Exhibit (c)(1)
CONFORMED COPY
CONTINGENT
STOCK REDEMPTION AGREEMENT
dated as of
January 26, 1996
among
THE LIMITED, INC.,
XXXXXX X. XXXXXX
and
THE WEXNER CHILDREN'S TRUST
CONTINGENT STOCK REDEMPTION AGREEMENT
THIS CONTINGENT STOCK REDEMPTION AGREEMENT (the "AGREEMENT") is
made and entered into as of January 26, 1996 among The Limited, Inc., a
Delaware corporation (the "COMPANY"), Xxxxxx X. Xxxxxx, in his individual
capacity, (in such capacity, the "PRINCIPAL STOCKHOLDER"), and Xxxxxx X.
Xxxxxx, as Trustee (in such capacity, the "TRUSTEE") of The Wexner Children's
Trust under a Trust Agreement dated January 24, 1996 (the "TRUST").
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. (a) The following terms, as
used herein, have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with such Person. For the purpose of this definition, the term "control"
(including with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
the ownership of voting securities or by contract or otherwise.
"BUSINESS DAY" means each day other than Saturdays, Sundays and
days when commercial banks are authorized or required to be closed for
business in New York City, New York.
"CLOSING" means any closing of a redemption of Subject Shares
pursuant to Section 2.01 or 2.02 hereof, as the case may be.
"COMMON STOCK" means the common stock, par value $.50 per
share, of the Company (or any successor thereto).
"CREDIT AGREEMENT" means any credit or similar agreement
providing for the making of loans or other financial accommodations to a
Holder of the Section 2.01 Redemption Right or any portion thereof.
"EFFECTIVE DATE" means the earlier to occur of (i) the day
immediately preceding the date of the commencement of the Tender Offer or (ii)
February 2, 1996.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GUARANTY" means any guaranty of the obligations of the Company
hereunder entered into pursuant to Section 3.06.
"HOLDER" means the Trust, any Permitted Transferee and any
other Person to whom rights or obligations under this Agreement have been
transferred in accordance with the terms hereof.
"IMMEDIATE FAMILY" shall be defined as in Rule 16a-1(e) under
the Exchange Act.
"PERMITTED TRANSFEREE" means (i) the Principal Stockholder,
(ii) any member of the Immediate Family of the Principal Stockholder, (iii)
any corporation, partnership, trust or other entity all of the
stockholders, partners, owners or beneficiaries of which are the Principal
Stockholder, members of the Immediate Family of the Principal Stockholder
or any Person qualified as tax-exempt under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended, and (iv) the estate or personal
representative of (A) the Principal Stockholder or (B) any member of the
Immediate Family of the Principal Stockholder.
"PERSON" means an individual or a corporation, partnership,
trust, or any other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
"REDEMPTION PRICE" means the price per share, as adjusted from
time to time in accordance with the terms of Sections 2.07 and 2.08 hereof, at
which the Subject Shares may be redeemed in accordance with the terms and
conditions of this Agreement.
"SUBJECT SHARES" means (i) as of the Effective Date, 18,750,000
shares of Common Stock, and (ii) as of any subsequent date, the number of
shares of Common Stock (and the number of shares, units or amounts of each
such other security or other property, which, as of such date, is a Subject
Share in accordance with the terms and provisions hereof) which are subject to
redemption hereunder (either pursuant to Section 2.01 or 2.02), as adjusted
from time to time in accordance with the terms hereof.
"TENDER OFFER" means the offer by the Company to purchase up
to 85 million shares of Common Stock to be commenced on or about February
1, 1996.
"TRANSFEREE" means a Person to whom a Transfer has been made.
"TRUST AGREEMENT" means the Declaration of Trust made as of
January 24, 1996 by Xxxxxx X. Xxxxxx, as Settlor and as Trustee.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Term Section
---- -------
Aggregate Common Stock Component 2.07(c)
Cash Collateral 3.05(a)
Constituent Person 2.09
Current Market Price
Per Common Share 2.07(d)
Custodian 3.04(a)
Custodian's Notice 3.05(a)
Custody Account 3.04
DGCL 2.03(c)
Daily Price 2.07(d)
Determination Date 2.07(c)
Designated Subject Shares 2.07(a)(ii)
Distributee Company 2.06(a)
Extraordinary Dividend 2.07(b)
Minimum Required Amount 3.05
Pledge Agreement 3.04(a)
Permitted Pledgee 2.04(c)
Pre-Distribution
Subject Shares 2.07(a)(i)(c)
Redemption Notice 2.01 and 2.02
Relevant Distribution 2.06(a)
Replaced Shares 2.04(d)
Repurchased Designated
Common Stock 2.07(c)
Rights 2.07(a)
Section 2.01 Redemption Right 2.01
Section 2.02 Redemption Right 2.02
Specified Number 2.07(a)(i)(A)
Subject Share Shortfall 2.07(a)(iii)
Transfer 2.04(a)
Transferee Agreement 2.04(b)
Withdrawn Shares 3.05(a)
ARTICLE II
REDEMPTION RIGHTS
Section 2.01. Redemption Right of the Holder. Subject to the
final sentence of this Section 2.01, from time to time during the period
commencing upon the second annual anniversary of the Effective Date and ending
on the day prior to the fifth annual anniversary of the Effective Date, a
Holder shall be entitled to require the Company to redeem Subject Shares, in
whole or in part, subject to the terms and conditions hereof, if, and only if,
during such period such Holder gives written notice (a "REDEMPTION NOTICE") to
the Company stating the number of Subject Shares to be redeemed (the "SECTION
2.01 REDEMPTION RIGHT"). In such event, the Redemption Price shall be a price
equal to $18.75 per share in cash, as adjusted from time to time in
accordance with Sections 2.07 and 2.08 hereof. The Company shall not be
required to redeem a number of Subject Shares pursuant to this Section 2.01
having an aggregate Redemption Price of less than $200 million, unless all
other Subject Shares shall have been previously, or shall be simultaneously,
redeemed by the Company pursuant to the terms of this Agreement. The number
of Subject Shares from time to time subject to the Section 2.01 Redemption
Right shall be reduced by the number of Subject Shares theretofore redeemed
pursuant to this Section 2.01.
