On
May 23, 2014,
the Company's Board of Directors adopted a tax benefit preservation plan (the
“Plan”). The Plan is intended to diminish the risk that
the Company’s ability to use net operating loss carryforwards to reduce future federal income tax obligations may become substantially limited due to an
“ownership change,” as defined in Section 382 of the Internal Revenue Code. The Board of Directors authorized and declared a dividend distribution of one right for each outstanding share of common stock, par value $
0.001 per share, and Series F Preferred Stock, par value $0.001 per share, of
the Company to stockholders of record as of the close of business on
June 4, 2014. Each right entitles the registered holder to purchase from
the Company one one-thousandth of a share of Series G Participating Preferred Stock, par value $0.001 per share, of
the Company at an exercise price of $
14.00 per one one-thousandth of a share of Series G Participating Preferred Stock, subject to adjustment.
The rights will become exercisable following (i) the 10th business day (or such later date as may be determined by the Board of Directors) after the public announcement that an acquiring person has acquired beneficial ownership of 4.99% or more of the common stock (calculated pursuant to the Plan) or (ii) the 10th business day (or such later date as may be determined by the board) after a person or group announces a tender or exchange offer that would result in ownership by a person or group of 4.99% or more of the common stock (calculated pursuant to the Plan).
In addition, upon the occurrence of certain events, the exercise price of the rights would be adjusted and holders of the rights (other than rights owned by an acquiring person or group) would be entitled to purchase common stock at approximately half of market value. Given the potential adjustment of the exercise price of the rights, the rights could cause substantial dilution to a person or group that acquires 4.99% or more of
the Company's common stock on terms not approved by
the Company's Board of Directors.