1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 02549
--------------------
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
TELCO SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-2178777
- ----------------------------------------- -------------------
(State of incorporation or organization) (IRS Employer
Identification No.)
63 Nahatan Street, Norwood, Massachusetts 02062
- ----------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
None.
Securities to be registered pursuant to Section 12(g) of the Act:
Rights to Purchase Series A
Participating Cumulative Preferred Stock
----------------------------------------
(Title of Class)
2
Item 1. Description of Securities to be Registered.
On February 19, 1997, the Board of Directors of Telco Systems,
Inc. (the "Company") distributed one Right for each outstanding share of the
Company's Common Stock, par value $.01 per share (the "Common Stock"). The
Rights will be issued to the holders of record of Common Stock outstanding on
February 19, 1997, and with respect to Common Stock issued thereafter until the
Distribution Date (as defined below) and, in certain circumstances, with respect
to Common Stock issued after the Distribution Date. Each Right, when it becomes
exercisable as described below, will entitle the registered holder to purchase
from the Company one one-hundredth (1/100th) of a share of Series A
Participating Cumulative Preferred Stock, par value $.01 per share, of the
Company (the "Preferred Shares") at a price of $50.00 (the "Purchase Price").
The description and terms of the Rights are set forth in a Rights Agreement
dated as of February 19, 1997 (the "Rights Agreement"), between the Company and
Bank of Boston, as Rights Agent (the "Rights Agent").
Until the earlier of (i) such time as the Company learns that
a person or group (including any affiliate or associate of such person or group)
has acquired, or has obtained the right to acquire, beneficial ownership of an
amount equal to or greater than such person's or group's Ownership Threshold (as
defined below) of the outstanding Capital Shares (as defined below) (such person
or group being an "Acquiring Person"), and (ii) such date, if any, as may be
designated by the Board of Directors of the Company following the commencement
of, or first public disclosure of an intent to commence, a tender or exchange
offer for outstanding Capital Shares which could result in such person or group
becoming the beneficial owner of an amount equal to or greater than such
person's or group's Ownership Threshold (as defined below) of the outstanding
Capital Shares (the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced by the certificates for Capital Shares registered
in the names of the holders thereof (which certificates shall also be deemed to
be Right Certificates, as defined below) and not by separate Right Certificates.
Therefore, until the Distribution Date, the Rights will be transferred with and
only with the Capital Shares.
The definition of "Acquiring Person" under the Rights Agreement does
not include (i) Kopp Investment Advisors, Inc. ("KIA") for so long as KIA
qualifies to report its beneficial ownership of Capital Shares on Schedule 13G
under the Securities and Exchange Act of 1934 or (ii) affiliates or associates
of KIA that have acquired Capital Shares in the ordinary course of business and
not with the purpose or effect of changing or influencing the control of the
Company. According to a Schedule 13G dated as of January 30, 1997 filed by KIA
and its affiliates, KIA and such affiliates owned approximately 43.5% of the
Capital
-2-
3
Shares as of such date.
"Capital Shares", when used with reference to the Company
prior to a business combination, shall mean the shares of Common Stock or any
other shares of capital stock of the Company into which the Common Stock shall
be reclassified or changed.
"Ownership Threshold" means, with respect to any person, the
beneficial ownership of the greater of (i) 15% of the Capital Shares at any time
outstanding or (ii) the percentage of the aggregate of the outstanding Capital
Shares beneficially owned by such person on the date the Rights Plan is
implemented, plus in the case of this clause (ii) 1% of the Capital Shares
outstanding on such date. A person will not be deemed to beneficially own any
Capital Shares solely by virtue of the receipt by such person of a revocable
proxy or consent given to such person pursuant to a definitive proxy statement
filed with the Securities and Exchange Commission and otherwise in accordance
with the rules and regulations under the Securities Exchange Act of 1934.
As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Capital Shares as of the close of business on
the Distribution Date (and to each initial record holder of certain Common Stock
originally issued after the Distribution Date), and such separate Right
Certificates alone will thereafter evidence the Rights.
The Rights are not exercisable until the Distribution Date and
will expire on February 19, 2007 (the "Expiration Date") unless earlier redeemed
by the Company as described below.
The number of Preferred Shares or other securities issuable
upon exercise of a Right, the Purchase Price, the Redemption Price (as defined
below) and the number of Rights associated with each outstanding Capital Share
are all subject to adjustment by the Board of Directors of the Company in the
event of any change in the Capital Shares or the Preferred Shares, whether by
reason of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations or exchanges of securities, split-ups, split-offs,
spin-offs, liquidations, other similar changes in capitalization, any
distribution or issuance of cash, assets, evidences of indebtedness or
subscription rights, options or warrants to holders of Capital Shares or
Preferred Shares, as the case may be (other than distribution of the Rights or
regular quarterly cash dividends) or otherwise.
The Preferred Shares are authorized to be issued in fractions
which are an integral multiple of one one-hundredth
-3-
4
(1/100th) of a Preferred Share. The Company may, but is not required to, issue
fractions of shares upon the exercise of Rights, and, in lieu of fractional
shares, the Company may issue certificates or utilize a depository arrangement
as provided by the terms of the Preferred Shares and, in the case of fractions
other than one one-hundredth (1/100th) of a Preferred Share or integral
multiples thereof, may make a cash payment based on the market price of such
shares.
