shareholders) with respect to the execution, delivery and performance
of each Loan Document to which the Customer is intended to be a party.
(g) OFFICER'S CERTIFICATE. A certificate, dated the
Effective Date and signed by a Responsible Officer of the Customer,
confirming the following:
(i) that no default in the scheduled payments or
other obligations under the Satellite Purchase Agreement has
occurred or is continuing;
(ii) that no Default or Event of Default shall have
occurred and be continuing;
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(iii) that each of the representations and
warranties of the Customer set out in Article III is true and
correct; and
(iv) that there are no actions, suits or
proceedings by or before any arbitrator or Government
Authority now pending against or threatened against or
affecting the Customer or XM (i) as to which there is a
reasonable possibility of an adverse determination and that,
if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material
Adverse Effect (other than the Disclosed Matters) or (ii) that
involve this Agreement or the Transactions.
(h) PROCESS AGENT. A letter from CT Corporation System (or
any successor thereto), confirming its acceptance as process agent in
New York for the Customer and XM.
(i) INSURANCE. Satisfactory evidence that the Customer is in
compliance with the requirements of Section 5.06.
(j) NOTICE OF BORROWING. From the Customer, delivery of the
Notice of Borrowing.
(k) OTHER DOCUMENTS. Such other documents as the Lender or
counsel to the Lender may reasonably request.
SECTION 4.02. ADDITIONAL CONDITIONS TO EFFECTIVE DATE. The obligation of
the Lender to make the Loan hereunder is subject to satisfaction (or waiver in
accordance with Section 8.02) of the following additional conditions:
(a) NO MATERIAL ADVERSE CHANGE. There shall not have occurred,
in the reasonable opinion of the Lender, a material adverse change in
(a) the business, assets, operations, business, prospects, or condition
(financial or otherwise) of XM, the Customer and their subsidiaries
taken as a whole, (b) the ability of the Customer to perform its
obligations under this Agreement or the Security Documents, (c) the
value of the Collateral or the validity, enforceability or priority of
the Liens contemplated under the Security Documents, or (d) the ability
of the Lender to exercise any of its rights and/or remedies available
under this Agreement or any of the other Loan Documents.
(b) PAYMENT OF CERTAIN FEES. The Customer shall have paid the
Lender the second and final installment of the upfront fee described in
that certain Commitment Letter dated September 25, 2001 between XM and
the Lender (as assigned to the Customer) in the amount of $131,250 and
the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy
LLP, special counsel to the Lender, in connection with the negotiation,
preparation, execution and delivery of this Agreement and the other
Loan Documents and the Loan hereunder (to the extent that statements
for such fees and expenses have been delivered to the Customer).
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(c) NO DEFAULT UNDER SATELLITE PURCHASE AGREEMENT. No
default in the scheduled payments or other obligations under the
Satellite Purchase Agreement has occurred or is continuing.
(d) NO DEFAULT OF EVENT OF DEFAULT. No Default or Event of
Default shall have occurred and be continuing.
(e) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Customer set out in Article III
is true and correct.
(f) NO LITIGATION. There are no actions, suits or proceedings
by or before any arbitrator or Government Authority now pending against
or threatened against or affecting the Customer or XM (i) as to which
there is a reasonable possibility of an adverse determination and that,
if adversely determined, could reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect (other than
the Disclosed Matters) or (ii) that involve this Agreement or the
Transactions.
SECTION 4.03. TERMINATION OF THE COMMITMENT. The obligation of the
Lender to make the Loan hereunder shall not become effective unless each of the
foregoing conditions described in Sections 4.01 and 4.02 is satisfied (or waived
pursuant to Section 8.02) on or prior to 3:00 p.m., New York City time, on
December 5, 2001 (and, in the event such conditions are not so satisfied or
waived, the Commitment shall terminate at such time).
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitment has expired or been terminated and the
principal of and interest on the Loan and all fees payable hereunder shall have
been paid in full, the Customer covenants and agrees with the Lender that:
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Customer
will furnish to the Lender:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Customer, consolidated and
consolidating statements of income, retained earnings and cash flows of
the Customer and its Consolidated Subsidiaries for such fiscal year and
the related consolidated and consolidating balance sheets of the
Customer and its Consolidated Subsidiaries as at the end of such fiscal
year, setting forth in each case in comparative form the corresponding
consolidated and consolidating figures for the preceding fiscal year,
and accompanied (i) in the case of said consolidated statements and
balance sheets of the Customer, by an opinion thereon of independent
certified public accountants of recognized national standing reasonably
acceptable to the Lender, which opinion shall state that said
consolidated financial statements present fairly in all material
respects the consolidated financial condition and results of operations
of the Customer and its Consolidated Subsidiaries as at the end of, and
for, such fiscal year
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in accordance with GAAP, and (ii) in the case of said consolidating
statements and balance sheets, by a certificate of a Responsible
Officer of the Customer, which certificate shall state that said
consolidating financial statements fairly present the respective
individual unconsolidated financial condition and results of operations
of the Customer and of each of its Consolidated Subsidiaries, in each
case in accordance with GAAP, consistently applied, as at the end of,
and for, such fiscal year;
(b) as soon as available and in any event within 45 days after
the end of each quarterly fiscal period of each fiscal year of the
Customer, consolidated and consolidating statements of income, retained
earnings and cash flows of the Customer and its Consolidated
Subsidiaries for such period and for the period from the beginning of
the respective fiscal year to the end of such period, and the related
consolidated and consolidating balance sheets of the Customer and its
Consolidated Subsidiaries as at the end of such period, setting forth
in each case in comparative form the corresponding consolidated and
consolidating figures for the corresponding periods in the preceding
fiscal year (except that, in the case of balance sheets, such
comparison shall be to the last day of the prior fiscal year),
accompanied by a certificate of a Responsible Officer of the Customer,
which certificate shall state that said financial statements present
fairly the consolidated financial condition and results of operations
of the Customer and its Consolidated Subsidiaries, and said
consolidating financial statements present fairly in all material
respects the respective individual unconsolidated financial condition
and results of operations of the Customer and of each of its
Consolidated Subsidiaries, in each case in accordance with GAAP,
consistently applied, as at the end of, and for, such period (subject
to normal year-end audit adjustments);
(c) promptly upon their becoming available, copies of all
registration statements and regular periodic reports that the Customer
shall have filed with the Securities and Exchange Commission (or any
governmental agency substituted therefor) or any national securities
exchange;
(d) concurrently with any delivery of financial statements
under clause (a) or (b) of this Section, a certificate of a Responsible
Officer of the Customer (i) certifying as to whether a Default or Event
of Default has occurred and, if a Default or Event of Default has
occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, and (ii) stating whether any
change in GAAP or in the application thereof has occurred since the
date of the audited financial statements previously delivered and, if
any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate;
(e) concurrently with any delivery of financial statements
under clause (a) of this Section, a certificate of the accounting firm
that reported on such financial statements stating whether they
obtained knowledge during the course of their examination of such
financial statements of any Default or Event of Default (which
certificate may be limited to the extent required by accounting rules
or guidelines); and
(f) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Customer, or compliance with
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the terms of this Agreement and the other Loan Documents, as the Lender
may reasonably request.
