Engagement Letter - Libra Investments Inc. and CD Radio Inc.
[Letterhead of Libra Investments, Inc.]
11766 Wilshire Boulevard, Suite 870
Los Angeles, California 90025
Tel: (310) 312-5600
Fax: (310) 312-5666
June 14, 1997
Strictly Confidential
CD Radio Inc.
Sixth Floor
1001 22nd Street, N.W.
Washington, D.C. 20037
Attn: David Margolese
Dear Mr. Margolese:
This letter will confirm our understanding that CD Radio Inc.,
a Delaware corporation, (the "Issuer") has engaged Libra Investments, Inc. (the
"Advisor") to act as the Issuer's exclusive financial advisor and placement
agent in connection with the issuance and sale by the Issuer (the "Private
Placement") of Convertible Preferred Stock (the "Securities"). It is currently
contemplated that the Securities will be authorized by the Issuer as soon as
practicable and will reflect the terms contained in Appendix A. Capitalized
terms not defined herein shall have the meaning specified in Appendix A.
Section 1. Services to Rendered. In connection with this
engagement, the Advisor shall act as financial advisor to and agent for the
Issuer in connection with the Private Placement, which duties will include:
(a) advising as to the specific terms of the
Securities and the Private Placement;
(b) developing a list of potential purchasers of the
Securities;
(c) consulting with the Issuer from time to time as
to such potential purchasers;
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David Margolese
CD Radio, Inc.
June 14, 1997
Page 2
(d) if requested by the Issuer, assisting the Issuer
and its counsel in the preparation and distribution of appropriate
offering materials; and
(e) attempting to arrange the Private Placement of
the Securities at a price and on terms acceptable to the Issuer, it
being understood and agreed that the aggregate offering price for the
Securities is currently expected to be up to a maximum of approximately
$150 million, and that such consideration may take the form of cash
and/or exchanges of the Issuer's 5% Delayed Convertible Preferred
Stock.
Nothing contained herein constitutes a commitment on the part of the Advisor to
purchase any of the Securities or an assurance that the Private Placement will
be completed, and the Advisor shall not have the power or authority to bind the
Issuer to any sale of the Securities.
Section 2. Compensation. In consideration of the Advisor's
agreements hereunder, the Advisor shall be paid an advisory fee of 3.0% of the
aggregate gross proceeds from the Securities sold, payable in immediately
available funds upon closing of the Private Placement; provided, that such fee
shall be reduced to 1.875% of gross proceeds with respect to the first
$50,000,000 of Securities purchased by Everest Capital International, Ltd.,
Everest Capital Fund L.P. and other entities managed by Everest Capital Limited
(i.e. such fee shall be reduced by $562,500). In the event that the Private
Placement is completed in multiple closings, a pro rata portion of such advisory
fee shall be paid to the Advisor at each closing.
No fee payable to any other financial advisor either by the
Issuer or any other entity shall reduce or otherwise affect the fees payable
hereunder to the Advisor.
Section 3. The Advisor's Expenses. In addition to the
compensation payable pursuant to Section 2 of this Agreement, the Issuer shall
reimburse the Advisor for all reasonable costs and expenses (including without
limitation reasonable fees and disbursements of its legal counsel) incurred in
connection with this engagement, whether or not the Private Placement is
consummated.
Section 4. Term of Engagement. Either party to this Agreement
may terminate this Agreement, with or without cause, by giving 10 day's prior
written notice to the other party at any time after December 15, 1997; provided,
however, that Section 3, the second paragraph of this Section 4 and Sections 5,
6 and 9 hereof shall survive any termination of this Agreement.
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David Margolese
CD Radio, Inc.
June 14, 1997
Page 3
The Advisor shall be entitled to receive its full compensation
under Section 2 hereof if at any time prior to the date twelve months after the
termination of this Agreement a transaction is agreed to or consummated by the
Issuer involving the sale or issuance of securities of the type contemplated
hereby in a private placement to investors contacted by Advisor regarding
purchase of Securities in connection with this engagement (the "Libra
Investors"). Promptly following termination of this engagement, Advisor shall
provide Issuer with a list of Libra Investors.
