SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
----------------------------------
Date of Report (Date of earliest event reported): March 8, 1999
FOOTSTAR, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-11681 22-3439443
(State of (Commission File Number) (IRS Employer
incorporation) Identification No.)
933 MacArthur Boulevard, Mahwah, New Jersey 07430
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 934-2000
<PAGE>
Item 5. OTHER EVENTS
On March 8, 1999, the Board of Directors of Footstar, Inc. (the
"Corporation") declared a dividend distribution of one preferred share
purchase right (a "Right") for each outstanding share of Common Stock, par
value $.01 per share (the "Common Shares"), of the Corporation. The
dividend is payable to the shareholders of record on March 19, 1999 (the
"Record Date"), and with respect to Common Shares issued thereafter until
the Distribution Date (as defined below) and, in certain circumstances,
with respect to Common Shares issued after the Distribution Date. Except as
set forth below, each Right, when it becomes exercisable, entitles the
registered holder to purchase from the Corporation one one-thousandth of a
share of Series A Junior Participating Preferred Stock, $.01 par value per
share (the "Preferred Shares"), of the Corporation at a price of $100 per
one one-thousandth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Corporation and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Rights
Agent"), dated as of March 8, 1999.
Initially, the Rights will be attached to all certificates
representing Common Shares then outstanding, and no separate Right
Certificates will be distributed. The Rights will separate from the Common
Shares upon the earlier to occur of (i) a person or group of affiliated or
associated persons (an "Acquiring Person") having acquired Beneficial
Ownership (as defined in the Rights Agreement) of 15% or more of the
outstanding Common Shares (except pursuant to a Permitted Offer (as defined
in the Rights Agreement) or a Qualifying Offer as hereinafter defined), or
(ii) 10 days (or such later date as the Board of Directors of the
Corporation may determine) following the commencement of, or announcement
of an intention to make, a tender offer or exchange offer, the consummation
of which would result in a person or group becoming an Acquiring Person
(the earlier of such dates being called the "Distribution Date"), provided
that an Acquiring Person does not include a Grandfathered Shareholder or a
Grandfathered Transferee (as such terms are defined in the Rights
Agreement). The date that a person or group becomes an Acquiring Person is
the "Shares Acquisition Date."
A "Qualifying Offer" is an offer for all the outstanding Common
Shares of the Corporation which generally meets the following requirements:
(i) the consideration offered must be the same for all shareholders; (ii)
to the extent the consideration includes cash, the Corporation must receive
an opinion from a nationally recognized investment bank designated by the
Corporation that the offeror has the ability to finance the offer; (iii)
upon consummation of the offer, the offeror must own a majority of the
outstanding Common Shares of the Corporation; (iv) the per share
consideration being offered is no less than the highest amount of
consideration paid for any Common Shares purchased by the offeror within
the two years prior to the offer; (v) the offer must remain open for at
least 60 business days; (vi) the Corporation must receive an opinion from a
nationally recognized investment bank designated by the Corporation stating
that the offer price is fair to the Corporation's shareholders from a
financial point of view; and (vii) before the date the offer is commenced,
the offeror must make an irrevocable written commitment to the Corporation
that (A) following completion of the offer, the offeror will acquire all
shares not purchased in the offer at the same price per share as that paid
in the offer, (B) the offeror will not make any amendment to the terms of
the offer that reduces the offer price, changes the form of consideration
offered, reduces the number of shares sought, or otherwise is not in the
interest of the Corporation's shareholders, and (C) the offeror will not
make any offer for any equity securities of the Corporation for six months
after the original offer is commenced if the original offer is not
successful, unless an offer by another party is commenced either for a
higher per share price or with the approval of the Board of Directors of
the Corporation, in either of which case a new offer by the initial offeror
must be at a per share price at least equal to that provided for in the
alternative offer.
The Rights Agreement provides that, until the Distribution Date,
the Rights will be transferred with, and only with, the Common Shares.
Until the Distribution Date (or earlier redemption or expiration of the
Rights) new Common Share certificates issued after the Record Date upon
transfer or new issuance of Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares outstanding as of the Record
Date, even without such notation or a copy of this Summary of Rights being
attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon
as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution
Date (and to each initial record holder of certain Common Shares issued
after the Distribution Date), and such separate Right Certificates alone
will evidence the Rights.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on March 8, 2009, unless earlier
redeemed by the Corporation as described below.
In the event that any person becomes an Acquiring Person or an
affiliate or associate thereof (except pursuant to a Permitted Offer or a
Qualifying Offer, each holder of a Right will thereafter have the right
(the "Flip-In Right") to receive upon exercise the number of Common Shares
or, in the discretion of the Board of Directors of the Corporation, one
one-thousandth of a Preferred Share (or, in certain circumstances, other
securities of the Corporation) having a value (immediately prior to such
triggering event) equal to two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of the event
described above, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, Beneficially Owned by any
Acquiring Person or any affiliate or associate thereof will be null and
void.
