SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D**
Under the Securities Exchange Act of 1934
(Amendment No. )*
CD Radio Inc.
(Name of Issuer)
Common Stock, par value $.001
(Title of Class of Securities)
125127100
(Cusip Number)
W. Robert Cotham
201 Main Street, Suite 2600
Fort Worth, Texas 76102
(817)390-8400
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 2, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
**The total number of shares reported herein is 5,127,900 shares, which
constitutes approximately 22.2% of the total number of shares outstanding. All
ownership percentages set forth herein assume that there are 23,145,104 shares
outstanding.<PAGE>
<PAGE>
1. Name of Reporting Person:
Prime 66 Partners, L.P.
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) / X /
3. SEC Use Only
4. Source of Funds: OO-Partnership Contributions
5. Check box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e):
/ /
6. Citizenship or Place of Organization: Texas
7. Sole Voting Power: 5,061,700
Number of
Shares
Beneficially 8. Shared Voting Power: -0-
Owned By
Each
Reporting 9. Sole Dispositive Power: 5,061,700
Person
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
5,061,700
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
/ /
13. Percent of Class Represented by Amount in Row (11): 21.9%
14. Type of Reporting Person: PN
<PAGE>
<PAGE>
1. Name of Reporting Person:
Composite 66, L.P.
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) / X /
3. SEC Use Only
4. Source of Funds: OO-Partnership Contributions
5. Check box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e):
/ /
6. Citizenship or Place of Organization: Texas
7. Sole Voting Power: -0-
Number of
Shares
Beneficially 8. Shared Voting Power: -0-
Owned By
Each
Reporting 9. Sole Dispositive Power: -0-
Person
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
66,200 (1)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
/ /
13. Percent of Class Represented by Amount in Row (11): 0.3%
14. Type of Reporting Person: PN
- ----------
(1) Pursuant to Rule 13d-3(d)(1)(i)(C), such shares may be deemed to be
beneficially owned pursuant to the power to terminate a managed account.<PAGE>
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This statement relates to shares of Common Stock, par value $.001 per
share (the "Stock"), of CD Radio Inc. (the "Issuer"). The principal executive
offices of the Issuer are located at 2175 K Street, N.W., Sixth Floor,
Washington, D.C. 20037.
ITEM 2. IDENTITY AND BACKGROUND.
(a) Pursuant to Rule 13d-1(a) of Regulation 13D-G of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended (the
"Act"), this Schedule 13D Statement is hereby filed by Prime 66 Partners, L.P.,
a Texas limited partnership ("Prime") and Composite 66, L.P., a Texas limited
partnership ("Composite") (each a "Reporting Person" and collectively, the
"Reporting Persons"). Additionally, pursuant to Instruction C to Schedule 13D,
information is included herein with respect to the following persons
(collectively, the "Controlling Persons"): P-66 Genpar, L.P., a Texas limited
partnership ("Genpar"), Carmel Land & Cattle Co., a Texas corporation
("Carmel"), William P. Hallman, Jr. ("Hallman"), P-66, Inc., a Texas corporation
("P-66"), The Sid R. Bass Management Trust, a revocable trust existing under the
laws of the state of Texas ("Trust"), and Sid R. Bass ("SRB"). The Reporting
Persons and the Controlling Persons are sometimes hereinafter collectively
referred to as the "Item 2 Persons."
(b)-(c)
Reporting Persons
Prime is a Texas limited partnership, the principal business of which
is the purchase, sale, exchange, acquisition and holding of investment
securities. The principal address of the Reporting Person, which also serves
as its principal office, is 201 Main Street, Suite 3200, Fort Worth, Texas
76102.
Composite is a Texas limited partnership, the principal business of
which is the purchase, sale, exchange, acquisition and holding of investment
securities. The principal address of the Reporting Person, which also serves
as its principal office, is 201 Main Street, Suite 3200, Fort Worth, Texas
76102.
Controlling Persons
Pursuant to Instruction C to Schedule 13D of the Act, information with
respect to the Controlling Persons is set forth below.
Genpar is a Texas limited partnership, the principal business of which
is serving as one of two general partners of each of the Reporting Persons and
activities related thereto. The principal address of Genpar, which also serves
as its principal office, is 201 Main Street, Suite 3200, Fort Worth, Texas
76102.
Carmel is a Texas corporation, the principal business of which is
investment in securities and real estate and activities related thereto. The
principal address of Carmel, which also serves as its principal office, is 201
Main Street, Suite 3200, Fort Worth, Texas 76102. Hallman is the sole
shareholder of Carmel; Hallman and Donald J. McNamara ("McNamara") are its
directors; and Hallman (Vice-President) and McNamara (President) are its
principal officers.
Hallman's principal occupation or employment is serving as a
shareholder and director of the law firm of Kelly, Hart & Hallman, P.C.
Hallman's business address is 201 Main Street, Suite 2500, Fort Worth, Texas
76102.
The principal occupation of McNamara is serving as the Chairman of The
Hampstead Group. McNamara's business address is 4200 Chase Texas Tower West,
2200 Ross Avenue, Dallas, Texas 75201.
The Hampstead Group is a real estate investment firm, the principal
business of which is real estate investment. The principal address of The
Hampstead Group, which also serves as its principal office, is 4200 Chase Texas
Tower West, 2200 Ross Avenue, Dallas, Texas 75201.
P-66 is a Texas corporation, the principal business of which is
serving as general partner of each of the Reporting Persons and activities
related thereto. The principal address of P-66, which also serves as its
principal office, is 201 Main Street, Suite 3200, Fort Worth, Texas 76102.
Trust is the sole shareholder of P-66; SRB is its sole director; and SRB
(President), Hallman (Vice-President and Assistant Secretary), and W. Robert
Cotham ("Cotham") (Vice-President and Secretary) are its principal officers.
Trust is a revocable trust existing under the laws of the state of
Texas, the grantor of which is SRB. The address of Trust is 201 Main Street,
Suite 2700, Fort Worth, Texas 76102. The Trustees of the Trust are SRB and two
members of his family.
SRB's principal occupation or employment is serving as the President
of Sid R. Bass, Inc. ("SRB, Inc."). SRB's business address is 201 Main Street,
Suite 2700, Fort Worth, Texas 76102.
SRB, Inc. is a Texas corporation, the principal businesses of which
are the ownership and operation of oil and gas properties (through Bass
Enterprises Production Co. ["BEPCO"]), the ownership and operation of gas
processing plants and carbon black plants (through various partnerships),
farming and ranching, investing in marketable securities and real estate
investment and development. The principal address of SRB, Inc., which also
serves as its principal office, is 201 Main Street, Suite 2700, Fort Worth,
Texas 76102.
The principal occupation or employment of Cotham is serving as the
Vice-President/Controller of BEPCO. Cotham's business address is 201 Main
Street, Suite 2600, Fort Worth, Texas 76102.
BEPCO is a Texas corporation, the principal business of which is oil
exploration and drilling and producing hydrocarbons. The principal address of
BEPCO, which also serves as its principal office, is 201 Main Street, Suite
2700, Fort Worth, Texas 76102.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The source and amount of the funds used or to be used by the Reporting
Person to purchase the shares is set forth below.
REPORTING PERSON SOURCE OF FUNDS AMOUNT OF FUNDS
Prime Other (1) $ 101,240,236.04
Composite Other (1) $ 1,746,514.41
(1) Contributions from partners.
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Persons acquired and continue to hold the shares of the
Stock reported herein for investment purposes. Depending on market conditions
and other factors that the Reporting Persons may deem material to their
investment decision, the Reporting Persons may purchase additional Stock in the
open market or in private transactions. Depending on these same factors, the
Reporting Persons may sell all or a portion of the Stock on the open market or
in private transactions. In addition, 5,000,000 shares of the Stock are subject
to the Purchase Agreement described in Item 6 below.
Except as set forth in this Item 4, the Reporting Persons have no
present plans or proposals that relate to or that would result in any of the
actions specified in clauses (a) through (j) of Item 4 of Schedule 13D of the
Act.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)
Reporting Persons
Prime
Pursuant to Rule 13d-3(a), Prime is the beneficial owner of 5,061,700
shares of the Stock, which constitutes approximately 21.9% of the outstanding
shares of Stock.
