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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) October 19, 1998
ADVANCED FIBRE COMMUNICATIONS, INC.
(Exact name of registrant as specified in charter)
Delaware 0-28734 68-0277743
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One Willow Brook Court, Petaluma, California 94954
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (707) 794-7700
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None
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
On October 19, 1998, Advanced Fibre Communications ("AFC") amended its
Rights Agreement, dated May 13, 1998 (the "Rights Plan"), to eliminate those
provisions that require that certain actions may only be taken by "Continuing
Directors." This Amendment to the Rights Plan was made in response to the
Delaware Court of Chancery's recent decision in Carmody v. Toll Brothers, Inc.
In the view of the AFC Board of Directors, based on advice of counsel, the Toll
Brothers, Inc. decision has cast doubt on the legality under Delaware law of
so-called "dead-hand" provisions in many existing shareholder rights plans.
Although the opinion related to the denial of a motion to dismiss an action
challenging the "dead-hand" provision and not an opinion addressing the actual
validity of the provision under Delaware law, the Delaware court stated that a
"dead-hand" provision was open to challenge under Delaware law on both statutory
and fiduciary grounds. A so-called "dead-hand" provision is a provision which
provides that outstanding rights can only be redeemed by "continuing directors,"
which is generally defined to mean directors who were members of the board at
the time the Rights Agreement was adopted and any other person who subsequently
becomes a member of the board if such person's nomination for election to the
board was recommended or approved by a majority of the continuing directors.
While AFC's Rights Plan differs in significant respects from the plan considered
in the Toll Brothers case, particularly as regards to the "Continuing Directors"
provisions thereof, the Board of Directors believes the disputed validity of
these provisions under the Toll Brothers opinion warrants action to amend the
Rights Plan. The Form of First Amendment to the Rights Agreement is attached
hereto as Exhibit 99.1 and is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
99.1 Form of First Amendment to Rights Agreement
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.
ADVANCED FIBRE COMMUNICATIONS, INC.
DATE: October 29, 1998 By: /s/ Peter A. Darbee
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Name: Peter A. Darbee
Title: Vice President, Chief Financial
Officer, Treasurer and Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
<S> <C>
99.1 Form of First Amendment to Rights Agreement.
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EXHIBIT 99.1
FIRST AMENDMENT TO THE RIGHTS AGREEMENT
AND CERTIFICATION OF COMPLIANCE WITH SECTION 27 THEREOF
Pursuant to Section 27 of the Rights Agreement (the "Agreement")
dated as of May 13, 1998, between Advanced Fibre Communications, Inc., a
Delaware corporation (the "Company"), and BankBoston, N.A. (the "Rights Agent"),
the Company and the Rights Agent hereby amend the Agreement as of October __,
1998, as provided below.
1. Certain Definitions. Section 1 of the Agreement shall be
amended as follows:
(a) The phrase "(upon approval by a majority of the
Continuing Directors (as such term is hereinafter defined))" shall be
deleted from the definition of Acquiring Person.
(b) The definition of "Continuing Director" shall be
deleted.
2. Issue of Rights Certificates. Section 3(a) of the Agreement
shall be amended by deleting the phrase "upon approval by a majority of the
Continuing Directors" in the first sentence of the paragraph.
3. Form of Rights Certificates. Section 4(b)(iii)(B) of the
Agreement shall be amended by replacing the phrase "a majority of the
Continuing" with the phrase "the Board of".
4. Exercise of Rights; Purchase Price; Expiration Date of Rights.
Section 7(e)(iii)(B) shall be amended by replacing the phrase "the a majority of
the Continuing" with the phrase "the Board of".
5. Adjustment of Purchase Price, Number of Shares or Number of
Rights. Section 11 shall be amended as follows:
(a) The phrase, "upon approval by a majority of the
Continuing Directors", which appears four times in subsection (a)(iii)
and once in subsection (d)(ii), shall be deleted.
(b) The phrase "a majority of the Continuing" in the
second sentence of subsection (b) and the first sentence of subsection
(c) shall be replaced with the phrase "the Board of".
(c) The phrase "a majority of the Continuing Directors" in
the
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second sentence of subsection (d)(i) shall be replaced with the phrase
"the Board of Directors of the Company".
6. Fractional Rights and Fractional Shares. Section 14 (a) shall
be amended by deleting the phrase "upon approval by a majority of the Continuing
Directors," in the last sentence of the paragraph.
7. Issuance of New Rights Certificates. Section 22 shall be
amended by deleting the phrase "upon approval by a majority of the Continuing
Directors," in the first and second sentences of the paragraph.
8. Redemption and Termination. Section 23 shall be amended as
follows:
(a) The phrase "a majority of the Continuing Directors" in
the first and last sentences of subsection (a) shall be replaced with
the phrase "the Board of Directors of the Company".
(b) The phrase "a majority of the Continuing" in the first
sentence of subsection (b) shall be replaced with the phrase "the Board
of".
(c) The phrase "a majority of the Continuing Directors" in
the third sentence of subsection (b) shall be replaced with the phrase
"the Board of Directors of the Company".
9. Exchange. Section 24 shall be amended as follows:
(a) The phrase "a majority of the Company's Continuing Directors"
in the first sentence of subsection (a) shall be replaced with the phrase "the
Board of Directors of the Company".
(b) The phrase "a majority of the Continuing Directors" in the
first sentence of subsection (c) shall be replaced with the phrase "the Board of
Directors of the Company".
(c) The phrase, "upon approval by a majority of the Continuing
Directors," in the second sentence of subsection (c) shall be deleted.
10. Supplements and Amendments. Section 27 shall be amended by
deleting the phrase, "upon approval by a majority of the Continuing Directors,"
in the first and second sentences of the Section.
11. Determinations and Actions by the Board of Directors. Section
29 shall be amended as follows:
(a) The designation "(a)" at the beginning of Section 29
shall be
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deleted.
(b) The phrase "or the Continuing Directors" in the last
sentence of Section 29 shall be deleted.
12. Severability. Section 31 shall be amended by deleting the
phrase, "upon approval by a majority of the Continuing Directors,".
The undersigned officer of the Company, being an appropriate
officer of the Company and authorized to do so by resolution of the board of
directors of the Company dated as of October __, 1998, hereby certifies to the
Rights Agent that these amendments are in compliance with the terms of Section
27 of the Agreement.
ADVANCED FIBRE COMMUNICATIONS, INC.
By: ____________________________________
Name:
Title:
Acknowledged and Agreed:
BANK BOSTON, N.A.,
as Rights Agent
By: __________________________________
Name:
Title:
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