SECTION 5.02. NOTICES OF MATERIAL EVENTS. The Customer will furnish to
the Lender prompt written notice of the following:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting the Customer or any of its Affiliates that, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect, PROVIDED, HOWEVER, that with respect to the
Disclosed Matters listed on SCHEDULE I, the Customer shall only be
obligated to provide the Lender with developments pertaining to such
proceedings to the extent it would be required to do so pursuant to
Section 5.02(f);
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Customer in an aggregate amount
exceeding $100,000;
(d) the assertion of any environmental matter by any Person
against, or with respect to the activities of, the Customer and any
alleged violation of or non-compliance with any Environmental Laws or
any permits, licenses or authorizations, other than any environmental
matter or alleged violation that, if adversely determined, would not
(either individually or in the aggregate) reasonably be expected to
result in a Material Adverse Effect;
(e) any amendment of the Satellite Purchase Agreement or the
SPA Assignment Agreement; and
(f) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Responsible Officer of the Customer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
SECTION 5.03. EXISTENCE; CONDUCT OF BUSINESS. The Customer will do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business.
SECTION 5.04. BOOKS AND RECORDS; INSPECTION RIGHTS. The Customer will
keep proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. The Customer will permit any representatives designated by the
Lender, upon reasonable prior notice, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested. Without
limiting the generality of the foregoing sentence,
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the Customer will provide access to representatives designated by the Lender for
the purposes of reviewing licenses, approvals and authorizations where such
access is applicable and available under applicable laws and regulations.
SECTION 5.05. MAINTENANCE OF PROPERTIES. The Customer will keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted.
SECTION 5.06. INSURANCE.
(a) SATELLITE MANUFACTURER'S COVERAGE. The Customer shall use
commercially reasonably efforts to cause or ensure that the Satellite
Manufacturer procure at its own expense and maintain in full force and effect,
at all times prior to the time when risk of loss or damage to the Satellite
manufactured thereby is transferred to the Customer and XM under the Satellite
Purchase Agreement, insurance in a minimum amount equal to the Minimum Insurance
Threshold in accordance with the provisions of Section 25.1 of the Satellite
Purchase Agreement with respect to the Satellite. The Customer shall cause the
Satellite Manufacturer to deliver to the Lender copies of all suitable evidence
of such insurance received by the Customer under the Satellite Purchase
Agreement. In addition, the Customer shall procure at its own expense and
maintain in full force and effect, at all times from and after the time when
risk of loss or damage to the Satellite manufactured thereby is transferred to
the Customer and XM under the Satellite Purchase Agreement, insurance with
respect to the Satellite in a minimum amount equal to the Minimum Insurance
Threshold.
(b) COMMON TERMS. The Customer shall cause the Satellite
Manufacturer to name the Lender as loss payee to the extent of its interest with
respect to the Satellite, as its interest may appear, in respect of the
insurance policy required to be maintained pursuant to the first sentence of
Section 5.06(a). The Customer shall name the Lender as loss payee to the extent
of its interest with respect to the Satellite, as its interest may appear, in
respect of the insurance policy required to be maintained pursuant to the second
sentence of Section 5.06(a). The policy of insurance required to be maintained
pursuant to such Section covering loss of or damage to the Satellite shall
provide, either as a clause in, or an endorsement to, such policies, that (i)
there shall be no recourse against the Lender or any Collateral for payment of
premiums or other amounts with respect thereto, and (ii) the insurers are
required to provide the Lender with at least thirty (30) days (or ten (10) days
in the case of nonpayment of premiums) prior written notice of cancellation or
non-renewal of any policy. The policy shall, either as a clause in, or an
endorsement to, such policy, waive any right of subrogation against the Insured
Parties (and their respective officers, employees, agents and insurers).
(c) CURE. In the event the Customer fails to cause to be taken
out or maintained, the full insurance coverage required by this Section 5.06,
the Lender upon ten (10) days' prior notice (unless the aforementioned insurance
would lapse within such period, in which event notice shall be given as soon as
reasonably possible) to the Customer of any such failure, may (but shall not be
obligated to) take out the required policy of insurance and pay the premiums on
the same. All amounts so advanced therefor by the Lender shall be promptly
reimbursed by the Customer to the Lender and the Customer shall forthwith pay
such amounts to the Lender together with interest thereon at the Default Rate
from the date so advanced.
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(d) COMMUNICATIONS. The Customer shall promptly furnish to the
Lender copies of all material communications between the Customer and any of its
insurers or insurance broker concerning the insurance policies required by this
Section 5.06.