Section 2.02. Redemption Right of the Company. Subject to the
final sentence of this Section 2.02, from time to time during the period
commencing upon the 66th monthly anniversary of the Effective Date and ending
on the day prior to the 72nd monthly anniversary of the Effective Date, the
Company shall have the right to redeem Subject Shares from a Holder that holds
such Subject Shares (or has withdrawn Subject Shares from the Custody Account
in accordance with Section 3.05) subject to the Section 2.02 Redemption Right,
in whole or in part, subject to the terms and conditions hereof, if, and only
if, during such period the Company gives written notice (a "REDEMPTION
NOTICE") to such Holder stating the number of Subject Shares to be redeemed
(the "SECTION 2.02 REDEMPTION RIGHT"). In such event, the Redemption Price
shall be a price equal to $25.07 per share in cash, as adjusted from time to
time in accordance with Sections 2.07 and 2.08 hereof. The Company shall not
be entitled to redeem a number of Subject Shares pursuant to this Section 2.02
having an aggregate Redemption Price of less than $200 million unless all
other Subject Shares shall have been previously, or shall be simultaneously,
redeemed by the Company pursuant to the terms of this Agreement. The number
of Subject Shares from time to time subject to the Section 2.02 Redemption
Right shall be reduced by the number of Subject Shares theretofore redeemed
pursuant to either the Section 2.01 Redemption Right or the Section 2.02
Redemption Right.
Section 2.03. Closing. (a) Any Closing shall occur no
later than five Business Days following the receipt by the Company or the
Holder, as the case may be, of a Redemption Notice. A Closing shall be
permitted to occur following the periods specified in Section 2.01 and 2.02
provided that the Redemption Notice shall have been given prior to the
expiration of the applicable period.
(b)(i) At any Closing, the relevant Holder shall deliver, or cause
to be delivered, to the Company a certificate or certificates representing the
securities included in the Subject Shares to be redeemed at such Closing, duly
endorsed for transfer or accompanied by duly executed instruments of transfer,
in each case, with signature guaranteed, against payment therefor pursuant to
paragraph (ii) below. If less than all the securities included in the Subject
Shares represented by any such certificate or certificates are being redeemed,
the Company shall, at any such Closing (or, to the extent that the applicable
Subject Shares are not shares of Common Stock, as soon as practicable
thereafter), deliver to the Custodian, Trust or other Holders, as applicable,
new certificates representing the securities included in the Subject Shares
equal to the difference between the securities included in the Subject Shares
represented by the certificate(s) delivered to the Company and the securities
included in the Subject Shares redeemed. To the extent Subject Shares to be
redeemed at any Closing include property other than securities, title to such
property shall be conveyed, and possession of such property surrendered, to
the Company in a manner appropriate for such property. In the event any
Closing shall occur following a record date for a distribution with respect to
any security constituting a part of the Subject Shares, but prior to such
distribution, the relevant Holder shall not be required to deliver the
security or other property to be distributed in such distribution but,
instead, shall be obligated to deliver an instrument assigning such Holder's
right to receive such security or other property in such distribution with
respect to the Subject Shares so delivered.
(ii) At any Closing, the Company shall deliver to the relevant
Holder, against receipt of the Subject Shares being redeemed at such Closing
in accordance with paragraph (i) above, the aggregate Redemption Price for the
Subject Shares to be redeemed from such Holder at such Closing by wire
transfer of immediately available funds to such bank account as such Holder
shall have specified in writing no later than two Business Days prior to the
Closing.
(c) Notwithstanding any provision of this Agreement to the
contrary, the Company's obligation to effect any Closing shall be subject to
the following conditions: (i) as of the date of the Closing, the relevant
Holder (A) has the legal capacity to deliver for redemption the Subject Shares
and (B) owns the Subject Shares (or is a Permitted Pledgee), and is delivering
such shares to the Company, free and clear of (x) in the case of any pledgee
to whom any Section 2.01 Redemption Right and related Subject Shares shall
have been pledged in accordance with Section 2.04(c) hereof, or any other
Holder following a Transfer contemplated by clause (ii), (iii) or (iv) of such
Section 2.04(c), all claims, charges, encumbrances, or security interests
created by or arising or attaching through such pledgee or Holder and (y) in
the case of any other Holder, all claims, charges, encumbrances or security
interests of any nature whatsoever, except, in each case, a pledge or security
interest granted pursuant to Section 3.04 hereof; (ii) as of the date of the
Closing, the Company is not prohibited from redeeming the Subject Shares by
reason of clause (a)(1) of Section 160 of the Delaware General Corporation Law
("DGCL"); (iii) no preliminary or permanent injunction or other order by any
court of competent jurisdiction prohibiting the consummation of the
transaction shall be in effect and (iv) the relevant Holder shall have
confirmed in writing to the Company as of the Closing Date the accuracy of the
matters referred to in clause (i) of this Section 2.03(c).
Section 2.04. Transfer of the Section 2.01 Redemption Right
and the Subject Shares. (a) Any Holder shall have the right to transfer,
sell, assign, bequeath or otherwise dispose of (together, "TRANSFER"), from
time to time, in whole or in part, the Section 2.01 Redemption Right to any
Permitted Transferee; provided the Transferee of the Section 2.01
Redemption Right, at the time of the Transfer and at all times during which
such Transferee holds the Section 2.01 Redemption Right, holds the number
of Subject Shares from time to time required to exercise the Section 2.01
Redemption Right in full (it being understood that such Subject Shares need
not have been owned by the Transferor of the Section 2.01 Redemption
Right), and provided further, that as a condition to such Transfer, such
Transferee shall enter into a written agreement reasonably satisfactory to
the Company to the effect that such Transferee shall be bound by the terms
and provisions of this Agreement applicable to Holders of a Section 2.01
Redemption Right, including, without limitation, the terms of the
immediately foregoing proviso.
