SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D/A
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13D-2(a)
(AMENDMENT NO. 2)
CIRCUIT RESEARCH LABS, INC.
(Name of Issuer)
COMMON STOCK, $0.10 PAR VALUE
(Title of Class of Securities)
172743205
(CUSIP Number)
EDWIN SUMMERS
VICE PRESIDENT AND GENERAL COUNSEL
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
8500 BALBOA BLVD.
NORTHRIDGE, CALIFORNIA 91329
(218) 893-8411
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
with a copy to:
JAMES E. O'BANNON
JONES DAY
2727 NORTH HARWOOD STREET
DALLAS, TEXAS 75201
(214) 220-3939
APRIL 30, 2003
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. |_|
(continued on following pages)
Page 1 of 10 Pages
CUSIP NO. 172743205 13D/A PAGE 2 OF 10 PAGES
--------------------------------------------------------------------------------
1 Name of Reporting Person
Harman Acquisition Corp.
--------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (a) |_|
(b) |_|
--------------------------------------------------------------------------------
3 SEC Use Only
--------------------------------------------------------------------------------
4 Source of Funds
00
--------------------------------------------------------------------------------
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Item 2(d) or 2(e) |_|
--------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Delaware
--------------------------------------------------------------------------------
Number of 7 Sole Voting Power
Shares 1,395,690(1)
-------------------------------------------------
Beneficially 8 Shared Voting Power
0
-------------------------------------------------
Owned by 9 Sole Dispositive Power
Each 1,395,690(1)
-------------------------------------------------
Reporting 10 Shared Dispositive Power
Person With 0
--------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,395,690(1)
--------------------------------------------------------------------------------
12 Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares |_|
--------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)
26.8%(2)
--------------------------------------------------------------------------------
14 Type of Reporting Person
CO
--------------------------------------------------------------------------------
1 All shares of common stock, par value $.10 per share ("Common Stock") of
Circuit Research Labs, Inc., an Arizona corporation ("CRL"), covered by
this statement may be acquired by Harman Acquisition Corp. ("HAC") upon
exercise of a warrant issued to HAC as of May 31, 2000 (the "Warrant").
Prior to the exercise of the Warrant, HAC is not entitled to any rights as
a stockholder of CRL.
2 Based on 3,806,846 shares outstanding at March 31, 2003 according to the
Annual Report on Form 10-KSB filed by Circuit Research Labs, Inc. for the
fiscal year ended December 31, 2002, plus 1,395,690 shares issuable upon
exercise of the Warrant described in Item 6 below.
CUSIP NO. 172743205 13D/A PAGE 3 OF 10 PAGES
------- ------------------------------------------------------------------------
1 Name of Reporting Person
Harman International Industries, Incorporated
--------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (a) |_|
(b) |_|
--------------------------------------------------------------------------------
3 SEC Use Only
--------------------------------------------------------------------------------
4 Source of Funds
00
--------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant
to Item 2(d) or 2(e) |_|
--------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Delaware
--------------------------------------------------------------------------------
Number of 7 Sole Voting Power
Shares 0
-------------------------------------------------
Beneficially 8 Shared Voting Power
1,395,690(1)
-------------------------------------------------
Owned by 9 Sole Dispositive Power
Each 0
-------------------------------------------------
Reporting 10 Shared Dispositive Power
Person With 1,395,690(1)
--------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,395,690(1)
--------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares |_|
--------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)
26.8%(2)
--------------------------------------------------------------------------------
14 Type of Reporting Person
CO
--------------------------------------------------------------------------------
1 All shares of Common Stock covered by this statement may be acquired by
HAC upon exercise of the Warrant described in Item 6 below. HAC is a
wholly owned subsidiary of Harman International Industries, Incorporated
("Harman"). As such, Harman may be deemed to have shared voting and
dispositive power with respect to the shares covered by this Schedule 13D.
2 Based on 3,806,846 shares outstanding at March 31, 2003 according to the
Annual Report on Form 10-KSB filed by Circuit Research Labs, Inc. for the
fiscal year ended December 31, 2002, plus 1,395,690 shares issuable upon
exercise of the Warrant described in Item 6 below.
CUSIP NO. 172743205 13D/A PAGE 4 OF 10 PAGES
This Amendment No. 2 (this "Amendment No. 2") amends the joint
statement on Schedule 13D filed with the Securities and Exchange Commission (the
"SEC") on March 13, 2002 (as previously amended, the "Schedule 13D") by Harman
International Industries, Incorporated ("Harman") and its wholly owned
subsidiary, Harman Acquisition Corp. ("HAC"), relating to the common stock, par
value $0.10 per share (the "Common Stock"), of Circuit Research Labs, Inc., an
Arizona corporation ("CRL"), as amended by Amendment No. 1 to Schedule 13D filed
with the SEC on March 31, 2003 (the "Amendment No. 1"). Capitalized terms used
but not otherwise defined in this Amendment No. 2 have the meanings given to
those terms in the Schedule 13D.
