SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOOTSTAR, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3439443
- ---------------------------------------- -------------------
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
933 MacArthur Boulevard
Mahwah, New Jersey 07430
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange on which
Title of each class to be so registered each class is to be registered
- --------------------------------------- ------------------------------
Preferred Stock Purchase Rights New York Stock Exchange
If this Form relates to the registration of a class of debt securities and
is effective upon filing pursuant to General Instruction A.(c)(1), please
check the following box. [ ]
If this Form relates to the registration of a class of debt securities and
is to become effective simultaneously with the effectiveness of a
concurrent registration statement under the Securities Act of 1933 pursuant
to General Instruction A.(c)(2), please check the following box. [ ]
Securities to be registered pursuant to Section 12(g) of the Act:
None
- ---------------------------------------------------------------------------
(Title of Class)
<PAGE>
Item 1. Description of Securities to be Registered.
-------------------------------------------
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 the 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 1 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 2. Exhibits.
- ------- ---------
1. 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. Pursuant to the Rights
Agreement, Right Certificates will not be
mailed until after a Shares Acquisition Date
(as defined in the Rights Agreement) or ten
days after a person commences or announces its
intention to commence an offer if, upon
consummation thereof, such person would become
an Acquiring Person (as defined in the Rights
Agreement).
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly
authorized.
FOOTSTAR, INC.
By /s/ Maureen Richards
------------------------------
Name: Maureen Richards
Title: Vice President
Date: March 9, 1999
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Description Page
- ------- ----------- ----
1 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. Pursuant
to the Rights Agreement, Right Certificates will
not be mailed until after a Shares Acquisition
Date (as defined in the Rights Agreement) or ten
days after a person commences or announces its
intention to commence an offer if, upon
consummation thereof, such person would become an
Acquiring Person (as defined in the Rights
Agreement).
EXHIBIT 1
- ---------------------------------------------------------------------------
FOOTSTAR, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
-------------------------------
Rights Agreement
Dated as of March 8, 1999
- ---------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
Section 1. Certain Definitions...........................................1
Section 2. Appointment of Rights Agent...................................8
Section 3. Issuance of Right Certificates................................8
Section 4. Form of Right Certificate....................................10
Section 5. Countersignature and Registration............................11
Section 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificate............................................11
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights....................................................12
Section 8. Cancellation and Destruction of Right Certificates...........15
Section 9. Reservation and Availability of Preferred Shares.............15
Section 10. Preferred Shares Record Date................................17
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights..................................17
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares...................................................25
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power............................................25
Section 14. Fractional Rights and Fractional Shares.....................28
Section 15. Rights of Action............................................30
Section 16. Agreement of Right Holders..................................30
Section 17. Right Certificate Holder Not Deemed a Shareholder...........31
Section 18. Concerning the Rights Agent.................................31
Section 19. Merger or Consolidation or Change of Name of
Rights Agent................................................32
Section 20. Duties of Rights Agent......................................33
Section 21. Change of Rights Agent......................................35
Section 22. Issuance of New Right Certificates..........................36
Section 23. Redemption and Termination..................................36
Section 24. Exchange....................................................38
Section 25. Notice of Certain Events....................................39
Section 26. Notices.....................................................40
Section 27. Supplements and Amendments..................................40
Section 28. Determination and Actions by the Board of Directors, etc....41
Section 29. Successors..................................................42
Section 30. Benefits of this Agreement..................................42
Section 31. Severability................................................42
Section 32. Governing Law...............................................42
Section 33. Counterparts................................................43
Section 34. Descriptive Headings........................................43
Exhibit A - Certificate of Designation, Preferences and Rights of Series A
- --------- Junior Participating Preferred Stock of Footstar, Inc.
Exhibit B - Form of Right Certificate
- ---------
Exhibit C - Summary of Rights to Purchase Preferred Shares
- ---------
<PAGE>
Defined Term Cross Reference Sheet
----------------------------------
Term Location
- ---- --------
Acquiring Person....................................Exhibit C. Section 1(a)
Act............................................................Section 1(b)
Adjusted Number of Shares................................Section 11(a)(iii)
Adjusted Purchase Price..................................Section 11(a)(iii)
Adjustment Shares.........................................Section 11(a)(ii)
Affiliate......................................................Section 1(c)
Agreement..........................................................Preamble
Associate......................................................Section 1(c)
Beneficial Owner...............................................Section 1(d)
Beneficially Own...............................................Section 1(d)
Business Day...................................................Section 1(e)
Bylaws............................................................Exhibit A
capital stock equivalent.................................Section 11(a)(iii)
Certificate of Incorporation......................................Exhibit A
Close of Business.............................................Section 1 (f)
Commencement Date..........................................Section 1(n)(ii)
Common Shares.......................................Exhibit C. Section 1(g)
Common Stock......................................................Exhibit A
Corporation...................Exhibit C. Exhibit B. Section 13(a). Preamble
current per share market price.............................Section 11(d)(i)
Distribution Date...................................Exhibit C. Section 1(h)
equivalent preferred shares...................................Section 11(b)
Exchange Act...................................................Section 1(c)
Final Expiration Date............................Section 7(a). Section 1(i)
First Issuance....................................................Exhibit A
Flip-In Right.....................................................Exhibit C
Flip-Over Right...................................................Exhibit C
Grandfathered Percentage.......................................Section 1(j)
Grandfathered Shareholder......................................Section 1(k)
Grandfathered Transferee.......................................Section 1(l)
Interested Shareholder.........................................Section 1(m)
Liquidation.......................................................Exhibit A
NASDAQ.....................................................Section 11(d)(i)
Participating Preferred Liquidation Preference....................Exhibit A
Participating Preferred Stock.....................................Exhibit A
Permitted Offer................................................Section 1(n)
Person.........................................................Section 1(o)
Preferred Shares.........................Exhibit C. Exhibit B. Section 1(p)
Principal Party................................Section 13(b). Section 11(n)
Proration Factor.........................................Section 11(a)(iii)
Purchase Price...........................Exhibit C. Exhibit B. Section 4(a)
Qualifying Offer....................................Exhibit C. Section 1(q)
Quarterly Dividend Payment Date...................................Exhibit A
Record Date.............................................Exhibit C. Preamble
Redemption Date..................................Section 7(a). Section 1(r)
Redemption Price................................Exhibit C. Section 23(a)(i)
Right...................................................Exhibit C. Preamble
Right Certificate..............................................Section 3(a)
Right Certificates................................................Exhibit C
Rights Agent.................................Exhibit C. Exhibit B. Preamble
Rights Agreement.........................Exhibit C. Exhibit B. Section 3(c)
Section 11(a)(ii) Event........................................Section 1(s)
Section 13 Event...............................................Section 1(t)
Security...................................................Section 11(d)(i)
Shares Acquisition Date.............................Exhibit C. Section 1(u)
Subsidiary..................................Section 13(b)(ii). Section 1(v)
Summary of Rights..............................................Section 3(b)
Trading Day................................................Section 11(d)(i)
Triggering Event...............................................Section 1(w)
voting securities.............................................Section 13(a)
<PAGE>
RIGHTS AGREEMENT
----------------
RIGHTS AGREEMENT, dated as of March 8, 1999 (the "Agreement"),
between Footstar, Inc., a Delaware corporation (the "Corporation"), and
ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability
company, as Rights Agent (the "Rights Agent").
The Board of Directors of the Corporation has authorized and
declared a dividend of one preferred share purchase right (a "Right") for
each Common Share (as hereinafter defined) of the Corporation outstanding
at the Close of Business on March 19, 1999 (the "Record Date"), each Right
representing the right to purchase one one-thousandth of a Preferred Share
(as hereinafter defined), upon the terms and subject to the conditions
herein set forth, and has further authorized and directed the issuance of
one Right with respect to each Common Share that shall become outstanding
between the Record Date and the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date (as such terms are hereinafter
defined); provided, however, that Rights may be issued with respect to
Common Shares that shall become outstanding after the Distribution Date and
prior to the earlier of the Redemption Date and the Final Expiration Date
in accordance with the provisions of Section 22 of this Agreement.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the then outstanding Common Shares
(other than as a result of a Permitted Offer (as hereinafter defined) or a
Qualifying Offer (as hereinafter defined)) or was such a Beneficial Owner
at any time after the date hereof, whether or not such person continues to
be the Beneficial Owner of 15% or more of the then outstanding Common
Shares. Notwithstanding the foregoing, (A) the term "Acquiring Person"
shall not include (i) the Corporation, (ii) any Subsidiary of the
Corporation, (iii) any employee benefit plan of the Corporation or of any
Subsidiary of the Corporation, (iv) any Person or entity organized,
appointed or established by the Corporation for or pursuant to the terms of
any such plan, (v) a Grandfathered Shareholder or a Grandfathered
Transferee, unless and until such Grandfathered Shareholder or
Grandfathered Transferee, as applicable, without the prior approval of the
Board of Directors of the Corporation, shall after the date hereof become
the Beneficial Owner of more than the applicable Grandfathered Percentage
of the Common Shares of the Corporation, or (vi) any Person, who or which
together with all Affiliates and Associates of such Person becomes the
Beneficial Owner of 15% or more of the then outstanding Common Shares as a
result of the acquisition of Common Shares directly from the Corporation,
and (B) no Person (including, without limitation, any Grandfathered
Shareholder or Grandfathered Transferee) shall be deemed to be an
"Acquiring Person" either (X) as a result of the acquisition of Common
Shares by the Corporation which, by reducing the number of Common Shares
outstanding, increases the proportional number of shares Beneficially Owned
by such Person together with all Affiliates and Associates of such Person;
except that if (i) a Person (including, without limitation, any
Grandfathered Shareholder or Grandfathered Transferee) would become an
Acquiring Person (but for the operation of this subclause X) as a result of
the acquisition of Common Shares by the Corporation, and (ii) after such
share acquisition by the Corporation, such Person, or an Affiliate or
Associate of such Person, becomes the Beneficial Owner of any additional
Common Shares, then such Person shall be deemed an Acquiring Person, or (Y)
if such Person became an Acquiring Person inadvertently, and (i) promptly
after such Person discovers that such Person would otherwise be an
Acquiring Person (but for the operation of this subclause Y), notifies the
Board of Directors of the Corporation that such Person did so inadvertently
and (ii) within 2 days after such notification, becomes the Beneficial
Owner of less than 15% of the outstanding Common Shares.
