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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): July 24, 1998
COMPUTER NETWORK TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 0-139944 41-1356476
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
605 North Highway 169, Suite 800, Minneapolis, MN 55441
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 797-6000
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Former name or former address, if changed since last report
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Item 5. Other Events
Adoption of Rights Plan
On July 24, 1998, the Board of Directors of Computer Network Technology
Corporation, a Minnesota corporation (the "Company"), declared a dividend of one
preferred share purchase right (a "Right") for each outstanding share of common
stock, par value $.01 per share (the "Common Shares"), of the Company. The
dividend is payable to holders of record of Common Shares as of the close of
business on August 10, 1998 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company one one-thousandth of a share of
Series A Junior Participating Preferred Stock, par value $.01 per share (the
"Preferred Shares"), of the Company at a price of $50 per one one-thousandth of
a Preferred Share (the "Purchase Price"), subject to adjustment in certain
circumstances. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent"). A copy of
the Rights Agreement, which includes as Exhibit B thereto, the form of Right
Certificate, and as Exhibit C thereto, the Summary of Rights to Purchase
Preferred Shares (the "Summary"), is Exhibit 4.1 hereto, and is incorporated
herein by reference. Unless otherwise defined herein, all capitalized terms used
herein shall have the meaning as set forth in the Rights Agreement. The
following description of the Rights does not purport to be complete and is
qualified in its entirety by reference to said Exhibit 4.1.
Until the earlier to occur of (i) the close of business on the tenth day
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") have acquired beneficial ownership of
20% or more of the outstanding Common Shares or (ii) the close of business on
the tenth day (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 20% 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 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 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.
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The Rights are not exercisable until the Distribution Date. The Rights will
expire on July 23, 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 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
interests in 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.
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 $0.01 per share but will be entitled to an
aggregate dividend of 1,000 times the dividend declared per Common Share. In the
event of liquidation, the holders of the Preferred Shares will be entitled to a
minimum preferential liquidation payment of $1.00 per share but will be entitled
to an aggregate payment of 1,000 times the payment made per Common Share. Each
Preferred Share will have 1,000 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
1,000 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.
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 or its
affiliate, associate or transferee (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. 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 in a transaction with
such Acquiring Person or group, 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. In each
case, there are exceptions for transactions that have received the prior
approval of the Board of Directors.
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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-thousandth of a Preferred Share (or of a share of a class or series of the
Company's preferred 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 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 depository
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 acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% 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, payable in cash or Common
Shares (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.
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 may cause
substantial dilution to a person or group that attempts to acquire the Company
upon terms not approved by the Board of Directors of the Company, and under
certain circumstances the Rights beneficially owned by such a person or group
may become void. The Rights should not interfere with any merger or other
business combination which is approved by the Board of Directors of the Company,
since it may redeem the then outstanding Rights as discussed above.
Amendments to By-laws
In connection with the execution of the Rights Agreement, the Board of
Directors amended the By-laws of the Company as set forth in Exhibit 3.1 hereto.
The purpose of the amendment is to reflect that the Series A Junior Preferred
Stock has 1,000 votes per share, subject to adjustment as set forth in the
Rights Agreement and exhibits thereto.
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Exhibits.
3.1. Amendment to the Company's By-laws
4.1. Rights Agreement, dated as of July 24, 1998, between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent, including the Form of
Right Certificate and the Summary of Rights to Purchase Preferred Shares
attached thereto as Exhibits B and C, respectively (incorporated by reference to
the Company's Registration Statement on Form 8-A, dated July 29, 1998).
99.1. Press Release dated July 27, 1998.
[Remainder of page is blank]
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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.
Date: July 29, 1998 COMPUTER NETWORK
TECHNOLOGY CORPORATION
By /s/ Gregory T. Barnum
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Name: Gregory T. Barnum
Title: Secretary and Chief Financial
Officer
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EXHIBIT INDEX
Page No.
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Exhibit 3.1 Amendment to Company's By-laws.