In the event that, at any time following the Shares Acquisition
Date, (i) the Corporation is acquired in a merger or other business
combination transaction in which the holders of all of the outstanding
Common Shares immediately prior to the consummation of the transaction are
not the holders of all of the surviving corporation's voting power, or (ii)
more than 50% of the Corporation's assets or earning power is sold or
transferred, in either case with or to an Acquiring Person or any affiliate
or associate or any other person in which such Acquiring Person, affiliate
or associate has an interest or any person acting on behalf of or in
concert with such Acquiring Person, affiliate or associate, or, if in such
transaction all holders of Common Shares are not treated alike, any other
person, then each holder of a Right (except Rights which previously have
been voided as set forth above) shall thereafter have the right (the
"Flip-Over Right") to receive, upon exercise, common shares of the
acquiring company (or in certain circumstances, its parent) having a value
equal to two times the exercise price of the Right. The holder of a Right
will continue to have the Flip-Over Right whether or not such holder
exercises or surrenders the Flip-In Right.
The Purchase Price payable, and the number of Preferred Shares,
Common Shares or other securities 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 Preferred Shares, (ii) upon the grant to holders
of the Preferred Shares of certain rights or warrants to subscribe for or
purchase Preferred Shares at a price, or securities convertible into
Preferred Shares with a conversion price, less than the then current market
price of the Preferred Shares, or (iii) upon the distribution to holders of
the Preferred Shares of evidences of indebtedness or assets (excluding
regular quarterly cash dividends or dividends payable in Preferred Shares)
or of subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-thousandth of a Preferred Share issuable upon exercise of each Right
are also subject to adjustment in the event of a stock split of the Common
Shares or a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares
occurring, in any such case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled to a minimum
preferential quarterly dividend payment of $10.00 per share but, if
greater, will be entitled to an aggregate dividend per share of 1,000 times
the dividend declared per Common Share. In the event of liquidation, the
holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment of $1,000 per share, provided that the holders will be
entitled to an aggregate payment per share of at least 1,000 times the
aggregate payment made per Common Share. These rights are protected by
customary antidilution provisions. In the event that the dividends on the
Preferred Shares are in arrears in an amount equal to six quarterly
dividend payments, the holders of the Preferred Shares shall have the
right, voting as a class, to elect two directors in addition to the
directors elected by the holders of the Common Shares until all cumulative
dividends on the Preferred Shares have been paid through the last quarterly
dividend payment date and dividends for the current dividend period
declared and set apart.
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional Preferred Shares will be issued
(other than fractions which are one one-thousandth or integral multiples of
one one-thousandth of a Preferred Share, which may, at the election of the
Corporation, be evidenced by depositary receipts), and in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Shares on the last trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) a person
becoming an Acquiring Person or (ii) the expiration of the Rights, and
under certain other circumstances, the Corporation may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"), which redemption shall generally be effective upon the action of
the Board of Directors of the Corporation. Additionally, following the
Shares Acquisition Date, the Corporation may redeem the then outstanding
Rights in whole, but not in part, at the Redemption Price, provided that
such redemption is in connection with a merger or other business
combination transaction or series of transactions involving the Corporation
in which all holders of Common Shares are treated alike but not involving
an Acquiring Person or its affiliates or associates.
All the provisions of the Rights Agreement, except those which
concern the rights, duties or obligations of the Rights Agent, may be
amended by the Board of Directors of the Corporation prior to the
Distribution Date. After the Distribution Date, the provisions of the
Rights Agreement may be amended by the Board of Directors of the
Corporation in order to cure any ambiguity, defect or inconsistency, to
shorten or lengthen any time period under the Rights Agreement (subject to
certain limitations), or to make changes that do not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person), as long as such amendments do not change the rights, duties or
obligations of the Rights Agent.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Corporation, including, without
limitation, the right to vote or to receive dividends. While the
distribution of the Rights will not be taxable to shareholders of the
Corporation, shareholders may, depending upon the circumstances, recognize
taxable income should the Rights become exercisable or upon the occurrence
of certain events thereafter.
Attached hereto as Exhibit 4 and incorporated by reference are a
copy of the Rights Agreement between the Corporation and ChaseMellon
Shareholder Services, L.L.C., specifying the terms of the Rights, and the
exhibits thereto, as follows: Exhibit A - Certificate of Designation,
Preferences and Rights of Series A Junior Participating Preferred Stock of
Footstar, Inc.; Exhibit B - Form of Right Certificate; and Exhibit C -
Summary of Rights to Purchase Preferred Shares. The foregoing description
of the Rights is qualified by reference to the Rights Agreement and the
exhibits thereto.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(c) Exhibits
4 Rights Agreement (the "Rights Agreement")
dated as of March 9, 1999 between Footstar,
Inc. and ChaseMellon Shareholder Services,
L.L.C., which includes, as Exhibit A thereto,
the Certificate of Designation, Preferences
and Rights of Series A Junior Participating
Preferred Stock of Footstar, Inc., as Exhibit
B thereto, the Form of Right Certificate, and
as Exhibit C thereto, the Summary of Rights
to Purchase Preferred Shares, incorporated
herein by reference to Exhibit 1 to the
Registration Statement on Form 8-A dated
March 9, 1999 and filed by Footstar, Inc.
with the Securities and Exchange Commission
on March 9, 1999.
