Item 1. |
Description of the Registrants Securities to Be Registered. |
The Board of Directors (the Board) of Edgio, Inc., a Delaware corporation (the Company), has declared a
dividend of one preferred share purchase right (a Right) for each of the Companys issued and outstanding shares of common stock, par value $0.001 per share (Common Stock). The dividend will
be paid to the Common Stock shareholders of record at the close of business on June 17, 2024 (the Record Date). Each Right entitles the registered holder, subject to the terms of the Rights Agreement (as defined
below), to purchase from the Company one one-thousandth of a share of the Companys Series A Junior Participating Preferred Stock, par value $0.001 per share (the Series A Preferred
Stock), at a price of $50.00 (the Exercise Price), subject to certain adjustments. The description and terms of the Rights are set forth in the Tax Benefits Preservation Plan, dated as of June 7, 2024
(the Rights Agreement), by and between the Company and Equiniti Trust Company, LLC, a New York limited liability company, as rights agent (the Rights Agent).
The Company has significant cumulative U.S. net operating loss carryforwards (NOLs). The purpose of the Rights Agreement is to reduce
the risk that the Companys ability to use its NOLs and certain other tax attributes (collectively, the Tax Benefits) to reduce potential future income tax obligations would become subject to limitations by reason of
the Company experiencing an ownership change, as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the Tax Code). As of December 31, 2023, the Company had U.S. federal NOLs of
approximately $300 million that can be used to offset taxable income.
The Company generally will experience an ownership change if the percentage of
the Companys stock owned by its 5-percent shareholders, as defined in Section 382 of the Tax Code, increases by more than 50 percentage points over their lowest ownership percentage over
a three-year period (or, if a shorter period, since the Companys last ownership change).
The Rights Agreement is designed to reduce the likelihood
that the Company will experience an ownership change under Section 382 of the Tax Code by (i) discouraging any person or group of persons from acquiring beneficial ownership of (A) 4.95% or more of the shares of Common Stock
then-outstanding or (B) in the Boards determination, 4.95% or more (by value) of the shares of Company Stock, which is defined in the Rights Agreement and includes the Common Stock, par value $0.001 per share (the Company
Stock) and (ii) discouraging any existing shareholder currently beneficially holding 4.95% or more of the shares of Common Stock or 4.95% or more (by value) of the shares of Company Stock from acquiring one or more additional
shares of Company Stock.
The Rights will not be exercisable until the earlier to occur of (i) the close of business on the tenth business day after a
public announcement or filing that a person or group of affiliated or associated persons has become an Acquiring Person, which is defined as a person or group of affiliated or associated persons (other than a Grandfathered
Person or Exempt Person (each as described below) that, at any time after the date of the Rights Agreement, has acquired, or obtained the right to acquire, beneficial ownership of (x) 4.95% or more of the shares of the then-outstanding Common Stock
or (y) in the Boards determination, 4.95% or more (by value) of the shares of the then-outstanding Company Stock, in either case subject to certain exceptions (or, if such tenth business day occurs before the Record Date, the close of
business on the Record Date), or (ii) the close of business on the tenth business day (or, if such tenth business day occurs before the Record Date, the close of business on the Record Date) after the commencement of, or announcement of an
intention to commence, a tender offer or exchange offer the consummation of which would result in any person becoming an Acquiring Person (the earlier of such dates being called the Distribution Date). A
Grandfathered Person is person or group of related persons that, as of the date of the Rights Agreement or, if later, immediately prior to the public announcement of the Rights Agreement, beneficially owns (x) 4.95% or more
of the shares of the then-outstanding Common Stock or (y) in the Boards determination, 4.95% or more (by value) of the shares of the then-outstanding Company Stock, in either case subject to certain exceptions (or, if such tenth business
day occurs before the Record Date, the close of business on the Record Date). However, a person or group of related persons will cease to be a Grandfathered Person if they acquire beneficial ownership of one or more additional shares of Common
Stock, subject to certain exceptions for acquisitions pursuant to certain existing securities of the Company described in the Rights Agreement. In addition, the Board may exempt a person from becoming an Acquiring Person (an Exempt
Person) if the Board determines, in it sole discretion, that such persons ownership of Common Stock will not jeopardize or endanger the value or availability of the Tax Benefits.
With respect to certificates representing shares of Common Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates for shares of Common Stock registered in the names of the holders thereof together with the Summary of Rights to Purchase Preferred Stock, as appended to such certificates and substantially in the form attached as Exhibit B to the
Rights Agreement (the Summary of Rights, and not by separate Rights Certificates (as defined below). With respect to book entry shares of Common Stock outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by the balances indicated in the book entry account system of the transfer agent for the Common Stock together with the Summary of Rights. Until the earlier of the Distribution Date and the Expiration Date (as defined
below), the transfer of any shares of Common Stock outstanding on the Record Date will also constitute the transfer of the Rights associated with such shares of Common Stock. As soon as practicable after the Distribution Date, separate certificates,
substantially in the form of Exhibit C to the Rights Agreement, evidencing the Rights (Rights Certificates) will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date, and
such Rights Certificates alone will evidence the Rights.
The Rights, which are not exercisable until the Distribution Date, will expire at or prior to the
earliest of (i) the close of business on June 30, 2025, or such later date as may be established by the Board prior to the expiration of the Rights; (ii) the close of business on the first day after the final adjournment of the 2024
annual meeting of the stockholders of the Company if approval or ratification by the stockholders of the Company of Rights Agreement is not received prior to such time; (iii) the time at which the Rights are redeemed pursuant to the Rights
Agreement; (iv) the time at which the Rights are exchanged pursuant to the Rights Agreement; (v) the time at which the Rights are terminated upon the occurrence of certain mergers or other transactions approved in advance by the Board; and
(vi) the close of business on the date set by the Board following a determination by the Board that (x) the Rights Agreement is no longer necessary or desirable for the preservation of the Tax Benefits or (y) no Tax Benefits are
available to be carried forward or are otherwise available (the earliest of (i), (ii), (iii), (iv), (v) and (vi) is referred to as the Expiration Date). The Board will regularly request an officer of the Company to
review information that becomes publicly available that may result in the circumstances described in subclauses (x) or (y) of clause (vi) of the immediately preceding sentence and shall promptly set an Expiration Date if the Board
determines that such circumstances have been met, which Expiration Date shall be (A) announced reasonably promptly following the date that the Board has made such determination and (B) shall be no later than the date of such announcement.
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