(b) Each of the Trust and any Permitted Transferee shall have the
right to Transfer at any time following the third annual anniversary of the
Effective Date, in whole or, subject to the final sentence of this Section
2.04(b), in part, the Section 2.01 Redemption Right, to any Person other than
a Permitted Transferee, provided that (A) the number of Subject Shares to
which the Transferred Section 2.01 Redemption Right relates shall be
Transferred together with such Section 2.01 Redemption Right and (B) as a
condition to such Transfer, the Transferee shall enter into a written
agreement reasonably satisfactory to the Company to the effect that such
Transferee shall (i) be a "Holder" hereunder, (ii) be bound by the terms and
provisions of this Agreement applicable to Holders, (iii) hold such Section
2.01 Redemption Right (or portion thereof) (and the related Subject Shares)
for investment purposes only, (iv) not engage (and shall not permit any other
Person to engage) in any options, hedging, derivatives or similar transactions
or arrangements with respect to such Section 2.01 Redemption Right (or portion
thereof) or the Subject Shares related thereto and (v) not Transfer such
Section 2.01 Redemption Right (or portion thereof) or Subject Shares except in
accordance with this Section 2.04 (such agreement, a "TRANSFEREE AGREEMENT").
Unless such Transferee shall continue to hold Subject Shares subject to the
Section 2.02 Redemption Right, upon expiration or termination of the Section
2.01 Redemption Right, any Transferee Agreement relating thereto shall also
expire or terminate. In the case of a partial Transfer of the Section 2.01
Redemption Right pursuant to this Section 2.04(b), such Transfer shall be made
only with respect to a portion of such Section 2.01 Redemption Right in
respect of Subject Shares having an aggregate Redemption Price at least equal
to $200 million, unless the number of Subject Shares which have not been
previously or simultaneously redeemed pursuant to this Agreement shall have an
aggregate Redemption Price of less than $200 million (in which case the
Section 2.01 Redemption Right may be Transferred only in its entirety).
(c) The Trust or any Permitted Transferee shall have the right to
pledge the Section 2.01 Redemption Right (and related Subject Shares), from
time to time, in whole or in part, to any financial institution reasonably
satisfactory to the Company to secure such Holder's obligations under a Credit
Agreement; provided that, as a condition to such pledge, the pledgee shall
enter into a written agreement reasonably satisfactory to the Company intended
to protect the Company's rights under this Agreement. Any such pledgee is
referred to herein as a "PERMITTED PLEDGEE". Notwithstanding any contrary
provision of Section 2.01, the Section 2.01 Redemption Right shall be
exercisable beginning on the first annual anniversary of the Effective Date by
a Permitted Pledgee following the occurrence of a default under the applicable
Credit Agreement or by any Holder of the Section 2.01 Redemption Right and
related Subject Shares following a Transfer thereof pursuant to an exercise of
remedies by a Permitted Pledgee (whether by foreclosure of its pledge or the
exercise of other legal or equitable remedies) or pursuant to a Transfer made
in lieu of foreclosure following a default under the applicable Credit
Agreement. In the event of any default under a Credit Agreement entitling a
Permitted Pledgee to exercise or Transfer the Section 2.01 Redemption Right,
then such Permitted Pledgee shall have the right to:
(i) exercise the Section 2.01 Redemption Right at any time
prior to effecting any Transfer thereof, by foreclosure or otherwise;
(ii) effect a Transfer of the Section 2.01 Redemption Right
(and related Subject Shares), by foreclosure or otherwise, to a
Permitted Transferee, but in such event the Section 2.01
Redemption Right shall not be exercisable prior to the second
annual anniversary of the Effective Date (except in accordance
with this Section 2.04(c) if pledged by such Permitted Transferee
to another Permitted Pledgee);
(iii) effect a Transfer of the Section 2.01 Redemption Right
(and related Subject Shares), by foreclosure or otherwise, to any
Person (including, without limitation, itself); provided that the
Transferee executes and delivers a Transferee Agreement and holds the
Section 2.01 Redemption Right (and related Subject Shares) subject to
the terms thereof; or
(iv) effect a Transfer of the Section 2.01 Redemption Right
(and related Subject Shares), by foreclosure or otherwise, to any
Person (including, without limitation, itself) other than in
accordance with the foregoing clauses, but in such event the Section
2.01 Redemption Right so Transferred shall terminate 15 Business Days
after the date of consummation of such Transfer unless such Person is
a Permitted Pledgee (or an affiliate thereof) and executes an
agreement whereby such Person agrees not to Transfer the Section 2.01
Redemption Right (and related Subject Shares) other than in
accordance with clause (ii) or (iii) above, in which case the Section
2.01 Redemption Right so Transferred shall terminate 15 Business Days
after the later to occur of (A) the date of consummation of such
Transfer and (B) the first annual anniversary of the Effective Date.
A Transfer may be made as contemplated by clause (ii), (iii) or
(iv) above only if the Person to whom such Transfer is made assumes the
obligations of a Holder hereunder with respect to the Section 2.02 Redemption
Right to the extent of the Subject Shares Transferred; provided that such
assumption shall not be required if such Subject Shares constitute Withdrawn
Shares, or Replaced Shares, at the time of such Transfer.
In addition to the foregoing, following the expiration of the
Section 2.01 Redemption Right, the Trust or any Permitted Transferee shall be
permitted to pledge the Subject Shares, subject to the Section 2.02 Redemption
Right, on the same terms as are applicable to a pledge of the Section 2.01
Redemption Right (and the related Subject Shares) under this Section 2.04(c).
