SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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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): February 24, 1998
DATATEC SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-20688 94-2914253
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
20C Commerce Way, Totowa, New Jersey 07512
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Address of principal executive offices
Registrant's telephone number, including area code: (973) 890-4800
N/A
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(Former name or former address, if changed since last report.)
Exhibit Index on Page 8.
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Item 5. OTHER EVENTS.
Datatec Systems, Inc. (the "Company") has announced that its
Board of Directors has declared a dividend of one preference share purchase
right (a "Right") for each outstanding share of common stock, par value $.001
per share (the "Common Shares"), of the Company. The dividend is payable on
March 9, 1998 (the "Record Date") to the stockholders of record on that date.
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series D Preference stock, par value $.001 per share
(the "Preference Shares"), of the Company at a price of $40 per one
one-hundredth of a Preference Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement"), dated as of February 24, 1998, between the
Company and Continental Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agent").
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 may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons 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 the 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 Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of the Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), 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 upon transfer or new issuance of
Common Shares will contain a notation 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
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. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights (the "Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution Date
and 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 February 24, 2008 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preference
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
Preference Shares, (ii) upon the grant to holders of the Preference Shares of
certain rights or warrants to subscribe for or purchase Preference Shares at a
price, or securities convertible into Preference Shares with a conversion price,
less than the then-current market price of the Preference Shares or (iii) upon
the distribution to holders of the Preference Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preference Shares) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preference 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.
Preference Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preference Share will be entitled to a minimum
preferential quarterly dividend payment of $1 per share but will be entitled to
an aggregate dividend of 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preference Shares will be entitled
to a minimum preferential liquidation payment of $100 per share but will be
entitled to an aggregate payment of 100 times the payment made per Common Share.
Each Preference Share will have 100 votes, voting together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preference Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
Because of the nature of the Preference Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
Preference Share purchasable upon exercise of each Right should approximate the
value of one Common Share.
In the event that 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 after a person or group has become an Acquiring Person,
proper provisions will be made so that each holder of a Right will thereafter
have the right
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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. In the event that any person or group of affiliated or
associated persons 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 (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.
At any time after any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of 50% or more 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 will
have become void), in whole or in part, at an exchange ratio of one Common
Share, or one one-hundredth of a Preference Share (or of a share of a class or
series of the Company's preference stock having equivalent rights, preferences
and privileges), 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 Preference Shares will be issued (other
than fractions which are integral multiples of one one-hundredth of a Preference
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 Preference Shares on the last trading day prior to the date
of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of the
outstanding Common Shares, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"). The redemption of the Rights may be made effective at such time on such
basis 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,
including an amendment to lower certain thresholds described above to not less
than the greater of (i) the sum of .001% and the largest percentage of the
outstanding Common Shares then known to the Company to be beneficially owned by
any person or group of affiliated or associated persons and (ii) 10%, except
that from and after such time as any person or group of affiliated or associated
persons becomes an Acquiring Person no such amendment may adversely affect the
interests of the holders of the Rights.
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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.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Company's Board of Directors, except
pursuant to an offer conditioned on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors since the Rights may be redeemed
by the Company at the Redemption Price prior to the time that a person or group
has acquired beneficial ownership of 15% or more of the Common Shares.
For additional information regarding the Stockholders' Rights
Plan, reference is made to the news release attached hereto as Exhibit 99.1 and
the Rights Agreement, dated as of February 24, 1998, between the Company and
Continental Stock Transfer & Trust Company, as Rights Agent, specifying the
terms of the Rights and including the form of the Certificate of Designations
setting forth the terms of the Preference Shares as an exhibit thereto that is
attached to the Company's Form 8-A as an exhibit, each of which are incorporated
herein by reference. The foregoing description of the Rights is qualified in its
entirety by reference to the Rights Agreement.
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<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(c) EXHIBITS.
99.1 News Release of Datatec Systems, Inc. dated February
25, 1998.
99.2 Form of Rights Agreement, dated as of February 24,
1998, between Datatec Systems, Inc. and Continental
Stock Transfer & Trust Company (Incorporated by
reference to the Company's Registration Statement of
Form 8-A filed with the Commission on February 24,
1998).
