EX-4.1



 






FIRST AMENDMENT TO THE RIGHTS AGREEMENT




          FIRST AMENDMENT TO THE RIGHTS AGREEMENT, dated as of March 20, 2007 (this “Amendment”)
to the Rights Agreement, dated as of May 30, 2003 (the “Rights Agreement”), by and between
Claire’s Stores, Inc. (the “Company”) and American Stock Transfer and Trust Company, as
successor to Wachovia Bank, N.A., as Rights Agent (the “Rights Agent”). Terms used herein
but not defined shall have the meaning assigned to them in the Rights Agreement.




          WHEREAS the Company and the Rights Agent have heretofore executed and entered into the Rights
Agreement;




          WHEREAS, the Company proposes to enter into an Agreement and Plan of Merger, dated as of March
20, 2007 (as amended from time to time, the “Merger Agreement”), among Bauble Holdings
Corp., a Delaware corporation (“Parent”), Bauble Acquisition Sub, Inc., a Florida
corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), and the Company,
providing for the merger (the “Merger”) of the Company and the Merger Sub, with the Company
continuing as the surviving corporation;




          WHEREAS, concurrently with the execution and delivery of the Merger Agreement and as a
condition and inducement to the willingness of Parent and Merger Sub to enter into this Agreement,
certain shareholders of the Company are entering into a voting agreement with Parent and Merger Sub
(the “Shareholders Agreement”) pursuant to which such shareholders are agreeing, in their
capacity as shareholders of the Company, to vote to adopt the Merger Agreement and take certain
other actions in furtherance of the Merger, in each case, upon the terms and conditions contained
therein;




          WHEREAS, the Board of Directors of the Company has determined, in connection with the Merger
Agreement and the Shareholders Agreement, that it is necessary and desirable to amend the Rights
Agreement to exempt the Merger Agreement, the Shareholders Agreement and the transactions
contemplated thereby, including, without limitation, the Merger, from the application of the Rights
Agreement as set forth in this Amendment;




          WHEREAS, (i) Section 27 of the Rights Agreement provides that, for so long as the Rights are
then outstanding and redeemable, the Company may, in its sole and absolute discretion, and the
Rights Agent shall if so directed by the Company, supplement or amend any provision of the Rights
Agreement without the consent or approval of any holders of the Rights (subject to limited
exceptions that do not apply for purposes hereof); (ii) pursuant to Section 27 of the Rights
Agreement, an appropriate officer of the Company has delivered a certificate to the Rights Agent
stating that the proposed supplements and amendments to the Rights Agreement set forth in this
Amendment are in compliance with Section 27 of the Rights Agreement; and (iii) pursuant to the
terms of the Rights Agreement and in accordance with Section 27 thereof, the Company has directed
that the Rights Agreement should be amended and supplemented as set forth in this Amendment
immediately prior to the execution of the Merger Agreement.;

 









 








          WHEREAS, in connection with the Merger Agreement, the Company desires to make certain
amendments to the Rights Agreement; and




          NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the parties hereby agree as follows:




          1. Amendment to Rights Agreement. Effective upon the date hereof, the Rights
Agreement is hereby amended as follows:





     1.1 Amendment of Section 1(a). The definition of “Acquiring Person” in
Section 1(a) of the Rights Agreement is amended by inserting the following as a new
paragraph at the end of such definition:




“Notwithstanding anything in this Section 1(a) to the contrary, none of
Bauble Holdings Corp., a Delaware corporation (“Parent”), Bauble Acquisition
Sub, Inc., a Florida corporation (“Merger Sub”), or any of their respective
Affiliates or Associates, either individually, collectively or in any
combination, shall be deemed to be an “Acquiring Person” solely by virtue or
as a result of the approval, execution, delivery, adoption or performance of
the Agreement and Plan of Merger, dated as of March 20, 2007, among Parent,
Merger Sub and the Company (as it may be amended or supplemented from time
to time, the “Merger Agreement”) or the consummation of the Merger (as
defined in the Merger Agreement) or any other transactions contemplated
thereby, including without limitation, entry into or performance of the
Shareholders Agreement, dated as of March 20, 2007, among Parent, Merger Sub
and the other signatory parties thereto (as it may be amended or
supplemented from time to time) (such actions described in this sentence,
the “Permitted Events”).




     1.2 Amendment of Section 1(x). Section 1(x) of the Rights Agreement is
hereby amended to add the following sentence at the end thereof:




“Notwithstanding anything in this Agreement to the contrary, a Shares
Acquisition Date shall not be deemed to have occurred solely by virtue or as
a result of the public announcement of any Permitted Event.”




