Pandora Media, Inc. (NYSE:P) Files An 8-K Entry into a Material Definitive Agreement

On May 8, 2017, Pandora Media, Inc., a Delaware corporation (the
Company or Pandora), announced the entry into an Investment
Agreement dated as of May 8, 2017 (the Investment Agreement)
between the Company and an affiliate of Kohlberg Kravis Roberts LLC
(KKR) relating to the issuance and sale to KKR of 150,000 shares of
the Companys Series A Convertible Preferred Stock, par value
$0.0001 per share (the Series A Preferred Stock), for an aggregate
purchase price of $150 million, or $1,000 per share. Under the
Investment Agreement, the Company may also issue up to an
additional $100 million of Series A Preferred Stock. The closing of
the transaction contemplated by the Investment Agreement is
conditioned upon certain customary closing conditions, including,
among others, obtaining clearance under the Hart-Scott-Rodino
Antitrust Improvements Act, and is expected to close no earlier
than June 8, 2017.

The Series A Preferred Stock will rank senior to the shares of the
Companys common stock, par value $0.0001 per share (the Common
Stock), with respect to dividend rights, redemption rights and
rights on the distribution of assets on any voluntary or
involuntary liquidation, dissolution or winding up of the affairs
of the Company. The Series A Preferred Stock will have a
liquidation preference of $1,000 per share. Holders of Series A
Preferred Stock will be entitled to a cumulative dividend at the
rate of 7.5% per annum, payable quarterly in arrears, as set forth
in the Certificate of Designation of Preferences, Rights and
Limitations of Series A Convertible Preferred Stock classifying the
Series A Preferred Stock, a form of which is attached as Annex I to
the Investment Agreement (the Certificate of Designation). If the
Company does not declare and pay a dividend, the dividend rate will
increase by 0.5% to 8.0% per annum until all accrued but unpaid
dividends have been paid in full.

The Series A Preferred Stock will be convertible at the option of
the holders at any time into shares of Common Stock at an initial
conversion price of $13.50 per share and an initial conversion rate
of 74.0741 shares of Common Stock per share of Series A Preferred
Stock, subject to certain customary anti-dilution adjustments. Any
conversion of Series A Preferred Stock may be settled by the
Company, at its option, in shares of Common Stock at the conversion
rate, cash in an amount equal to the market value of the shares of
Common Stock into which the Series A Preferred Stock is to
converted or any combination thereof.

Holders of Series A Preferred Stock will be entitled to vote with
the holders of the Common Stock on an as-converted basis. Holders
of Series A Preferred Stock will be entitled to a separate class
vote with respect to amendments to the Companys organizational
documents that have an adverse effect on the Series A Preferred
Stock, issuances by the Company of securities that are senior to,
or equal in priority with, the Series A Preferred Stock and the
incurrence of indebtedness for borrowed money in excess of both
$700 million and three times trailing four quarter Consolidated
EBITDA (as defined in the Certificate of Designations).

Upon certain change of control events involving the Company, the
Company will be required to repurchase all of the Series A
Preferred Stock at the greater of (1) an amount in cash equal to
50% of the liquidation preference thereof plus all accrued but
unpaid dividends plus a change of control premium and (2) the
consideration the holders would have received if they had converted
their shares of Series A Preferred Stock into Common Stock
immediately prior to the change of control event. Additionally,
upon certain insolvency events involving the Company, the Company
will be required to repurchase all of the Series A Preferred Stock
for an amount in cash equal to 50% of the liquidation preference
thereof plus all accrued but unpaid dividends.

On any date after the fifth anniversary of the closing, holders of
Series A Preferred Stock will have the right to require the Company
to redeem all or any portion of the Series A Preferred Stock at 50%
of the liquidation preference thereof plus all accrued but unpaid
dividends, at the election of the Company, for cash, shares of
Common Stock or a combination thereof.

On any date after the third anniversary of the date of the issuance
of the Series A Preferred Stock, if the volume weighted average
price of the Common Stock exceeds $20.25, as may be adjusted to the
Certificate of Designations, for at least 20 trading days in any
period of 30 consecutive trading days, all of the Series A
Preferred Stock may be redeemed, at the election of the Company,
for cash, shares of Common Stock or a combination thereof.

to the Investment Agreement, the Company has agreed to elect
Richard Sarnoff to the Companys board of directors (the Board).
KKRs right to designate a director to the Board shall continue
until KKR or its affiliates fail to beneficially own a specified
threshold of shares of Series A Preferred Stock and/or shares of
Common Stock issued upon conversion of Series A Preferred Stock
(the Fall-Away of KKRs Board Rights). After the Fall-Away of KKRs
Board Rights occurs, the holders of a majority of the Series A
Preferred Stock will have the right to designate a director to the
Board, and the Company agrees under the Investment Agreement to
include such director in the Companys slate of director nominees
for the Companys annual meetings, unless all initial holders of the
Series A Preferred Stock fail to beneficially own in the aggregate
a

specified threshold of shares of Series A Preferred Stock and/or
shares of Common Stock issued upon conversion of Series A Preferred
Stock.

