CAPSTONE THERAPEUTICS CORP. (OTCMKTS:CAPS) Files An 8-K Entry into a Material Definitive Agreement

CAPSTONE THERAPEUTICS CORP. (OTCMKTS:CAPS) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01

Entry into a Material Definitive Agreement.

On April 18, 2017, the Board of Directors (the Board) of Capstone
Therapeutics Corp. (the Company) authorized and declared a
dividend distribution of one right (a Right) for each outstanding
share of common stock, par value $0.0005 per share (the Common
Shares), of the Company to shareholders of record as of the close
of business on April 18, 2017 (the Record Date). Each Right
entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Preferred Stock, par value
$0.0005 per share (the Preferred Shares), of the Company at an
exercise price of $5.00 per one one-hundredth of a Preferred
Share, subject to adjustment (the Exercise Price). The complete
terms of the Rights are set forth in a Tax Benefit Preservation
Plan (the Benefit Plan), dated as of April 18, 2017, between the
Company and Computershare Inc., as rights agent.

By adopting the Benefit Plan, the Board is seeking to protect the
Companys ability to use its net operating losses and other tax
attributes (collectively, Tax Benefits). The Company views its
Tax Benefits as highly valuable assets of the Company that are
likely to inure to the benefit of the Company and its
shareholders. However, if the Company experiences an ownership
change, as defined in Section 382 of the Internal Revenue Code
(the Code), its ability to use the Tax Benefits could be
substantially limited, and the timing of the usage of the Tax
Benefits could be substantially delayed, which could
significantly impair the value of the Tax Benefits. Generally, an
ownership change occurs if the percentage of the Companys stock
owned by one or more five percent shareholders increases by more
than 50 percentage points over the lowest percentage of stock
owned by such shareholders at any time during the prior
three-year period or, if sooner, since the last ownership change
experienced by the Company. The Plan is intended to act as a
deterrent to any person acquiring 4.90% or more of the
outstanding Common Shares without the approval of the Board. This
would protect the Tax Benefits because changes in ownership by a
person owning less than 4.90% of the Common Shares are not
included in the calculation of ownership change for purposes of
Section 382 of the Code. The Board believes that it is in the
best interest of the Company and its shareholders that the
Company provide for the protection of the Tax Benefits by
adopting the Benefit Plan.

The following is a summary description of the terms of the
Benefit Plan. This summary does not purport to be complete and is
qualified in its entirety by reference to the Benefit Plan, a
copy of which is attached as Exhibit 4.1 hereto and incorporated
herein by reference.

Distribution and Transfer of Rights; Rights Certificates

The Board has declared a dividend of one Right for each
outstanding Common Share. Prior to the Distribution Date referred
to below:

the Rights will be evidenced by and trade with the
certificates for the Common Shares (or, with respect to any
uncertificated Common Shares registered in book entry form,
by notation in book entry), and no separate rights
certificates will be distributed;

new Common Shares certificates issued after the Record Date
will contain a legend incorporating the Benefit Plan by
reference (for uncertificated Common Shares registered in
book entry form, this legend will be contained in a notation
in book entry); and
the surrender for transfer of any certificates for Common
Shares (or the surrender for transfer of any uncertificated
Common Shares registered in book entry form) will also
constitute the transfer of the Rights associated with such
Common Shares.

Rights will accompany any new Common Shares that are issued after
the Record Date.

Distribution Date

Subject to certain exceptions specified in the Benefit Plan, the
Rights will separate from the Common Shares and become
exercisable following (i) the 10th business day (or such later
date as may be determined by the Board) after the public
announcement that an Acquiring Person has acquired beneficial
ownership of 4.90% or more of the Common Shares 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
4.90% or more of the Common Shares.

The date on which the Rights separate from the Common Shares and
become exercisable is referred to as the Distribution Date.

After the Distribution Date, the Company will mail Rights
certificates to the Companys shareholders as of the close of
business on the Distribution Date and the Rights will become
transferable apart from the Common Shares. Thereafter, such
Rights certificates alone will represent the Rights.