Composite
Pursuant to Rule 13d-3(d)(1)(i)(C), Composite may be deemed to be the
beneficial owner of 66,200 shares of the Stock, which constitutes approximately
0.3% of the outstanding shares of Stock.
Controlling Persons
Each of (1) Genpar, as one of two general partners of each of the
Reporting Persons, and (2) Carmel, as the sole general partner of Genpar, may,
pursuant to Rule 13d-3 of the Act, be deemed to be the beneficial owner of
5,127,900 shares of the Stock, which constitutes approximately 22.2% of the
outstanding shares of Stock.
In his capacity as the sole shareholder of Carmel, Hallman may,
pursuant to Rule 13d-3 of the Act, be deemed to be the beneficial owner of
5,127,900 shares of the Stock, which constitutes approximately 22.2% of the
outstanding shares of Stock.
In its capacity as one of two general partners of each of the
Reporting Persons, P-66 may, pursuant to Rule 13d-3 of the Act, be deemed to be
the beneficial owner of 5,127,900 shares of the Stock, which constitutes
approximately 22.2% of the outstanding shares of Stock.
In its capacity as the sole shareholder of P-66, Trust may, pursuant
to Rule 13d-3 of the Act, be deemed to be the beneficial owner of 5,127,900
shares of the Stock, which constitutes approximately 22.2% of the outstanding
shares of Stock.
In his capacity as a Trustee of Trust, SRB may, pursuant to Rule 13d-3
of the Act, be deemed to be the beneficial owner of 5,127,900 shares of the
Stock, which constitutes approximately 22.2% of the outstanding shares of Stock.
To the best of the knowledge of the Reporting Persons, other than as
set forth above, none of the persons named in Item 2 herein is the beneficial
owner of any shares of the Stock.
(b)
Reporting Persons
Prime
Acting through its two general partners, Genpar and P-66, Prime has
the sole power to vote or to direct the vote and to dispose or to direct the
disposition of 5,061,700 shares of the Stock.
Composite
Composite has no power to vote or to direct the vote or to dispose or
direct the disposition of any shares of the Stock.
Controlling Persons
Acting through its general partner, Carmel, and in its capacity as
one of two general partners of Prime, Genpar has the shared power to vote or to
direct the vote and to dispose or to direct the disposition of 5,061,700 shares
of the Stock.
Acting through its sole shareholder, Hallman, and in its capacity as
the general partner of Genpar, Carmel has the shared power to vote or to direct
the vote and to dispose or direct the disposition of 5,061,700 shares of the
Stock.
In his capacity as the sole shareholder of Carmel, Hallman has the
shared power to vote or to direct the vote and to dispose or to direct the
disposition of 5,061,700 shares of the Stock.
In its capacity as one of two general partners of Prime, P-66 has the
shared power to vote or to direct the vote and to dispose or to direct the
disposition of 5,061,700 shares of the Stock.
In its capacity as the sole shareholder of P-66, Trust has the shared
power to vote or to direct the vote and to dispose or direct the disposition of
5,061,700 shares of the Stock.
In his capacity as a Trustee of Trust, SRB has the shared power to
vote or to direct the vote and to dispose or direct the disposition of 5,061,700
shares of the Stock.
(c)
During the last 60 days, Prime has purchased shares of the Stock in
open market transactions on the Nasdaq National Market as follows:
NUMBER OF PRICE PER
DATE SHARES SHARE
09/11/98 3,000 $16.00
09/11/98 4,200 $16.02
In addition, on November 2, 1998, Prime purchased 5,000,000 shares of
stock in a private transaction at a price per share of $20.00.
(d)
Not applicable.
(e)
Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
On November 2, 1998, the Issuer issued to Prime a total of 5,000,000
shares of Stock for an aggregate purchase price of $100,000,000 pursuant to a
Stock Purchase Agreement dated October 8, 1998 (the "Purchase Agreement"). The
description of the Purchase Agreement that follows does not purport to be
complete and is qualified in its entirety by reference to the Purchase
Agreement, a copy of which is attached hereto as Exhibit 99.2.
Under the Purchase Agreement, after October 1, 2000, Prime is entitled
to two demand registrations under the Securities Act of 1933, as amended (the
"Securities Act") of its purchased shares of Stock. Such demand rights are
subject to a "blackout" period (not to exceed 90 days) if, among other things,
the Board of Directors of the Issuer determines in good faith that it would be
seriously detrimental to the Issuer and its stockholders to file a registration
statement at the requested time. In addition, after October 1, 2000, Prime will
have certain piggyback registration rights granting it the right to include its
purchased shares of Stock if the Issuer files a registration statement under the
Securities Act. The Purchase Agreement also provides that, at any time prior
to the earlier of (i) October 1, 2001 and (ii) the date that Prime ceases to own
beneficially 10% or more of the Stock, Prime will not offer, sell or transfer
the Stock acquired pursuant to the Purchase Agreement for a period of up to 180
days if requested not to do so by the Issuer's underwriters in connection with
a public offering.
Except as set forth herein or in the Exhibits filed herewith, there
are no contracts, arrangements, understandings or relationships with respect to
shares of the Stock owned by the Item 2 Persons.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 99.1 -- Agreement and Power of Attorney authorizing W. Robert
Cotham, William O. Reimann IV, Mark L. Hart, Jr., Thomas W. Briggs, and Calvin
M. Jackson to act on behalf of Composite 66, L.P. and Prime 66 Partners, L.P.
filed herewith.
Exhibit 99.2 -- Stock Purchase Agreement by and among CD Radio Inc.
and Prime 66 Partners, L.P. dated as of October 8, 1998, filed herewith.<PAGE>
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
DATED: November 12, 1998
PRIME 66 PARTNERS, L.P.
By: P-66, INC.,
general partner
By: /s/ William P. Hallman, Jr.
William P. Hallman, Jr., Vice-President
By: P-66 GENPAR, L.P.,
general partner
By: Carmel Land & Cattle Co.,
general partner
By: /s/ William P. Hallman, Jr.
William P. Hallman, Jr., Vice-President
COMPOSITE 66, L.P.
By: P-66, INC.,
general partner
By: /s/ William P. Hallman, Jr.
William P. Hallman, Jr., Vice-President
By: P-66 GENPAR, L.P.,
general partner
By: Carmel Land & Cattle Co.,
general partner
By: /s/ William P. Hallman, Jr.
William P. Hallman, Jr., Vice-President
<PAGE>
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
99.1 Joint Filing Agreement and Power of Attorney authorizing W.
Robert Cotham, William O. Reimann IV, Mark L. Hart, Jr., Thomas
W. Briggs, and Calvin M. Jackson to act on behalf of Composite
66, L.P. and Prime 66 Partners, L.P. filed herewith.
99.2 Stock Purchase Agreement by and among CD Radio Inc. and Prime 66
Partners, L.P. dated October 8, 1998.
Exhibit 99.1
1. Joint Filing. Pursuant to Rule 13d-1(k)(1)(iii) of Regulation
13D-G of the General Rules and Regulations of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, the
undersigned agrees that the statement to which this Exhibit is attached is filed
on behalf of each of them in the capacities set forth below.
2. Power of Attorney. Know all persons by these presents that each
person whose signature appears below constitutes and appoints W. Robert Cotham,
William O. Reimann IV, Mark L. Hart, Jr., Thomas W. Briggs, and Calvin M.
Jackson, and each of them, as his true and lawful attorneys-in-fact and agents
with full power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities, to sign any and all
reports filed pursuant to Sections 13(d), 13(g) or 16(a) of the Securities
Exchange Act of 1934, filed on behalf of each of them with respect to their
beneficial ownership of CD Radio Inc., and any and all amendments thereto, and
to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as such person
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or such person or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
DATED: November 12, 1998
PRIME 66 PARTNERS, L.P.
By: P-66, INC.,
general partner
By: /s/ William P. Hallman, Jr.