At such time as there is an Acquiring Person, the Rights will
entitle each holder (other than such Acquiring Person (or any affiliate or
associate of such Acquiring Person)) of a Right to purchase, for the Purchase
Price, that number of one one-hundredths (1/100ths) of a Preferred Share
equivalent to the number of Capital Shares which at the time of such event would
have a market value of twice the Purchase Price.
In the event the Company is acquired in a merger or other
business combination by an Acquiring Person or an associate or affiliate of an
Acquiring Person that is a publicly traded corporation or 50% or more of the
Company's assets or assets representing 50% or more of the Company's revenues or
cash flow are sold, leased, exchanged or otherwise transferred (in one or more
transactions) to an Acquiring Person or an associate or affiliate of an
Acquiring Person that is a publicly traded corporation, each Right will entitle
its holder (subject to the next paragraph) to purchase, for the Purchase Price,
that number of common shares of such corporation which at the time of the
transaction would have a market value of twice the Purchase Price. In the event
the Company is acquired in a merger or other business combination by an
Acquiring Person or an associate or affiliate of an Acquiring Person that is not
a publicly traded entity or 50% or more of the Company's assets or assets
representing 50% or more of the Company's revenues or cash flow are sold,
leased, exchanged or otherwise transferred (in one or more transactions) to an
Acquiring Person or an associate or affiliate of an Acquiring Person that is not
a publicly traded entity, each Right will entitle its holder (subject to the
next paragraph) to purchase, for the Purchase Price, at such holder's option,
(i) that number of shares of the surviving corporation in the transaction with
such entity (which surviving corporation could be the Company) which at the time
of the transaction would have a book value of twice the Purchase Price, (ii)
that number of shares of such entity which at the time of the transaction would
have a book value of twice the Purchase Price or (iii) if such entity has an
affiliate which has publicly traded common shares, that number of common shares
of such affiliate which at the time of the transaction would have a market value
of twice the Purchase Price.
Any Rights that are at any time beneficially owned by an
Acquiring Person (or any affiliate or associate of an
-4-
5
Acquiring Person) will be null and void and nontransferable and any holder of
any such Right (including any purported transferee or subsequent holder) will be
unable to exercise or transfer any such Right.
At any time after a person or a group becomes an Acquiring
Person, the Board of Directors of the Company may exchange all or part of the
then outstanding Rights (other than Rights that have become null and void and
nontransferable as described above) for consideration per Right consisting of
one-half of the securities that otherwise would have been issuable to the holder
of each Right upon exercise thereof. The Board of Directors of the Company may
also issue, in substitution for Preferred Shares, Common Stock having an
equivalent market value to the Preferred Shares if, at such time, the Company
has a sufficient number of Common Stock issued but not outstanding or authorized
but unissued.
At any time prior to the earlier of (i) such time as a person
becomes an Acquiring Person and (ii) the Expiration Date, the Board of Directors
of the Company may redeem the Rights in whole, but not in part, at a price (in
cash or Common Stock or other securities of the Company deemed by the Board of
Directors to be at least equivalent in value) of $.01 per Right, subject to
adjustment as provided in the Rights Agreement (the "Redemption Price").
Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
After there is an Acquiring Person, the Board of Directors may
elect to exchange each Right (other than Rights that shall have become null and
void and nontransferable as described above) for consideration per Right
consisting of one-half of the securities that would be issuable at such time
upon the exercise of one Right pursuant to the terms of the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
At any time prior to the Distribution Date, the Company may,
without the approval of any holder of the Rights, supplement or amend any
provision of the Rights Agreement (including the date on which the Distribution
Date shall occur, the time during which the Rights may be redeemed or the terms
of the Preferred Shares), except that no supplement or amendment shall be made
-5-
6
which reduces the Redemption Price (other than pursuant to certain adjustments
therein) or provides for an earlier Expiration Date.
The Rights have certain antitakeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company without conditioning the offer on substantially all the Rights being
acquired. The Rights will not interfere with any merger or other business
combination pursuant to certain all-cash tender offers for all outstanding
Capital Shares or with a third party approved by the Board of Directors of the
Company since the Board of Directors of the Company may, at its option, at any
time prior to any person becoming an Acquiring Person, redeem all but not less
than all of the then outstanding Rights at the Redemption Price.
The Rights Agreement specifying the terms of the Rights, the
Certificate of Designation of the Preferred Shares specifying the terms of the
Preferred Shares (Exhibit A to the Rights Agreement) and the form of Right
Certificate (Exhibit B to the Rights Agreement) are filed herewith as exhibits.
The foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to such exhibits, which are incorporated
herein by reference.
-6-
7
Item 2. Exhibits.
1. Rights Agreement dated as of February 19, 1997, between
Telco Systems, Inc. and Bank of Boston, as Rights
Agent.
2. Form of Certificate of the Voting Powers, Preferences and
Relative, Participating, Optional and other Special Rights,
Qualifications, Limitations or Restrictions of Series A
Participating Cumulative Preferred Stock of Telco Systems,
Inc. (which is attached as Exhibit A to the Rights Agreement
filed as Exhibit 1 hereto).
3. Form of Right Certificate (which is attached as Exhibit
B to the Rights Agreement filed as Exhibit 1 hereto).
-7-
8
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
TELCO SYSTEMS, INC.
Dated: February 19, 1997 By: /s/ William B. Smith
---------------------------
Dr. William B. Smith
President and
Chief Executive Officer
-8-