Items 4, 5, 6 and 7 of the Schedule 13D are hereby amended and restated
in their entirety as follows:
ITEM 4. PURPOSE OF TRANSACTION.
In connection with the sale by HAC of substantially all of the assets
of HAC to CRL Systems, Inc. ("Systems"), CRL issued the Warrant to HAC. The
beneficial ownership of Common Stock by Harman and HAC reported in this
statement is based solely on the ownership of the Warrant (as defined below in
Item 6). The Warrant will expire on May 31, 2003.
HAC has no present intent to exercise the Warrant.
Except for the Proposed Restructuring (as defined in Item 6)
contemplated by the Amended Letter Agreement (as defined in Item 6) or as
otherwise described in the response to Item 6, neither Harman nor HAC have
formulated any plans or proposals which relate to or would result in: (i)
acquisition or disposition of securities of CRL; (ii) an extraordinary corporate
transaction involving CRL or any of its subsidiaries; (iii) a sale or transfer
of a material amount of the assets of CRL or any of its subsidiaries; (iv) any
change in the present board of directors or management of CRL; (v) any material
change in CRL's capitalization or dividend policy; (vi) any other material
change in CRL's business or corporate structure; (vii) any change in CRL's
charter or bylaws or other instruments corresponding thereto or other action
which may impede the acquisition of control of CRL by any person; (viii) causing
a class of CRL's securities becoming deregistered or delisted; (ix) causing a
class of CRL's equity securities to become eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934, as amended; or (x) an action similar to any of those enumerated above.
The response to Item 6 is incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As a result of HAC's ownership of the Warrant, HAC is deemed to
beneficially own 1,395,690 shares of Common Stock or approximately 26.8% of the
Common Stock that would be outstanding after giving effect to the exercise in
full of the Warrant. Harman owns all of the outstanding capital stock of HAC,
and as a result, Harman is deemed to also beneficially own these 1,395,690
shares of Common Stock or approximately 26.8% of the Common Stock that would be
outstanding after giving effect to the exercise in full of the Warrant.
CUSIP NO. 172743205 13D/A PAGE 5 OF 10 PAGES
(b) Under SEC regulations, HAC is deemed to have sole voting and
dispositive power with respect to 1,395,690 shares of Common Stock as a result
of its ownership of the Warrant. HAC is a wholly owned subsidiary of Harman. As
such, under SEC regulations Harman may be deemed to also have shared voting and
dispositive power with respect to 1,395,690 shares of Common Stock as a result
of HAC's ownership of the Warrant.
(c) None.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
On May 31, 2000, Systems and HAC entered into an Asset Sale Agreement
(the "Asset Sale Agreement") pursuant to which Systems acquired substantially
all of the assets of HAC (the "Transaction"). As consideration for the assets of
HAC, HAC received $1,500,000 in cash, a $3.5 million short-term note (the
"Tranche B Note"), a $5 million long-term note (the "Tranche A Note" and,
together with the Tranche B Note, the "Notes") and warrant to purchase 1,000,000
shares of Common Stock, exercisable for $2.25 per share (the "Warrant").
The Warrant expires on May 31, 2003 and can be exercised either (i) by
payment in cash, (ii) by reducing the amount of the unpaid principal on the
Tranche A Note or the Tranche B Note or (iii) by any combination of (i) and
(ii). The provisions of the Warrant also provide HAC with anti-dilution
protection under certain circumstances, including for stock splits, stock
dividends, combinations, reclassifications and issuances of Common Stock at
prices below the current trading price or the exercise price of the Warrant. As
a result of certain transactions effected by CRL subsequent to the issuance of
the Warrant, the aggregate number of shares of Common Stock issuable upon
exercise of the Warrant increased to 1,395,690 shares, and the exercise price
per share decreased to $1.6121 per share.
The provisions of the Warrant further provide HAC with certain rights
to cause CRL to register the shares of Common Stock issuable to HAC upon
exercise of the Warrant.
Under the terms of the Asset Purchase Agreement, Systems and HAC
entered into an $8,500,000 Credit Agreement (the "Credit Agreement") that
governs the repayment of the Notes. In addition, CRL, Systems and HAC entered
into a Guarantee and Collateral Agreement (the "Guarantee") whereby each of CRL
and Systems pledged all of their respective assets, including the stock of
Systems, as collateral for the repayment of the Notes. Among other things, the
Guarantee provides that the cash proceeds received by CRL from any sale of debt
or equity securities or sales of assets by CRL will be applied to pay amounts
owed under the Notes.
