SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 22, 1997
CD RADIO INC.
(Exact name of registrant as specified in its charter)
Delaware 0-24710 52-1700207
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1001 22nd Street, N.W., Washington, DC 20037
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(Address of principal executive offices)
Registrant's telephone number, including area code: (202) 296-6192
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER
On October 22, 1997, the Board of Directors of CD Radio Inc. (the
"COMPANY") declared a dividend distribution of one Right for each outstanding
share of Common Stock, par value $0.001 per share (a "COMMON SHARE"), of the
Company to stockholders of record at the close of business on November 3, 1997
(the "RECORD DATE"). Except as set forth below, each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of
Series B Preferred Stock, par value $0.001 per share ("SERIES B SHARES"), at a
price of $115.00 (the "PURCHASE PRICE"), subject to adjustment. The Purchase
Price shall be paid in cash. The description and terms of the Rights are set
forth in a Rights Agreement (the "RIGHTS AGREEMENT") between the Company and
Continental Stock Transfer & Trust Company, as Rights Agent.
Initially, no separate Right Certificates will be distributed. Until
the earlier to occur of (a) 10 business days following a public announcement
that a person or group of affiliated or associated persons (an "ACQUIRING
PERSON") has acquired, or obtained the right to acquire, beneficial ownership of
15% or more of the outstanding Common Shares or (b) 15 business days following
the commencement of a tender offer or exchange offer if, upon consummation
hereof, such person or group would be the beneficial owner of 15% or more of
such outstanding Common Shares (the earlier of such dates being called the
"SEPARATION DATE"), the Rights will be evidenced, with respect to any Common
Shares outstanding as of the Record Date, by the certificates representing such
Common Shares. The Rights Agreement provides that, until the Separation Date,
the Rights will be transferred with, and only with, Common Share certificates.
From as soon as practicable after the Record Date and until the Separation Date
(or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Separation Date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date will also constitute the transfer of the
Rights associated with the Common Shares represented by such certificates. As
soon as practicable following the Separation Date, separate certificates
evidencing the Rights ("RIGHT CERTIFICATES") will be mailed to holders of record
of the Common Shares as of the close of business on the Separation Date and,
thereafter, such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Separation Date and will
expire on October 22, 2002, unless earlier redeemed by the Company as described
below.
In the event that, at any time following the Separation Date, (a)
the Company is the surviving corporation in a merger with an Acquiring Person
and the Company's Common Shares are not changed or exchanged, (b) a person
(other than the Company and its affiliates) becomes the beneficial owner of 15%
or more of the
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then outstanding Common Shares (in any manner, except pursuant to (i) the
exercise of stock options granted pursuant to the Company's existing and future
stock option plans, (ii) the exercise of conversion rights contained in
specified Preferred Stock issues of the Company, (iii) the exercise of certain
warrants specified in the Rights Agreement and (iv) a tender offer for any
and all outstanding Common Shares made in accordance with applicable laws, which
remains open for at least 40 Business Days and into which holders of 80% or more
of the Company's outstanding Common Shares tender their shares), (c) an
Acquiring Person engages in one or more "self-dealing" transactions as set forth
in the Rights Agreement or (d) during such time as there is an Acquiring Person,
an event occurs that results in such Acquiring Person's ownership interest being
increased by more than one percent (e.g., a reverse stock split), the Rights
Agreement provides that proper provision shall be made so that each holder of a
Right will thereafter be entitled to receive, upon exercise, Common Shares (or,
in certain circumstances, cash, property or other securities of the Company)
having a value equal to two times the exercise price of the Right.
In the event that, at any time following the first date of public
announcement by the Company or an Acquiring Person indicating that an Acquiring
Person has become such (the "SHARES ACQUISITION DATE"), (a) the Company engages
in a merger or other business combination transaction in which the Company is
not the surviving corporation, (b) the Company engages in a merger or other
business combination transaction with another person in which the Company is the
surviving corporation, but in which its Common Shares are changed or exchanged
or (c) 50% or more of the Company's assets or earning power is sold or
transferred, the Rights Agreement provides that proper provision shall be made
so that each holder of a Right shall thereafter have the right to receive, upon
the exercise thereof at the then current exercise price of the Right, common
shares of the acquiring company having a value equal to two times the exercise
price of the Right.
