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Item 1.01
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Entry into Material Definitive Agreement.
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On
April 2, 2020, the Board of Directors (the “Board”) of Chico’s
FAS, Inc. (the “Company”), a Florida corporation, declared a dividend of one
preferred share purchase right (a “Right”) for each outstanding share of common stock, par value $0.01 per share, of
the Company (the “Common Stock”), to purchase from the Company one one-ten thousandth of a share of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the Company (the “Preferred Stock”) at a price of $12.00
per one ten-thousandth of a share of Preferred Stock (the “Purchase Price”), subject to adjustment as provided in the
Rights Agreement (defined below). The dividend is payable to stockholders of record at the close of business on April 13, 2020
(the “Record Date”). The description and terms of the Rights are set forth in a Rights Agreement, dated as of April
2, 2020, as the same may be amended from time to time (the “Rights Agreement”),
between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent (the “Rights Agent”).
The
Board adopted the Rights Agreement to ensure that the Board remains in the best position to perform its fiduciary duties and to
enable all stockholders of the Company to receive fair and equal treatment. The Rights Agreement is also intended to protect
the Company and its stockholders from efforts to obtain control of the Company that the Board determines are not in the best interests
of the Company and its stockholders, and to enable all stockholders to realize the long-term value of their investment in the Company.
The Rights may cause substantial dilution to any person or group that attempts to acquire
the Company without the approval of the Board. As a result, the overall effect of the Rights Agreement and the issuance of the
Rights may be to render more difficult or discourage a merger, tender or exchange offer or other business combination involving
the Company that is not approved by the Board.
The
following is a summary of the terms of the Rights Agreement. The summary does not purport to be complete and is qualified in its
entirety by reference to the full text of the Rights Agreement, a copy of which is attached as Exhibit 4.1 and incorporated herein
by reference.
Effectiveness
The
Rights Agreement became effective on April 2, 2020 (the “Effective Date”). Upon and following the Effective Date, Rights
will be issued in respect of all outstanding shares of Common Stock on the Record Date, and for all shares of Common Stock issued
after the Record Date and, subject to the terms described in the Rights Agreement, prior to the earliest of the Distribution Date
(as defined below), the redemption of the Rights or the expiration of the Rights.
Distribution
and Transfer of Rights; Distribution Date; Rights Certificates
Subject
to certain exceptions specified in the Rights Agreement, the Rights will separate from the Common Stock and become exercisable
following the earlier of (i) 10 business days from the earlier of (x) the public announcement that a person or group of affiliated
or associated persons has become an Acquiring Person (as defined below) or (y) a majority of the Board becoming aware that a person
or group of affiliated or associated persons has become an Acquiring Person, or (ii) such date (prior to such time as any person
or group of affiliated persons becomes an Acquiring Person), if any, as may be determined by action of the Board following the
commencement of, or public announcement of an intention to make, a tender or exchange offer the consummation of which would result
in any person or group of affiliated persons becoming an Acquiring Person (the earlier of such dates being called the “Distribution
Date”). Except in certain situations, a person or group of affiliated or associated persons becomes an “Acquiring Person”
upon acquiring beneficial ownership of 10% (20% in the case of a passive institutional investor) or more of the outstanding shares
of Common Stock. Certain synthetic interests in securities created by derivative positions are treated as beneficial ownership
of the number of shares of the Common Stock equivalent to the economic exposure created by the derivative security, to the extent
actual shares of Common Stock are directly or indirectly beneficially owned by a counterparty to such derivative security.
Prior
to the Distribution Date, the Rights will be transferred with and only with the Common Stock. Until the Distribution Date (or earlier
expiration of the Rights), new Common Stock certificates issued after the Record Date upon transfer or new issuances of Common
Stock will contain a notation incorporating the Rights
Agreement by
reference. Until the Distribution Date (or earlier expiration of the Rights), the surrender for transfer of any certificates for
shares of Common Stock (or book entry shares of Common Stock) outstanding as of the Record Date, even without such notation or
a copy of the Summary of Rights, will also constitute the transfer of the Rights associated with the shares of Common Stock represented
thereby. 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 Stock as of the close of business on the Distribution Date and such separate
Right Certificates alone will evidence the Rights.
