UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 13, 1998
CD RADIO INC.
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(Exact name of registrant as specified in its charter)
State of Delaware 0-24710 52-1700207
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(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
1180 Avenue of the Americas, 14th Floor, New York, New York 10036
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (212) 899-5000
Not applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On November 13, 1998, CD Radio Inc. (the "Company") entered into a
Stock Purchase Agreement with Apollo Investment Fund IV, L.P. ("AIF IV") and
Apollo Overseas Partners IV, L.P. ("AOP IV" and, together with AIF IV, the
"Apollo Investors") (the "Stock Purchase Agreement") pursuant to which the
Company agreed to sell a total of 1,350,000 shares of its 9.2% Series A Junior
Cumulative Convertible Preferred Stock, par value $.001 per share (the "Series A
Preferred Stock"), to the Apollo Investors, for an aggregate purchase price of
$135 million, and the Apollo Investors agreed to grant the Company an option to
sell the Apollo Investors an additional 650,000 shares of its 9.2% Series B
Junior Cumulative Convertible Preferred Stock, par value $.001 per share (the
"Series B Preferred Stock" and, together with the Series A Preferred Stock, the
"Junior Preferred Stock"), for an aggregate purchase price of $65 million. The
Company may exercise its option to require the Apollo Investors to purchase the
Series B Preferred Stock at any time prior to the earlier of ten months from the
closing of the issuance and sale of the Series A Preferred Stock and September
30, 1999. Copies of (i) the Stock Purchase Agreement, (ii) Exhibit A to the
Stock Purchase Agreement (Form of Certificate of Designation of the Series A
Preferred Stock), (iii) Exhibit B to the Stock Purchase Agreement (Form of
Certificate of Designation of the Series B Preferred Stock) and (iv) Exhibit C
to the Stock Purchase Agreement (Form of Opinion of Counsel to the Company) are
filed as Exhibits 99.1, 99.2, 99.3 and 99.4 hereto, respectively, and are
incorporated herein by reference.
The Junior Preferred Stock will be convertible into shares of the
Company's common stock, par value $.001 per share (the "Common Stock"), at a
price of $30 per share of Common Stock. The Junior Preferred Stock will be
callable by the Company beginning November 15, 2001 if the current market price
of the Common Stock, as defined in the Certificate of Designation of the Junior
Preferred Stock, exceeds $60 per share for a period of 20 consecutive trading
days, and in all events will be callable beginning November 15, 2003 at a price
of 100% and must be redeemed by the Company on November 15, 2011. Dividends on
the Junior Preferred Stock are payable-in-kind or cash annually, at the option
of the Company. The Junior Preferred Stock will have the right to vote, on an
as-converted basis, on matters in which the holders of the Common Stock of the
Company have the right to vote.
The issuance and sale of the Junior Preferred Stock is subject to the
expiration, or early termination, of the waiting period under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, approval of the
stockholders of the Company and other customary conditions.
In connection with the execution of the Stock Purchase Agreement, David
Margolese, Chairman and Chief Executive Officer of the Company, entered into a
Voting Agreement with the Apollo Investors (the "Voting Agreement")
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pursuant to which he agreed to, and did, consent to the transactions
contemplated by the Stock Purchase Agreement, including the issuance of the
Junior Preferred Stock, with respect to 1,600,000 shares of Common Stock of the
Company owned by him and an additional 2,834,500 shares of Common Stock which he
has the right to vote pursuant to the terms of a Voting Trust Agreement of which
he is the voting trustee. A copy of the Voting Agreement is filed as Exhibit
99.5 hereto and is incorporated herein by reference.
In connection with the execution of the Stock Purchase Agreement, David
Margolese and the Company also entered into a Tag-Along Agreement with the
Apollo Investors (the "Tag-Along Agreement"). Pursuant to the Tag-Along
Agreement, in the event that Mr. Margolese sells more than 800,000 shares of
Common Stock of the Company prior to the earlier of the date that the Apollo
Investors beneficially own less than 2,000,000 shares of the Common Stock or the
date that is six months after the nationwide commercial introduction of the
Company's CD Radio service, then the Apollo Investors have certain rights to
sell, on a pro rata basis with Mr. Margolese, a portion of the Common Stock
owned by the Apollo Investors in any subsequent transaction in which Mr.