Between May 31, 2000 and May 2, 2002, HAC and Systems agreed to several
payment extensions on the Notes. On October 1, 2001, Systems and HAC entered
into an amendment to the Credit Agreement under which both Notes were amended
and restated (the "Amended Credit Agreement"). Under the Amended Credit
Agreement, the Notes were converted to demand notes payable on the demand of HAC
or if no demand is sooner made, on the dates and in the
CUSIP NO. 172743205 13D/A PAGE 6 OF 10 PAGES
amounts specified in the Amended Credit Agreement. Interest only payments
remain payable from time to time for both Notes and are also due on demand.
On May 1, 2002, Systems and HAC entered into a second amendment to the Credit
Agreement under which both Notes were again amended and restated (the "Second
Amendment to Credit Agreement"). Under the Second Amendment to Credit
Agreement, the requirement for quarterly principal payments was removed and
the maturity date of the Notes was extended to December 31, 2003.
On April 30, 2003, HAC, CRL and Systems, entered into a non-binding
letter agreement (the "Amended Letter Agreement"), which amended and restated
their non-binding letter agreement dated as of March 27, 2003. The Amended
Letter Agreement sets forth the terms of a proposed restructuring (the "Proposed
Restructuring") of the Notes and HAC's investment in CRL. The Amended Letter
Agreement contemplates, among other things, that:
(a) CRL will make a cash principal payment on the Notes in an amount
not less than $1,000,000;
(b) HAC will exchange $3.5 million in debt payable under the Notes
plus the Warrant, for a number of shares of Common Stock such
that HAC will own 19% of the then-outstanding shares of Common
Stock of CRL at the time of issuance, determined on a fully
diluted basis; and
(c) CRL and HAC will consolidate amounts owed under the Notes into a
single senior secured note (the "Amended Note") and amend the
Credit Agreement to, among other things, (i) provide that accrued
but unpaid interest on the Notes will be added to the principal
amount due under the Amended Note, (ii) reduce the interest rate
and (ii) amend the timing and amount of principal payments.
The Proposed Restructuring is subject to a number of conditions, including (a)
CRL receiving $1.5 million in new common equity investments prior to May 16,
2003, (b) the negotiation and execution of definitive agreements setting forth
the terms of the Proposed Restructuring, and (c) the approval of the Boards of
Directors of each of CRL and HAC.
HAC acquired the Warrant (and as a result, beneficial ownership of the
Common Stock issuable upon exercise of the Warrant) as consideration received in
the Transaction. HAC from time to time intends to review its investment in CRL,
including in connection with the Proposed Restructuring contemplated by the
Amended Letter Agreement, on the basis of various factors, including CRL's
business, financial condition, results of operations and prospects, general
economic and industry conditions, the securities markets in general and for
CRL's securities in particular, as well as other developments and other
investment opportunities. Based upon such review, it will take such actions in
the future as it may deem appropriate in light of the circumstances existing
from time to time, including but not limited to demanding payment of all or a
portion of the principal and interest due under the Notes and/or exercising its
rights under the Credit Agreement, as amended, the Guarantee or the Asset Sale
Agreement. Depending on market and other factors, HAC may determine to dispose
of some or all of the Notes and/or the Warrant pursuant to the Proposed
Restructuring or otherwise.
CUSIP NO. 172743205 13D/A PAGE 7 OF 10 PAGES
The foregoing descriptions of the Asset Sale Agreement, the Warrant,
the Guarantee and the Amended Letter Agreement are qualified in their entirety
by reference to the copies of such agreements which have been filed as exhibits
to this statement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following are filed herewith as Exhibits to the statement:
EXHIBIT NO. DESCRIPTION
1 Asset Sale Agreement, dated as of May 31, 2000, between Harman
Acquisition Corp. (F/K/A Orban, Inc.) and CRL Systems, Inc.(1)
2 Warrant, dated May 31, 2000, issued by Circuit Research Labs, Inc. to
Harman Acquisition Corp.(1)
3 Guarantee and Collateral Agreement, dated as of May 31, 2000, made by
Circuit Research Labs, Inc., as Parent, CRL Systems, Inc., as
Borrower, in favor of Harman Acquisition Corp., as Lender.(1)
4 Joint Filing Agreement(1)
5 Letter Agreement, dated as of March 27, 2003, among Circuit Research
Labs, Inc., CRL Systems, Inc. and Harman Acquisition Corp.(2)
6 Letter Agreement dated as of April 30, 2003, among Circuit Research
Labs, Inc., CRL Systems, Inc. and Harman Acquisition Corp.
---------------------
(1) Filed previously as an exhibit to the Schedule 13D
(2) Filed previously as an exhibit to Amendment No. 1
CUSIP NO. 172743205 13D/A PAGE 8 OF 10 PAGES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: May 2, 2003 HARMAN ACQUISITION CORP.
By: /s/ FRANK MEREDITH
-------------------------------
Frank Meredith, Secretary
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
By: /s/ FRANK MEREDITH
---------------------------------
Frank Meredith, Executive Vice President
and Chief Financial Officer