(d) No Holder shall be permitted to Transfer any Subject Shares
except (i) in connection with a Transfer of the Section 2.01 Redemption Right
in accordance with Section 2.04(a), (b) or (c) or (ii) Withdrawn Shares or
Replaced Shares. All Subject Shares (other than Withdrawn Shares or Replaced
Shares) Transferred in accordance with Section 2.04(a), (b) or (c) shall
at all times remain subject to the Section 2.02 Redemption Right.
Notwithstanding the foregoing, the Trust shall be entitled from time to
time to deposit into the Custody Account (or to establish a separate
Custody Account and deposit therein) additional Subject Shares which shall
immediately become subject to the Section 2.02 Redemption Right (or cash in
the Minimum Required Amount) in lieu of an equivalent number of Subject
Shares then held by another Holder (designated by the Trustee) ("REPLACED
SHARES"), and (i) the Company shall thereupon issue or, to the extent
possible, cause to be issued to such Holder new certificates representing
the Replaced Shares without the legend referred to in Section 2.04(f) and
(ii) such Replaced Shares shall no longer be subject to the Section 2.02
Redemption Right.
(e) Except as expressly permitted by Section 2.04(a), (b), and
(c), a Section 2.01 Redemption Right may not be Transferred by any Holder;
provided that, notwithstanding any contrary provision in this Section 2.04,
it is understood that any Transfer of Subject Shares and the Section 2.01
Redemption Right pursuant to enforcement of the Guaranty (or any drawing under
a letter of credit issued to support obligations under the Guaranty) shall not
be prohibited by any provision of this Agreement.
(f) All Subject Shares from time to time subject to the
Section 2.02 Redemption Right shall bear a legend to such effect.
Section 2.05. Transfer of Section 2.02 Redemption Right. The
Company shall have the right to transfer, from time to time, in whole or in
part, the Section 2.02 Redemption Right to any Affiliate, including, without
limitation to a Distributee Company in connection with any Relevant
Distribution; provided, however, that (i) no such transfer shall relieve the
Company of its obligation to pay the aggregate Redemption Price in respect of
the Section 2.01 Redemption Right, unless the Distributee Company shall have
assumed such obligation, and (ii) the Guaranty and all other credit support
referred to in Section 3.06 hereof shall remain in effect.
Section 2.06. Certain Adjustments to the Subject Shares. (a)
In the event the Company shall fix a record date for the distribution to
holders of Common Stock of any security representing an interest in any
business theretofore owned or controlled by the Company, immediately following
the effective date of such distribution (a "RELEVANT DISTRIBUTION"), each
Subject Share shall be deemed to consist of the share or shares of Common
Stock and other securities and other assets, if any, which, as of the date
immediately prior to such distribution, constituted a Subject Share, plus such
security, or portion thereof, to be received by the holders of Common Stock in
such distribution in respect of the share or shares of Common Stock included
in one Subject Share immediately prior to such distribution. If, in
connection with any such distribution, the Company's obligations under the
Section 2.01 Redemption Right and the Company's rights under the Section 2.02
Redemption Right are transferred to the entity the stock of which is being
distributed to holders of Common Stock (the "DISTRIBUTEE COMPANY"), (i) an
adjustment in the number and type of securities included in one Subject Share
shall be made in accordance with the first sentence of this Section 2.06(a),
(ii) the Distributee Company shall be deemed the successor to the Company for
all purposes of this Agreement and (iii) without limiting the generality of
the foregoing, for purposes of determining whether any adjustment is required
pursuant to Section 2.06, 2.07, 2.08 or 2.09 as a result of any action taken
or event occurring after the date of such distribution, all references to the
Company shall be deemed to be references to the Distributee Company and all
references to Common Stock shall be deemed to be references to the common
stock of the Distributee Company received in the Relevant Distribution. The
foregoing adjustments shall be made successively whenever a record date is
fixed and, in the event that such distribution is not so made, the composition
of the Subject Shares shall again be adjusted to be such Subject Shares which
would then be in effect if such record date had not been fixed.
(b) In case the Company shall at any time after the date hereof (i)
declare a dividend, or make a distribution on Common Stock, payable in Common
Stock, (ii) subdivide or split the outstanding Common Stock, (iii) combine or
reclassify the outstanding Common Stock into a smaller number of shares, or
(iv) issue any shares of its capital stock in a reclassification of Common
Stock (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing corporation), each Subject
Share shall thereafter consist of (x) the number of shares of Common Stock or
portions thereof resulting from such dividend, distribution, subdivision,
split, combination or reclassification in respect of the number of shares of
Common Stock or portions thereof thereto fore contained in a Subject Share and
(y) all other assets and property theretofore contained in a Subject Share.
Such adjustment shall be made successively whenever any event listed above
shall occur.
(c) All calculations required by this Section 2.06 shall be made to
the nearest one hundredth of a share.
Section 2.07. Certain Additional Adjustments.