Section 5. Indemnification. The Company agrees to the
indemnification, contribution, limitation of liability and expense reimbursement
obligations set forth in Exhibit A hereto, the provisions of which are
incorporated herein in their entirety.
Section 6. Work Product. The Advisor's advice shall be the
proprietary work product and intellectual property of the Advisor and such
advice may not be disclosed to other parties by the Issuer without the prior
written permission of the Advisor unless such disclosure is required by law. Any
document or information prepared by the Advisor in connection with this
engagement shall not be duplicated by the Issuer and shall be returned by the
Issuer to the Advisor upon termination of this Agreement.
Section 7. Cooperation. The Issuer shall furnish the Advisor
with all information, data or documents that the Advisor shall reasonably deem
appropriate in connection with its activities hereunder and shall provide the
Advisor full access to the Issuer's officers, employees and professional
advisors. Issuer represents and warrants that all such information, data and
documents, taken in their entirety, shall not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements herein not misleading. The Issuer agrees to advise the Advisor if any
such information, data or documents becomes materially inaccurate, misleading or
incomplete during the term of this Agreement. The Advisor shall be entitled to
rely on the accuracy and completeness of such information, data and documents,
and the Advisor shall not be required to make an independent verification
thereof. If requested by the Advisor, the Issuer shall provide to the Advisor a
certificate signed by two of its executive officers as to the accuracy of the
second sentence of this paragraph at each closing of a sale of the Securities.
It is further understood that the Issuer shall involve the
Advisor in all discussions between the Issuer and potential purchasers and shall
make available to the Advisor all information regarding potential purchasers
that it shall receive from any source whatsoever. The Issuer recognizes and
confirms that the Advisor in acting pursuant to this authorization will be using
information provided by the Issuer and
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David Margolese
CD Radio, Inc.
June 14, 1997
Page 4
that the Advisor does not assume responsibility for the accuracy or completeness
of any such information.
Section 8. Confidentiality. Advisor agrees that all
confidential information which it may now possess or may obtain relating to the
financial condition, results of operations, business properties, assets,
liabilities, or future prospects of the Issuer shall not be published, disclosed
or made accessible by it to any other person or any entity at any time or used
by it without the written consent of the Issuer; provided, however, that the
restrictions of this sentence shall not apply (a) as may otherwise be required
by law, (b) as may be necessary or appropriate in connection with this
Agreement, or (c) to the extent such information shall be or shall have
otherwise become publicly available, including without limitation all
information contained in the Issuer's publicly-available reports and filings
with the Securities and Exchange Commission, if any.
Section 9. Outside Advisors and Conflicts. The Issuer
acknowledges that the Advisor and its affiliates may have and may continue to
have investment banking, broker-dealer and other relationships with parties
other than the Issuer pursuant to which the Advisor may acquire information of
interest to the Issuer. The Advisor shall have no obligation to disclose such
information to the Issuer (except to the extent such information relates
directly to the Issuer or the Securities), or to use such information in
connection with its efforts hereunder.
Section 10. Exclusivity. No other financial advisor or other
entity is or will be authorized by the Issuer during the term of this Agreement
to perform services on its behalf of the type which the Advisor is authorized to
perform hereunder.
Section 11. Notices. All notices and other communications
provided for in this Agreement shall be made by first class mail or telecopier.
All notices to the Issuer shall be delivered at the address shown on the first
page of this agreement or to telecopier number (202) 296-6265. All notices to
the Advisor shall be delivered as follows:
Libra Investments, Inc.
11766 Wilshire Boulevard
Suite 870
Los Angeles, CA 90025
Attn: Jess M. Ravich
Telecopier: (310) 996-9590
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David Margolese
CD Radio, Inc.
June 14, 1997
Page 5
Either party hereto may amend such address or telecopier
information by written notice to the other party delivered as provided in this
Section 11.