Preferred Shares Purchasable Upon Exercise of Rights

After the Distribution Date, each Right will entitle the holder
to purchase, for $5.00 (the Exercise Price), one one-hundredth of
a Preferred Share.

Each one one-hundredth of a Preferred Share, if issued, will:

not be redeemable;
entitle holders to quarterly dividend payments of $0.001 per
one one-hundredth of a share, or an amount equal to the
dividend paid on one Common Share, whichever is greater;
entitle holders upon liquidation either to receive $0.10 per
one one-hundredth of a share or an amount equal to the
payment made on one Common Share, whichever is greater;
have no general voting rights, but will have specified class
voting power in the event of mergers and similar
transactions; and

entitle holders to a per share payment equal to the payment
made on one Common Share if the Common Shares are exchanged
via merger, consolidation or a similar transaction.

Flip-In Trigger

If a person or group of affiliated or associated persons (an
Acquiring Person) obtains beneficial ownership of 4.90% or more
of the Common Shares, except to an offer for all outstanding
Common Shares that the independent members of the Board determine
to be fair and not inadequate and to otherwise be in the best
interests of the Company and its shareholders after receiving
advice from one or more investment banking firms, then each Right
will entitle the holder thereof to purchase, for the Exercise
Price, a number of Common Shares (or, in certain circumstances,
cash, property or other securities of the Company) having a
then-current market value of twice the Exercise Price. However,
the Rights are not exercisable following the occurrence of the
foregoing event until such time as the Rights are no longer
redeemable by the Company, as further described below.

Following the occurrence of an event set forth in preceding
paragraph, all Rights that are or, under certain circumstances
specified in the Benefit Plan, were beneficially owned by an
Acquiring Person or certain of its transferees will be null and
void.

Any person who, together with its affiliates and associates,
beneficially owns 4.90% or more of the outstanding Common Shares
as of the time of the first public announcement of the Benefit
Plan (an Exempt Person) shall not be deemed an Acquiring Person,
but only for so long as such person, together with its affiliates
and associates, does not become the beneficial owner of any
additional Common Shares while such person is an Exempt Person. A
person will cease to be an Exempt Person if such person, together
with such persons affiliates and associates, becomes the
beneficial owner of less than 4.90% of the outstanding Common
Shares.

Flip-Over Trigger

If, after an Acquiring Person obtains 4.90% or more of the Common
Shares, (i) the Company merges into another entity, (ii) an
acquiring entity merges into the Company or (iii) the Company
sells or transfers more than 50% of its assets, cash flow or
earning power, then each Right (except for Rights that have
previously been voided as set forth above) will entitle the
holder thereof to purchase, for the Exercise Price, a number of
shares of common stock of the person engaging in the transaction
having a then-current market value of twice the Exercise Price.

Redemption of the Rights

The Rights will be redeemable at the Companys option for $0.001
per Right (payable in cash, Common Shares or other consideration
deemed appropriate by the Board) at any time on or prior to the
10th business day (or such later date as may be determined by the
Board) after the public announcement that an Acquiring Person has
acquired beneficial ownership of 4.90% or more of the Common
Shares. Immediately upon the action of the Board ordering
redemption, the Rights will terminate and the only right of the
holders of the Rights will be to receive the $0.001 redemption
price. The redemption price will be adjusted if the Company
undertakes a stock dividend or a stock split.

Exchange Provision

At any time after the date on which an Acquiring Person
beneficially owns 4.90% or more of the Common Shares and prior to
the acquisition by the Acquiring Person of 50% of the Common
Shares, the Board may exchange the Rights (except for Rights that
have previously been voided as set forth above), in whole or in
part, for Common Shares at an exchange ratio of one Common Share
per Right (subject to adjustment). In certain circumstances, the
Company may elect to exchange the Rights for cash or other
securities of the Company having a value approximately equal to
one Common Share.