(a)(i) In case the Company shall fix a record date for the issuance to all
holders of Common Stock of rights, options, warrants, convertible securities
or other securities entitling such holders to subscribe for or purchase shares
of Common Stock (or securities convertible into shares of Common Stock)
(collectively, "RIGHTS") and the price per share of Common Stock (or the
conversion price per share of Common Stock, if a security convertible into
shares of Common Stock) to be paid upon exercise or conversion thereof is less
than the Current Market Price Per Common Share on such record date, then:
(A) unless the relevant Holder elects to have the provisions of
clause (iii) of this Section 2.07(a) apply, the Specified Number of
shares of Common Stock theretofore withdrawn from the Custody Account
as a result of the substitution of Cash Collateral shall be replaced
in the Custody Account at least two Business Days prior to the record
date for such issuance and such replacement shares of Common Stock
shall remain in the Custody Account through such record date (For
purposes of this clause (A), the term "Specified Number" means a
number of shares of Common Stock equal to the excess, if any, of (1)
the number of shares of Common Stock then required (together with all
other assets comprising Subject Shares) to satisfy the Section 2.02
Redemption Right in full over (2) the sum of the number of shares of
Common Stock then subject to a security interest of Permitted
Pledgees and the number of shares of Common Stock subject to the
Section 2.02 Redemption Right but not subject to such security
interest.);
(B) all Rights received in respect of Common Stock constituting
a part of the Designated Subject Shares, from and after the
distribution thereof, may not be Transferred (other than in
connection with a Transfer of Subject Shares);
(C) until such time as such Rights included in the Designated
Subject Shares expire or are exercised or converted, each Subject
Share shall be deemed to consist of each share of Common Stock
included in a Subject Share in respect of which such Rights were
issued and such other securities and other assets, if any, which, as
of such record date constituted a Subject Share (together, a
"Pre-Distribution Subject Share") plus the number of Rights
determined by dividing (1) the total number of unexercised or
unconverted Rights included in the Designated Subject Shares, by (2)
the number of Subject Shares;
(D) to the extent such Rights included in the Designated
Subject Shares are exercised or converted, from and after the time of
such exercise or conversion each Subject Share shall be deemed to
consist of a Pre-Distribution Subject Share plus any unexpired,
unexercised and unconverted Rights included therein pursuant to
clause (C) above, plus (x) a number of shares of Common Stock with a
Current Market Price Per Common Share (measured as of the record
date) equal to the difference between (1) the aggregate Current
Market Price Per Common Share (determined as aforesaid) of the
shares of Common Stock received upon such exercise or conversion
of Rights included in the Designated Subject Shares minus (2) the
aggregate price paid by the relevant Holder upon such exercise or
conversion divided by (y) the number of Subject Shares.
(ii) For purposes hereof, "DESIGNATED SUBJECT SHARES" means,
at any time, particular Subject Shares equal to the total number of Subject
Shares at the time, determined by reference to (A) first, to the extent that
any Subject Shares have been pledged, together with related Section 2.01
Redemption Rights, to a Permitted Pledgee, the number of Subject Shares so
pledged and (B) second, to the extent that the total number of Subject Shares
at the time exceeds the Designated Subject Shares specified in clause (A) of
this Section 2.07(a)(ii), the Subject Shares in the Custody Account.
(iii) For purposes of this Section 2.07(a), if on any record date
referred to in clause (i) of this Section 2.07(a), the aggregate number of
Designated Subject Shares shall be less than the aggregate number of Subject
Shares (such shortfall, the "SUBJECT SHARE SHORTFALL") each Subject Share
shall be adjusted pursuant to clause (i)(D) of this Section 2.07(a) as if, in
addition to the Rights actually exercised in respect of actual Designated
Subject Shares, all Rights in respect of a number of Designated Subject Shares
equal to the Subject Share Shortfall had been exercised on such record date.
(iv) The adjustments set forth above shall be made successively
whenever a record date is fixed or any Right is exercised or converted, as the
case may be; and in the event that such Rights are not so issued or expire
unexercised, each Subject Share shall again be adjusted to be such Subject
Shares which would then be in effect if such record date had not been fixed.
(b) In case the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, assets or other property
(other than (w) distributions payable in Common Stock or Rights referred to
in, and for which an adjustment is made pursuant to, Section 2.07(a) hereof,
(x) distributions referred to in, and for which an adjustment is made pursuant
to Section 2.06, (y) any regular quarterly or semi-annual dividend payable in
cash or (z) any dividend payable in cash other than a regular quarterly or
semi-annual dividend (an "EXTRAORDINARY DIVIDEND") which, individually or
together with all other Extraordinary Dividends paid in such fiscal year, does
not exceed 50% of the aggregate amount of any regular quarterly or semi-annual
dividend or dividends paid in the preceding fiscal year) then (i) in the case
of any distribution of cash, the Redemption Price to be in effect after such
record date shall be reduced by the amount of cash distributed in respect of
the number of shares of Common Stock included in one Subject Share and (ii) in
the case of a distribution of evidences of indebtedness, assets or other
property (other than cash), from and after such record date, each Subject
Share shall be deemed to consist of such number of shares of Common Stock
included in one Subject Share as of such record date, and such other
securities and other assets, if any, which, as of such record date,
constituted one Subject Share, plus such evidences of indebtedness, assets or
other property received by the Holder in respect of such number of shares of
Common Stock in such distribution. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, each Redemption Price or the composition of the
Subject Shares, as the case may be, shall again be adjusted to be such
Redemption Price or such Subject Shares, as the case may be, which would then
be in effect if such record date had not been fixed.
(c) In case at any time or from time to time the Company or any
subsidiary thereof shall repurchase, by self tender offer (excluding for this
purpose, open market purchases), any shares of Common Stock of the Company
included in any Designated Subject Shares at a weighted average purchase price
in excess of the Current Market Price Per Common Share on the Business Day
immediately prior to the earliest date of such repurchase, the commencement of
an offer to repurchase or the public announcement of either (such date being
referred to as the "DETERMINATION DATE"), (i) each Subject Share shall
thereafter consist of (A) all property and assets other than shares of Common
Stock included in one Subject Share on the Determination Date and (B) a number
of shares of Common Stock equal to the number of shares of Common Stock
included in one Subject Share on the Determination Date multiplied by a
fraction the numerator of which is (I) the aggregate number of shares of
Common Stock included in the total number of Subject Shares on the
Determination Date (such aggregate number of shares of Common Stock, the
"AGGREGATE COMMON STOCK COMPONENT") less (II) the number of shares of Common
Stock included in all Designated Subject Shares on the Determination Date that
are purchased pursuant to such repurchase (the "REPURCHASED DESIGNATED COMMON
STOCK") and the denominator of which is the Aggregate Common Stock Component
as of the Determination Date and (ii) each Redemption Price shall be adjusted
to equal the amount determined by dividing (x) the difference between (A) the
product of the number of Subject Shares outstanding on the Determination Date
multiplied by the Redemption Price theretofore in effect minus (B) the number
of shares of Repurchased Designated Common Stock multiplied by the purchase
price per share of Repurchased Designated Common Stock paid by the Company or
any subsidiary in such repurchase by (y) the total number of Subject Shares.