The Board may, at its option, at any time after the right of the
Board to redeem the Rights has expired or terminated (with certain exceptions),
exchange all or part of the then outstanding and exercisable Rights (other than
those held by the Acquiring Person and Affiliates and Associates of the
Acquiring Person) for Common Shares at a ratio of one Common Share per Right, as
adjusted; PROVIDED, HOWEVER, that such Right cannot be exercised once a Person,
together with such Person's Affiliates and Associates, becomes the owner of 50%
or more of the Outstanding Common Shares. If the Board authorizes such an
exchange, the Rights will immediately cease to be exercisable.
Notwithstanding any of the foregoing, following the occurrence of
any of the events set forth in the fourth and fifth paragraphs of this Summary,
any Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person shall immediately
become null and void. The Rights Agreement contains provisions intended to
prevent the utilization of voting trusts or similar arrangements (except for a
contemplated voting arrangement between two of the Company's principal
stockholders) that could have the effect of rendering
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ineffective or circumventing the beneficial ownership rules set forth in the
Rights Agreement.
The Purchase Price payable, and the number of Series B Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (a) in the event of a
dividend of Series B Shares on, or a subdivision, combination or
reclassification of, the Series B Shares, (b) upon the grant to holders of the
Series B Shares of certain rights or warrants to subscribe for Series B Shares
or securities convertible into Series B Shares at less than the current market
price of the Series B Shares or (c) upon the distribution to holders of the
Series B Shares of debt securities or assets (excluding regular quarterly cash
dividends and dividends payable in Series B Shares) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares that are not integral multiples of one
one-hundredth of a Series B Share will be issued and, in lieu thereof, an
adjustment in cash will be made based on the closing price of the Series B
Shares on the last trading date prior to the date of exercise.
At any time after the date of the Rights Agreement until 10 Business
Days (a period that can be extended) following the Shares Acquisition Date, the
Board of Directors of the Company (the "BOARD"), with the concurrence of a
majority of the Independent Directors (those members of the Board who are not
officers or employees of the Company or of any Subsidiary of the Company and who
are not Acquiring Persons or their Affiliates, Associates, nominees or
representatives, and who either (a) were members of the Board prior to the
adoption of the Rights Plan or (b) were subsequently elected to the Board and
were recommended for election or approved by a majority of the Independent
Directors then on the Board), may redeem the Rights in whole, but not in part,
at a price of $0.01 per Right, subject to adjustment (the "REDEMPTION PRICE").
Thereafter, the Board may only redeem the Rights in certain specified
circumstances including in connection with certain events not involving an
Acquiring Person or an Affiliate or Associate of an Acquiring Person. In
addition, the Company's right of redemption may be reinstated if (a) an
Acquiring Person reduces its beneficial ownership to 10% or less of the
outstanding Common Shares in a transaction or series of transactions not
involving the Company and (b) there is at such time no other Acquiring Person.
The Rights Agreement may also be amended, as described below, to extend the
period of redemption. Immediately upon the action of the Board ordering
redemption of the Rights, the Rights will no longer be exercisable, except upon
the occurrence of certain events that have the effect of deferring the effective
time of the redemption. In general, thereafter the only right of the holders of
Rights will be to receive the Redemption Price.
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Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to shareholders or to the Company, shareholders may, depending
upon the circumstances, recognize taxable income in the event that the Rights
become exercisable for Common Shares (or other consideration) of the Company or
for common shares of the Acquiring Person as set forth above.
Other than those provisions relating to the principal economic terms
of the Rights or imposing limitations on the right to amend the Agreement, any
of the provisions of the Rights Agreement may be amended by the Board with the
concurrence of a majority of the Independent Directors or by special approval of
the stockholders of the Company prior to the Separation Date. Thereafter, the
period during which the Rights may be redeemed may be extended (by action of the
Board, with the concurrence of a majority of the Independent Directors or by
special approval of the stockholders of the Company), and other provisions of
the Rights Agreement may be amended by action of the Board with the concurrence
of a majority of the Independent Directors or by special approval of the
shareholders of the Company; PROVIDED, HOWEVER, that (a) such amendment will not
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person) and (b) no amendment shall be made at such time as the
Rights are no longer redeemable (except for the possibility of the right of
redemption being reinstated as described above).
A copy of the Rights Agreement will be filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
ITEM 7. Financial Statements and Exhibits
(a) Not applicable
(b) Not applicable
(c) Exhibits
(4) Rights Agreement, dated as of October 22, 1997 between CD
Radio Inc. and Continental Stock Transfer & Trust Company.
(99) Press Release dated October 22, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CD RADIO INC.
By /s/ David Margolese
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David Margolese
Chairman and Chief
Executive Officer
Date: October 27, 1997