Preferred Stock Investment Agreement [Amendment No. 2] - CD Radio Inc.
SECOND AMENDMENT
TO PREFERRED STOCK INVESTMENT AGREEMENT
This SECOND AMENDMENT TO PREFERRED STOCK INVESTMENT AGREEMENT
(this "AMENDMENT") is dated as of March 14, 1997, and entered into by and among
CD Radio, Inc., a Delaware corporation ("CDRD") and the undersigned investors
and any additional investor that signs a counterpart to this Amendment
(collectively, "INVESTORS"). Capitalized terms used herein without definition
shall have the same meanings herein as set forth in the Preferred Stock
Investment Agreement dated as of October 23, 1996, by and between CDRD and
Investors, as amended by the First Amendment to Preferred Stock Investment
Agreement, dated as of March 7, 1997 (the "FIRST AMENDMENT", as so amended, the
"PREFERRED STOCK INVESTMENT AGREEMENT").
RECITALS
WHEREAS, CDRD and Investors desire to amend the Preferred Stock
Investment Agreement as set forth below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE PREFERRED STOCK
INVESTMENT AGREEMENT
1.1 AMENDMENT OF RECITALS: The Recitals to the Preferred
Stock Investment Agreement shall be amended by deleting the third Recital and
replacing such Recital with a new Recital as follows:
"WHEREAS, CDRD will have the option to sell to the
Investors a number of Preferred Shares up to the number of
First Closing Shares ("SECOND CLOSING SHARES") after the
First Closing Shares have been sold, subject to the terms
and conditions set forth in this Agreement."
1.2 AMENDMENT OF SECTION 1.1: PURCHASE AND SALE OF
PREFERRED SHARES. Section 1.1 of the Preferred Stock Investment Agreement is
hereby amended by deleting such Section in its entirety and substituting the
following therefor:
"Section 1.1 Purchase and Sale of Preferred Shares.
Upon the following terms and conditions, CDRD shall issue
and sell to each Investor severally, and each Investor
severally shall purchase from CDRD, the number of First
Closing Shares and up to the number of Second Closing
Shares indicated next to such Investor's name on Schedule I
attached to this Agreement."
1.3 AMENDMENT OF SECTION 1.4: THE SECOND CLOSING. Section
1.4(a)(i)(A) of the Preferred Stock Investment Agreement is hereby amended
deleting such clause in its entirety and substituting the following therefor:
"(A) ten days after written notice ("SECOND CLOSING
NOTICE") from CDRD electing to sell an aggregate number to
all Investors of Second Closing Shares specified in such
Second Closing Notice (which number shall not exceed the
number of First Closing Shares) and which Second Closing
Notice shall be delivered to the Investors not earlier
<PAGE> 2
than the First Closing Date and not later than fifteen days
after the First Closing Date; and "
Section 1.4 of the Preferred Stock Investment Agreement is hereby further
amended by adding after the last sentence of clause (a) thereof the following
sentence:
"On the Second Closing Date each Investor shall purchase a
number of Second Closing Shares equal to the total number
of Second Closing Shares to be sold to all Investors on
such date as specified in the Second Closing Notice
multiplied by the quotient of the number of First Closing
Shares purchased by such Investor divided by the total
number of First Closing Shares sold to all Investors."
1.4 NEW SECTION 3.14: MINIMUM DRAW AMOUNT. The Preferred
Stock Investment Agreement is hereby amended by adding a new Section 3.14 as
follows:
"Section 3.14 Minimum Draw Amount. If CDRD submits a
Winning Bid, CDRD shall sell a number of Preferred Shares
to Investors at least sufficient to generate gross proceeds
to CDRD equal to the amount bid for the Satellite DARS
License; provided, however, that in no event shall CDRD be
permitted to sell fewer Preferred Shares to Investors than
the number of First Closing Shares issuable under this
Agreement nor required to sell more Preferred Shares to
Investors than twice such number."