Expiration of the Rights

The Rights expire on the earliest of (i) the Close of Business on
December 31, 2020; (ii) the time at which the rights are
redeemed; (iii) the time at which the rights are exchanged; (iv)
the close of business on the effective date of the repeal of
Section382 or any other change if the Board, in its sole
discretion, determines that this Plan is no longer necessary or
desirable for the preservation of the Tax Benefits; (v) the time
at which the Board determines that the Tax Benefits are fully
utilized or no longer available to Section 382 or that an
ownership change to Section 382 would not adversely impact in any
material respect the time period in which the Company could use
the Tax Benefits, or materially impair the amount of the Tax
Benefits that could be used by the Company in any particular time
period, for applicable tax purposes; or (vi) a determination by
the Board, in its sole discretion and prior to the Distribution
Date, that this Plan and the Rights are no longer in the best
interests of the Company and its shareholders.

Amendment of Terms of Rights Plan and Rights

The terms of the Rights and the Benefit Plan may be amended in
any respect without the consent of the holders of the Rights on
or prior to the Distribution Date. Thereafter, the terms of the
Rights and the Benefit Plan may be amended without the consent of
the holders of Rights in order to (i) cure any ambiguities, (ii)
shorten or lengthen any time period to the Benefit Plan or (iii)
make changes that do not adversely affect the interests of
holders of the Rights.

Voting Rights; Other Shareholder Rights

The Rights will not have any voting rights. Until a Right is
exercised, the holder thereof, as such, will have no separate
rights as shareholder of the Company.

Anti-Dilution Provisions

The Board may adjust the Exercise Price, the number of Preferred
Shares issuable and the number of outstanding Rights to prevent
dilution that may occur from a stock dividend, a stock split or a
reclassification of the Preferred Shares or Common Shares.

With certain exceptions, no adjustments to the Exercise Price
will be made until the cumulative adjustments amount to at least
1% of the Exercise Price. No Preferred Shares will be issued in
fractions (other than fractions that are integral multiples of
one one-hundredth of a Preferred Share) and, in lieu thereof, an
adjustment in cash will be made based on the then current market
price of the Preferred Shares.

Taxes

The distribution of Rights should not be taxable for federal
income tax purposes. However, following an event that renders the
Rights exercisable or upon redemption of the Rights, shareholders
may recognize taxable income.

Section 3 Securities and Trading Markets

Item 3.03. Material Modification to Rights of Security
Holders.

The information included in Item 1.01 of this Current Report on
Form 8-K is incorporated by reference into this Item 3.03.

Section 9 Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d)Exhibits

Exhibit No. Description
4.1 Tax Benefit Preservation Plan, dated as of April 18, 2017, by
and between Capstone Therapeutics Corp. and Computershare
Inc., as rights agent.


About CAPSTONE THERAPEUTICS CORP. (OTCMKTS:CAPS)

Capstone Therapeutics Corp. is a biotechnology company. The Company is engaged in developing a pipeline of peptides and other molecules aimed at helping patients with under-served medical conditions. The Company entered into a joint venture, LipimetiX Development, Inc., to develop Apo E mimetic peptide molecule AEM-28 and its analogs for the treatment for Homozygous Familial Hypercholesterolemia, Acute Hypertriglyceridemic Pancreatitis, diabetic dyslipidemia and other hyperlipidemic indications. Apolipoprotein E is a 299 amino acid protein that plays a role in lipoprotein metabolism. AEM-28 is a 28 amino acid mimetic of Apo E and AEM-28 and its analogs, including AEM-28-14, a 28 amino acid mimetic of Apo E (with an aminohexanoic acid group and a phospholipid), and both contain a domain that anchors into a lipoprotein surface while also providing the Apo E receptor binding domain, which allows clearance through the heparan sulfate proteoglycan receptors (Syndecan-1) in the liver.

CAPSTONE THERAPEUTICS CORP. (OTCMKTS:CAPS) Recent Trading Information

CAPSTONE THERAPEUTICS CORP. (OTCMKTS:CAPS) closed its last trading session 00.0000 at 0.0600 with 3,844 shares trading hands.

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