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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Trans World Entertainment | NASDAQ:TWMC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 8.35 | 7.55 | 8.83 | 0 | 01:00:00 |
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
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Date and Time
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Thursday, September 3, 2020, at 10:00 A.M., Pacific Time
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Place
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Our meeting will be held online via live webcast. You can access the meeting via the internet at www.meetingcenter.io/219588432. To access the virtual meeting, please have your Notice of Internet Availability of Proxy Materials or proxy card in hand when you visit the website. The password for this virtual meeting is – TWMC2020.
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Items of Business
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(1)
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To elect three Directors to serve one year terms and until their successors are chosen and qualified;
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(2)
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To adopt an amendment to the Company’s Certificate of Incorporation, as amended (the “Certificate of Incorporation”), to change the name of the Company to “Kaspien Holdings Inc.”;
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(3)
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To adopt an amendment to the Certificate of Incorporation and Bylaws to set the size of the Board of Directors at three directors;
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(4)
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To adopt an amendment to the Certificate of Incorporation and Bylaws to permit shareholders entitled to vote to take an action without a meeting by written consent of not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting, instead of unanimous approval;
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(5)
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To adopt an amendment to the Certificate of Incorporation to implement certain transfer restrictions intended to prevent an ownership change that could substantially reduce tax benefits associated with the Company’s net operating losses under Section 382 of the Internal Revenue Code of 1986, as amended;
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(6)
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To ratify the appointment of Fruci & Associates II, PLLC as our independent registered public accounting firm for the fiscal year ending January 30, 2021; and
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(7)
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To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof.
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Record Date
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Shareholders of record as of July 10, 2020 are eligible to vote. A complete list of these shareholders will be available at our corporate offices at 2818 N. Sullivan Road, Suite 30, Spokane, WA 99216 during regular business hours for ten days prior to the Annual Meeting. This list also will be available during the Annual Meeting on the virtual meeting website. A shareholder may examine the list for any legally valid purpose related to the Annual Meeting.
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Proxy Voting
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We are furnishing proxy materials to shareholders primarily over the internet. We believe that this process expedites shareholders’ receipt of proxy materials, lowers the costs of the Annual Meeting and conserves natural resources. On or about July 16, 2020, we expect to mail to our shareholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement for the Annual Meeting and Annual Report on Form 10-K for the fiscal year ended February 1, 2020 (“Annual Report”). This Notice provides instructions on how to vote online or by telephone and includes instructions on how to receive a paper copy of proxy materials by mail. We also include in the Notice instructions on how you can request a paper copy of the proxy materials.
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YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual Meeting, please submit your vote via the internet, telephone or mail as soon as possible.
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By order of the Board of Directors,
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Edwin J. Sapienza,
Secretary |
Name and Address of Beneficial Owner
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Amount and Nature
of Beneficial Ownership |
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Percent of
Class |
The Robert J. Higgins TWMC Trust
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38 Corporate Circle
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Albany, New York 12203
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713,986(1)
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39.3%
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Neil S. Subin
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3300 South Dixie Highway, Suite 1-365
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West Palm Beach, 33405
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300,084(2)
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16.5%
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Renaissance Technologies LLC
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800 Third Avenue
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New York, New York 10022
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99,399(3)
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5.5%
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(1)
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Based on Form 5, filed February 21, 2017, by The Robert J Higgins TWMC Trust.
