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XM Satellite Radio - Amended And Restated Director Designation Agreement
EXHIBIT 10.42
AMENDED AND RESTATED DIRECTOR DESIGNATION AGREEMENT
This Amended and Restated Director Designation Agreement, dated as of February 1, 2003 (this " Agreement" ), is hereby entered into by and among XM Satellite Radio Holdings Inc., a corporation duly organized under the laws of the State of Delaware (the " Company"); AEA XM Investors I LLC, AEA XM Investors II LLC, AEA XM Investors IA LLC and AEA XM Investors IIA LLC, each a limited liability company organized under the laws of the State of Delaware (individually or collectively " AEA XM"); Clear Channel Investments, Inc., a corporation duly organized under the laws of the State of Nevada (" Clear Channel" );; Hughes Electronics Corporation, corporation duly organized under the laws of Delaware (" Hughes"); American Honda Motor Co., Inc., a corporation duly organized under the laws of the State of California (" Honda"); and Madison Dearborn Capital Partners III, L.P. (" Madison Capital"), Madison Dearborn Special Equity III, L.P. (" Madison Equity"), and Special Advisors Fund I, LLC (" Madison Advisors" and, collectively with Madison Capital and Madison Equity, each an entity duly organized under the laws of the State of Delaware, " Madison"). AEA XM, Clear Channel, Honda, Hughes and Madison are collectively referred to herein as the " Investors ." The Company and the Investors are collectively referred to herein as the " Parties ." Columbia XM Radio Partners, LLC, a limited liability company duly organized under the laws of the Commonwealth of Virginia (" Columbia Radio Partners"), Columbia XM Satellite Partners III, LLC, a limited liability company duly organized under the laws of the Commonwealth of Virginia (" Columbia Satellite Partners"), Columbia Capital Equity Partners III (QP), L.P. (" Columbia Equity Partners III") and Columbia Capital Equity Partners II (QP), L.P. (" Columbia Equity Partners II"), each a limited partnership duly organized under the laws of the State of Delaware, who were parties to the January 2003 Agreement (as defined below), are becoming parties hereto solely for the purposes of agreeing to the amendment and restatement of the January 2003 Agreement by this Agreement and terminating their respective rights and obligations hereunder. Upon effectiveness of this Agreement, each of Columbia Radio Partners, Columbia Satellite Partners, Columbia Equity Partners II and Columbia Equity Partners III shall cease to be a party to this Agreement and all of its respective rights and obligations hereunder shall be terminated.
WITNESSETH
WHEREAS, the Company, the Investors, Columbia Radio Partners, Columbia Satellite Partners, Columbia Equity Partners II and Columbia Equity Partners III are parties to a Director Designation Agreement, dated January 28, 2003 (the " January 2003 Agreement"), that relates to the designation of the Company's directors; and
WHEREAS, the Company and each of the Investors believe it to be in the best interests of the Company and the mutual best interests of each of the Investors to continue to have certain agreements with respect to the designation of directors of the Company.
NOW, THEREFORE, in consideration for the mutual covenants contained herein, the adequacy, receipt, and sufficiency of which are hereby acknowledged, the undersigned hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.1 Definitions .
Affiliate : means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. For purposes of Section 2.1, a member of a limited liability company or a partner of a partnership shall be deemed an Affiliate of said company or partnership.
Board or Board of Directors : means the Board of Directors of the Company or a committee consisting of one or more directors lawfully exercising the powers of the Board.
Business Day : means any day other than a Saturday, Sunday or any other day on which commercial banks are authorized or required by law to be closed in New York City or the District of Columbia.
Capital Stock : means any and all securities, shares, interests, warrants, options, rights to acquire equity or equity-linked securities of the Company, participations or other equivalents (however designated, whether voting or non-voting) in equity of the Company, whether issued by the Company or its Subsidiaries, and whether now outstanding or issued subsequently hereto, including, without limitation, all series and classes of Common Stock and preferred stock of the Company, and all Convertible Securities, including the Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock and the 10% Senior Secured Discount Convertible Notes due 2009 of the Company and its wholly owned subsidiary XM Satellite Radio Inc. (the " New Notes").