99 Press Release, dated March 9, 1999, issued by
Footstar, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
FOOTSTAR, INC.
(Registrant)
By /s/ Maureen Richards
----------------------------
Name: Maureen Richards
Title: Vice President
Date: March 9, 1999
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Description Page
- ------- ----------- ----
4 Rights Agreement (the "Rights Agreement") dated as
of March 8, 1999 between Footstar, Inc. and
ChaseMellon Shareholder Services, L.L.C., which
includes, as Exhibit A thereto, the Certificate of
Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock of Footstar,
Inc., as Exhibit B thereto, the Form of Right
Certificate, and as Exhibit C thereto, the Summary
of Rights to Purchase Preferred Shares,
incorporated herein by reference to Exhibit 1 to
the Registration Statement on Form 8-A dated March
9, 1999 and filed by Footstar, Inc. with the
Securities and Exchange Commission on March 9,
1999.
99 Press Release, dated March 9, 1999, issued by
Footstar, Inc.
EXHIBIT 99
[logo of footstar]
Investor
Contact: Carlos Alberini Media Contact: Wendi Kopsick
Sr. Vice President & CFO Jim Fingeroth
Kathy Guinnessey Kekst and Company
Vice President, Finance (212) 521-4800
Footstar, Inc.
(201) 760-4008
FOR IMMEDIATE RELEASE
---------------------
FOOTSTAR ADOPTS SHAREHOLDER RIGHTS PLAN
---------------------------------------
MAHWAH, NEW JERSEY, March 9, 1999-Footstar, Inc. (NYSE:FTS) today announced
that its Board of Directors has approved the adoption of a Shareholder
Rights Plan. The Plan is designed to ensure that all shareholders receive
fair and equal treatment in the event of any proposed takeover of the
Company and to protect the Company and to protect the Company's
shareholders from abusive takeover tactics. The rights will be issued on
March 19, 1999 to shareholders of record on that date.
Under the Plan, preferred stock purchase rights will be distributed as a
dividend to shareholders at the rate of one Right for each share of common
stock outstanding. Initially, the rights are not exercisable. Upon a
"trigger event," each Right entitles its holder (other than the holder who
caused the trigger event) to purchase at an "Exercise Price" of $100 the
equivalent of that number of shares of common stock of the Company worth
twice the Exercise Price.
The Rights will be exercisable only if a person or group that is not
currently a 15% shareholder acquires beneficial ownership of 15% or more of
the Company's common stock. The Rights will not be triggered by a
"Qualifying Offer" that provides that all shareholders will receive the
same "fair" consideration and is for all outstanding shares not owned by
the offerer, among other things. In addition, stock repurchases by the
Company do not constitute a trigger event, under any circumstances.
Shareholders who currently own more than 15% of the stock are
"grandfathered" under the Plan, as long as they do not purchase additional
shares.
Mickey Robinson, Chairman and Chief Executive Officer, commented,
"Footstar's Shareholder Rights Plan has been carefully developed to serve
the interests of our shareholders and ensure they receive the full value of
their investment in the Company. Unlike almost all other Rights Plans, our
Plan has a "chewable" feature that will permit offers that meet certain
objective criteria designed to promote fairness for all shareholders.
Therefore, our Plan will not prevent an acquisition of the Company on terms
that the Board considers fair and in the best interests of all
shareholders."
The Company will be entitled to Redeem the Rights at a price of $0.01 per
Right at any time prior to the earlier of the trigger or expiration of the
Rights.
Details of the Shareholder Rights Plan will be mailed to shareholders.
As of February 27, 1999, Footstar operated 569 Footaction stores, which
sell branded athletic footwear and apparel, and 2,537 Meldisco leased
footwear departments.
Except for the historical information contained herein, the matters
discussed in this release are forward looking statements that involve risks
and uncertainties that may cause actual results to differ from those
expressed in any of the forward looking statements. Such risks and
uncertainties include, but are not limited to, uncertainties related to the
effect of competitive products and pricing, consumer demand for footwear,
unseasonable weather, consumer acceptance of our merchandise mix and retail
locations, the availability of products, and the other risks detailed in
the Company's Securities and Exchange Commission filings. The Company
undertakes not obligation to update forward looking statements to reflect
events or circumstances after the date such statements were made.
# # #
