You are hereby
notified of the Annual Meeting of Shareholders (the “Annual Meeting”) of iMedia Brands, Inc., a Minnesota corporation
(the “Company”), to be held at our offices located at 6690 Shady Oak Road (Human Resources Entrance), Eden Prairie, Minnesota,
on , 2022 at 10:00 a.m. CT.
This year we are again taking
advantage of a Securities and Exchange Commission rule allowing us to furnish our proxy materials over the Internet. You will receive
a Notice Regarding Availability of Proxy Materials that will tell you how you can access our proxy materials which describe the matters
to come before the meeting. It also will tell you how to request a paper or e-mail copy of our proxy materials.
Whether or not you plan to
attend the Annual Meeting, please take the time to vote. Please vote your shares as instructed in the Notice Regarding Availability of
Proxy Materials, or on your proxy card if you requested paper materials, and send your proxy through the Internet, telephone or mail as
soon as possible so that your proxy is received prior to the Annual Meeting. This will assure that your shares will be represented at
the meeting and voted in accordance with your wishes. Please vote as quickly as possible, even if you plan to attend the Annual Meeting.
Anyone who attends the meeting
in person will need to comply with state and local safety guidelines for attending such events. Accordingly, please note that you may
be required to wear a self-provided mask and agree to practice social distancing to access the venue and attend the meeting. If you are
experiencing any symptoms of COVID-19 or you suspect or believe you have COVID-19 or were exposed to COVID-19 in the two weeks leading
up to the meeting, then we ask that you please do not attempt to attend the meeting in person.
Your vote is extremely
important regardless of the number of shares you own.
EXECUTIVE COMPENSATION
Executive Summary
Business Overview
We are a leading interactive
media company capitalizing on the convergence of entertainment, ecommerce, and advertising. We own a growing, global portfolio of entertainment,
consumer brands and media commerce services businesses that cross promote and exchange data with each other to optimize the engagement
experiences we create for advertisers and consumers. Our growth strategy revolves around our ability to increase our expertise and scale
using interactive video and first-party data to engage customers within multiple business models and multiple sales channels. We believe
our growth strategy builds on our core strengths and provides an advantage in these marketplaces. We operate and report three operating
segments, which are entertainment, consumer brands and media commerce services. Our operating segments have been updated in fiscal 2021
to align with the segments’ respective product mix, revenue streams, and growth strategy. The corresponding current and prior period
segment disclosures have been recast to reflect the current segment presentation.
Entertainment Segment –
Our entertainment segment is comprised of our television networks, ShopHQ, ShopBulldogTV, ShopHQHealth, ShopJewelryHQ and 1-2-3.tv, which
service homes throughout the United States, Puerto Rico, Germany and Austria.
● ShopHQ (www.shophq.com)
is our flagship, nationally distributed shopping entertainment network distributed in approximately 80 million United States and Puerto
Rican homes that offers a mix of proprietary, exclusive, and name-brand merchandise in the categories of Jewelry and Watches, Home, Beauty
and Health, and Fashion and Accessories, directly to consumers 24 hours a day, 365 days a year using engaging interactive video.
● ShopBulldogTV
(www.shopbulldogtv.com), which launched in the fourth quarter of fiscal 2019, is a niche television shopping entertainment network distributed
in approximately 14 million United States homes that offers male-oriented products and services to men and to customers shopping for men.
● ShopHQHealth
(www.shophqhealth.com), which launched in the third quarter of fiscal 2020, is a nationally distributed niche television shopping entertainment
network distributed in approximately 14 million United States homes that offers women and men products and services focused on health
and wellness categories such as 5 physical, mental and spiritual health, financial and motivational wellness, weight management and telehealth
medical services.
● ShopJewelryHQ
(www.shopjewelryHQ.com), which digitally launched in the fourth quarter of fiscal 2021 and will be securing distribution in United States
television homes in 2022 is a niche television shopping entertainment network that offers jewelry products and services to men and to
women.
● 1-2-3.tv (www.1-2-3.tv),
which we acquired in November 2021, is the leading German interactive media company distributed in approximately 40 million German
and Austrian homes, disrupting Germany's TV retailing marketplace with its expertise in proprietary live and automated auctions that emotionally
engage customers with 1-2-3.tv's balanced merchandising mix of compelling products shipped directly to their homes.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
Each entertainment network
offers engaging, interactive video programming distributed primarily in linear television through cable and satellite distribution agreements,
agreements with telecommunication companies and arrangements with over-the-air broadcast television stations. This interactive programming
is also streamed live online on the respective network’s digital commerce platforms that sell products which appear on our television
networks as well as offer an extended assortment of online-only merchandise. These networks’ interactive video is also available
on leading social platforms over-the-top (“OTT”) platforms and ConnectedTV platforms (“CTV”) such as Roku, AppleTV,
and Samsung connected televisions, and mobile devices, including smartphones and tablets.
Consumer Brands
Segment – Our consumer brands segment is comprised of Christopher & Banks (“C&B”), J.W. Hulme Company (“JW”),
Cooking with Shaquille O’Neal (“Shaq”), OurGalleria.com and TheCloseout.com, which are primarily ecommerce within the
United States.
● Christopher &
Banks – Our flagship consumer brand, C&B was founded in 1956 and is a brand that specializes in offering women’s value-priced
apparel and accessories that cater to women of all sizes, from petite to missy to plus sizes. Its internally designed, modern and comfortable
apparel and accessories provide customers with an exclusive experience. We acquired the rights to the brand through a licensing agreement
in partnership with a Hilco Global company in March 2021. C&B’s omni-channel business model includes digital advertising
driven online revenue, five brick and mortar retail stores, direct-to-consumer catalogs and a growing wholesaling business driven primarily
by C&B’s television programming on our entertainment networks.
● J.W. Hulme
Company – JW was founded in 1905 and is an iconic brand offering men and women high quality accessories made by craftswomen and
craftsmen all over the world. We acquired the brand in 2019. JW’s omnichannel business model includes two brick and mortar retail
stores, direct-to-consumer catalogs, digital advertising driven online revenue and a growing wholesaling business driven primarily by
JW’s television programming on our entertainment networks.
● Cooking with
Shaquille O’Neal – We offer Shaq kitchen products and watches designed and curated by Shaq via its licensing agreement with
Authentic Brands Group. Shaq’s omnichannel business model is driven by Shaq’s television programming on our entertainment
networks.
● OurGalleria.com and
TheCloseout.com are online marketplaces with business models driven by their television programming on our television networks. OurGalleria.com
is a higher-end online marketplace for discounted merchandise, offering an exciting shopping experience with a selection of curated flash
sales and events. TheCloseout.com is a lower-end online marketplace for discounted merchandise, offering quality products at deeply discounted
prices. We obtained a controlling interest in TheCloseout.com in 2021.
Media Commerce Services
Segment – Our media commerce services segment is comprised of iMedia Digital Services (“iMDS”), Float Left (“FL”)
and i3PL, which service homes throughout the United States and Canada.
● iMedia Digital
Services – Our flagship media commerce service brand is iMDS, which is a digital advertising platform specializing in engaging shopping
enthusiasts online and in OTT marketplaces. iMDS’s suite of services includes its Retail Media Exchange (“RME”) and
value-added services (“VAS”). RME is an advertising auction platform for advertisers, digital publishers, supply-side-platforms
(SSPs) and demand-side platforms (DSPs). VAS is a suite of services centered on offering managed and self-serve end-to-end, white-label
digital platforms for domestic multichannel video programming distributors (“MVPDs”), internet service providers (ISPs), digital
publishers and ecommerce brands. iMDS’s growth strategy is driven by its ability to differentiate its advertising 6 platform by
offering solutions that include our first-party shopping enthusiast data created continually by our entertainment and consumer brand segments.
iMDS is primarily comprised of Synacor’s Portal and Advertising business, which we acquired in July 2021.
● Float Left
– FL is an OTT Software as a Service (“SaaS”) app platform that offers media and consumer brands the digital tools they
need to deliver engaging television experiences to their audiences within the OTT and CTV ecosystems. FL offers custom, natively built
solutions for Roku, Fire TV, Apple TV, Web, iOS and Android Mobile, and various smart TVs. Its growth strategy is driven by its ability
to integrate iMDS’s advertising operations within its OTT SaaS platform and continue to deliver sophisticated end-to-end OTT apps.
We acquired FL in 2019.
● i3PL offers end-to-end,
white label, managed services specializing in ecommerce customer experience and fulfillment services through its Bowling Green distribution
center. i3PL’s business model is driven primarily by providing these services to vendors, clients and customers within our entertainment
and consumer brands segments.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
2021 Performance
Our compensation structure
is based on a pay for performance philosophy. The following metrics highlight our performance in fiscal 2021:
| ● | Net sales of $551.1 million, an increase of 21.4% compared to the same prior-year period |
| ● | Gross profit of $222.6 million, an increase of 33.3% compared to the same prior-year period |
| ● | Gross profit as a percentage of sales was 40.4% for fiscal 2021, a 360-basis point improvement over the
same prior-year period |
| ● | Net loss attributable to shareholders was $22.0 million for fiscal 2021, an 8.8
million decline compared to the same prior-year period |
| ● | EPS of ($1.14) per share, a $0.09 per share improvement compared to the same prior-year period |
| ● | Adjusted EBITDA1 of $41.6 million for fiscal 2021, a $17.7 million improvement compared to
the same prior-year period |
Prior Year Say-on-Pay Results
The Board values the opinions
of our shareholders and carefully reviews and considers the outcome of our Say-on-Pay vote, along with other relevant factors, in evaluating
the compensation program for the NEOs. In 2021, more than 99% of the votes cast were in favor of our executive compensation. The HR and
Compensation Committee devotes time and resources to understanding shareholder feedback and analyzing the executive compensation programs
with the assistance of its independent compensation consultant. In evaluating potential changes, the HR and Compensation Committee also
takes into consideration market practices and the Company’s overarching compensation philosophy of attracting and retaining exceptional
leaders and enabling them to behave like owners. Our current programs are materially the same as the programs approved at our 2021 Annual
Meeting. We believe our programs effectively align with the interests of our shareholders.
Executive Compensation for Fiscal 2021
This discussion is intended
to provide an overview of the compensation awarded to, earned by, or paid to our named executive officers for fiscal 2021, including the
material elements of the compensation paid to our named executive officers as outlined in the compensation tables included in this proxy
statement. Our “named executive officers” or “NEOs” for 2021 are:
Name |
|
Title |
Timothy A. Peterman |
|
Chief Executive Officer |
Jean-Guillaume Sabatier |
|
Executive Vice President, Chief Commerce Officer |
Montgomery Wageman |
|
Senior Vice President, Chief Financial Officer |
Compensation Objectives and Philosophy
The primary objective of
our executive compensation program is to attract and retain exceptional leaders and encourage them to behave like owners. When setting
executive compensation, we apply a consistent approach for all executive officers and intend that the combination of compensation elements
closely aligns the executives’ financial interests with those of our shareholders. The program is primarily designed to:
| ● | Attract, motivate and retain a highly capable and performance-focused executive team; |
| ● | Promote a culture of employee owners whose financial interests are aligned with those of our shareholders; |
| ● | Pay for performance such that total compensation reflects the individual performance of executives and
the Company’s absolute and relative performance; |
| ● | Promote a focus on equity value by tying executive compensation to the long-term enhancement of shareholder
value; |
| ● | Permit the HR and Compensation Committee to exercise independent judgment and approval authority with
respect to establishing executive compensation programs, performance measures, and awards; and |
| ● | Consider the potential stock dilution, cash flow, tax and reported earnings implications of executive
compensation, consistent with the other objectives of the program. |
| 1 | Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA
is defined and reconciled to EBITDA and net income on page 28 of our Annual Report on Form 10-K for fiscal 2021. |
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
Target total compensation
is comprised of an appropriate balance of cash and equity and divided into three core elements: base salary, annual cash incentive compensation,
and long-term incentive compensation. In support of our emphasis on significant ownership by executives, the HR and Compensation Committee
offers long-term incentive opportunities that encourage stock ownership. Generally, the amount of compensation realizable from prior compensation
does not directly impact the level at which future pay opportunities are set. However, when granting equity awards, the HR and Compensation
Committee reviews and considers the number of outstanding and previously granted equity awards. In addition to promoting share ownership,
our executive compensation objectives and philosophy focus on rewarding performance. This means that shareholder returns along with corporate,
operating unit, and individual performance, both short-term and long-term, determine the largest portion of the executives’ pay
opportunity.
Role of the HR and Compensation Committee
and Executive Compensation Consultant
The HR and Compensation Committee
oversees the administration of the executive compensation program and determines the compensation of our executive officers. The HR and
Compensation Committee is composed of only non-employee directors, all of whom meet the independence requirements of applicable Nasdaq
rules. The HR and Compensation Committee similarly engaged Semler Brossy Consulting Group, LLC to serve as its independent compensation
consultant in 2021 and to continue in such a role for fiscal 2022. The consultant’s role is to develop analyses and competitive
information and to provide independent advice to the HR and Compensation Committee related to executive compensation programs.
Process for Determining Executive Compensation
The HR and Compensation Committee
reviews executive total compensation levels, including equity grants, during the first quarter of each fiscal year. Our CEO’s target
total compensation package is set by the HR and Compensation Committee during an executive session, where the CEO is not present, based
on the HR and Compensation Committee’s review of the competitive information prepared by the consultant and assessment of the CEO’s
individual performance in conjunction with the Company’s financial and operating performance. Target total compensation recommendations
for other executive officers are made by the CEO and the head of human resources who work closely with the HR and Compensation Committee,
after reviewing the executive’s and the Company’s performance in conjunction with the executive’s responsibilities and
experience when compared to the competitive information prepared by the consultant. The HR and Compensation Committee then determines
the compensation of these executive officers.
Market Data Review
To gain an understanding
of current compensation practices and competitive pay levels, the HR and Compensation Committee perform a “market check,”
which reviews each executive officer’s target total compensation in relation to comparably sized companies based on general industry
data derived from several published survey sources. For our NEOs, the HR and Compensation Committee also takes into account competitive
compensation data for comparable positions from the proxy statements of a selected group of retail, e-commerce, media, and mail order
catalog companies. For fiscal 2021, the HR and Compensation Committee Semler Brossy Consulting Group, LLC to assist in reviewing our peer
group. The companies in our peer group for fiscal 2021 were substantially the same as for fiscal 2020 and are set forth in the following
table.
Fiscal 2021 Peer Group |
1-800-FLOWERS.COM, Inc. |
The E.W. Scripps Company |
Liquidity Services, Inc. |
Big 5 Sporting Goods Corporation |
J.Jill, Inc. |
MSG
Networks Inc.a |
Build-A-Bear Workshop, Inc. |
Kaspien Holdings Inc. |
Sleep Number Corporation |
Cars.com Inc. |
Kirkland’s Inc. |
Stagwell Inc. (f/k/a MDC Partners Inc.) |
The Cato Corporation |
Lands’ End, Inc. |
Townsquare Media, Inc. |
| (a) | Acquired in July 2021. |
We use this information as
a reference point and to gain a better and more current understanding of prevailing compensation practices. Although the practices of
other companies represent useful guidelines, the HR and Compensation Committee does not rely solely on the peer group data in making its
individual compensation determinations, nor is this data a material factor in any such determination made by the HR and Compensation Committee.
Rather, the HR and Compensation Committee takes into account various other factors such as individual performance, an individual’s
primary duties and responsibilities, internal equity and affordability in setting individual executive compensation packages.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
Risk Assessment
The HR and Compensation
Committee has reviewed the concept of risk as it relates to our compensation programs and does not believe our compensation programs
encourage excessive or inappropriate risk. Overall, our internal risk assessment confirmed that our compensation arrangements are low
in risk and do not foster undue risk taking because they focus on performance of Company-wide annual goals, including adjusted earnings
before interest, taxes depreciation and amortization (“Adjusted EBITDA”), that are aligned with the long-term interests of
our shareholders and have strong governance appropriate risk-mitigating control mechanisms (such as incentive caps for the incentive
programs and stock ownership guidelines).
Our Executive Compensation Program and Fiscal
2021 Performance
The primary elements of our
executive compensation program are designed to be consistent with the compensation objectives described above. These key compensation
elements are divided into three main categories which are outlined in the following table. The purpose of each element is provided to
demonstrate how each component fits with the overall compensation objectives established by the HR and Compensation Committee, specifically,
stock ownership and pay for performance. The “Performance Outcomes” column describes the result of each element.
Elements |
|
Form |
|
Purpose |
|
Performance Measures |
|
Performance Outcomes |
Base Compensation |
|
Base salary paid in the form of cash compensation |
|
Provide a fixed element of pay based on individual’s primary duties and responsibilities |
|
Company and individual performance, experience level and contribution on primary duties and responsibilities |
|
Certain NEOs received base pay increases for fiscal 2021 |
|
|
|
|
|
|
|
|
|
Annual Incentive Plan |
|
Performance based cash compensation |
|
Designed to reward achievement of specified annual corporate goals |
|
Results measured against Adjusted EBITDA, and individual performance |
|
NEOs received payouts based on actual results, as described under the caption “Annual Incentive Plan” below |
|
|
|
|
|
|
|
|
|
Long-Term Incentive Plan |
|
Stock Options, Restricted Stock Units and Performance Share Units |
|
Designed to encourage and reward shareholder value creation and to attract and retain talent |
|
Individual’s level of responsibility and the Company’s performance |
|
NEOs received long-term incentive awards as described under the caption “Long-Term Incentive Plan” below |
Base Compensation
The Summary Compensation
Table sets forth the actual base salary earned by each of our NEOs during fiscal 2021. The level of base salary takes into account job
responsibilities, Company and individual performance, experience level and market competitiveness. Base salaries are generally reviewed
annually in March, with any changes becoming effective in May. Annual adjustments are based on individual performance, performance of
the area of responsibility, the Company’s performance, competitiveness versus the external market and budget availability for internal
merit increases. No annual merit increases were made to the base salaries of our NEOs for fiscal 2021.
Annual Incentive Plan
An annual incentive opportunity
is provided to encourage and reward the NEOs for making decisions that improve performance as measured by annual performance measures
selected by the HR and Compensation Committee. The annual incentive plan is designed to produce sustained shareholder value by establishing
a direct link between these performance measures and the incentive compensation. The annual incentive opportunity is established each
year as a percentage of an executive’s annual base salary and is targeted at the estimated median of our competitive market with
the opportunity to earn more for above-target performance or less for below target performance. The HR and Compensation Committee administers
the annual incentive plan in which the NEOs participate.