(e) REMITTANCE OF INSURANCE PROCEEDS. If any insurance
proceeds are paid to the Customer in connection with the Satellite prior to the
time when risk of loss or damage to the Satellite is transferred to the Customer
and XM under the Satellite Purchase Agreement, then the Customer hereby agrees
that (i) such proceeds are held by the Customer in trust for the Satellite
Manufacturer until remitted to the Satellite Manufacturer and (ii) the Customer
will immediately remit such proceeds to the Satellite Manufacturer for
allocation between the Lender, the Customer and the Satellite Manufacturer and
distribution to such parties in accordance with Articles 11.3(b) and 32.4(b) of
the Satellite Purchase Agreement. The Customer hereby agrees to take any and all
other actions necessary to ensure that any insurance proceeds relating to the
Satellite are allocated and distributed in accordance with Articles 11.3(b) and
32.4(b) of the Satellite Purchase Agreement. If any insurance proceeds are paid
to the Customer in connection with the Satellite after the time when risk of
loss or damage to the Satellite is transferred to the Customer and XM under the
Satellite Purchase Agreement, then such proceeds shall be distributed as
follows: (i) first, insurance proceeds shall be paid to the Lender in
satisfaction of the aggregate amount (including principal, interest, fees and
any other amounts outstanding) owed by the Customer to the Lender under this
Agreement, and (ii) after all amounts owing under this Agreement shall have been
indefeasibly paid in full, any remaining amounts shall be retained by the
Customer. The Customer hereby agrees to take any and all other actions necessary
to ensure that any insurance proceeds relating to the Satellite are allocated
and distributed in accordance with this Section 5.06(e).
SECTION 5.07. COMPLIANCE WITH LAWS. The Customer will comply with all
laws, rules, regulations and orders of any Governmental Authority applicable to
it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.08. PAYMENT OF OBLIGATIONS. The Customer will pay its
obligations, including tax liabilities, that, if not paid, could result in a
Material Adverse Effect before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) the Customer or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and (c)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.09. FURTHER ASSURANCES.
(a) The Customer will take such action from time to time as
shall reasonably be requested by the Lender to effectuate the purposes
and objectives of this Agreement.
(b) The Customer shall ensure that all written information,
exhibits and reports furnished to the Lender do not and will not
contain any untrue statement by the Customer or any Affiliate thereof
of a material fact and do not and will not omit, on the part of the
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Customer or any such Affiliate, to state any material fact or any fact
necessary to make the statements contained therein not misleading in
light of the circumstances in which made, and will promptly disclose to
the Lender and correct any defect or error that may be discovered
therein or in any of the Loan Documents or any of the Security
Documents, or in the execution, acknowledgment or recordation thereof.
(c) The Customer shall as of and at all times after the date
of execution of the Security Documents take or cause to be taken all
action reasonably requested by the Lender to maintain and preserve the
Liens of the Security Documents and the perfection and priority thereof
required by the terms of this Agreement.
SECTION 5.10. USE OF PROCEEDS. Subject to the terms and conditions
hereof, the proceeds of the Loan will be used solely to pay amounts owed by the
Customer pursuant to the SPA Assignment or arising as a result of the rights,
duties and obligations of the Ground Spare Satellite Bus Provisions of the
Satellite Purchase Agreement assumed from XM under the terms of the SPA
Assignment. No part of the proceeds of the Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations U and X.
ARTICLE VI
NEGATIVE COVENANTS
Until the Commitment has expired or terminated and the
principal of and interest on the Loan and all fees payable hereunder have been
paid in full, the Customer covenants and agrees with the Lender that:
SECTION 6.01. FUNDAMENTAL CHANGES. Without the Lender's prior written
consent, which will not be unreasonably withheld, the Customer will not and it
shall ensure that XM will not:
(a) enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution); or
(b) convey, sell, lease, transfer or otherwise dispose of, in
one transaction or a series of transactions, all or a substantial part
of its business or property, whether now owned or hereafter acquired
(including receivables and leasehold interests, but excluding obsolete
or worn-out property, tools or equipment no longer used or useful in
its business).
SECTION 6.02. LIENS. The Customer will not create, incur, assume or
permit to exist any Lien on the Collateral, except:
(a) Liens created pursuant to the Security Documents; and
(b) Permitted Liens.
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SECTION 6.03. AMENDMENT OF SATELLITE PURCHASE AGREEMENT; ASSIGNMENT OF
SPA ASSIGNMENT. The Customer will not, and shall ensure that XM will not,
without the Lender's prior written consent, which will not be unreasonably
withheld or delayed, consent to any modification, supplement or waiver of any of
the provisions of the Ground Spare Satellite Bus Provisions of the Satellite
Purchase Agreement (other than an assignment to the Customer by means of the SPA
Assignment). The Customer will not, and will ensure that XM will not, assign the
SPA Assignment.
SECTION 6.04. DISPOSITION OF COLLATERAL. The Customer shall not, from
and after the date that any Security Document is executed, sell, assign, lease,
convey, transfer or otherwise dispose of any Collateral or enter into any
agreement to do any of the foregoing without the prior written consent of the
Lender.