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(2)
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Based on Schedule 13D, filed April 9, 2020, on behalf of (i) Neil S. Subin (“Mr. Subin”); (ii) MILFAM LLC; (iii) Alimco Financial Corporation (“Alimco”); (iv) Alimco Re Ltd., a wholly-owned subsidiary of Alimco (“Alimco Re”); (v) Jonathan Marcus (“Mr. Marcus”); (vi) AMIL Of Ohio, LLC; (vii) Catherine C. Miller Irrevocable Trust dtd 3/26/91; (viii) Catherine C Miller Trust A-2; (ix) Catherine C Miller Trust A-3; (x) Catherine Miller Trust C; (xi) Kimberly S. Miller GST Trust dtd 12/17/1992; (xii) LIMFAM LLC; (xiii) Lloyd I. Miller Trust A-1; (xiv) Lloyd I. Miller, III Trust A-4; (xv) Lloyd I. Miller, III Irrevocable Trust dtd 12/31/91; (xvi) Lloyd I. Miller, III Revocable Trust dtd 01/07/97; (xvii) MILFAM I L.P.; (xviii) MILFAM II L.P.; (xix) MILFAM III LLC; and (xx) Susan F. Miller (such persons, trusts and entities named in items (i) through (xx), collectively, the “Reporting Persons”).
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(3)
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Based on Form 13G, filed on February 12, 2020, by Renaissance Technologies LLC, which is majority owned by Renaissance Technologies Holdings Corporation.
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Name
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Positions With the
Company |
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Age
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Year
First Elected as Director/ Officer |
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Direct
Ownership |
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Shares
that may be acquired within 60 days of June 15, 2020 |
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Total
Shares Beneficially Owned |
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Percent
of Class |
Jonathan Marcus
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Director
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60
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2020
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—
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—
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—
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*
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W. Michael Reickert
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Director
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56
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2016
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3,200(1)
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750(2)
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3,950
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*
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Tom Simpson
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Director
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59
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2020
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57,000(3)
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—(4)
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57,000
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3.1%
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Kunal Chopra(7)
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Chief Executive
Officer – etailz |
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38
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2020
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—
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—
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—
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*
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Michael Feurer(5)
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Former Chief
Executive Officer, Director |
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51
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2014
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11,441
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42,858
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54,299
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3.0%
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Edwin J. Sapienza
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Chief Financial
Officer |
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50
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2018
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1,500
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7,525
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9,025
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*
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Bruce J. Eisenberg(6)
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Former Executive
Vice President-Real Estate |
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60
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1995
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—
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—
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—
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*
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All Directors and Executive Officers as a group (7 persons)
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73,141
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51,133
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124,274
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6.8%
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*
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Less than 1% of issued and outstanding Common Stock
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(1)
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Excludes 713,986 shares held in the Robert J Higgins TWMC Trust of which Mr. Reickert is a Trustee.
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(2)
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Excludes 202,067 warrants held by the RJHDC LLC.
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(3)
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Excludes 25 shares held by the wife of Tom Simpson. Also excludes 23,879 and 9,737 shares held by WIN Partners, LLC and Kick Start I, LLC. Mr. Simpson holds an interest, manages and has voting control of WIN Partners, LLC and Kick Start I, LLC.
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(4)
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Excludes 14,041 and 9,360 warrants held by Kick Start III, LLC and Kick Start IV, LLC. Mr. Simpson holds an interest, manages and has voting control of Kick Start III and Kick Start IV, LLC.
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(5)
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Mr. Feurer ceased to be a board member and his employment was terminated as of March 30, 2020.
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(6)
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Mr. Eisenberg’s employment was terminated as of February 28, 2020.
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(7)
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Mr. Chopra joined the Company as of September 3, 2019.
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Plan Category
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Number of Shares to be
Issued upon Exercise of Outstanding Options, Warrants and Rights(1) |
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Weighted Average Exercise
Price of Outstanding Options, Warrants and Rights |
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Number of Shares
Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Outstanding Options, Warrants and Rights) |
Equity Compensation Plan
Approved by Shareholders |
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140,708
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$52.11
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213,125
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Equity Compensation Plans
and Agreements not Approved by Shareholders |
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—
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—
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—
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(1)
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Includes 11,512 deferred shares which may be issued for no consideration.