An annual incentive award
is designed to reward achievement of annual financial and individual performance goals in the form of cash bonuses. The Company’s
and the NEO’s performance determine the amount, if any, of awards earned. Targets are established annually for the Company as a
whole and are based on our prior and anticipated future performance. For a given year, a payout at 100% of target annual incentive compensation
is achieved when Company performance achieves the stated goals. The plan is designed to motivate continuous improvement in order to achieve
payouts at or above target over time. Actual incentive payments could range from 50 to 200 percent of the targeted incentive opportunity
based on corporate performance and individual performance goals. Performance below a threshold goal level results in no payout under the
plan.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
For fiscal 2021, the HR and
Compensation Committee determined that the annual performance bonus for our NEOs would be based on the Company achieving a goal with respect
to the Company’s Adjusted EBITDA before giving effect to performance bonus payouts to Company employees (the “Pre-Bonus Adjusted
EBITDA”). The performance bonus of the NEOs was based entirely on the Company achieving the Pre-Bonus Adjusted EBITDA goal. The
HR and Compensation Committee selected the Pre-Bonus Adjusted EBITDA as the financial metric since most executives possess the ability
to impact the Pre-Bonus Adjusted EBITDA, and the metric provides a balanced focus on sales and profitability. The target incentive opportunities
(expressed as a percentage of base salary) for the NEOs for fiscal 2021 were as follows:
Name | |
Target Annual Cash Incentive Payment (as Percent of Base Salary) | |
Timothy A. Peterman | |
| 100 | % |
Jean Sabatier | |
| 60 | % |
Montgomery Wageman | |
| 40 | % |
The HR and Compensation Committee established
a target for Pre-Bonus Adjusted EBITDA of $30 million. Actual Pre-Bonus Adjusted EBITDA for fiscal 2021 was $45.6 million, a $15.6 million
increase from fiscal 2020. As a result, Mr. Sabatier received a $180,000 payout under the Annual Cash Incentive Plan equal to 60%
of his annual base salary. Mr. Wageman received an $80,000 payout under the Annual Cash Incentive Plan equal to 27% of his annual
base salary, which included a pro-rata increase from his June 2021 promotion from VP, Corporate Controller to SVP, CFO. In light
of his substantial role in the Company’s actual performance far exceeding the target, and in compliance with the Annual Cash Incentive
Plan, Mr. Peterman received the maximum payout of $1,800,000, equaling 200% of his target annual cash incentive.
Pre-Bonus Adjusted EBITDA Reconciliation
Pre-Bonus Adjusted EBITDA
is a non-GAAP financial Measure. A reconciliation of the comparable GAAP measure, net income (loss), to EBITDA and Adjusted EBITDA appears
on page 27 of our Annual Report on Form 10-K for fiscal 2021. The following is a further reconciliation of Pre-Bonus Adjusted
EBITDA for fiscal 2021 and 2020, in thousands:
| |
2021 | | |
2020 | |
Adjusted EBITDA(a) | |
$ | 41,647 | | |
$ | 23,913 | |
Bonus adjustment | |
| 3,300 | | |
| 2,600 | |
Pre-Bonus Adjusted EBITDA | |
$ | 44,947 | | |
$ | 26,513 | |
| (a) | EBITDA as defined for this statistical presentation represents
net income (loss) for the respective periods excluding depreciation and amortization expense, interest income (expense) and income taxes.
We define Adjusted EBITDA as EBITDA excluding non-operating gains (losses); transaction, settlement and integration costs, net; restructuring
costs; non-cash impairment charges and write downs; executive and management transition costs; and non-cash share-based compensation
expense. |
Long-Term Incentive Program
A key component of an executive
officer’s compensation is long-term equity incentive awards, which are critical to focusing our executives on the Company’s
long-term growth and creating shareholder value. The long-term equity incentive plan is designed to attract and retain exceptional leaders
and enable them to behave like owners. The following is a general description of the vehicles in place during fiscal 2021.
Stock
Option. A stock option allows the recipient to buy a certain number of shares of our common stock at a pre-determined “exercise
price.” The exercise price is equal to the fair market value on the grant date. Stock options have a ten-year term and vest in three
equal annual installments beginning on the first anniversary of the grant date, subject to certain post termination and change of control
provisions. Unvested options are generally forfeited upon termination of employment. As a result, options are intended to retain key employees,
including the NEOs, and align their interests with shareholders.
Restricted
Stock Unit (“RSU”). An RSU is a promise to issue shares of our common stock in the future, provided the recipient
remains employed with us through the award’s vesting period. The RSUs vest in three equal annual installments beginning on the first
anniversary of the grant date, and unvested RSUs are generally forfeited upon termination of employment. As a result, RSUs are intended
to retain key employees, including the NEOs, and align their interests with shareholders.
Performance
Share Unit (“PSU”). A PSU is a promise to issue shares of our common stock in the future provided the recipient
remains employed with us through the award’s vesting period and certain performance conditions are achieved. Depending on actual
performance against established metrics, the number of units that could be earned and become eligible to vest pursuant to such an award
can be between 0% and 125% of the target number of shares.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
Grant levels of each component
of the long-term incentive program may vary from year to year and by participant, based on a variety of factors. The HR and Compensation
Committee determines the award opportunity level for each executive officer based upon the individual’s responsibility level and
potential within the Company, competitive practices, the number of shares available for grant, the individual’s and Company’s
performance and the market price for our common stock.
The Company uses RSUs and
PSUs for the long-term incentive (“LTI”) grant. For fiscal 2021, the award opportunity levels for each NEO and the mix of
RSUs and PSUs is set forth below.
Name |
|
Long Term
Incentive
(% of Salary) |
|
|
RSUs |
|
|
PSUs |
|
Timothy A. Peterman |
|
|
150 |
|
|
|
50 |
% |
|
|
50 |
% |
Jean Sabatier |
|
|
85 |
|
|
|
100 |
% |
|
|
— |
|
Montgomery Wageman |
|
|
45 |
|
|
|
100 |
% |
|
|
— |
|
The HR and Compensation Committee
approved grants of PSUs and RSUs on March 25, 2021, resulting in the issuance of 77,408 RSUs and 77,408 PSUs to Mr. Peterman,
29,243 RSUs to Mr. Sabatier, and 2,294 RSUs to Mr. Wageman, although at the time of approval and distribution, Mr. Wageman
had not yet been promoted to his position of Chief Financial Officer and was not considered an NEO. As part of Mr. Wageman’s
promotion on June 16, 2021. Mr. Wageman received promotion equity compensation in an amount up to 10,000 shares of common stock,
with 50% of the award in RSUs and 50% of the aware in stock option. All of the RSUs were scheduled to vest on each of the first, second
and third anniversaries of their respective dates of grant.
The PSUs granted to Mr. Peterman
in fiscal 2021 were eligible to vest at the end of a three-year period, if the Company achieves pre-established goals for liquidity over
the measurement period from January 31, 2021 to January 29, 2022. The number of units that could be earned and become eligible
to vest pursuant to the PSUs was between 0% and 200% of the target number shares. Based on maximum performance in excess of the established
goals during the measurement period, the PSUs granted to Mr. Peterman in fiscal 2021 were earned at 200% of target and are eligible
to vest and settle into 154,816 shares of common stock on February 3, 2024.
Employment Agreement with Timothy A. Peterman
In May 2019, we entered
into an executive employment agreement with Mr. Peterman providing for a two-year initial term, followed by automatic one-year renewals,
and providing that Mr. Peterman will: (a) receive an annual base salary of $650,000, (b) be eligible for annual cash discretionary
bonuses targeted at 100% of his annual salary (pro-rated for the 2019 fiscal year) with a maximum annual cash discretionary bonus equal
to 200% of his annual salary, (c) received 68,000 PSUs, and (d) received a $150,000 relocation payment and temporary housing
assistance while he relocates to the Company’s headquarters.
In March 2021, our compensation
committee approved an annual base salary increase from $650,000 to $900,000 for Mr. Peterman.
Executives’ Severance Benefit Plan
As further described under
“Executives’ Severance Benefit Plan” below, we have established guidelines regarding severance for our NEOs in the event
their employment is terminated under specified circumstances.
Clawback Policy
We have implemented an executive
compensation recovery, or clawback, policy, which covers all officers, providing for recoupment of certain compensation in the event
we are required to restate our financial statements due to material non-compliance, as a result of misconduct of an executive officer
or officers, with any financial reporting requirement under the securities laws. The policy complies with the Dodd-Frank Wall Street
Reform and Consumer Protection Act.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
Anti-Hedging and Anti-Pledging Policy
We have implemented
an anti-hedging and pledging policy covering all directors, officers and employees which prohibits such individuals from:
| ● | holding any Company securities in a margin account or pledging Company securities as collateral for a
loan; |
| ● | engaging in puts or calls or other derivative transactions relating to the Company’s securities; |
| ● | short-selling securities of the Company; and |
| ● | purchasing any financial instruments (including prepaid variable forward contracts, equity swaps, collars,
and exchange funds) that are designed to hedge or offset any decrease in the market value of any equity securities of the Company. |
The foregoing
restrictions apply to all securities of the Company owned directly or indirectly by such individuals, including securities of the Company
owned by family members where the individuals are deemed to beneficially own such securities, and their respective designees.
Stock Ownership Guidelines for Directors and
Executive Officers
Consistent with
our ownership philosophy, the Board has established stock ownership guidelines for non-management members of the Board and executive officers.
Under the guidelines, non-management directors are required to own equity at a level equal to four times the amount of the annual cash
retainer (not including any chair or vice-chair retainers) within five years of becoming subject to the guidelines. The guidelines also
require that within five years of becoming subject to the guidelines, each executive officer must own equity at a level equal to a specified
multiple of his or her annual base salary. The minimum equity ownership levels are four times the annual base salary for our CEO and two
times the annual base salary for the other executive officers. Shares counted for purposes of the guidelines are fully-vested outstanding
shares as well as a number of shares whose fair market value as of the most recent fiscal year end is equal to the aggregate amount by
which the fair market value as of the most recent fiscal year end of the number of shares subject to vested and “in-the-money”
stock option, stock appreciation right, RSU, deferred stock unit and similar awards held by the director or executive officer exceeds
the aggregate exercise or purchase price for such number of shares. Shares subject to unvested equity awards do not count toward the ownership
level under the guidelines. Until the director or executive officer has achieved the applicable ownership level, he or she must retain
at least 50% of the “net profit shares” resulting from any stock option exercise or from the exercise, vesting or settlement
of any other form of equity-based compensation award. “Net profit shares” refers to that portion of the number of shares subject
to the exercise, vesting or settlement of an award that the director or executive officer would receive had he or she authorized us to
withhold shares otherwise deliverable in order to satisfy any applicable exercise price or withholding taxes.
As of January 29, 2022,
all directors and executive officers who were subject to the ownership guidelines for at least five years complied with the guidelines,
and the directors and executive officers who were subject to the ownership guidelines for less than five years had made progress toward
achieving their stock ownership requirements.
Accounting and Tax Considerations
When establishing pay elements
or associated programs, the HR and Compensation Committee reviews projections of the estimated pro forma expense and tax impact of all
material elements of the Company’s executive compensation program. Generally, an accounting expense is accrued over the requisite
service period of the particular pay element, which in many cases is equal to the performance period, and the Company realizes a tax deduction
upon payment to and/or realization by the executive.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
Summary Compensation Table
The following table provides
information for the fiscal years indicated relating to compensation paid or granted to, or accrued by us on behalf of, our NEOs.
Name and Principal
Position | |
Fiscal
Year | | |
Salary
($) | | |
Bonus
($) | | |
Stock
Awards(a)
($) | | |
Option
Awards(a)(b) ($) | | |
Nonequity
Incentive Plan
Compensation(c) ($) | | |
All
Other
Compensation ($) | | |
Total
($) | |
Timothy
A. Peterman | |
2021 | | |
| 870,261 | | |
| — | | |
| 1,349,996 | (d) | |
| — | | |
| 1,800,000 | | |
| 4350 | (e) | |
| 4,020,257 | |
Chief Executive Officer | |
2020 | | |
| 650,000 | | |
| — | | |
| 662,457 | | |
| — | | |
| 1,300,000 | | |
| 1,125 | (e) | |
| 2,613,582 | |
Jean
Sabatier | |
2021 | | |
| 300,690 | | |
| — | | |
| 254,999 | (f) | |
| — | | |
| 180,000 | | |
| 4350 | (e) | |
| 735,689 | |
Executive Vice President and
Chief Commerce Officer | |
2020 | | |
| 300,000 | | |
| — | | |
| 128,641 | | |
| — | | |
| 180,000 | | |
| 865 | (e) | |
| 609,506 | |
Montgomery
Wageman Senior Vice President,
Chief Financial Officer | |
2021 | | |
| 261,860 | | |
| — | | |
| 50,704 | (g) | |
| 30,700 | (h) | |
| 80,000 | | |
| — | | |
| 423,265 | |
(a) | Each amount represents the grant date fair value of stock-based
awards granted during the fiscal year computed in accordance with FASB ASC Topic 718. |
(b) | The assumptions used to calculate the value of the option
awards granted in the appliable fiscal year are set forth in Note 10, Shareholders’ Equity — Stock-Based Compensation,
of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2021. Amounts do not reflect
compensation actually realized by the NEO. |
(c) | Represents payments under the Company’s Annual Incentive
Plan. |
(d) | Represents RSUs awarded on March 10, 2021 with a transaction
date of March 23, 2021 and PSUs awarded on March 10, 2020 as part of the Company’s long-term compensation program. The grant date
fair value of the PSUs is based on the maximum potential number of units eligible to vest based on actual performance during the performance
period. The PSUs will vest on January 28, 2023, so long as Mr. Peterman’s service has been continuous through the vest date. Amount
shown for 2019 represents the grant date fair value of market-based PSUs granted in fiscal 2019 in conjunction with the appointment of
Mr. Peterman as CEO of the Company. The grant date fair value of the PSUs is based on the grant date closing price of the Company’s
stock. |
(e) | Represents Company’s matching contributions to 401(k)
plan. |
(f) | Represents 29,243 RSUs awarded on March 25, 2021 and scheduled
to vest and settle into shares of common stock on a 1:1 basis as part of the Company’s long-term compensation incentive program. |
(g) | Represents 5,000 RSUs awarded on June 16, 2021 and scheduled
to vest and settle into shares of common stock on a 1:1 basis in three substantially equal increments on the first, second, and third
anniversaries of the date of grant as part of the Company’s long-term compensation incentive program. |
(h) | Option awarded on August 26, 2021 to purchase 5,000 shares
of common stock scheduled to vest in three substantially equal increments on the first, second, and third anniversaries of the date of
grant, granted in connection with Mr. Wageman’s promotion. |
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
Outstanding Equity Awards at Fiscal 2021 Year-End
The following table
presents information regarding the outstanding equity awards held by our NEOs on January 29, 2022.
| |
| |
Option
Awards | | |
Stock
Awards | |
| |
| |
Number
of Securities Underlying Unexercised Options | | |
| | |
| |
Shares
or Units of Stock That Have Not Vested | | |
Equity
Incentive Plan Awards: Unearned Shares, Units or Other Rights That Have Not Vested | |
Name | |
Grant
Date | |
Exercisable
(#) | | |
Unexercisable | | |
Option
Exercise Price ($/Share) | | |
Option
Expiration
Date | |
Number | | |
Market
Value(a) ($) | | |
Number | | |
Market
or
Payout
Value(a) ($) | |
Timothy
A. Peterman | |
5/2/19 | |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| 45,332 | (b) | |
| 221,673 | |
| |
4/16/20 | |
| | | |
| | | |
| | | |
| |
| 47,860 | (d) | |
| 234,035.40 | | |
| | | |
| | |
| |
4/16/20 | |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| 181,902 | (c) | |
| 889,501 | |
| |
7/13/20 | |
| | | |
| | | |
| | | |
| |
| 49,152 | (d) | |
| 240,353.28 | | |
| | | |
| | |
| |
3/25/21 | |
| | | |
| | | |
| | | |
| |
| 77,408 | | |
| 378,525.12 | | |
| | | |
| | |
| |
3/25/21 | |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| 77,408 | | |
| 378,525 | |
| |
| |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| | | |
| | |
Jean Sabatier | |
5/30/19 | |
| 5,834 | | |
| 2,916 | (e) | |
| 4.60 | | |
5/30/29 | |
| | | |
| | | |
| | | |
| | |
| |
5/30/19 | |
| | | |
| | | |
| | | |
| |
| 2,916 | (e) | |
| 14,259.24 | | |
| | | |
| | |
| |
4/16/20 | |
| | | |
| | | |
| | | |
| |
| 50,764 | (d) | |
| 248,235.96 | | |
| | | |
| | |
| |
3/25/21 | |
| | | |
| | | |
| | | |
| |
| 29,243 | | |
| 142,998.27 | | |
| | | |
| | |
| |
| |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| | | |
| | |
Montgomery Wageman | |
3/25/21 | |
| | | |
| | | |
| | | |
| |
| 2,294 | | |
| 11,217.66 | | |
| | | |
| | |
| |
8/26/21 | |
| | | |
| | | |
| | | |
| |
| 5,000 | | |
| 24,450 | | |
| | | |
| | |
| |
8/26/21 | |
| – | | |
| 5,000 | (f) | |
| 6.14 | | |
8/26/31 | |
| | | |
| | | |
| | | |
| | |
(a) | Market value of unvested or unearned shares is based on the
closing price of our common stock on January 28, 2022, the last trading day prior to the completion of our 2021 fiscal year, which was
$4.89 per share. |
(b) | Remainder of PSU award eligible to vest on the date the Company’s
average closing stock price for 20 consecutive trading days equals or exceeds $20.00 per share and the executive has been continuously
employed at least one year and the remaining shares on the date the Company’s average closing stock price for 20 consecutive trading
days equals or exceeds $40.00 per share and the executive has been continuously employed at least two years. Such vestings may occur
any time on or before May 1, 2029 if the executive has been continuously employed through the vesting date. |
(c) | Time-vested RSUs scheduled to vest on January 28, 2023. The
number of shares earned represents amount determined pursuant to PSU award based on the Company’s achievement of pre-established
goals for liquidity over the measurement period from February 2, 2020 to January 30, 2021. |
(d) | Scheduled to vest in three equal annual installments beginning
on the first anniversary of the date of grant. |
(e) | Eligible to vest on May 30, 2022. |
(f) | Eligible to vest with respect to 1,666 shares on August 26,
2022, 1,666 shares on August 26, 2023, and 1667 shares on August 26, 2024. |
Other Compensation
Retirement Benefits
The Company maintains a qualified
401(k) retirement savings plan covering substantially all employees and the NEOs may voluntarily elect to participate in the plan.
Matching contributions are contributed to the plan on a per pay period basis. The Company historically provides a contribution match of
$0.50 for every $1.00 contributed by eligible participants up to a maximum of 6% of eligible compensation. We do not provide a defined
benefit plan to our NEOs or any of our other executive officers.
Health Benefits and Other Perquisites
We provide several benefit
plan options, such as medical insurance, dental insurance, life insurance, short term disability insurance and long-term disability insurance.
All full-time team members, including NEOs, are eligible for these benefits plans. These benefits are provided to enable us to attract
and retain talent and are comparable to those provided by the companies in our peer group. All benefit plans are reviewed periodically
with the HR and Compensation Committee.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
Potential Payments upon Termination or Change-in-Control
Executives’ Severance Benefit Plan
The Company maintains the
iMedia Brands, Inc. Executives’ Severance Benefit Plan (“Severance Plan”) to provide certain severance benefits
to executive officers and designated employees (“Executives”). Under the terms of the Severance Plan, if an Executive’s
employment is terminated by the Company without “Cause” or by the Executive for “Good Reason” and no Change in
Control has occurred, the Executive will receive the following:
Executive Level |
Cash Severance Amount |
Tier I Executive
(Chief Executive Officer, Executive Vice Presidents) |
An amount equal to 1 ¼ times the Executive’s highest base salary. |
Tier II Executive
(Senior Vice Presidents) |
1 times the Executive’s highest annual rate of base salary during the 12-month period immediately preceding the date that the Executive separates from the Company. |
If within a one-year period
(the “Benefit Period”) commencing on the date of a Change in Control (as defined in the Severance Plan), an Executive’s
employment is terminated by the Company without “Cause” or by the Executive for “Good Reason,” the Executive will
be entitled to benefits under the Severance Plan as set forth in the table below. In addition, an Executive who was a participant in the
Severance Plan on the date of the Change in Control will be entitled to benefits under the Severance Plan if the Executive’s employment
is terminated by the Company during the Benefit Period or the immediately preceding six months.