For purposes of this Section 2.07(c), if on any Determination Date in respect
of any self tender offer there shall exist a Subject Share Shortfall, the
adjustments set forth in the foregoing sentence shall be made as if the number
of shares of Repurchased Designated Common Stock included, in addition to any
shares of Common Stock included in any Designated Subject Shares actually
purchased pursuant to such repurchase, a number of Shares of Common Stock
equal to the number that would have been purchased had a number of shares of
Common Stock equal to the number of shares included in a number of Subject
Shares equal to the Subject Share Shortfall been tendered and purchased on the
basis of the maximum proration possible in respect of such tender offer. In
addition, for purposes of this Section 2.07(c), neither (A) the Tender Offer,
(B) the exercise of the Section 2.01 Redemption Right or the Section 2.02
Redemption Right nor (C) the repurchase or repurchases by the Company or any
subsidiary thereof within any 12 month period of not more than 15% of the
shares of Common Stock outstanding as of the first date of such period, at a
price not in excess of 115% of the Current Market Price Per Common Share as of
the Determination Date of any such repurchase, shall be deemed to constitute a
repurchase to which this Section 2.07(c) applies. An adjustment made pursuant
to this Section 2.07(c) shall become effective immediately after the effective
date of such repurchase.
(d) For the purpose of any computation under Sections 2.07(a), (b)
or (c) hereof, on any Determination Date the "CURRENT MARKET PRICE PER COMMON
SHARE" shall be deemed to be the average (weighted by daily trading volume) of
the Daily Prices (as defined below) per share of the applicable class of
Common Stock for the 20 consecutive trading days immediately prior to such
date. "DAILY PRICE" means the closing price on such day as reported on the
New York Stock Exchange, Inc. Composite Transactions Tape.
(e) No adjustment in the Redemption Price shall be required unless
such adjustment would require an adjustment of at least one percent in such
price; provided that any adjustments which by reason of this Section 2.07(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 2.07 shall be
made to the nearest one tenth of a cent.
2.08. Other Adjustments. In the event that the Subject Shares
shall include any shares of capital stock of the Company other than Common
Stock or any shares of capital stock of any other Person, the number of such
other shares and/or the applicable Redemption Price shall thereafter be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions contained in Sections 2.06, 2.07
and 2.09 hereof. In addition, if (i) the Company effects any distribution or
similar transaction to or in respect of holders of Common Stock involving any
securities representing an interest in any business theretofore owned by the
Company and (ii) the effect of such distribution or similar transaction on the
composition of the Subject Shares is not addressed in Section 2.06, 2.07 or
2.09 hereof, the composition of the Subject Shares shall thereafter be
adjusted in an equitable manner to reflect both the nature of the distribution
or transaction and the purposes of the provisions of Sections 2.06, 2.07 and
2.08.
2.09. Merger, Consolidation or Sale of Assets. In case of
any consolidation of the Company with, or merger of the Company into, any
other Person, any merger of another Person into the Company (other than a
merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock) or any sale or transfer of
all or substantially all of the assets of the Company or of the Person formed
by such consolidation or resulting from such merger or which acquires such
assets, as the case may be, the portion of one Subject Share consisting of
Common Stock shall thereafter be the kind and amount of securities receivable
upon such consolidation, merger, sale or transfer by a holder of the number of
shares of Common Stock equal to the number of shares of Common Stock included
in one Subject Share immediately prior to such consolidation, merger, sale or
transfer, assuming (i) such holder of Common Stock is not a Person with which
the Company consolidated or into which the Company merged or which merged into
the Company or to which such sale or transfer was made, as the case may be
("CONSTITUENT PERSON"), or an Affiliate of a Constituent Person and (ii) in
the case of a consolidation, merger, sale or transfer which includes an
election as to the consideration to be received by the holders, (A) such
holder made the election actually made in respect of the Designated Subject
Shares and (B) if there is a Subject Share Shortfall at the time at which any
such election is to be made, no election was made in respect of a number of
Subject Shares equal to such Subject Share Shortfall, (provided that in the
case of this clause (B), if the kind or amount of securities and other
property receivable upon such consolidation, merger, sale or transfer is not
the same for each share of Common Stock held immediately prior to such
consolidation, merger, sale or transfer by other than a Constituent Person or
an Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("non-electing share"), then for the purpose of clause (B)
of this Section 2.09 the kind and amount of securities and other property
receivable upon such consolidation, merger, sale or transfer by each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). Adjustments for events
subsequent to the effective date of such a consolidation, merger and sale of
assets shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Agreement. In the event the Company is not the surviving
entity, this Agreement shall be assumed by the Person with whom such
transaction is effected and any such resulting or surviving corporation shall
expressly assume the obligation to deliver, upon exercise of the Section 2.01
Redemption Right and the Section 2.02 Redemption Right, the aggregate
Redemption Price. The provisions of this Section 2.09 shall similarly apply
to successive consolidations, mergers, sales, leases or transfers.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01. Representations and Warranties of the
Company. The Company represents and warrants to the Principal Stockholder and
the Trust that (a) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to enter into this Agreement and to carry
out its obligations hereunder, (b) the execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or any of
the transactions contemplated hereby, and (c) this Agreement has been duly
executed and delivered by the Company and, assuming this Agreement constitutes
a valid and binding obligation of the Principal Stockholder and the Trust,
constitutes a valid and binding obligation of the Company and is enforceable
against the Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
Section 3.02. Representations and Warranties of the Trustee.