The
Rights are not exercisable until the Distribution Date. The Rights will expire on April 1, 2021 (the “Final Expiration
Date”), unless the Rights are earlier redeemed or exchanged by the Company, in each case as described below, or upon the
occurrence of certain transactions.
Preferred
Stock Purchasable Upon Exercise of Rights
Because
of the nature of the Preferred Stock’s dividend, liquidation and voting rights, the value of the one ten-thousandth interest
in a share of Preferred Stock purchasable upon exercise of each Right should approximate the value of one share of Common Stock.
Flip-In
Trigger
If
any person or group of affiliated or associated persons becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person and certain transferees thereof (which will thereupon become null and void), will thereafter
have the right to receive upon exercise of a Right that number of shares of Common Stock having a market value of two times the
exercise price of the Right.
Flip-Over
Trigger
If,
after a person or group has become an Acquiring Person, the Company is acquired in a merger or other business combination transaction
or 50% or more of its consolidated assets or earning power are sold, proper provisions will be made so that each holder of a Right
(other than Rights beneficially owned by an Acquiring Person and certain transferees thereof which will have become null and void)
will thereafter have the right to receive upon the exercise of a Right that number of shares of common stock of the person with
whom the Company has engaged in the foregoing transaction (or its parent) that at the time of such transaction have a market value
of two times the exercise price of the Right.
Exchange
Provisions
At
any time after any person or group becomes an Acquiring Person and prior to the earlier of one of the events described in the previous
paragraph or the acquisition by such Acquiring Person of 50% or more of the outstanding shares of Common Stock, the Board may exchange
the Rights (other than Rights owned by such Acquiring Person and certain transferees thereof which will have become null and void),
in whole or in part, for shares of Common Stock or Preferred Stock (or a series of the Company’s preferred stock having equivalent
rights, preferences and privileges), at an exchange ratio of one share of Common Stock, or a fractional share of Preferred Stock
(or other preferred stock) equivalent in value thereto, per Right.
Redemption
of the Rights
At
any time prior to the earlier of (a) the Distribution Date and (b) the Final Expiration Date, the Board may redeem the Rights in
whole, but not in part, at a price of $0.001 per Right (the “Redemption Price”) payable, at the option of the Company,
in cash, shares of Common Stock or such other form of consideration as the Board shall determine. The redemption of the Rights
may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish. Immediately
upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
Amendment
of Terms of Rights Agreement and Rights
For
so long as the Rights are then redeemable, the Company may, except with respect to the Redemption Price, amend the Rights Agreement
in any manner. After the Rights are no longer redeemable, the Company may, except with respect to the Redemption Price, amend the
Rights Agreement in any manner that does not adversely affect the interests of holders of the Rights (other than holders of Rights
owned by or transferred to any person who is or becomes an Acquiring Person and certain transferees thereof).
Voting
Rights; Other Stockholder Rights
Until
a Right is exercised or exchanged, the holder thereof, as such, will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
Anti-Dilution
Provisions
The
Purchase Price payable, and the number of shares of Preferred Stock or other securities or property issuable, upon exercise of
the Rights is 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 Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for or purchase Preferred Stock at a price, or securities convertible into Preferred Stock with a conversion
price, less than the then-current market price of the Preferred Stock or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends or dividends payable in Preferred Stock)
or of subscription rights or warrants (other than those referred to above).
The
number of outstanding Rights is subject to adjustment in the event of a stock dividend on the Common Stock payable in shares of
Common Stock or subdivisions, consolidations or combinations of the Common Stock occurring, in any such case, prior to the Distribution
Date.