Section 12. Third Party Beneficiaries. This Agreement is
intended solely for the benefit of the parties hereto and, with the exception of
the rights and benefits conferred upon the Indemnified Persons by Section 5 of
this Agreement, shall not be deemed or interpreted to confer any rights upon any
third parties.
Section 13. Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of New York without
giving effect to the choice of law or conflict of law principles hereof.
Section 14. Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
Agreement.
Section 15. Complete Agreement; Amendments; Assignment. This
Agreement sets forth the entire understanding of the parties relating to the
subject matter hereof and supersedes and cancels any prior communications,
understandings and agreements between the parties. This Agreement may not be
amended or modified except in writing. The rights of the Advisor hereunder shall
be freely assignable, and this Agreement shall apply to, inure to the benefit of
and be binding upon and enforceable against the Advisor and its successors and
assigns; provided, however, that the Advisor shall not assign this Agreement to
any party that is not an affiliate of the Advisor.
If the foregoing terms meet with your approval, please
indicate your acceptance by signing and returning the attached copy of this
letter to us.
Very truly yours,
LIBRA INVESTMENTS, INC.
By: /s/ Jess M. Ravich
------------------------
Jess M. Ravich
Chairman
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David Margolese
CD Radio, Inc.
June 14, 1997
Page 6
AGREED TO AND ACCEPTED:
CD RADIO INC.
By: /s/ David Margolese
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David Margolese
Chairman and CEO
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EXHIBIT A
The Issuer agrees to indemnify and hold harmless the Advisor,
its affiliates, and each person, if any, who controls the Advisor, or any of its
affiliates, within the meaning of either the Securities Act of 1933, as amended
(the "Act") or the Securities Exchange Act of 1934, as amended (a "Controlling
Person"), and the respective agents, employees, officers and directors of the
Advisor, its affiliates, and any such Controlling Person (each an "Indemnified
Party" and collectively, the "Indemnified Parties"), from and against any and
all losses, claims, damages, liabilities and expenses (including, without
limitation and as incurred, reasonable costs of investigating, preparing or
defending any such claim or action) arising out of, or in connection with any
activities contemplated by the letter to which this Exhibit A is attached or any
other services rendered in connection therewith, including, but not limited to,
losses, claims, damages, liabilities or expenses arising out of or based upon
(i) any untrue statement or any alleged untrue statement of a material fact or
any omission or any alleged omission to state a material fact in any disclosure,
offering, consent solicitation or confidential information documents prepared or
approved by the Issuer (the "Disclosure Documents") pertaining to any of the
transactions or proposed transactions contemplated by such letter (collectively,
the "Transaction"), or (ii) any engagement or retention by the Issuer of any
other person, corporation or entity that has acted or is acting as a finder,
agent, broker, dealer, consultant or advisor to or on behalf of the Issuer with
respect to the activities contemplated by the letter to which this Exhibit A is
attached. The Issuer will not, however, be responsible for any claims,
liabilities, losses, damages or expenses based on statements or omissions made
by an Indemnified Party (or in reliance on information provided by an
Indemnified Party) concerning such Indemnified Party or that have resulted from
such Indemnified Party's willful misconduct or gross negligence. The Issuer also
agrees that (i) no Indemnified Party shall have liability to the Issuer or any
other person in connection with the services rendered pursuant to the agreement
except for claims, liabilities, damages, losses or expenses, including
reasonable legal fees, incurred by the Issuer based on statements or omissions
made by an Indemnified Party (or in reliance on information provided by an
Indemnified Person) concerning such Indemnified Party or that have resulted from
such Indemnified Party's willful misconduct or gross negligence and (ii) in no
event shall the Indemnified Parties be liable, in the aggregate, to the Issuer
or any other person for an amount grater than the fee actually received by the
Advisor pursuant to the letter to which this Exhibit A is attached.