Executive Level |
Cash Severance Amount |
Tier I Executive
(Chief Executive Officer, Executive Vice Presidents) |
The sum of:
● 1
½ times the Executive’s highest annual rate of base salary during the 12-month period immediately preceding the date that
the Executive separates from service; and
● 1
½ times the target annual incentive bonus determined from such base salary. |
Tier II Executive
(Senior Vice Presidents) |
The sum of:
● 1
¼ times the Executive’s highest annual rate of base salary during the 12-month period immediately preceding the date that
the Executive separates from service, and
● 1
¼ times the target annual incentive bonus determined from such base salary. |
The Executive will also be entitled to reimbursement
for a portion of the premium amount for COBRA coverage equal to the amount paid by other similarly situated Executives who have not been
terminated and who receive similar group, health, dental and life insurance benefits. The Company shall provide such reimbursement for
a period of eighteen months for Tier 1 Executives and fifteen months for Tier II Executives after the Executive’s employment terminates,
subject to the Executive’s timely payment of his or her share of the applicable premiums. All severance pay or benefits are conditioned
upon the applicable Executive’s execution of an effective release and his or her compliance with applicable covenants under the
Severance Plan (including non-solicitation, non-disparagement, confidentiality and non-use covenants).
The Severance Plan defines
“Cause” as what the term is expressly defined to mean in a then-effective written agreement between an Executive and the Company
or, in the absence of any such then-effective agreement or definition, as (i) a material act of fraud which results in or is intended
to result in an Executive’s personal enrichment at the expense of Company, including theft or embezzlement from the Company; (ii) public
conduct by an Executive that is materially detrimental to the reputation of the Company; (iii) a material violation by an Executive
of any written Company policy, regulation or practice; (iv) the willful or grossly negligent failure to adequately perform the duties
of an Executive’s position to the material detriment of the Company; (v) the commission of conduct constituting a felony; (vi) a
material breach by an Executive of any of the terms and conditions of an agreement with the Company; or (vii) the Executive continues
to materially fail to perform the duties associated with Executive’s employment after being notified of such failure and given a
reasonable opportunity to cure such failure.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
“Good Reason”
is defined in the Severance Plan as, without an Executive’s written consent, (i) an adverse and material change in the Executive’s
status, position or responsibilities as compared to the Executive’s status, position or responsibilities as in effect prior to such
change; (ii) a material reduction in the amount of either the Executive’s annual base salary or target annual incentive program
opportunity as in effect on the date she or he became a participant in the Severance Plan, or as the same may be increased from time to
time during the term of the Executive’s participation in this Severance Plan; (iii) the failure to provide or continue in effect
materially similar compensation and benefits, in accordance with the Severance Plans, practices, policies and programs of the Company
in effect for the Executive at any time during the 120-day period immediately preceding the Change in Control or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company; (iv) the failure
of any successor or assign of the Company to assume and expressly agree to perform the obligations under the Severance Plan; (v) any
purported termination of the Executive’s employment which is not effected in accordance with the applicable provisions of the Severance
Plan; and (vi) any request by the Company that the Executive participate in an unlawful act.
Additional Potential Payments for Accelerated Equity Awards Upon
Change in Control
Under the terms of our 2020
Equity Incentive Plan (the “2020 Plan”), if a change in control (as defined in the 2020 Plan) of the Company that involves
a corporate transaction (as defined in the 2020 Plan) occurs, then the consequences will be as described below. If outstanding awards
are continued, assumed or replaced by the surviving or successor entity in connection with a corporate transaction, and if within one
year after the corporate transaction a participant’s employment or other service is involuntarily terminated without cause, then
(i) each of the participant’s outstanding options and SARs will become exercisable in full and remain exercisable for one year,
and (ii) each of the participant’s unvested full value awards will fully vest. For these purposes, a performance-based full
value award will be considered fully vested if the performance goals are deemed to have been satisfied at the target level of performance
and the vested portion of the award at that level of performance is proportionate to the portion of the performance period elapsed prior
to the participant’s termination of employment or other service.
If any outstanding award
is not continued, assumed or replaced in connection with a change in control involving a corporate transaction, then (i) all outstanding
options and SARs will become fully exercisable for a period of time prior to the effective time of the corporate transaction and will
then terminate at the effective time of the corporate transaction, and (ii) all full value awards will fully vest immediately prior
to the effective time of the corporate transaction. In this scenario, performance-based full value awards will be considered fully vested
in the same manner as described above, except that the proportionate vesting amount will be determined with respect to the portion of
the performance period that elapsed prior to the corporate transaction. Alternatively, if outstanding awards are not continued, assumed
or replaced, the HR and Compensation Committee may elect to cancel such awards in exchange for a payment with respect to each award in
an amount equal to the excess, if any, between the fair market value of the shares subject to the award immediately prior to the effective
date of such corporate transaction (which may be the fair market value of the consideration to be received in the corporate transaction
for the same number of shares) over the aggregate exercise price (if any) for the shares subject to such award (or, if there is no excess,
such award may be terminated without payment).
If a change in control of
the Company occurs that does not involve a corporate transaction, the HR and Compensation Committee may, in its discretion, provide for
one or more of the following with respect to awards under the 2020 Plan: (i) the cancellation of awards in exchange for payment to
participants in cash and (ii) making such adjustments to the awards then outstanding as the HR and Compensation Committee deems appropriate
to reflect such change in control, which may include the acceleration of vesting in full or in part.
Under
the terms of our 2011 Omnibus Incentive Plan, as amended to date (the “2011 Plan”),
equity awards will accelerate in full upon a change in control involving a corporate transaction (as defined in the 2011 Plan) if: (1) such
awards are not continued, assumed or replaced or (2) such awards are continued, assumed or replaced and the individual’s employment
with the Company is terminated without cause within one year of the corporate transaction. For a change in control not involving a corporate
transaction, the 2011 Plan provides the HR and Compensation Committee with discretion to accelerate vesting of outstanding equity awards.
Pursuant to the terms of the PSU award agreements, in the event of either type of change of control, the number of units that will accelerate
will be based on actual performance through the date of the change in control or termination of employment, as applicable. Under our 2004
Omnibus Stock Plan, accelerated vesting of equity awards is mandatory upon a change in control of the Board that is not approved by the
then-current Board.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
OTHER
MATTERS
As
of the date of this proxy statement, the Board knows of no matters that will be presented for consideration at the Annual Meeting other
than as described in this proxy statement. If other matters are properly presented at the Annual Meeting and you
are a shareholder of record and have submitted a completed proxy card or voting instruction form, the persons named as proxies in such
proxy card or voting instruction form will vote your shares in accordance with their discretion.
No
appraisal or dissenters’ rights will be available to Company shareholders in connection with the proposals to be considered at
the Annual Meeting.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
APPENDIX A
IMEDIA
BRANDS INC.1
and
EQUINITI
TRUST COMPANY2
as Rights Agent
SHAREHOLDER RIGHTS PLAN
Dated July 13, 2015
1 Originally EVINE Live, Inc.
2 Originally Wells Fargo Bank, N.A.
PRELIMINARY PROXY STATEMENT – SUBJECT
TO COMPLETION
TABLE OF CONTENTS
|
|
Page |
|
|
|
Section 1. |
Definitions |
1 |
Section 2. |
Appointment of Rights Agent |
4 |
Section 3. |
Issuance of Right Certificates |
5 |
Section 4. |
Form of Right Certificates; Notice to Rights Agent
as to Acquiring Person |
6 |
Section 5. |
Countersignature and Registration |
6 |
Section 6. |
Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates |
7 |
Section 7. |
Exercise of Rights; Purchase Price; Expiration Date
of Rights |
7 |
Section 8. |
Cancellation and Destruction of Right Certificates |
8 |
Section 9. |
Reservation and Availability of Shares of Preferred
Stock |
8 |
Section 10. |
Securities Issuable Upon Exercise |
9 |
Section 11. |
Adjustments to Number and Kind of Securities or Other
Property, Number of Rights or Purchase Price |
10 |
Section 12. |
Certification of Adjustments |
15 |
Section 13. |
Fractional Rights and Fractional Shares |
15 |
Section 14. |
Rights of Action |
15 |
Section 15. |
Agreement of Right Holders |
15 |
Section 16. |
Right Certificate Holder Not Deemed a Shareholder |
16 |
Section 17. |
Concerning the Rights Agent. |
16 |
Section 18. |
Merger or Consolidation or Change of Name of Rights
Agent |
16 |
Section 19. |
Duties of Rights Agent |
17 |
Section 20. |
Change of Rights Agent |
18 |
Section 21. |
Issuance of New Right Certificates |
19 |
Section 22. |
Redemption |
19 |
Section 23. |
Exchange |
20 |
Section 24. |
Notice of Proposed Actions |
20 |
Section 25. |
Notices |
21 |
Section 26. |
Supplements and Amendments |
22 |
Section 27. |
Successors |
22 |
Section 28. |
Benefits of this Plan |
22 |
Section 29. |
Governing Law |
22 |
Section 30. |
Counterparts |
22 |
Section 31. |
Descriptive Headings |
22 |
Section 32. |
Severability |
22 |
Section 33. |
Determination and Actions by the Board, etc. |
22 |
PRELIMINARY PROXY STATEMENT – SUBJECT
TO COMPLETION
SHAREHOLDER RIGHTS PLAN (this
“Plan”), dated July 13, 2015, between iMedia Brands, Inc., a Minnesota corporation (the “Company”),
and Equiniti Trust Company, as Rights Agent (the “Rights Agent”).
WITNESSETH:
WHEREAS, the Company has
generated substantial operating losses and other tax attributes in previous years which, under the Internal Revenue Code of 1986, as
amended (the “Code”) and rules promulgated by the Internal Revenue Service, the Company may in certain circumstances
use to offset current and future earnings and thus reduce its future federal income tax liability (subject to certain requirements and
restrictions); and
WHEREAS, if the Company experiences
an Ownership Change, as defined in Section 382 of the Code and the Treasury Regulations thereunder and any successor or replacement
provisions (“Section 382”), its ability to use the Tax Attributes (as hereinafter defined) could be substantially
limited or lost altogether; and
WHEREAS, the Company desires
to avoid an Ownership Change and, in furtherance of such objective, the Company wishes to enter into this Plan; and
WHEREAS, on July 10,
2015, a duly authorized committee of the Board of Directors of the Company (the “Board”) (i) authorized and declared
a dividend of one right (a “Right”) for each share of the common stock, par value $0.01 per share, of the Company
outstanding as of the Close of Business (as defined herein) on July 23, 2015 (the “Record Date”), and authorized
the issuance of the Rights as of the Record Date, each Right representing the right to purchase one one-thousandth of a share of Series A
Junior Participating Cumulative Preferred Stock, par value $0.01 per share, of the Company having the voting powers, designation, preferences
and relative rights described in the Certificate of Designation, Preferences and Rights attached hereto as Exhibit A (each one one-thousandth
of a share, a “Unit”, and such shares of preferred stock, “Preferred Stock”), and (ii) further
authorized the issuance of one Right with respect to each share of Common Stock of the Company that shall become outstanding between
the Record Date and the earlier of the Distribution Date and the Expiration Date (each as defined herein) (or thereafter in accordance
with Section 21), all upon the terms and subject to the conditions hereafter set forth.
NOW, THEREFORE, in consideration
of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Definitions.
For purposes of this Plan,
the following terms shall have the meanings indicated:
“Acquiring Person”
means any Person who or which, together with all Affiliates and Associates of such Person, is or becomes the Beneficial Owner of 4.99%
or more of the shares of Common Stock of the Company then outstanding, as calculated herein, but shall not include:
(i) the
Company;
(ii) any
Subsidiary of the Company;
(iii) any
employee benefit plan or employee stock plan of the Company or any Subsidiary of the Company, any Person organized, appointed, established
or holding shares of Common Stock of the Company for or pursuant to the terms of any such plan;
(iv) any
“direct public group” within the meaning of Treasury Regulations Section 1.382-2T(j)(2)(ii);
(v) any
Person who the Board determines prior to the time such Person would otherwise be an Acquiring Person, should be permitted to become the
Beneficial Owner of up to a number of the shares of Common Stock determined by the Board (the “Exempted Number”) and
be exempted from being an Acquiring Person, unless and until such Person acquires Beneficial Ownership of shares of Common Stock of the
Company in excess of the Exempted Number (other than pursuant to a stock split, stock dividend or similar transaction) in which case
such Person shall be an Acquiring Person; provided, however, that the Board may make such exemption subject to
such conditions, if any, which the Board may determine;
PRELIMINARY PROXY STATEMENT – SUBJECT
TO COMPLETION
(vi) any
Person who would otherwise be an Acquiring Person upon the first public announcement by the Company of the adoption of this Plan, unless
and until such Person, or any Affiliate of such Person, acquires Beneficial Ownership of any additional shares of Common Stock of the
Company after the first public announcement by the Company of the adoption of this Plan (other than pursuant to a stock split, stock
dividend or similar transaction), in which case such Person shall be an Acquiring Person;
(vii) any
Person who as the result of an acquisition of shares of Common Stock by the Company which, by reducing the number of shares of Common
Stock of the Company outstanding, increases the proportionate number of shares of Common Stock of the Company Beneficially Owned by such
Person to 4.99% or more of the shares of Common Stock of the Company then outstanding; provided, however, that,
if a Person shall become the Beneficial Owner of 4.99% or more of the shares of Common Stock of the Company then outstanding by reason
of acquisition of shares by the Company and shall, after the first public announcement by the Company of such share acquisitions by the
Company, become the Beneficial Owner of any additional shares (other than pursuant to a stock split, stock dividend or similar transaction)
of Common Stock of the Company and immediately thereafter be the Beneficial Owner of 4.99% or more of the shares of Common Stock of the
Company then outstanding, then such Person shall be an Acquiring Person; or
(viii) any
Person who inadvertently becomes an Acquiring Person, so long as such Person promptly enters into, and delivers to the Company, an irrevocable
commitment to promptly divest, and thereafter promptly divests Beneficial Ownership of sufficient shares of Common Stock of the Company
so that such Person ceases to be an Acquiring Person;
provided, however, that no
Person shall be an Acquiring Person if the Board shall have affirmatively determined, prior to or after the Distribution Date, in light
of the intent and purposes of this Agreement or other circumstances facing the Company, that such Person shall not be deemed an Acquiring
Person, unless and until such Person shall again become an Acquiring Person.
In determining whether a Person owns 4.99% or
more of the shares of Common Stock of the Company then outstanding, for all purposes of this Plan, all of the Common Stock of the Company
Beneficially Owned by such Person shall be taken into account in the numerator and only the Common Stock of the Company then outstanding
shall be taken into account in the denominator. Without limiting the foregoing, any Person (other than a “direct public group”
within the meaning of Treasury Regulations Section 1.382-2T(j)(2(ii)) shall be treated as the Beneficial Owner of 4.99% or more
shares of the Common Stock of the Company then outstanding if, in the determination of the Board, that Person would be treated as a “5-percent
shareholder” for purposes of Section 382 (substituting “4.99” for “5” each time “five”
or “5” is used in or for purposes of Section 382).
“Adjustment Shares”
shall have the meaning set forth in Section 11(a)(ii).
“Affiliate”
and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act as in effect on the date of this Plan, and to the extent not included within the foregoing clause
of this Section, shall also include, with respect to any Person, any other Person whose Common Stock would be deemed constructively or
otherwise owned by, or otherwise aggregated with shares owned by, such first Person or owned by a single “entity” pursuant
to the provisions of Section 382; provided, however, that a Person will not be deemed to be the Affiliate or Associate of another
Person solely because either or both Persons are or were directors of the Company.
A Person shall be deemed
the “Beneficial Owner” of, and to “Beneficially Own,” any securities:
(i) which
such Person or any of such Person’s Affiliates or Associates is deemed to beneficially own, directly or indirectly, within the
meaning of Rule 13d-3 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement, provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own securities (including rights, options or warrants)
which are convertible or exchangeable into or exercisable for Common Stock except to the extent the acquisition or transfer of such rights,
options or warrants would reasonably be expected to result in the rights, options or warrants being treated as exercised on the date
of their acquisition or transfer under Section 382;
(ii) the
beneficial ownership of which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right
to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of conversion rights, exchange rights, warrants, options or other rights
(including, without limitation, within the meaning of Section 382) (in each case, other than upon exercise or exchange of the Rights); provided, however,
that a Person will not be deemed the Beneficial Owner of, or to Beneficially Own, securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted
for purchase or exchange;
(iii) of
which any other Person is the Beneficial Owner, if such Person or any of such Person’s Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) with such other Person (or any of such other Person’s Affiliates or Associates)
with respect to acquiring, holding, voting or disposing of any securities of the Company; or
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(iv) to
the extent not included within the foregoing provisions of this Section, a Person shall be deemed the “Beneficial Owner”
of and shall be deemed to “beneficially own” or have “beneficial ownership” of, securities which such Person
would be deemed to constructively or otherwise own, or which would otherwise be aggregated with shares owned or beneficially owned by
such Person, for purposes of Section 382;
provided, however, that (i) a
Person will not be deemed the Beneficial Owner of, or to Beneficially Own, any security (A) if such Person has the right to vote
such security pursuant to an agreement, arrangement or understanding (whether or not in writing) which (1) arises solely from a
revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance
with, Section 14(a) of the Exchange Act by means of a solicitation statement filed on Schedule 14A, and (2) is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report), or (B) if such beneficial ownership
arises solely as a result of such Person’s status as a “clearing agency,” as defined in Section 3(a)(23) of the
Exchange Act; (ii) nothing in this definition will cause a Person engaged in business as an underwriter of securities
to be the Beneficial Owner of, or to Beneficially Own, any securities acquired through such Person’s participation in good faith
in an underwriting syndicate until the expiration of 40 calendar days after the date of such acquisition, or such later date as the Board
may determine in any specific case; and (iii) subject to clause (iv), above, a Person shall not be deemed the Beneficial Owner of,
or to Beneficially Own, any securities if (i) such securities would not be deemed constructively or otherwise owned by, or otherwise
aggregated with shares owned by, such Person, and (ii) such securities would not be deemed constructively or otherwise owned by
a single “entity”, in each case, for purposes of Section 382.
“Board”
shall have the meaning set forth in the recitals.
“Business Day”
shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.
“Close of Business”
on any given date shall mean 5:00 P.M. New York City time, on such date; provided, however, that if such
date is not a Business Day, it shall mean 5:00 P.M., New York City time, on the next succeeding Business Day.
“Common Stock,”
when used with reference to the Company, shall mean the common stock (presently $0.01 par value per share) of the Company. “Common
Stock”, when used with reference to any Person other than the Company, shall mean shares of the capital stock with the greatest
voting power of such other Person or, if such other Person is a subsidiary of another Person, the entity which ultimately controls such
first-mentioned Person. “Common Stock” when used with reference to any Person not organized in corporate form shall
mean units of beneficial interest which (x) represent the right to participate generally in the profits and losses of such Person
(including without limitation any flow-through tax benefits resulting from an ownership interest in such Person) and (y) are entitled
to exercise the greatest voting power of such Person or, in the case of a limited partnership, have the power to remove the general partner
or partners.
“Code”
shall have the meaning set forth in the preamble.
“Company”
shall have the meaning set forth in the preamble.
“Current Market
Price” shall have the meaning set forth in Section 11(d).