William P. Hallman, Jr., Vice-President
By: P-66 GENPAR, L.P.,
general partner
By: Carmel Land & Cattle Co.,
general partner
By: /s/ William P. Hallman, Jr.
William P. Hallman, Jr., Vice-President
COMPOSITE 66, L.P.
By: P-66, INC.,
general partner
By: /s/ William P. Hallman, Jr.
William P. Hallman, Jr., Vice-President
By: P-66 GENPAR, L.P.,
general partner
By: Carmel Land & Cattle Co.,
general partner
By: /s/ William P. Hallman, Jr.
William P. Hallman, Jr., Vice-President
Exhibit 99.2
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . .
1.1 Definitions. .
ARTICLE 2 PURCHASE AND SALE OF SECURITIES. . . . . . . . . .
2.1 Purchase and Sale of Securities. . . . . . . . . .
2.2 Closing. . . . . . . . . . . . . . . . . . . . . .
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . .
3.1 Corporate Existence and Power. . . . . . . . . . .
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . .
3.3 Corporate Authorization; No Contravention. . . . .
3.4 Governmental Authorization; Third Party Consents .
3.5 Binding Effect . . . . . . . . . . . . . . . . . .
3.6 Capitalization of the Company. . . . . . . . . . .
3.7 SEC Filings; Financial Statements. . . . . . . . .
3.8 Absence of Certain Developments. . . . . . . . . .
3.9 Compliance with Laws . . . . . . . . . . . . . . .
3.10 Licenses . . . . . . . . . . . . . . . . . . . . .
3.11 Litigation . . . . . . . . . . . . . . . . . . . .
3.12 Intellectual Property. . . . . . . . . . . . . . .
3.13 Private Offering . . . . . . . . . . . . . . . . .
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. .
4.1 Existence and Power. . . . . . . . . . . . . . . .
4.2 Authorization; No Contravention. . . . . . . . . .
4.3 Governmental Authorization; Third Party Consents .
4.4 Binding Effect . . . . . . . . . . . . . . . . . .
4.5 Purchase for Own Account . . . . . . . . . . . . .
4.6 Sufficient Funds . . . . . . . . . . . . . . . . .
ARTICLE 5 COVENANTS. . . . . . . . . . . . . . . . . . . . .
5.1 Conduct of Business. . . . . . . . . . . . . . . .
5.2 Indemnification of Brokerage . . . . . . . . . . .
5.3 Rule 144 . . . . . . . . . . . . . . . . . . . . .
5.4 HSR Approval . . . . . . . . . . . . . . . . . . .
5.5 Stockholder Approval . . . . . . . . . . . . . . .
5.6 Amendment to Rights Agreement and Board Approval .
ARTICLE 6 LOCK-UP AGREEMENTS . . . . . . . . . . . . . . . .
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
PURCHASER TO CLOSE. . . . . . . . . . . . . . .
7.1 Representations and Covenants. . . . . . . . . . .
7.2 Consents and Approvals . . . . . . . . . . . . . .
7.3 Opinion of Counsel to the Company. . . . . . . . .
7.4 HSR Act. . . . . . . . . . . . . . . . . . . . . .
7.5 No Claims. . . . . . . . . . . . . . . . . . . . .
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
COMPANY TO CLOSE. . . . . . . . . . . . . . . .
8.1 Representations and Covenants. . . . . . . . . . .
8.2 Consents and Approvals . . . . . . . . . . . . . .
8.3 HSR Act. . . . . . . . . . . . . . . . . . . . . .
8.4 No Claims. . . . . . . . . . . . . . . . . . . . .
ARTICLE 9 REGISTRATION RIGHTS. . . . . . . . . . . . . . . .
9.1 Requested Registration . . . . . . . . . . . . . .
9.2 Company Registration . . . . . . . . . . . . . . .
9.3 Transferability. . . . . . . . . . . . . . . . . .
9.4 Expenses of Registration . . . . . . . . . . . . .
9.5 Registration Procedures. . . . . . . . . . . . . .
9.6 Indemnification. . . . . . . . . . . . . . . . . .
ARTICLE 10TERMINATION OF AGREEMENT . . . . . . . . . . . . .
10.1 Termination. . . . . . . . . . . . . . . . . . . .
10.2 Survival After Termination . . . . . . . . . . . .
ARTICLE 11MISCELLANEOUS. . . . . . . . . . . . . . . . . . .
11.1 Expenses . . . . . . . . . . . . . . . . . . . . .
11.2 Notices. . . . . . . . . . . . . . . . . . . . . .
11.3 Successors and Assigns . . . . . . . . . . . . . .
11.4 Amendment and Waiver . . . . . . . . . . . . . . .
11.5 Counterparts . . . . . . . . . . . . . . . . . . .
11.6 Headings . . . . . . . . . . . . . . . . . . . . .
11.7 GOVERNING LAW. . . . . . . . . . . . . . . . . . .
11.8 Severability . . . . . . . . . . . . . . . . . . .
11.9 Entire Agreement . . . . . . . . . . . . . . . . .
11.10Further Assurances . . . . . . . . . . . . . . . .
11.11Public Announcements . . <PAGE>
SCHEDULE 3.2 Subsidiaries of the Company
SCHEDULE 3.4 Required Consents
EXHIBIT A Form of Opinion of Counsel to the Company<PAGE>
STOCK P URCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of October 8,
1998 (this Agreement ), by and between CD RADIO INC., a
Delaware corporation (the Company ), and PRIME 66 PARTNERS,
L.P., a Texas limited partnership (the Purchaser ).
WHEREAS, the Company proposes to issue and sell to
the Purchaser, and the Purchaser proposes to buy, for an
aggregate purchase price of One Hundred Million Dollars
($100,000,000), a total of 5,000,000 shares of Common Stock,
par value $.001 per share, of the Company;
NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth herein and for good and
valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and
unless the context requires a different meaning, the follow-
ing terms shall have the meanings set forth below:
Affiliate means a Person that directly, or
indirectly through one or more intermediaries, controls or
is controlled by, or is under common control with the Person
specified.
Agreement means this Agreement as the same may
be amended, supplemented or modified in accordance with the
terms hereof.
Beneficial Owner shall mean a Person who
beneficially owns any securities within the meaning of Rule
13d-3 under the Exchange Act, and beneficially owned and
beneficial ownership shall have correlative meanings.
Business Day means any day other than Saturday,
Sunday or other day on which commercial banks in the State
of New York are authorized or required by law or executive
order to close.
Bylaws means the bylaws of the Company, as the
same may have been amended and in effect as of the Closing
Date.
Certificate of Incorporation means the Amended
and Restated Certificate of Incorporation of the Company, as
the same may have been amended and in effect as of the
Closing Date.
Claims means actions, causes of action, suits,
claims, complaints, demands, litigations or legal,
administrative or arbitral proceedings.
Closing has the meaning assigned to such term in
Section 2.2.
Closing Date has the meaning assigned to such
term in Section 2.2.
Commission means the Securities and Exchange
Commission or any similar agency then having jurisdiction to
enforce the Securities Act.
Common Stock means the Common Stock, par value
$.001 per share, of the Company, or any other capital stock
of the Company into which such stock is reclassified or
reconstituted.
Contemplated Transactions means the transactions
contemplated by this Agreement, including without limitation
the purchase and sale of the Purchased Shares.
Contractual Obligation means, as to any Person,
any agreement, undertaking, contract, indenture, mortgage,
deed of trust or other instrument to which such Person is a
party or by which it or any of its property is bound.
Convertible Preferred Stock means the Company's
10 1/2% Series C Convertible Preferred Stock.
Exchange Act means the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the
Commission thereunder.
GAAP means United States generally accepted
accounting principles as in effect from time to time.
Governmental Authority means the government of
any nation, state, city, locality or other political
subdivision of any thereof, and any entity exercising
executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government or
any International regulatory body having or asserting
jurisdiction over a Person, its business or its properties.
HSR Act means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations of the Federal Trade Commission thereunder.
Lien means any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or
other), restriction or other security interest of any kind
or nature whatsoever.
NASD means the National Association of
Securities Dealers, Inc.