In case any action shall be brought against an Indemnified
Person with respect to which indemnity may be sought against the Issuer under
this agreement, the Indemnified Party shall promptly notify the Issuer in
writing and the Issuer shall, if requested by the Indemnified Party, assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and payment of all reasonable fees and expenses. The
failure to so notify the Issuer shall not affect any obligations the Issuer may
have to the Indemnified Parties under this letter
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agreement or otherwise unless the Issuer is materially adversely affected by
such failure.
If for any reason the foregoing indemnity is unavailable to an
Indemnified Party or insufficient to hold an Indemnified Party harmless, then in
lieu of indemnifying such Indemnified Party, the Issuer shall contribute to the
amount paid or payable by such Indemnified Party as a result of such claims,
liabilities, losses, damages, or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Issuer on the one
hand and by the Advisor on the other from the Transaction or (ii) if the
allocation provided by clause (i) is not permitted under applicable law, in such
proportion as is appropriate to reflect not only the relative benefits received
by the Issuer on the one hand and the Advisor on the other, but also the
relative fault of the Issuer and the Advisor as well as any other relevant
equitable considerations. It is hereby further agreed that the relative benefits
to the Issuer on the one hand and the Advisor on the other with respect to any
Transaction shall be deemed to be in the same proportion as (i) the principal
amount of the Securities sold in the Transaction bears to (ii) the fees paid to
the Advisor with respect to such Transaction. The relative fault of the Issuer
on the one hand and the Advisor on the other with respect to the Transaction
shall be determined by reference to, among other things, whether any untrue or
alleged untrue statement of material fact or the omission or alleged omission to
state a material fact related to information supplied by the Issuer or by the
Advisor and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. Notwithstanding
anything to the contrary in the provisions of this Exhibit A, the aggregate
contribution of all Indemnified Parties shall not exceed the amount of fees
actually received by the Advisor pursuant to the letter to which this Exhibit A
is attached. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent representation.
The indemnity, contribution and expense reimbursement
obligations set forth herein (i) shall be in addition to any liability the
Issuer may have to any Indemnified Party at common law or otherwise, (ii) shall
survive the conclusion of the Advisor's services in connection with the
Transaction and (iii) shall remain operative and in full force and effect
regardless or any investigation made by or on behalf of the Advisor or any other
Indemnified Party.
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APPENDIX A
SUMMARY TERM SHEET/COMMITMENT
ISSUER: CD Radio Inc. (the "Company")
ISSUE: Convertible Preferred Stock (the "Preferred")
PRINCIPAL AMOUNT: Up to a Maximum of $150 million
MATURITY: 10 years
CONVERTIBLE: Any time after closing, at a price of
$21.00; provided, however, that the conversion price
will reset to market price if on the 4th anniversary of
the issuance of the Preferred the market price of the
common stock of the Company (as so defined) is below
$21.00; provided further that in no event shall the
reset be below $10.00. (For the purpose hereof, the
term "market price" shall mean the average of the
closing prices of the Company's common stock for the 20
trading days ending 5 days prior to the 4th
anniversary.)
OPTIONAL REDEMPTION: Non-call for first three years.
During years four and five, callable at par plus
accrued but unpaid dividends if the closing market
price of the Company's Common Stock exceeds $31 1/2per
share for 20 trading days out of any 30 consecutive
trading days. Thereafter, callable at anytime at par
plus accrued but unpaid dividends.
DIVIDEND RATE: 5% PIK or cash, at the Company's option.
RANKING: The Preferred will be junior to all debt (bank
debt, high- yield offering), but senior to the common
equity. (The foregoing ranking is not intended to
constitute a restriction on other financings by the
Company.)
COVENANTS: None
PLACEMENT FEE: 3% of the gross proceeds payable to
Libra Investments, Inc. upon closing; provided, that
such fee shall be 1.875% of gross proceeds with respect
to the first
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$50,000,000 of Preferred purchased by the Everest
Funds.