The Trustee represents and warrants to the Company that (i) the Trust has been
duly constituted and is validly existing under the laws of the State of Ohio,
and has the requisite power and authority to enter into this Agreement and to
carry out its obligations hereunder, (ii) the execution and delivery of this
Agreement by the Trustee and the consummation by the Trustee and/or its
successors in trust of the transactions contemplated hereby have been duly
authorized by all necessary action under the Trust Agreement and no other
proceedings on the part of the Trustee or any other Person are necessary to
authorize this Agreement or any of the transactions contemplated hereby, and
(iii) this Agreement has been duly executed and delivered by the Trustee and,
assuming this Agreement constitutes a valid and binding obligation of the
Company and the Principal Stockholder, constitutes a valid and binding
obligation of the Trustee and/or its successors in trust, enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and the availability of equitable
remedies may be limited by equitable principles of general applicability.
Section 3.03. Covenants of the Principal Stockholder. The
Principal Stockholder agrees that he (a) will not, and will cause all members
of his Immediate Family who reside in his household and all other non-natural
Persons referred to in the definition of Permitted Transferees over which he
exercises control not to, tender any shares of Common Stock in the Tender
Offer, and (b) will cause the Trust to comply with all of its obligations
under this Agreement.
Section 3.04. Certain Other Covenants. (a) The Trust agrees
that it will (i) not tender any shares of Common Stock in the Tender Offer,
(ii) on the Effective Date, own not less than 18,750,000 shares of Common
Stock and deposit the certificate or certificates representing such Shares
in a custody account (the "CUSTODY ACCOUNT") with a financial or similar
institution (the "CUSTODIAN") in the manner contemplated in the Pledge
Agreement referred to below; (iii) deposit any certificate or certificates
representing any shares of capital stock or other securities which
hereinafter become Subject Shares in the Custody Account as soon as
practicable following the date on which such securities become Subject
Shares, (iv) upon any exercise of the Section 2.02 Redemption Right unless
such Section 2.02 Redemption Right shall have been assumed by another
Holder in accordance with the terms hereof, will deliver all the Subject
Shares being redeemed free and clear of all liens, charges, encumbrances,
or security interests of any nature whatsoever, (v) at the Effective Date,
own the Subject Shares free and clear of any claims, charges, encumbrances
or security interests other than those created under the Pledge Agreement
or those securing a Credit Agreement as permitted under Section 2.04(c) and
(vi) on or prior to the Effective Date, (A) execute a pledge or similar
agreement (the "PLEDGE AGREEMENT") in form and substance reasonably
satisfactory to the Trust and the Company pursuant to which the Trust shall
grant to the Company and its permitted assigns a security interest in the
Subject Shares and any Cash Collateral that may be collateral after the
date hereof, (B) to the fullest extent permitted by applicable law, give,
execute, file and record any notice, financing statement, continuation
statement or other instrument, document or agreement that the Company may
reasonably consider necessary or desirable to create, perfect, continue or
validate such security interest or to exercise or enforce the Company's
rights with respect to such security interest and (C) appoint the Company
as its attorney-in-fact to execute, file and record any such documents.
The Company hereby acknowledges and agrees that, in the event the Trust
shall enter into a Credit Agreement containing an obligation on the part of
the Trust for borrowed money for which any Subject Shares shall be pledged
as security, the security interest referred to in this Section 3.04(a)(vi)
shall be subordinated to any security interest in such Subject Shares
required by and granted to any lender (or agent thereof) in connection with
any such borrowing.
(b) Upon any exercise of the Section 2.02 Redemption Right,
each Holder (other than the Trust (the obligations of which are set forth in
Section 3.04(a)) and a Permitted Pledgee (the obligations of which will be set
forth in agreements to be entered into between the Company and such Permitted
Pledgee) shall deliver the Subject Shares being redeemed free and clear of (x)
in the case of any pledgee to whom the Subject Shares shall have been pledged
in accordance with Section 2.04(c) hereof, or any other Holder following a
Transfer contemplated by clause (ii), (iii) or (iv) of such Section 2.04(c),
all claims, charges, encumbrances or security interests created by or arising
or attaching through such pledgee or Holder and (y) in the case of any other
Holder, all claims, charges, encumbrances or security interests of any nature
whatsoever.
Section 3.05. Substitution of Collateral. (a) The Trust shall
be permitted, from time to time, to withdraw Subject Shares from the Custody
Account and the security interest under the Pledge Agreement, provided,
however, that the Trust shall substitute therefor, in a manner and pursuant to
agreements and arrangements reasonably satisfactory to the Company under which
the Company shall have a perfected security interest therein subject to no
prior liens or security interests other than liens and security interests
theretofore applicable to the Subject Shares withdrawn prior to or
concurrently with any such withdrawal, either (i) an amount in cash (the
"CASH COLLATERAL") at least equal to the Minimum Required Amount or (ii) an
equal number of Subject Shares (the number of Subject Shares from time to
time so withdrawn, "WITHDRAWN SHARES"). The "MINIMUM REQUIRED AMOUNT"
means 120% of the product of the fair market value of the assets comprising
a Subject Share and the number of Withdrawn Shares. For purposes of the
preceding sentence, the fair market value (i) of a share of Common Stock
shall be the Current Market Price Per Common Share as of the Determination
Date or (ii) of any other publicly traded securities shall be deemed to be
the average (weighted by trading volume) of the daily closing prices (as
reported in The Wall Street Journal or other recognized source of financial
information) of such securities on the principal securities exchange on
which, or the principal securities market in which, such securities are
traded during the 20 consecutive trading days immediately prior to such
date and (iii) of any other assets, as determined in good faith by the
Board of Directors of the Company. The required amount of Cash Collateral
shall be recalculated weekly by the Custodian, which shall deliver promptly
(by telecopier in accordance with Section 4.05) a written notice of such
recalculation to the Trust (a "CUSTODIAN'S NOTICE"). Cash Collateral shall
be remitted by the Custodian to, or additional Cash Collateral (or Subject
Shares) which may be required shall be deposited in the Custody Account by,
the Trust based upon the most recent Custodian's Notice, to the extent, but
only to the extent, the value of the Cash Collateral is greater or less
than, as the case may be, the then current Minimum Required Amount. Any
payment by or to the Trust shall be made on the second Business Day after
the date of the Custodian's Notice. Any income in respect of the Cash
Collateral shall be paid to the Trust; provided that any such income shall
be retained by the Custodian to the extent necessary to bring the Trust
into compliance with the provisions of this Section 3.05. Cash Collateral
may be invested only in U.S. Government debt securities having a maturity
of less than 90 days.