“Current Value”
shall have the meaning set forth in Section 11(a)(iii).
“Distribution Date”
shall have the meaning set forth in Section 3(a).
“Equivalent Preferred
Securities” shall have the meaning set forth in Section 11(b).
“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended.
“Expiration Date”
shall mean the earliest of (i) the date on which all of the Rights are redeemed as provided in Section 22, (ii) the date
on which the Rights are exchanged as provided in Section 23, (iii) the consummation of a reorganization transaction entered
into by the Company resulting in the imposition of stock transfer restrictions that the Board determines will provide protection for
the Company’s Tax Attributes similar to that provided by this Plan, (iv) the Close of Business on the effective date of the
repeal of Section 382 (but excluding the repeal or withdrawal of any Treasury Regulations thereunder), or any other change, if the
Board determines that this Plan is no longer necessary or desirable for the preservation of Tax Attributes, (v) the date on which
the Board determines that the Tax Attributes have been applied within the meaning of Section 382 and that this Plan is no longer
necessary to preserve the Tax Attributes, (vi) the beginning of a taxable year of the Company to which the Board determines that
no Tax Attributes may be carried forward, (vii) the Close of Business on the earlier of the first anniversary of the date of the
Plan or the date of the final adjournment of the Company’s 2016 annual meeting of shareholders, if the Plan shall not have been
approved by holders of a majority of the shares of Common Stock of the Company present in person or represented by proxy at a meeting
of shareholders of the Company, and (viii) the Close of Business on the date of the final adjournment of the third annual meeting
of shareholders following the last annual meeting of shareholders of the Company at which this Plan was most recently approved by a holders
of a majority of the shares of Common Stock of the Company present in person or represented by proxy at such meeting of shareholders
of the Company, unless the Plan is re-approved by holders of a majority of the shares of Common Stock of the Company present in person
or represented by proxy at such third annual meeting of shareholders of the Company.
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“Final Expiration
Date” shall mean the tenth anniversary of the date of the Plan.
“NASDAQ”
shall mean The Nasdaq Stock Market LLC or any of its listing venues.
“NYSE”
shall mean the New York Stock Exchange.
“Person”
shall mean any individual, firm, corporation, partnership, limited liability company, limited liability partnership, association, trust,
syndicate or other entity, and includes without limitation an unincorporated group of individuals who, by formal or informal agreement
or arrangement (whether or not in writing), have embarked on a common purpose or act.
“Preferred Stock”
shall have the meaning set forth in the recitals.
“Purchase Price”
shall have the meaning set forth in Section 7(b).
“Record Date”
shall have the meaning set forth in the recitals.
“Redemption Price”
shall have the meaning set forth in Section 22(a).
“Right”
shall have the meaning set forth in the preamble.
“Rights Agent”
shall have the meaning set forth in the preamble.
“Right Certificate”
shall have the meaning set forth in Section 3(a).
“Section 11(a)(ii) Event”
shall have the meaning set forth in Section 11(a)(ii).
“Section 382”
shall have the meaning set forth in the preamble.
“Securities Act”
shall mean the Securities Act of 1933, as amended.
“Share Equivalents”
shall have the meaning set forth in Section 11(a)(iii).
“Stock Acquisition
Date” shall mean the first date of a public announcement (which, for purposes of this definition, shall include, without limitation,
a report filed or amended pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person indicating
that an Acquiring Person has become such; provided that, if such Person is determined by the Board not to be or have
become an Acquiring Person, then no Stock Acquisition Date shall be deemed to have occurred.
“Subsidiary”
of a Person shall mean any corporation or other entity of which securities or other ownership interests having ordinary voting power
sufficient to elect or appoint a majority of the board of directors or other persons performing similar functions are beneficially owned,
directly or indirectly, by such Person and any corporation or other entity that is otherwise controlled by such Person.
“Substitution Period”
shall have the meaning set forth in Section 11(a)(iii).
“Summary of Rights”
shall have the meaning set forth in Section 3(b).
“Tax Attributes”
shall mean the net operating loss carryforwards, capital loss carryforwards, general business credit carryforwards, alternative minimum
tax credit carryforwards and foreign tax credit carryforwards, as well as any loss or deduction attributable to a “net unrealized
built-in loss” within the meaning of Section 382, of the Company or its Subsidiaries.
“Trading Day”
shall have the meaning set forth in Section 11(d)(i).
“Triggering Event”
shall mean any Section 11(a)(ii) Event.
“Unit”
shall have the meaning set forth in the recitals.
Section 2. Appointment
of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also be the holders of the Common Stock) in accordance
with the terms and conditions of this Plan, and the Rights Agent hereby accepts this appointment. The Company may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable. In the event the Company appoints one or more co-Rights Agents, the respective
duties of the Rights Agents and any co-Rights Agents shall be as the Company shall determine. No Rights Agent shall have a duty to supervise,
and in no event shall be liable for, the acts or omissions of any such co-Rights Agent.
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Section 3. Issuance
of Right Certificates.
(a) Until
the Close of Business on the earlier to occur of (i) the tenth calendar day after the Stock Acquisition Date or (ii) the tenth
calendar day (or such later time as determined by the Board but in no event later than the time such Person becomes an Acquiring Person)
after the date of the commencement by any Person of a tender or exchange offer, upon the successful consummation of which such Person,
together with its Affiliates and Associates, would be an Acquiring Person (irrespective of whether any shares are actually purchased
pursuant to such offer), or in the case of clause (ii) such later date specified by the Board which date shall not be later than
the date specified in clause (i) (the earliest of such dates being referred to herein as the “Distribution Date”),
(x) the Rights will be evidenced by the certificates for the shares of Common Stock of the Company registered in the names of the
holders of the shares of Common Stock of the Company (which certificates for shares of Common Stock of the Company shall be deemed also
to be certificates for Rights) or, with respect to shares of Common Stock of the Company not represented by certificates, the Rights
related thereto will be evidenced by the notation on the records of the Company representing these shares, and, in each case, not by
separate certificates, (y) the registered holders of shares of Common Stock of the Company shall also be the registered holders
of the associated Rights, and (z) the Rights (and the right to receive certificates therefor) will be transferable only in connection
with the transfer of the underlying shares of Common Stock of the Company (including a transfer to the Company). As soon as practicable
after the Distribution Date, the Rights Agent will, if requested to do so by the Company and provided with all necessary information,
send, by first-class, postage prepaid mail, to each record holder of shares of Common Stock of the Company as of the Close of Business
on the Distribution Date, at the address of the holder shown on the records of the Company, a certificate in substantially the form of
Exhibit B (the “Right Certificate”) evidencing the Rights underlying the shares of Common Stock of the Company
so held. As of and after the Distribution Date, the Rights will be evidenced solely by the Right Certificates. The Company shall promptly
notify the Rights Agent in writing upon the occurrence of the Distribution Date and, if notification is given orally, the Company shall
confirm the same in writing on or prior to the Business Day next following. Until this notice is received by the Rights Agent, the Rights
Agent may presume conclusively for all purposes that the Distribution Date has not occurred.
(b) Upon
request of any holder of record of a Right, the Company will send a copy of this Agreement and a copy of the Summary of the Terms of
the Rights, substantially in the form attached hereto as Exhibit C (the “Summary of Rights”), by postage prepaid
mail, to the holder.
(c) Until
the Distribution Date (or, if earlier, the Expiration Date or Final Expiration Date), the surrender for transfer of any certificate for
shares of Common Stock of the Company shall also constitute the surrender for transfer of the Rights associated with the shares of Common
Stock represented thereby and the transfer of shares of Common Stock on the records of the Company shall also constitute the transfer
of the Rights associated with the shares.
(d) Certificates
issued for shares of Common Stock of the Company (including, without limitation, certificates issued upon transfer or exchange of shares
of Common Stock of the Company) after the Record Date, but prior to the earlier of the Distribution Date, the Expiration Date or the
Final Expiration Date, shall have impressed on, printed on, written on or otherwise affixed to them the following legend:
This certificate also evidences
and entitles the holder to certain Rights as set forth in a Shareholder Rights Plan between iMedia Brands, Inc., and Equiniti Trust
Company, as Rights Agent, dated July 13, 2015, as from time to time amended, extended or renewed (the “Plan”),
the terms of which are incorporated herein by reference and a copy of which is on file at the principal executive office of iMedia Brands, Inc..
Under certain circumstances, as set forth in the Plan, such Rights will be evidenced by separate certificates and will no longer be evidenced
by this certificate. iMedia Brands, Inc. will mail to the holder of record of this certificate a copy of the Plan, without charge,
within ten Business Days after receipt of a written request therefor. Under certain circumstances, as provided in the Plan, Rights issued
to or beneficially owned by Acquiring Persons or their Associates or Affiliates (as defined in the Plan) or any purported subsequent
holder of such Rights will become null and void. The Rights shall not be exercisable, and shall be void so long as held, by a holder
in any jurisdiction where the requisite qualification to the issuance to such holder, or the exercise by such holder, of the Rights in
such jurisdiction shall not have been obtained or be obtainable.
PRELIMINARY PROXY STATEMENT – SUBJECT
TO COMPLETION
The failure to print the
foregoing legend on any such certificate representing shares of Common Stock of the Company or any defect therein shall not affect in
any manner whatsoever the application or interpretation of the provisions of Section 7(e) hereof.
Section 4. Form of
Right Certificates; Notice to Rights Agent as to Acquiring Person.
(a) The
Right Certificates (and the forms of election to purchase shares and forms of assignment to be printed on the reverse thereof), when,
as and if issued, shall be substantially in the form set forth in Exhibit B and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as the Company may deem appropriate (which do not affect the duties or responsibilities
of the Rights Agent) and as are not inconsistent with the provisions of this Plan, or as may be required to comply with any law or with
any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage. Subject to the terms and conditions hereof, the Right Certificates evidencing the Rights,
whenever issued, on their face shall entitle the holders thereof to purchase, for each Right, one Unit, at the Purchase Price, but the
number and type of shares or other property holders thereof shall be entitled to purchase and the Purchase Price shall be subject to
adjustment as provided in this Plan.
(b) Notwithstanding
any other provision of this Plan, any Right Certificate that represents Rights that may be or may have been at any time on or after the
Distribution Date beneficially owned by an Acquiring Person or any Affiliate or Associate thereof (or any purported transferee of such
Rights) may have impressed on, printed on, written on or otherwise affixed to it the following legend:
The beneficial owner of the
Rights represented by this Right Certificate may be an Acquiring Person or an Affiliate or Associate (as defined in the Shareholder Rights
Plan between iMedia Brands, Inc., and Equiniti Trust Company, as Rights Agent, dated July 13, 2015 (the “Plan”))
of an Acquiring Person or a subsequent holder of a Right Certificate beneficially owned by such Persons. Accordingly, under certain circumstances
as provided in the Plan, this Right Certificate and the Rights represented hereby will be null and void.
The provisions of this Plan
shall be operative whether or not the foregoing legend is imprinted on any such Right Certificate. The Company shall give notice to the
Rights Agent promptly after it becomes aware of the existence of any Acquiring Person.
Section 5. Countersignature
and Registration.
(a) The
Right Certificates shall be signed on behalf of the Company by the Chief Executive Officer, Chief Financial Officer, Chief Strategy Officer
or any Vice President of the Company, either manually or by facsimile signature, and shall have affixed thereto the Company’s seal
or a facsimile thereof which shall be attested by the Secretary, Assistant Secretary, the Treasurer or any Assistant Treasurer of the
Company, either manually or by facsimile signature. The Right Certificates shall be countersigned by the Rights Agent, manually, or where
permitted, in facsimile, and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, the Right Certificates nevertheless may be countersigned by the Rights Agent, issued and delivered
with the same force and effect as though the person who signed the Right Certificates had not ceased to be such officer of the Company;
and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign the Right Certificate, although at the date of the execution of this Plan
any such person was not such an officer.
(b) Following
the Distribution Date and receipt by the Rights Agent of notice to that effect and all other relevant information referred to in Section 3(a),
the Rights Agent will keep or cause to be kept books for registration and transfer of the Right Certificates issued hereunder. The books
shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by
each of the Right Certificates, the date of each of the Right Certificates, and the certificate numbers for each of the Right Certificates.
PRELIMINARY PROXY STATEMENT – SUBJECT
TO COMPLETION
Section 6. Transfer,
Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject
to the provisions of Sections 4(b), 7(e) and 13(b), at any time after the Close of Business on the Distribution Date and at or prior
to the Close of Business on the earlier of the Expiration Date or the Final Expiration Date, any Right Certificate or Right Certificates
may be (a) transferred or (b) split up, combined or exchanged for another Right Certificate or Right Certificates, entitling
the registered holder to purchase a like number of Units (and/or other securities or property, as the case may be) as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer any Right Certificate
shall surrender the Right Certificate at the office of the Rights Agent designated for this purpose with the form of assignment on the
reverse side thereof duly endorsed (or enclose with such Right Certificate a written instrument of transfer in a form satisfactory to
the Company and the Rights Agent, duly executed by the registered holder thereof or the registered holder’s attorney duly authorized
in writing), and with all signatures duly guaranteed. Any registered holder desiring to split up, combine or exchange any Right Certificate
shall make such request in writing delivered to the Rights Agent, and shall surrender the Right Certificate or Right Certificates to
be split up, combined or exchanged at the office of the Rights Agent designated for such purpose. Thereupon the Rights Agent shall countersign
(by manual or, where permitted, facsimile signature) and deliver to the Person entitled thereto a Right Certificate or Right Certificates,
as the case may be, as so requested. The Company may require payment from the holder of a Right Certificate of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates.
The Rights Agent shall have no duty or obligation to take any action under this Section 6 unless and until the Rights Agent is reasonably
satisfied that all such taxes and/or charges have been paid.
(b) Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, if
requested by the Company, reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Right Certificate if mutilated, the Company will execute and deliver to the Rights Agent a new Right Certificate
of like tenor for delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. Without
limiting the foregoing, the Company may require the owner of any lost, stolen or destroyed Right Certificate, or his legal representative,
to give the Company a bond sufficient to indemnify the Company against any claim that may be made against it on account of the alleged
loss, theft or destruction of any such Right Certificate or the issuance of any such new Right Certificate.
Section 7. Exercise
of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject
to Section 7(e) or as otherwise provided in this Plan, the registered holder of any Right Certificate may exercise the Rights
evidenced thereby in whole at any time or in part from time to time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed (with such signature duly guaranteed), to the Rights
Agent at the office of the Rights Agent designated for such purposes together with payment of the Purchase Price (defined below), or
portion thereof, as applicable, with respect to each Unit or Units (and/or other securities or property in lieu thereof) as to which
the Rights are exercised, subject to adjustment as hereinafter provided, at or prior to the earlier of the Expiration Date and the Final
Expiration Date.
(b) The
purchase price shall initially be $9.003
for each Unit issuable pursuant to the exercise of a Right. The purchase price and the number of Units (and/or other securities or property,
as the case may be) to be acquired upon exercise of a Right shall be subject to adjustment from time to time as provided in Section 11.
(The purchase price, after giving effect to any adjustments, shall be referred to as the “Purchase Price.”) The Purchase
Price shall be payable in lawful money of the United States of America, in accordance with Section 7(c).
3 Adjusted to $90.00 as a result of 10:1 reverse stock
split effective December 11, 2019.
PRELIMINARY PROXY STATEMENT – SUBJECT
TO COMPLETION
(c) Except
as provided in Sections 7(d) and 7(e), upon receipt of a Right Certificate with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price, or the applicable portion thereof, for the Units (and/or other securities or property,
as the case may be) to be purchased and an amount equal to any applicable tax or governmental charge, by cash, certified check or official
bank check payable to the order of the Company or the Rights Agent, the Rights Agent shall thereupon promptly (i) (A) requisition
from the Company or any transfer agent for the Units, certificates for the number of Units so elected to be purchased, and the Company
will comply and hereby authorizes and directs the transfer agent to comply with all such requests or (B) if the Company, in its
sole discretion, shall have elected to deposit the shares of Preferred Stock underlying the Units issuable upon exercise of the Rights
hereunder into a depositary, requisition from the depositary agent depositary receipts representing the number of Units as are to be
purchased (in which case certificates for the shares of Preferred Stock underlying the Units represented by the receipts shall be deposited
by the transfer agent with the depositary agent) and the Company will direct the depositary agent to comply with such request, (ii) requisition
from the Company the amount of cash to be paid in lieu of issuance of fractional shares in accordance with Section 13(b) and
(iii) promptly after receipt of the Units certificates or depositary receipts, as the case may be, cause the same to be delivered
to or upon the order of the registered holder of the Right Certificate, registered in such name or names as may be designated by such
holder, and, when appropriate, after receipt promptly deliver the cash to or upon the order of the registered holder of the Right Certificate.
In the event that the Company is obligated to issue other securities of the Company, pay cash and/or distribute other property pursuant
to Section 11(a), the Rights Agent shall promptly take the appropriate actions corresponding to the foregoing clauses (i) through
(iii), as applicable, and the Company shall otherwise make all arrangements necessary so that those other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when necessary to comply with this Plan. In addition, in the case
of an exercise of the Rights by a holder pursuant to Section 11(a)(ii), the Rights Agent shall return the Right Certificate to the
registered holder thereof after imprinting, stamping or otherwise indicating thereon that the Rights represented by the Right Certificate
no longer include the rights provided by Section 11(a)(ii) and, if less than all the Rights represented by such Right Certificate
were so exercised, the Rights Agent shall indicate on the Right Certificate the number of Rights represented thereby which continue to
include the rights provided by Section 11(a)(ii). In case the holder of any Rights Certificate shall exercise (except pursuant to
Section 11(a)(ii)) less than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to the registered holder of the Rights Certificate or the holder’s
duly authorized assigns, subject to the provisions of Section 13(b).
(d) Notwithstanding
anything in this Plan to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect
to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless the registered holder
shall have (i) properly completed and signed the certificate contained in the form of election to purchase set forth on the reverse
side of the Right Certificate surrendered for exercise and (ii) provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall reasonably request.
(e) Notwithstanding
anything in this Plan to the contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person or an Affiliate or Associate thereof, (ii) a transferee of an Acquiring Person (or of any
Affiliate or Associate thereof) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or of any Affiliate or Associate thereof) who becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives those Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in the Acquiring Person or to any Person with whom the Acquiring Person has a continuing agreement, arrangement
or understanding (whether or not in writing) regarding the transferred Rights or (B) a transfer which the Board has determined is
part of an agreement, arrangement or understanding which has as a primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action and no holder of those Rights shall have any rights whatsoever with respect to
those Rights, whether under any provision of this Plan or otherwise. The Company shall notify the Rights Agent when this Section 7(e) applies
and shall use best efforts to insure that the provisions of this Section 7(e) and Section 4(b) are complied with,
but neither the Company nor the Rights Agent shall have any liability to any holder of Right Certificates or other Person as a result
of the Company’s failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
Section 8. Cancellation
and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination
or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in lieu thereof except
as expressly permitted by any of the provisions of this Plan. The Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any Right Certificate purchased or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Right Certificates to the Company, or shall, at the written request of the Company,
destroy the cancelled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation
and Availability of Shares of Preferred Stock.
(a) The
Company covenants and agrees that, from and after the Distribution Date, it will cause to be reserved and kept available, out of and
to the extent of its authorized and unissued shares of Preferred Stock not reserved for another purpose or shares of Preferred Stock
not reserved for another purpose held in its treasury, the number of Units that, as provided in this Plan, will be sufficient to permit
the exercise in full of all outstanding Rights; provided, however, that the Company shall not be required to
reserve and keep available Units sufficient to permit the exercise in full of all outstanding Rights pursuant to the adjustments set
forth in Sections 11(a)(ii) or 11(a)(iii) unless, and only to the extent that, the Rights become exercisable pursuant to such
adjustments.
