Drive Shack Inc. (the “Company”) (OTCQX: DSHK), a leading owner
and operator of golf-related leisure and entertainment businesses,
has announced that it has amended and restated its existing tax
benefits preservation plan in order to accommodate technical
changes to the rights available thereunder in connection with DS’s
listing on OTCQX and delisting from the New York Stock Exchange,
effective January 3, 2023.
The amended and restated plan contains substantially identical
terms to the Tax Benefits Preservation Plan dated May 22, 2022. In
order to comply with the listing requirements of the OTCQX, the
Company is including a summary of the New Plan as Exhibit 1 to this
announcement.
Additional Information For additional information that
management believes to be useful for investors, please refer to the
presentation posted on the Company’s investor relations website,
https://ir.driveshack.com.
About Drive Shack Inc.
Drive Shack Inc. is a leading owner and operator of golf-related
leisure and entertainment businesses focused on bringing people
together through competitive socializing. Today, our portfolio
consists of American Golf, Drive Shack and Puttery.
Exhibit 1 – Summary of
Tax Benefits Preservation Plan
On May 3, 2024, Drive Shack Inc. (the “Company”) entered into a
Tax Benefits Preservation Plan (the “Plan”) with American Stock
Transfer & Trust Company, LLC, as rights agent (the “Rights
Agent”), and the disinterested members of the Board of Directors
(the “Board”) of the Company declared a dividend distribution of
one right (a “Right”) for each outstanding share of common stock,
par value $0.01 per share, of the Company (the “Common Stock”) to
stockholders of record at the close of business on May 12, 2024
(the “Record Date”). Each Right is governed by the terms of the
Plan and entitles the registered holder to purchase from the
Company a unit consisting of one one-thousandth of a share (a
“Unit”) of Series E Junior Participating Preferred Stock, par value
$0.01 per share (the “Series E Preferred Stock”), at a purchase
price of $9.00 per Unit, subject to adjustment (the “Purchase
Price”). The Plan is intended to help protect the Company’s ability
to use its tax net operating losses and certain other tax assets
(“Tax Benefits”) by deterring an “ownership change” as defined
under Section 382 of the Internal Revenue Code of 1986, as amended,
and the Treasury Regulations thereunder (the “Code”).
Rights Certificates; Exercise Period
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate
rights certificates (“Rights Certificates”) will be distributed.
Subject to certain exceptions specified in the Plan, the Rights
will separate from the Common Stock then outstanding and a
distribution date (the “Distribution Date”) will occur upon the
earlier of (i) 10 business days following a public announcement
that a person or group of affiliated or associated persons (an
“Acquiring Person”) has become the beneficial owner of 4.9% or more
of the shares of the Common Stock (the “Stock Acquisition Date”)
and (ii) 10 business days (or such later date as the Board shall
determine) following the commencement of a tender offer or exchange
offer that would result in a person or group becoming an Acquiring
Person.
Until the Distribution Date, (i) the Rights will be evidenced by
the Common Stock certificates (or, in the case of book entry
shares, by the notations in the book entry accounts) and will be
transferred with and only with such Common Stock, (ii) new Common
Stock certificates issued after the Record Date will contain a
notation incorporating the Plan by reference and (iii) the
surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
Pursuant to the Plan, the Company reserves the right to require
prior to the occurrence of a Triggering Event (as defined below)
that, upon any exercise of Rights, a number of Rights be exercised
so that only whole shares of Series E Preferred Stock will be
issued.
The definition of “Acquiring Person” contained in the Plan
contains several exemptions, including for (i) the Company or any
of the Company’s subsidiaries; (ii) any employee benefit plan of
the Company, or of any subsidiary of the Company, or any person or
entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan; (iii) any person who
becomes the beneficial owner of 4.9% or more of the shares of the
Common Stock then outstanding as a result of a reduction in the
number of shares of Common Stock by the Company or a stock
dividend, stock split, reverse stock split or similar transaction,
unless and until such person increases his ownership by more than
one percentage point over such person’s lowest percentage stock
ownership on or after the consummation of the relevant transaction;
(iv) any person who, together with all affiliates and associates of
such person, was the beneficial owner of 4.9% or more of the shares
of the Common Stock then outstanding on the date of the Plan,
unless and until such person and its affiliates and associates
increase their aggregate ownership by more than one percentage
point over their lowest percentage stock ownership on or after the
date of the Plan or decrease their aggregate percentage stock
ownership below 4.9%; (v) any person who, within 10 business days
of being requested by the Company to do so, certifies to the
Company that such person became an Acquiring Person inadvertently
or without knowledge of the terms of the Rights and who, together
with all affiliates and associates, thereafter within 10 business
days following such certification disposes of such number of shares
of Common Stock so that it, together with all affiliates and
associates, ceases to be an Acquiring Person; (vi) Wesley R. Edens
and any of his associates (“Mr. Edens”); provided that the foregoing exemption (x) shall
apply only to the extent that the Company does not undergo an
“ownership change” (as that term is defined in Section 382 of the
Code) as a result of beneficial ownership of Company securities by
Mr. Edens and (y) may be revoked at any time by the disinterested
members of the Board as to future acquisitions; and (vii) any
person that the Board has affirmatively determined shall not be
deemed an Acquiring Person.