COMMITMENT: Everest Capital International, Ltd.,
Everest Capital Fund L.P. and other entities managed by
Everest Capital Limited (collectively the "Everest
Funds") and The Ravich Revocable Trust of 1989
("Ravich" together with the Everest Funds, the "Buyer")
will commit to buy $50 million and $2 million (the
committed amounts), respectively, of the Preferred (by
either exchanging shares of the Company's 5% Delayed
Convertible Preferred Stock (the "Delayed Preferred
Stock") having an Exchange Value (see below) equal to
the foregoing amount or by paying in cash) and the
Company will commit to sell such amounts simultaneous
with the closing of any financing (not including this
financing up to an amount equal to the Liquidation
Preference of all outstanding Delayed Preferred Stock
divided by 72.125%) yielding "new money" gross proceeds
equal to or in excess of $150 million completed on or
prior to November 15, 1997 (the "New Financing" and
such date shall be referred to as the "New Financing
Date"); provided, that it shall be a condition of the
Buyers' obligation that (a) all Delayed Preferred Stock
is redeemed or converted on or prior to the New
Financing Date, and (b) a mutually agreeable (it being
understood that an expert chosen by any of Morgan,
Stanley & Co., Donaldson Lufkind & Jenrette, Lehman
Brothers, Inc., Merrill, Lynch, Pierce, Fenner & Smith
or Bear Stearns & Co. shall be deemed to be mutually
agreeable) third party expert verify to Buyers that the
system (e.g. only two satellites and limited
terrestrial repeaters) of delivering digital audio to
automobiles, as described in its business plan
(including, but not limited to, being able to reach at
least 90% of the United States population), is
technically feasible; and provided further, that, if in
connection with the New Financing, any common stock,
securities convertible or exchangeable into common
stock or warrants (each an "Equity Equivalent") is sold
or given in conjunction with such New Financing where
the lowest of the (i) sale price, (ii) conversion
price, (iii) "market price" (as defined above) of the
common stock measured over the 20 trading days prior to
the date of such sale or (iv) exercise price (the
"Equity Equivalent Price") is less than $21.00 per
share of common stock,
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then the conversion price of the Preferred shall be
reset (but never above $21.00) to the Equity Equivalent
Price; and provided further that in lieu of purchasing
the Preferred the Buyers, at their option, may purchase
a like amount of the Equity Equivalent.
EVEREST OPTION: The Everest Funds shall have the option
to increase its commitment (on the same terms as herein
provided) to $98 million provided it gives written
notice to the Company on or before July 3, 1997 (the
"Everest Option"). The Everest Option shall not be
transferable.
LISTING: The Company undertakes to list the Preferred
on the same exchange on which the Company's common
stock trades.
COMMITMENT FEE: Upon execution of this Commitment Term
Sheet (or as soon thereafter as practical), the Company
will issue to the Everest Funds and Ravich 1,560,000
(or, if the Everest Option is exercised 1,560,000 times
the total amount committed by the Everest Funds and
Ravich divided by $52 million) eight-year warrants to
purchase common stock at a price of $50.00 per share,
allocable pro rata between the Everest Funds and
Ravich based on amounts purchased. The Warrants shall
not be exercisable until the date one year after
execution of this Commitment Term Sheet, at which date
they shall become exercisable for the remainder of
their term. The Warrants shall contain customary terms
and conditions, and shall be callable by the Company
after three years at a price of $0.01 per warrant if
the closing market price of the Company's Common Stock
exceeds $75.00 per share for at least 20 trading days
in any 30 consecutive trading day period after three
years from the date of issuance. In addition to the
Warrants, the Company shall pay the Everest Funds a
cash commitment fee equal to $562,500, payable upon
closing of Everest's purchase of at least $50,000,000
of Preferred (whether through purchase for cash or by
exchanging Delayed Preferred Stock).