99.3 Form of Letter to Stockholders to be mailed with
copies of Summary of Rights to Purchase Preference
Shares (Incorporated by reference to the Company's
Registration Statement of Form 8-A filed with the
Commission on February, 24, 1998).
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<PAGE>
SIGNATURE
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 hereunto duly authorized.
Dated: February 25, 1998 DATATEC SYSTEMS, INC.
By: /S/ JAMES M. CACI
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Name: James M. Caci
Title: Vice President, Chief
Financial Officer,
Secretary and
Treasurer
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EXHIBIT LIST
99.1 News Release of Datatec Systems, Inc. dated February
25, 1998.
99.2 Form of Rights Agreement, dated as of February 24,
1998, between Datatec Systems, Inc. and Continental
Stock Transfer & Trust Company (Incorporated by
reference to the Company's Registration Statement of
Form 8-A filed with the Commission on February 24,
1998).
99.3 Form of Letter to Stockholders to be mailed with
copies of Summary of Rights to Purchase Preference
Shares (Incorporated by reference to the Company's
Registration Statement of Form 8-A filed with the
Commission on February, 24, 1998).
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DATATEC SYSTEMS, INC.
Contacts: DATATEC SYSTEMS, INC. - (973) 890-4800
Issac Gaon - Chief Executive Officer
THE MWW GROUP
Investor Relations - (201) 507-9500
Robert C. Ferris ([email protected])
FOR IMMEDIATE RELEASE
DATATEC SYSTEMS, INC. ADOPTS STOCKHOLDER RIGHTS PLAN
TOTOWA, N.J. -- February 25, 1998 -- Datatec Systems, Inc. (Nasdaq:
DATC; BSE: DAT) announced today that its Board of Directors has unanimously
adopted a Stockholder Rights Plan and has declared a dividend granting to its
stockholders the right to purchase for each Common Share one one-hundredth of a
share of a series of preferred stock that will be established by the Company, at
a price of $40 for each one one-hundredth of a Preference Share. The Rights will
be issued on March 9, 1998 or shortly thereafter, to stockholders on that date.
The Company stated that the Plan is designed to protect stockholders
from various abusive takeover tactics, including attempts to acquire control of
the Company at an inadequate price which would deny stockholders the full value
of their investments. The Plan is designed to assure that any acquisition of the
Company and/or any acquisition of control of the Company would take place under
circumstances in which the Board of Directors can secure the best available
transaction for all of the Company's stockholders. The Plan will encourage a
potential buyer to negotiate appropriately with the Board prior to attempting a
takeover and will have no effect on lawful proxy solicitation activity.
Initially, the Rights are attached to the Company's common stock and
are not exercisable. They become detached from the common stock and became
immediately exercisable after any person or group becomes the beneficial owner
of 15% or more of the Company's common stock
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or 10 days after any person or group of persons publicly announces a tender or
exchange offer that would result in that same beneficial ownership level. If a
buyer becomes a 15% owner in the Company, all Rights holders except such
"Acquiring Person" (as defined in the "Plan") will be entitled to purchase the
Company's stock at a price discounted from the then market price. If the Company
is acquired in a merger after such acquisition, all Rights holders except the
Acquiring Person will also be entitled to purchase stock in the acquiring
company at a discount in accordance with the Plan.
The distribution of Rights will be made to common stockholders of
record on March 9, 1998 and shares of common stock that are newly-issued after
that date will also carry Rights until the Rights become detached from the
common stock. The Rights will expire on February 24, 2008. The Company may
redeem the Rights for $.01 each at any time before a buyer acquires a 15%
position in the Company, and under certain other circumstances. The Rights
distribution is not taxable to stockholders. Details of the Plan are included
with a letter which will be mailed to all of the Company's stockholders of
record as of March 9, 1998.
Datatec Systems, Inc. specializes in the rapid deployment of network
and computing technologies for Fortune 1000 companies, systems manufacturers,
system integrators and independent software vendors. The Company utilizes
proprietary software tools, a team of professionals in 19 offices and five
staging and configuration centers across North America, and proven methodologies
to drastically reduce configuration and deployment time. Through accelerated IT
implementation, Datatec helps its customers improve business performance and
ROI.
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