Item 1.01
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Entry into a Material Definitive Agreement.
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Merger Agreement
On February 10, 2008, Kellwood Company, a Delaware corporation (Company), entered into an Agreement and Plan of Merger (Merger Agreement) with Cardinal Integrated, LLC, a Delaware limited liability company (Cardinal) and Cardinal Group Integrated, Inc., a Delaware corporation and a wholly owned subsidiary of Cardinal (Merger Sub).
On January 15, 2008, Cardinal commenced an unsolicited tender offer (Offer) to purchase all of the Companys outstanding shares of common stock, par value $0.01 per share, together with the associated preferred stock purchase rights pursuant to the Rights Agreement defined below (the Shares), at a purchase price of $21.00 per share in cash, less any required withholding taxes (Offer Price). The Offer is subject to certain closing conditions, including (i) the expiration or termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and certain other regulatory requirements under foreign laws, (ii) the tender of a majority Shares, including Suns existing holdings (the Majority Condition) and (iii) Kellwood rescinding its note tender offer and giving requisite approvals under Delaware
law, its charter, and its Rights Agreement (defined below) (the Kellwood Approval Conditions).
Upon successful completion of the Offer, Merger Sub will be merged with and into the Company, the separate corporate existence of the Merger Sub shall cease, and the Company will survive the Merger as a wholly owned subsidiary of Cardinal. The Merger is subject to certain conditions including (i) the absence of certain legal impediments, (ii) stockholder approval, if such approval is required, (iii) the satisfaction of the Majority Condition, and (iv) the satisfaction of the Kellwood Approval Conditions.
The parties have agreed that if, following completion of the Offer, Cardinal and Merger Sub own at least 90% of the Companys outstanding Shares, pursuant to the Offer or otherwise, the Merger will be completed without a meeting of the Companys stockholders pursuant to Delawares short-form merger statute (the Short Form Merger).
The Company granted to Cardinal and Merger Sub the option (the Top-Up Option) to purchase from the Company the number of newly-issued Shares equal to the lowest number of Shares, that when added to the number of Shares owned by Cardinal and Merger Sub and their respective affiliates at the time of exercise, shall constitute one Share more than the number of Shares necessary for the Short Form Merger; however, the Top-Up Option shall not be exercisable and shall terminate if the number Shares to be issued in the Top-Up Option would exceed the number of authorized but unissued Shares, or after issuance of the Shares under the Top-Up Option, the number of owned by Cardinal would be insufficient to effectuate the Short Form Merger. The Top-Up Option is intended to expedite the timing of the completion of the Merger by permitting the Short Form Merger at a time when the approval
of the Merger at a meeting of the Companys stockholders would be assured because of Cardinals and Merger Subs ownership of a majority of shares of the outstanding common stock following completion of the Offer.
The Merger Agreement also contains certain termination rights for both the Company and Cardinal and provides that, including the ability of the Company to terminate the Merger Agreement prior to the effective time of the merger if the Company determines that it desires to pursue a competing proposal that satisfies certain conditions designated in the Merger Agreement.
The foregoing summary of the Merger Agreement and the transactions contemplated thereby do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Merger Agreement attached as Exhibit 2.1, which is incorporated herein by reference. The Merger Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company. Moreover, certain representations and warranties in the Merger Agreement were used for the purpose of allocating risk between the Company, Parent and Merger Sub, rather than establishing matters of fact. Accordingly, the representations and warranties in the Merger Agreement may not constitute the actual state of facts about the Company, Parent or Merger Sub.
Rights Agreement
In connection with the Merger Agreement and the Offer, the Company and American Stock Transfer and Trust Company, a New York trust company (the Rights Agent), will enter into an Amendment (the Amendment) to the Amended and Restated Rights Agreement, dated as of April 19, 2007, by and between the Company and the Rights Agent (the Rights Agreement) to make the provisions of the Rights Agreement inapplicable to the transactions contemplated by the Offer and the Merger Agreement. A copy of the Amendment is furnished herewith as Exhibit 4.1.