(b) "Act" shall mean the Securities Act of 1933, as amended
and as in effect on the date of this Agreement.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended and in
effect on the date of this Agreement (the "Exchange Act").
(d) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "Beneficially Own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates Beneficially Owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to Beneficially Own, securities
tendered pursuant to a tender or exchange offer made by or on behalf of
such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange; or (B) the right
to vote pursuant to any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
Beneficially Own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable
proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2)
is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are Beneficially Owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person (or any of such Person's Affiliates or Associates)
has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities) relating to the
acquisition, holding, voting (except to the extent contemplated by the
proviso to Section l(d)(ii)(B)) or disposing of any securities of the
Corporation.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of the
Corporation, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to Beneficially
Own hereunder.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday or U.S. federal holiday.
(f) "Close of Business" on any given date shall mean 5:00
P.M., New York time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., New York time, on the next
succeeding Business Day.
(g) "Common Shares" when used with reference to the
Corporation shall mean the shares of Common Stock, par value $.01 per
share, of the Corporation or, in the event of a subdivision, combination or
consolidation with respect to such shares of Common Stock, the shares of
Common Stock resulting from such subdivision, combination or consolidation.
"Common Shares" when used with reference to any Person other than the
Corporation shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
(h) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(i) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(j) "Grandfathered Percentage" shall mean, (A) with respect
to any Grandfathered Person, the percentage of the outstanding Common
Shares that such Grandfathered Person Beneficially Owned on the date
hereof, or (B) with respect to any Grandfathered Transferee, the percentage
of the outstanding Common Shares that such Grandfathered Transferee
Beneficially Owns immediately after giving effect to the transaction by
which such Grandfathered Transferee first becomes a Grandfathered
Transferee; provided that if the percentage of Common Shares Beneficially
Owned by any Grandfathered Person or Grandfathered Transferee, as
applicable, is reduced for any reason subsequent to the date hereof, the
Grandfathered Percentage with respect to such Grandfathered Shareholder or
Grandfathered Transferee, as applicable, shall be reduced to the same
extent.
(k) "Grandfathered Shareholder" shall mean any Person who as
of the Close of Business on the date hereof was the Beneficial Owner of 15%
or more of the Common Shares of the Corporation then outstanding. Any
Grandfathered Shareholder who subsequent to the date hereof becomes the
Beneficial Owner of less than 15% of the outstanding Common Shares shall
cease to be a Grandfathered Shareholder.
(l) "Grandfathered Transferee" shall mean any Person who or
which, together with all Affiliates and Associates of such Person:
(i) acquires directly from a Grandfathered Shareholder
in any one transaction Common Shares such that, after giving effect to such
acquisition, such Person is the Beneficial Owner of 15% or more of the
outstanding Common Shares; and
(ii) immediately prior to such acquisition Beneficially
Owned less than 1% of all then outstanding Common Shares.
Any Grandfathered Transferee who subsequent to the date
hereof becomes the Beneficial Owner of less than 15% of the outstanding
Common Shares shall cease to be a Grandfathered Transferee.
(m) "Interested Shareholder" shall mean any Acquiring Person
or any Affiliate or Associate of an Acquiring Person or any other Person in
which any such Acquiring Person, Affiliate or Associate has an interest, or
any other Person acting directly or indirectly on behalf of or in concert
with any such Acquiring Person, Affiliate or Associate.
(n) "Permitted Offer" shall mean an offer which is for all
outstanding Common Shares at a price and on terms determined, prior to the
purchase of shares under such tender or exchange offer, by at least a
majority of the members of the Board of Directors of the Corporation who
are not officers of the Corporation and who are not Acquiring Persons or
Persons who would become Acquiring Persons as a result of the offer in
question or Affiliates, Associates, nominees or representatives of any such
Person, to be adequate (taking into account all factors that such Directors
deem relevant including, without limitation, prices that could reasonably
be achieved if the Corporation or its assets were sold on an orderly basis
designed to realize maximum value) and otherwise in the best interests of
the Corporation and its shareholders (other than the Person or any
Affiliate or Associate thereof on whose behalf the offer is being made)
taking into account all factors that such directors may deem relevant.
(o) "Person" shall mean any individual, firm, partnership,
corporation, limited liability company, trust, association, joint venture
or other entity, and shall include any successor (by merger or otherwise)
of such entity.
(p) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, with a par value of $.01 per share, of the
Corporation having the relative rights, preferences and limitations set
forth in the Certificate of Designation, Preferences and Rights attached to
this Agreement as Exhibit A.
(q) "Qualifying Offer" shall mean an offer for all
outstanding Common Shares which meets all of the following requirements:
(i) the consideration offered is the same for all
holders of Common Shares (it being agreed that a Qualifying Offer may offer
multiple forms of consideration if all holders have the same right, if any,
to choose between such forms of consideration);
(ii) in the event that any portion of the consideration
to be paid pursuant to such offer constitutes cash, on or prior to the date
that such offer is commenced within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act (the "Commencement
Date"), the Corporation has received an opinion from a nationally
recognized investment banking firm designated by the Corporation that the
Person or group making the offer has the capability under then prevailing
conditions in the credit markets to obtain funds sufficient to pay the cash
portion of the consideration for all Common Shares outstanding on a fully
diluted basis together with all related expenses in accordance with the
financing plan therefor set forth in the Schedule 14D-1 filed by such
Person or group in connection with such offer;
(iii) such Person or group must own, after consummating
such offer, a majority of the then outstanding Common Shares of the
Corporation;
(iv) the consideration per share being offered pursuant
to such offer shall have, on the date of the commencement of the offer, a
fair market value (as determined in good faith by the Board of Directors of
the Corporation) at least equal to the greatest amount of consideration
paid for any Common Shares purchased by the Person or group making the
offer within the two-year period prior to the Commencement Date;
(v) such offer remains open for at least 60 Business
Days; provided, however, that (x) if there is any increase in the price of
such offer, such offer must remain open for at least an additional 20
Business Days after the last such increase, (y) such offer must remain open
for at least 10 Business Days after the date that any bona fide alternative
offer is made which, in the opinion of a nationally recognized investment
banking firm designated by the Corporation, provides for consideration per
share in excess of that provided for in such offer, and (z) such offer must
remain open for at least 10 Business Days after the date on which such
Person reduces the per share price offered in accordance with clause
(vii)(y) below; provided further, however, that such offer need not remain
open, as a result of this clause (v), beyond (A) the time which any other
offer satisfying the criteria for a Qualifying Offer is then required to be
kept open under this clause (v), or (B) the scheduled expiration date, as
such date may be extended by public announcement on or prior to the then
scheduled expiration date, of any other tender offer for Common Shares with
respect to which the Board of Directors of the Corporation has agreed to
redeem the Rights immediately prior to acceptance for payment of Common
Shares thereunder (unless such other offer is terminated prior to its
expiration without any Common Shares having been purchased thereunder);
(vi) such offer is accompanied by a written opinion, in
customary form, of a nationally recognized investment banking firm
designated by the Corporation, stating that the price to be paid to holders
of Common Shares pursuant to the offer is fair from a financial point of
view to such holders; and
(vii) prior to the Commencement Date, such Person or
group makes an irrevocable written commitment to the Corporation (x) to
consummate a transaction or transactions promptly upon the completion of
such offer, whereby all Common Shares not purchased in such offer will be
acquired at the same price per share paid in such offer, subject only to
the condition that the Board of Directors of the Corporation shall have
granted any approvals required to enable such Person to consummate such
transaction or transactions following consummation of such offer without
obtaining the vote of any other shareholder, (y) that such person will not
make any amendment to such offer which reduces the per share price offered
(other than a reduction to reflect any dividend declared by the Corporation
after the commencement of such offer or any material change in the capital
structure of the Corporation initiated by the Corporation after the
commencement of such offer, whether by way of recapitalization,
reorganization, repurchase or otherwise), changes the form of consideration
offered, or reduces the number of shares being sought or which is otherwise
in any other respect materially adverse to the Corporation's shareholders,
and (z) that neither such Person nor any of its Affiliates or Associates
will make any other offer for any equity securities of the Corporation for
a period of six months after the commencement of the original offer if such
original offer does not result in the tender of the number of Common Shares
required to be purchased pursuant to clause (iii) above, unless another
tender offer by another party for all outstanding Common Shares is
commenced (A) at a consideration per share (as determined by a nationally
recognized investment banking firm designated by the Corporation) in excess
of that provided for in such original offer (in which event any new offer
by such Person or any of its Affiliates or Associates must be at a
consideration (as determined by a nationally recognized investment banking
firm designated by the Corporation) no less than that provided for in such
higher offer), or (B) with the approval of the Board of Directors of the
Corporation (in which event any new offer by such Person or of any of its
Affiliates or Associates must be at a price no less than that provided for
in such approved offer).
(r) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(s) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii) hereof.
(t) "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) hereof.
(u) "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to the Exchange Act) by the
Corporation or an Acquiring Person that an Acquiring Person has become
such; provided, that, if such Person is determined not to have become an
Acquiring Person pursuant to Section 1(a)(B)(Y) hereof, then no Shares
Acquisition Date shall be deemed to have occurred.
(v) "Subsidiary" of any Person shall mean any corporation or
other Person of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
(w) "Triggering Event" shall mean any Section 11(a)(ii)
Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Corporation hereby
appoints the Rights Agent to act as agent for the Corporation in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Corporation may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable. The Rights Agent
shall have no duty to supervise, and in no event shall be liable for, the
acts or omissions of any such co-Rights Agent.