SECTION 6.05. SUBSIDIARIES. Set forth in Schedule IV is a list of all
Subsidiaries of the Customer. The Customer shall give the Lender prompt notice
of the acquisition or formation of additional Subsidiaries.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. EVENTS OF DEFAULT. If any of the following events ("EVENTS
OF DEFAULT") shall occur:
(a) the Customer shall fail to pay any principal of the Loan
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Customer shall fail to pay any interest on the Loan or
any fee or any other amount (other than an amount referred to in clause
(a) of this Article) payable under this Agreement or under any other
Loan Document, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of five (5) or more
Business Days;
(c) any representation or warranty made or deemed made by or
on behalf of the Customer in or in connection with this Agreement or
any other Loan Document or any amendment or modification hereof or
thereof, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with this Agreement or
any other Loan Document or any amendment or modification hereof or
thereof, shall prove to have been materially inaccurate or false when
made or deemed made; PROVIDED, HOWEVER, that in the case of any
representation or warranty made in any report, certificate, financial
statement or other document furnished to the Lender after the Effective
Date shall prove to be materially inaccurate or false when made, such
inaccuracy or falsity shall not constitute an Event of Default unless
the Customer fails to correct or ameliorate such inaccuracy in a manner
reasonably acceptable to the Lender as soon as reasonably practicable,
but in any event by no later than ten (10) Business Days,
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after (i) the Customer became aware or should have become aware of such
inaccuracy or falsity or (ii) the Lender provides notice to the
Customer of its discovery of such material inaccuracy or falsity;
(d) the Customer shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.03 (with
respect to the Customer's existence) or 5.06(a) or in Article VI or the
Customer shall default in the performance of any of its obligations
contained in Sections 3.01, 4.01, 4.02 and 4.11 of the Security
Agreement; PROVIDED, HOWEVER, that the foregoing events shall not
constitute an Event of Default if such events occur solely as a result
of any action taken by the Lender or its representatives, and PROVIDED,
FURTHER, that if the foregoing events do not result in the imposition
of intervening Liens or in the filing of actions which would prejudice
the Lender's position as a first priority secured creditor, such event
shall not constitute an Event of Default if the Customer has restored
the Lender's valid and perfected first priority Lien within ten (10)
Business Days from the discovery of such event;
(e) the Customer shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other
than those specified in clause (a), (b) or (d) of this Article) or any
other Loan Document and such failure shall continue unremedied for a
period of ten (10) or more days after notice thereof from the Lender to
the Customer;
(f) any event of default under or with respect to any Material
Indebtedness shall occur and be continuing, including the failure to
make any payments when due (subject to any applicable grace periods or
cure periods);
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of any such Material Indebtedness
or any trustee or agent on its or their behalf to cause any such
Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; PROVIDED that this clause (g) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Customer or XM or any
of their respective debts, or of a substantial part of any of their
respective assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Customer or XM or for a
substantial part of any of their respective assets, and, in any such
case, such proceeding or petition shall continue undismissed for a
period of sixty (60) or more days or an order or decree approving or
ordering any of the foregoing shall be entered;
(i) the Customer or XM shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or
other relief under any Federal, state or
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foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Customer or XM or for a
substantial part of their assets, (iv) file an answer admitting the
material allegations of a petition filed against them in any such
proceeding, (v) make a general assignment for the benefit of creditors
or (vi) take any action for the purpose of effecting any of the
foregoing;
(j) either of the Customer or XM shall admit in writing its
inability, or fail generally, to pay its debts as they become due;
(k) an ERISA Event shall have occurred that, in the opinion of
the Lender, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse
Effect;
(l) a reasonable basis shall exist for the assertion against
the Customer, or any predecessor in interest of the Customer, of (or
there shall have been asserted against the Customer) any claims or
liabilities, whether accrued, absolute or contingent, based on or
arising from the generation, storage, transport, handling or disposal
of Hazardous Materials by the Customer or predecessors that, in the
judgment of the Lender, are reasonably likely to be determined
adversely to the Customer, and the amount thereof (either individually
or in the aggregate) is reasonably likely to have a Material Adverse
Effect (insofar as such amount is payable by the Customer but after
deducting any portion thereof that is reasonably expected to be paid by
other creditworthy Persons jointly and severally liable therefor);
(m) either (i) the Liens created by the Security Documents
shall at any time not constitute a valid and perfected first priority
(subject to other Liens permitted under Section 6.02) Lien on the
collateral intended to be covered thereby (to the extent perfection by
filing, registration, recordation or possession is required herein or
therein) in favor of the Lender, free and clear of all other Liens
(other than Liens permitted under Section 6.02 or under the respective
Security Documents); PROVIDED, HOWEVER, that the foregoing events shall
not constitute an Event of Default if such events occur solely as a
result of any action taken by the Lender or its representatives, and
PROVIDED, FURTHER, that if the foregoing events do not result in the
imposition of intervening Liens or in the filing of actions which would
prejudice the Lender's position as a first priority secured creditor,
such event shall not constitute an Event of Default if the Customer has
restored the Lender's valid and perfected first priority Lien within
ten (10) Business Days from the discovery of such event, or (ii) except
for expiration in accordance with its terms, any of the Security
Documents shall for whatever reason be terminated or cease to be in
full force and effect, or the enforceability thereof shall be contested
by the Customer;
(n) on or after the execution of the Security Documents:
(i) any provision of any Security Document shall
for any reason cease to be valid and binding on or enforceable
against the Customer or any Affiliate
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thereof party thereto, if the effect thereof may materially
deprive the Lender of the benefits of the Collateral taken as
a whole, or the Customer shall so state in writing or bring an
action to limit its obligations or liabilities thereunder; or
(ii) any Security Document shall for any reason
(other than pursuant to, or contemplated by, the terms
thereof) cease to create a valid Lien in any Collateral
purported to be covered thereby that is significant in value,
relative value or fundamental to the operation of the
Satellite, and that is not replaced with other collateral
reasonably acceptable to the Lender within five (5) Business
Days, or any such Lien that, pursuant to the terms hereof, is
intended to constitute a perfected and first priority Lien in
favor of the Lender shall for any reason cease to be a
perfected and first priority Lien;
(o) at any time on or after the Effective Date, the Customer
shall fail to obtain, renew, maintain or comply with the Government
Approvals; or any Governmental Authority shall revoke, terminate,
withdraw, suspend, modify, withhold or fail to renew any material
Government Approval; or any Government Approval shall for whatever
reason cease to be in full force and effect; or the Customer shall for
any reason lose any Government Approval, the loss of which could
reasonably be expected to result in a Material Adverse Effect;
(p) at any time on or after the Effective Date, the Customer
shall fail to procure, renew or maintain, or cause to be procured,
renewed or maintained, any insurance coverage required pursuant to
Section 5.06 of this Agreement or any insurer issues any notice of
avoidance or cancellation of any such coverage as a result of a breach
by the Customer of the terms of any of such insurance;
(q) any provision of any of this Agreement or the Security
Documents shall at any time for any reason cease to be valid and
binding or in full force and effect after their effective date or any
party thereto shall, in good faith, so assert in writing; or any
provision of any of such agreements shall, in good faith, be declared
to be null and void, or the validity or enforceability thereof shall be
contested by any party thereto or any Governmental Authority; or any
party to any of such agreements shall deny that it has any further
liability or obligation under any such Loan Document; or any party to
any of such agreements shall default in the observance or performance
of any of the covenants or agreements contained in any of such
agreements and such default is not cured within the applicable grace
period (if any) contained in such agreements;
(r) on or after their respective effective date any provision
of any of the Satellite Purchase Agreement or the SPA Assignment shall
at any time for any reason cease to be valid and binding or in full
force and effect or any party thereto shall so assert in writing; or
any provision of any of the Satellite Purchase Agreement or the SPA
Assignment shall be declared to be null and void, or the validity or
enforceability thereof shall be contested by any party thereto or any
Governmental Authority; or any party to either the Satellite Purchase
Agreement or the SPA Assignment shall deny that it has any further
liability or obligation under either such agreement; or any party to
the Satellite Purchase Agreement or the SPA Assignment shall default in
the observance or performance of any of the
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covenants or agreements contained in either such agreement and such
default is not cured within the applicable grace period (if any)
contained in such agreement;
(s) any default by XM under the Satellite Purchase Agreement
(including, without limitation, Section 32.3 thereof) or by the
Customer under the SPA Assignment shall have occurred and be
continuing;
(t) the Satellite Purchase Agreement or the SPA Assignment is
terminated for any reason by the Satellite Manufacturer in accordance
with the terms thereof; or
Then, and in every such event (other than an event with respect to the Customer
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Lender may, by notice to the Customer,
take either or both of the following actions, at the same or different times:
declare the portion of the Loan then outstanding to be due and payable in whole
(or in part, in which case any principal not so declared to be due and payable
may thereafter be declared to be due and payable), and thereupon the principal
of the Loan so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Customer accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Customer; and
in case of any event with respect to the Customer described in clause (h) or (i)
of this Article, the Commitment shall automatically terminate and the principal
of the portion of the Loan then outstanding, together with accrued interest
thereon and all fees and other obligations of the Customer accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Customer.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Customer, to it at 1500 Eckington Place, NE,
Washington, D.C. 20002, Attention of Heinz Stubblefield, Senior Vice
President and Chief Financial Officer, with a copy to Joseph M.