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Name
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Fees
Earned or Paid in Cash ($)(1) |
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Stock
Awards ($) |
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Option
Awards ($)(2)(4) |
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All Other
Compensation ($) |
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Total
Compensation ($) |
Martin Hanaka(3)
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120,361
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—
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—
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—
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120,361
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Jeff Hastings
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50,962
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—
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2,520
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—
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53,482
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Robert Marks
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123,000
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—
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—
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—
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123,000
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Michael Nahl
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187,500
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—
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—
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—
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187,500
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W. Michael Reickert
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174,000
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—
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—
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—
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174,000
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Michael B. Solow
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232,508
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—
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—
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—
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232,508
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(1)
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Fees earned reflect the amount of cash received for the annual retainer, Board and committee meeting fees. Fees earned for Mr. Solow reflect an annual retainer of $50,000 for his role as Chairman of the Board.
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(2)
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Amount represents the grant date fair value as computed in accordance with Accounting Standards Codification Topic 718, relating to the grant of stock options to Mr. Hastings in 2019. See Note 9 to the Consolidated Financial Statements in the Company’s 2019 Annual Report on Form 10-K for the assumptions made in determining the value. Effective August 8, 2019, 15,000 stock options were awarded to Mr. Hastings.
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(3)
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Mr. Hanaka did not stand for re-election at the 2019 Shareholders’ Annual Meeting. Upon his exit from the Board, Mr. Hanaka received payment of his deferred income in the form of cash and shares.
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(4)
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As of June 15, 2020, Mr. Hanaka, Mr. Nahl, Mr. Reickert, Mr. Hastings and Mr. Marks each held options to purchase 15,000 shares.
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Name
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Principal
Position |
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Year
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Salary
($)(1) |
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Bonus
($)(2) |
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Stock
Awards ($)(3) |
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Option
Awards ($)(4) |
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Non-Equity
Incentive Plan Compensation ($) |
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All Other
Compensation ($)(6) |
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Total
Compensation ($) |
Michael Feurer(5)
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Former Chief Executive Officer
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2019
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700,000
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—
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—
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—
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—
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11,750
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711,750
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2018
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700,000
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—
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49,000
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73,500
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—
|
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15,361
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837,861
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Bruce J. Eisenberg(5)
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Former Executive Vice
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2019
|
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425,000
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100,000
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| |
—
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—
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—
|
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—
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525,000
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President—Real Estate
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2018
|
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425,000
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—
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—
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17,115
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—
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—
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442,115
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Edwin J. Sapienza
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Chief Financial Officer
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2019
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280,000
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233,334
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—
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—
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—
|
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—
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513,334
|
|
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2018
|
| |
224,615
|
| |
—
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4,900
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12,275
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—
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2,403
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244,193
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(1)
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Salary represents amounts earned during fiscal year ended February 1, 2020.
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(2)
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Bonus for 2019 for Mr. Eisenberg represents the payment of a retention bonus pursuant to his Severance, Retention and Restrictive Covenant Agreement with the Company. For Mr. Sapienza, the bonus amount consists of a $133,334 retention bonus and a $100,000 guaranteed bonus paid pursuant to his Severance, Retention and Restrictive Covenant Agreement with the Company.
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(3)
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Amounts represent the grant date fair value, as computed in accordance with Accounting Standards Codification Topic 718, relating to restricted share units awarded to Mr. Feurer, and Mr. Sapienza in fiscal year 2018. See Note 9 to the Consolidated Financial Statements in the Company’s 2019 Annual Report on Form 10-K for the assumptions made in determining the value.
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(4)
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Amount represents the grant date fair value as computed in accordance with Accounting Standards Codification Topic 718, relating to the grant of stock options to the named executive officer in fiscal year 2019 and fiscal 2018. See Note 9 to the Consolidated Financial Statements in the Company’s 2019 Annual Report on Form 10-K for the assumptions made in determining the value.
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(5)
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Mr. Feurer’s employment terminated as of March 30, 2020. Mr. Eisenberg’s employment terminated as of February 28, 2020.