     1.3 Amendment of Section 3(a). Section 3(a) of the Rights Agreement is
hereby amended to add the following sentence at the end thereof:




“Notwithstanding anything in this Agreement to the contrary, a Distribution
Date shall not be deemed to have occurred solely as the result of any
Permitted Event.”




     1.4 Amendment of Section 7(a). Section 7(a) of the Rights Agreement is
hereby amended and restated in its entirety as follows:




“ Except as otherwise provided herein, the Rights shall become exercisable
on the Distribution Date, and thereafter the registered holder



 








 






of any Right Certificate may, subject to Section 11(a)(ii) hereof and except
as otherwise provided herein, exercise the Rights evidenced thereby in whole
or in part upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the office or agency of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect
to the total number of one one-thousandths of Preferred Shares (or other
securities, cash or other assets, as the case may be) as to which the Rights
are exercised, at any time which is both after the Distribution Date and
prior to the earliest of (i) the time immediately prior to the Effective
Time (as defined in the Merger Agreement) (the “Effective Time”), but only
if the Effective Time shall occur, (ii) the close of business on May 20,
2013 (the “Final Expiration Date”), (iii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the “Redemption Date”) or (iv)
the time at which such Rights are exchanged as provided in Section 24
hereof. The Company will provide the Rights Agent with notice of the
Effective Time, provided, however, that failure to notify the Rights Agent
of the Effective Time shall not in any way effect the time at which the
Rights cease to be exercisable pursuant to the foregoing sentence.”




     1.5 Amendment of Section 13(c). Section 13(c) is hereby amended to add
the following sentence at the end thereof:




“Notwithstanding anything in this Agreement to the contrary, a
consolidation, merger, sale or transfer referred to in Section 13(a) or
otherwise in this Agreement shall not be deemed to have occurred solely by
virtue of or as a result of the public announcement of any Permitted Event.”




     1.6 Addition of Section 35. A new Section 35 is added to read in its
entirety as follows:




“Section 35. Termination. Notwithstanding anything herein to the contrary,
immediately prior to the Effective Time, but only if the Effective Time
shall occur, (a) this Agreement shall be terminated and be without further
force or effect, (b) none of the parties to this Agreement will have any
rights, obligations or liabilities hereunder and (c) the holders of the
Rights shall not be entitled to any benefits, rights or other interests
under this Agreement, including, without limitation, the right to purchase
or otherwise acquire Preferred Shares or any other securities of the Company
or of any other Person; provided, however, that notwithstanding the
foregoing, Sections 18, 20, 27, 28 and 29 hereof shall survive the
termination of this Agreement.”



 









 





          2. Interpretation. The term “Agreement” as used in the Rights Agreement shall be
deemed to refer to the Rights Agreement as amended hereby.




          3. Severability. If any term, provision, covenant or restriction of this Amendment 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 Amendment, and of the
Rights Agreement, shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.




          4. Waiver of Notice. The Rights Agent and the Company hereby waive any notice
requirement under the Rights Agreement pertaining to the matters covered by this Amendment.




          5. Effectiveness. This Amendment shall be deemed effective as of the date first
written above. Except as expressly amended herein, all other terms and conditions of the Rights
Agreement shall remain in full force and effect. Without limiting the foregoing, the Rights Agent
shall not be subject to, nor required to interpret or comply with, or determine if any Person has
complied with, the Merger Agreement even though reference thereto may be made in this Amendment and
the Rights Agreement.




          6. Governing Law. This Amendment shall be deemed a contract made under the laws of
the State of Florida, and for all purposes of this Amendment shall be governed by and construed in
accordance with the laws of such State applicable to contracts made and to be performed entirely
within such State.




          7. Counterparts. This Amendment may be executed in any number of counterparts, each
of which shall be an original and all of which shall constitute one and the same document.




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          IN WITNESS WHEREOF, the Company and the Rights Agent have caused this Amendment to be duly
executed as of the day and year first above written.




	 	 	 	 	 
	 	CLAIRE’S STORES, INC.

 	 
	 	By:  	/s/ IRA KAPLAN	 
	 	 	Name:  Ira Kaplan	 	 
	 	 	Title:    Chief Financial Officer	 	 
	 
	 	AMERICAN STOCK TRANSFER AND TRUST COMPANY, as Rights Agent

 	 
	 	By:  	/s/ HERBERT J. LEMMER	 
	 	 	Name:  Herbert J. Lemmer	 	 
	 	 	Title:    Vice President