Section 3. Issuance of Right Certificates. (a) Until the earlier
of (i) the Shares Acquisition Date or (ii) the Close of Business on the
tenth day (or such later date as may be determined by action of the
Corporation's Board of Directors of the Corporation) after the date of the
commencement by any Person (other than the Corporation, any Subsidiary of
the Corporation, any employee benefit plan of the Corporation or of any
Subsidiary of the Corporation or any Person or entity organized, appointed
or established by the Corporation for or pursuant to the terms of any such
plan) of, or of the first public announcement of the intention of any
Person (other than the Corporation, any Subsidiary of the Corporation, any
employee benefit plan of the Corporation or of any Subsidiary of the
Corporation or any Person or entity organized, appointed or established by
the Corporation for or pursuant to the terms of any such plan) to commence
(which intention to commence remains in effect for five Business Days after
such announcement), a tender or exchange offer the consummation of which
would result in any Person becoming an Acquiring Person (including, in the
case of both (i) and (ii), any such date which is after the date of this
Agreement and prior to the issuance of the Rights), the earlier of such
dates being herein referred to as the "Distribution Date," (x) the Rights
will be evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right Certificates)
and not by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of
the underlying Common Shares (including a transfer to the Corporation);
provided, however, that if a tender offer is terminated prior to the
occurrence of a Distribution Date, then no Distribution Date shall occur as
a result of such tender offer. As soon as practicable after the
Distribution Date, the Corporation will prepare and execute, the Rights
Agent will countersign, and the Corporation will send or cause to be sent
by first-class, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at the address
of such holder shown on the records of the Corporation, a Right
Certificate, substantially in the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so held. As of
and after the Distribution Date, the Rights will be evidenced solely by
such Right Certificates.
(b) As promptly as practicable following the Record Date,
the Corporation will send a copy of a Summary of Rights to Purchase
Preferred Shares, in substantially the form of Exhibit C hereto (the
"Summary of Rights"), by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the Close of Business on the Record Date, at
the address of such holder shown on the records of the Corporation. With
respect to certificates for Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof together with a
copy of the Summary of Rights attached thereto. Until the Distribution Date
(or the earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares outstanding on
the Record Date, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with
such Common Shares. As a result of the execution of this Agreement on March
8, 1999, each share of Common Stock outstanding as of March 19, 1999,
shall, subject to the terms and conditions of this Agreement, also
represent one Right and shall, subject to the terms and conditions of this
Agreement, represent the right to purchase one one-thousandth of a share of
Preferred Stock.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the
last sentence of this paragraph (c)) after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date, shall be deemed also to be certificates for Rights, and
shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between
Footstar, Inc. and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent, dated as of March 8, 1999 (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive offices
of Footstar, Inc. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
Footstar, Inc. will mail to the holder of this certificate a copy
of the Rights Agreement without charge after receipt of a written
request therefor. Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and
certain related persons, whether currently held by or on behalf
of such Person or by any subsequent holder, may become null and
void and will no longer be transferable.
With respect to such certificates containing the foregoing legend, until
the Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Corporation purchases or
acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares shall be
deemed cancelled and retired so that the Corporation shall not be entitled
to exercise any Rights associated with the Common Shares which are no
longer outstanding.
Section 4. Form of Right Certificate. (a) The Right Certificates
(and the forms of election to purchase and of assignment to be printed on
the reverse thereof) shall be substantially in the form set forth in
Exhibit B hereto and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as the
Corporation may deem appropriate (which do not affect the duties or
responsibilities of the Rights Agent) and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage. Subject to the provisions
of Section 11 and Section 22 hereof, the Right Certificates shall entitle
the holders thereof to purchase such number of one one-thousandths of a
Preferred Share as shall be set forth therein at the price per one
one-thousandth of a Preferred Share set forth therein (the "Purchase
Price"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights which are null and void pursuant
to Section 7(e) of this Agreement and any Right Certificate issued pursuant
to Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence,
shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
Beneficially Owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Right Certificate and the Rights represented hereby are null
and void.
Provisions of Section 7(e) of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Right Certificate. The
Corporation shall notify the Rights Agent to the extent that this Section
4(b) applies.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Corporation by its Chairman
of the Board, its Chief Executive Officer, its President, any of its Vice
Presidents, or its Treasurer, either manually or by facsimile signature,
shall have affixed thereto the Corporation's seal or a facsimile thereof,
and shall be attested by the Secretary or an Assistant Secretary of the
Corporation, either manually or by facsimile signature. The Right
Certificates shall be countersigned by the Rights Agent and shall not be
valid for any purpose unless so countersigned. In case any officer of the
Corporation who shall have signed any of the Right Certificates shall cease
to be such officer of the Corporation before countersignature by the Rights
Agent and issuance and delivery by the Corporation, such Right Certificates
may nevertheless be countersigned by the Rights Agent and issued and
delivered by the Corporation with the same force and effect as though the
person who signed such Right Certificates had not ceased to be such officer
of the Corporation; and any Right Certificate may be signed on behalf of
the Corporation by any Person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Corporation to
sign such Right Certificate, although at the date of the execution of this
Agreement any such Person was not such an officer.
Following the Distribution Date and receipt by the Rights Agent
of a list of record holders of Rights, the Rights Agent will keep or cause
to be kept, at its office designated pursuant to Section 26 hereof or
offices designated as the appropriate place for surrender of such Right
Certificate or transfer, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number
of Rights evidenced on its face by each of the Right Certificates and the
certificate number and the date of each of the Right Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificate.
Subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time after the Close of Business on the Distribution Date,
and at or prior to the Close of Business on the earlier of the Redemption
Date or the Final Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of one one-thousandths of a Preferred
Share (or, following a Triggering Event, other securities, as the case may
be) as the Right Certificate or Right Certificates surrendered then
entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office or offices of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Corporation
shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate until the registered
holder shall have completed and signed the certificate contained in the
form of assignment on the reverse side of such Right Certificate and shall
have provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as
the Corporation or the Rights Agent shall reasonably request. Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Corporation may require payment of a sum sufficient to cover any tax or
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates. If the Corporation requires
the payment referred to in the immediately preceding sentence, then the
Rights Agent shall have no duty or obligation under this Section until it
receives notice from the Corporation that the Corporation has received
payment for such taxes and/or charges.
Upon receipt by the Corporation and the Rights Agent of evidence
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, and, at the Corporation's request,
reimbursement to the Corporation and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Corporation will make
and deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
and properly executed, to the Rights Agent at the office or offices of the
Rights Agent designated for such purpose, together with payment of the
aggregate Purchase Price for the total number of one one-thousandths of a
Preferred Share (or other securities, as the case may be) as to which such
surrendered Rights are exercised, at or prior to the earliest of (i) the
Close of Business on March 8, 2009 (the "Final Expiration Date"), (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date"); (iii) the time at which the Rights are exchanged as
provided in Section 24 hereof, or (iv) the consummation of a transaction
contemplated by Section 13(d) hereof.
(b) The Purchase Price for each one one-thousandth of a
Preferred Share pursuant to the exercise of a Right shall initially be
$100.00, shall be subject to adjustment from time to time as provided in
the next sentence and in Sections 11 and 13(a) hereof and shall be payable
in accordance with paragraph (c) below. Anything in this Agreement to the
contrary notwithstanding, in the event that at any time after the date of
this Agreement and prior to the Distribution Date, the Corporation shall
(i) declare or pay any dividend on the Common Shares payable in Common
Shares or (ii) effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment of
dividends in Common Shares) into a greater or lesser number of Common
Shares, then in any such case, each Common Share outstanding following such
subdivision, combination or consolidation shall continue to have one Right
associated therewith and the Purchase Price following any such event shall
be proportionately adjusted to equal the result obtained by multiplying the
Purchase Price immediately prior to such event by a fraction the numerator
of which shall be the total number of Common Shares outstanding immediately
prior to the occurrence of the event and the denominator of which shall be
the total number of Common Shares outstanding immediately following the
occurrence of such event. The adjustment provided for in the preceding
sentence shall be made successively whenever such a dividend is declared or
paid or such a subdivision, combination or consolidation is effected.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly and properly executed, accompanied by payment of the
Purchase Price for the Preferred Shares (or other securities, as the case
may be) to be purchased and an amount equal to any applicable tax or charge
required to be paid by the holder of such Right Certificate in accordance
with Section 6 hereof by certified check, cashier's check or money order
payable to the order of the Corporation, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased and
the Corporation hereby irrevocably authorizes its transfer agent to comply
with all such requests, or (B) if the Corporation, in its sole discretion,
shall have elected to deposit the Preferred Shares issuable upon exercise
of the Rights hereunder into a depositary, requisition from the depositary
agent depositary receipts representing such number of one one-thousandths
of a Preferred Share as are to be purchased (in which case certificates for
the Preferred Shares represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Corporation will direct
the depositary agent to comply with such requests, (ii) when appropriate,
requisition from the Corporation the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver such cash
to or upon the order of the registered holder of such Right Certificate. In
the event that the Corporation is obligated to issue other securities
(including Common Shares) of the Corporation pursuant to Section 11(a)
hereof, the Corporation will make all arrangements necessary so that such
other securities are available for distribution by the Rights Agent in
accordance with this Agreement, if and when necessary to comply with this
Agreement.
In addition, in the case of an exercise of the Rights by a holder
pursuant to Section 11(a)(ii), the Rights Agent, shall return such Right
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the rights represented by such Right
Certificate no longer include the rights provided by Section 11(a)(ii) of
the Agreement and if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby which continue to
include the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced by the Right Certificate,
a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to the registered
holder of such Right Certificate or to his duly authorized assigns, subject
to the provisions of Section 6 and Section 14 hereof, or the Rights Agent
shall place an appropriate notation on the Right Certificate with respect
to those Rights exercised.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event,
any Rights Beneficially Owned by (i) an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any Affiliate or Associate thereof) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or of any Affiliate or Associate thereof) who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has a
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of the
Corporation has determined is part of an agreement, arrangement or
understanding which has as a primary purpose or effect the avoidance of
this Section 7(e), shall become null and void without any further action
and no holder of such Rights shall have any rights whatsoever with respect
to such Rights, whether under any provision of this Agreement or otherwise.
