Innovative Eyewear, Inc. Adopts Limited Duration Stockholders Rights Plan

Rhea-AI Summary

Innovative Eyewear, Inc. (Nasdaq: LUCY), developer of smart eyewear brands, has adopted a duration stockholder rights plan. The plan, effective from September 25, 2024 to September 25, 2025, aims to protect stockholders' interests and ensure fair value realization. Key features include:

1. One right distributed per outstanding common stock share.
2. Rights become exercisable if a person/group acquires 20% or more ownership without board approval.
3. Allows stockholders to purchase additional shares at a discount in specific scenarios.
4. Does not deter fair offers for the company.
5. Vladimir Galkin and affiliates are grandfathered but subject to certain conditions.

The plan is designed to prevent control acquisition through open market accumulation without paying an appropriate premium, while giving the board time to make informed decisions in stockholders' best interests.

Positive

• Adoption of stockholder rights plan to protect shareholder value
• Plan designed to prevent hostile takeovers without fair premium
• Provides board with time to make informed decisions in stockholders' interests
• Does not deter fair offers for the company

Negative

• Potential limitation on large stake acquisitions by investors
• May discourage some investors from accumulating significant positions

Insights

Corporate Governance Expert

The adoption of a duration stockholder rights plan, commonly known as a "poison pill," is a significant defensive measure by Innovative Eyewear. This move suggests the company perceives a potential threat of hostile takeover or activist investor intervention. The 20% ownership threshold and one-year duration are typical features, balancing protection with shareholder interests.

Key implications include:

• Deterrence of unsolicited takeover attempts
• Potential increase in negotiating leverage for the Board
• Possible negative perception by some investors who view it as entrenching management

The grandfathering of Vladimir Galkin and associates indicates they are likely significant shareholders. This plan may impact stock liquidity and could influence future strategic decisions. While it provides short-term protection, the Board must use this time effectively to enhance shareholder value to justify the measure.

Legal Analyst

This Rights Plan is a complex legal mechanism with significant implications. Key legal aspects include:

• Compliance with Delaware law and SEC regulations
• Potential challenges from shareholders or potential acquirers
• Fiduciary duty considerations for the Board

The plan's structure, particularly the 20% trigger and exclusion of Vladimir Galkin, may face scrutiny. Courts typically uphold such plans if they're reasonable in relation to the threat posed. The duration is a positive factor for legal defensibility.

Shareholders should note that while this plan doesn't prevent a takeover, it significantly alters the process and economics of any potential acquisition. The Board's actions in response to any offers will be important in determining the plan's legal standing if challenged.

MIAMI, Sept. 25, 2024 /PRNewswire/ -- Innovative Eyewear, Inc. ("Innovative Eyewear" or the "Company") (Nasdaq: LUCY), the developer of smart eyewear under the Lucyd®, Nautica®, Eddie Bauer® and Reebok® brands, today announced that its Board of Directors has approved the adoption of a limited duration stockholder rights plan (the "Rights Plan") and declared a dividend distribution of one right ("Right") for each outstanding share of common stock. The record date for such dividend distribution is September 25, 2024. The Rights Plan expires, without any further action being required to be taken by Innovative Eyewear's Board of Directors, on September 25, 2025 or at such earlier time as disclosed in the Rights Plan. 

The adoption of the Rights Plan is intended to enable all Innovative Eyewear stockholders to realize the full potential value of their investment in the company and to protect the interests of the company and its stockholders by reducing the likelihood that any person or group gains control of Innovative Eyewear through open market accumulation or other tactics without paying an appropriate control premium. In addition, the Rights Plan provides the Board of Directors with time to make informed decisions that are in the best long-term interests of Innovative Eyewear and its stockholders and does not deter Innovative Eyewear's Board of Directors from considering any offer that is fair and otherwise in the best interest of Innovative Eyewear's stockholders.