Titlebaum, Senior Vice President and General Counsel (Telecopy No.
(202) 380-4500; Telephone No. (202) 380-4000; and
(b) if to the Lender, to Boeing Capital Services Corporation,
500 Naches Avenue SW, Third Floor, Renton, WA 98055, Attention of Mr.
Christopher M. Cook (Telecopy No. (425) 393-1002; Telephone No.
(425) 393-0835.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other
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communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the date of receipt.
SECTION 8.02. WAIVERS; AMENDMENTS.
(a) NO DEEMED WAIVERS; REMEDIES CUMULATIVE. No failure or
delay by the Lender in exercising any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further
exercise thereof or the exercise of any other right or power. The
rights and remedies of the Lender hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure
by the Customer therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section, and then such
waiver or consent shall be effective only in the specific instance and
for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan shall not be construed as a waiver of
any Default or Event of Default, regardless of whether the Lender may
have had notice or knowledge of such Default or Event of Default at the
time.
(b) AMENDMENTS. Neither this Agreement nor any provision
hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Customer and the
Lender.
SECTION 8.03. EXPENSES; INDEMNITY; DAMAGE WAIVER.
(a) COSTS AND EXPENSES. The Customer shall pay (i) all
reasonable out-of-pocket expenses incurred by the Lender and its
Affiliates, including the fees, charges and disbursements of Milbank,
Tweed Hadley & McCloy LLP, in connection with the preparation and
administration of this Agreement and the other Loan Documents or any
amendments, modifications or waivers of the provisions hereof or
thereof including local counsel in relevant jurisdictions in connection
with matters relating to the Security Documents (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii)
all reasonable out-of-pocket expenses incurred by the Lender, including
the fees, charges and disbursements of any counsel for the Lender, in
connection with the enforcement or protection of its rights in
connection with this Agreement and the other Loan Documents, including
its rights under this Section, or in connection with the Loan made
hereunder, including in connection with any workout, restructuring or
negotiations in respect thereof and (iii) all taxes, assessments and
other charges and reasonable costs and expenses incurred in connection
with any filing, registration, recording or perfection of any security
interest contemplated by any Loan Document or any other document
referred to therein.
(b) INDEMNIFICATION BY THE CUSTOMER. The Customer shall
indemnify the Lender and each Related Party of the Lender (each such
Person being called an "INDEMNITEE") against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any
counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of,
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in connection with, or as a result of (i) the execution or delivery of
this Agreement or any agreement or instrument contemplated hereby, the
performance by the parties hereto of their respective obligations
hereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or the use of the
proceeds therefrom, (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the
Customer or any Environmental Liability related in any way to the
Customer, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether
based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; PROVIDED that such indemnity shall
not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee.
(c) WAIVER OF CONSEQUENTIAL DAMAGES, ETC. To the extent
permitted by applicable law, the Customer shall not assert, and hereby
waives, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to
direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or the use of the proceeds thereof.
(d) PAYMENTS. All amounts due under this Section shall be
payable upon written demand therefor.
SECTION 8.04. SUCCESSORS AND ASSIGNS.
(a) ASSIGNMENTS GENERALLY. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except
that the Customer may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of
the Lender (and any attempted assignment or transfer by the Customer
without such consent shall be null and void); PROVIDED, HOWEVER, that
the Customer may assign its rights and obligations hereunder (together
with its rights and obligations under the Security Documents) to a
wholly owned Subsidiary of the Customer, subject to the approval (not
to be unreasonably withheld) of, and in a manner satisfactory to, the
Lender, and subject to the execution and delivery by the Customer of
(i) a guarantee of such Subsidiary's obligations hereunder in form and
substance satisfactory to the Lender, (ii) a pledge of the ownership
interest in such Subsidiary in form and substance satisfactory to the
Lender, and (iii) appropriate modifications to this Agreement, in each
case as reasonably requested by the Lender. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, the
Related Parties of the Lender) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
(b) ASSIGNMENT BY THE LENDER. The Lender may assign any or all
of its rights, duties and obligations under this Agreement to the
Satellite Manufacturer at any time
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without the prior written consent of the Customer. The Lender may
assign the Loan to any other Person with the prior written consent of
the Customer, such consent not to be unreasonably withheld or delayed;
PROVIDED that any consent of the Customer otherwise required under
this paragraph shall not be required if an Event of Default under
clause (a), (b), (h) or (i) of Article VII has occurred and is
continuing. Upon execution and delivery by the assignee to the
Customer of an instrument in writing pursuant to which such assignee
agrees to become the "Lender" hereunder, and upon consent thereto by
the Customer to the extent required above, the assignee shall have
(unless provided in such assignment with the consent of the Customer)
the obligations, rights and benefits of the Lender hereunder in
respect of the Commitment and Loan theretofore held by the Lender, and
the Lender shall be released from the Commitment. Any assignment or
transfer by the Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes
of this Agreement as a sale by the Lender of a participation in such
rights and obligations in accordance with paragraph (c) of this
Section.