The Corporation shall notify the Rights Agent when this Section 7(e)
applies and the Corporation shall use all reasonable efforts to insure that
the provisions of this Section 7(e) and Section 4(b) hereof are complied
with, but neither the Corporation nor the Rights Agent shall have any
liability to any holder of Right Certificates or other Person as a result
of the Corporation's failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Corporation shall be obligated
to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless
such registered holder shall have (i) properly completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as
the Corporation or the Rights Agent shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Corporation
or to any of its agents, be delivered to the Rights Agent for cancellation
or in cancelled form, or, if surrendered to the Rights Agent, shall be
cancelled by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement.
The Corporation shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other
Right Certificate purchased or acquired by the Corporation otherwise than
upon the exercise thereof. The Rights Agent shall deliver all cancelled
Right Certificates to the Corporation, or shall, at the written request of
the Corporation, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Corporation.
Section 9. Reservation and Availability of Preferred Shares. The
Corporation covenants and agrees that at all times prior to the occurrence
of a Section 11(a)(ii) Event it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares, or any
authorized and issued Preferred Shares held in its treasury, the number of
Preferred Shares that will be sufficient to permit the exercise in full of
all outstanding Rights and, after the occurrence of a Section 11(a)(ii)
Event, shall, to the extent reasonably practicable, so reserve and keep
available a sufficient number of Common Shares (and/or other securities)
which may be required to permit the exercise in full of the Rights pursuant
to this Agreement.
So long as the Preferred Shares (and, after the occurrence of a
Section 11(a)(ii) Event, Common Shares or any other securities) issuable
upon the exercise of the Rights may be listed on any national securities
exchange, the Corporation shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for
such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
The Corporation covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares (or Common
Shares and/or other securities, as the case may be) delivered upon exercise
of Rights shall, at the time of delivery of the certificates for such
shares or other securities (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and non-assessable
shares or securities.
The Corporation further covenants and agrees that it will pay
when due and payable any and all taxes and charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
Preferred Shares (or Common Shares and/or other securities, as the case may
be) upon the exercise of Rights. The Corporation shall not, however, be
required to pay any tax or other charge which may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or
the issuance or delivery of certificates or depositary receipts for the
Preferred Shares (or Common Shares and/or other securities, as the case may
be) in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, or to issue or to
deliver any certificates or depositary receipts for Preferred Shares (or
Common Shares and/or other securities, as the case may be) upon the
exercise of any Rights, until any such tax or other charge shall have been
paid (any such tax or other charge being payable by the holder of such
Right Certificate at the time of surrender) or until it has been
established to the Corporation's reasonable satisfaction that no such tax
or other charge is due.
The Corporation shall use its best efforts to (i) file, as soon
as practicable following the Shares Acquisition Date, a registration
statement under the Act, with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act and the rules
and regulations thereunder) until the date of the expiration of the rights
provided by Section 11(a)(ii). The Corporation will also take such action
as may be appropriate under the blue sky laws of the various states.
Section 10. Preferred Shares Record Date. Each Person in whose
name any certificate for Preferred Shares (or Common Shares and/or other
securities, as the case may be) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the
Preferred Shares (or Common Shares and/or other securities, as the case may
be) represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable taxes and
charges) was made; provided, however, that, if the date of such surrender
and payment is a date upon which the Preferred Shares (or Common Shares
and/or other securities, as the case may be) transfer books of the
Corporation are closed, such person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer books of the
Corporation are open.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of
shares covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Corporation shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred
Shares, (C) combine the outstanding Preferred Shares into a smaller number
of Preferred Shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted so that the holder
of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right
had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Corporation were open, such holder
would have owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Corporation issuable upon exercise of one Right. If an
event occurs which would require an adjustment under both Section 11(a)(i)
and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii).
(ii) In the event any Person, alone or together with
its Affiliates and Associates, shall become an Acquiring Person, then
proper provision shall be made so that each holder of a Right (except as
provided below and in Section 7(e) hereof) shall, for a period of 60 days
after the later of the occurrence of any such event or the effective date
of an appropriate registration statement under the Act pursuant to Section
9 hereof, have a right to receive, upon exercise thereof at a price equal
to the then current Purchase Price, in accordance with the terms of this
Agreement, such number of Common Shares (or, in the discretion of the Board
of Directors of the Corporation, one one-thousandths of a Preferred Share)
as shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of one one-thousandths of a Preferred
Share for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and dividing that product by (y)
50% of the then current per share market price of the Corporation's Common
Shares (determined pursuant to Section 11(d) hereof) on the date of such
first occurrence (such number of shares being referred to as the
"Adjustment Shares"); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii);
(iii) In the event that there shall not be sufficient treasury
shares or authorized but unissued (and unreserved) Common Shares to permit
the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) and the Rights become so exercisable (and the Board of
Directors of the Corporation has not determined to make the Rights
exercisable into one one-thousandths of a Preferred Share), notwithstanding
any other provision of this Agreement, to the extent necessary and
permitted by applicable law, each Right shall thereafter represent the
right to receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, (x) a number of (or
fractions of) Common Shares (up to the maximum number of Common Shares
which may permissibly be issued) and (y) one-one thousandth of a Preferred
Share or a number of, or fractions of other equity securities of the
Corporation (or, in the discretion of the Board of Directors of the
Corporation, debt) which the Board of Directors of the Corporation has
determined to have the same aggregate current market value (determined
pursuant to Section 11(d)(i) and (ii) hereof, to the extent applicable) as
one Common Share (such number of, or fractions of, Preferred Shares, debt,
or other equity securities or debt of the Corporation being referred to as
a "capital stock equivalent"), equal in the aggregate to the number of
Adjustment Shares; provided, however, if sufficient Common Shares and/or
capital stock equivalents are unavailable, then the Corporation shall, to
the extent permitted by applicable law, take all such action as may be
necessary to authorize additional Common Shares or capital stock
equivalents for issuance upon exercise of the Rights, including the calling
of a meeting of shareholders; and provided, further, that if the
Corporation is unable to cause sufficient Common Shares and/or capital
stock equivalents to be available for issuance upon exercise in full of the
Rights, then each Right shall thereafter represent the right to receive the
Adjusted Number of Shares upon exercise at the Adjusted Purchase Price (as
such terms are hereinafter defined). As used herein, the term "Adjusted
Number of Shares" shall be equal to that number of (or fractions of) Common
Shares (and/or capital stock equivalents) equal to the product of (x) the
number of Adjustment Shares and (y) a fraction, the numerator of which is
the number of Common Shares (and/or capital stock equivalents) available
for issuance upon exercise of the Rights and the denominator of which is
the aggregate number of Adjustment Shares otherwise issuable upon exercise
in full of all Rights (assuming there were a sufficient number of Common
Shares available) (such fraction being referred to as the "Proration
Factor"). The "Adjusted Purchase Price" shall mean the product of the
Purchase Price and the Proration Factor. The Board of Directors of the
Corporation may, but shall not be required to, establish procedures to
allocate the right to receive Common Shares and capital stock equivalents
upon exercise of the Rights among holders of Rights.
(b) In case the Corporation shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all
holders of Preferred Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase
Preferred Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares ("equivalent preferred shares")) or
securities convertible into Preferred Shares or equivalent preferred shares
at a price per Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into Preferred Shares
or equivalent preferred shares) less than the then current per share market
price of the Preferred Shares (as determined pursuant to Section 11(d)
hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date
plus the number of Preferred Shares which the aggregate offering price of
the total number of Preferred Shares and/or equivalent preferred shares so
to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current per
share market price, and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however,
that in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of capital
stock of the Corporation issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall
be determined in good faith by the Board of Directors of the Corporation,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of the
Rights. Preferred Shares owned by or held for the account of the
Corporation shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not
been fixed.
(c) In case the Corporation shall fix a record date for the
making of a distribution to all holders of the Preferred Shares (including
any such distribution made in connection with a consolidation or merger in
which the Corporation is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or subscription rights
or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then current
per share market price (as determined pursuant to Section 11(d) hereof) of
the Preferred Shares on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Corporation,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of the
Rights) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such current per
share market price of the Preferred Shares; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the
Corporation to be issued upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event
that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the
thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to and not including such date; provided, however, that
in the event that the current per share market price of the Security is
determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares, or (B)
any subdivision, combination or reclassification of such Security and prior
to, but not including, the expiration of thirty (30) Trading Days after and
not including the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification,
then, and in each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Security is not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such
other system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Corporation. If on any
such date no such market maker is making a market in the Security, the fair
value of the Security on such date as determined in good faith by the Board
of Directors of the Corporation shall be used. The term "Trading Day" shall
mean a day on which the principal national securities exchange on which the
Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in Section 11(d)(i). If
the Preferred Shares are not publicly traded, the "current per share market
price" of the Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as determined pursuant
to Section 11(d)(i) (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof),
multiplied by one thousand (1,000). If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, "current per
share market price" shall mean the fair value per share as determined in
good faith by the Board of Directors of the Corporation, whose
determination shall be described in a statement filed with the Rights Agent
and shall be binding and conclusive on the Rights Agent and the holders of
the Rights.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Purchase Price;
provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one one-thousandth
of a Preferred Share or one ten-thousandth of any other share or security
as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three (3) years from the date of the transaction
which mandates such adjustment or (ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock of
the Corporation other than Preferred Shares, thereafter the number of other
shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Preferred Shares
contained in Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Corporation
subsequent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the number
of one one-thousandths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Corporation shall have exercised its election
so provided in Section 11(i) hereof, upon adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and 11(c) hereof,
each Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the Adjusted Purchase
Price, that number of one one-thousandths of a Preferred Share (calculated
to the nearest one one-thousandth of a Preferred Share) obtained by (i)
multiplying (A) the number of Preferred Shares covered by a Right
immediately prior to this adjustment of the Purchase Price by (B) the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(i) The Corporation may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of
any adjustment in the number of one one-thousandths of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Corporation shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of
the adjustment to be made, a copy of which public announcement shall
promptly be delivered to the Rights Agent. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the
Right Certificates have been issued, shall be at least ten (10) days later
than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Corporation shall, as promptly as practicable, cause to
be distributed to holders of record of Right Certificates on such record
date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Corporation, shall cause to be
distributed to such holders of record in substitution and replacement for
the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Corporation, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for
herein and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandths of a Preferred Share issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the number
of one one-thousandths of a Preferred Share which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the number
of one one-thousandths of a Preferred Share, Common Shares or other
securities issuable upon exercise of the Rights, the Corporation shall take
any corporate action which may, in the opinion of its counsel, be necessary
in order that the Corporation may validly and legally issue such number of
fully paid and non-assessable one one-thousandths of a Preferred Share,
Common Shares or other securities at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Corporation may elect to defer, with prompt
notice thereof to the Rights Agent, until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the
Preferred Shares, Common Shares or other securities of the Corporation, if
any, issuable upon such exercise over and above the Preferred Shares,
Common Shares or other securities of the Corporation, if any, issuable upon
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Corporation shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Corporation shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that it in its sole discretion
shall determine to be advisable in order that (i) any consolidation or
subdivision of the Preferred Shares, (ii) issuance wholly for cash of
Preferred Shares at less than the current market price, (iii) issuance
wholly for cash of Preferred Shares or securities which by their terms are
convertible into or exchangeable for Preferred Shares, (iv) stock dividends
or (v) issuance of rights, options or warrants referred to in this Section
11, hereafter made by the Corporation to holders of its Preferred Shares
shall not be taxable to such shareholders.