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(6)
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Includes the following payments made by the Company to the named executive officers:
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Name
|
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Year
|
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Perquisites
and Other Personal Benefits ($) |
| |
Insurance
Premiums ($) |
| |
Company
Contributions to Retirement and 401(K) Plans ($) |
| |
Death
Benefits to Survivor ($) |
| |
Total ($)
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Michael Feurer
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2019
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11,700
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—
|
| |
—
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|
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11,700
|
|
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2018
|
| |
11,700
|
| |
—
|
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3,661
|
| |
—
|
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15,361
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Bruce J. Eisenberg
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2019
|
| |
—
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—
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| |
—
|
| |
—
|
| |
—
|
|
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2018
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
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Edwin J. Sapienza
|
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2019
|
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—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
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2018
|
| |
—
|
| |
—
|
| |
2,403
|
| |
—
|
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2,403
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Option Awards
|
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Name
|
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Grant
Date(1) |
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Number of
Securities Underlying Unexercised Options (#) Exercisable |
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Number of
Securities Underlying Unexercised Options (#) Unexercisable |
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Option
Exercise Price ($) |
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Option
Expiration Date |
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Number of
Shares or Units of Stock That Have Not Vested (#)(2) |
Michael Feurer(3)
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10/13/2014
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15,000
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—
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70.00
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10/13/2024
|
| |
—
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4/14/2016
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7,860
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| |
—
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77.00
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4/14/2026
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—
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5/6/2016
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3,750
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1,250
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76.20
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5/6/2026
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—
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5/1/2017
|
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7,500
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3,750
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37.00
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5/1/2027
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1,250
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6/27/2018
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1,875
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5,625
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19.60
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6/27/2028
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1,875
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Bruce J. Eisenberg
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5/6/2010
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10,000
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—
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42.20
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5/6/2020
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| |
—
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6/21/2013
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2,500
|
| |
—
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| |
97.40
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6/21/2023
|
| |
—
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6/3/2014
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1,750
|
| |
—
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| |
67.20
|
| |
6/3/2024
|
| |
—
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5/15/2015
|
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1,750
|
| |
—
|
| |
77.60
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| |
5/15/2025
|
| |
—
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5/6/2016
|
| |
1,313
|
| |
437
|
| |
76.20
|
| |
5/6/2026
|
| |
—
|
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5/1/2017
|
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875
|
| |
875
|
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37.00
|
| |
5/1/2027
|
| |
—
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Edwin J. Sapienza
|
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6/27/2018
|
| |
438
|
| |
1,313
|
| |
19.60
|
| |
6/27/2028
|
| |
—
|
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3/1/2011
|
| |
400
|
| |
—
|
| |
34.60
|
| |
3/1/2021
|
| |
—
|
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| |
5/7/2012
|
| |
500
|
| |
—
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| |
50.60
|
| |
5/7/2022
|
| |
—
|
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| |
6/21/2013
|
| |
500
|
| |
—
|
| |
97.40
|
| |
6/21/2023
|
| |
—
|
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| |
6/3/2014
|
| |
375
|
| |
—
|
| |
67.20
|
| |
6/21/2023
|
| |
—
|
|
| |
4/1/2015
|
| |
375
|
| |
—
|
| |
77.60
|
| |
4/1/2026
|
| |
—
|
|
| |
5/6/2016
|
| |
282
|
| |
93
|
| |
76.20
|
| |
5/6/2026
|
| |
—
|
|
| |
5/1/2017
|
| |
625
|
| |
625
|
| |
37.00
|
| |
5/1/2027
|
| |
125
|
|
| |
6/27/2018
|
| |
313
|
| |
937
|
| |
19.60
|
| |
6/27/2028
|
| |
188
|
|
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10/23/2018
|
| |
625
|
| |
1,875
|
| |
20.80
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| |
10/23/2028
|
| |
750
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(1)
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Mr. Feurer’s, Mr. Eisenberg’s and Mr. Sapienza’s, options vested on February 20, 2020 upon the closing of the FYE Transaction (as defined below).
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(2)
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Mr. Feurer’s and Mr. Sapienza’s Restricted Stock Units vested on February 20, 2020 upon the closing of the FYE Transaction (as defined below).