Class A Common Stock : means the Class A Common Stock, par value $0.01 per share, of the Company having one (1) vote per share.
Common Stock : means all classes and series of the common stock of the Company, any stock into which such common stock shall have been changed or converted or any stock resulting from any capital reorganization or reclassification of such common stock, and all other stock of any class or classes (however designated) of the Company, the holders of which have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions of any shares entitled to preference.
Common Stock Deemed Outstanding : means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock
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issuable upon the conversion, exchange, or exercise in full, of all Convertible Securities, whether or not the Convertible Securities are convertible into or exercisable or exchangeable for Common Stock at such time.
Convertible Securities : means securities or obligations that are exercisable for, convertible into or exchangeable for shares of Common Stock. The term includes options, warrants or other rights to subscribe for or purchase Common Stock or to subscribe for or purchase other securities or obligations that are convertible into or exercisable or exchangeable for Common Stock, including, without limitation, the Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock and the New Notes.
Person : means any individual, partnership, corporation, joint venture, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof.
Series A Convertible Preferred Stock : means the Series A Convertible Preferred Stock, par value $1.00 per share, of the Company having zero (0) votes per share.
Series B Convertible Preferred Stock : means the Series B Convertible Redeemable Preferred Stock, par value $.01 per share, of the Company having zero (0) votes per share.
Series C Convertible Preferred Stock : means the Series C Convertible Redeemable Preferred Stock, par value $.01 per share, of the Company, having the same voting rights as the Class A Common Stock determined on an as converted basis.
Series C Purchase Agreement : means the Series C Convertible Preferred Stock Purchase Agreement, dated as of July 7, 2000, by and among the Company and the investors named therein.
Subsidiary : means, with respect to any Person, any corporation, association or other business entity of which more than fifty percent (50%) of the voting power of the outstanding Capital Stock is owned, directly or indirectly, by such Person or one or other Subsidiaries of such Person.
ARTICLE II. CORPORATE GOVERNANCE; VOTING AGREEMENT
Section 2.1 Board of Directors .
(a) The Board of Directors and the board of directors of XM Satellite Radio Inc. and any other material Subsidiary of the Company (other than the board of any joint venture with Sirius Satellite Radio Inc. so long as the Company's management provides regular reports to the Board of Directors as to the status of any such joint venture) (collectively, the " Boards of Directors") shall consist of at least seven (7) members, of whom:
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(i) one (1) member shall be designated by Clear Channel;
(ii) one (1) member shall be the President and CEO of the Company;
(iii) one (1) member shall be the Chairman of the Company;
(iv) two (2) members shall be independent directors of recognized industry expertise and stature both of whom shall be approved by the Investors who hold a majority of the Common Stock Deemed Outstanding that is held by the Investors;
(v) one (1) member shall be designated by AEA XM who shall be appointed to any Audit Committee and Executive Committee (subject to meeting the Nasdaq Stock Market's Audit Committee and Charter requirements); and
(vi) at Honda's option, one (1) member shall be designated by Honda who shall be appointed to any Executive or comparable committee of the Boards of Directors.
(b) Each Investor agrees to vote its voting securities of the Company in favor of the persons nominated in accordance with the provisions herein. The rights of Clear Channel to designate a director and approve the appointment of independent directors pursuant to this Section 2.1 shall continue for so long as Clear Channel holds (A) in excess of 5% of the Common Stock Deemed Outstanding or (B) the full amount of its original investment in the Company. The right of AEA XM to designate a director and approve the appointment of independent directors shall continue for so long as AEA XM (or its Affiliates) holds at least 50% of the stock that it originally purchased under the Series C Purchase Agreement, either in Series C Convertible Preferred Stock or as converted into Class A Common Stock. The right of Honda to designate a director and approve the appointment of independent directors shall continue for so long as Honda (or any of its Affiliates) retains at least 50% of its investment, including debt and equity securities, in the Company (measured by the purchase price paid by Honda for such securities and without regard to (i) whether or not such securities have been converted into any other security of the Company or (ii) the current market value of any such securities) as of the date hereof.