PRELIMINARY PROXY STATEMENT – SUBJECT
TO COMPLETION
(b) The
Company shall (i) use its best efforts to cause, from and after the Distribution Date, the Rights and all Units (and/or following
the occurrence of a Triggering Event, shares of Common Stock of the Company or other securities, as the case may be) issued or reserved
for issuance upon exercise thereof to be listed or admitted to trading on the NYSE, NASDAQ or another national securities exchange, and
(ii) if then necessary to permit the offer and issuance of such Units, shares of Common Stock of the Company and/or other securities,
as the case may be, register and qualify such Units (or shares of Common Stock of the Company or other securities, as the case may be)
under the Securities Act and any applicable state securities or “blue sky” laws (to the extent exemptions therefrom
are not available), cause the related registration statement and qualifications to become effective as soon as possible after filing
and keep such registration statement and qualifications effective (with a prospectus at all times meeting the requirements of the Securities
Act) until the earlier of the expiration of the 60-day period referred to in Section 11(a)(ii), the Expiration Date or the Final
Expiration Date. The Company may temporarily suspend, for a period of time not to exceed 90 days, the exercisability of the Rights in
order to prepare and file a registration statement under the Securities Act and permit it to become effective. Upon any such suspension,
the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect. The Company shall notify the Rights Agent whenever it makes
a public announcement pursuant to this Section 9(b) and give the Rights Agent a copy of such announcement. Notwithstanding
any provision of this Plan to the contrary, the Rights shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained or the exercise thereof shall not otherwise be permitted under applicable law or a registration
statement under the Securities Act (if required) shall not have been declared effective.
(c) The
Company covenants and agrees that it will take all such action as may be necessary to insure that all Units (or shares of Common Stock
or other securities) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such Units (or shares of
Common Stock of the Company or other securities) subject to payment of the Purchase Price (or the applicable portion thereof) in respect
thereof, be duly and validly authorized and issued and fully paid and nonassessable Units (and/or shares of Common Stock and other securities,
as the case may be) in accordance with applicable law.
(d) The
Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and governmental
charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any Units (or shares of Company Stock
of the Company or other securities or property, as the case may be) upon the exercise of Rights. The Company shall not, however, be required
to pay any tax or charge which may be payable in respect of any transfer or delivery of Right Certificates to a Person other than, or
the issuance or delivery of certificates for Units (or shares of Common Stock of the Company or other securities or property, as the
case may be) upon exercise of Rights in a name other than that of, the registered holder of the Right Certificate, and the Company shall
not be required to issue or deliver a Right Certificate or certificate for Units (and/or shares of Common Stock of the Company or other
securities or property, as the case may be) to a Person other than the registered holder until any such tax or charge shall have been
paid (any such tax or charge being payable by the holder of such Right Certificate at the time of surrender) or until it has been established
to the Company’s satisfaction that no such tax or charge is due.
Section 10. Securities
Issuable Upon Exercise. Each Person in whose name any certificate for Units (or shares of Common Stock of the Company or other securities,
as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the
Units (or shares of Common Stock or other securities, as the case may be) represented thereby on, and the certificate shall be dated,
the date upon which the Right Certificate evidencing these Rights was duly surrendered and payment of the Purchase Price, or the applicable
portion thereof (and any applicable taxes and governmental charges), was made; provided, however, that if the
date of such presentation and payment is a date upon which the transfer books for the Units (or shares of Common Stock of the Company
or other securities, as the case may be) are closed, such Person shall be deemed to have become the record holder of such Units (or shares
of Common Stock of the Company or other securities) on, and such certificate shall be dated, the next succeeding Business Day on which
the transfer books for the Units (or shares of Common Stock of the Company or other securities) are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate, as such, shall not be entitled to any rights of a shareholder of the Company
with respect to shares for which the Right shall be exercisable, including without limitation the right to vote, to receive dividends
or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
PRELIMINARY PROXY STATEMENT – SUBJECT
TO COMPLETION
Section 11. Adjustments
to Number and Kind of Securities or Other Property, Number of Rights or Purchase Price. The number and kind of securities or other
property subject to purchase upon the exercise of each Right, the number of Rights outstanding and the Purchase Price are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In
the event that the Company shall at any time after the date of this Plan (A) declare or pay any dividend on the shares of Preferred
Stock payable in shares of Preferred Stock, (B) subdivide or split the outstanding shares of Preferred Stock into a greater number
of shares, (C) combine or consolidate the outstanding shares of Preferred Stock into a smaller number of shares or effect a reverse
split of the outstanding shares of Preferred Stock or (D) issue any shares of its capital stock in a reclassification of the shares
of Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then except as otherwise provided in this Section 11(a) and Section 7(e), the Purchase Price
in effect at the time of the record date for the dividend or of the effective date of the subdivision, split, combination, consolidation
or reclassification, and the number of Units and the number and kind of other securities, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment
of the Purchase Price then in effect, the aggregate number of Units and/or the number and kind of other securities as the case may be,
which, if the Right had been exercised immediately prior to such date, whether or not such Right was then exercisable, and at a time
when the transfer books for the Preferred Stock (or other capital stock, as the case may be) of the Company were open, such holder would
have owned upon such exercise and been entitled to receive by virtue of the dividend, subdivision, split, combination consolidation or
reclassification. If an event occurs which would require an adjustment under both Sections 11(a)(i) and 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii).
(ii) In the event any
Person at any time becomes an Acquiring Person (this event being referred to as a “Section 11(a)(ii) Event”),
then, subject to Sections 22(a) and 23, and except as otherwise provided in Section 7(e), each holder of a Right shall, for
a period of sixty days (or such longer period as may be established by the Board) after the later of the occurrence of any such event
and the effective date of an appropriate registration statement under the Securities Act pursuant to Section 9, have a right to
receive for each Right, upon exercise thereof in accordance with the terms of this Plan and payment of the Purchase Price (or the applicable
portion thereof) such number of shares of Common Stock of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of Units for which a Right was exercisable immediately prior to the first occurrence of
a Section 11(a)(ii) Event (whether or not such right was then exercisable), and (y) dividing that product by 50% of the
Current Market Price per shares of Common Stock of the Company on the date of such first occurrence (such number of shares of Common
Stock is called the “Adjustment Shares”); provided, however, that the Purchase Price and the
number of Adjustment Shares shall be further adjusted as appropriate to reflect any stock split, stock dividend or similar transaction,
or as provided in this Agreement to reflect any other events, occurring after the date of such first occurrence; and provided, further,
that in connection with any exercise effected pursuant to this Section 11(a)(ii), the Board may (but shall not be required to) determine
that a holder of Rights shall not be entitled to receive shares of Common Stock of the Company that would result in such holder, together
with such holder’s Affiliates, becoming the Beneficial Owner of 4.99% or more of the total number of shares of Common Stock of
the Company then outstanding. If a holder would, but for the previous clause, be entitled to receive a number of shares of Common Stock
of the Company (such shares, the “Excess Flip-In Shares”), in lieu of receiving such Excess Flip-In Shares, such holder
will be entitled to receive an amount in (1) cash, (2) debt securities of the Company, (3) other assets, or (4) any
combination of the foregoing, having an aggregate value equal to the Current Market Price per share of Common Stock of the Company on
the date of the occurrence of a Section 11(a)(ii) Event multiplied by the number of Excess Flip-In Shares that would otherwise
have been issuable to such holder.
PRELIMINARY PROXY STATEMENT – SUBJECT
TO COMPLETION
(iii) In the event that
the number of shares of Common Stock of the Company which are authorized by the Company’s articles of incorporation but not outstanding
and which are not reserved for issuance for purposes other than upon exercise of the Rights is not sufficient to permit the exercise
in full of the Rights for shares of Common Stock of the Company in accordance with Section 11(a)(ii) and the Rights shall become
so exercisable, to the extent permitted by applicable laws, each Right shall thereafter represent the right to receive, upon exercise
thereof at the Purchase Price, (x) a number of shares of Common Stock of the Company (up to the maximum number of shares of Common
Stock of the Company which may be permissibly issued), and (y) a number Units so that, when added together, the numbers in clauses
(x) and (y) equal the number of Adjustment Shares. In the event the number of shares of Common Stock and Preferred Stock which
are authorized by the Company’s articles of incorporation but not outstanding or reserved for issuance for purposes other than
upon exercise of the Rights is insufficient to permit the exercise in full of the Rights in accordance with the prior sentence and the
Rights shall become so exercisable, to the extent permitted by applicable law, the Company shall: (A) determine the value of the
Adjustment Shares issuable upon the exercise of a Right (the “Current Value”) and that value shall be conclusive for
all purposes; and (B) with respect to each Right, upon exercise of such Right, issue shares of Common Stock of the Company and Units
to the extent available for the exercise in full of such Right and, to the extent shares of Common Stock or Units are not so available,
make adequate provision to substitute for the Adjustment Shares not received upon exercise of such Right: (1) other equity securities
of the Company (including, without limitation, shares, or units of shares, of preferred stock which, by virtue of having dividend, voting
and liquidation rights substantially comparable to the shares of Common Stock of the Company, are deemed in good faith by the Board to
have substantially the same value as one share of Common Stock of the Company (such shares are herein called “Share Equivalents”)
and whose determination shall be conclusive for all purposes); (2) debt securities of the Company; (3) other assets; (4) cash;
or (5) any combination of the foregoing determined by the Board, having a value which, when added to the value of the number of
the shares of Common Stock of the Company and Units actually issued upon exercise of such Right, shall have an aggregate value equal
to the Current Value, where such aggregate value has been determined by the Board based upon the advice of a nationally recognized independent
investment banking firm selected by the Board; provided, however, if the Company shall not have made adequate
provision to deliver shares of Common Stock, Units and Share Equivalents pursuant to Section 11(a)(ii), the prior sentence of this
paragraph and clause (B) above within 50 days following the Stock Acquisition Date, then, to the extent permitted by applicable
law, the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available), Units or Share Equivalents and then, if necessary, cash, debt securities, or
other assets (in that order) which shares, units, cash, debt securities and/or assets have an aggregate value equal to the excess of
the Current Value over the Purchase Price, and provided, further, that the Board may (but shall not be required
to) determine that a holder of Rights shall not be entitled to receive equity securities under this Section 11(a)(iii) to the
extent the Company determines the receipt thereof could limit the Company’s ability to utilize the Tax Attributes. If the Board
shall determine in good faith that it is likely that sufficient additional shares of Common Stock, Units or Share Equivalents could be
authorized for issuance upon exercise in full of the Rights, the 50 day period set forth above may be extended to the extent necessary,
but not more than 120 days after the Stock Acquisition Date, in order that the Company may seek shareholder approval for the authorization
of such additional shares or Shares Equivalents (such 50 day period, as it may be extended, is called the “Substitution Period”).
To the extent that the Company determines that some action need be taken pursuant to the foregoing provisions of this Section 11(a)(iii),
the Company (x) shall provide, subject to Section 7(e), that this action shall apply uniformly to all outstanding and exercisable
Rights, and (y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to the foregoing provisions
of this Section 11(a)(iii) and, if necessary, to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement
(with a prompt written notice thereof to the Rights Agent) at such time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of each Unit, each share of Common Stock of Company and the per share or unit value of any Share Equivalent
shall be deemed to equal the Current Market Price of a share of Common Stock of the Company thereof as of the Stock Acquisition Date.
(b) In
case the Company shall fix a record date for the issuance of rights (other than the Rights), options or warrants to all holders of shares
of Preferred Stock entitling them to subscribe for or purchase (for a period expiring within 45 calendar days after this record date)
shares of Preferred Stock and/or securities having the same rights, privileges and preferences as the Preferred Stock (“Equivalent
Preferred Securities”) or securities convertible into Preferred Stock or Equivalent Preferred Securities at a price per share
of Preferred Stock or per unit of Equivalent Preferred Securities (or having a conversion price per share or unit, if a security convertible
into Preferred Stock or Equivalent Preferred Securities) less than the Current Market Price per share of Preferred Stock on the record
date, the Purchase Price to be in effect after the record date shall be determined by multiplying the Purchase Price in effect immediately
prior to the record date by a fraction, the numerator of which shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which the aggregate offering price of the total number of shares of Preferred Stock
and/or units of Equivalent Preferred Securities (and/or the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at that Current Market Price, and the denominator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of additional shares of Preferred Stock and/or units of Equivalent Preferred Securities to be offered
for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case the subscription
price may be paid by delivery of consideration part or all of which may be in a form other than cash, the value of the non-cash consideration
shall be as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent.
Shares of Preferred Stock and units of Equivalent Preferred Securities owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. This adjustment shall be made successively whenever such a record date is fixed,
and in the event that such rights, options or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if the record date had not been fixed.
PRELIMINARY PROXY STATEMENT – SUBJECT
TO COMPLETION
(c) In
case the Company shall fix a record date for a distribution to all holders of shares of Preferred Stock (including any such distribution
made in connection with a consolidation, merger or share exchange in which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend), assets (other than a dividend payable in shares of Preferred Stock,
but including any dividend payable in stock other than Preferred Stock) or subscription rights or warrants (excluding those referred
to in Section 11(b)), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to the record date by a fraction, the numerator of which shall be the Current Market Price per share
of Preferred Stock on the record date, less the fair market value (as determined in good faith by the Board, whose determination shall
be described in a statement filed with the Rights Agent) of the portion of the cash, assets or evidences of indebtedness so to be distributed
or of such subscription rights or warrants applicable to a share of Preferred Stock and the denominator of which shall be such Current
Market Price per share of Preferred Stock; provided, however, that in no event shall the consideration to be
paid upon exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon the
exercise of one Right. These adjustments shall be made successively whenever such a record date is fixed; and in the event that the distribution
is not so made, the Purchase Price shall be adjusted to be the Purchase Price which would have been in effect if such record date had
not been fixed.
(d) (i) For
the purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii), and subject to Section 11d(ii),
the “Current Market Price” per share of stock or unit of other securities on any date shall be deemed to be the average
of the daily closing prices per share of such stock or unit of other securities for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however, that in the event that the Current Market
Price per share of any stock or unit of other securities is determined during a period following the announcement by the issuer of that
stock or other security of (i) any dividend or distribution on such stock or other securities (other than a regular quarterly cash
dividend and other than the Rights), or (ii) any subdivision, split, combination or reclassification of that stock or other securities,
and prior to the expiration of the requisite 30 Trading Day period, the ex-dividend date for the dividend or distribution, or the record
date for the subdivision, combination or reclassification occurs, then, and in each such case, the Current Market Price shall be properly
adjusted to take into account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case
no such sale takes place on that day, the average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to shares of stock or units of securities listed or admitted to trading
on the NYSE or NASDAQ or, if the shares of stock or units of any other securities are not listed or admitted to trading on the NYSE or
NASDAQ, as reported in the principal consolidated transaction reporting system with respect to shares of stock or units of other securities
listed on the principal national securities exchange on which the shares of stock or units of other securities are listed or admitted
to trading or, if the shares of stock or units of other security are not listed or admitted to trading on any national securities exchange,
the last quoted sale price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc., Automated Quotations System or any other system then in use, or,
if on any such date the shares of such stock or units of such other security are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker making a market in such stock or other securities selected
by the Board; provided, that if such security is not listed or quoted on the NYSE or NASDAQ and the principal market for
such securities is a non-U.S. securities exchange, then the closing price for each day shall be determined by using the customary convention
for determining the closing price of a security on such exchange as determined by the Board (in which event the exchange rate of the
relevant currency into U.S. dollars for each Trading Day (as defined below) shall be determined by the Board). The term “Trading
Day” shall mean a day on which the principal national securities exchange on which the shares of such stock or units of other
securities are listed or admitted to trading is open for the transaction of business or, if the shares of such stock or other units of
such security are not listed or admitted to trading on any national securities exchange, a Business Day; provided, that if such security
is not listed or quoted on the NYSE or NASDAQ and the principal market for such security is a non-U.S. securities exchange, then “Trading
Day” shall mean a day on which such non-U.S. securities exchange is open for the transaction of business. Subject to Section 11(d)(ii) with
respect to Units, if such stock or unit of other securities is not publicly held or not so listed, traded or quoted, “Current
Market Price” per share or other unit of such securities shall mean the fair value per share of stock or other unit of such
securities as determined in good faith by the Board whose determination shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
(ii) For
the purpose of any computation hereunder, the “Current Market Price” per Unit shall be determined in the same manner
as set forth above in paragraph (i) of this Section 11(d) (other than the last sentence thereof). If the Current Market
Price per Unit cannot be determined in the manner provided above because the Units are not publicly held, listed or traded or quoted
in a manner described in paragraph (i) of this Section 11(d), the “Current Market Price” per Unit shall
be conclusively deemed to be an amount equal to the Current Market Price per share of the Common Stock of the Company. If neither the
shares of Common Stock of the Company nor the Units are listed or traded or quoted as described in Section 11(d)(i), “Current
Market Price” per share thereof shall mean the fair value per share of Common Stock of the Company as determined in good faith
by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.
(e) Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent in the Purchase Price; provided, however, that any adjustments which
by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest thousandth of a Unit or share
of Common Stock or any other security, as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three years from the date of the transaction which
mandates such adjustment, or (ii) the Final Expiration Date.
(f) If
as a result of an adjustment made pursuant to Section 11(a)(ii), the holder of any Right thereafter exercised shall become entitled
to receive any securities other than Units, thereafter the number of the other securities so receivable upon exercise of any Right and
the Purchase Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the shares of Preferred Stock and/or Units contained in Sections 11(a), (b), (c), (d), (e), (g), (h),
(i), (j), (k), (l) and (m), and the provisions of Sections 7, 9, 10 and 13 with respect to the shares of Preferred Stock and/or
Units shall apply on like terms to any such other shares.
(g) All
Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Units (and/or other securities) purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless
the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price as a result
of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of Units (calculated to the nearest one-thousandth)
equal to the quotient obtained by (i) multiplying (x) the number of Units covered by a Right immediately prior to this adjustment
by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price, and (ii) dividing the product
so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.
(i) The
Company may elect on or after the date of any adjustment of the Purchase Price or any adjustment to the number of Units for which a Right
may be exercised, to adjust the number of Rights, in lieu of any adjustment in the number of Units purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of Units for which
a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company
shall make a public announcement (with prompt notice thereof to the Rights Agent) of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any date thereafter, but, if the Right Certificates have been issued, shall be at least 10
days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to the registered holders
of Right Certificates on the record date Right Certificates evidencing, subject to Section 13, the additional Rights to which the
holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such registered
holders in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the registered holders of
Right Certificates on the record date specified in the public announcement.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
(j) Irrespective
of any adjustment or change in the Purchase Price or the number of Units issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase Price per Unit and the number of Units which were expressed in
the initial Right Certificates issued hereunder.
(k) Before
taking any action that would cause an adjustment reducing the Purchase Price below the then par value, if any, attributable to the Units,
shares of Common Stock or other securities issuable upon exercise of the Rights, the Company shall use best efforts to take any corporate
action, which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and
nonassessable Units, shares of Common Stock or other securities at such adjusted Purchase Price.
