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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
DIGITAL RECORDERS, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1362926
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
4018 PATRIOT DRIVE, SUITE 100
DURHAM, NORTH CAROLINA 27703
(Address of principal executive offices) (Zip code)
If this form relates to the registration If this form relates to the registration
of a class of securities pursuant to of a class of securities pursuant to
Section 12(b) of the Exchange Act and is Section 12(g) of the Exchange Act and is
effective pursuant to General Instruction effective pursuant to General Instruction
A.(c), please check the following box. [ ] A.(d), please check the following box. [x]
Securities Act registration statement file number to which this form relates: (if applicable)
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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
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NONE NOT APPLICABLE
Securities to be registered pursuant to Section 12(g) of the Act:
PREFERRED STOCK PURCHASE RIGHTS
(Title of Each Class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On December 13, 1999, the Board of Directors of Digital Recorders, Inc.
(the "Company") approved a Rights Agreement (the "Rights Agreement") between the
Company and Continental Stock Transfer & Trust Company, as Rights Agents (the
"Rights Agent"), effective December 14, 1999, and declared a dividend of one
preferred share purchase right (a "Right") for each outstanding share of common
stock, par value $.10 per share (the "Common Shares") outstanding on December
27, 1999 (the "Record Date") to the stockholders of record on that date. Each
Right entitles the registered holder, under certain circumstances and upon the
occurrence of certain events, to purchase from the Company one one-thousandth of
a share of Series D Junior Participating Preferred Stock, par value $.10 per
share, of the Company (the "Preferred Shares"), at an exercise price of $20.00
per one one-thousandth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in the Rights
Agreement.
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 15% or more of the
outstanding Common Shares or (ii) 10 business days (or such later date as maybe
determined by action of the Board of Directors prior to such time as any person
becomes an Acquiring Person) following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 15% or more of
such outstanding Common Shares (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Shares outstanding as of the Record Date that are represented by
certificates, by such Common Share certificate with a copy attached thereto, of
the Summary of Rights (the "Summary of Rights") attached as Exhibit C to the
Rights Agreement and incorporated herein by reference. The Rights will be
evidenced, with respect to Common Shares outstanding as of the Record Date that
are uncertificated, by the registration by the Company or its agent of the
attachment of the Summary of Rights of the holders of such shares as the
registered owner of such Rights and shares together with a copy of the Summary
of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date or upon transfer or new
issuance of Common Shares will contain a legend incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the Company will send, with respect to Common Shares
that are uncertificated and issued after the Record Date or upon transfer or new
issuance of Common Shares, notice incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares or
the transfer of any uncertificated Common Shares outstanding as of the Record
Date, even without such notation or a copy of the Summary of Rights being
attached thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate or so transferred. As
soon as practicable following the distribution Date, if any, 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
Distribution Date and thereafter such separate Right Certificates alone will
evidence the Rights.
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The Rights are not exercisable until the Distribution Date. The Rights
will expire on December 13, 2009 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by the
Company, in each case, as described below.
Both the Purchase Price payable and the number of Preferred Shares or
other securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Although the Rights are redeemable as discussed below, Preferred Shares
purchasable upon exercise of the Rights will not be redeemable. Each Preferred
Share will be entitled to a quarterly dividend payment of 1000 times the
dividend declared per Common Share. In the event of liquidation, the holders of
the Preferred Shares will be entitled to an aggregate payment of 1000 times the
aggregate payment made per Common Share. Each Preferred Share will have 1000
votes, voting together with the Common Shares. In the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 1000 times the amount received per
Common Share. These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
From and after the occurrence of an event described in Section
11(a)(ii) of the Rights Agreement, if the Rights evidenced by the Right
certificate are or were at any time on or after the earlier of (x) the date of
such event and (y) the Distribution Date (as such term is defined in the Rights
Agreement) acquired or beneficially owned by an Acquiring Person or an Associate
or Affiliate of an Acquiring Person (as such terms are defined in the Rights
Agreement), such Rights shall become void, and any holder of such Rights shall
thereafter have no right to exercise such Rights.
In the event that, at any time after a Person becomes an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
of two times the exercise price of the Right. Unless the Board acts otherwise,
in
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the event that any person becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person and its Affiliates and Associates (which will thereafter be
void), will thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the exercise price of the
Right. If the Company does not have sufficient Common Shares to satisfy such
obligation to issue Common Shares, or if the Board of Directors so elects, the
Company shall deliver upon payment of the exercise price of a Right an amount of
cash or securities equivalent in value to the Common Shares issuable upon
exercise of a Right; provided that, if the Company fails to meet such obligation
within 30 days following the later of (x) the first occurrence of an event
triggering the right to purchase Common Shares and (y) the date on which the
Company's right to redeem the Rights expires, the Company must deliver, upon
exercise of a Right but without requiring payment of the exercise price then in
effect, Common Shares (to the extent available) and cash equal in value to the
difference between the value of the Common Shares otherwise issuable upon the
exercise of a Right and the exercise price then in effect. The Board of
Directors may extend the 30-day period described above for up to an additional
60 days to permit the taking of action that may be necessary to authorize
sufficient additional Common Shares to permit the issuance of Common Shares upon
the exercise in full of the Rights.
At any time after any Person becomes an Acquiring Person and prior to
the acquisition by any person or group of a majority of the outstanding Common
Shares, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by such person or group which have become void), in whole or
in part, at an exchange ratio of one Common Share per Right (subject to
adjustment).
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 Preferred Shares will be issued (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the time any Person becomes an Acquiring Person,
the Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $0.001 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from and
after such time as any person becomes an Acquiring Person no such amendment may
adversely affect the interests of the holders of the Rights (other than the
Acquiring Person and its Affiliates and Associates).
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.
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The Rights Agreement is attached hereto as an exhibit and is
incorporated herein by reference. The foregoing description of the Rights does
not purport to be complete and is qualified in its entirety by reference to such
exhibit.
ITEM 2. EXHIBITS.
The following is a complete list of Exhibits filed as part of the
Registration Statement and incorporated herein by reference:
Reg. S-B
Exhibit No. Description Item No.
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3.1.12 Amendment to Articles of Incorporation together with Exhibit A - Certificate of 3
Designation of Series D Junior Participating Preferred Stock.
4.5 Rights Agreement, dated as of December 14, 1999, between Digital Recorders, 4
Inc. and Continental Stock Transfer & Trust Company, as Rights Agent, together
with the following exhibits thereto: Exhibit A - Form of Certificate of Designation
of Series D Junior Participating Preferred Stock of Digital Recorders, Inc.; Form
B - Form of Right Certificate; and Exhibit C - Summary of Rights to Purchase
Shares.
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, thereto duly authorized.
DIGITAL RECORDERS, INC.
Date: December 15, 1999 By: /s/ Lawrence Taylor
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Lawrence Taylor, Chief Financial
Officer and Vice President
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EXHIBIT INDEX
Exhibit No. Description
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3.1.12 Amendment to Articles of Incorporation together with Exhibit A -
Certificate of Designation of Series D Junior Participating
Preferred Stock.
4.5 Rights Agreement, dated as of December 14, 1999, between Digital
Recorders, Inc. and Continental Stock Transfer & Trust Company,
as Rights Agent, together with the following exhibits thereto:
Exhibit A - Form of Certificate of Designation of Series D Junior
Participating Preferred Stock of Digital Recorders, Inc.; Form B
- Form of Right Certificate; and Exhibit C - Summary of Rights to
Purchase Shares.