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Chico's FAS Adopts 'Poison Pill' Amid COVID-19 Impact - Quick Facts

Chico's FAS, Inc. (CHS), a omnichannel specialty retailer for women, announced Friday that its Board of Directors adopted a "Poison Pill" in the form of a limited duration shareholder rights plan in the best interest of all its shareholders.

The rights plan was adopted due to the unprecedented impact of the global coronavirus (COVID-19) pandemic on equity market valuations, including the dislocation in the Company's stock price.

Pursuant to the Rights Plan, the company is issuing one right for each share of common stock outstanding at the close of business on April 13, 2020. The rights will become exercisable only if an entity, person or group acquires beneficial ownership of 10% or more of the Company's common stock, or 20% in the case of certain passive investors.

The Rights Plan has a one-year duration, expiring on April 1, 2021. It is similar to plans adopted by other public companies and is intended to protect the interest of the company and its shareholders by reducing the likelihood that any person or group gains control of Chico's FAS through open market accumulation or other tactics without paying an appropriate control premium.

When the rights become exercisable, each holder of a right will be entitled to purchase, at the then-current exercise price (which was initially set at $12 per right), additional shares of common stock having a value of twice the exercise price of the right, a 50% discount.

However, the company said the Rights Plan has not been adopted in response to any specific takeover bid or other proposal to acquire control of the Company.

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