(n) The Corporation covenants and agrees that it shall not,
at any time after the Distribution Date, (i) consolidate with any other
Person (other than a Subsidiary of the Corporation in a transaction which
does not violate Section 11(o) hereof), (ii) merge with or into any other
Person (other than a Subsidiary of the Corporation in a transaction which
does not violate Section 11(o) hereof), or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction, or a series
of related transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Corporation and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Corporation and/or any of its Subsidiaries in one or more transactions each
of which does not violate this Section 11(n)), if (x) at the time of or
immediately after such consolidation, merger, sale or transfer there are
any charter or by-law provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect or other
actions taken, which would materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or
sale, the shareholders of the Person who constitutes, or would constitute,
the "Principal Party" for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such Person or any of
its Affiliates and Associates. The Corporation shall not consummate any
such consolidation, merger, sale or transfer unless prior thereto the
Corporation and such other Person shall have executed and delivered to the
Rights Agent a supplemental agreement evidencing compliance with this
Section 11(n).
(o) The Corporation covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23, Section
24 or Section 27 hereof, take (or permit any Subsidiary to take) any action
the purpose of which is to, or if at the time such action is taken it is
reasonably foreseeable that the effect of such action is to, materially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights.
(p) The exercise of Rights under Section 11(a)(ii) shall
only result in the loss of rights under Section 11(a)(ii) to the extent so
exercised and shall not otherwise affect the rights represented by the
Rights under this Agreement, including the rights represented by Section
13.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 or 13
hereof, the Corporation shall promptly (a) prepare a certificate setting
forth such adjustment, and a brief reasonably detailed statement of the
facts and computations accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Shares and the
Preferred Shares a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall have no duty
with respect to and shall not be deemed to have knowledge of such
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power. (a) In the event that, on or following the Shares
Acquisition Date, directly or indirectly, (x) the Corporation shall
consolidate with, or merge with and into, any Interested Shareholder or, if
in such merger or consolidation all holders of Common Stock are not treated
alike, any other Person, (y) the Corporation shall consolidate with, or
merge with, any Interested Shareholder or, if in such merger or
consolidation all holders of Common Stock are not treated alike, any other
Person, and the Corporation shall be the continuing or surviving
corporation of such consolidation or merger (other than, in a case of any
transaction described in (x) or (y), a merger or consolidation which would
result in all of the securities generally entitled to vote in the election
of directors ("voting securities") of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into securities of the surviving entity)
all of the voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation and the holders
of such securities not having changed as a result of such merger or
consolidation), or (z) the Corporation shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Corporation
and its Subsidiaries (taken as a whole) to any Interested Shareholder or
Shareholders or, if in such transaction all holders of Common Stock are not
treated alike, any other Person (other than the Corporation or any
Subsidiary of the Corporation in one or more transactions each of which
does not violate Section 11(n) hereof), then, and in each such case (except
as provided in Section 13(d) hereof), proper provision shall be made so
that (i) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at a
price equal to the then current Purchase Price, in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of
freely tradable Common Shares of the Principal Party (as hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable
(without taking into account any adjustment previously made pursuant to
Section 11(a)(ii)) and dividing that product by (B) 50% of the then current
per share market price of the Common Shares of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of consummation
of such Section 13 Event; (ii) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Corporation pursuant to this Agreement; (iii)
the term "Corporation" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the
first occurrence of a Section 13 Event; and (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares) in connection with the consummation
of any such transaction as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be, in
relation to the Common Shares thereafter deliverable upon the exercise of
the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which Common Shares of the Corporation are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or consolidation
(including, if applicable, the Corporation if it is the surviving
corporation); and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
provided, however, that in any of the foregoing cases, (1) if the Common
Shares of such Person are not at such time and have not been continuously
over the preceding twelve (12) month period registered under Section 12 of
the Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Shares of which are and have been so registered,
"Principal Party" shall refer to such other Person; (2) in case such Person
is a Subsidiary, directly or indirectly, of more than one Person, the
Common Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of
the Common Shares having the greatest aggregate market value; and (3) in
case such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly,
by the same Person, the rules set forth in (1) and (2) above shall apply to
each of the chains of ownership having an interest in such joint venture as
if such party were a "Subsidiary" of both or all of such joint venturers
and the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Corporation shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party shall
have a sufficient number of its authorized Common Shares which have not
been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior thereto the
Corporation and such Principal Party shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further providing that, as
soon as practicable after the date of any consolidation, merger, sale or
transfer mentioned in paragraph (a) of this Section 13, the Principal Party
at its own expense shall:
(i) prepare and file a registration statement under the
Act with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a prospectus
at all times meeting the requirements of the Act) until the Final
Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights under the
blue sky laws of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all respects
with the requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. The
rights under this Section 13 shall be in addition to the rights to exercise
Rights and adjustments under Section 11(a)(ii) and shall survive any
exercise thereof.
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if: (i) such transaction is
consummated with a Person or Persons who acquired Common Shares pursuant to
a Qualifying Offer or a Permitted Offer (or a wholly owned Subsidiary of
any such Person or Persons); (ii) the price per Common Share offered in
such transaction is not less than the price per Common Share paid to all
holders of Common Shares whose shares were purchased pursuant to such
Qualifying Offer or Permitted Offer; and (iii) the form of consideration
offered in such transaction is the same as the form of consideration paid
pursuant to such Qualifying Offer or Permitted Offer. Upon consummation of
any such transaction contemplated by this Section 13(d), all Rights
hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares. (a) The
Corporation shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Rights are
not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are
not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such
other system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Corporation. If on any such date
no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of
Directors of the Corporation shall be used.
(b) The Corporation shall not be required to issue fractions
of Preferred Shares (other than fractions which are one one-thousandth or
integral multiples of one one-thousandth of a Preferred Share) upon
exercise of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are one
one-thousandth or integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the
Corporation, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Corporation and a depositary selected by
it; provided that such agreement shall provide that the holders of such
depositary receipts shall have the rights, privileges and preferences to
which they are entitled as Beneficial Owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not one one-thousandth or integral multiples of one
one-thousandth of a Preferred Share, the Corporation shall pay to the
registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction
of the current market value of one Preferred Share. For the purposes of
this Section 14(b), the current market value of a Preferred Share shall be
the closing price of a Preferred Share (as determined pursuant to Section
11(d)(ii) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of one of the transactions or
events specified in Section 11 giving rise to the right to receive Common
Shares, capital stock equivalents (other than Preferred Shares) or other
securities upon the exercise of a Right, the Corporation shall not be
required to issue fractions of shares or units of such Common Shares,
capital stock equivalents or other securities upon exercise of the Rights
or to distribute certificates which evidence fractions of such Common
Shares, capital stock equivalents or other securities. In lieu of
fractional shares or units of such Common Shares, capital stock equivalents
or other securities, the Corporation may pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of
a share or unit of such Common Shares, capital stock equivalents or other
securities. For purposes of this Section 14(c), the current market value
shall be determined in the manner set forth in Section 11(d) hereof for the
Trading Day immediately prior to the date of such exercise and, if such
capital stock equivalent is not traded, each such capital stock equivalent
shall have the value of one one-thousandth of a Preferred Share.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional share upon exercise of a Right (except as provided above). The
Rights Agent shall not be deemed to have knowledge of, and shall have no
duty in respect of, the issuance of fractional Rights or fractional shares
until it shall have received instructions from the Corporation concerning
the issuance of the fractional Rights or fractional shares upon which
instructions the Rights Agent may conclusively rely.
Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent
under this Agreement, are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Shares),
may, in his own behalf and for his own benefit, enforce, and may institute
and maintain any suit, action or proceeding against the Corporation to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy
at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual
or threatened violations of the obligations of any Person subject to, this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right,
by accepting the same, consents and agrees with the Corporation and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office or offices of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer and with
the appropriate form fully executed;
(c) subject to Section 7(f) hereof, the Corporation and the
Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common
Shares certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificate or the associated Common Shares
certificate made by anyone other than the Corporation or the Rights Agent)
for all purposes whatsoever, and neither the Corporation nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof shall be
required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Corporation nor the Rights Agent shall have any
liability to any holder of a Right or a beneficial interest in a Right or
other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction
or other order, judgment, decree or ruling (whether interlocutory or final)
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Corporation must use its best efforts to
have any such order, decree, judgment, or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or any other securities of the Corporation which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights
of a shareholder of the Corporation or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except
as provided in Section 25 hereof), or to receive dividends or other
distributions or to exercise any preemptive or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Corporation agrees
to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the preparation, delivery, amendment, administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Corporation also agrees to indemnify the Rights Agent for,
and to hold it harmless against, any loss, liability, damage, judgment,
fine, penalty, claim, demand, settlement, cost or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for any action taken, suffered or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement,
including without limitation the costs and expenses of defending against
any claim of liability arising therefrom, directly or indirectly. The
indemnity provided for herein shall survive the expiration of the Rights
and the termination of this Agreement. The cost and expenses incurred in
enforcing the Rights Agent's right of indemnification shall be paid by the
Corporation.