The Rights Plan is similar to other plans adopted by publicly traded companies. Under the Rights Plan, the rights generally will become exercisable only if a person or group (including a group of persons who are acting in concert with each other) acquires beneficial ownership of 20% or more of Innovative Eyewear's common stock in a transaction not approved by the Innovative Eyewear Board of Directors. In that situation, each holder of a right (other than the acquiring person or group, whose rights will become void and will not be exercisable) will have the right to purchase, upon payment of the exercise price and in accordance with the terms of the Rights Plan, a number of shares of Innovative Eyewear's common stock having a market value of twice such price. In addition, if Innovative Eyewear is acquired in a merger or other business combination after an acquiring person acquires 20% or more of Innovative Eyewear's common stock, each holder of the right would thereafter have the right to purchase, upon payment of the exercise price and in accordance with the terms of the Rights Plan, a number of shares of common stock of the acquiring person having a market value of twice such price. The acquiring person or group will not be entitled to exercise these Rights. Vladimir Galkin and his affiliates and associates have been grandfathered under the Rights Plan but will become an acquiring person upon their acquisition of more of our outstanding shares of common stock, subject to certain exceptions as described in the Rights Plan. In the Rights Plan, the definition of "beneficial ownership" includes derivative securities.

Further details of the Rights Plan will be contained in a Current Report on Form 8-K that Innovative Eyewear will be filing with the Securities and Exchange Commission (SEC). These filings will be available on the SEC's web site at www.sec.gov. Copies are also available at no charge at the Investors section of Innovative Eyewear's corporate website at www.lucyd.co.

Ellenoff Grossman & Schole LLP is serving as legal counsel to Innovative Eyewear.

About Innovative Eyewear, Inc.

Innovative Eyewear is a developer of cutting-edge ChatGPT enabled smart eyewear, under the Lucyd®, Nautica®, Eddie Bauer® and Reebok® brands. True to our mission to Upgrade Your Eyewear®, our Bluetooth audio glasses allow users to stay safely and ergonomically connected to their digital lives and are offered in hundreds of frame and lens combinations to meet the needs of the optical market. To learn more and explore our continuously evolving collection of smart eyewear, please visit www.lucyd.co.

Forward-Looking Statements

 This press release contains certain forward-looking statements, including but not limited to, those relating to the Company's Rights Plan. Forward-looking statements are based on the Company's current expectations and assumptions. The Private Securities Litigation Reform Act of 1995 provides a safe-harbor for forward-looking statements. These statements may be identified by the use of forward-looking expressions, including, but not limited to, "anticipate," "believe," "continue," "estimate," "expect," "future," "intend," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar expressions that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does not mean that a statement is not forward-looking. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among others, market and other conditions, and other factors and risks identified from time to time in the Company's filings with the Securities and Exchange Commission (the "SEC"), including its annual report on Form 10-K under the caption "Risk Factors" filed with the SEC on March 25, 2024.

Investor Relations Contact:

Innovative Eyewear, Inc.
Scott Powell
Skyline Corporate Communications Group, LLC
Office: +1 (646) 893-5835
Email: scott@skylineccg.com

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SOURCE Innovative Eyewear, Inc.

FAQ

What is the purpose of Innovative Eyewear's (LUCY) new stockholder rights plan?

The plan aims to protect stockholders' interests by preventing control acquisition without an appropriate premium and giving the board time to make informed decisions in the best long-term interests of the company and its stockholders.

When does Innovative Eyewear's (LUCY) stockholder rights plan expire?

The plan expires on September 25, 2025, or at an earlier time as disclosed in the Rights Plan, without requiring further action from the Board of Directors.

What triggers the rights in Innovative Eyewear's (LUCY) stockholder rights plan?

The rights generally become exercisable if a person or group acquires beneficial ownership of 20% or more of Innovative Eyewear's common stock in a transaction not approved by the Board of Directors.

How does the stockholder rights plan affect Vladimir Galkin's ownership in Innovative Eyewear (LUCY)?

Vladimir Galkin and his affiliates are grandfathered under the Rights Plan but will become an acquiring person upon acquiring more outstanding shares of common stock, subject to certain exceptions described in the plan.