(l) In
any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer (with prompt written notice thereof to the Rights Agent) until the occurrence of such
event the issuance to the holder of any Right exercised after such record date the Units and/or other securities of the Company, if any,
issuable upon such exercise over and above the Units and/or other securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver
to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive the additional Units and/or
other securities upon the occurrence of the event requiring such adjustment.
(m) Anything
in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as and to the extent that in its good faith judgment the
Board shall determine to be advisable in order that any (i) consolidation or subdivision of the Preferred Stock or Common Stock,
(ii) issuance wholly for cash of any shares of Preferred Stock or Common Stock at less than the Current Market Price, (iii) issuance
wholly for cash of shares of Common Stock, Preferred Stock or securities which by their terms are convertible into or exchangeable for
shares of Preferred Stock or Common Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to
in this Section 11, hereafter made by the Company to holders of its Common Stock or Preferred Stock, shall not be taxable to such
shareholders.
(n) The
Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Section 22, Section 23
or Section 26, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable
that such action will diminish substantially or eliminate the benefits intended to be afforded by the Rights.
(o) Anything
in this Plan to the contrary notwithstanding, in the event that at any time after the date of this Plan and prior to the Distribution
Date, the Company shall (i) declare or pay any dividend on the shares of Common Stock of the Company payable in shares of Common
Stock of the Company or (ii) effect a subdivision or split the outstanding shares of Common Stock of the Company into a greater
number of shares of Common Stock of the Company or (iii) combine or consolidate the outstanding shares of Common Stock of the Company
into a small number of shares or effect a reverse split of the outstanding shares of Common Stock of the Company, then in any such case,
each share of Common Stock outstanding following payment of such dividend, such subdivision, split, combination, consolidation or issuance
shall continue to have one Right (as adjusted as otherwise provided herein) associated therewith and the Purchase Price following any
such event shall be proportionately adjusted to equal the result obtained by multiplying the Purchase Price immediately prior to such
event by a fraction, the numerator of which shall be the total number of shares of Common Stock of the Company outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the total number of shares of Common Stock of the Company
outstanding immediately following the occurrence of such event. The adjustment provided for in the preceding sentence shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination or consolidation is effected.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
Section 12. Certification
of Adjustments. Whenever an adjustment is made as provided in Section 11, the Company shall (a) promptly prepare a certificate
setting forth the adjustment and a brief statement of facts and computations accounting for such adjustment, (b) promptly file with
the Rights Agent and with each transfer agent for the shares of Common Stock and Preferred Stock a copy of the certificate, and (c) if
a Distribution Date has occurred, mail or cause the Rights Agent to mail a brief summary thereof to each registered holder of a Right
Certificate (or, if prior to the Distribution Date, to each holder of record of shares of Common Stock) in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to prepare such certificate or statement or make such filings or mailings
shall not affect the validity of, or the force or effect of, the requirement for such adjustment. The Rights Agent shall be fully protected
in relying on any certificate prepared by the Company pursuant to Section 11 and shall have no duty with respect to any adjustment
therein contained. Any adjustment to be made pursuant to Section 11 shall be effective as of the date of the event giving rise to
the adjustment.
Section 13. Fractional
Rights and Fractional Shares.
(a) The
Company shall not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. Units
may, at the election of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that the agreement shall provide that the holders of the depositary
receipts shall have all the rights, privileges and preferences to which they are entitled as beneficial owners of the Units represented
by the depositary receipts. In lieu of such fractional Rights, there may be paid to the holders of record of the Right Certificates with
regard to which the fractional Rights would otherwise be issuable an amount in cash equal to the same fraction of the then Current Market
Value of a whole Right.
(b) The
Company shall not be required to issue fractions of Units or other securities upon exercise of the Rights or to distribute certificates
which evidence fractional Units or other securities. In lieu of issuing fractions of Units or other securities, there may be paid to
the registered holders of Right Certificates at the time the Right Certificates are exercised as herein provided an amount in cash equal
to the same fraction of the then Current Market Value of a Unit or other securities, as the case may be.
(c) The
holder of a Right by the acceptance of a Right expressly waives his right to receive any fractional Right or fractional Unit or other
fractional securities (other than the fractional shares of Preferred Stock represented by Units) upon exercise of a Right.
Section 14. Rights
of Action. All rights of action in respect of this Agreement, except those rights of action vested in the Rights Agent pursuant to
Sections 17 and 19, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the
holders of record of the Common Stock); and any registered holder of any Right Certificate (or, prior to the Distribution Date, the shares
of Common Stock), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution
Date, any shares of Common Stock), may, in its own behalf and for its own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company or any other Person to enforce, or otherwise act in respect of, its right to exercise the Rights
evidenced by the Right Certificate in the manner provided in the Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and, accordingly, that they will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of, the obligations of any Person subject to this Agreement.
Section 15. Agreement
of Right Holders. Every holder of a Right by accepting the same consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior
to the Distribution Date, the Rights will not be evidenced by a Rights Certificate and will be transferable only in connection with the
transfer of Common Stock of the Company;
(b) from
and after the Distribution Date, the Right Certificates will be transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with
the appropriate forms and certificates contained therein duly executed;
(c) subject
to Section 6 and Section 7(e), the Company and the Rights Agent may deem and treat the Person in whose name the Right Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificate or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent or the transfer agent of the shares of Common Stock) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary; and
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(d) notwithstanding
anything in this Agreement to the contrary, neither the Company, its directors, officers, employees and agents nor the Rights Agent shall
have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or other order, decree, judgment or ruling (whether interlocutory or final)
issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or by reason of
any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation.
Section 16. Right
Certificate Holder Not Deemed a Shareholder. No holder of a Right, as such, shall be entitled to vote, receive dividends in respect
of or be deemed for any purpose to be the holder of shares of Common Stock, Preferred Stock, Units or any other securities of the Company
which may at any time be issuable upon the exercise of the Rights, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as such, any of the rights of a shareholder of the Company or any right
to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in Section 24
hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions hereof.
Section 17. Concerning
the Rights Agent.
(a) The
Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, reimbursement of its reasonable expenses and counsel fees and disbursements and other disbursements incurred
in the preparation, delivery, amendment, administration and execution of this Plan and the exercise and performance of its duties hereunder.
The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, demand, judgment, fine,
penalty, claim, settlement, cost or expense incurred without gross negligence or willful misconduct on the part of the Rights Agent as
each must be finally determined by a court of competent jurisdiction, for any action taken, suffered or omitted by the Rights Agent in
connection with the acceptance and administration of this Plan, including the costs and expenses of defending against any claim of liability
in the premises.
(b) The
Rights Agent shall be authorized and protected and shall incur no liability for or in respect of any action taken, suffered or omitted
by it in good faith in connection with its administration of this Plan in reliance upon any Right Certificate, certificate for shares
of Common or Preferred Stock, Units or other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other paper or document reasonably believed by it to be genuine
and to be signed, executed and, where necessary, guaranteed, verified or acknowledged, by the proper person or persons.
The
indemnity provided herein shall survive the termination of this Agreement and the termination and the expiration of the Rights. The costs
and expenses incurred in enforcing this right of indemnification shall be paid by the Company. Anything to the contrary notwithstanding,
in no event shall the Rights Agent be liable for special, punitive, indirect, consequential or incidental loss or damage of any kind
whatsoever (including but not limited to lost profits) (other than by reason of gross negligence or willful misconduct), even if the
Rights Agent has been advised of the likelihood of such loss or damage. Any liability of the Rights Agent under this Plan (other than
by reason of gross negligence or willful misconduct) will be limited to the amount of fees paid by the Company to the Rights Agent.
Section 18. Merger
or Consolidation or Change of Name of Rights Agent.
(a) Any
Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting
from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to
the shareholder services business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under
this Plan without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that
such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 20. In case at the time
such successor Rights Agent shall succeed to the agency created by this Plan, any of the Right Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor
Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this
Plan.
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(b) In
case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Plan.
Section 19. Duties
of Rights Agent. The Rights Agent undertakes to perform only the duties and obligations expressly imposed by this Plan upon the following
terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound:
(a) The
Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the advice or opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect
of, any action taken, suffered or omitted by it in good faith and in accordance with such advice or opinion.
(b) Whenever
in the performance of its duties under this Plan the Rights Agent shall deem it necessary or desirable that any fact or matter (including,
without limitation, the identity of any Acquiring Person and the determination of Current Market Price) be proved or established by the
Company prior to taking, suffering or omitting to take any action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chairman of
the Board, the Chief Executive Officer, the Chief Strategy Officer, or any Vice President of the Company and by the Chief Financial Officer,
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization and protection to the Rights Agent, and the Rights Agent shall incur no liability for or in respect
of any action taken, suffered or omitted in good faith by it under the provisions of this Plan in reliance upon such certificate.
(c) The
Rights Agent shall be liable hereunder only for its own gross negligence or willful misconduct, as each is finally determined by a court
of competent jurisdiction.
(d) The
Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Plan or in the Right
Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The
Rights Agent shall not have any liability for nor be under any responsibility in respect of the validity of this Plan or the execution
and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereon); nor shall it be liable nor responsible for any breach by the Company of any covenant or condition
contained in this Plan or in any Right Certificate; nor shall it be liable or responsible for any adjustment required under the provisions
of Sections 11 or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after receipt of a certificate
describing any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization
or reservation of any shares of Preferred Stock or Common Stock to be issued pursuant to this Plan or any Right Certificate or as to
whether any shares of Preferred Stock (or other securities, as the case may be) will, when issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The
Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Plan.
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(g) The
Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Chief Executive Officer, the Chief Strategy Officer or any Vice President, the Chief Financial Officer, Treasurer,
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company, and to apply to such officers for advice or instructions
in connection with its duties, and such advice or instructions shall be full authorization and protection to the Rights Agent and the
Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it in good faith in accordance
with the advice or instructions of any such officer.
(h) The
Rights Agent and any shareholder, Affiliate, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract
with or lend money to the Company or otherwise act as fully and freely as though it were not the Rights Agent under this Plan. Nothing
herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other Person.
(i) If,
with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or the form of election to purchase set forth on the reverse thereof, as the case may be, has either not been completed
or indicates an affirmative response to clause 1 and/or 2 of such certificate, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting with the Company.
(j) No
provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder (other than internal costs incurred by the Rights Agent in providing services to the
Company in the ordinary course of its business as Rights Agent) or in the exercise of its rights if it believes that repayment of such
funds or adequate indemnification against such risk or liability is not reasonably assured to it.
(k) The
Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be liable, answerable or accountable for any act, default, neglect
or misconduct of any such attorneys or agents or for any loss to the Company, any holder of Rights or any other Person resulting from
any such act, default, neglect or misconduct, absent gross negligence or willful misconduct in the selection and continued employment
thereof, as each is finally determined by a court of competent jurisdiction.
Section 20. Change
of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Plan upon
30 days notice in writing mailed to the Company and to each transfer agent of the shares of Common Stock by registered or certified mail,
and to the registered holders of the Right Certificates by mail. The Company may remove the Rights Agent or any successor Rights Agent
(with or without cause) upon 30 days notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and
to each transfer agent of the shares of Common Stock by registered or certified mail, and to the registered holders of the Right Certificates
by mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor
to the Rights Agent. Notwithstanding the foregoing provisions of this Section 20, in no event shall the resignation or removal of
a Rights Agent be effective until a successor Rights Agent shall have been appointed and have accepted such appointment. If the Company
shall fail to make such appointment within a period of 30 days after such removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Rights Agent or by the registered holder of a Right Certificate (who shall, with such
notice, submit such holder’s Right Certificate for inspection by the Company), then the incumbent Rights Agent or the registered
holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a) a Person organized and doing business under the
laws of the United States or any state of the United States so long as such Person is in good standing, is authorized to do business
in such state, is authorized under such laws to exercise shareholder services powers, is subject to supervision or examination by federal
or state authority and has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an
Affiliate of a Person described in clause (a) of this sentence. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder,
and shall execute and deliver, if applicable, any further assurance, conveyance, act or deed necessary for that purpose. Not later than
the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock, and mail a notice thereof in writing to the registered holders of the Right Certificates, if any.
Failure to give any notice provided for in this Section 20, however, or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.
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Section 21. Issuance
of New Right Certificates. Notwithstanding any of the provisions of this Plan or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as may be approved by its Board to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares of stock or other securities or property purchasable under
the Right Certificates made in accordance with the provisions of this Plan. In addition, in connection with the issuance or sale of shares
of Common Stock of the Company following the Distribution Date and prior to the earlier of the Redemption Date and the Final Expiration
Date, the Company (a) shall, with respect to shares of Common Stock of the Company so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement, or upon the exercise, conversion or exchange of securities hereafter issued
by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board, issue Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no
such Right Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create
a significant risk of material adverse tax consequences to the Company or the Person to whom such Right Certificate would be issued,
and (ii) no such Right Certificate shall be issued, if, and to the extent that, appropriate adjustment shall otherwise have been
made in lieu of the issuance thereof.
Section 22. Redemption.
(a) (i) The
Board may, at its option, at any time prior to the earlier of (x) the Close of Business on the tenth calendar day after the Stock
Acquisition Date or (y) the Close of Business on the Final Expiration Date, direct the Company to, and if directed, the Company
shall, redeem all but not less than all of the then outstanding Rights at a redemption price of $0.001 per Right (the total amount paid
to any holder of Rights to be rounded up to the nearest $0.01), as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date (such redemption price being hereinafter referred to as the “Redemption
Price”).
(b) Immediately
upon the action of the Board directing the Company to make the redemption of the Rights, evidence of which shall have been filed with
the Rights Agent, and without any further action and without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. Promptly after the action
of the Board directing the Company to make such redemption of the Rights, the Company shall give notice of such redemption to the Rights
Agent and each such holder of the then outstanding Rights by mailing such notice to the Rights Agent and to each such holders at such
holder’s last address as it appears upon the registry books of the Rights Agent, or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock. Any notice which is mailed in the manner herein provided shall be deemed given, whether
or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price
will be made, unless such notice is mailed together with such payment.
In
the case of a redemption permitted under Section 22(a), the Company may, at its option, discharge all of its obligations with respect
to the Rights by (i) issuing a press release announcing the manner of redemption of the Rights (with prompt notice thereof to the
Rights Agent) and (ii) mailing payment of the Redemption Price to each registered holder of the Rights at each such holder’s
last address as it appears on the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent of the Common Stock, and upon such action, all outstanding Rights Certificates shall be null and void without any further
action by the Company.
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Section 23. Exchange.
(a) The
Board may, at its option, at any time after the later of the Stock Acquisition Date or the Distribution Date, exchange all or part of
the then-outstanding and exercisable Rights (which shall not include Rights that have become null and void pursuant to the provisions
of Section 11(a)(ii)) for Common Stock of the Company at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction occurring after the Record Date (such exchange ratio being
hereinafter referred to as the “Exchange Ratio”); provided, however, that in connection with
any exchange effected pursuant to this Section 23, the Board may (but shall not be required to) determine that a holder of Rights
shall not be entitled to receive shares of Common Stock that would result in such holder, together with such holder’s Affiliates,
becoming the Beneficial Owner of 4.99% or more of the shares of Common Stock then outstanding. If a holder would, but for the proviso
set forth in the previous sentence, be entitled to receive a number of shares under this Section 23 that would otherwise result
in such holder, together with such holder’s Affiliates, becoming the Beneficial Owner of 4.99% or more of the shares of Common
Stock then outstanding (such shares, the “Excess Exchange Shares”), in lieu of receiving such Excess Exchange Shares,
such holder will be entitled to receive an amount in (1) cash, (2) debt securities of the Company, (3) other assets, or
(4) any combination of the foregoing, having an aggregate value equal to the Current Market Price per share of the Common Stock
on the date of the Stock Acquisition Date or Distribution Date, as applicable, multiplied by the number of Excess Exchange Shares that
would otherwise have been issuable to such holder. Any such exchange will be effective immediately upon the action of the Board ordering
the same, unless such action of the Board expressly provides that such exchange will be effective at a subsequent time or upon the occurrence
or nonoccurrence of one or more specified events (in which case such exchange will be effective in accordance with the provisions of
such action of the Board). Without limiting the foregoing, prior to effecting an exchange pursuant to this Section 23, the Board
may enter into a Trust Agreement in such form and with such terms as the Board shall then approve (the “Trust Agreement”).
If the Board so directs, the Company shall enter into the Trust Agreement and shall issue to the trust created by such agreement (the
“Trust”) all of the Common Stock issuable pursuant to the exchange (or any portion thereof that has not theretofore
been issued in connection with the exchange). From and after the time at which such shares are issued to the Trust, all shareholders
then entitled to receive shares pursuant to the exchange shall be entitled to receive such shares (and any dividends or distributions
made thereon after the date on which such shares are deposited in the Trust) only from the Trust and solely upon compliance with the
relevant terms and provisions of the Trust Agreement. Any shares of Common Stock issued at the direction of the Board in connection herewith
shall be validly issued, fully paid and nonassessable Common Stock, and the Company shall be deemed to have received as consideration
for such issuance a benefit having a value that is at least equal to the aggregate par value of the shares so issued.
(b) Immediately
upon the action of the Board authorizing the exchange of any Rights pursuant to Section 23(a) and without any further action
and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of the holders of such Rights
shall be to receive that number of shares of Common Stock (or Units, as applicable) equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company shall promptly mail
a notice of any such exchange to all of the holders of Rights at their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice.
Each notice of exchange will state the method by which the exchange of shares of Common Stock (or Units, as applicable) for Rights will
be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become null and void pursuant to the provisions of Section 7(e))
held by each holder of Rights.
(c) In
any exchange pursuant to this Section 23, the Company, at its option, may, and to the extent there are an insufficient number of
authorized shares of Common Stock not reserved for any other purpose to exchange all of the outstanding Rights shall, substitute Units
or Share Equivalents for some or all of the shares of Common Stock exchangeable for Rights, at the initial rate of one Unit or Share
Equivalent for each share of Common Stock.
(d) The
Board shall not authorize any exchange transaction referred to in Section 23(a) unless at the time such exchange is authorized
there shall be sufficient shares of Common Stock (and/or Units or Unit Equivalents) issued but not outstanding, or authorized but unissued,
to permit the exchange of Rights as contemplated in accordance with this Section 23.
Section 24. Notice
of Proposed Actions.
(a) In
case the Company shall propose, at any time after the Distribution Date, (i) to pay any dividend to the holders of record of its
shares of Preferred Stock payable in stock of any class or to make any other distribution to the holders of record of its shares of Preferred
Stock (other than a regular periodic cash dividend out of earnings or retained earnings of the Company), (ii) to offer to the holders
of record of its shares of Preferred Stock options, warrants, or other rights to subscribe for or to purchase shares of Preferred Stock
(including any security convertible into or exchangeable for shares of Preferred Stock) or shares of stock of any class or any other
securities, options, warrants, convertible or exchangeable securities or other rights, (iii) to effect any reclassification of its
shares of Preferred Stock or any recapitalization or reorganization of the Company, (iv) to effect any consolidation, combination
or merger with or into, or any share exchange with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more transactions, of 50% or more of the assets, earning power or cash flow of the Company
and its Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to the Rights Agent and to each registered holder of a Right Certificate,
to the extent feasible and in accordance with Section 25, a notice of such proposed action, which shall specify the record date
for the purposes of such dividend or distribution, or the date on which such reclassification, recapitalization, reorganization, consolidation,
combination, merger, share exchange, sale or transfer of assets, liquidation, dissolution, or winding up is to take place and the record
date for determining participation therein by the holders of record of shares of Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least 10 days prior to the record
date for determining holders of record of the shares of Preferred Stock for purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of such proposed action or the date of participation therein by the holders
of record of the shares of Preferred Stock, whichever shall be the earlier. The failure to give notice required by this Section 24
or any defect therein shall not affect the legality or validity of the action taken by the Company or the vote upon any such action.