The Rights Agent shall be authorized and protected and shall
incur no liability for, or in respect of, any action taken, suffered or
omitted by it in connection with, its acceptance and administration of this
Agreement in reliance upon any Right Certificate or certificate for Common
Shares or for other securities of the Corporation, instrument of assignment
or transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document
(collectively, "Documents") believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper
Person or Persons or otherwise upon the advice of counsel as set forth in
Section 20. The Rights Agent shall not be deemed to have knowledge of, and
shall have no duty in respect of, any such Documents, until it receives
notice or instructions in respect thereof. Anything to the contrary
notwithstanding, in no case will the Rights Agent be liable for special,
indirect, punitive, incidental or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage. Any
liability of the Rights Agent under this Agreement will be limited to the
amount of the fees paid by the Corporation to the Rights Agent.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any Person succeeding to the shareholder
services business of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such Person would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and deliver
such Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of
the predecessor or in the name of the successor Rights Agent; and in all
such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement. In case at any time the name
of the Rights Agent shall be changed and at such time any of the Right
Certificates shall have been countersigned but not delivered, the Rights
Agent may adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
only those duties and obligations expressly imposed by this Agreement (and
no implied duties or obligations) upon the following terms and conditions,
by all of which the Corporation and the holders of Right Certificates, by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Corporation), and the advice or opinion of such
counsel shall be full and complete authorization and protection to the
Rights Agent and the Rights Agent shall incur no liability for or in
respect of, to any action taken, suffered or omitted by it in good faith
and in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of an Acquiring
Person and the determination of the current market price of any Security)
be proved or established by the Corporation prior to taking, suffering or
omitting any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of
the Chairman of the Board, the Chief Executive Officer, the President, any
Vice President, the Treasurer or the Secretary of the Corporation and
delivered to the Rights Agent; and such certificate shall be full
authorization and protection to the Rights Agent and the Rights Agent shall
incur no liability in respect of any action taken, suffered or omitted in
good faith by it under the provisions of this Agreement in reliance upon
such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any liability in respect of, of the statements of fact or recitals
contained in this Agreement or in the Right Certificates (except its
countersignature on such Right Certificates) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have
been made by the Corporation only.
(e) The Rights Agent shall not be under any liability or
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Corporation of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including
the Rights becoming null and void pursuant to Section 7(e) hereof) or any
adjustment required under the provisions of Section 11, Section 13, Section
23 or Section 24 hereof or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after receipt of the certificate
described in Section 12 hereof); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares or Common Shares to be issued pursuant
to this Agreement or any Right Certificate or as to whether any Preferred
Shares or Common Shares will, when issued, be validly authorized and
issued, fully paid and non-assessable.
(f) The Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged
and delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary of the
Corporation, and to apply to such officers for advice or instructions in
connection with its duties, and instructions shall be full authorization
and protection to the Rights Agent and the Rights Agent shall incur no
liability for or in respect of any action taken, suffered or omitted by it
in good faith or lack of action in accordance with instructions of any such
officer or for any delay in acting while waiting for those instructions.
Any application by the Rights Agent for written instructions from the
Corporation may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this
Agreement and the date on or after which such action shall be taken or
suffered or such omission shall be effective. The Rights Agent shall not be
liable or responsible for any action taken or suffered by, or omission of,
the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date
shall not be less than five Business Days after the date any officer of the
Corporation actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking
any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instruction in response to such
application specifying the action to be taken, suffered or omitted.
(h) The Rights Agent and any shareholder, affiliate,
director, officer or employee of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Corporation or become
pecuniarily interested in any transaction in which the Corporation may be
interested, or contract with or lend money to the Corporation or otherwise
act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Corporation or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall
not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the
Corporation or any other Person resulting from any such act, default,
neglect or misconduct, absent gross negligence, bad faith or willful
misconduct in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if it believes that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate, attached to
the form of assignment or form of election to purchase, as the case may be,
confirming that the holder is not an Acquired Person (or an affiliate or
associate thereof) has not been completed, the Rights Agent shall not take
any further action with respect to such requested exercise or transfer
without first consulting with the Corporation.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon thirty (30) days' notice in writing mailed to the
Corporation and to each transfer agent of the Common Shares or Preferred
Shares by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. The Corporation may remove the Rights
Agent or any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares or Preferred Shares
by registered or certified mail, and to holders of the Right Certificates
by first-class mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Corporation shall appoint a
successor to the Rights Agent. If the Corporation shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder
of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Corporation), then the registered holder
of any Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Corporation or by such a court, shall be a Person
organized and doing business under the laws of the United States or of any
state of the United States or the District of Columbia, in good standing,
which is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000. After appointment,
the successor Rights Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Corporation shall file notice
thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares or Preferred Shares, and mail a notice thereof
in writing to the registered holders of the Right Certificates. Failure to
give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary,
the Corporation may, at its option, issue new Right Certificates evidencing
Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date, the Corporation (a) shall
with respect to Common Shares so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities, notes or debentures issued
by the Corporation, and (b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Corporation, issue Right
Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) the Corporation
shall not be obligated to issue any such Right Certificates if, and to the
extent that, the Corporation shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Corporation or the Person to whom such Right Certificate would be issued,
and (ii) no Right Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
Section 23. Redemption and Termination.
(a) (i) The Board of Directors of the Corporation may, at
its option, redeem all but not less than all of the then outstanding Rights
at a redemption price of $.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price"), at any time prior
to the earlier of (x) the occurrence of a Section 11(a)(ii) Event, or (y)
the Final Expiration Date.
(ii) In addition, the Board of Directors of the
Corporation may, at its option, at any time following the occurrence of a
Section 11(a)(ii) Event and the expiration of any period during which the
holder of Rights may exercise the rights under Section 11(a)(ii) but prior
to any Section 13 Event redeem all but not less than all of the then
outstanding Rights at the Redemption Price (x) in connection with any
merger, consolidation or sale or other transfer (in one transaction or in a
series of related transactions) of assets or earning power aggregating 50%
or more of the earning power of the Corporation and its subsidiaries (taken
as a whole) in which all holders of Common Shares are treated alike and not
involving (other than as a holder of Common Shares being treated like all
other such holders) an Interested Shareholder or (y)(aa) if and for so long
as the Acquiring Person is not thereafter the Beneficial Owner of 15% of
the Common Shares, and (bb) at the time of redemption no other Persons are
Acquiring Persons.
(b) In the case of a redemption permitted under Section
23(a)(i), immediately upon the date for redemption set forth (or determined
in the manner specified in) in a resolution of the Board of Directors of
the Corporation ordering the redemption of the Rights, and without any
further action and without any notice, the right to exercise the Rights
will terminate and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price for each Right so held. In the case of a
redemption permitted only under Section 23(a)(ii), the right to exercise
the Rights will terminate and represent only the right to receive the
Redemption Price upon the later of ten Business Days following the giving
of such notice or the expiration of any period during which the rights
under Section 11(a)(ii) may be exercised. The Corporation shall promptly
give public notice and notify the Rights Agent of any such redemption;
provided, however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within ten (10)
days after such date for redemption set forth in a resolution of the Board
of Directors of the Corporation ordering the redemption of the Rights, the
Corporation shall mail a notice of redemption to all the holders of the
then outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption
Price will be made. Neither the Corporation nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time
in any manner other than that specifically set forth in this Section 23 and
other than in connection with the purchase of Common Shares prior to the
Distribution Date.
(c) The Corporation may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release and
notice to the Rights Agent announcing the manner of redemption of the
Rights in accordance with this Agreement and (ii) mailing payment of the
Redemption Price to the registered holders of the Rights at their last
addresses as they appear on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent
of the Common Shares, and upon such action, all outstanding Rights and
Right Certificates shall be null and void without any further action by the
Corporation.
Section 24. Exchange. (a) The Board of Directors of the
Corporation may, at its option, at any time after the time that any Person
becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become
null and void pursuant to the provisions of Section 7(e) and Section
11(a)(ii) hereof) for Common Shares of the Corporation at an exchange ratio
of one Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Corporation's Board of
Directors shall not be empowered to effect such exchange at any time after
any Person (other than the Corporation, any Subsidiary of the Corporation,
any employee benefit plan of the Corporation or any such Subsidiary, any
Person organized, appointed or established by the Corporation for or
pursuant to the terms of any such plan or any trustee, administrator or
fiduciary of such a plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common
Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Corporation ordering the exchange of any Rights pursuant to subsection
(a) of this Section 24 and without any further action and without any
notice, the right to exercise such rights shall terminate and the only
right thereafter of the holders of such Rights shall be to receive that
number of Common Shares equal to the number of such rights held by such
holder multiplied by the Exchange Ratio. The Corporation shall promptly
give public notice and notify the Rights Agent of any such exchange;
provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Corporation promptly
shall mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each
such notice of exchange will state the method by which the exchange of the
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become null and void pursuant to the provisions of Section 7(e)
and Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Corporation, at its option, may substitute Preferred Shares (or equivalent
preferred shares, as such term is defined in Section 11(b) hereof) for some
or all of the Common Shares exchangeable for Rights, at the initial rate of
one one-thousandth of a Preferred Share (or equivalent preferred share) for
each Common Share, as appropriately adjusted to reflect adjustments in the
voting rights of the Preferred Shares pursuant to the terms thereof, so
that the fraction of a Preferred Share delivered in lieu of each Common
Share shall have the same voting rights as one Common Share.
(d) The Board of Directors of the Corporation shall not
authorize any exchange transaction referred to in Section 24(a) hereof
unless at the time such exchange is authorized there shall be sufficient
Common Shares or Preferred Shares issued but not outstanding, or authorized
but unissued, to permit the exchange of Rights as contemplated in
accordance with this Section 24.
