Item 8.01 Other Events.
As previously disclosed in periodic filings with the the U.S. Securities and Exchange Commission (the “SEC”) by Edgio, Inc. (the “Company” or “Edgio”), on July 18, 2022, two stockholders filed verified class actions in the Delaware Court of Chancery, which were subsequently consolidated under the caption In re Edgio, Inc. Stockholders Litigation (Case No. 2022-0624-MTZ). The operative complaint alleges that the Edgio board of directors violated its fiduciary duties in entering into a stockholders agreement (the “Stockholders Agreement”) as part of the Company’s acquisition of 100% of the equity interests of Edgecast, Inc., a California corporation (“Edgecast”), and certain Edgecast-related businesses and assets from College Parent LP. The plaintiffs challenge certain provisions of the Stockholders Agreement, alleging that those provisions constituted defensive measures designed to entrench the board of directors and protect it from stockholder activism. The complaint seeks injunctive relief in the form of an injunction enjoining the enforcement of the challenged provisions. Edgio filed a motion to dismiss and the matter was heard on October 12, 2022 in the Delaware Court of Chancery. On May 2, 2023, the Delaware Court of Chancery issued a memorandum opinion denying the company’s motion to dismiss. On May 12, 2023, the parties entered into an interim arrangement to avoid the costs and burdens of expedited litigation where the Company agreed not to enforce the provisions of the Stockholders Agreement that the plaintiffs challenged in the suit in connection with the Company’s 2023 annual meeting.
On September 29, 2023, the parties executed and filed with the Delaware Court of Chancery a Stipulation and Agreement of Settlement, Compromise, and Release (the “Stipulation”). In the Stipulation, the Company agreed, among other things, to amend the Stockholders Agreement to conform to the following terms: (1) with respect to all matters other than director elections, College Parent LP shall vote 25% of its Edgio shares pro rata with all other Edgio stockholders and may vote 75% of its Edgio shares, at its discretion, either in favor of the board’s recommendation or pro rata with all other Edgio stockholders; (2) with respect to director elections, College Parent LP may vote its Edgio shares at its discretion; and (3) certain transfer restrictions applicable to College Parent LP are limited to Competitors, as defined in the amended Stockholders Agreement.
The full terms of the proposed settlement (the “Settlement”) are set forth in the Stipulation. The Settlement is subject to final consideration at a hearing to be held in person before the Delaware Court of Chancery on January 3, 2024 at 11:00 am.
On October 23, 2023, the Delaware Court of Chancery issued an order preliminarily approving the proposed Settlement. Pursuant to the Delaware Court of Chancery’s order granting preliminary approval, the Company is filing the Notice of Proposed Settlement (the “Notice”) and the Stipulation, copies of which are attached hereto as Exhibits 99.1 and 99.2, respectively, with the SEC.
This Current Report on Form 8-K, the Notice, and the Stipulation are also available on Edgio’s website at investor.edg.io. This website address is included for reference only. The information contained on Edgio’s website is not incorporated by reference into this Current Report on Form 8-K.
Additional information regarding the terms of the Settlement can be found in the Stipulation and the Notice. The summary above is qualified in its entirety by reference to the Stipulation and the Notice.
