Exhibit 99.1
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 1/2 per 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
$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, 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
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 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
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
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
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
----------------------------
Marko Dimitrijevic
Ravich Revocable Trust of 1989
By: /S/ JESS M. RAVICH
----------------------------
Jess M. Ravich, Trustee
CD Radio Inc
By: /S/ DAVID MARGOLESE
----------------------------
David Margolese, Chairman
and Chief Executive Officer
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
- ------------------------
David Margolese
/S/ DARLENE FRIEDLAND
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Darlene Friedland