STANDSTILL AGREEMENT OF
EVEREST FUNDS: The following limitations (the "Standstill Agreement")
apply to the Everest Funds and their affiliates, and to
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certain transferees. Until the date one year after
execution of this Commitment Term Sheet, the Everest
Funds and their affiliates (i) shall not acquire common
stock, including by means of conversion of the
Preferred or Delayed Preferred Stock or exercise of any
other right, if, upon such acquisition, the Everest
Funds and their affiliates will have or share, directly
or indirectly, voting or investment power over ten
percent or more of the outstanding class of common
stock (for purposes of this clause (i), a right to
acquire upon exercise or conversion will not be deemed
to confer voting or investment power over the
underlying security in the absence of an exercise or
conversion), and (ii) shall not sell or otherwise
dispose of Warrants, Preferred or Delayed Preferred
Stock to any one purchaser if, following such sale or
disposition, the purchaser and its affiliates would be
beneficial owners of ten percent or more of the
outstanding class of stock, except for a sale or
disposition of Warrants, Preferred and/or Delayed
Preferred Stock to a purchaser who, for itself and its
affiliates, agrees to be bound by the limitations set
forth in this Standstill Agreement. Except as provided
otherwise in the parenthetical language in clause (i)
above, terms and concepts used in this Standstill
Agreement shall have the meanings set forth in Section
13(d) of the Securities Act of 1934 and the rules and
regulations thereunder.
EXCHANGE VALUE: "Exchange Value" shall be defined as 1.3865 times the
Liquidation Preference of the Delayed Preferred Stock
being exchanged (including accrued but unpaid dividends
and fees, if any).
EXCHANGE OFFER/
REGISTRATION RIGHTS: Within 180 days after the New Financing Date,
the Company shall use its best efforts to file
with the SEC, if permitted by then applicable
interpretations of the SEC staff, a
registration statement with respect to an
offer to exchange the Preferred (the "Exchange
Offer") for preferred stock of the Company
with identical terms to the Preferred (other
than restrictions on transfer) and convertible
into registered shares of Common Stock. The
Company shall also use its best efforts to
cause such registration statement to
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become effective, and to obtain all other
necessary approvals, including the FCC (if
applicable), within 90 days of such filing
with the SEC. The Everest Funds and Ravich
understand that such SEC Staff interpretations
currently would not permit the Company to
undertake the Exchange Offer as contemplated
above. In the event applicable interpretations
of the staff of the SEC do not permit the
Company to effect the Exchange Offer, or if
for any other reason the Exchange Offer is not
consummated, the Company will use its best
efforts to a) within 180 days after the New
Financing Date, file a shelf registration
statement with respect to resales of the
Preferred and the shares issuable upon
conversion of the Preferred, and (b) within 90
days of such filing with the SEC, cause such
registration to become effective and to obtain
all other necessary approvals, including the
FCC (if applicable). The parties shall enter
into a registration rights agreement with
respect to the foregoing containing customary
terms, conditions and indemnities, including
without limitation provision for reasonable
cash penalties for failure to timely comply
with the foregoing obligations.
WARRANT
REGISTRATION RIGHTS: Within 180 days after the New Financing Date,
the Company shall use its best efforts to
register for resale the shares of common stock
issuable upon exercise of the Warrants with
the SEC pursuant to a shelf registration on
Form S-3 (if available) or Form S-1 (if Form
S-3 is not available) and to obtain all other
necessary approvals, including the FCC (if
applicable), for the resale of such shares.
The parties shall enter into a registration
rights agreement with respect to such
registration containing customary terms,
conditions and indemnities, including without
limitation provision for reasonable cash
penalties for failure to timely register the
shares.