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(3)
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Mr. Feurer’s employment terminated as of March 30, 2020. Mr. Eisenberg’s employment terminated as of February 28, 2020.
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•
|
Subordinated Loan and Security Agreement, pursuant to which the Related Party Entities made a $5.2 million secured term loan ($2.7 million from Alimco, $0.5 million from Kick-Start, and $2.0 million from RJHDC) to etailz with a scheduled maturity date of May 22, 2023, interest accruing at the rate of twelve percent (12%) per annum and compounded on the last day of each calendar quarter by becoming a part of the principal amount, and secured by a second priority security interest in substantially all of the assets of the Company and etailz;
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•
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Common Stock Purchase Warrants (“Warrants”), pursuant to which the Company issued warrants to purchase up to 244,532 shares of Common Stock to the Related Party Entities (127,208 shares for Alimco, 23,401 shares for Kick-Start, and 93,923 shares for RJHDC), subject to adjustment in accordance with the terms of the Warrants, at an exercise price of $0.01 per share;
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•
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Contingent Value Rights Agreement (the “CVR Agreement”), pursuant to which the Related Party Entities received contingent value rights (“CVRs”) representing the contractual right to receive cash payments from the Company in an amount equal, in the aggregate, to 19.9% of the proceeds (10.35% for Alimco, 1.90% for Kick-Start, and 7.64% for RJHDC) received by the Company in respect of certain intercompany indebtedness owing to it by etailz and/or its equity interest in etailz; and
|
•
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Voting Agreement (the “Voting Agreement”), pursuant to which the Related Party Entities, the Trust, Mr. Simpson and their respective related entities agreed to how their respective shares of the Company’s capital stock held by the parties will be voted with respect to (i) amending the Articles of Incorporation of the Company to set the size of the Board of Directors of the Company at three directors, (ii) the designation, election, removal, and replacement of members of the Board and (iii) how shares of the Company’s capital stock held by the parties to the Voting Agreement will be voted on a Sale of the Company (as defined in the Voting Agreement) with respect to which there is a shareholder vote or some other action to take place during the ninety (90) days immediately following the date of the Voting Agreement. Pursuant to the Voting Agreement, Messrs. Marcus and Simpson were appointed as directors of the Company, and Mr. Reickert, a trustee of the Trust, remained as a director of the Company. Mr. Subin was also granted board observer rights.
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1.
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The current name of the corporation is Trans World Entertainment Corporation (the “Corporation”). The Corporation was originally incorporated under the name of Trans-World Music Corp.
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2.
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The Certificate of Incorporation of the Corporation was filed by the Department of State on February 7, 1972, and has been amended at various times by action of the Board of Directors and shareholders of the Corporation.
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3.
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The amendment effected by this certificate of amendment is as follows:
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Paragraph FIRST of the Certificate of Incorporation is hereby amended to read in its entirety as follows:
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“FIRST: The name of the corporation is Kaspien Holdings Inc.”
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The first paragraph of paragraph NINTH of the Certificate of Incorporation is hereby amended to read in its entirety as follows:
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“NINTH: 1) The number of Directors of the Corporation shall be three. A Director shall hold office until his or her successor shall be elected and qualified, subject to prior death, resignation, retirement or removal from office. In no case will a decrease in the number of Directors shorten the term of any incumbent director.”
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Paragraph TENTH is added in the following form:
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“TENTH: Any action permitted to be taken by the shareholders of the Corporation may be taken without a meeting by written consent, signed by not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which the holders of all shares entitled to vote thereon were present and voted.”
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Paragraph ELEVENTH is added in the following form:
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ELEVENTH: Restrictions on Transfers.