Person means any individual, firm, corporation,
partnership, limited liability company, trust, incorporated
or unincorporated association, joint venture, joint stock
company, Governmental Authority or other entity of any kind.
Prospectus shall mean the prospectus included in
any Registration Statement (including without limitation a
prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities
covered by such Registration Statement and all other
amendments and supplements to such prospectus, including
post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such
prospectus.
Purchased Shares has the meaning assigned to
such term in Section 2.1.
Registrable Securities shall mean each of the
Purchased Shares and any capital stock of the Company issued
as a dividend or other distribution with respect to, or in
exchange for or in replacement of, such Purchased Shares,
until, in the case of any such share, (i) it is effectively
registered under the Securities Act and disposed of in
accordance with the Registration Statement covering it,
(ii) in the opinion of counsel to the Company, it is
saleable by the holder thereof pursuant to Rule 144(k), or
(iii) it is distributed to the public by the holder thereof
pursuant to Rule 144; provided, however, that for purposes
of Sections 9.1, 9.2 and Article 6, Registrable Securities
shall not include any Purchased Shares that are subject to a
lock-up agreement during the period in which disposition of
such Purchased Shares would violate the terms of such lock-
up agreement.
Registration Expenses means all expenses
incurred by the Company in compliance with Article 9,
including without limitation all registration and filing
fees, printing expenses, fees and disbursements of counsel
for the Company, blue sky fees and expenses and the expense
of any special audit incident to or required by any such
registration.
Registration Statement shall mean any
registration statement of the Company under the Securities
Act that covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the related
Prospectus, all amendments and supplements to such
registration statement (including post-effective
amendments), all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such
registration statement.
Requirement of Law means, as to any Person, the
Certificate of Incorporation and Bylaws or other organiza-
tional or governing documents of such Person, and any law,
treaty, rule, regulation, qualification, license or
franchise or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable or
binding upon such Person or any of its property or to which
such Person or any of its property is subject or pertaining
to any or all of the transactions contemplated hereby.
Rule 144 shall mean Rule 144 promulgated by the
Commission under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
SEC Reports means all proxy statements,
registration statements, reports and other documents filed
or required to be filed by the Company or any of its
Subsidiaries with the Commission pursuant to the Securities
Act or the Exchange Act since December 31, 1997.
Securities Act means the Securities Act of 1933,
as amended, and the rules and regulations of the Commission
thereunder.
Selling Expense means all underwriting
discounts and commissions applicable to the sale of the
Purchased Shares.
Subsidiary means in respect of any Person any
other Person which, at the time as of which any
determination is made, such Person or one or more of its
Subsidiaries has, directly or indirectly, voting control.
Transfer means any sale, assignment,
hypothecation, transfer or other disposition. Transferor
and Transferee shall have correlative meanings.
ARTICLE 2
PURCHASE AND SALE OF SECURITIES
2.1 Purchase and Sale of Securities. Subject to
the terms herein set forth and in reliance upon the
representations set forth below, the Company agrees to sell
to the Purchaser, and the Purchaser agrees to purchase from
the Company, on the Closing Date, 5,000,000 shares of Common
Stock for the aggregate purchase price of $100,000,000 (all
of the shares of Common Stock being purchased pursuant
hereto being referred to herein as the Purchased Shares ).
2.2 Closing. The purchase and issuance of the
Purchased Shares shall take place at a closing (the
Closing ) to be held at the offices of Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas,
New York, New York 10019-6064, at 10:00 A.M., local time, on
the first Business Day after the conditions to closing set
forth in Articles 7 and 8 have been satisfied or waived by
the party entitled to waive such condition (the Closing
Date ). At the Closing, the Company shall deliver to the
Purchaser certificates representing the Purchased Shares,
duly registered in the name of the Purchaser or its nominee,
and the Purchaser shall deliver to the Company the aggregate
purchase price therefor by wire transfer of immediately
available funds to an account designated in writing by the
Company to the Purchaser at least two Business Days before
the Closing.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the
Purchaser as follows:
3.1 Corporate Existence and Power. The Company
(a) is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware;
(b) has all requisite corporate power and authority to own
and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is
engaged; and (c) has the corporate power and authority to
execute, deliver and perform its obligations under this
Agreement. The Company is duly qualified to do business as
a foreign corporation in, and is in good standing under the
laws of, each jurisdiction in which the conduct of its
business or the nature of the property owned requires such
qualification.
3.2 Subsidiaries. Except as set forth on
Schedule 3.2, the Company has no Subsidiaries and no
interest or investments in any corporation, partnership,
limited liability company, trust or other entity or
organization. Each Subsidiary listed on Schedule 3.2 has
been duly organized, is validly existing and in good
standing under the laws of the jurisdiction of its
organization, has the power and authority (corporate or
otherwise) to own its properties and to conduct its business
and is duly registered, qualified and authorized to transact
business and is in good standing in each jurisdiction in
which the conduct of its business or the nature of its
properties requires such registration, qualification or
authorization. Except as disclosed on Schedule 3.2, all of
the issued and outstanding capital stock (or equivalent
interests) of each Subsidiary set forth on Schedule 3.2 has
been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company free and clear of
any Liens and there are no rights, options or warrants
outstanding or other agreements to acquire shares of capital
stock (or equivalent interests) of such Subsidiary.
3.3 Corporate Authorization; No Contravention.
The execution, delivery and performance by the Company of
this Agreement and the transactions contemplated hereby,
including, without limitation, the sale, issuance and
delivery of the Purchased Shares, (a) have been duly
authorized by all necessary corporate action of the Company;
(b) do not contravene the terms of the Certificate of
Incorporation or Bylaws or the organizational documents of
its Subsidiaries; and (c) do not violate, conflict with or
result in any breach or contravention of, or the creation of
any Lien under, any Contractual Obligation of the Company or
any Requirement of Law applicable to the Company or its
Subsidiaries. No event has occurred and no condition exists
which, upon notice or the passage of time (or both), would
constitute a default under any indenture, mortgage, deed of
trust, credit agreement, note or other evidence of
indebtedness or other material agreement of the Company or
its Subsidiaries or the Certificate of Incorporation or
Bylaws or the organizational documents of the Company's
Subsidiaries.
3.4 Governmental Authorization; Third Party
Consents. Except for the approvals and consents as
specified on Schedule 3.4 hereto (collectively, the
Required Consents ), no approval, consent, exemption,
authorization or other action by, or notice to, or filing
with, any Governmental Authority or any other Person in
respect of any Requirement of Law, Contractual Obligation or
otherwise, and no lapse of a waiting period under a
Requirement of Law, is necessary or required in connection
with the execution, delivery or performance (including,
without limitation, the sale, issuance and delivery of the
Purchased Shares) by the Company, or enforcement against the
Company, of this Agreement, or the transactions contemplated
hereby.
3.5 Binding Effect. This Agreement has been duly
executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance or transfer,
moratorium or other similar laws affecting the enforcement
of creditors' rights generally and by general principles of
equity.
3.6 Capitalization of the Company. The
authorized capital stock of the Company consists of
(i) 200,000,000 shares of Common Stock, of which
17,761,122 shares were issued and outstanding on
September 23, 1998 and 5,060,330 shares which were, as of
September 23, 1998, reserved for issuance upon the exercise
of outstanding stock options, warrants to purchase Common
Stock and conversion of Convertible Preferred Stock issuable
pursuant to warrants to purchase Convertible Preferred
Stock, and (ii) 50,000,000 shares of Preferred Stock, of
which 1,538,561 shares of Convertible Preferred Stock were
issued and outstanding on September 23, 1998. Each share of
Convertible Preferred Stock may be converted at any time, at
the option of the holder, unless previously redeemed, into a
number of shares of Common Stock calculated by dividing the
$100 liquidation preference of the Convertible Preferred
Stock (without accrued and unpaid dividends) by $18 (as
adjusted from time to time). Except (a) as set forth in
this Section 3.6, (b) shares of Common Stock issued
(i) pursuant to the exercise of outstanding stock options or
warrants or (ii) on the conversion of outstanding shares of
Convertible Preferred Stock and (c) options granted under
existing stock option plans, plans subject to stockholder
approval or plans for which stockholder approval has been
obtained, on the Closing Date there will be no shares of
Common Stock or any other equity security of the Company
issuable upon conversion or exchange of any security of the
Company nor will there be any rights, options or warrants
outstanding or other agreements to acquire shares of capital
stock of the Company nor will the Company be contractually
obligated to purchase, redeem or otherwise acquire any of
its outstanding shares of capital stock. Except for Loral
Space & Communications, Ltd. ( Loral ), no stockholder of
the Company is entitled to any preemptive or similar rights
to subscribe for shares of capital stock of the Company.