The Rights are not exercisable until the Distribution Date and
will expire at the earliest of (i) 11:59 P.M. (New York City time)
on May 2, 2033, or such later date and time as may be determined by
the Board and approved by the stockholders of the Company by a vote
of the majority of the votes cast by the holders of shares entitled
to vote thereon at a meeting of the stockholders of the Company
prior to 11:59 P.M. (New York City time) on May 2, 2033 (which
later date and time shall be in no event later than 11:59 P.M. (New
York City time) on May 15, 2035), (ii) the time at which the Rights
are redeemed or exchanged as provided in the Plan, (iii) the time
at which the Board determines that the Plan is no longer necessary
or desirable for the preservation of Tax Benefits, and (iv) the
close of business on the first day of a taxable year of the Company
to which the Board determines that no Tax Benefits may be carried
forward.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will represent
the Rights. After the Distribution Date, the Company generally
would issue Rights with respect to shares of Common Stock issued
upon the exercise of stock options or pursuant to awards under any
employee plan or arrangement, which stock options or awards are
outstanding as of the Distribution Date, or upon the exercise,
conversion or exchange of securities issued by the Company after
the Plan’s adoption (except as may otherwise be provided in the
instruments governing such securities). In the case of other
issuances of shares of Common Stock after the Distribution Date,
the Company generally may, if deemed necessary or appropriate by
the Board, issue Rights with respect to such shares of Common
Stock.
Preferred Share Provisions
Each one one-thousandth of a share of Series E Preferred Stock,
if issued:
- will entitle the holder thereof to quarterly dividend payments
of $0.001 or an amount equal to the dividend paid on one share of
Common Stock, whichever is greater;
- will, upon any liquidation of the Company, entitle the holder
thereof to receive either $1.00 plus accrued and unpaid dividends
and distributions to the date of payment or an amount equal to the
payment made on one share of Common Stock, whichever is
greater;
- will have the same voting power as one share of Common Stock;
and
- will, if shares of Common Stock are exchanged via merger,
consolidation or a similar transaction, entitle holders to a per
share payment equal to the payment made on one share of Common
Stock.
Flip-in Trigger
In the event that a person or group of affiliated or associated
persons becomes an Acquiring Person (unless the event causing such
person or group to become an Acquiring Person is a transaction
described under Flip-over Trigger, below), each holder of a Right
will thereafter have the right to receive, upon exercise, Common
Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the
exercise price of the Right. Notwithstanding the foregoing,
following the occurrence of such an event, all Rights that are, or
(under certain circumstances specified in the Plan) were,
beneficially owned by any Acquiring Person will be null and void.
However, Rights are not exercisable following the occurrence of
such an event until such time as the Rights are no longer
redeemable by the Company as set forth below.
Flip-over Trigger
In the event that, at any time following the Stock Acquisition
Date, (i) the Company engages in a merger or other business
combination transaction in which the Company is not the surviving
corporation or (ii) the Company engages in a merger or other
business combination transaction in which the Company is the
surviving corporation and the Common Stock is changed or exchanged,
each holder of a Right (except Rights that have previously been
voided as set forth above) shall thereafter have the right to
receive, upon exercise, common stock of the acquiring company
having a value equal to two times the exercise price of the Right.
The events set forth in this paragraph and in the next preceding
paragraph are referred to as the “Triggering Events.”
Exchange Feature
At any time after a person becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the
outstanding Common Stock, the Board may exchange the Rights (other
than Rights owned by such person or group which have become void),
in whole or in part, at an exchange ratio of one share of Common
Stock, or one one-thousandth of a share of Series E Preferred Stock
(or of a share of a class or series of the Company’s preferred
stock having equivalent rights, preferences and privileges), per
Right (subject to adjustment).
Equitable Adjustments
The Purchase Price payable, and the number of Units of Series E
Preferred 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 Series E
Preferred Stock, (ii) if holders of the Series E Preferred Stock
are granted certain rights or warrants to subscribe for Series E
Preferred Stock or convertible securities at less than the current
market price of the Series E Preferred Stock, or (iii) upon the
distribution to holders of the Series E Preferred Stock of
evidences of indebtedness or assets (excluding regular quarterly
cash dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1%
of the Purchase Price. No fractional Units will be issued and, in
lieu thereof, an adjustment in cash will be made based on the
market price of the Series E Preferred Stock on the last trading
day prior to the date of exercise.
Redemption Rights
At any time until 10 business days following the Stock
Acquisition Date, the Company may, at the Company’s option, redeem
the Rights in whole, but not in part, at a price of $0.001 per
Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board ). Immediately upon the action of the
Board ordering redemption of the Rights, the Rights will terminate
and the only right of the holders of Rights will be to receive the
$0.001 redemption price.
Amendment of Rights
Any of the provisions of the Plan may be amended by the Board
prior to the Distribution Date except that the Board may not extend
the expiration of the Rights beyond 11:59 P.M. (New York City time)
on May 2, 2033, unless such extension is approved by the Company’s
stockholders prior to 11:59 P.M. (New York City time) on May 2,
2033. After the Distribution Date, the provisions of the Plan may
be amended by the Board in order to cure any ambiguity, to make
changes that do not adversely affect the interests of holders of
Rights, or to shorten or lengthen any time period under the Plan.
The foregoing notwithstanding, no amendment may be made at such
time as the Rights are not redeemable, except to cure any ambiguity
or correct or supplement any provision contained in the Plan which
may be defective or inconsistent with any other provision
therein.
Miscellaneous
Until a Right is exercised, the holder thereof, as such, will
have no separate rights as a stockholder of the Company, including
the right to vote or to receive dividends in respect of the Rights.
While the distribution of the Rights will not be taxable to the
Company’s stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the
event that the Rights become exercisable for Common Stock (or other
consideration) of the Company or for common stock of the acquiring
company or in the event of the redemption of the Rights as set
forth above.
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Investor Relations Drive Shack Inc. 646-585-5591
ir@driveshack.com