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(a)
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Definitions. For purposes of this ELEVENTH paragraph, the following terms shall have the following meanings:
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“Acquiring Person” shall mean any Person who or which is or becomes a Five-Percent Stockholder (other than by reason of Treasury Regulation Section 1.382-2T(j)(3)(i) or solely as a result of a transaction in which no “5-percent shareholder” (as defined in Section 382 of the Code and Treasury Regulations thereunder) experiences an increase in its percentage stock ownership interest of the Corporation, as determined in accordance with Treasury Regulation Sections 1.382-2(a), 1.382-2T(g), (h), (j) and (k), 1.382-3(a) and (j) and 1.382-4(d)), whether or not such Person continues to be a Five-Percent Shareholder, but shall not include (i) any Grandfathered Person and (ii) any Person who or which the Board of Directors of the Corporation determines, in its sole discretion, has inadvertently become a Five-Percent Shareholder (or has inadvertently failed to continue to qualify as a Grandfathered Person), so long as such Person promptly enters into, and delivers to the Corporation, an irrevocable commitment promptly to divest and thereafter promptly divests (without exercising or retaining any power, including voting, with respect to such securities), sufficient Corporation Securities so that such Person’s Percentage Stock Ownership is less than 5% (or, in the case of any Person who or which has inadvertently failed to continue to qualify as a Grandfathered Person, the Corporation Securities that caused such Person to so fail to qualify as a Grandfathered Person).
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“Agent” shall mean an agent designated by the Board of Directors of the Corporation.
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“Code” shall mean the Internal Revenue Code of 1986, as amended.
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“Corporation Securities” shall mean (i) shares of Common Stock, (ii) shares of Preferred Stock (other than preferred stock described in Section 1504(a)(4) of the Code), (iii) options (within the meaning of Treasury Regulations Section l.382-4(d)(9)) to purchase Corporation Securities, and (iv) any other interests that would be treated as “stock” of the Corporation pursuant to Treasury Regulations Section 1.382-2T(f)( 18), or any successor provision.
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“Effective Date” shall mean March 31, 2020.
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“Excess Securities” shall mean the Corporation Securities which are the subject of the Prohibited Transfer.
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“Five-Percent Shareholder” shall mean (i) a Person or group of Persons that is identified as a “5-percent shareholder” of the Corporation pursuant to Treasury Regulation Section l.382-2T(g) or (ii) a Person that is a “first tier entity” or “higher tier entity” (as such terms are defined in Treasury Regulations Section 1.382-2T(f)) of the Corporation if (A) that Person has a “public group” or individual, or (B) a “higher tier entity” of that Person has a “public group” or individual, that, in each case, is treated as a “5-percent shareholder” of the Corporation pursuant to Treasury Regulations Section l .382-2T(g).
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“Grandfathered Person” shall mean (i) any Person who would otherwise qualify as an Acquiring Person as of immediately prior to the Effective Date, unless and until such Person’s Percentage Stock Ownership shall be increased by more than one percentage point over such Person’s Percentage Stock Ownership immediately prior to the Effective Date or, if lower, such Person’s Percentage Stock Ownership thereafter, other than any increase pursuant to or as a result of (A) the exercise of any option, warrant or convertible instrument to purchase Corporation Securities that such Person held as of immediately prior to the Effective Date, (B) a stock dividend, stock split, reverse stock split or similar transaction effected by the Corporation or (C) any redemption or repurchase of Corporation Securities by the Corporation; and (ii) any Person who would otherwise qualify as an Acquiring Person as a result of a redemption or repurchase of Corporation Securities by the Corporation, unless and until such Person’s Percentage Stock Ownership shall be increased by more than one percentage point over such Person’s lowest Percentage Stock Ownership on or after the date of such redemption or repurchase, other than any increase pursuant to or as a result of (A) a stock dividend, stock split, reverse stock split or similar transaction effected by the Corporation or (B) any redemption or repurchase of Corporation Securities by the Corporation subsequent to the original redemption or repurchase.
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“Percentage Stock Ownership” shall mean the percentage stock ownership interest as determined in accordance with Treasury Regulations Sections 1.382-2(a)(3), 1.382-2T(g), (h), (j) and (k), l.382-3(a), 1.382-3(j) and l.382-4(d); provided, however, that for the sole purpose of determining the percentage stock ownership of any entity (and not for the purpose of determining the percentage stock ownership of any other Person), Corporation Securities held by such entity shall not be treated as no longer owned by such entity pursuant to Treasury Regulations Section 1.382-2T(h)(2)(i)(A).