All of the issued and outstanding shares of Common Stock and
Convertible Preferred Stock are, and the Purchased Shares
(when issued hereunder) after payment therefor to the
Company, will be, duly authorized, and validly issued, fully
paid and nonassessable.
3.7 SEC Filings; Financial Statements. The
Company has timely filed all SEC Reports. The SEC Reports
complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, as
applicable, and did not contain any untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary in order to make the
statements in the SEC Reports, in light of the circumstances
under which they were made, not misleading. Each of the
Company's financial statements (including, in each case, any
related notes) contained in the SEC Reports, complied as to
form in all material respects with applicable published
rules and regulations of the Commission with respect
thereto, was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements)
and fairly presented the financial position of the Company
and its Subsidiaries as at the respective dates and for the
periods indicated, except that the unaudited financial
statements were subject to normal and recurring year-end
adjustments which were not or are not expected to be
material in amount or effect.
3.8 Absence of Certain Developments. Since
June 30, 1998, except as set forth in the SEC Reports
delivered to the Purchaser, there has been no material
adverse change, or any development involving a prospective
material adverse change, in or affecting the business,
management or condition, financial or otherwise, of the
Company and its Subsidiaries, taken as a whole.
3.9 Compliance with Laws. None of the Company or
its Subsidiaries is in material violation of any Requirement
of Law to which it is subject.
3.10 Licenses. The Company has no reason to
believe that either (a) it will not finally obtain any
license, permit, franchise or other authorizations necessary
for it to conduct its business as described in the SEC
Reports or (b) such license, permit, franchise or
authorization will not be obtained on a timely basis.
3.11 Litigation. Except with respect to certain
filings made with the Federal Communications Commission by
Primosphere, there is no legal action, suit, arbitration or
other legal, administrative or other governmental
investigation, inquiry or proceeding pending, or to the best
knowledge of the Company, threatened against or affecting
the Company or its Subsidiaries which, if determined
adversely to the Company, would have a material adverse
effect on its business or financial condition.
3.12 Intellectual Property. The Company and its
Subsidiaries own, free and clear of all Liens, and has good
and marketable title to, or holds adequate licenses or
otherwise possesses all such rights as are necessary to use
all patents (and applications therefor), patent disclosures,
trademarks, service marks, trade names, copyrights (and
applications therefor), inventions, discoveries, processes,
know-how, scientific, technical, engineering and marketing
data, formulae and techniques (collectively, Intellectual
Property ) used or proposed to be used in or necessary for
the conduct of its business as now conducted or as proposed
to be conducted in the SEC Reports. The Company has not
received notice or otherwise has reason to know of any
conflict or alleged conflict with the rights of others
pertaining to the Company s Intellectual Property. To the
best of the Company's knowledge, the business of the Company
as presently conducted and as proposed to be conducted in
the SEC Reports does not infringe upon or violate any
Intellectual Property rights of others.
3.13 Private Offering. No form of general
solicitation or general advertising was used by the Company
or its representatives in connection with the offer or sale
of the Purchased Shares. No registration of the Purchased
Shares pursuant to the provisions of the Securities Act or
any state securities or blue sky laws will be required by
the offer, sale, or issuance of the Purchased Shares
pursuant to this Agreement, assuming the accuracy of the
Purchaser's representation contained in Section 4.5.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to
the Company as follows:
4.1 Existence and Power. The Purchaser (a) is
duly organized and validly existing as a limited partnership
under the laws of the jurisdiction of its formation and
(b) has the requisite power and authority to execute,
deliver and perform its obligations under this Agreement.
4.2 Authorization; No Contravention. The execu-
tion, delivery and performance by the Purchaser of this
Agreement and the transactions contemplated hereby, includ-
ing, without limitation, the purchase of the Purchased
Shares, (a) have been duly authorized by all necessary
action, (b) do not contravene the terms of the Purchaser's
organizational documents, or any amendment thereof, and
(c) do not violate, conflict with or result in any breach or
contravention of, or the creation of any Lien under, any
Contractual Obligation of the Purchaser or any Requirement
of Law applicable to the Purchaser, except for such
violation, conflict, breach or Lien which will not result in
a material adverse effect on the Purchaser's ability to
consummate the Contemplated Transactions.
4.3 Governmental Authorization; Third Party
Consents. Except for the Required Consents, no approval,
consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any
other Person in respect of any Requirement of Law, and no
lapse of a waiting period under a Requirement of Law, is
necessary or required in connection with the execution,
delivery or performance by the Purchaser, or enforcement
against the Purchaser, of this Agreement or the consummation
of the Contemplated Transactions.
4.4 Binding Effect. This Agreement has been duly
executed and delivered by the Purchaser and constitutes the
legal, valid and binding obligation of the Purchaser,
enforceable against it in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the
enforcement of creditors' rights generally or by general
principles of equity.
4.5 Purchase for Own Account. The Purchased
Shares to be acquired by the Purchaser pursuant to this
Agreement are being acquired for its own account and with no
intention of distributing or reselling such Purchased Shares
or any part thereof in any transaction that would be in
violation of the securities laws of the United States of
America or any state, without prejudice, however, to the
rights of the Purchaser at all times to sell or otherwise
dispose of all or any part of such Purchased Shares under an
effective Registration Statement under the Securities Act or
under an exemption from said registration available under
the Securities Act. The Purchaser understands and agrees
that if the Purchaser should in the future decide to dispose
of any Purchased Shares, it may do so only in compliance
with the Securities Act and applicable state securities
laws, as then in effect. The Purchaser agrees to the
imprinting, so long as required by law, of a legend on all
certificates representing such Purchased Shares to the
following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFEC-
TIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
4.6 Sufficient Funds. The Purchaser has
sufficient funds, either in the form of cash or committed
lines of credit, to purchase the Purchased Shares in
accordance with the terms of this Agreement and to perform
its obligations hereunder.
ARTICLE 5
COVENANTS
5.1 Conduct of Business. From the date hereof
through the Closing Date, the Company and its Subsidiaries
shall conduct their businesses in a manner such that the
representations and warranties contained in Article 3 shall
continue to be true and correct in all material respects on
and as of the Closing Date (except for representations and
warranties made as of a specific date) as if made on and as
of the Closing Date. The Company shall give the Purchaser
prompt notice of any event, condition or circumstance
occurring from the date hereof through the Closing Date that
would constitute a violation or breach of (i) any
representation or warranty, whether made as of the date
hereof or as of the Closing Date, or (ii) any covenant of
the Company contained in this Agreement.
5.2 Indemnification of Brokerage. The Company
represents and warrants to the Purchaser that no broker,
finder, agent or similar intermediary (a Broker ) has acted
on behalf of the Company or its Subsidiaries in connection
with this Agreement or the Contemplated Transactions, and
that, except for a fee to Batchelder & Partners, Inc. (the
Sellers Fee ), there are no brokerage commissions,
finder's fees or similar fees or commissions payable in
connection therewith based on any agreement, arrangement or
understanding with the Company or any of the Subsidiaries or
any action taken by the Company or any of its Subsidiaries.
The Company agrees to pay the Sellers' Fee and to indemnify
and hold harmless the Purchaser from any Claim or demand for
commission or other compensation by any Broker claiming to
have been employed by or on behalf of the Company or any of
its Subsidiaries and to bear the cost of legal expenses
incurred in defending against any such claim. The Purchaser
represents and warrants to the Company that no Broker has
acted on behalf of the Purchaser in connection with this
Agreement or the Contemplated Transactions, and that there
are no brokerage commissions, finders' fees or similar fees
or commissions payable in connection therewith based on any
agreement, arrangement or understanding with the Purchaser,
or any action taken by the Purchaser. The Purchaser agrees
to indemnify and hold harmless the Company from any Claim or
demand for commission or other compensation by any Broker
claiming to have been employed by or on behalf of the
Purchaser, and to bear the cost of legal expenses incurred
in defending against any such claim.
