Poison pill clause samples

8.In summary, the Poison Pill prevents Mr. Schnatter or anyone else from talking to actual or potential stockholders or potential director nominees, lenders or financial partners that hold any stock in the Company, lest they risk being deemed by the Board, in its sole discretion, to be “Acting in Concert” and trigger the Poison Pill. At the same time that Mr. Schnatter is constrained by the Poison Pill, the other members of the Board are busy securing votes to preserve their incumbency, such as those secured already through the Governance Agreement. The need to resolve this issue is even more pressing because on February 14, 2019, the Company announced that its annual meeting of stockholders will be held on April 30, 2019.

22.At the end of the discussion, the Board voted to adopt the Poison Pill. Mr. Schnatter was the only director to abstain in the vote on the adoption of the Poison Pill. Nonetheless, numerous media reports consistently have stated that the Board adopted the Poison Pill specifically because Mr. Schnatter represented a threat to the Company. Much like the Company’s failure to correct misreporting about statements attributed to Mr. Schnatter, the Board has done nothing to disabuse anyone of the notion that the Board, in fact, believed Mr. Schnatter was a threat to the Company and the reason for the adoption of the Poison Pill.

24.Given the absence of an identifiable threat, one might think that the Board would be restrained in the form of Poison Pill. Not so. The Poison Pill, is not some generic, off-the-shelf rights plan with terms that Delaware courts have consistently approved. Specifically, the “wolf pack” provision in the Poison Pill has never been approved by a Delaware court, because, as a practical matter and just one example of its extreme design, it eliminates the ability of stockholders to run a proxy contest as a practical matter.

29.In other words, under this definition, if two 10% stockholders have any interaction regarding proxies or opposition to board proposals and do not reach agreement on a plan of action, but each knows the other intends to vote in the same way, the Board could trigger the Poison Pill. Even if one of the stockholders later runs a proxy contest, because the two 10% stockholders simply interacted previously, the non-soliciting stockholder’s vote would not be “solely” because of the solicitation, and therefore could trigger the Poison Pill.

Among its more noxious elements, the Poison Pill contains provisions that may be interpreted to cause investors who, like us, no longer make regulatory filings on Schedule 13G (i.e., who are no longer so-called “ordinary course institutional investors”) to have tripped the Poison Pill threshold to the extent their beneficial ownership of the Company’s common stock exceeds 10%. The applicable threshold for all other investors is 20%. The effect is that any such investors whose change in intent causes them no longer to qualify as “ordinary course institutional investors” are required to reduce their beneficial ownership position to below 10% within 30 days, or trigger the Poison Pill. Moreover, such provisions appear to apply to us notwithstanding that our affiliated funds have not purchased a single additional share since the Company’s precipitous and unlawful adoption of the Poison Pill on August 28, 2019.

However, we are now faced with an untenable dilemma – sell our position below 10%, by no later than March 27, 2020, into a rapidly declining market that significantly undervalues the Company’s true worth, or alternatively, face the crippling effects of dilution under the Poison Pill. This all as a penalty for doing no more than to exercise our most basic and fundamental right as a stockholder – raising our voices, making our positions known, and preserving our core ability to advocate for certain vitally necessary changes at the Company.

Meanwhile, for the benefit of all public shareholders (and to mitigate any damage done by the poison pill), The Capital Corps requests the Board of Directors provide The Capital Corps its consent to acquire additional shares of Broadway stock in excess of the limits outlined in the poison pill without triggering any provisions of the poison pill. It would be unfortunate to cause the Company to spend additional shareholder resources defending non-sensical governance practices which destroy shareholder value in favor of a single insider’s interest.

With its ownership already exceeding the threshold established by the Poison Pill, Engaged Capital sent a letter to RCII on March 28, 2017 requesting a waiver to the Poison Pill. In its request, Engaged Capital made clear that it had no intention to mount a takeover bid or participate in any change of control transaction for RCII, and thus should not be prevented from acquiring up to 19.9% of RCII’s outstanding stock (or a 24.9% economic interest in the Company). To date, the Board has refused to respond to Engaged Capital’s request.