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“Person” shall mean any individual, firm, corporation, partnership, limited liability company, limited liability partnership, trust, syndicate, estate, association, joint venture or similar organization, other entity, or group of persons making a “coordinated acquisition” of Corporation Securities or otherwise treated as an “entity” within the meaning of Treasury Regulations Section l.382-3(a) or otherwise, and includes, without limitation, an unincorporated group of persons who, by formal or informal agreement or arrangement (whether or not in writing), have embarked on a common purpose or act, and also includes any successor (by merger or otherwise) of any such individual or entity.
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“Prohibited Distributions” shall mean any dividends or other distributions that were paid by the Corporation and received by a Purported Transferee with respect to the Excess Securities.
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“Prohibited Transfer” shall mean any purported Transfer of Corporation Securities to the extent that such Transfer is prohibited and/or void under this ELEVENTH paragraph
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“Purported Transferee” shall mean the purported transferee of a Prohibited Transfer.
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“Restriction Release Date” shall mean the earlier of (i) the repeal of Section 382 of the Code (and any comparable successor provision) and (ii) the earliest date on which the Board of Directors determines that (1) an ownership change (within the meaning of Section 382 of the Code) would not result in a substantial limitation on the ability of the Corporation (or a direct or indirect subsidiary of the Corporation) to use otherwise available Tax Benefits, or (2) no significant value attributable to the Tax Benefits would be preserved by continuing the Transfer restrictions herein.
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“Tax Benefits” shall mean the net operating loss carryovers, capital loss carryovers, general business credit carryovers, alternative minimum tax credit carryovers and foreign tax credit carryovers, as well as any “net unrealized built-in loss” within the meaning of Section 382 of the Code, of the Corporation or any direct or indirect subsidiary thereof.
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“Transfer” shall mean, subject to the last sentence of this definition, any direct or indirect sale, transfer, assignment, conveyance, pledge, or other disposition and shall also include the creation or grant of an option (within the meaning of Treasury Regulations Section l .382- 4(d)(9)). A Transfer shall not include an issuance or grant of Corporation Securities by the Corporation, the modification, amendment or adjustment of an existing option by the Corporation, the exercise by an employee of the Corporation of any option to purchase Corporation Securities granted to such employee pursuant to contract or any stock option plan or other equity compensation plan of the Corporation, and the exercise of a Warrant, but only to the extent that there has not been a change in the direct or indirect ownership of such Warrant after the Effective Date.
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“Treasury Regulation” shall mean the income tax regulations (whether temporary or final) promulgated under the Code and any successor regulations. References to any subsection of such regulations include references to any successor subsection thereof.
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“Warrant” shall mean any of the warrants issued to Alimco Re Ltd., RJHDC, LLC, Kick-Start III, LLC or Kick-Start IV, LLC, on March 30, 2020.
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(b)
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Restrictions on Transfer. In order to preserve the Tax Benefits, subject to sub-section (c) of this ELEVENTH paragraph, any attempted Transfer of Corporation Securities prior to the Restriction Release Date, or any attempted Transfer of Corporation Securities pursuant to an agreement entered into prior to the Restriction Release Date, shall be prohibited and void ab initio to the extent that, as a result of such Transfer (or any series of Transfers of which such Transfer is a part), any Person or group of Persons shall become an Acquiring Person. Notwithstanding the foregoing, nothing in this ELEVENTH paragraph shall prevent a Person that is a member of a public group of the Corporation (as defined in Treasury Regulation Section 1.382-2T(f)(13)) from transferring Corporation Securities to a new or existing public group of the Corporation.
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(c)
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Certain Exceptions.
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(d)
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Treatment of Excess Securities.
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(e)
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Board Determinations.