(c) The right of Clear Channel to designate a director pursuant to Section 2.1(a)(i) also shall terminate, and any director designated by Clear Channel shall promptly resign from the Boards of Directors, if a majority of the ownership interests of Clear Channel cease to be owned, directly or indirectly, by Clear Channel Communications, Inc.
Section 2.2 Removal of Directors . The Investors agree to vote so that each member of the Board of Directors nominated or designated in accordance with Section 2.1 shall serve as a director of the Company until removed, upon the instructions of the Party designating such director, and each Party agrees to vote its shares of Common Stock in accordance with such directions. To the extent permitted by law, each Investor agrees not to take any action to remove or replace (and to use all reasonable efforts to cause the Board of Directors not to replace), with or without cause, any director of the Company that has not been designated for removal or replacement by the Party having originally nominated or designated such director.
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Section 2.3 No Group . It is the intent of the Investors that no "group" (within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended) shall be formed as a result of this Agreement.
Section 2.4 Partial Termination . If the Investors at any time beneficially own in excess of 50% of the voting securities of the Company, then this Agreement shall terminate automatically as to the following, in all respects, first, Clear Channel, second (if necessary), Madison, and, third (if necessary), AEA XM until the remaining Investors beneficially own 50% or less of the voting securities of the Company. The Parties shall take all actions to reflect any such partial termination as may be reasonably requested by the Company or any other Party. Thirty (30) days prior to a date for payment of interest (an "Interest Payment") under any of (i) the New Notes, (ii) the Series GM 10% Senior Secured Convertible Notes due 2009 of the Company and XM Satellite Radio Inc., and (iii) the Credit Agreement among the Company, XM Satellite Radio Inc. and General Motors Corporation, the Company shall calculate the Investors' beneficial ownership of voting securities of the Company (with a copy of such calculation to be furnished to each of the Investors). Each Investor shall provide the Company with at least ten (10) days prior written notice of its intent to purchase any voting securities of the Company. If any proposed purchase of voting securities or Interest Payment would cause the beneficial ownership of the Investors to be in excess of 50%, then the Parties shall take such actions as necessary to remove Investors as Parties to this Agreement in the order set forth above.
Section 2.5 Transfers . Any assignment or transfer by an Investor to a single transferee or a group of Affiliated transferees, whether in a single transaction or a series of related transactions, of:
(i) Convertible Securities representing more than 1% of the Common Stock Deemed Outstanding, other than Common Stock sold pursuant to an effective registration statement or Rule 144 or Rule 145 under the Securities Act of 1934, as amended, or
(ii) any New Notes
shall be subject to the assumption by such transferee of the obligation to vote its Common Stock as provided herein and the obligation to require the same in subsequent such assignments or transfers.
ARTICLE III.
CERTAIN REPRESENTATIONS
Each Party hereby represents and warrants on behalf of itself to each other Party that:
Section 3.1 Existence and Power .
(a) it is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of formation;
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(b) it has the power and authority to own its assets, carry on its business and execute, deliver, and perform its obligations under this Agreement; and
(c) it is duly qualified to do business and is licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification or license except where such failure to qualify would not have a material adverse effect on the business or financial condition of such Party.
Section 3.2 Due Authorization; No Contravention . The execution, delivery and performance by it of this Agreement have been duly authorized by all necessary action, and do not and will not:
(a) Breach or violate the terms of its certificate of incorporation (or similar constituent document) or bylaws (or similar constituent document);
(b) Breach or violate the terms of any material agreement to which it is party; or
(c) Violate any law or regulation applicable to it, including but not limited to the Communications Act and the rules and...
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