Exhibit 4.1 Rights Agreement, dated as of July 24, 1998 between
Computer Network Technology Corporation and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent, including the Form of Right
Certificate and the Summary of Rights to Purchase Preferred Shares
attached thereto as Exhibits B and C, respectively (incorporated by
reference to the Company's Registration Statement on Form 8-A dated
July 29, 1998).
Exhibit 99.1 Press Release dated July 27, 1998.
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EXHIBIT 3.1
AMENDMENT TO BY-LAWS OF
COMPUTER NETWORK TECHNOLOGY CORPORATION
Section 7 of Article II of the by-laws of Computer Network Technology
Corporation is hereby deleted in its entirety and replaced with the following:
Section 7. Voting and Proxies. Except as otherwise provided in the
Articles of Incorporation or any certificate of designations for preferred
stock, at each meeting of the shareholders every shareholder shall be
entitled to one vote in person or by proxy for each share of capital stock
held by such shareholder, but no appointment of a proxy shall be valid for
any purpose more than eleven (11) months after the date of its execution,
unless a longer period is expressly provided in the appointment. Every
appointment of a proxy shall be in writing (which shall include
telegraphing, cabling, or telephotographic transmission), and shall be
filed with the Secretary of the corporation at or before the meeting at
which the appointment is to be effective. At all meetings of the
stockholders, all matters, except as otherwise provided by law or in the
Articles of Incorporation or in the By-laws, shall be decided by a vote of
a majority of the votes cast by stockholders present in person or by proxy
and entitled to vote thereat, a quorum being present.
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EXHIBIT 99.1
COMPUTER NETWORK TECHNOLOGY
ADOPTS SHAREHOLDER RIGHTS PLAN
MINNEAPOLIS, MINNESOTA, JULY 27, 1998 -- Computer Network Technology Corp. today
announced that it has adopted a Shareholder Rights Plan and declared a dividend
distribution of one Preferred Share Purchase Right on each outstanding share of
Computer Network Technology Common Stock. Each Right will entitle stockholders
to buy one one-thousandth of a share of the Company's Series A Junior Preferred
Stock at an exercise price of $50.00. Subject to the terms of the Plan, if a
person or group acquires beneficial ownership of 20% or more of the Company's
Common Stock the rights (other than those held by the acquiring person or group)
will become exercisable for Common Stock of the Company having a market value of
two times the exercise price.
The Company will be entitled to redeem the Rights at $0.01 per Right at any time
prior to the acquisition by a person or group of beneficial ownership of 20% or
more of the Company's Common Stock.
The Rights are designed to help assure that all stockholders of Computer Network
Technology receive fair and equal treatment in the event of any proposed
takeover of the Company and to guard against partial tender offers and other
abusive tactics to gain control of the Company without paying all stockholders
the fair value of their shares.
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Thomas G. Hudson President and Chief Executive Officer, said "this Rights
Agreement is intended to help protect our stockholders should Computer Network
Technology become the target of coercive takeover tactics. It is also designed
to help ensure that all CNT stockholders receive full and fair treatment in the
event of an attempted unsolicited takeover." Mr. Hudson also noted "the Rights
Agreement was not adopted in response to any specific effort to acquire control
of the Company and that Company's directors are not aware of any such effort."
The dividend distribution will be made on August 10, 1998, to stockholders of
record on that date. The Rights will expire on July 23, 2008.
ABOUT COMPUTER NETWORK TECHNOLOGY (CNT)
Computer Network Technology (NASDAQ:CMNT), based in Minneapolis, Minnesota, is a
leading provider of high-performance networking solutions that allow mainframe
systems and open systems environments to share data and information. The
company's Channelink(R), FileSpeed(TM), and UltraNet(R) product lines offer
high-speed open systems connectivity, access to legacy data and guaranteed data
integrity for applications such as remote storage, mirroring and disaster
recovery. In addition, its Enterprise/Connect, Enterprise/View and
Enterprise/Access product lines offer unique gateway and Web-to-host integration
solutions. The company's products are sold worldwide through a direct sales
force and a network of authorized distributors. For more information, visit
CNT's web site at www.cnt.com, or call 1-800-638-8324 (U.S.) or 612-797-6000
(International).
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