(c) PARTICIPATIONS. The Lender may, without the consent of the
Customer, sell participations to one or more banks or other entities (a
"PARTICIPANT") in all or a portion of the Lender's rights and
obligations under this Agreement and the other Loan Documents
(including all or a portion of the Loan); PROVIDED that (i) the
Lender's obligations under this Agreement and the other Loan Documents
shall remain unchanged, (ii) the Lender shall remain solely responsible
to the other parties hereto for the performance of such obligations and
(iii) the Customer shall continue to deal solely and directly with the
Lender in connection with the Lender's rights and obligations under
this Agreement and the other Loan Documents. Any agreement or
instrument pursuant to which the Lender sells such a participation
shall provide that the Lender shall retain the sole right to enforce
this Agreement and the other Loan Documents and to approve any
amendment, modification or waiver of any provision of this Agreement or
any other Loan Document. In no event shall the Lender agree with the
Participant to take or refrain from taking any action under this
Agreement or under any other Loan Document except that the Lender may
agree with the Participant that it will not, without the consent of the
Participant, agree to (i) increase or extend the term, or extend the
time or waive any requirement for the reduction or termination, of the
Loan, (ii) extend the date fixed for the payment of principal of or
interest on the Loan, (iii) reduce the amount of any such payment of
principal, (iv) reduce the rate at which interest is payable on any
amount under this Agreement, or reduce any fee or other amount payable
to the Participant to a level below the rate at which the Participant
is entitled to receive such interest or fee, (v) alter the rights or
obligations of the Customer to prepay the Loan, or (vi) release any
portion of the Collateral or terminate any Lien under the Security
Documents prior to the payment in full of the Loan and all amounts
required to be paid by the Customer to the Lender under the Loan
Documents except as contemplated in the Security Documents.
(d) LIMITATIONS ON RIGHTS OF PARTICIPANTS. A Participant shall
not be entitled to receive any greater payment under Section 2.10 or
2.12 than the Lender would have been entitled to receive with respect
to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Customer's prior
written consent.
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SECTION 8.05. SURVIVAL. All covenants, agreements, representations and
warranties made by the Customer herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loan,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Lender may have had notice or knowledge of any
Default or Event of Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid and so long
as the Commitment has not expired or terminated. The provisions of Sections
2.10, 2.11, 2.12 and 8.03 shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loan, the expiration or termination of the Commitment or the
termination of this Agreement or any provision hereof.
SECTION 8.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement constitutes
the entire contract between the parties relating to the subject matter hereof
and supersedes any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section
4.01, this Agreement shall become effective when it shall have been executed by
the Lender and when the Lender shall have received a counterpart hereof bearing
the signature of the Customer, and thereafter shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
SECTION 8.07. SEVERABILITY. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 8.08. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, the Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by the Lender to or for
the credit or the account of the Customer against any of and all the obligations
of the Customer now or hereafter existing under this Agreement held by the
Lender, irrespective of whether or not the Lender shall have made any demand
under this Agreement and although such obligations may be unmatured. The rights
of the Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which the Lender may have.
SECTION 8.09. GOVERNING LAW; JURISDICTION; ETC.
(a) GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the law of the State of New York.
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(b) SUBMISSION TO JURISDICTION. The Customer hereby
irrevocably and unconditionally submits, for itself and its property,
to the nonexclusive jurisdiction of the Supreme Court of the State of
New York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit
on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Lender may otherwise have to
bring any action or proceeding relating to this Agreement against the
Customer or its properties in the courts of any jurisdiction.
(b) WAIVER OF VENUE. The Customer hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement in any court referred to in paragraph (b) of
this Section. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such
court.
(c) SERVICE OF PROCESS. Each party to this Agreement
irrevocably consents to service of process in the manner provided for
notices in Section 8.01. Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other
manner permitted by law.
SECTION 8.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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SECTION 8.11. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 8.12. TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.
(a) TREATMENT OF CERTAIN INFORMATION. The Customer
acknowledges that from time to time financial advisory, investment
banking and other services may be offered or provided to the Customer
(in connection with this Agreement or otherwise) by the Lender or by
one or more subsidiaries or Affiliates of the Lender and the Customer
hereby authorizes the Lender to share any information delivered to the
Lender by the Customer pursuant to this Agreement, or in connection
with the decision of the Lender to enter into this Agreement, to any
such subsidiary or Affiliate, it being understood that any such
subsidiary or Affiliate receiving such information shall be bound by
the provisions of paragraph (b) of this Section as if it were the
Lender hereunder. Such authorization shall survive the repayment of the
Loan, the expiration or termination of the Commitment or the
termination of this Agreement or any provision hereof.
(b) CONFIDENTIALITY. Each of the Customer and the Lender agree
to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (i) to the Customer's and the
Lender's Affiliates and to such Affiliates' directors, officers,
employees and agents, including accountants, legal counsel and other
advisors who need to know (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of
such Information and will agree to keep such Information confidential),
(ii) to the extent requested by any regulatory authority or to the
extent required by applicable laws or regulations or by any subpoena or
similar legal process (PROVIDED, that prompt notice of such requested
or required disclosure shall be provided to any other party to this
Agreement so as to enable such party to obtain a protective order,
confidential treatment or other appropriate remedy), (iii) to any other
party to this Agreement, (iv) in connection with the exercise of any
remedies hereunder or under any other Loan Document or any suit, action
or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (v) subject to an
agreement containing provisions substantially the same as those of this
paragraph, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under
this Agreement, (vi) with the consent of the Customer or the Lender, as
the case may be, or (vii) to the extent such Information (A) becomes
publicly available other than as a result of a breach of this paragraph
or (B) becomes available to the Customer or to the Lender on a
non-confidential basis from a source other than the Customer or the
Lender as the case may be, PROVIDED, that such source is not known to
be bound by a confidentiality arrangement or otherwise prohibited from
transmitting the Information by a contractual, legal or fiduciary
obligation. The Lender hereby acknowledges that it is aware of and
shall comply with all applicable United States securities laws that
impose restrictions upon any Person who has received material,
non-public information concerning the Customer with respect to
purchasing or selling securities of the Customer and prohibits such
Persons from communicating such information to any other Person under
circumstances in which it is reasonably foreseeable that such other
Person is likely to purchase or sell securities
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of the Customer. For the purposes of this paragraph, "INFORMATION"
means all information (a) received by the Lender from the Customer
relating to the Customer or its business, other than any such
information that is available to the Lender on a non-confidential
basis prior to disclosure by the Customer; and (b) received by the
Customer from the Lender relating to the Lender or its business, other
than such information that is available to the Customer on a
non-confidential basis prior to disclosure by the Lender, PROVIDED
that, in the case of information received from either party after the
date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such
Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its
own confidential information.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
XM SATELLITE RADIO HOLDINGS INC.