Section 25. Notice of Certain Events. (a) In case the Corporation
shall propose (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to the
holders of its Preferred Shares (other than a regularly quarterly cash
dividend), (ii) to offer to the holders of its Preferred Shares rights or
warrants to subscribe for or to purchase any additional Preferred Shares or
shares of stock of any class or any other securities, rights or options,
(iii) to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Corporation in a transaction which
does not violate Section 11(n) hereof), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer) in one or more transactions, of 50% or more of the
assets or earning power of the Corporation and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Corporation and/or
any of its Subsidiaries in one or more transactions each of which does not
violate Section 11(n) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Corporation, then, in each such case, the
Corporation shall give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such
proposed action and file a certificate with the Rights Agent to that
effect, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Shares, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least twenty (20) days prior to the record
date for determining holders of the Preferred Shares for purposes of such
action, and in the case of any such other action, at least twenty (20) days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares, whichever
shall be the earlier.
(b) In case of a Section 11(a)(ii) Event, then (i) the
Corporation shall as soon as practicable thereafter give to each holder of
a Right Certificate, in accordance with Section 26 hereof, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii)
hereof, and (ii) all references in the preceding paragraph (a) to Preferred
Shares shall be deemed thereafter to refer also to Common Shares and/or, if
appropriate, other securities of the Corporation.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Corporation shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Footstar, Inc.
933 MacArthur Boulevard
Mahway, New Jersey 07430
Attention: Office of the Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Corporation or by
the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Corporation)
as follows:
ChaseMellon Shareholder Services, L.L.C.
450 West 33rd Street, 10th floor
New York, NY 10003
Attention: Robert Kavanagh
Notices or demands authorized by this Agreement to be given or made by the
Corporation or the Rights Agent to the holder of any Right Certificate or,
if prior to the Distribution Date, to the holder of certificates
representing Common Shares shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address
of such holder as shown on the registry books of the Corporation.
Section 27. Supplements and Amendments. Except as set forth in
the penultimate sentence of this Section 27, prior to the Distribution
Date, the Corporation may and the Rights Agent shall, if the Corporation so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing Common Shares. From
and after the Distribution Date, the Corporation may and the Rights Agent
shall, if the Corporation so directs, supplement or amend this Agreement
without the approval of any holders of Right Certificates in order (i) to
cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions
herein, (iii) to shorten or lengthen any time period hereunder or (iv) to
change or supplement the provisions hereunder in any manner which the
Corporation may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, however, that this Agreement may not be supplemented or amended
to lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are
not then redeemable, or (B) any other time period unless any such
lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon the delivery
of a certificate from an appropriate officer of the Corporation which
states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, and if requested by the Rights Agent an opinion
of counsel, the Rights Agent shall execute such supplement or amendment,
provided that such supplement or amendment does not adversely affect,
change or increase the rights, duties, liabilities or obligations of the
Rights Agent under this Agreement. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Shares.
Section 28. Determination and Actions by the Board of Directors,
etc. The Board of Directors of the Corporation shall have the exclusive
power and authority to administer this Agreement and to exercise all rights
and powers specifically granted to the Board of Directors of the
Corporation, or the Corporation, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary or advisable for the administration of
this Agreement (including, without limitation, a determination to redeem or
not redeem the Rights or to amend this Agreement and whether any proposed
amendment adversely affects the interests of the holders of Right
Certificates). For all purposes of this Agreement, any calculation of the
number of Common Shares or other securities outstanding at any particular
time, including for purposes of determining the particular percentage of
such outstanding Common Shares or any other securities of which any Person
is the Beneficial Owner, shall be made in accordance with the last sentence
of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement. All such actions,
calculations, interpretations and determinations (including, for purposes
of clause (y) below, all omissions with respect to the foregoing) which are
done or made by the Board of Directors of the Corporation in good faith
(and the Rights Agent shall be able to assume that the Board of Directors
of the Corporation acted in such good faith), shall (x) be final,
conclusive and binding on the Corporation, the Rights Agent, the holders of
the Right Certificates and all other Persons, and (y) not subject the Board
of Directors of the Corporation to any liability to the holders of the
Right Certificates.
Section 29. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Corporation or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Corporation, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Corporation,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired
or invalidated.
Section 32. Governing Law. This Agreement, each Right and each
Right Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such
State; except that all provisions regarding the rights, duties and
obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
made and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and attested, all as of the date and year first above
written.
FOOTSTAR, INC.
Attest:
By: /s/ Maureen Richards By: /s/ J.M. Robinson
--------------------------- ------------------------
Name: Maureen Richards Name: J.M. Robinson
Title: Vice President Title: President and Chief
Executive Officer
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., as Rights Agent
Attest:
By: /s/ John Comer By: /s/ Robert Kavanagh
--------------------------- ------------------------
Name: John Comer Name: Robert Kavanagh
Title: Relationship Manager Title: Vice President
<PAGE>
Exhibit A
---------
FOOTSTAR, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
(Pursuant to Section 151
of the General Corporation Law of the State of Delaware)
We, J.M. Robinson, Chief Executive Officer and President, and
Maureen Richards, Corporate Secretary, of Footstar, Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "Corporation"), in accordance with the provisions of Section
103 thereof, do hereby certify:
That pursuant to the authority conferred upon the Board of
Directors by the Corporation's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation"), the Board of Directors,
at a meeting on March 8, 1999, adopted the following resolution creating a
series of one hundred thousand (100,000) shares of Preferred Stock
designated as Series A Junior Participating Preferred Stock:
WHEREAS, the Certificate of Incorporation provides that the
Corporation is authorized to issue 30,000,000 shares of Preferred Stock,
none of which are currently outstanding, now therefore it is:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by Article FOURTH of the Certificate of
Incorporation, a series of Preferred Stock of the Corporation be, and it
hereby is, created out of the authorized but unissued shares of the capital
stock of the Corporation, such series to be designated Series A Junior
Participating Preferred Stock (the "Participating Preferred Stock"), to
consist of one hundred thousand (100,000) shares, of par value $.01 per
share, of which the preferences and relative and other rights, and the
qualifications, limitations or restrictions thereof, shall be as follows:
1. Future Increase or Decrease. Subject to paragraph 4(e) of this
resolution, the number of shares of said series may at any time or from
time to time be increased or decreased by the Board of Directors
notwithstanding that shares of such series may be outstanding at such time
of increase or decrease.
2. Dividend Rate.
-------------
(a) The holders of shares of Participating Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of each November, February, May
and August in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Participating Preferred Stock (the "First Issuance"), in an amount
per share (rounded to the nearest cent) equal to the greater of (a) $10.00
or (b) 1,000 times the aggregate per share amount of all cash dividends and
1,000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock, of
par value $.01 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Participating Preferred Stock. In the event
the Corporation shall at any time after the First Issuance declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which holders
of shares of Participating Preferred Stock were entitled immediately prior
to such event under the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) On or after the first issuance of any share or
fractional share of Participating Preferred Stock, no dividend on Common
Stock shall be declared unless concurrently therewith a dividend or
distribution is declared on the Participating Preferred Stock as provided
in paragraph (a) above; and the declaration of any such dividend on the
Common Stock shall be expressly conditioned upon payment or declaration of
and provision for a dividend on the Participating Preferred Stock as above
provided. In the event no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $10.00 per share on the Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(c) Whenever quarterly dividends or other dividends payable
on the Participating Preferred Stock as provided in paragraph (a) above are
in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Participating
Preferred Stock outstanding shall have been paid in full, the Corporation
shall not redeem or purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Participating Preferred Stock, provided
that the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any stock of the
Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Participating Preferred Stock.
(d) Dividends shall begin to accrue and be cumulative on
outstanding shares of Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of
Participating Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of
holders of shares of Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. The Board of Directors may fix a record
date for the determination of holders of shares of Participating Preferred
Stock entitled to receive payment of a dividend distribution declared
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.
3. Dissolution, Liquidation and Winding Up. In the event of any
voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Corporation (hereinafter referred to as a "Liquidation"),
the holders of Participating Preferred Stock shall receive at least $1,000
per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment, provided that the holders of shares of Participating Preferred
Stock shall be entitled to receive at least an aggregate amount per share
equal to 1,000 times the aggregate amount to be distributed per share to
holders of Common Stock (the "Participating Preferred Liquidation
Preference"). In the event the Corporation shall at any time after the
First Issuance declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the aggregate amount to which holders of shares of
Participating Preferred Stock were entitled immediately prior to such event
under the preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding immediately
prior to such event.
4. Voting Rights. The holders of shares of Participating
Preferred Stock shall have the following voting rights:
(a) Each share of Participating Preferred Stock shall
entitle the holder thereof to one thousand (1,000) votes on all matters
submitted to a vote of the shareholders of the Corporation. In the event
the Corporation shall at any time after the First Issuance declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Participating Preferred Stock were entitled
immediately prior to such event under the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein, the Certificate of
Incorporation or the Bylaws of the Corporation (the "Bylaws"), the holders
of shares of Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a
vote of shareholders of the Corporation.
(c) If and whenever dividends on the Participating Preferred
Stock shall be in arrears in an amount equal to six quarterly dividend
payments, then and in such event the holders of the Participating Preferred
Stock, voting separately as a class (subject to the provisions of
subparagraph (d) below), shall be entitled at the next annual meeting of
the shareholders or at any special meeting to elect two (2) directors. Each
share of Participating Preferred Stock shall be entitled to one vote, and
holders of fractional shares shall have the right to a fractional vote.
Upon election, such directors shall become additional directors of the
Corporation and the authorized number of directors of the Corporation shall
thereupon be automatically increased by such number of directors. Such
right of the holders of Participating Preferred Stock to elect directors
may be exercised until all dividends in default on the Participating
Preferred Stock shall have been paid in full, and dividends for the current
dividend period declared and funds therefor set apart, and when so paid and
set apart, the right of the holders of Participating Preferred Stock to
elect such number of directors shall cease, the term of such directors
shall thereupon terminate, and the authorized number of directors of the
Corporation shall thereupon return to the number of authorized directors
otherwise in effect, but subject always to the same provisions for the
vesting of such special voting rights in the case of any such future
dividend default or defaults. The fact that dividends have been paid and
set apart as required by the preceding sentence shall be evidenced by a
certificate executed by the President and the Chief Financial Officer of
the Corporation and delivered to the Board of Directors. The directors so
elected by holders of Participating Preferred Stock shall serve until the
certificate described in the preceding sentence shall have been delivered
to the Board of Directors or until their respective successors shall be
elected or appointed and qualify.