KKR and certain holders of the Series A Preferred Stock that become
party to the Investment Agreement will be subject to certain
standstill restrictions, including, among other things, that they
will be restricted from acquiring additional securities of the
Company, beginning on the Closing Date until the date that is six
months after the date on which both (1) KKR and its permitted
transferees no longer have the right to designate a Board member
under the terms of the Investment Agreement and (2) the director
designated by the holders of the Series A Preferred Stock is no
longer serving on the Board. Subject to certain customary
exceptions, KKR and certain holders of the Series A Preferred Stock
that become party to the Investment Agreement will, subject to
certain exceptions, be restricted from transferring the Series A
Preferred Stock or Common Stock issued upon conversion of Series A
Preferred Stock until the one-year anniversary of the Closing Date.

The Investment Agreement may be terminated by either party if
closing has not occurred by August 8, 2017. The Investment
Agreement may also be terminated by the Company within 30 days in
the event that (1) a bona fide acquisition proposal for ownership
of 50% or more of the Companys total assets or capital stock has
been made to the Company, the Companys stockholders or in the event
that such proposal is announced publicly and (2) the Company
approves, recommends, or publicly declares advisable any letter of
intent, acquisition agreement, or other forms of agreements to
consummate the acquisition proposal. In the event of such
termination, the Company shall pay KKR a fee of $15,000,000.

KKR and certain holders of the Series A Preferred Stock and their
affiliates will have certain customary registration rights with
respect to the Series A Preferred Stock and the Common Stock issued
upon conversion of Series A Preferred Stock to the terms of a
registration rights agreement, a form of which is attached as Annex
II to the Investment Agreement.

The foregoing description of the terms of the Series A Preferred
Stock, the Investment Agreement and the transactions contemplated
thereby does not purport to be complete and is subject to, and
qualified in its entirety by, the full text of the Investment
Agreement and the annexes thereto, which is attached hereto as
Exhibit 10.1, and is incorporated herein by reference.

A copy of the press release announcing the execution of the
Investment Agreement and the transactions contemplated by the
Investment Agreement is attached as Exhibit 99.1 to this Current
Report on Form 8-K and is incorporated by reference herein.

Item 3.02 >Unregistered Sales of Equity Securities.

The information contained in Item 1.01 is incorporated herein by
reference.

As described in Item 1.01, under the terms of the Investment
Agreement, the Company has agreed to issue shares of Series A
Preferred Stock to KKR. This issuance and sale will be exempt from
registration under the Securities Act of 1933, as amended (the
Securities Act), to Section 4(a)(2) of the Securities Act. KKR
represented to the Company that it is an accredited investor as
defined in Rule 501 of the Securities Act and that the Series A
Preferred Stock is being acquired for investment purposes and not
with a view to, or for sale in connection with, any distribution
thereof, and appropriate legends will be affixed to any
certificates evidencing the shares of Series A Preferred Stock or
Common Stock issued upon conversion of Series A Preferred Stock.

Item 5.02 >Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.

On May 12, 2017, James M. P. Feuille and Peter Gotcher each
resigned from the Board effective immediately. The resignations of
Messrs. Feuille and Gotcher did not result from any disagreement
with the Company, the Companys management or the Board. Mr. Feuille
was a chairman of the Board, chairman of the Compensation Committee
and a member of the Audit Committee. Mr. Gotcher was chairman of
the Nominating and Corporate Governance Committee and a member of
the Compensation Committee.

A copy of the press release announcing the above changes to the
Board is attached as Exhibit 99.2 to this Current Report on Form
8-K and is incorporated by reference herein.

Forward-Looking Statements

This communication contains forward-looking statements.
Forward-looking statements use words such as expect, anticipate,
outlook, intend, believe, will, should, would, could and words of
similar meaning. Statements regarding the investment by KKR and
statements that do not relate to historical or current fact, are
examples of forward-looking statements. These forward-looking
statements are based on Pandora’s current assumptions,
expectations and beliefs and involve substantial risks and
uncertainties that may cause results, performance or achievement to
materially differ from those expressed or implied by these
forward-looking statements. Forward-looking statements are not
guarantees of future performance, and there are a number of
important factors that could cause actual outcomes and results to
differ materially from the results contemplated by such
forward-looking statements, including factors relating to the
successful closing of the investment by KKR and achievement of its
potential benefits Further information on risks and uncertainties
affecting Pandoras business are described in Pandoras filings with
the Securities and Exchange Commission (the SEC), including under
the headings Risk Factors and Managements Discussion and Analysis
of Financial Condition and Results of Operations in Pandoras annual
report on Form 10-K for the year ended December 31, 2016 filed with
the SEC on April 27, 2016 and in any of Pandoras subsequently filed
Form 10-Qs. Any forward-looking statement speaks only as of the
date on which it is made. Pandora does not undertake any obligation
to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

Item 9.01 >Financial Statements and Exhibits.

(d) >Exhibits.

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, hereunto duly authorized.

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