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(b) In
case a Section 11(a)(ii) Event is proposed, then, in any such case, the Company shall, as soon as practicable thereafter, give
to the Rights Agent and to each registered holder of Rights, to the extent feasible, in accordance with Section 25, notice of the
occurrence of such event or proposal of such transaction which notice shall specify the proposed event and the consequences of the event
to holders of Rights under Section 11(a)(ii), upon consummating such transaction, shall similarly give notice thereof to each holder
of Rights.
Section 25. Notices.
Notices
or demands authorized by this Plan to be given or made by the Rights Agent or by the registered holder of any Right Certificate or Right
to or on behalf of the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
iMedia Brands, Inc.
6740 Shady Oak Road
Eden Prairie, Minnesota 55344
Attention: Chief Executive Officer
with a copy (which shall not
constitute notice) to:
Faegre Drinker Biddle & Reath LLP
90 South Seventh Street
2200 Wells Fargo Center
Minneapolis, Minnesota 55402
Attention: Jonathan Zimmerman
Subject
to the provisions of Section 20, any notice or demand authorized by this Plan to be given or made by the Company or by the registered
holder of any Right Certificate or Right to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Company) as follows:
Equiniti Trust Company
1110 Centre Point Curve, Suite 101
Mendota Heights, MN 55120
Attention: Relationship Management
Notices
or demands authorized by this Plan to be given or made by the Company or the Rights Agent to the registered holder of any Right Certificate
or Right shall be sufficiently given or made if sent by mail, postage prepaid, addressed to such holder at the address of such holder
as it appears upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent.
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Section 26. Supplements
and Amendments. Subject to extension by the Board by amendments, prior to the Close of Business on the tenth calendar day after the
Stock Acquisition Date, the Company may in its sole and absolute discretion and the Rights Agent shall, if the Company so directs, supplement
or amend any provision of this Agreement (including without limitation amendments that increase or decrease the Purchase Price or Redemption
Price or accelerate or extend the Final Expiration Date or the period in which Rights may be redeemed), without the approval of any holders
of the Rights or shares of Common Stock. From and after the Close of Business on the tenth calendar day after the Stock Acquisition Date,
the Company may and the Rights Agent shall, if the Company so directs, supplement or amend this Agreement without the approval of any
holders of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii) to shorten or lengthen any time period hereunder,
or (iv) to change or supplement the provisions hereunder in any manner which the Company may deem necessary or desirable which shall
not adversely affect the interests of the holders of Right Certificates (other than any interest an Acquiring Person or an Affiliate
or Associate of an Acquiring Person has other than as a holder of Rights). Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 26, the Rights
Agent shall execute such supplement or amendment. Prior to the Stock Acquisition Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of shares of Common Stock. Notwithstanding anything contained herein to the contrary,
the Rights Agent may, but shall not obligated to, enter into any supplement or amendment that affects the Rights Agent’s own rights,
duties, obligations or immunities under this Plan. In addition, notwithstanding anything to the contrary in this Plan, no supplement
or amendment to this Plan shall be made that extends the Expiration Date.
Section 27. Successors.
All of the covenants and provisions of this Plan by or for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
Section 28. Benefits
of this Plan. Nothing in this Plan shall be construed to give to any Person other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the shares of Common Stock) any legal or equitable right, remedy
or claim under this Plan but this Plan shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the shares of Common Stock).
Section 29. Governing
Law. This Plan and each Right Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Minnesota
and for all purposes shall be governed by and construed in accordance with the laws of such state applicable to contracts to be made
and performed entirely within such state.
Section 30. Counterparts.
This Plan may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature
page to this Plan by facsimile or electronic mail shall be as effective as delivery of a manually executed counterpart of this Rights
Agreement.
Section 31. Descriptive
Headings. Descriptive headings of the several sections of this Plan are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions.
Section 32. Severability.
If any term, provision, covenant or restriction of this Plan is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Plan shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided, however, that notwithstanding anything
in this Plan to the contrary, if any such term, provision, covenant or restriction is held by such court or authority to be invalid,
void or unenforceable and the Board determines in its good faith judgment that severing the invalid language from this Plan would adversely
affect the purpose or effect of this Agreement, the right of redemption set forth in Section 22 hereof shall be reinstated and shall
not expire until the Close of Business on the tenth Business Day following the date of such determination by the Board.
Section 33. Determination
and Actions by the Board, etc. The Board shall have the exclusive power and authority to administer this Plan and to exercise
all rights and powers specifically granted to the Board, or to the Company, or as may be necessary or advisable in the administration
of this Plan, including, without limitation, the right and power to (i) interpret the provisions of this Plan, and (ii) make
all determinations or judgments deemed necessary or advisable for the administration of this Plan (including without limitation a determination
to redeem or not redeem the Rights or to amend this Plan) or otherwise contemplated by this Plan. All such actions, calculations, interpretations,
judgments and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are
done or made by the Board in good faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders
of the Rights and all other parties, and (y) not subject the Board to any liability to the holders of the Rights Certificates. The
Rights Agent is entitled always to assume the Board acted in good faith and shall be fully protected and incur no liability in reliance
thereon.
[signature page follows]
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
IN WITNESS WHEREOF,
the parties have caused this Plan to be duly executed, all as of the day and year first above written.
Attest: |
|
IMEDIA BRANDS, INC.4 |
|
|
|
|
|
By: |
/s/ Timothy Peterman |
|
By: |
/s/ Russell Nuce |
Name: |
Timothy Peterman |
|
Name: |
Russell Nuce |
Title: |
Executive Vice President,Chief Financial Officer |
|
Title: |
Executive Vice President and Chief Strategy Officer |
EQUINITI TRUST COMPANY5
By: |
/s/ Darcie Rummel |
|
Name: |
Darcie Rummel |
|
Title: |
Officer |
|
4 Originally EVINE Live Inc.
5 Originally Wells Fargo
Bank, N.A.
[Signature Page to
Shareholder Rights Plan]
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
EXHIBIT A
to Shareholder
Rights Plan
CERTIFICATE OF
DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A JUNIOR
PARTICIPATING CUMULATIVE PREFERRED STOCK
($0.01 PAR VALUE)
OF
iMedia Brands, Inc.
Pursuant to Section 302A.401
of the Business Corporation Act
of the State
of Minnesota
I, [NAME], [TITLE(S)]
of iMedia Brands, Inc., a corporation organized and existing under the Business Corporation Act of the State of Minnesota (the "Corporation"),
in accordance with the provisions of Section 302A.401 thereof, DO HEREBY CERTIFY:
That pursuant to
the authority conferred upon the Board of Directors of the Corporation (the "Board of Directors") by the Amended and
Restated Articles of Incorporation of the Corporation (the “Articles”), a duly authorized committee of the Board of
Directors on July 10, 2015, adopted the following resolution creating a series of four hundred thousand (400,000) shares of preferred
stock of the par value of $0.01 per share designated as Series A Junior Participating Cumulative Preferred Stock:
RESOLVED, that pursuant
to the authority granted to and vested in the Board of Directors in accordance with the provisions of the Articles, a series of preferred
stock of the Corporation be, and it hereby is, created, and that the designation and amount thereof and the relative rights and preferences
of the shares of such series, are as follows:
SECTION 1. DESIGNATION
AND AMOUNT. The shares of such series shall be designated as “Series A Junior Participating Cumulative Preferred Stock”
(the "Series A Junior Participating Cumulative Preferred Stock") and shall have a par value per share of $0.01,
and the number of shares constituting the Series A Junior Participating Cumulative Preferred Stock shall be four hundred thousand
(400,000). Such number of shares may be increased or decreased by resolution of the Board of Directors; provided that
no decrease shall reduce the number of shares of Series A Junior Participating Cumulative Preferred Stock to a number less than
the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights
or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Junior Participating
Cumulative Preferred Stock.
SECTION 2. DIVIDENDS
AND DISTRIBUTIONS.
(A) Subject
to the prior and superior rights of the holders of any shares of any series of preferred stock ranking prior and superior to the shares
of Series A Junior Participating Cumulative Preferred Stock with respect to dividends or distributions, the holders of shares of
Series A Junior Participating Cumulative Preferred Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and
December in each year (each such date, a "Quarterly Dividend Payment Date") commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of Series A Junior Participating Cumulative Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to the greater of (a) $10.00 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per
share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the common stock, par value
$0.01 per share, of the Corporation (the “Common Stock”) since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of
Series A Junior Participating Cumulative Preferred Stock. In the event the Corporation shall at any time after July 23, 2015
(the “Rights Declaration Date”) (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a small number of shares, then in each such case
the amount to which holders of shares of Series A Junior Participating Cumulative Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number
of shares of Common Stock that were outstanding immediately prior to such event.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
(B) The
Corporation shall declare a dividend or distribution on the Series A Junior Participating Cumulative Preferred Stock as provided
in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable
in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $10.00 per share on the Series A Junior Participating Cumulative Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Cumulative Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Participating Cumulative Preferred
Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for determination of holders of shares of Series A Junior Participating Cumulative
Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating Cumulative Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A
Junior Participating Cumulative Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 45 days prior to the date fixed for the payment thereof.
SECTION 3. VOTING
RIGHTS. The holders of shares of Series A Junior Participating Cumulative Preferred Stock shall have the following voting rights:
(A) Subject
to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Cumulative Preferred Stock shall
entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the shareholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the number of votes per share to which holders of shares of Series A Junior Participating Cumulative
Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number
of shares of Common Stock that were outstanding immediately prior to such event.
(B) Except
as otherwise provided herein or by law, the holders of shares of Series A Junior Participating Cumulative Preferred Stock and the
holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation.
(C) (i) If
at any time dividends on any Series A Junior Participating Cumulative Preferred Stock shall be in arrears in an amount equal to
six (6) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a “default
period”) that shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and
for the current quarterly dividend period on all shares of Series A Junior Participating Cumulative Preferred Stock then outstanding
shall have been declared and paid or set apart for payment. During each default period, all holders of preferred stock (including holders
of the Series A Junior Participating Cumulative Preferred Stock) with dividends in arrears in an amount equal to six (6) quarterly
dividends thereon, voting as a class, irrespective of series, shall have the right to elect two (2) directors.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
(ii) During any
default period, such voting right of the holders of Series A Junior Participating Cumulative Preferred Stock may be exercised initially
at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of shareholders,
and thereafter at annual meetings of shareholders, provided that neither such voting right nor the right of the holders
of any other series of preferred stock, if any, to increase, in certain cases, the authorized number of directors shall be exercised
unless the holders of ten percent (10%) in number of shares of preferred stock outstanding shall be present in person or by proxy. The
absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of preferred stock of such voting right.
At any meeting at which the holders of preferred stock shall exercise such voting right initially during an existing default period,
they shall have the right, voting as a class, to elect directors to fill such vacancies, if any, in the Board of Directors as may then
exist up to two (2) directors or, if such right is exercised at an annual meeting, to elect two (2) directors. If the number
that may be so elected at any special meeting does not amount to the required number, the holders of the preferred stock shall have the
right to make such increase in the number of directors as shall be necessary to permit the election by them of the required number. After
the holders of the preferred stock shall have exercised their right to elect directors in any default period and during the continuance
of such period, the number of directors shall not be increased or decreased except by vote of the holders of cumulative preferred stock
as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Junior Participating
Cumulative Preferred Stock.
(iii) Unless
the holders of preferred stock shall, during an existing default period, have previously exercised their right to elect directors, the
Board of Directors may order, or any shareholder or shareholders owning in the aggregate not less than ten percent (10%) of the total
number of shares of preferred stock outstanding, irrespective of series, may request, the calling of a special meeting of the holders
of preferred stock, which meeting shall thereupon be called by the Chief Executive Officer, Chief Financial Officer, Chief Strategy Officer,
a Vice-President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of preferred
stock are entitled to vote pursuant to this paragraph (C)(iii) shall be given to each holder of record of preferred stock by mailing
a copy of such notice to such holder at such holder’s last address as the same appears on the books of the Corporation. Such meeting
shall be called for a time not earlier than 20 days and not later than 60 days after such order or request, or in default of the calling
of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any shareholder or shareholders
owning in the aggregate not less than ten percent (10%) of the total number of shares of preferred stock outstanding. Notwithstanding
the provisions of this paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding
the date fixed for the next annual meeting of the shareholders.
(iv) In any default
period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect
the whole number of directors until the holders of preferred stock shall have exercised their right to elect two (2) directors voting
as a class, after the exercise of which right (x) the directors so elected by the holders of preferred stock shall continue in office
until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy
in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section (3) be filled by vote of a majority
of the remaining directors theretofore elected by the holders of the class of stock that elected the director whose office shall have
become vacant. References in this paragraph (C) to directors elected by the holders of a particular class of stock shall include
directors elected by such directors to fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately
upon the expiration of a default period, (x) the right of the holders of preferred stock as a class to elect directors shall cease,
(y) the term of any directors elected by the holders of Preferred stock as a class shall terminate, and (z) the number of directors
shall be such number as may be provided for in the Articles or the Corporation’s by-laws (the “By-Laws”) irrespective
of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however,
to change thereafter in any manner provided by law or in the Articles or By-Laws). Any vacancies in the Board of Directors effected by
the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining directors.
(D) Except
as set forth herein, holders of Series A Junior Participating Cumulative Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein)
for taking any corporate action.
SECTION 4. REACQUIRED
SHARES. Any shares of Series A Junior Participating Cumulative Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of preferred stock of the Corporation and may be reissued as part of a new series of preferred
stock to be established by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein or as otherwise required by law.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
SECTION 5. LIQUIDATION,
DISSOLUTION OR WINDING UP.
(A) Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking (either as to dividends or upon liquidation, dissolution or winding up) junior to the Series A Junior
Participating Cumulative Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating Cumulative
Preferred Stock shall have received $10.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the “Series A Liquidation Preference”). Following the payment
of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of
Series A Junior Participating Cumulative Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have
received an amount per share (the “Common Adjustment”) equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph C below to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (ii), the “Adjustment
Number”). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Junior Participating Cumulative Preferred Stock and Common Stock, respectively, holders
of Series A Junior Participating Cumulative Preferred Stock and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Cumulative
Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In
the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference
and the liquidation preferences of all other series of preferred stock, if any, that rank on a parity with the Series A Junior Participating
Cumulative Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment
in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In
the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted automatically
by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such
event.
SECTION 6. CONSOLIDATION,
MERGER, ETC. In the event the Corporation shall enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such
case the shares of Series A Junior Participating Cumulative Preferred Stock shall at the same time be similarly exchanged or changed
in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock
is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Junior Participating Cumulative Preferred Stock shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
SECTION 7.
NO REDEMPTION. The shares of Series A Junior Participating Cumulative Preferred Stock shall
not be redeemable.
SECTION 8.
RANKING. The Series A Junior Participating Cumulative Preferred Stock shall rank junior to
all other series of preferred stock as to the payment of dividends and the distribution of assets.
SECTION 9.
AMENDMENT. The Articles shall not be further amended in any manner that would materially alter or
change the powers, preferences or special rights of the Series A Junior Participating Cumulative Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series A Junior Participating
Cumulative Preferred Stock, voting separately as a class.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
SECTION 10. FRACTIONAL
SHARES. Series A Junior Participating Cumulative Preferred Stock may be issued in fractions of a share that shall entitle the
holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions
and to have the benefit of all other rights of holders of Series A Junior Participating Cumulative Preferred Stock.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
IN WITNESS WHEREOF, the undersigned has executed
this Certificate of Designation, Preferences and Rights and does affirm the foregoing as true under the penalties of perjury this ___ day
of [MONTH] [YEAR].
|
iMedia Brands, Inc. |
|
|
|
By: |
|
|
Name: |
[NAME] |
|
Title: |
[TITLE(S)] |
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
EXHIBIT B
to Shareholder Rights Plan
[Form of Right Certificate]
Certificate No. R- |
_________Rights |
NOT EXERCISABLE AFTER JULY 13, 2025, SUBJECT TO
EARLIER REDEMPTION OR EXPIRATION PURSUANT TO THE SHAREHOLDER RIGHTS PLAN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. THE RIGHTS EVIDENCED BY THIS CERTIFICATE SHALL NOT BE EXERCISABLE,
AND SHALL BE VOID SO LONG AS HELD BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION FOR THE ISSUANCE TO SUCH HOLDER, OR
THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE OBTAINABLE. THE
BENEFICIAL OWNER OF THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE MAY BE AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE (AS
DEFINED IN THE SHAREHOLDER RIGHTS PLAN) OF AN ACQUIRING PERSON OR A SUBSEQUENT HOLDER
OF A RIGHT CERTIFICATE BENEFICIALLY OWNED BY SUCH PERSONS. ACCORDINGLY, UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT,
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY WILL BE NULL AND VOID.
Right Certificate
iMedia Brands, Inc.
This certifies that ____________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Shareholder Rights Plan, dated July 13, 2015, as amended, restated, renewed or extended from time
to time (the “Plan”) between IMEDIA BRANDS, INC., a Minnesota corporation (“Company”), and
Equiniti Trust Company (“Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Plan) and prior to 5:00 P.M. New York time on July 13, 2025, at the office or offices of the Rights Agent,
or its successors as Rights Agent, designated for such purpose, one one-thousandth of a fully paid, nonassessable share of Series A
Junior Participating Cumulative Preferred Stock, par value $0.01 per share, of the Company (a “Unit”), at a purchase
price of $9.00, as the same may from time to time be adjusted in accordance with the Plan (“Purchase Price”), upon
presentation and surrender or this Right Certificate with the Form of Election to Purchase and included Certificate duly completed
and executed. The number of Rights evidenced by this Right Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of ________, 20___, based on the
Units as constituted at such date.
As provided in the Plan, the Purchase Price and
the number of Units which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events and, upon the happening of certain events, shares of Common Stock or other securities
other than Units, or other property, may be acquired upon exercise of the Rights evidenced by this Right Certificate, as provided by the
Plan.
As more fully set forth in the Plan, from and after
the first occurrence of a Section 11(a)(ii) Event (as such term is defined in the Plan), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such terms
are defined in the Plan), (ii) a transferee of such Acquiring Person (or of any such Associate or Affiliate), or (iii) under
certain circumstances specified in the Plan, a transferee of such Acquiring Person (or of any such Associate or Affiliate) who becomes
a transferee prior to or concurrently with such Acquiring Person becoming such, such Rights shall become null and void without any further
action, and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event,
whether under the Plan or otherwise.
This Right Certificate is subject to all of the
terms, provisions and conditions of the Plan, which terms, provisions and conditions are incorporated herein by reference and made a part
hereof and to which Plan reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and
immunities of the Rights Agent, the Company and the registered holders of the Right Certificates. Copies of the Plan are on file at the
principal executive office of the Company and will be mailed to shareholders upon request to the Rights Agent.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
This Right Certificate, with or without other Right
Certificates, upon surrender at the office or offices of the Rights Agent designated for such purpose, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights entitling the registered holder to purchase a like aggregate
number of Units as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled the holder to purchase.
If this Right Certificate shall be exercised in part, the holder shall be entitled to receive, upon surrender hereof, the Right Certificate
indicating the remaining Rights represented thereby or another Right Certificate or Right Certificates for the number of Rights not exercised.