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(f)
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Securities Exchange Transactions. Nothing in this ELEVENTH paragraph (including, without limitation, any determinations made, or actions taken, by the Board of Directors pursuant to sub-section (c) of ELEVENTH paragraph) shall preclude the settlement of any transaction entered into through the facilities of a national securities exchange or any national securities quotation system. The fact that the settlement of any transaction occurs shall not negate the effect of any other provision of this ELEVENTH paragraph and any Purported Transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this ELEVENTH paragraph.
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(g)
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Legal Proceedings. If the Purported Transferee fails to surrender the Excess Securities or the proceeds of a sale thereof to the Agent within thirty days from the date on which the Corporation makes a written demand, then the Corporation may promptly take all cost effective actions which it believes are appropriate to enforce the provisions hereof, including, without limitation, the institution of legal proceedings to compel the surrender. Nothing in this section shall (a) be deemed inconsistent with any Transfer of the Excess Securities provided in this ELEVENTH paragraph being void ab initio or (b) preclude the Corporation in its discretion from immediately bringing legal proceedings without a prior demand. The Board of Directors may authorize such additional actions as it deems advisable to give effect to the provisions of this ELEVENTH paragraph.
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(h)
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Liability. To the fullest extent permitted by law, any shareholder subject to the provisions of this ELEVENTH paragraph who knowingly violates the provisions of this ELEVENTH paragraph and any Persons controlling, controlled by or under common control with such shareholder shall be jointly and severally liable to the Corporation for, and shall indemnify and hold the Corporation harmless against, any and all damages suffered as a result of such violation, including but not limited to damages resulting from a reduction in, or elimination of, the Corporation’s ability to utilize its Tax Benefits, and attorneys’ and auditors’ fees incurred in connection with such violation.
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(i)
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Certificates. All certificates representing Corporation Securities on or after the Effective Date shall, until the Restriction Release Date, bear a conspicuous legend in substantially the following form:
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(j)
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Reliance. To the fullest extent permitted by law, the Corporation and the members of the Board of Directors shall be fully protected in relying in good faith upon the information, opinions, reports or statements of the chief executive officer, the chief financial officer, the chief accounting officer or the corporate controller of the Corporation or of the Corporation’s legal counsel, independent auditors, transfer agent, investment bankers or other employees and agents in making the determinations and findings contemplated by this ELEVENTH paragraph, and the members of the Board of Directors shall not be responsible for any good faith errors made in connection therewith. For purposes of determining the existence and identity of, and the amount of any Corporation Securities owned by, any stockholder, the Corporation is entitled to rely on the existence and absence of filings of Schedule 13D or 13G under the Securities and Exchange Act of 1934, as amended (or similar filings), as of any date, subject to its actual knowledge of the ownership of Corporation Securities.
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(k)
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Benefits of ELEVENTH paragraph. Nothing in this ELEVENTH paragraph shall be construed to give to any Person other than the Corporation or the Agent any legal or equitable right, remedy or claim under this ELEVENTH paragraph. This ELEVENTH paragraph shall be for the sole and exclusive benefit of the Corporation and the Agent.
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(l)
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Severability. The purpose of this ELEVENTH paragraph is to facilitate the Corporation’s ability to maintain or preserve its Tax Benefits. If any provision of this ELEVENTH paragraph or the application of any such provision to any Person or under any circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this ELEVENTH paragraph.
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(m)
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Waiver. With regard to any power, remedy or right provided herein or otherwise available to the Corporation or the Agent under this ELEVENTH paragraph, (i) no waiver will be effective unless expressly contained in a writing signed by the waiving party; and (ii) no alteration, modification or impairment will be implied by reason of any previous waiver, extension of time, delay or omission in exercise, or other indulgence.
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4.
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The foregoing amendments to the Certificate of Incorporation were authorized by the vote of the Board of Directors followed by a vote of a majority of all outstanding shares entitled to vote thereon at a meeting of shareholders.
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Name: Kunal Chopra
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Title: Principal Executive Officer
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1.
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Inserting the following as Section 1.8:
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2.
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Amending Section 2.1 to read in its entirely as follows:
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