(b) If the Company exercises its Section 2.02 Redemption Right,
or the Trust fails to satisfy its obligations pursuant to Section 3.05(a),
upon the Company's instruction the Custodian shall utilize the Cash
Collateral to purchase (within three Business Days after the Redemption
Notice in respect of the Section 2.02 Redemption Right shall have been
given) such number of Subject Shares as are required to satisfy the Trust's
obligations in respect of the Section 2.02 Redemption Right so exercised.
Section 3.06. Covenants of the Company. The Company agrees
that it shall, prior to the Effective Date (or as promptly as practicable
thereafter), provide credit support in respect of its obligations hereunder on
terms reasonably satisfactory to the Company and the Trust which may include,
among other things, the creation of a bankruptcy remote vehicle, the funding
of such vehicle and the provision by such vehicle of guarantees of or
collateral to support such obligations of the Company, letters of credit to
support such guarantees or obligations and/or reimbursement obligations in
respect of such letters of credit.
ARTICLE IV
MISCELLANEOUS
Section 4.01. Expenses. (a) Except as otherwise agreed by
the parties and except as provided in Section 4.01(b) hereof, each party
hereto will pay all of its own expenses in connection with the transactions
contemplated by this Agreement, including, without limitation, the fees and
expenses of its counsel and other advisers, whether or not the transactions
contemplated herein are consummated. Any fees, commissions, and other
payments owing to a party's financial advisors in connection with this
Agreement shall be borne solely by that party.
(b) The Company shall pay any transfer taxes incurred by the Holder
as a result of the exercise of the Section 2.01 Redemption Right or the
Section 2.02 Redemption Right, provided, however, that if the Holder shall
request the Company to pay any portion of the aggregate Redemption Price to a
Person other than the registered holder of the Subject Shares represented by
the certificate or certificates surrendered in exchange therefor, it shall be
a condition to such payment that the Holder shall pay to the Company any
transfer taxes required to be paid as a result of such payment to a Person
other than the registered holder of such Subject Shares or establish to the
satisfaction of the Company that such tax has been paid or is not payable.
Section 4.02. Public Announcements. Except as required by
applicable law or regulations, the Principal Stockholder and the Company shall
jointly approve any public announcements relating to the transactions
described herein. Each party agrees to cooperate with the other in the
preparation of any governmental filing relating to the transactions
contemplated hereby.
Section 4.03. Mutual Cooperation. Each of the parties
hereto hereby agrees to reasonably cooperate with each other party in seeking
the successful consummation of the transactions contemplated herein and to use
its or his best efforts promptly to take all such actions as may be necessary
or appropriate to consummate the transactions contemplated herein.
Section 4.04. Amendment; Assigns. This Agreement may
not be modified, amended, altered or supplemented except by an agreement in
writing executed by each of the parties hereto. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 4.05. Notices. All notices, requests, demands and
other communications hereunder shall be in writing and shall be either (i)
hand-delivered, (ii) delivered by reputable overnight courier delivery or
(iii) sent by telecopy (with receipt confirmed) and shall be deemed given
upon delivery when hand-delivered, or one business day after having been
deposited with the overnight courier service or upon receipt of
confirmation of telecopier, addressed as follows (or to such other address
as a party may designate by notice to the other):
If to the Principal Stockholder:
Xxxxxx X. Xxxxxx
c/o The Limited, Inc.
Three Limited Parkway
P. O. Xxx 00000
Xxxxxxxx, Xxxx 00000
Facsimile: (000) 000-0000
If to the Trust:
The Wexner Children's Trust
c/o The Limited, Inc.
Three Limited Parkway
P. O. Xxx 00000
Xxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Trustee
Facsimile: (000) 000-0000
With a copy to:
Xxxx Xxxxxxx & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Block
Facsimile: (000) 000-0000
If to the Company:
The Limited, Inc.
Three Limited Parkway
X.X. Xxx 00000
Xxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Section 4.06. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same document.
Section 4.07. Governing Law. This Agreement shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
New York.
Section 4.08. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
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 4.09. Third Party Beneficiaries. Nothing in this
Agreement, expressed or implied, shall be construed to give any person other
than the parties hereto and their successors and permitted assigns any legal
or equitable right, remedy or claim under or by reason of this Agreement or
any provision contained herein.
Section 4.10. Entire Agreement. This Agreement and any documents
delivered by the parties pursuant hereto, constitutes the entire
understanding and agreement of the parties hereto with regard to the
subject matter hereof and thereof, and supersedes all prior agreements and
understandings, written or oral, between the parties relating to the
subject matter hereof.
Section 4.11. Injunctive Relief. Each of the parties hereto
acknowledges and agrees that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that, to the fullest extent permitted under applicable
law, the parties shall be entitled to an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specific performance of the terms and provisions hereof in any court of the
United States of America or any state thereof having jurisdiction, this
being in addition to any other remedy to which they may be entitled at law
or in equity.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
THE LIMITED, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice Chairman
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
----------------------------
/s/ Xxxxxx X. Xxxxxx
----------------------------
XXXXXX X. XXXXXX,
as Trustee of The
Wexner Children's Trust