1.5 AMENDMENT OF SECTION 7.3: ENTIRE AGREEMENT;
AMENDMENTS; ADDITIONAL INVESTORS; INCREASED COMMITMENTS. Section 7.3(b) of the
Preferred Stock Investment Agreement is hereby amended by deleting such clause
in its entirety and substituting the following therefor:
"(b) (i) Any Investor may increase its commitment under
this Agreement at any time on or prior to the First
Closing Date to purchase such number of First
Closing Shares and up to such number of Second
Closing Shares as shall be agreed between such
Investor and CDRD in writing. Upon execution of a
written agreement regarding such commitment by such
Investor and CDRD, such Investor shall be obligated
to purchase and CDRD shall be obligated to sell the
number of additional First Closing Shares and up to
the number of additional Second Closing Shares set
forth in such commitment pursuant to the terms of
this Agreement;
(ii) Any individual or other legal entity may become
an additional investor under this Agreement at any
time on or prior to the First Closing Date with
respect to such number of First Closing Shares and
up to such number of Second Closing Shares as shall
be agreed between such Investor and CDRD. Any
additional investor under this Agreement may become
an additional investor by executing and delivering a
counterpart to the most recent amendment to the
Preferred Stock Investment Agreement, as amended to
the date of such execution. Upon delivery of any
such counterpart and acceptance thereof by CDRD,
such counterpart shall be attached to such
amendment, such additional investor shall be an
Investor (such term as used in this Agreement to
include such additional Investor) and such
additional investor shall be as fully a party to
this Agreement as if such additional investor were
an original
- 2 -
<PAGE> 3
signatory of this Agreement. No consent of any other
Investor shall be required for such addition;
in each case, Schedule I to this Agreement and Exhibits A, B,
C and D to Schedule A to Exhibit 2 to this Agreement,
automatically shall be revised to reflect the new allocation
of First Closing Shares and Second Closing Shares to such
Investor pursuant to clause (b)(i) above or the joining of
such additional investors to this Agreement pursuant to
clause (b)(ii) above, as the case may be."
1.6 AMENDMENT TO SECTION 7.1: PLACEMENT AGENT FEE. Section
7.1(B) of the Preferred Stock Investment Agreement is hereby amended by adding
after the first occurrence of the words "Preferred Shares" in such clause, the
parenthetical "(or securities of CDRD that are either pari passu or junior in
seniority, structure and maturity to the Preferred Shares)".
1.7 AMENDMENT OF SCHEDULE A TO EXHIBIT 2: PREFERRED CUSTODY
SERVICES ESCROW AGREEMENT.
(A) Schedule A to Exhibit 2 to the Preferred Stock Investment
Agreement is hereby amended by deleting clause 3(a) thereof in its entirety and
substituting therefor the following:
"(a) at the close of the final bid submission
round of the Satellite DARS License auction conducted by the
FCC, if (1) Party A is the winning bidder for one of the
Satellite DARS Licenses and the Bid Financing Condition (as
defined below) is met and (2) each of the conditions set
forth in Article IV of the Investment Agreement and
applicable to the First Closing shall be fulfilled or waived
in accordance with the Investment Agreement; provided, that
it shall be a condition of release of the Escrowed Property
from the Escrow Account (the "BID FINANCING CONDITION"), that
Party A have at that time additional cash and/or binding
commitments for financing (from the proceeds from the sale of
the Second Closing Shares and/or any other binding
commitments that are either pari passu or junior in
seniority, structure and maturity to the Preferred Shares)
for an amount sufficient, together with the Escrowed Property
to be released to Party A, to enable Party A to fully and
timely make the payments required to purchase the Satellite
DARS License; or"
(B) Schedule A to Exhibit 2 is hereby further amended by
deleting the last two provisos in Section 4(a) thereof.
(C) Schedule A to Exhibit 2 is hereby further amended by
deleting the second full paragraph of Exhibit A thereof in its entirety and
replacing such paragraph with the following:
"The following conditions for release of the Escrowed
Property have been met: (i) at the close of the final bid
submission round of the Satellite DARS License auction
conducted by the FCC, CD Radio Inc. was the winning bidder
for one of the Satellite DARS Licenses and the Bid Financing
Condition has been met as shown on Annex A or waived in a
writing executed by each Investor and (ii) each of the
conditions set forth in Article IV of the Investment
Agreement and applicable to the First Closing have been
fulfilled or waived in accordance with the Investment
Agreement."
- 3 -
<PAGE> 4
(D) Schedule A to Exhibit 2 is hereby further amended by
deleting Annex A thereto in its entirety and replacing such Annex A with Annex
A hereto.
(E) Schedule A to Exhibit 2 is hereby further amended by
deleting the contents of Exhibit B thereto in their entirety and replacing such
contents with the words "Intentionally Omitted".
SECTION 2. MISCELLANEOUS
2.1 REFERENCE TO AND EFFECT ON THE PREFERRED STOCK
INVESTMENT AGREEMENT.