5.3 Rule 144. The Company hereby covenants and
agrees with the Purchaser that it shall file all reports
required to be filed by it under the Securities Act and the
Exchange Act and shall take such further action as the
Purchaser may reasonably request, all to the extent required
to enable the Purchaser to sell the Purchased Shares
pursuant to and in accordance with Rule 144 adopted by the
Commission under the Securities Act (as such rule may be
amended from time to time) ( Rule 144 ) or any similar rule
or regulation hereafter adopted by the Commission. Such
action shall include, but not be limited to, making
available adequate current public information meeting the
requirements of paragraph (c) of Rule 144.
5.4 HSR Approval. Promptly upon execution and
delivery (and in any event within three (3) Business Days of
the date) of this Agreement, the Purchaser and the Company
will prepare and file, or cause to be prepared and filed,
with the appropriate Governmental Authorities, a
notification with respect to the Contemplated Transactions
pursuant to the HSR Act, supply all information requested by
Governmental Authorities in connection with the HSR Act
notification and cooperate with each other in responding to
any such request.
5.5 Stockholder Approval. As promptly as
possible following the execution of this Agreement, the
Company shall seek to obtain approval of the Contemplated
Transactions from its stockholders and, in connection
therewith, shall make such filings and prepare and
distribute to its stockholders such documents as shall be
necessary to complete the Contemplated Transactions.
5.6 Amendment to Rights Agreement and Board
Approval. The Company hereby covenants and agrees with the
Purchaser that on or before the Closing Date it shall
(a) amend 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
Contemplated Transactions and permit the Purchaser, and any
other Person deemed to Beneficially Own the shares of
Common Stock owned by the Purchaser (within the meaning of
the Rights Agreement), to purchase and own up to an
additional 1% of the outstanding shares of Common Stock
without the Purchaser becoming an Acquiring Person under
the Rights Agreement and (b) take all action necessary to
cause the restrictions contained in Section 203 of the
Delaware General Corporation Law to be inapplicable to the
Contemplated Transactions and to approve the Purchaser
becoming an interested stockholder within the meaning of
Section 203 of the Delaware General Corporation Law.
ARTICLE 6
LOCK-UP AGREEMENTS
At any time prior to the earlier of (a) October 1,
2001 and (b) the date that the Purchaser ceases to
beneficially own 10% or more of the Common Stock, the
Company and its underwriters, by written notice from the
Company and its lead underwriter to the Purchaser (a Lock-
up Request ), given as provided herein on or after the time
of the initial filing with the Commission of any
registration statement (other than a registration statement
relating to an offering described in Section 9.1) with
respect to any offering of Common Stock or securities
convertible into Common Stock (the Offering ), may request
that the Purchaser agree not to offer, sell or transfer any
of the Purchased Shares, or engage in any hedging
transactions with respect to the Purchased Shares, during
the 180-day period (the Lock-up Period ) beginning on a
date specified in the Lock-up Request, which date may be as
early as five (5) Business Days prior to the expected
effective date (but no later than the effective date) with
respect to the registration statement for the Offering, and
the Purchaser agrees to consent to and be bound by the
restrictions specified in any such Lock-up Request;
provided, however, that such a lock-up agreement with
respect to any Offering shall not prevent Purchaser from
selling Purchased Shares which it is entitled to sell in
such Offering pursuant to Section 9.2 if it shall have made
the request specified therein. The Company shall specify
the expected effective date of any Offering by notice to the
Purchaser given not later than two (2) Business Days prior
to the beginning of the Lock-up Period. The Purchaser shall
cause each Person to whom it Transfers, in one or a series
of related transactions, 1,000,000 or more shares of Common
Stock to execute and deliver to the Company a letter
agreement pursuant to which such transferee agrees (and to
cause each other Person to whom it Transfers any shares of
Common Stock if, after giving effect to such Transfer, such
Person, together with its Affiliates, would beneficially own
1,000,000 or more shares of Common Stock to execute and
deliver to the Company a similar letter agreement) to comply
with the requirements of this Article 6 (including this
sentence) to the same extent and subject to the same terms
and conditions as the Purchaser.
ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE PURCHASER TO CLOSE
The obligation of the Purchaser to enter into and
complete the Closing is subject, at the option of the
Purchaser acting in accordance with the provisions of
Article 10 with respect to termination of this Agreement, to
the fulfillment on or prior to the Closing Date of the
following conditions, any one or more of which may be waived
by the Purchaser:
7.1 Representations and Covenants. The
representations and warranties of the Company contained in
this Agreement shall be true in all material respects on and
as of the Closing Date with the same force and effect as
though made on and as of the Closing Date; the Company shall
have performed and complied with all covenants and
agreements required by this Agreement to be performed or
complied with by the Company on or prior to the Closing
Date; and the Company shall have delivered to the Purchaser
a certificate, dated the date of the Closing and signed by
an executive officer of the Company, to the foregoing
effect.
7.2 Consents and Approvals. All Required
Consents shall have been obtained and be in full force and
effect, and the Purchaser shall have been furnished with
evidence reasonably satisfactory to it that such Required
Consents have been granted and obtained.
7.3 Opinion of Counsel to the Company. The
Purchaser shall have received the legal opinion of Paul,
Weiss, Rifkind, Wharton & Garrison, counsel to the Company,
dated the date of the Closing, addressed to the Purchaser,
to the effect set forth in Exhibit A.
7.4 HSR Act. Any Person required in connection
with the Contemplated Transactions to file a notification
and report form in compliance with the HSR Act shall have
filed such form and the applicable waiting period with
respect to each such form (including any extension thereof
by reason of a request for additional information) shall
have expired or been terminated.
7.5 No Claims. No Claims shall be pending before
any Governmental Authority (including investigations
instituted by the United States Department of Justice or the
Federal Trade Commission in connection with antitrust
regulations) to restrain or prohibit this Agreement or the
consummation of the Contemplated Transactions.
ARTICLE 8
CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE COMPANY TO CLOSE
The obligation of the Company to enter into and
complete the Closing is subject, at the option of the
Company acting in accordance with the provisions of
Article 10 with respect to termination of this Agreement, to
the fulfillment on or prior to the Closing Date of the
following conditions, any one or more of which may be waived
by the Company:
8.1 Representations and Covenants. The
representations and warranties of the Purchaser contained in
this Agreement shall be true in all material respects on and
as of the Closing Date with the same force and effect as
though made on and as of the Closing Date; the Purchaser
shall have performed and complied with all covenants and
agreements required by this Agreement to be performed or
complied with by it on or prior to the Closing Date; and the
Purchaser shall have delivered to the Company a certificate,
dated the date of the Closing and signed by a general
partner of the Purchaser, to the foregoing effect.
8.2 Consents and Approvals. All Required
Consents shall have been obtained and be in full force and
effect.
8.3 HSR Act. Any Person required in connection
with the Contemplated Transactions to file a notification
and report form in compliance with the HSR Act shall have
filed such form and the applicable waiting period with
respect to each such form (including any extension thereof
by reason of a request for additional information) shall
have expired or been terminated.
8.4 No Claims. No Claims shall be pending before
any Governmental Authority (including investigations
instituted by the United States Department of Justice or the
Federal Trade Commission in connection with antitrust
regulations) to restrain or prohibit this Agreement or the
consummation of the Contemplated Transactions.
