XM Radio 2008 Annual Report Download - page 124

Concurrently with entering into the Sirius Credit Agreement, we borrowed $250 million under the term loan
facility.
The loans under the Sirius Credit Agreement bear interest at a rate of 15% per annum. Commencing on
March 31, 2010, the loans amortize in quarterly installments equal to: (i) 0.25% of the aggregate principal amount
of the loans outstanding on January 1, 2010 and (ii) after December 31, 2011, 25% of the aggregate principal
amount of the loans outstanding on January 1, 2012. The loan matures on December 20, 2012. We paid Liberty
Media Corporation a structuring fee of $30 million in connection with the Sirius Credit Agreement. In addition, we
pay a commitment fee of 2% per annum on the unused portion of the purchase money loan facility.
The loans under the Sirius Credit Agreement are guaranteed by Satellite CD Radio, Inc. and Sirius Asset
Management Company LLC, our wholly owned subsidiaries. The loans are secured by a lien on substantially all of
our assets. The affirmative covenants, negative covenants and event of default provisions in the Sirius Credit
Agreement are substantially similar to those in the Term Credit Agreement, dated as of June 20, 2007, among us,
the lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent.
Investment Agreement
On February 17, 2009, we entered into an investment Agreement (the “Investment Agreement”) with
Liberty Radio, LLC, an indirect wholly-owned subsidiary of Liberty Media Corporation. Pursuant to the
Investment Agreement, we agreed to issue to Liberty Radio, LLC 12,500,000 shares of convertible preferred
stock with a liquidation preference of $0.001 per share in partial consideration for the loan investments
described herein. The preferred stock was issued on March 6, 2009, as described below. See “Relationship
with Liberty Media — Issuance of the Preferred Stock”.
The preferred stock is convertible into 40% of our outstanding shares of common stock (after giving effect to
such conversion). Liberty Radio, LLC has agreed not to acquire more than 49.9% of our outstanding common
stock for three years from the date the preferred stock was issued, except that Liberty Radio, LLC may acquire
more than 49.9% of our outstanding common stock at any time after the second anniversary of such date pursuant
to any cash tender offer for all of the outstanding shares of our common stock that are not beneficially owned by
Liberty Radio, LLC or its affiliates at a price per share greater than the closing price of the common stock on the
trading day preceding the earlier of the public announcement or commencement of such tender offer. The
Investment Agreement also provides for certain other standstill provisions during such three year period.
The rights, preferences and privileges of the preferred stock are set forth in the Certificate of Designations
of Convertible Perpetual Preferred Stock, Series B-1 (the “Certificate of Designations”), filed with the
Secretary of State of the State of Delaware. The holder of our preferred stock is entitled to appoint a
proportionate number of our board of directors based on its ownership levels from time to time. The
Certificate of Designations also provides that so long as at least 6,250,000 shares of Series B-1 Preferred
Stock are outstanding, we need the consent of the holder of the Series B-1 Preferred Stock for certain actions,
including:
• the grant or issuance of our equity securities;
• any merger or sale of all or substantially all of our assets;
• any acquisition or disposition of assets other than in the ordinary course of business above certain
thresholds;
• the incurrence of debt in amounts greater than a stated threshold;
• engaging in a business different than the business currently conducted by us; and
• amending our certificate of incorporation or by-laws in a manner that materially adversely affects the
holders of the preferred stock.
The preferred stock, with respect to dividend rights, ranks on a parity with our common stock, and with
respect to rights on liquidation, winding-up and dissolution, ranks senior to our common stock. Dividends on
the preferred stock are payable, on a non-cumulative basis, as and if declared on our common stock, in cash,
on an as-converted basis.
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