SECURITIES EXCHANGE AND COMMISSION
Washington, D. C. 20549
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 6, 2001
Terayon Communication Systems, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
000-24647 77-0328533
(Commission File No.) (I.R.S. Employer Identification No.)
2952 Bunker Hill Lane
Santa Clara, CA 95054
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (408) 727-4400
Item 5. Other Events.
On February 6, 2001 the Board of Directors of Terayon Communication
Systems, Inc. (the "Company") approved the adoption of a Share Purchase Rights
Plan (the "Plan"). Terms of the Plan provide for a dividend distribution of one
preferred 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 February 20, 2001 (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 A Junior Participating
Preferred Stock, par value $.001 per share (the "Preferred Shares"), at a price
of $50.00 per one one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustment. Each one one-hundredth of a share of Preferred Shares
has designations and powers, preferences and rights, and the qualifications,
limitations and restrictions which make its value approximately equal to the
value of a Common Share. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement"), dated as of February 6, 2001
entered into between the Company and Fleet National Bank (f/k/a Bank Boston, N.
A., f/k/a The First National Bank of Boston) as rights agent (the "Rights
Agent").
Initially, the Rights will be evidenced by the stock certificates
representing the Common Shares then outstanding, and no separate Right
Certificates, as defined, will be distributed. Until the earlier to occur of
(i) the date of a public announcement that a person, entity or group of
affiliated or associated persons have acquired beneficial ownership of 15% or
more of the outstanding Common Shares (an "Acquiring Person") 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 entity becomes an Acquiring
Person) following 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 or entity becoming an Acquiring Person (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 or without a copy of the Summary of
Rights, which is included in the Rights Agreement as Exhibit C thereof (the
"Summary of Rights").
Until the Distribution Date, the Rights will be transferable 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 or 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 ("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.
1.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on February 6, 2011 (the "Final Expiration Date"), 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 Preferred Shares or other
securities or other property, 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 exercise of Rights
for Preferred Shares is at all times subject to the availability of a sufficient
number of authorized but unissued Preferred Shares.
The number of outstanding Rights and the number of one one-hundredths 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,
consolidation or combinations of the Common Shares occurring, in any case, prior
to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 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 Preferred Shares would be entitled to a minimum
preferential liquidation payment of $100 per share, but would be entitled to
receive an aggregate payment equal to 100 times the payment made per Common
Share. Each Preferred 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 Preferred Share will be
entitled to receive 100 times the amount of consideration received per Common
Share. These rights are protected by customary anti-dilution provisions.
Because of the nature of the Preferred Shares' dividend and liquidation rights,
the value of one one-hundredth of a Preferred Share should approximate the value
of one Common Share. The Preferred Shares would rank junior to any other series
of the Company's preferred stock.
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 and its
associates and affiliates (which will thereafter be void), will for a 60-day
period 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 (or, if such
number of shares is not and cannot be authorized, the Company may issue
Preferred Shares, cash, debt, stock or a combination thereof in exchange for the
Rights). This right will terminate 60 days after the date on which the Rights
become nonredeemable (as described below), unless there is an injunction or
similar obstacle to exercise of the Rights, in which event this right will
terminate 60 days after the date on which the Rights again become exercisable.
2.
Generally, under the Plan, an "Acquiring Person" shall not be deemed to
include (i) the Company, (ii) a subsidiary of the Company, (iii) any employee
benefit or compensation plan of the Company or (iv) any entity holding Common
Shares for or pursuant to the terms of any such employee benefit or compensation
plan. In addition, except under limited circumstances, no person or entity
shall become an Acquiring Person as the result of the acquisition of Common
Shares by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such person
or entity to 15% or more of the Common Shares then outstanding. Further, except
under certain circumstances, no person shall become an Acquiring Person due to
the acquisition of Common Shares directly from the Company.
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 to an Acquiring Person, its associates or affiliates or certain
other persons in which such persons have an interest, 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.
At any time after an Acquiring Person becomes an Acquiring Person and prior
to the acquisition by such Acquiring Person 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 have become void), in
whole or in part, at an exchange ratio of one Common Share, or one one-hundredth
of a Preferred Share, per Right (or, at the election of the Company, the Company
may issue cash, debt, stock or a combination thereof in exchange for the
Rights), 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 the number of one one-hundredths of a
Preferred Share issuable upon the exercise of one Right, 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 earliest of (i) the day of the first public
announcement that a person has become an Acquiring Person or (ii) the Final
Expiration Date, 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").
Following the expiration of the above periods, the Rights become nonredeemable.
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 the rights are distributed no such amendment may adversely
affect the interest of the holders of the Rights excluding the interests of an
Acquiring Person.
3.
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. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors since the Rights may be amended to permit such acquisition or
redeemed by the Company at $.001 per Right prior to the earliest of (i) the time
that a person or group has acquired beneficial ownership of 15% or more of the
Common Shares or (ii) the final expiration date of the rights.
Item 7. Exhibits.
4.1 Registrant's Amended and Restated Certificate of Incorporation,
as amended (including Certificate of Designation of Series A
Junior Participating Preferred Stock.)
99.1 Press Release, dated as of February 7, 2001 entitled "Terayon
Communication Systems, Inc. Adopts Stockholder Rights Plan."
99.2 Rights Agreement dated as of February 6, 2001 among Terayon
Communication Systems, Inc. and Fleet National Bank (f/k/a Bank
Boston, N. A., f/k/a The First National Bank of Boston).
99.3 Form of Rights Certificate.
4.
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, thereunto duly authorized.
Terayon Communication Systems, Inc.
Dated: February 9, 2001 By: /s/ Zaki Rakib
-------------------------------------
Zaki Rakib
Chief Executive Officer and Secretary
5.
INDEX TO EXHIBITS
4.1 Registrant's Amended and Restated Certificate of Incorporation, as
amended (including Certificate of Designation of Series A Junior
Participating Preferred Stock.)
99.1 Press Release, dated as of February 7, 2001 entitled "Terayon
Communication Systems, Inc. Adopts Stockholder Rights Plan."
99.2 Rights Agreement dated as of February 6, 2001 among Terayon Communication
Systems, Inc. and Fleet National Bank (f/k/a Bank Boston, N. A., f/k/a
The First National Bank of Boston).
99.3 Form of Rights Certificate.