ARTICLE 9
REGISTRATION RIGHTS
9.1 Requested Registration. If the Company shall
receive from the Purchaser, at any time after October 1,
2000, a written request (which shall specify whether the
distribution will be made by means of an underwriting) that
the Company effect any registration with respect to all or a
part of the Purchased Shares that constitute Registrable
Securities (a Demand Notice ), which Demand Notice shall
request registration of not less than 1,000,000 shares of
Common Stock or all remaining shares of Common Stock then
held by the Purchaser, the Company will, as soon as
practicable, use its best efforts to effect such
registration as may be so requested and as would permit or
facilitate the sale and distribution of the Purchased Shares
as are specified in such request. After the Company has
effected two (2) such registrations pursuant to this
Section 9.1 and such registration has been declared
effective and the distribution contemplated thereunder
completed, the Company shall have no further obligation
under this Section 9.1. Notwithstanding the foregoing, if
the Company shall furnish to the Purchaser a certificate
signed by the President or the Chief Executive Officer of
the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such
registration statement to be filed and it is therefore
desirable and in the best interests of the Company to defer
the filing of such registration statement, then the Company
shall have the right to defer such filing for a period of
not more than 90 days after receipt of the request of the
Purchaser.
9.2 Company Registration. (a) If the Company
shall determine to register any shares of Common Stock for
the account of a security holder or holders (other than a
registration relating solely to employee benefit plans, or a
registration relating solely to a Commission Rule 145
transaction, or a registration on any registration form
which does not permit secondary sales or does not include
substantially the same information as would be required to
be included in a registration statement covering the sale of
Purchased Shares), the Company will promptly give to the
Purchaser a written notice thereof and include in such
registration, and in any underwriting involved therein, all
the Purchased Shares that constitute Registrable Securities
specified in a written request made by the Purchaser within
ten Business Days after receipt of the written notice from
the Company described above. The Purchaser shall be
entitled to have its shares included in an unlimited number
of registrations pursuant to Section 9.2.
(b) If the registration of which the Company
gives notice is for a registered public offering involving
an underwriting, the Company shall so advise the Purchaser
as a part of the written notice given pursuant to
Section 9.2(a). In such event, the right of the Purchaser
to registration pursuant to Section 9.2(a) shall be
conditioned upon the Purchaser's participation in such
underwriting and the inclusion of the Purchased Shares in
the underwriting to the extent provided herein. If the
Purchaser shall have elected to exercise its rights under
Section 9.2(a), it shall enter into an underwriting
agreement in customary form with the representative of the
underwriter or underwriters selected for underwriting by the
Company. Notwithstanding any other provision of this
Section 9.2, if the representative determines and so advises
the Company in writing that marketing factors require a
limitation on the number of shares to be underwritten, the
Company shall so advise the Purchaser. In such an event,
the number of Purchased Shares that may be included in the
registration and underwriting by the Purchaser shall be
reduced, on a pro rata basis (based on the number of shares
held by the Purchaser and each other Person (other than the
Company) registering shares under such registration), by
such minimum number of shares as is necessary to comply with
such limitation. If the Purchaser disapproves of the terms
of any such underwriting, it may elect to withdraw therefrom
by written notice to the Company and the underwriter. Any
Purchased Shares excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
9.3 Transferability. The registration rights
granted pursuant to this Article 9 shall be assignable, in
whole but not in part, to any Transferee of the Purchased
Shares; provided, however, that the rights granted under
Section 9.1 shall be assignable only to a Transferee who,
after giving effect to such Transfer, beneficially owns at
least 1,000,000 shares of Common Stock.
9.4 Expenses of Registration. All Registration
Expenses incurred in connection with any registration,
qualification or compliance pursuant to this Article 9 shall
be borne by the Company, and all Selling Expenses shall be
borne by the Purchaser.
9.5 Registration Procedures. In the case of each
registration effected by the Company pursuant to Article 9,
the Company will:
(a) furnish to the Purchaser prior to the
filing of the requisite Registration Statement copies of
drafts of such Registration Statement as is proposed to be
filed, and thereafter such number of copies of such
Registration Statement, each amendment and supplement
thereto (in each case including all exhibits thereto), the
Prospectus included in such Registration Statement
(including each preliminary prospectus) and such other
documents in such quantities as the Purchaser may reasonably
request from time to time in order to facilitate its
distribution;
(b) notify the Purchaser promptly of any
request by the Commission for the amending or supplementing
of such Registration Statement or Prospectus or for
additional information;
(c) advise the Purchaser promptly after the
Company shall receive notice or obtain knowledge of the
issuance of any stop order by the Commission suspending the
effectiveness of any such Registration Statement or
amendment thereto or of the initiation or threatening of any
proceeding for that purpose, and promptly use its best
efforts to prevent the issuance of any stop order or to
obtain its withdrawal promptly if such stop order should be
issued;
(d) use all reasonable efforts to register
or qualify the Purchased Shares under such other securities
or blue sky laws of such jurisdictions as the Purchaser (or
the managing underwriter, in the case of underwritten
offerings) reasonably requests; provided that the Company
shall not be required to qualify to do business or become
subject to service of process or taxation in any
jurisdiction in which it is not already so qualified or
subject;
(e) use all reasonable efforts to cause the
Purchased Shares included in the Registration Statement to
be listed on a securities exchange or authorized for
quotation on a national quotation system on which any of the
Common Stock is then listed;
(f) notify the Purchaser, at any time when a
prospectus relating to the proposed sale is required to be
delivered under the Securities Act, of the happening of any
event as a result of which the Prospectus included in such
Registration Statement or amendment contains an untrue
statement of a material fact or omits to state any material
fact required to be stated therein in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading, and the Company will
prepare a supplement or amendment to such Prospectus so
that, as thereafter delivered to the purchasers of the
Purchased Shares, such Prospectus will not contain an untrue
statement of a material fact or omit to state any material
fact required to be stated therein in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading;
(g) enter into customary agreements
(including without limitation, an underwriting agreement in
customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the
disposition of the Purchased Shares included in the
Registration Statement; and
(h) in the case of a Registration Statement
filed pursuant to Section 9.1 involving a shelf Registration
Statement, prepare and file with the Commission such
amendments and supplements to such shelf Registration
Statement and the Prospectus used in connection therewith as
may be necessary to keep such shelf Registration Statement
effective until the earlier of (i) the sale of all
Registrable Securities covered thereby or (ii) three years
(exclusive of any period during which the distribution is
postponed pursuant to Section 9.1), and to comply with the
provisions of the Securities Act with respect to the sale or
other disposition of all Registrable Securities covered by
such Registration Statement.
9.6 Indemnification. (a) The Company will
indemnify the Purchaser, each of its officers and directors,
and each person controlling the Purchaser within the meaning
of Section 15 of the Securities Act and the rules and
regulations thereunder, with respect to each registration
which has been effected pursuant to this Article 9, and each
underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder,
against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material
fact contained in any Prospectus or other document
(including any related registration statement, notification
or the like) incident to any such registration,
qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of
the Securities Act or any rule or regulation thereunder
applicable to the Company and relating to action or inaction
required of the Company in connection with any such
registration, qualification or compliance, and will
reimburse the Purchaser, each of its officers and directors,
and each person controlling the Purchaser, each such
underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any
such claim, loss, damage, liability or action, provided that
the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or
omission based upon written information furnished to the
Company by the Purchaser with respect to the Purchaser and
stated to be specifically for use therein.
(b) The Purchaser will, if Purchased Shares
held by it are included in the securities as to which such
registration, qualification or compliance is being effected,
indemnify the Company, each of its directors and officers
and each underwriter, if any, of the Company's securities
covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning
of Section 15 of the Securities Act and the rules and
regulations thereunder, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out
of or based on any untrue statement (or alleged untrue
statement) of a material fact with respect to the Purchaser
contained in any such registration statement, prospectus or
other document made by the Purchaser, or any omission (or
alleged omission) to state therein a material fact with
respect to the Purchaser required to be stated therein or
necessary to make the statements by the Purchaser therein
not misleading, and will reimburse the Company and such
other directors, officers, partners, persons, underwriters
or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration
statement, prospectus or other document in reliance upon and
in conformity with written information furnished to the
Company by the Purchaser with respect to the Purchaser and
stated to be specifically for use therein; provided,
however, that the obligations of the Purchaser hereunder
shall be limited to an amount equal to the proceeds to the
Purchaser of securities sold as contemplated herein.