Subject to the provisions of the Plan, the Rights
evidenced by this Certificate may be (x) redeemed by the Company at its option at a redemption price of $0.001 per Right at any time
prior to the earlier of the Close of Business on (i) the tenth calendar day after Stock Acquisition Date, and (ii) the Final
Expiration Date, or under certain other conditions as specified in the Plan, and (y) exchanged, after any Person becomes an Acquiring
Person (as such terms are defined in the Plan), at the option of the Board of Directors of the Company, for one share of Common Stock
of the Company as set forth in the Plan.
No fractional Units, shares of Common Stock of
the Company or other securities (other than fractions of a share of Preferred Stock represented by Units) shall be required to be issued
upon the exercise of any Right or Rights evidenced hereby, and in lieu thereof, as provided in the Plan, a holder otherwise entitled to
fractions of shares of Common Stock, Units or other securities (other than fractions of a share of Preferred Stock represented by Units)
may receive an amount in cash equal to the same fraction of the then current value of a shares of Common Stock or such other securities.
No holder of this Right Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose the holder of Units, shares of Preferred Stock, shares of Common Stock or of
any other securities of the Company which may at any time be issuable upon the exercise hereof, nor shall anything contained in the Plan
or herein be construed to confer upon the holder hereof, as such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors, or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to
any corporate action or to receive notice of meetings or other actions affecting shareholders (except as provided in the Plan) or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised
as provided in the Plan.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the Rights Agent.
[remainder of page intentionally left blank]
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal, dated as of __________ __, ____.
ATTEST: |
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iMedia Brands, Inc. |
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By: |
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By: |
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Title |
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Title: |
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Countersigned:
EQUINITI TRUST COMPANY
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Rights Agent |
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By: |
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Authorized signature |
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PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED __________________________ hereby sells,
assigns and transfers unto
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(Please print name and address of transferee) |
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______________ Rights evidenced by this Right
Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ____________________
Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution.
Dated: _____________, 20__ |
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Signature |
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(Signature must conform in all respects to the name of holder as written upon the face of this Right Certificate, without alteration or enlargement or any change whatsoever.) |
Signature Guaranteed:*
* |
Signature must be guaranteed by an “Eligible Guarantor Institution” pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934. |
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the
Rights evidenced by this Right Certificate
[ ] are
[ ] are not
being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Plan);
(2) after
due inquiry and to the best knowledge of the undersigned, the undersigned
[ ] did
[ ] did not
acquire the Rights evidenced by this Right Certificate
from any Person who is or was an Acquiring Person or an Affiliate or Associate of an Acquiring Person or any transferee of such Persons.
Dated: ______________, 20__
Signature: |
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(Signature must conform in all respects to the name of holder as written upon the face of this Right Certificate, without alteration or enlargement or any change whatsoever.) |
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Signature Guaranteed:*
* |
Signature must be guaranteed by an “Eligible Guarantor Institution” pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934. |
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder desires to
Exercise the Right Certificate.)
To: IMEDIA BRANDS, INC.
The undersigned hereby irrevocably elects to exercise
____________ Rights represented by this Right Certificate to purchase the number of one one-thousandths of a share of Preferred Stock,
shares of Common Stock or other securities issuable upon the exercise of such Rights and requests that certificates representing such
share(s) or other securities be issued in the name of:
Please insert social security or other identifying number |
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(Please print name and address) |
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate for the remaining such Rights shall be registered in the name of and delivered
to:
Please insert social security or other identifying number |
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(Please print name and address) |
Dated: ________________, 20__
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Signature |
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(Signature must conform in all respects to the name of holder as written upon the face of the Right Certificate, without alteration or enlargement or any change whatsoever.) |
Signature Guaranteed: *
* |
Signature must be guaranteed by an “Eligible Guarantor Institution” pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934. |
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the
Rights evidenced by this Right Certificate
[ ] are
[ ] are not
being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Plan);
(2) after
due inquiry and to the best knowledge of the undersigned, the undersigned
[ ] did
[ ] did not
acquire the Rights evidenced by this Right Certificate
from any Person who is or was an Acquiring Person or an Affiliate or Associate of an Acquiring Person or any transferee of such Persons.
Dated: ______________, 20__
Signature: |
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(Signature must conform in all respects to the name of holder as written upon the face of this Right Certificate, without alteration or enlargement or any change whatsoever.) |
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Signature Guaranteed:*
* |
Signature must be guaranteed by an “Eligible Guarantor Institution” pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934. |
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
IMEDIA BRANDS, INC.
SUMMARY OF THE TERMS OF THE RIGHTS TO PURCHASE
UNITS OF
PREFERRED STOCK
On July 10, 2015, a duly authorized committee
of the Board of Directors of iMedia Brands, Inc. (the “Company”) declared a dividend distribution of one purchase
right (a “Right”) for each outstanding share of Common Stock, par value $0.01 per share (“Common Stock”),
of the Company, payable to shareholders of record on July 23, 2015, and issuable as of that date. Except in the circumstances described
below, each Right, when it becomes exercisable, entitles the registered holder to purchase from the Company one one-thousandth of a share
of Series A Junior Participating Cumulative Preferred Stock, $.01 par value, of the Company (“Preferred Stock”
and each one one-thousandth of a share of Preferred Stock, a “Unit”) at a price of $9.00 per Unit (the “Purchase
Price”). The rights of a holder of a Unit are substantially equivalent to the rights of a holder of a share of Common Stock.
The description and terms of the Rights are set forth in a Shareholder Rights Plan (the “Plan”) between the Company
and Equiniti Trust Company (the “Rights Agent”).
The Company has generated
substantial operating losses and other tax attributes in previous years which, under the Internal Revenue Code of 1986 (the “Code”),
the Company may in certain circumstances use to offset current and future earnings and thus reduce its future federal income tax liability
(subject to certain requirements and restrictions. However, if the Company experiences an “Ownership Change,” as defined in
Section 382 of the Code and the treasury regulations thereunder (“Section 382”), its ability to use the tax
attributes could be substantially limited or lost altogether. In order to seek to avoid an “Ownership Change”, the Board of
Directors adopted the Plan.
As discussed below, initially the Rights will
not be exercisable, certificates will not be sent to shareholders and the Rights will automatically trade with the Common Stock.
The Rights will be evidenced by the Common Stock
certificates, and Rights relating to shares of Common Stock not represented by certificates will be represented by notation on the records
of the Company, until the close of business on the earlier to occur of (i) the tenth calendar day after the day on which a public
announcement or filing that a person or group of affiliated or associated persons has become an “Acquiring Person”,
which is defined as a person who, at any time after the date of the Rights Agreement, has acquired, or obtained the right to acquire,
beneficial ownership of 4.99% or more of the Common Stock of the Company then outstanding , subject to certain exceptions as described
below, or (ii) the tenth day (or a later date determined by the Board of Directors of the Company) after the commencement of a tender
or exchange offer the consummation of which would result in a person becoming an Acquiring Person (the earlier of these dates is called
the “Distribution Date”).
As soon as practicable following a Distribution
Date, the Rights Agent will, if requested to do so by the Company, mail separate certificates evidencing the Rights (“Right Certificates”)
to holders of record of shares of the Common Stock as of the close of business on the Distribution Date, and those separate certificates
alone will evidence the Rights from and after the Distribution Date.
Each of the following persons will not be deemed
to be an Acquiring Person, even if they have acquired, or obtained the right to acquire, beneficial ownership of 4.99% or more of the
shares of Common Stock of the Company then outstanding: (i) the Company, (ii) any subsidiary of the Company, (iii) any
employee benefit plan or employee stock plan of the Company or any subsidiary of the Company; (iv) any “direct public group”
within the meaning of Treasury Regulations Section 1.382-2T(j(2(ii); (v) any person who the Board of Directors of the Company
determines prior to the time the person would otherwise be an Acquiring Person, should be exempted from being an Acquiring Person; (vi) any
person who would otherwise be an Acquiring Person upon the first public announcement by the Company of the adoption of the Plan, unless
and until such person, or any affiliate of such person, acquires beneficial ownership of any additional shares of Common Stock after the
first public announcement by the Company of the adoption of the Plan; (vii) any person who as the result of an acquisition of shares
of Common Stock by the Company which, by reducing the number of shares of Common Stock outstanding, increases the proportionate number
of shares of Common Stock beneficially owned by the person to 4.99% or more of the shares of Common Stock then outstanding; or (viii) any
person who inadvertently may become an Acquiring Person, so long as the person promptly enters into, and delivers to the Company, an irrevocable
commitment to promptly divest, and thereafter promptly divests beneficial ownership of sufficient shares of Common Stock so that the person
ceases to be an Acquiring Person. In addition, no person shall be an Acquiring Person if the Board of Directors shall have affirmatively
determined in light of the intent and purposes of the Plan or other circumstances facing the Company, that such person should not be deemed
an Acquiring Person. A person (other than any “direct public group” within the meaning of Treasury Regulations Section 1.382-2T(j)(2(ii))
will be treated as the beneficial owner of 4.99% or more shares of the Common Stock if, in the determination of the Board of Directors,
that person would be treated as a “5-percent shareholder” for purposes of Section 382 (substituting “4.99”
for “5” each time “five” or “5” is used in or for purposes of Section 382.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
The Rights are not exercisable until after the
Distribution Date. The Rights will expire upon the earliest of (i) the date on which all of the Rights are redeemed as described
below, (ii) the date on which the Rights are exchanged as described below, (iii) the consummation of a reorganization transaction
entered into by the Company resulting in the imposition of stock transfer restrictions that the Board of Directors determines will provide
protection for the Company’s tax attributes similar to that provided by this Plan, (iv) the close of business on the effective
date of the repeal of Section 382, or any other change, if the Board of Directors determines that this Plan is no longer necessary
or desirable for the preservation of the Company’s tax attributes, (v) the date on which the Board of Directors determines
that the Company’s tax attributes have been applied within the meaning of Section 382 and that this Plan is no longer necessary
to preserve those tax attributes, (vi) the beginning of a taxable year of the Company to which the Board of Directors determines
that none of the Company’s tax attributes may be carried forward, (vii) the close of business on the earlier of the first anniversary
of the date of the Plan or the date of the Company’s 2016 annual meeting of shareholders, if the Plan shall not have been approved
by the Company’s shareholders, (viii) the close of business on the date of the third annual meeting of shareholders following
the last annual meeting of shareholders of the Company at which this Plan was most recently approved by shareholders, unless the Plan
is re-approved by shareholders at that third annual meeting of shareholders, and (ix) the close of business on July 13, 2025.
The Purchase Price, and the number of Units, shares
of Common Stock or other securities or property issuable upon exercise of the Rights, are subject to adjustment from time to time to prevent
dilution: (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock; (ii) upon
the grant to holders of Preferred Stock of certain rights or warrants to subscribe for Preferred Stock or convertible securities at less
than the current market price of the Preferred Stock; or (iii) upon the distribution to holders of the Preferred Stock of evidences
of indebtedness or assets (excluding dividends payable in Preferred Stock) or of subscription rights or warrants (other than those referred
to above). The Purchase Price is also subject to adjustment from time to time in the event of a Common Stock dividend on, or a subdivision
or combination of, the shares of Common Stock.
In the event any Person becomes an Acquiring Person,
then each holder of record of a Right, other than the Acquiring Person, will thereafter have the right to receive, upon payment of the
Purchase Price, that number of shares of Common Stock having a value at the time the person becomes an Acquiring Person equal to twice
the Purchase Price. Any Rights that are or were at any time, on or after the Distribution Date, beneficially owned by an Acquiring Person
will become null and void. After such an event, to the extent that insufficient shares of Common Stock are available for the exercise
in full of the Rights, holders of Rights will receive upon exercise a number of shares of Common Stock to the extent available and then
Units or other securities of the Company, assets, or cash, in proportions determined by the Company, so that the aggregate value received
is equal to twice the Purchase Price.
No fractional shares of Common Stock or Units will
be required to be issued upon exercise of the Rights and, in lieu thereof, a payment in cash equal to the fraction of the then current
value of a share of Common Stock may be made.
At any time after a person becomes an Acquiring
Person, the Board may exchange all of part of the outstanding Rights (other than those held by an Acquiring Person) for shares of Common
Stock at an exchange rate of one share of Common Stock (and, in certain circumstances, a Unit) for each Right. The Company will promptly
give public notice of any exchange (although failure to give notice will not affect the validity of the exchange).
At any time until close of business on the tenth
calendar day after the day a public announcement or the filing is made indicating that a person has become an Acquiring Person (and prior
to the giving of notice of the exchange or redemption, as applicable to the holders of the Rights), or thereafter under certain circumstances,
the Company may redeem the Rights in whole, but not in part, at a price of $0.001 per Right.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
Immediately upon the action of the Board authorizing
exchange or redemption of the Rights, the right to exercise the Rights will terminate, and the only right of the holders of Rights will
be to receive (if applicable) the shares of Common Stock of the Company(or Units) issuable in connection with the exchange or the Redemption
Price without any interest thereon.
Until the close of business on the tenth calendar
day after the day a public announcement or a filing is made indicating that a person has become an Acquiring Person, or thereafter under
certain circumstances, the Company may amend the Rights in any manner. The Company may also amend the Rights Agreement after the close
of business on the tenth calendar day after the day a public announcement or filing is made indicating that a person has become an Acquiring
Person, to cure ambiguities, to correct defective or inconsistent provisions or in any manner that does not adversely affect the interests
of holders of the Rights.
Until a Right is exercised, the holder, as such,
will have no rights as a shareholder of the Company, including the right to vote or to receive dividends.
The issuance of the Rights is not taxable to the
Company or to shareholders under presently existing federal income tax law, and will not change the way in which shareholders can presently
trade the Company’s shares of Common Stock. If the Rights should become exercisable, shareholders, depending on then existing circumstances,
may recognize taxable income.
A copy of the Plan has been
filed with the Securities and Exchange Commission as an Exhibit to a Registration Statement on Form 8-K filed on July 13,
2015. A copy of the Plan is available free of charge from either the Rights Agent by writing to Equiniti Trust Company, 1110 Centre Pointe
Curve, Suite 101, Mendota Heights, Minnesota 55120, Attention: Relationship Management, or the Company by writing to iMedia Brands, Inc.,
6740 Shady Oak Road, Eden Prairie, Minnesota 55344, Attention: Corporate Secretary. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Plan, which is incorporated in this summary description by reference.
PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
APPENDIX
B
PROPOSED
AMENDMENT
TO
ARTICLE 3 OF THE
THIRD
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
IMEDIA
BRANDS, INC.
ARTICLE 3
CAPITAL
| A. | The
Corporation is authorized to issue Ten Million (10,000,000) shares of capital stock and Forty
Million (40,000,000) shares of common stock, having a par value of one cent ($.01) per share
in the case of common stock, and having a par value as determined by the Board of Directors
in the case of preferred stock, to be held, sold and paid for at such times and in such manner
as the Board of Directors may from time to time determine in accordance with the laws of
the State of Minnesota. |
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NAME THE COMPANY NAME INC. - COMMON
123,456,789,012.12345
THE COMPANY NAME INC. - CLASS A
123,456,789,012.12345
THE COMPANY NAME INC. - CLASS B
123,456,789,012.12345
THE COMPANY NAME INC. - CLASS C
123,456,789,012.12345
THE COMPANY NAME INC. - CLASS D
123,456,789,012.12345
THE COMPANY NAME INC. - CLASS E
123,456,789,012.12345
THE COMPANY NAME INC. - CLASS F
123,456,789,012.12345
THE COMPANY NAME INC. - 401 K
123,456,789,012.12345
→
x
02 0000000000
JOB #
1 OF 2
1 OF 2
PAGE
SHARES
CUSIP #
SEQUENCE #
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
Signature (Joint Owners)
Signature [PLEASE SIGN WITHIN BOX]
Date
Date
CONTROL # SHARES
SCAN TO
VIEW MATERIALS &
VOTE
To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
0 0 0
0 0 0 0 0 0 0 0 0
0000572360_1 R1.0.0.24
For
Withhold
For All
All
All
Except
The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees 01) Michael Friedman
02) Landel C. Hobbs
03) Jill Krueger
04) Eyal Lalo
05) Lisa A. Letizio
06) Timothy A. Peterman
07) Darryl C. Porter
08) Aaron P. Reitkopf
IMEDIA BRANDS, INC. 6740 SHADY OAK RD. EDEN PRAIRIE, MN 55344
Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1
Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1
VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use
the
Internet
to
transmit
your
voting
instructions
and
for
electronic
delivery
of
information.
Vote
by
11:59
P.M.
ET
on
(TBD).
Have
your
proxy
card
in
hand
when
you
access
the
web
site
and
follow
the
instructions
to
obtain
your
records
and
to
create
an
electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If
you
would
like
to
reduce
the
costs
incurred
by
our
company
in
mailing
proxy
materials,
you
can
consent
to
receiving
all
future
proxy
statements,
proxy
cards
and
annual
reports
electronically
via
e-mail
or
the
Internet.
To
sign
up
for
electronic
delivery,
please
follow
the
instructions
above
to
vote
using
the
Internet
and,
when
prompted,
indicate
that
you
agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use
any
touch-tone
telephone
to
transmit
your
voting
instructions.
Vote
by
11:59
P.M.
ET
on (TBD). Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark,
sign
and
date
your
proxy
card
and
return
it
in
the
postage-paid
envelope
we
have
provided
or
return
it
to
Vote
Processing,
c/o
Broadridge,
51
Mercedes
Way,
Edgewood,
NY 11717.
The Board of Directors recommends you vote FOR proposals 2, 3 and 4.
For
Against
Abstain
2. To approve, on an advisory basis, the fiscal 2021 compensation of the Company's named executive officers as disclosed in the accompanying proxy statement; 3. To re-approve our Shareholder Rights Plan; and 4. Approve the amendment to the Company's Articles of Incorporation to increase the number of authorized shares of common stock. NOTE: To transact such other business as may properly come before the Annual Meeting, or any adjournments or postponements thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
| 0000572360_2 R1.0.0.24
PRELIMINARY PROXY FORM - SUBJECT
TO COMPLETION
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report on Form 10-K are available at
www.proxyvote.com
iMedia Brands, Inc.
Annual Meeting of Shareholders
(TBD) 10:00 AM
This proxy is solicited by the Board of Directors
The
shareholder(s)
hereby
appoint(s)
Timothy
A.
Peterman
or
Jean
Sabatier,
or
either
of
them,
as
proxies,
each
with
the
power
to
appoint
his
substitute,
and
hereby
authorize(s)
them
to
represent
and
to
vote,
as
designated
on
the
reverse
side
of
this
proxy
card,
all
of
the
shares
of
common
stock
of
iMedia
Brands,
Inc.
that
the
shareholder(s)
is/
are
entitled
to
vote
at
the
Annual
Meeting
of
Shareholders
to
be
held
at
10:00
AM,
CDT
on
(TBD),
at
the
iMedia
Brands,
Inc.
Corporate
Offices,
6690
Shady
Oak
Road,
Eden
Prairie,
MN
55344,
and
any
adjournment
or
postponement thereof. This
proxy,
when
properly
executed,
will
be
voted
in
the
manner
directed
herein.
If
no
such
direction
is
made,
this
proxy
will
be
voted
in
accordance
with
the
Board
of
Directors'
recommendations.
Notwithstanding
the
foregoing,
if
this
proxy
is
to
be
voted
for
any
nominee
named
on the reverse side and such nominee is unwilling or unable to serve, this proxy will be voted for a substitute in the discretion of the proxies.
Continued and to be signed on reverse side |