SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
MIPS TECHNOLOGIES, INC.
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(Name of Registrant as Specified In Its Charter)
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MIPS TECHNOLOGIES, INC.
1225 CHARLESTON ROAD
MOUNTAIN VIEW, CALIFORNIA 94043
MARCH 19, 1999
Dear Stockholder:
Accompanying this letter is a Supplement to the Proxy Statement of MIPS
Technologies, Inc. dated February 26, 1999 (the "Proxy Statement") relating to a
proposed recapitalization of MIPS Technologies, including the approval and
adoption of certain changes to its certificate of incorporation and by-laws
pursuant to which, among other things, each issued and outstanding share of our
common stock will be redesignated as one share of newly created and issued Class
A common stock. The Supplement contains new information regarding certain
conversion and exchange provisions of the proposed certificate of incorporation
that, based on Silicon Graphics' conversations with the staff of the Internal
Revenue Service subsequent to the date of the Proxy Statement, are not likely to
be available to us to eliminate the dual class structure after a tax-free
distribution by Silicon Graphics of its interest in MIPS Technologies. OUR BOARD
OF DIRECTORS, AND THE SPECIAL COMMITTEE OF OUR BOARD OF DIRECTORS CONSTITUTED TO
REVIEW THE PROPOSED TERMS OF THE RECAPITALIZATION, HAVE UNANIMOUSLY APPROVED THE
RECAPITALIZATION AS DESCRIBED IN THE PROXY STATEMENT AND THE ACCOMPANYING
SUPPLEMENT AND RECOMMEND THAT YOU VOTE FOR ITS APPROVAL AND ADOPTION.
You are urged to read carefully the Proxy Statement and the accompanying
Supplement for more detailed information concerning the proposed
recapitalization and the special meeting of our stockholders to be held on
Wednesday, March 31, 1999 at Hyatt Rickeys Hotel, 4219 El Camino Real, Palo
Alto, California, commencing at 2:00 p.m. local time.
A new proxy card is included with the enclosed Supplement. If you have not
already returned the proxy card that was included in the Proxy Statement, or if
you have previously returned the proxy card and wish to change the manner in
which your shares are voted, please sign and date the enclosed proxy card and
return it as soon as possible in the enclosed postage pre-paid, self-addressed
envelope. If you have previously returned the proxy card included in the Proxy
Statement and do not wish to change the manner in which your shares are voted,
you do not need to return the enclosed proxy card.
Very truly yours,
[SIGNATURE]
John E. Bourgoin
CHIEF EXECUTIVE OFFICER AND PRESIDENT
MIPS TECHNOLOGIES, INC.
SUPPLEMENT TO PROXY STATEMENT DATED FEBRUARY 26, 1999
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MIPS Technologies, Inc. has previously furnished to its stockholders a Proxy
Statement dated February 26, 1999 (the "Proxy Statement") in connection with the
solicitation of proxies by its Board of Directors for use at a special meeting
of stockholders to be held on March 31, 1999. At the special meeting,
stockholders will be asked to consider and vote upon the proposed
Recapitalization of MIPS Technologies, including the approval and adoption of
certain changes to its certificate of incorporation and by-laws. This Supplement
provides new and updated information with regard to certain conversion and
exchange provisions contained in the proposed certificate of incorporation that
is included in the Recapitalization Proposal. This Supplement should be read in
conjunction with the Proxy Statement.
Capitalized terms used but not otherwise defined herein have the meanings
given to them in the Proxy Statement.
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This Supplement is dated March 19, 1999 and is first being mailed to our
stockholders on or about March 19, 1999.