At any time when such special voting rights have been so vested
in the holders of the Participating Preferred Stock, the Secretary of the
Corporation may, and upon the written request of the holders of record of
10% or more of the number of shares of the Participating Preferred Stock
then outstanding addressed to such Secretary at the principal office of the
Corporation in the State of New Jersey, shall, call a special meeting of
the holders of the Participating Preferred Stock for the election of the
directors to be elected by them as hereinabove provided, to be held in the
case of such written request within forty (40) days after delivery of such
request, and in either case to be held at the place and upon the notice
provided by law and in the Bylaws of the Corporation for the holding of
meetings of shareholders; provided, however, that the Secretary shall not
be required to call such a special meeting (i) if any such request is
received less than ninety (90) days before the date fixed for the next
ensuing annual or special meeting of shareholders or (ii) if at the time
any such request is received, the holders of Participating Preferred Stock
are not entitled to elect such directors by reason of the occurrence of an
event specified in the third sentence of subparagraph (d) below.
(d) If, at any time when the holders of Participating
Preferred Stock are entitled to elect directors pursuant to the foregoing
provisions of this paragraph 4, the holders of any one or more additional
series of Preferred Stock are entitled to elect directors by reason of any
default or event specified in the Certificate of Incorporation, as in
effect at the time of the certificate of designation for such series, and
if the terms for such other additional series so permit, the voting rights
of the two or more series then entitled to vote shall be combined (with
each series having a number of votes proportional to the aggregate
liquidation preference of its outstanding shares). In such case, the
holders of Participating Preferred Stock and of all such other series then
entitled so to vote, voting as a class, shall elect such directors. If the
holders of any such other series have elected such directors prior to the
happening of the default or event permitting the holders of Participating
Preferred Stock to elect directors, or prior to a written request for the
holding of a special meeting being received by the Secretary of the
Corporation from the holders of not less than 10% of the then outstanding
shares of Participating Preferred Stock, then such directors so previously
elected will be deemed to have been elected by and on behalf of the holders
of Participating Preferred Stock as well as such other series, without
prejudice to the right of the holders of Participating Preferred Stock to
vote for directors if such previously elected directors shall resign, cease
to serve or fail to stand for reelection while the holders of Participating
Preferred Stock are entitled to vote. If the holders of any such other
series are entitled to elect in excess of two (2) directors, the
Participating Preferred Stock shall not participate in the election of more
than two (2) such directors, and those directors whose terms first expire
shall be deemed to be the directors elected by the holders of Participating
Preferred Stock; provided that, if at the expiration of such terms the
holders of Participating Preferred Stock are entitled to vote in the
election of directors pursuant to the provisions of this paragraph 4, then
the Secretary of the Corporation shall call a meeting (which meeting may be
the annual meeting or special meeting of shareholders referred to in
subparagraph (c)) of holders of Participating Preferred Stock for the
purpose of electing replacement directors (in accordance with the
provisions of this paragraph 4) to be held on or prior to the time of
expiration of the expiring terms referred to above.
(e) Except as otherwise set forth herein or required by law,
the Certificate of Incorporation or the Bylaws, holders of Participating
Preferred Stock shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for the taking of any
corporate action. No consent of the holders of outstanding shares of
Participating Preferred Stock at any time outstanding shall be required in
order to permit the Board of Directors to: (i) increase the number of
authorized shares of Participating Preferred Stock or to decrease such
number to a number not below the sum of the number of shares of
Participating Preferred Stock then outstanding and the number of shares
with respect to which there are outstanding rights to purchase; or (ii) to
issue Preferred Stock which is senior to the Participating Preferred Stock,
junior to the Participating Preferred Stock or on a parity with the
Participating Preferred Stock.
5. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
each share of Participating Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1000 times the
aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share
of Common Stock is changed or exchanged. In the event the Corporation shall
at any time after the First Issuance declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Participating Preferred
Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
6. Redemption. The shares of Participating Preferred Stock shall
not be redeemable.
7. Conversion Rights. The Participating Preferred Stock is not
convertible into Common Stock or any other security of the Corporation.
IN WITNESS WHEREOF, the undersigned President and Secretary of
the Corporation each declares under penalty of perjury the truth, to the
best of his or her knowledge, of this Certificate of Designation,
Preferences and Rights of Series A Junior Participating Preferred Stock.
Executed this 8th day of March, 1999.
By: /s/ J.M. Robinson
-------------------------------
Name: J. M. Robinson
Title: Chief Executive Officer
and President
Attest:
/s/ Maureen Richards
- -----------------------------
Name: Maureen Richards
Title: Corporate Secretary
<PAGE>
Exhibit B
---------
Form of Right Certificate
Certificate No. R- Rights
-----
NOT EXERCISABLE AFTER MARCH 8, 2009, OR EARLIER IF REDEEMED BY
THE CORPORATION. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
ISSUED TO, OR HELD BY ANY PERSON WHICH IS, WAS OR BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER
BE TRANSFERABLE.
Right Certificate
Footstar, Inc.
This certifies that _________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement, dated as of March 8, 1999 (the "Rights
Agreement"), between Footstar, Inc., a Delaware corporation (the
"Corporation"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey
limited liability company, as Rights Agent (the "Rights Agent"), to
purchase from the Corporation at any time after the Distribution Date (as
such term is defined in the Rights Agreement) and prior to 5:00 P.M., New
York time, on March 8, 2009, unless the Rights evidenced hereby shall have
been previously redeemed by the Corporation, at the office or offices of
the Rights Agent designated for such purpose, or at the office of its
successor as Rights Agent, one one-thousandth of a fully paid
non-assessable share of Series A Junior Participating Preferred Stock,
without par value (the "Preferred Shares"), of the Corporation, at a
purchase price of $100.00 per one one-thousandth of Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number
of Rights evidenced by this Right Certificate (and the number of one
one-thousandths of a Preferred Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of March 8, 1999, based on the Preferred
Shares as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are Beneficially Owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Associate or Affiliate who becomes a transferee after the Acquiring
Person becomes such, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of any such Acquiring Person, Associate or
Affiliate who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such, such Rights shall become null and void and
no holder hereof shall have any right with respect to such Rights from and
after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the
number of one one-thousandth of a Preferred Share or other securities which
may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening
of certain events, including Triggering Events (as such term is defined in
the Rights Agreement).
This Right Certificate is subject to all of the terms, covenants
and restrictions of the Rights Agreement, which terms, covenants and
restrictions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Corporation and the holders
of the Right Certificates. Copies of the Rights Agreement are on file at
the principal executive offices of the Corporation and the office or
offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares or other securities as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall
have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Corporation at a
redemption price of $.01 per Right (subject to adjustment as provided in
the Rights Agreement) payable in cash.
No fractional Preferred Shares will be issued upon the exercise
of any Right or Rights evidenced hereby (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), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Corporation which may at any time
be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof,
as such, any of the rights of a shareholder of the Corporation or any right
to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in the Rights Agreement), or to
receive dividends or other distributions or to exercise any preemptive or
subscription rights, or otherwise, until the Right or Rights evidenced by
this Right Certificate shall have been exercised as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal. Dated as of _________, ____.
[SEAL]
ATTEST: FOOTSTAR, INC.
By
- ------------------------- -------------------------
Name: Name:
Title: Title:
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., as Rights Agent
By
-------------------------
Authorized Signatory
Name:
Title:
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
---------------------------------------------------------
hereby sells, assigns and transfers unto
-----------------------------------
- ---------------------------------------------------------------------------
(Please print name and address of transferee)
- ---------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint _________
Attorney, to transfer the within Right Certificate on the books of the
within-named Corporation, with full power of substitution.
Dated:
------------, ----
---------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank, savings association, credit
union or trust company having an office or correspondent in the United
States or other eligible guarantor institution which is a participant in a
signature guarantee medallion program.
- ---------------------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being sold, assigned or transferred by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement) and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right Certificate
from any Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).
---------------------------
Signature
- ---------------------------------------------------------------------------
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by the Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the Preferred Shares,
Common Shares or such other securities issuable upon the exercise of such
Rights at this time as follows:
Please Insert
Number of Rights To
Be Exercised
----------------------------
(i) Preferred Shares Exercise
----------------------------
(ii) Section 11(a)(ii) Exercise
----------------------------
(iii) Section 13 Exercise ----------------------------
The undersigned requests that certificates for such Preferred
Shares, Common Shares or other securities be issued in the name of:
Please insert social security
or other identifying number
------------------------------------------------
- ---------------------------------------------------------------------------
(Please print name and address of transferee)
- ---------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
------------------------------------------------
- ---------------------------------------------------------------------------
(Please print name and address of transferee)
- ---------------------------------------------------------------------------
Dated: 19
---------, --
---------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank, savings association, credit
union or trust company having an office or correspondent in the United
States or other eligible guarantor institution which is a participant in a
signature guarantee medallion program.
<PAGE>
Form of Reverse Side of Right Certificate -- continued.
- ---------------------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being exercised by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement) and (2) after due inquiry
and to the best knowledge of the undersigned, the undersigned did not
acquire the Rights evidenced by this Rights Certificate from any Person who
is or was an Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement).
---------------------------
Signature
- ---------------------------------------------------------------------------
NOTICE
------
The signature on the foregoing Forms of Assignment and Election
and certificates must conform to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or
any change whatsoever.
In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Corporation and the Rights Agent will deem the Beneficial Owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement) and such Assignment or Election to Purchase will not be honored.
<PAGE>
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
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 $100.00
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 earliest 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 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 earliest 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.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form
8-A dated March 9, 1999. A copy of the Rights Agreement is available free
of charge from the Corporation. This summary description of the Rights does
not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is hereby incorporated herein by reference.