Margolese disposes of 80,000 or more shares of Common Stock of the Company. A
copy of the Tag-Along Agreement is filed as Exhibit 99.6 hereto and is
incorporated herein by reference.
On November 13, 1998, the Company amended the Rights Agreement, dated
as of October 22, 1997 (the "Rights Agreement"), between the Company and
Continental Stock Transfer & Trust Company, as rights agent, to render the
Rights Agreement inapplicable to the transactions contemplated by the Stock
Purchase Agreement and to permit the Apollo Investors, and any other person
deemed to beneficially own the shares of Junior Preferred Stock owned by the
Apollo Investors, to (i) purchase shares of Junior Preferred Stock pursuant to
the Stock Purchase Agreement, (ii) acquire additional shares of Junior Preferred
Stock pursuant to dividends declared on the Junior Preferred Stock, (iii)
acquire additional shares of Common Stock upon the conversion of shares of
Junior Preferred Stock into shares of Common Stock, or (iv) acquire up to an
additional 1% of the outstanding shares of Common Stock, without the Apollo
Investors becoming "Acquiring Persons" within the meaning of the Rights
Agreement. A copy of the Amendment to the Rights Agreement is filed as Exhibit
99.7 hereto and is incorporated herein by reference.
On November 16, 1998, the Company issued the press release attached
hereto as Exhibit 99.8 and incorporated herein by reference announcing the
transaction with the Apollo Investors.
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Item 7. Financial Statements, PRO FORMA Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits
99.1 Stock Purchase Agreement, dated as of
November 13, 1998, by and among CD Radio
Inc., Apollo Investment Fund IV, L.P. and
Apollo Overseas Partners IV, L.P.
99.2 Exhibit A to the Stock Purchase Agreement (Form of
Certificate of Designation of 9.2% Series A Junior
Cumulative Convertible Preferred Stock).
99.3 Exhibit B to the Stock Purchase Agreement
(Form of Certificate of Designationof 9.2%
Series B Junior Cumulative Convertible
Preferred Stock).
99.4 Exhibit C to the Stock Purchase Agreement
(Form of Opinion of Counsel to the Company).
99.5 Voting Agreement, dated as of November 13, 1998, by
and among Apollo Investment Fund IV, L.P., Apollo
Overseas Partners IV, L.P. and David Margolese.
99.6 Tag-Along Agreement, dated as of November 13, 1998,
by and among Apollo Investment Fund IV, L.P., Apollo
Overseas Partners IV, L.P., CD Radio Inc. and David
Margolese.
99.7 Amendment to the Rights Agreement, dated as of
October 22, 1997, between CD Radio Inc. and
Continental Stock Transfer & Trust Company, as rights
agent, dated as of November 13, 1998.
99.8 Press Release, dated November 16, 1998.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 17, 1998
CD RADIO INC.
By: /s/ David Margolese
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David Margolese
Chairman and Chief Executive Officer
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EXHIBIT INDEX
Pursuant to Item 601 of Regulation S-K
Exhibit No. Description of Exhibit
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99.1 Stock Purchase Agreement, dated as of
November 13, 1998, by and among CD Radio
Inc., Apollo Investment Fund IV, L.P. and
Apollo Overseas Partners IV, L.P.
99.2 Exhibit A to the Stock Purchase Agreement (Form of
Certificate of Designation of 9.2% Series A Junior
Cumulative Convertible Preferred Stock).
99.3 Exhibit B to the Stock Purchase Agreement
(Form of Certificate of Designationof 9.2%
Series B Junior Cumulative Convertible
Preferred Stock).
99.4 Exhibit C to the Stock Purchase Agreement
(Form of Opinion of Counsel to the Company).
99.5 Voting Agreement, dated as of November 13, 1998, by
and among Apollo Investment Fund IV, L.P., Apollo
Overseas Partners IV, L.P. and David Margolese.
99.6 Tag-Along Agreement, dated as of November 13, 1998,
by and among Apollo Investment Fund IV, L.P., Apollo
Overseas Partners IV, L.P., CD Radio Inc. and David
Margolese.
99.7 Amendment to the Rights Agreement, dated as of
October 22, 1997, between CD Radio Inc. and
Continental Stock Transfer & Trust Company, as rights
agent, dated as of November 13, 1998.
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EXHIBIT INDEX
Pursuant to Item 601 of Regulation S-K
99.8 Press Release, dated November 16, 1998.