As previously reported in a Form 8-K filed by the Issuer on July 23, 2018, the Board of Directors of the Issuer adopted a rights agreement (the “Rights Plan”) and authorized and declared a dividend to stockholders of record at the close of business on August 2, 2018, of one preferred share purchase right (a “Right”) for each outstanding share of the Issuer’s common stock. The Rights Plan is commonly referred to as a “poison pill.” Under the terms of the Rights Plan, the Rights are generally not exercisable unless a person (including certain affiliated, associated and other persons) acquires more than a specified threshold amount (an “Acquiring Person”) and a certain amount of time elapses. If the Rights become exercisable, then each holder of a Right will thereafter have the right to receive, upon exercise, shares of common stock (or, in certain circumstances, shares of preferred stock, other securities, cash, property, or a combination thereof) having a value equal to two times the exercise price of the Right. However, the Acquiring Person’s rights become null and void. The result is that the Rights Plan gives persons other than the Acquiring Person the ability to purchase interests in the Issuer at a substantial discount (i.e., at half price), which means that any actions that result in a stockholder becoming an Acquiring Person creates a significant risk of reducing the value of the Acquiring Person’s existing interest in the Issuer.

Specifically, I request that you promptly amend the Poison Pill to remove or otherwise render inapplicable the “Acting in Concert” provisions of the Poison Pill. As you know, no Delaware court ever has found that this type of “wolfpack” provision in a poison pill is consistent with Delaware law. In fact, this provision goes far beyond Delaware law by unreasonably curtailing the rights and legitimate interests of shareholders. Among other things, it precludes shareholders from holding any substantive discussions about the Company because of the threat of crippling dilution of their ownership interest in the Company.

At the time of submission, Eldorado does not have a poison pill. Instead, Nevada’s Acquisition of Controlling Interest and Combinations with Interested Shareholders Statutes act as similar anti-takeover devices. We recommend a vote for this resolution to urge the Company not to subsequently enact a poison pill without shareholder approval in place of the Nevada anti-takeover statutes, if shareholders successfully urge the company to opt out of those Nevada provisions.

In August 2018, the Board adopted a rights agreement—more commonly known as a poison pill. This poison pill has the effect of entrenching the Board and the Company’s management. The Zeff Group believes that this poison pill could be used by the Board and the Company’s management to prevent value-maximizing transactions that might be supported by stockholders. The Zeff Group believes that as a matter of good corporate governance, stockholders should be able to vote on any poison pill adopted by the Board.

FrontFour acknowledges the Staff’s comment and offers the Staff the following explanation on a supplemental basis in support of its belief that management and certain members of the Board are entrenched. Notably, the Board adopted its stockholder rights agreement, or poison pill, in June 2009 and never sought stockholder approval or ratification of the poison pill. ILG’s poison pill, which was not terminated until December 2017, effectively prevented stockholders from acquiring 15% or more of the Company’s outstanding shares of common stock. FrontFour believes the practical effect and intent of the poison pill was to insulate the Board from the input of its stockholders. Furthermore, up until March 24, 2017, FrontFour notes that ILG’s employment agreements with executive officers/key personnel included “single triggers” for vesting of equity awards in the event of a change of control, meaning the executive would receive a windfall even without being terminated. Although these agreements and the poison pill are no longer in effect, FrontFour believes they had an impact of entrenching the current leadership team, which FrontFour believes is supported by the long tenure of ILG’s management and over half of the Board.

Despite repeated attempts, the Versum Board has refused to engage with us. Further, the Versum Board rejected our proposal two days after receipt, claiming they had undertaken careful review and consideration, and almost immediately implemented a shareholder-unfriendly poison pill. This stance is not in the best interest of Versum shareholders, many of whom have indicated to us their desire to have an avenue to express their support of our superior proposal. The tender offer allows us to take our superior proposal directly to Versum shareholders and allow them to judge our proposal, not the Versum Board. We view the tender offer as the next logical step in light of the Versum Board’s refusal to engage.

Poison Pills — Vote FOR shareholder proposals that ask a company to submit its poison pill for shareholder ratification. Review on a CASE-BY-CASE basis shareholder proposals to redeem a company’s poison pill. Review on a CASE-BY-CASE basis management proposals to ratify a poison pill.