CONDITIONAL OPTION
TO EXCHANGE FOR
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CONVERTIBLE DEBT: If at any time within six months after the New
Financing Date, the Company raises not less than $75
million in gross proceeds from the sale of common stock
(and/or convertible preferred stock provided that such
convertible preferred stock shall not have a reset and
provided further that in either instance no additional
equity securities are granted along with such common
stock or convertible preferred stock) (the "Equity
Sale"), the Company shall have the option, exercisable
not earlier than 187 days nor later than 200 days after
the New Financing Date, to require the conversion of
all or any portion of the Preferred into convertible
subordinated debt (the "Convertible Debt".) The
Convertible Debt shall have the same terms and
conditions as the Preferred (e.g. 10 year term
(commencing from the New Financing Date), same
conversion privileges, etc.) except that (i) interest
must either be paid in cash at 8% or PIKed at 10% (with
such PIK option being available for only the first 3
years), (ii) the conversion price shall reset (but
never above $21.00) to the price at which the stock is
sold in the Equity Sale (or, if the sale is of
convertible preferred stock, the conversion price shall
reset (but never above $21.00) to the "market price"
(as defined above) of the common stock measured over
the 20 trading days prior to the date of such sale),
and (iii) the conversion price shall not be reset to
market on the 4th anniversary.
STOCK SPLITS/
COMBINATIONS: All share amounts and share prices set
forth herein shall be appropriately adjusted for any
stock splits, stock dividends, stock combinations and
the like occurring after the date hereof.
CONDITIONS: The Company's obligations hereunder are subject to the
following conditions:
a) shareholder approval of the issuance of
the Preferred, if required to list the
Preferred, or to maintain the listing of
the Common, on the Nasdaq Small Cap
Market, and
b) FCC approval, if required to issue the
Preferred or Common Stock upon
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conversion of Preferred or exercise of
Warrants
; provided that (i) the Company shall use
its best efforts to cause the foregoing
conditions to be fulfilled as promptly as
reasonably practicable, and (ii) David
Margolese and Darlene Friedland agree to
cause all shares of Company stock held by
them or over which they exercise voting
control to approve the matter described in
subpagraph (a) above and to require any
transferees of their stock to so vote such
stock, it being understood that Friedland
and Margolese, taken together, currently
hold approximately 43% of the outstanding
common stock of the Company.
AMENDMENT TO
DELAYED PREFERRED
STOCK AGREEMENT: Each of the Everest Funds and Ravich will
cause all shares of Delayed Preferred Stock
held by them or over which they exercise
voting power to consent to the following
amendments to the terms of the Delayed
Preferred Stock if so requested by
the Company:
a) amend the definition of Qualifying
Offering in Section 3(e)(i) of the
Certificate of Designations of the
Delayed Preferred Stock to include the
offering of any securities of the
Company in an offering which is either
registered under the Securities Act of
1933 or exempt from registration
thereunder for net proceeds of not
less than $100 million; and
b) change the date "October 15, 1997"
in such Section 3(e)(i) to "November
15, 1997."
BINDING COMMITMENT: The obligations of the signatories hereto
shall not be subject to any conditions or
exceptions other than those expressly set
forth herein. As soon as practicable after
the signing of this Commitment Term Sheet,
the number of shares of Delayed Preferred
Stock to be exchanged by the Everest Funds
and Ravich shall be deposited with an escrow
agent acceptable to the parties pursuant
to a stock exchange agreement reflecting
the terms and
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conditions of this Commitment Term Sheet and
other customary terms and conditions, or, in
the absence of such an agreement, this
Commitment Term Sheet shall constitute a
binding agreement for the transactions
contemplated hereby. This Commitment Term
Sheet may be executed in any number of
counterparts, all of which taken together
constitute a single agreement.
Date: June 15, 1997 Everest Capital International, Ltd.
Everest Capital Fund, L.P.
By: /s/ M. Dimitrijevic
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Marko Dimitrijevic
Ravich Revocable Trust of 1989
By: /s/ Jess M. Ravich
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Jess M. Ravich, Trustee
CD Radio Inc
By: /s/ David Margolese
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David Margolese, Chairman
and Chief Executive Officer
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Agreement of Stockholders
The undersigned stockholders of CD Radio Inc. hereby agree to
be bound by the provisions set forth in clause (ii) of the proviso in the
section captioned "Conditions" in the above Summary Term Sheet.
/s/ David Margolese
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David Margolese
/s/ Darlene Friedland
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Darlene Friedland
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