(i) Each reference in the Preferred Stock Investment
Agreement to "this Agreement", "hereunder", "hereof", "herein", or
words of like import referring to the Preferred Stock Investment
Agreement and each reference in the Preferred Stock Investment
Agreement and other related agreements to the "Investment Agreement",
"thereunder" "thereof" or words of like import referring to the
Preferred Stock Investment Agreement shall mean and be a reference to
the Preferred Stock Investment Agreement, as amended by the First
Amendment to Preferred Stock Investment Agreement, dated as of March
7, 1997, and as further amended by this Amendment.
(ii) Except as specifically amended by this Amendment, the
Preferred Stock Investment Agreement shall remain in full force and
effect and is hereby ratified and confirmed.
2.2 COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
- 4 -
<PAGE> 5
<TABLE>
<CAPTION>
ANNEX A
ANNEX A TO EXHIBIT A TO SCHEDULE A TO ESCROW AGREEMENT
DETERMINATION OF BID FINANCING CONDITION
<S> <C> <C>
1. Purchase price payable for Satellite DARS License ...................................... $_____
2. Net proceeds from First Closing and Second Closing:
(a)
(i) Gross proceeds from First Closing and Second Closing (if $_____
any)..................................................................
(ii) Less: Financing fees, deal expenses and 2% funding fee on
First Closing......................................................... $_____
(iii) Net Proceeds from sale of Preferred Shares............................ $_____
(b) Gross proceeds from all other financings for which CDRD
has binding commitments:
(i) (A) From such financings that are pari passu to the
Preferred Shares............................................. $_____
(B) From such financings that are junior to the
Preferred Shares............................................. $_____
(C) Total gross proceeds from all other such financings
((b)(i)(A) + (b)(i)(B))...................................... $_____
(ii) Less: Financing fees, funding fees and deal expenses for all
other such financings................................................. $_____
(iii) Net proceeds from all other such financings ((b)(i)(C) - $_____
(b)(ii))..............................................................
(c) Total net proceeds from all financings and commitments for
financings ((a)(iii) plus (b)(iii) ................................... $_____
(d) Total additional cash currently held by CDRD ......................... $_____
(e) Total funds available for payment of purchase price ((c)
plus (d))............................................................. $_____
</TABLE>
IF LINE 2(e) IS GREATER THAN OR EQUAL TO LINE 1, THE BID FINANCING CONDITION IS
MET.
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
CD RADIO INC.
By:
---------------------------
Name:
Title:
- 6 -
<PAGE> 7
<TABLE>
<CAPTION>
INVESTORS:
<S> <C>
Dated: March ___, 1997 THE VALUE REALIZATION FUND, L.P.
By: Canpartners Investments III, L.P.
By: Canyon Capital Management, L.P.
By: Canpartners Incorporated
By:
------------------------------------
its
Dated: March ___, 1997 GRS PARTNERS II
By:
--------------------------------------------
its Account Manager
Dated: March ___, 1997 THE CANYON VALUE REALIZATION FUND, (CAYMAN)
LTD.
By:
--------------------------------------------
its Account Manager
Dated: March ___, 1997 CERBERUS PARTNERS, L.P.
By:
--------------------------------------------
General Partner Cerberus Associates, L.P.
General Partner Cerberus Partners, L.P.
Dated: March ___, 1997 THE COPERNICUS FUND, LP
By: DDJ Copernicus, LLC
By:
------------------------------------
its Member
Dated: March ___, 1997 THE GALILEO FUND, LP
By: DDJ Galileo, LLC
By:
------------------------------------
its Member
</TABLE>
- 7 -
<PAGE> 8
<TABLE>
<S> <C>
Dated: March ___, 1997 DICKSTEIN & CO., L.P.
By: Dickstein Partners, L.P.
By: Dickstein Partners, Inc.
By:
------------------------------------
its
Dated: March ___, 1997 DICKSTEIN INTERNATIONAL LIMITED
By: Dickstein Partners, Inc.
By:
------------------------------------
its
Dated: March ___, 1997 GLOBAL BERMUDA LIMITED PARTNERSHIP
By: Global Capital Management, Inc.
By:
------------------------------------
its Authorized Signatory
Dated: March ___, 1997 LAKESHORE INTERNATIONAL, LIMITED
By: Global Capital Management, Inc.
By:
------------------------------------
its Authorized Signatory
Dated: March ___, 1997 ELLIOTT ASSOCIATES, L.P.
By:
---------------------------------------------
its General Partner
Dated: March ___, 1997 WESTGATE INTERNATIONAL, L.P.
By: Martley International, Inc. as Attorney-in-fact
By:
------------------------------------
its
Dated: March ___, 1997 EVEREST CAPITAL INTERNATIONAL, LTD.