By:
--------------------------------------
Name:
Title:
Customer Credit Agreement
S-1
<PAGE>
BOEING CAPITAL SERVICES CORPORATION
By:
-----------------------------------
Name:
Title:
Customer Credit Agreement
<PAGE>
SCHEDULE I
LITIGATION
FCC MATTERS
1. CHALLENGE TO XM SATELLITE RADIO'S LICENSE.
In June 1997, Primosphere, one of the two losing bidders in the
Digital Audio Radio Service (DARS) auction, filed a Petition to Deny the
application of XM Satellite Radio Holdings Inc. and subsidiaries (the
"Company") for an FCC license. Primosphere alleges that an entity,
WorldSpace, had effectively taken control of the Company without FCC approval
and that WorldSpace has circumvented the FCC's application cut-off
procedures. (WorldSpace is no longer a stockholder in the Company.)
The FCC issued a decision denying Primosphere's petition. Primosphere
filed an Application for Review of this decision, but the FCC has not acted on
the Application for Review, which has been pending since November 1997. The
FCC's order granting the Company its license remains in effect during the
pendency of this Application for Review. In March 2001, Primosphere asked a
federal court of appeals to mandate that the FCC act on its Application for
Review.
In December 2000, the FCC approved a transfer of control of the
Company's FCC license from Motient Corporation to a diffuse group of owners,
none of whom has a controlling interest in the Company. Primosphere objected to
the transfer, and the FCC has conditioned its approval on the ultimate outcome
of Primosphere's Application for Review, but declined to act on the Application.
The Company believes that the award of its license will continue to be
upheld. The Company of course cannot guarantee the ultimate outcome of this
challenge. If this challenge is successful, the FCC could in its discretion take
a range of actions, which could harm the ability of the Company to continue its
satellite radio service.
2. TERRESTRIAL REPEATERS.
A. REPEATER RULEMAKING. The FCC is currently conducting a rulemaking
proceeding to establish permanent rules for the operation of DARS terrestrial
repeaters. The FCC has proposed to permit the Company to deploy these
facilities. Specifically, the FCC has proposed a form of blanket licensing for
terrestrial repeaters and service rules which would prohibit satellite radio
licensees from using terrestrial repeaters to originate local programming or
transmit signals other than those received from the satellite radio satellites.
B. REPEATER STA. Since the FCC has not completed its rulemaking on DARS
terrestrial repeaters, in September 2001, the FCC issued a decision granting the
Company special temporary authority ("STA") to operate DARS terrestrial
repeaters for commercial service. One party who opposed the Company's request
for STA has filed an Application for Review of this
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decision asking the FCC to reverse the decision and deny the Company's STA
request. This Application for Review is pending.
Various parties, including the National Association of Broadcasters,
Wireless Communications Service (WCS) licensees, Multipoint Distribution Service
(MDS) licensees, and Instructional Television Fixed Service (ITFS) licensees
have asked the FCC to:
o limit the number of repeaters operating at greater than 2 kW EIRP that
may be deployed;
o limit the power level of the repeaters operating at greater than 2 kW EIRP
that are deployed;
o delay consideration of terrestrial repeater rules until the Company and
Sirius Radio provide additional information regarding planned terrestrial
repeaters;
o require individual licensing of each terrestrial repeater; and
o impose a waiting period on the use of repeaters in order to determine if
signal reception problems can be resolved through other means.
The Company has made a proposal to the FCC to set a 40 kW limit on the
power of terrestrial repeaters operating above 2 kW EIRP. The Company has also
proposed to coordinate with WCS licensees in certain cases prior to operating
terrestrial repeaters above 2 kW EIRP. The coordination may include providing
filters in certain instances to limit the interference WCS licensees claim will
result from operation of repeaters operating above 2 kW EIRP.
The FCC may also require the Company to compensate certain MDS and ITFS
customers and licensees to remedy interference caused to some of their receivers
by the operation of terrestrial repeaters.
The FCC also may adopt limits on emissions of terrestrial repeaters to
protect other services using nearby frequencies. The Company believes that it
will meet any reasonable non-interference standard for terrestrial repeaters,
but the FCC has no specific standard at this time and the application of such
limits might increase the cost of using repeaters.
The Company is optimistic that it will be able to continue to construct
and use terrestrial repeaters as needed. The development and implementation of
the FCC's ultimate rules, however, might delay this process or restrict its
ability to do so, which could be materially adverse to the Company.
The Company must also coordinate its repeaters with systems operating
in the same frequency bands in adjacent countries. Canada and Mexico are the
countries whose radio systems are most likely to be affected by satellite radio.
The United States government, which conducts the coordination process, has
resolved the issue with both the Canadian and Mexican governments. As a result,
the Company must coordinate certain repeaters with Canada and Mexico prior to
operation.
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3. INTEROPERABILITY
The FCC's rules require interoperability with all licensed satellite
radio systems that are operational or under construction. The FCC has
conditioned the Company's license on certification that the Company's final
receiver design is interoperable with the final receiver design of the other
DARS licensee, Sirius Radio, which plans to use a different transmission
technology than the Company plans to use. Because of uncertainty regarding the
design of Sirius Radio's systems, the Company may face difficulties initially in
meeting this interoperability requirement. The Company has signed an agreement
with Sirius Radio to develop a unified standard for satellite radios, but it is
anticipated that it will take several years to develop the technologies
necessary for radios that will be capable of receiving the service of both the
Company and Sirius Radio.
