AMENDMENT NO. 2 TO RIGHTS
AGREEMENT
This Amendment
No. 2 (this “Amendment”), dated as of February 4,
2009, to the Rights Agreement, dated as of March 8, 1999, as
amended as of May 31, 2002 (as so amended, the “Rights
Agreement”), between Footstar, Inc., a Delaware corporation
(the “Corporation”), and Mellon Investor Services LLC,
a New Jersey limited liability company (formerly ChaseMellon
Shareholder Services, L.L.C.), as Rights Agent (the “Rights
Agent”).
The Corporation
and the Rights Agent have heretofore executed and entered into the
Rights Agreement. Pursuant to Section 27 of the Rights
Agreement, the Corporation and the Rights Agent may from time to
time supplement or amend the Rights Agreement in accordance with
the provisions of Section 27 thereof and the Corporation
desires and directs the Rights Agent to so amend the Rights
Agreement. All acts and things necessary to make this Amendment a
valid agreement according to its terms have been done and
performed, and the execution and delivery of this Amendment by the
Corporation has been in all respects authorized by the
Corporation.
In consideration
of the foregoing premises and mutual agreements set forth in the
Rights Agreement and this Amendment, the parties hereto agree as
follows:
1. Section 1(a)
of the Rights Agreement is hereby modified and amended in its
entirety with the following:
“Acquiring Person” shall mean any
Person who or which, together with all Affiliates and Associates of
such Person, shall be the Beneficial Owner of 4.75% or more of the
then outstanding Common Shares (other than as a result of a
Permitted Offer (as hereinafter defined)) or was such a Beneficial
Owner at any time after the Amendment Date, whether or not such
person continues to be the Beneficial Owner of 4.75% 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 Amendment Date
become the Beneficial Owner of more than the applicable
Grandfathered Percentage of the Common Shares of the Corporation
(vi) an Exempt Person, or (vii) any Person, who or which
together with all Affiliates and Associates of such Person becomes
the Beneficial Owner of 4.75% 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 4.75% of
the outstanding Common Shares.”
2. Section 1(c)
of the Rights Agreement is hereby modified and amended in its
entirety as follows:
““Affiliate” and
“Associate” shall mean, with respect to any Person, any
other Person (other than an Exempt Person) whose Common Shares
would be deemed constructively owned by such first Person, owned by
a single “entity” as defined in
Section 1.382-3(a)(i) of the Treasury Regulations, or
otherwise aggregated with shares owned by such first Person
pursuant to the provisions of Section 382 of the Internal
Revenue Code of 1986, as amended (the “Code”), or any
successor or replacement provision, and the Treasury Regulations
thereunder, provided, however, that a Person will not be deemed to
be the Affiliate or Associate of another Person solely because
either or both Persons are or were Directors of the
Corporation.”
3. Section 1(d)
of the Rights Agreement is hereby modified and amended in its
entirety as follows:
“A Person
shall be deemed the “Beneficial Owner” of and shall be
deemed to “Beneficially Own” any securities:
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(i)
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which such Person or any of such
Person’s Affiliates or Associates Beneficially Owns, directly
or indirectly;
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(ii)
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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 (whether or not in writing), 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 (whether or not in writing) if, in the case of
arrangements described in clause (A) or (B) above, the effect
of such right to acquire, agreement, arrangement or understanding
is to treat such Persons as an “entity” under Section
1.382-3(a)(1) of the Treasury
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Regulations; 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 (whether or not in writing) 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);
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(iii)
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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 (whether or not in writing, and 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 1(d)(ii)(B)) or
disposing of any securities of the Corporation, but only if the
effect of such agreement, arrangement or understanding is to treat
such Persons as an “entity” under
Section 1.382-3(a)(1) of the Treasury Regulations;
or
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(iv)
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if
such Person would be deemed to constructively own such securities
pursuant to Section 382 of the Code or any successor or
replacement provision, and the Treasury Regulations
thereunder.
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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.”
4. Section
1(e) of the Rights Agreement is hereby modified and amended in its
entirety as follows:
““Business Day” shall mean any
day other than a Saturday, a Sunday, or a day on which the banking
institutions in New York or New Jersey are authorized or obligated
by law or executive order to close.”
5. Section 1(j)
of the Rights Agreement is hereby modified and amended in its
entirety as follows:
““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 Amendment Date, 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 Amendment Date, the Grandfathered Percentage with
respect to such Grandfathered Shareholder or Grandfathered
Transferee, as applicable, shall be reduced to the same
extent.”
6. Section 1(k)
of the Rights Agreement is hereby modified and amended in its
entirety as follows:
““Grandfathered Shareholder”
shall mean any Person who as of the Close of Business on the
Amendment Date was the Beneficial Owner of 4.75% or more of the
Common Shares of the Corporation then outstanding. Any
Grandfathered Shareholder who subsequent to the Amendment Date
becomes the Beneficial Owner of less than 4.75% of the outstanding
Common Shares shall cease to be a Grandfathered
Shareholder.”
7. Section 1(l)
of the Rights Agreement is hereby modified and amended in its
entirety as follows:
““Grandfathered Transferee”
shall mean any Person who or which, together with all Affiliates
and Associates of such Person:
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(i)
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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 4.75% or more of the outstanding Common Shares;
and
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(ii)
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immediately prior to such
acquisition Beneficially Owned less than 1% of all then outstanding
Common Shares.
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Any
Grandfathered Transferee who subsequent to the Amendment Date
becomes the Beneficial Owner of less than 4.75% of the outstanding
Common Shares shall cease to be a Grandfathered
Transferee.”
8. Section 1(o)
of the Rights Agreement is hereby modified and amended in its
entirety as follows:
““Person” shall mean any
individual, firm, partnership, corporation, limited liability
company, limited liability partnership, trust, association, joint
venture or other entity, group of persons making a
“coordinated acquisition” of shares or otherwise
treated as an entity within the meaning of
Section 1.382-3(a)(1) of the Treasury Regulations or
otherwise, and shall include any successor (by merger or otherwise)
of such entity.”
9. The
definition of “Qualifying Offer” and each reference to
“Qualifying Offering” contained in the Rights Agreement
are hereby deleted in their entirety.
10. The
following new definitions are hereby added to Section 1 of the
Rights Agreement:
“(x)
“Amendment Date” means February 4, 2009.
(y)
“Exempt Person” means a Person whose Beneficial
Ownership (together with all
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