By: Everest Capital, Ltd., Investment Manager
By:
------------------------------------
its
</TABLE>
- 8 -
<PAGE> 9
<TABLE>
<S> <C>
Dated: March ___, 1997 EVEREST CAPITAL FUND, L.P.
By: Everest Capital, Ltd., General Partner
By:
------------------------------------
its
Dated: March ___, 1997 THE JAY GOLDMAN MASTER LIMITED PARTNERSHIP
By:
---------------------------------------------
its General Partner
Dated: March ___, 1997 GRACE BROTHERS, LTD.
By:
---------------------------------------------
its General Partner
Dated: March ___, 1997 MAINSTAY VP SERIES FUND, INC., ON BEHALF OF ITS
HIGH YIELD CORPORATE BOND PORTFOLIO
By: Mackay-Shields Financial Corporation
its Investment Advisor
By:
---------------------------------------------
name:
its:
Dated: March ___, 1997 THE MAINSTAY FUNDS, ON BEHALF OF ITS HIGH
YIELD CORPORATE BOND FUND SERIES
By: Mackay-Shields Financial Corporation
its Investment Advisor
By:
---------------------------------------------
name:
its:
Dated: March ___, 1997 THE RAVICH REVOCABLE TRUST OF 1989
By:
---------------------------------------------
its Trustee
</TABLE>
- 9 -
<PAGE> 10
<TABLE>
<S> <C>
Dated: March ___, 1997 SCOGGIN CAPITAL MANAGEMENT
By:
-------------------------------------------
its General Partner
By:
-------------------------------------------
its
By:
-------------------------------------------
its
Dated: March ___, 1997 SCOGGIN INTERNATIONAL FUND, LTD.
By:
---------------------------------------------
its General Partner
Dated: March ___, 1997 TCW SHARED OPPORTUNITY FUND II
By: TCW Investment Management Company, its
Investment Adviser
By:
------------------------------------
its
By:
------------------------------------
its
Dated: March ___, 1997 LIBERTYVIEW PLUS FUND
By:
---------------------------------------------
its
Dated: March ___, 1997 LIBERTYVIEW LLC FUND
By: Liberty View Capital Management, Inc.
By:
------------------------------------
its
</TABLE>
- 10 -
<PAGE> 11
<TABLE>
<S> <C>
Dated: March ___, 1997 PARESCO, INC.
By:
---------------------------------------------
its
Dated: March ___, 1997 NAVESINK INVESTMENT FUND, LDC
By:
---------------------------------------------
its
Dated: March ___, 1997 STONEHILL OFFSHORE PARTNERS LIMITED
By: Stonehill Advisors LLC, as Agent
By:
------------------------------------
its:
Dated: March ___, 1997 STONEHILL INVESTMENT CORP., FOR AN ON BEHALF
OF STONEHILL PARTNERS, L.P., GRS PARTNERS III
AND AURORA LIMITED PARTNERSHIP
By:
---------------------------------------------
its:
Dated: March ___, 1997 HERTA AND PAUL AMIR DEVELOPMENT FAMILY
TRUST
By:
---------------------------------------------
its Trustee
Dated: March ___, 1997 THE WOLENS FAMILY TRUST
By:
---------------------------------------------
its Trustee
</TABLE>
- 11 -
<PAGE> 12
<TABLE>
<S> <C>
Dated: March ___, 1997 LONGVIEW PARTNERS
By:
---------------------------------------------
its General Partner
By:
---------------------------------------------
its General Partner
Dated: March ___, 1997 CUMBERLAND PARTNERS
By:
---------------------------------------------
its General Partner
By:
---------------------------------------------
its
Dated: March ___, 1997 JMG CAPITAL PARTNERS, L.P.
By: JMG Capital Management, Inc.
By:
------------------------------------
its General Partner
</TABLE>
- 12 -
<PAGE> 13
ADDITIONAL INVESTORS:
Dated: , 1997 [ADDITIONAL INVESTOR NAME]
-------------------
By
-------------------------
Its
Investor's address:
<TABLE>
<S> <C>
For purposes of Section 3.6 of this Agreement, the following
percentage limitation shall be applicable:
[ ] 4.99% [ ] 9.99% [ ] no limitation
If no box is marked, no limitation shall be applicable.
CD RADIO INC.
By:
---------------------------------------------
David Margolese,
Chairman and Chief Executive Officer
------------------------------------------------
Aggregate Number of Shares of Preferred Stock Agreed to be
Issued and Sold
</TABLE>