The Company may not be able to meet the FCC's interoperability
requirements, or may need to obtain an extension of time or modification of the
interoperability requirement from the FCC. The Company and Sirius Radio have
informed the FCC of the progress that has been made to date in meeting the
interoperability requirement, and the Company believe that the FCC ultimately
will grant the Company additional time to comply. Complying with the
interoperability requirement ultimately could make radios more difficult and
costly to manufacture.
4. INTERFERENCE FROM UNLICENSED DEVICES
A. RF LIGHTING PROCEEDING. In April 1998, the FCC proposed to establish
rules for radio frequency ("RF") lighting devices that operate in a radio
frequency band adjacent to the Company. The Company has opposed this proposal on
the basis that the proliferation of this new kind of lighting and its proposed
emission limits may interfere with the Company's operations. The Company and
Sirius Radio have proposed to the FCC an emission limit for these RF lighting
devices that its believes will protect DARS receivers from interference. The
Company has also proposed that the FCC require existing RF lighting devices that
exceed the Company's proposed limit to cease operations. While the Company's
proposal is pending, these RF lighting devices may continue to be produced and
used, and the FCC ultimately may not adopt the Company's proposal. This could
adversely affect the Company's signal quality.
B. UWB PROCEEDING. In May 2000, the FCC proposed to amend its rules to
allow for the operation of devices incorporating ultra-wideband (UWB) technology
on an unlicensed basis. The FCC has proposed to impose less stringent emissions
limits for UWB devices operating above 2 GHz, where XM operates, than for such
devices operating below 2 GHz. The Company has opposed this proposal on the
basis that the operation of these devices may interfere with the Company's
operations.
C. SPREAD SPECTRUM RULEMAKING. In May 2001, the FCC issued a notice of
proposed rulemaking seeking to facilitate the development of new unlicensed
wireless devices operating in a frequency band adjacent to the Company. The
Company has opposed this proposal on the basis that the operation of these
devices pursuant to the FCC's current emissions limits may interfere with the
Company's operations.
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OTHER MATTERS
On January 12, 1999, Sirius Radio, the other holder of an FCC satellite radio
license, commenced an action against the Company in the United States District
Court for the Southern District of New York, alleging that the Company was
infringing or would infringe three patents assigned to Sirius Radio. In its
complaint, Sirius Radio sought money damages to the extent the Company
manufactured, used or sold any product or method claimed in their patents and
injunctive relief. This suit was dismissed without prejudice in February 2000 in
accordance with the terms of a joint development agreement between XM Satellite
Radio Inc. and Sirius Radio in which both companies agreed to develop a unified
standard for satellite radios and license our respective intellectual property,
including the patents that were the subject of the suit, for use in this joint
development. Each party is obligated to fund one half of the development cost.
Each party will be entitled to license fees or a credit towards its one half of
the cost based upon the validity, value, use, importance and available
alternatives of the technology it contributes. The amounts for these fees or
credits will be determined over time by agreement of the parties or by
arbitration. The parties have yet to agree on the validity, value, use,
importance, and available alternatives of their respective technology. The
companies have agreed to seek arbitration to resolve issues with respect to
certain existing technology. If this agreement is terminated before the value of
the licenses has been determined due to the Company's failure to perform a
material covenant or obligation, then this suit could be refiled.
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SCHEDULE II
ENVIRONMENTAL MATTERS
None.
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SCHEDULE III
QUALIFICATIONS TO FINANCIAL STATEMENTS
XM Satellite Radio Holdings Inc. and subsidiaries (the "Company") has been the
subject of a "going concern" opinion of its auditors since the initial public
offering in October 1999. The Company's ability to continue as a going concern
is subject to significant business, economic, regulatory, technical and
competitive uncertainties and contingencies. The Company plans to fund
operations and capital expansion through the additional sale of debt and equity
securities through public and private sources. Currently, economic uncertainties
exist regarding the successful acquisition of additional debt or equity
financings and the attainment of positive cash flows from the Company's service.
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SCHEDULE IV
SUBSIDIARIES
XM Satellite Radio Inc.
XM Radio Inc.
XM Orbit LLC
XM Equipment Leasing LLC
XM 1500 Eckington LLC
XM Capital Resources Inc.
XM Innovations Inc.
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EXHIBIT A
NOTICE OF BORROWING
[INSERT DATE]
To: Boeing Capital Services Corporation
500 Naches Avenue SW
Third Floor
Renton, WA 98055
This Notice of Borrowing is delivered pursuant to Section 2.01(b) of the
Customer Credit Agreement dated as of December 5, 2001 (as amended, modified or
supplemented and in effect from time to time, the "CUSTOMER CREDIT AGREEMENT")
between XM Satellite Radio Holdings Inc., a Delaware corporation ("CUSTOMER"),
and you, as Lender. Unless otherwise defined herein, capitalized terms used in
this Notice of Borrowing have the meanings given to them (whether by reference
to another document or otherwise) in the Customer Credit Agreement.
This Notice of Borrowing is irrevocable and constitutes a request for the Loan
as follows:
1. Aggregate amount of the Loan: $35,000,000.
2. Date of Loan: December 5, 2001.
3. Duration of the Interest Period for the Loan: 3 months
4. Account for deposit of proceeds of the Loan:
Account Number: [__________________] held with [____________________].
As contemplated by the Customer Credit Agreement, the Customer certifies that,
as at the date of this Notice of Borrowing and the date of the Loan (including
after giving effect to the making of the Loan and the intended use thereof)
that:
(a) the representations and warranties of the Customer set out in
Article III of the Customer Credit Agreement shall be true and correct
on and as of the date of the making of the Loan; and
(b) no Default or Event of Default shall have occurred and be continuing.
The Customer further confirms and certifies to the Lender that the proceeds of
the requested Loan will be used solely for the purposes specified and permitted
by the Customer Credit Agreement.
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Very truly yours,
XM SATELLITE RADIO HOLDINGS INC.
By:
-------------------------------------
Name:
Title:
Customer Credit Agreement