(c) If the indemnification provided for in
this Section 9.6 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense
referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and
of the indemnified party on the other in connection with the
statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other
relevant equitable considerations. The relative fault of
the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such
statement or omission.
ARTICLE 10
TERMINATION OF AGREEMENT
10.1 Termination. This Agreement may be
terminated prior to the Closing as follows:
(a) at the election of the Purchaser, if any
one or more of the conditions to the obligation of the
Purchaser to close set forth in Article 7 has not been
fulfilled as of March 31, 1999;
(b) at the election of the Company, if any
one or more of the conditions to the obligation of the
Company to close set forth in Article 8 has not been
fulfilled as of March 31, 1999;
(c) at the election of the Company or the
Purchaser, if any legal proceeding is commenced and pending
by any Governmental Authority seeking to prevent the
consummation of the Closing or any other Contemplated
Transaction and the Company or the Purchaser, as the case
may be, reasonably and in good faith deems it impracticable
or inadvisable to proceed in view of such legal proceeding;
(d) at the election of the Company, if the
Purchaser has breached any material representation,
warranty, covenant or agreement contained in this Agreement,
which breach cannot be or is not cured by March 31, 1999;
(e) at the election of the Purchaser, if the
Company has breached any material representation, warranty,
covenant or agreement contained in this Agreement, which
breach cannot be or is not cured by March 31, 1999;
(f) at the election of the Purchaser, if the
Closing Date shall not have occurred by March 31, 1999; or
(g) at any time on or prior to the Closing
Date, by mutual written consent of the Company and the
Purchaser.
If this Agreement so terminates, it shall become
null and void and have no further force or effect, except as
provided in Section 10.2.
10.2 Survival After Termination. If this
Agreement terminates pursuant to Section 10.1 and the
Contemplated Transactions are not consummated, this
Agreement shall become null and void and have no further
force or effect, except that any such termination shall be
without prejudice to the rights of any party on account of
the nonsatisfaction of the conditions set forth in
Articles 7 and 8 resulting from the intentional or willful
breach or violation of the representations, warranties,
covenants or agreements of another party under this
Agreement. Notwithstanding anything in this Agreement to
the contrary, the provisions of Sections 5.3, this
Section 10.2 and Article 11 shall survive any termination of
this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Expenses. Each of the Company and Purchaser
shall pay its own expenses incurred in connection with the
negotiation, execution, delivery and performance of this
Agreement.
11.2 Notices. All notices or other communications
required or permitted hereunder shall be in writing and
shall be delivered personally, telecopied or sent by
certified, registered or express mail, postage prepaid. Any
such notice shall be deemed given if delivered personally or
telecopied, on the date of such delivery or sent by
reputable overnight courier, on the first Business Day
following the date of such mailing, as follows:
(a) if to the Company:
CD Radio Inc.
1180 Avenue of the Americas
New York, New York 10036
Attention: Patrick L. Donnelly
Telecopy: (212) 899-5036
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Mitchell S. Fishman
Telecopy: (212) 757-3990
(b) if to the Purchaser:
Prime 66 Partners, L.P.
201 Main Street
Suite 2600
Fort Worth, TX 76102
Attention: W. R. Cotham
Telecopy: (817) 390-8739
with a copy to:
Kelly, Hart & Hallman
201 Main Street
Suite 2500
Fort Worth, TX 76102
Attention: Thomas W. Briggs, Esq
Telecopy: (817) 878-9280
Any party may by notice given in accordance with this
Section 11.2 designate another address or person for receipt
of notices hereunder.
11.3 Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors
and permitted assigns of the parties hereto. No Person
other than the parties hereto and their successors and
permitted assigns is intended to be a beneficiary of this
Agreement. No party hereto may assign its rights under this
Agreement without the prior written consent of the other
party hereto.
11.4 Amendment and Waiver.
(a) No failure or delay on the part of the
Company or the Purchaser in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not
exclusive of any remedies that may be available to the
Company or the Purchaser at law, in equity or otherwise.
(b) Any amendment, supplement or modifica-
tion of or to any provision of this Agreement and any waiver
of any provision of this Agreement shall be effective only
if it is made or given in writing and signed by the Company
and the Purchaser.
11.5 Counterparts. This Agreement may be executed
in any number of counterparts and by the parties hereto in
separate counterparts, all of which when so executed shall
be deemed to be an original and both of which taken together
shall constitute one and the same agreement.
11.6 Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
11.7 GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAW
PRINCIPLES THEREOF WHICH WOULD REQUIRE THE APPLICATION OF
THE LAWS OF ANOTHER STATE.
11.8 Severability. If any one or more of the
provisions contained herein, or the application thereof in
any circumstance, is held invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect
and of the remaining provisions hereof shall not be in any
way impaired, unless the provisions held invalid, illegal or
unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
11.9 Entire Agreement. This Agreement, together
with the schedules and exhibits hereto, is intended by the
parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein. There
are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein or therein.
This Agreement, together with the schedules and exhibits
hereto, supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
11.10 Further Assurances. Each of the parties
shall execute such documents and take, or cause to be taken,
all appropriate action, and shall do or cause to be done,
all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the
Contemplated Transactions and obtaining any consents,
exemptions, authorizations, or other actions by, or giving
any notices to, or making any filings with, any Governmental
Authority or any other Person.
11.11 Public Announcements. Except to the
extent required by law or the regulations of any national
securities exchange or the Nasdaq National Market, neither
party hereto will issue or make any reports, statements or
releases to the public with respect to this Agreement or the
Contemplated Transactions without consulting the other.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed and delivered by their
respective officers hereunto duly authorized as of the date
first above written.
CD RADIO INC.
By:/s/ Andrew J. Greenebaum
Name: Andrew J.
Greenebaum Title: Executive Vice
President and Chief
Financial Officer
PRIME 66 PARTNERS, L.P.
By: P-66, INC., as general partner
By:/s/ William P. Hallman, Jr.
Name: William P. Hallman, Jr.
Title: Vice President
By: P-66 GENPAR, L.P.,
as general partner
By: Carmel Land & Cattle Co.,
as general partner
By:/s/ William P. Hallman, Jr.
Name: William P. Hallman, Jr.
Title: Vice President
<PAGE>
SCHEDULE 3.2
Subsidiaries of the Company
Name
Jurisdiction of
Incorporation
Satellite CD Radio, Inc.(1)
Delaware
--------
1) All of the stock of this Subsidiary is pledged to
secure the Company s outstanding 15% Senior Secured Discount
Notes due 2007<PAGE>
SCHEDULE 3.4
Required Consents
1a The filings required under the HSR Act.
2a Approval of the Company s common stockholders in
accordance with rules of the NASD.
3a Waiver by Loral Space & Communications Ltd. of its
rights under Sections 5.2(b) and 5.3 of the Stock
Purchase Agreement dated August 5, 1997 by and among CD
Radio Inc., David Margolese and Loral Space &
Communications Ltd. in respect of the Contemplated
Transactions.
<PAGE>
EXHIBIT A
[Form of Opinion of Counsel to the Company]
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware with full corporate power and
authority to own, lease or operate its properties and to
conduct its businesses as described in the SEC Reports and
to consummate the transactions contemplated under this
Agreement.
(ii) The Purchased Shares have been duly
authorized for issuance and sale to the Purchaser pursuant
to this Agreement and, when issued in accordance with the
terms of this Agreement, the Purchased Shares will be duly
authorized, validly issued, fully paid and non-assessable
shares of the Company, free of all preemptive or similar
rights.
(iii) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a
valid and legally binding obligation of the Company
enforceable against it in accordance with its terms, subject
as to enforcement, to bankruptcy, insolvency,
rehabilitation, reorganization and other laws of general
applicability relating to or affecting creditors' rights and
to general principles of equity.
(iv) No consent, approval, authorization, order,
registration or qualification of or with any Governmental
Authority is required for the issue and sale of the
Purchased Shares by the Company or the consummation by the
Company of the Contemplated Transactions.
(v) The issuance and sale of the Purchased Shares
do not require registration under Section 5 of the
Securities Act or qualification under any state securities
or the blue sky laws of the State of New York.