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If the Recapitalization is approved, we will have two classes of common
stock outstanding: Class A common stock and Class B common stock. Holders of the
Class A common stock, voting separately as a class, will be entitled to elect
20% of our Board of Directors, and holders of the Class B common stock will be
entitled to elect the remaining directors. The Class A common stock and Class B
common stock will be substantially identical in all other respects. After the
Recapitalization (and until Silicon Graphics disposes of its entire interest in
MIPS Technologies in a Tax-Free Distribution), Silicon Graphics will own all of
the outstanding shares of Class B common stock. The proposed terms of the Class
A common stock and the Class B common stock following the Recapitalization are
described throughout the Proxy Statement, including under the caption
"Comparison of Current and Proposed Provisions of MIPS Technologies Certificate
of Incorporation and Bylaws" beginning on page 9, under the caption "Description
of MIPS Capital Stock Prior to and Following the Recapitalization" beginning on
page 35, and elsewhere.
As more fully described in the Proxy Statement, the proposed amended and
restated certificate of incorporation of MIPS Technologies includes provisions
pursuant to which, following a Tax-Free Distribution by Silicon Graphics, the
outstanding shares of Class B common stock may be converted into or exchanged
for shares of Class A common stock under certain circumstances and/or subject to
certain conditions. These automatic conversion and exchange provisions were
designed, in part, to provide us with the ability, if permitted under
then-existing tax law, to reduce the period of time following a Tax-Free
Distribution during which we would continue to have a dual class capital
structure. In particular, the proposed amended and restated certificate of
incorporation includes the following provisions:
- All of the outstanding shares of Class B common stock may be converted
into shares of Class A common stock at any time on or after the fifth
anniversary of a Tax-Free Distribution if such conversion is approved by
the holders of a majority of the Class A common stock and Class B common
stock, voting together as a class (Section 2(i)(ii) of the proposed
amended and restated certificate of incorporation included as Annex A to
the Proxy Statement); and
- At any time after a Tax-Free Distribution, subject to certain limitations
contained in the Tax Agreement between MIPS Technologies and Silicon
Graphics, we may exchange all (but not less than all) of the outstanding
shares of Class B common stock for shares of Class A common stock (Section
2(j)(ii) of the proposed amended and restated certificate of incorporation
included as Annex A to the Proxy Statement).
The proposed amended and restated certificate of incorporation provides that
either or both of the above provisions will be inoperative and therefore
unavailable to eliminate the dual class capital structure if their inclusion in
the amended and restated certificate of incorporation would have a material
adverse effect on Silicon Graphics' ability to timely obtain a favorable ruling
from the Internal Revenue Service (the "IRS") regarding the tax-free status of
the Tax-Free Distribution. As indicated in the Proxy Statement, as of February
26, 1999, it was uncertain whether the conversion and exchange provisions
described above would have a material adverse effect on Silicon Graphics'
ability to timely obtain a favorable ruling from the IRS regarding the tax-free
status of a Tax-Free Distribution. Subsequent to the date of the Proxy
Statement, Silicon Graphics engaged in discussions with the IRS regarding a
request submitted by Silicon Graphics to the IRS seeking a favorable ruling
regarding a Tax-Free Distribution. Silicon Graphics' ruling request was based on
the terms of the proposed amended and restated certificate of incorporation as
described in the Proxy Statement, including the conversion and exchange
provisions discussed above.
Silicon Graphics has advised us that, based on its discussions with the IRS
to date, it is highly unlikely that the IRS would grant a favorable ruling
regarding a Tax-Free Distribution if the conversion and exchange provisions
described above were to remain operative. Accordingly, we believe that it is
highly likely that Silicon Graphics will deliver to us an opinion of counsel to
the effect that such provisions would have a material adverse effect on Silicon
Graphics' ability to timely obtain a favorable
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ruling from the IRS. The delivery of such an opinion would render these
provisions inoperative pursuant to their terms. As a result, if the
Recapitalization is approved, following a Tax-Free Distribution, except for a
conversion of the Class B common stock into Class A common stock under certain
circumstances if we are acquired, it is highly likely that we will have a dual
class capital structure indefinitely.
The remaining conversion and exchange provisions described in the Proxy
Statement, including the automatic conversion of the Class B common stock into
Class A common stock if we are acquired, as well as several automatic conversion
and exchange provisions that may be triggered prior to a Tax-Free Distribution,
are not affected.